2 0 2 3
A N N U A L
R E P O R T
POWERED BY ADVANTAGE | ENABLED BY IMPROVEMENT
SNAP-ON CREATES
FUNDAMENTAL VALUE
BY PROVIDING SOLUTIONS
TO MATCH CRITICAL TASKS.
We customize our products to enable efficiencies in
moving the world forward and we solve a wide variety
of essential tasks with targeted offerings to give us
substantial advantage.
We believe strongly in the pride and dignity
of work and in celebrating the contributions
made by working men and women.
2023
22.0%
Since RCI was established,
operating margin before financial
services has improved from
6.5% in 2005 to 22.0% in 2023,
representing an average annual
increase of 85 basis points.
2005
6.5%
To create value, we follow a step-by-step
approach that is people intensive, product
complex, lower scale at its core; driven by
the multi-layered process we call Rapid
Continuous Improvement or RCI.
TRAINING | We ensure our people
are trained well for the challenges of
their current jobs by using in-house
instruction, as well as partnerships
with local technical schools, making
them experts in their particular
tasks. Pictured in our Elizabethton,
Tennessee hand tools facility
development center are Nick Pinchuk,
Chairman and Chief Executive Officer,
and Snap-on Tools manufacturing
associates Brian Smith, Maria Roman,
Eddie Stafford, and David Bellessa.
1
TO OUR
SNAP-ON
SHAREHOLDERS
TECHNOLOGY | We employ new technologies to augment the efforts of our people . . . devices such as robots
and advanced welders are installed to amplify the power of our manufacturing team. Our approach directs the
efforts of our associates away from the processes of product transformation and deploys them toward the highest
value tasks or non-standard work. In 2023, the Snap-on Challenger Lift factory in Louisville, Kentucky hosted
Chief Executive magazine’s “Smart Manufacturing Summit.” At this event, 150 CEOs and other leaders learned about
the innovative technologies found in that facility, such as in the two-post lift robotic welding operation. Pictured
here with Nick Pinchuk, Chairman and Chief Executive Officer in that cell are Equipment associates, Gino Amador,
Brian Spikes, Kameo Dunn, and Willie Marzette.
2
AT SNAP-ON WE’RE POWERED BY
ADVANTAGE . . . IN PRODUCT. . . IN BRAND
. . . IN PEOPLE . . . AS WE SOLVE THE
MOST CRITICAL OF TASKS. AND, WE’RE
ENABLED BY IMPROVEMENT AUTHORED
BY KAIZEN. . . BY TECHNOLOGY . . .
BY TRAINING . . . AS WE RISE TO THE
POSSIBILITIES OF OUR FUTURE.
Snap-on is rooted in the critical. We make work easier,
offering solutions for essential tasks where the penalties
for failure are high. We connect with our customers,
working men and women, developing further advantages
in our products, meeting the needs of rapidly changing
workplaces. And, we enable the makers and fixers who
perform day in and day out to move the world forward...
a focus that continues to be of particular and essential
relevance in the circumstances of today.
In 2023, we again demonstrated our diverse and abundant
opportunities, confirmed the resilience of our markets, and
highlighted the considerable capabilities of our experienced
team to overcome the demands of a varied environment.
Despite the economic uncertainties, regional conflicts, and
a dynamic global supply chain, we believe Snap-on is firmly
positioned to engage the turbulence and to rise on a steady
upward trajectory into the future by leveraging the power of our
advantages...our formidable array of innovative products, our
strong brand position, and our challenge-tested teams... and
by enabling our ability to improve day by day, authored
by kaizen, by technology, and by training.
Since our founding in 1920, our principal value-creating
mechanism has been to observe work and translate the
insights gained into creative solutions that make essential
tasks easier. Opportunities to leverage this approach, both
within and beyond vehicle repair, are embodied in our
runways for growth: enhance the franchise network; expand
with repair shop owners and managers; extend to critical
industries, and build in emerging markets. In 2023, we
continued investing in each of these strategically decisive
areas, positioning Snap-on for ongoing growth, increasing
profitability, and rising prosperity for years to come.
At the same time, we’re enabled by our runways for
improvement, applying our Snap-on Value Creation
Processes, a suite of principles we use every day in the areas
of safety, quality, customer connection, innovation, and
rapid continuous improvement (RCI). The contributions of
these efforts were evident in many ways throughout 2023.
For example, we again received recognition for a number of
our new products, earning awards from both Motor Magazine
and Professional Tool & Equipment News, reflecting our
strong commitment to customer connection and exhibiting
our ability to convert the associated insights into winning
innovations. On another note, since it was established in
2005, Snap-on’s RCI framework, a structured set of tools
used across the company to eliminate waste and improve
operations, has contributed significantly in advancing our
operating margin. Over these last 18 years, our operating
margin before financial services has improved by a total of
1,550 basis points, or approximately 85 basis points, on
average, per year.
We were encouraged by our 2023 performance as it reflects
our upward momentum and aligns with our longer-term
expectations of mid single-digit annual sales growth and
ongoing increases in profitability. Net sales of $4,730.2
million reflected an increase from 2022 levels of $237.4
million, or 5.3%, including a $250.7 million, or 5.6%, organic
sales¹ gain. With respect to our end markets, sales in our
industrial sector were robust, and activity in our automotive
repair sector was strong, despite being attenuated by lower
¹ Organic sales in a non-GAAP financial measure that excludes acquisition-related sales and the impact of foreign currency translation.
3
overall growth in our franchise business. From a geographic
perspective, sales gains in North America and Europe were
generally in line with the total growth of the company, while
somewhat lower year-over-year volumes in Asia were offset by
higher progress in other rest-of-world markets. During the
year, many geographies, including those in Europe, recovered
from the protracted effects of COVID. At the same time,
certain markets in Asia, including China, continued to be
afflicted by economic and political turbulence. Over the year,
however, having navigated the operational and geographical
differences, our collective business demonstrated clear
momentum along a sustained upward trend.
With respect to profitability, increased activity and the
operating improvement driven by our Snap-on Value Creation
Processes delivered diluted earnings per share of $18.76, up
11.5% from 2022. Operating margin before financial services
of 22.0% represented an improvement of 110 basis points
from 20.9% in 2022, with the benefits of higher sales volumes
and pricing actions, along with lower material costs and RCI,
overcoming increased personnel and other expenses. The
overall company operating margin, including financial services,
of 25.7% in 2023 compared to 24.9% last year.
Our Commercial & Industrial (C&I) Group serves a broad
range of customers, including professionals in critical
industries and emerging markets, primarily through direct
and distributor channels. Net sales of $1,458.3 million
represented an increase of 4.2% as compared to 2022,
reflecting a $69.7 million, or 5.0%, organic gain, $5.5
million of acquisition-related sales, and $16.1 million
of unfavorable foreign currency translation. The organic
increase primarily reflects gains in sales to customers in
critical industries. The group’s operating margin of 15.5%,
including 40 basis points of unfavorable currency,
represented an increase of 140 basis points from the
14.1% registered last year.
The operating environment for C&I, which has our largest
international presence, has generally improved, despite
continued economic and political challenges across its
geographies. Our business with customers in critical
industries was particularly robust in 2023. Sales to the
United States (U.S.) military were strong, and volumes in
the U.S. and international aviation, technical education,
and heavy duty sectors were also up over last year. Further,
the significant growth was enabled by our broadening product
lines in this arena and by our effective capacity expansion
in our complex kitting operation. Outside of the critical
industries business, volumes on a more-localized level
were mixed. For our European-based hand tools business,
sales were higher in Spain and the United Kingdom,
but down in Germany and the Nordic countries, resulting
in sales levels that were essentially flat versus last year.
In our Asia Pacific operations, economic turbulence in China,
a weakened yen in Japan, and recovery in India created a
varying landscape.
In November 2023, we acquired Mountz, Inc., a leading
developer, manufacturer, and marketer of high-precision
torque tools, including measurement, calibration, and
documentation products. The acquisition complements and
expands our torque offerings to customers in a variety of
critical industries, including aerospace, transportation, and
advanced manufacturing. It most notably strengthens our
position in solving tasks that require increased precision...an
area of accelerating importance as the world moves forward.
To further pursue the possibilities in critical industries,
we’re utilizing our advantages and investing in product
development to meet the evolving needs of the workplace.
In that regard, during the year, we introduced a new ¼-inch
drive flex-head TechAngle® micro torque wrench, specifically
designed for making a difference in essential tasks. The
new tool is aimed directly at criticality where the need for
accuracy is increasing, where repair in tight spaces is becoming
more common, and where the dependence on precision is
rising. And, our new unit delivers on all three fronts. The
wrench is almost one foot long, but less than one inch in
diameter, configured to facilitate access deep inside narrow
compartments. It’s also equipped with a 15-degree flex-head
design, allowing it to avoid most obstacles, and it uses our
durable 72-tooth gear mechanism, enabling the tool to operate
with small rotations when barriers restrict motion. The
TechAngle® delivers a robust 300 in. lbs. of torque, expanding
the range by over 20%, providing productivity gains by
increasing the number of applications covered, consolidating
process needs from multiple devices to one convenient
solution and eliminating tool changeover time. The new
product also has four alert modes—LCD, LED, vibratory, and
audible—all to prevent over-torquing, even when visibility is
low, and when space is constrained. And, when combined
with the unit’s accuracy of plus or minus 2%, the product
delivers gains in accessibility and in precision for technicians
across critical sectors.
The C&I Group demonstrated substantial progress in the
past year. We believe there’s more runway for Snap-on in this
crucial arena and we’re investing going forward to build our
advantages in pursuing that considerable opportunity.
In the Snap-on Tools Group net sales to our franchised
mobile van network, primarily serving vehicle repair
technicians, were $2,088.8 million representing an increase
4
of 0.8% as compared to 2022, and reflecting a $25.0 million,
or 1.2%, organic gain partially offset by $8.2 million of
unfavorable foreign currency translation. The organic increase
reflects higher sales in our international operations, while
activity in our U.S. operation was essentially flat. The group’s
operating margin of 23.6%, including 50 basis points of
unfavorable currency effects, represented an increase of
150 basis points from the 22.1% reported in 2022.
In the international van network, sales gains were achieved in
each of our major markets, including Australia, Canada, and
the United Kingdom...the latter reflecting improvements in the
economic environment following several years of uncertainty
in that country. Sales to franchisees in the U.S. were
essentially the same as last year. We do believe, however,
year-over-year sales from the franchisees to their customers
continued their growth in 2023. Despite the mixed sales
performance, the group achieved new levels of profitability
during the year and continues to focus on increasing
its product advantage, on strengthening its brands, on
RCI-driven improvements, and on further enabling its
franchisees by enhancing their selling capacity. Based on
feedback from our franchisees and customers, as well as
from market data, we continue to believe that the vehicle
repair arena is a considerable opportunity. Given the rapid
changes in vehicle technologies and the increases in the
number and the age of vehicles on the road, combined with
the strength and resilience of our direct model, we believe
KAIZEN | We enlist our team and its considerable understanding of the work to guide the kaizen
efforts that drive the day-by-day advances in efficiency throughout our operations. Dozens of times
each year, we partner with Japanese consultants to hold weeklong dedicated kaizen workshops in
our facilities and every year, members of our executive management team participate in one of these
focused events. Pictured here with Sensei Takahashi and Ms. Mayumi Yuchi are Snap-on associates,
Derreck Boehringer, Gavin Zintel, and Maria Vieira.
5
CELEBRATION | We encourage our team’s ongoing commitment and continuing energy, celebrating
the significant differences they make for our enterprise and for our society by enabling the essential
people of work...the Makers and the Fixers...who maintain our world.
that the Tools Group is well-positioned to take full advantage
of the environment and to progress on a positive trajectory.
Our ability to provide new products that make work easier
for technicians in the changing and increasingly challenging
repair shop of today is critical to the success of our franchise
business model. Powered by our advantages, led by our
engineering and manufacturing expertise, and guided by
our customer connections, we’ve introduced a continuous
stream of new products, second to none in quality and in
their favorable effect on technician efficiency. In 2023, we
launched a new 3/8-inch drive, Dual 80® compact multi-
position head ratchet...a triple-function tool that delivers
significant productivity for our end-user customers. In addition
to serving as a traditional fixed ratchet, the new unit’s head
can be locked into any one of 16 possible positions, 240
degrees around the handle center line, enabling the tool to
work while reaching around obstacles. Finally, in its third
configuration, the unit can be placed in a free-spin mode,
providing the technician with 360 degrees of continuous
rotation, greatly reducing work time in low torque situations.
The versatile ratchet is manufactured in our Elizabethton,
Tennessee facility with special alloy steel providing greater
strength and durability...important features for any
technician performing critical repairs. During 2023, in order
to produce higher volumes of our existing lineup and to
continue to augment the line with new products, we proceed
with capacity expansions at each of our main Tools Group
manufacturing facilities, including our hand tools factories in
Milwaukee, Wisconsin, Elkmont, Alabama, and Elizabethton,
as well as at our Algona, Iowa tool storage facility. We believe
manufacturing in the markets where we sell is a considerable
advantage and that adding capacity is an additional way to
aid in enhancing the power of our franchise business.
In 2023, we received external recognition, confirming that
a Snap-on Tools franchise provides a significant opportunity to
build a successful and sustainable business. In its annual
6
million of favorable foreign currency translation. The organic
rise reflects higher volume in undercar equipment and an
uplift in activity focused on OEM dealerships. The group’s
operating margin of 24.3% compared to 23.6% in 2022,
representing an increase of 70 basis points.
Across our RS&I businesses, we continue to address
increasing vehicle complexity and quickly-changing
technologies. Today, the range of sophisticated electronic
options is growing, vehicle automation is expanding, including
Advanced Driver Assistance Systems (ADAS), and there is a
greater array of drivetrains, from internal combustion engines
to hybrids to plug-in hybrids to full electric...all providing
increasing opportunities for new products across a variety of
repair situations. In that regard, as more diverse and greater
numbers of vehicle models are introduced, the size, weight,
and types of wheels and tires have grown significantly.
To address the associated needs of tire service shops,
based on customer connection, we launched the Hofmann®
Armored Series of wheel balancers, specifically designed
for high-throughput shops demanding precision, reliability
and versatility. Crafted from robust steel that makes the
new units resilient, even for larger tires and in the toughest
environments. With its high-resolution touchscreen display,
intuitive interface, and ergonomic design, the balancer
delivers unparalleled accuracy, speed, and durability with
every use, and the compact, yet powerful, framework
ensures maximum capability without occupying an excessive
footprint. This intelligent system utilizes sonar sensors to
automatically detect rim width, eliminating the need for
manual input and reducing the possibility of errors, and the
strong and reliable heavy duty pneumatic lift quickly and easily
handles the heavier wheel and tire combinations becoming
more common in today’s car parc. A new mobile app offers
users instant access to manuals and troubleshooting guides,
including real-time updates, to ensure seamless operation
without significant interruption. This solution enables the
handling of more wheel balancing, with increased flexibility,
greater accuracy, and higher speed, and is intended to
generate a high return on investment for the shop, providing
a substantial growth opportunity for this important segment
of repair and service providers.
In June, our Challenger Lifts facility in Louisville, Kentucky
hosted Chief Executive magazine’s “Smart Manufacturing
Summit.” This plant offers thousands of stock-keeping units
(SKUs) and has been expanding its product line of vehicle
lifts to accommodate the needs of independent shops and
dealerships in servicing new powertrains, including the
specific challenges associated with electric vehicles. Since
its acquisition 10 years ago, the operation has fully embraced
Snap-on’s manufacturing doctrine, following a step-by-step
7
ranking of the top 500 franchises, Entrepreneur Magazine
ranked Snap-on 20th overall and second among home-based
networks. In addition, the Franchise Business Review once
again identified Snap-on on its annual list of top franchises
based on operator satisfaction. Going forward, an important
element in furthering the considerable potential inherent in
our van network is the ongoing and effective training that we
deliver throughout the year, with special effort and particular
emphasis at our Snap-on Franchisee Conference (SFC) held in
August. Regarding the SFC, this year’s event saw an increase
in the routes represented and those in attendance were visibly
energetic, enthusiastic, and focused on advancing their
collective and individual businesses.
In the Repair Systems & Information (RS&I) Group, which
serves the owners and managers of both OEM dealerships
and independent repair shops, net sales of $1,781.2 million
represented an increase of 6.9% as compared to 2022,
reflecting a $111.7 million, or 6.7%, organic gain and $2.6
U.S.-BASED
MANUFACTURING
SAN JOSE, CA
DIAGNOSTICS
CITY OF INDUSTRY, CA
TORQUE
TUSTIN, CA
TOOL CONTROL
ROCHESTER HILLS, MI
HEAVY DUTY DIAGNOSTICS
WEST LEBANON, NH
BRAKE SERVICE
LOUISVILLE, KY
VEHICLE LIFTS
ELIZABETHTON, TN
HAND TOOLS
MURPHY, NC
POWER TOOLS
ELKMONT, AL
HAND TOOLS
MILWAUKEE, WI
HAND TOOLS
ALGONA, IA
TOOL STORAGE
CAROL STREAM, IL
TORQUE
CONWAY, AR
EQUIPMENT
MANUFACTURING STRATEGY
To create superior products, solving a wide
range of tasks, Snap-on produces a very large
number of stock-keeping units or SKUs. We
have a broad product line of continuously
growing complexity where the individual
operations focus on specific problems. The
number of SKUs make it difficult to ship the
lineup over long distances without significant
disruption and unreliability. Therefore, we
produce, to a large degree, in the markets
where we sell, enabling our customer
connection and innovation processes to be
more effective. The proximity to the actual
critical tasks makes the circular feedback loop
from the workplace to the design labs, to the
factory floor, and back to the workplace much
more powerful. To support our customers,
we manufacture across the world, including
at 13 locations in the United States.
approach that is people intensive, product complex, and
lower scale at its core, all driven by the multi-layered
process we call RCI. The event showcased our commitment
to kaizen, technology, training and celebration, the power of
customization in driving expansion through focused products,
and the extraordinary capabilities of RCI to render low-volume
manufacturing quite profitable.
Financial Services operating earnings of $270.5 million on
revenue of $378.1 million compared to operating earnings
of $266.0 million on revenue of $349.7 million a year ago.
Originations of $1,235.5 million in 2023 represented an
increase of 7.1% versus last year. Financial services expenses
increased in 2023 primarily due to higher provisions for credit
losses, reflecting growth in the portfolio and a return to what
we believe to be more normal levels as compared to those
recorded in 2022. Focused on supporting essential big-ticket
purchases by technicians and shops, as well as enabling our
franchisees’ investment in their businesses, our Financial
Services operation, with a strong connection to the Snap-on
Tools Group, has a decades-long track record of effectively and
efficiently providing customized financing in a wide variety of
economic environments.
8
ENABLED
BY IMPROVEMENT
DIVIDENDS PER SHARE
EARNINGS PER DILUTED SHARE
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
$3.93
$4.47
$5.11
$5.88
$6.72
Since 1939, paid without interruption or reduction
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
$12.41
$11.44
$14.92
$16.82
$18.76
During the year, under our existing programs, we repurchased
1,126,000 shares for $294.7 million, and we have
availability for future share repurchases within our current
authorizations. In November 2023, our Board of Directors
raised our quarterly cash dividend by 14.8% to $1.86 per
share. For 84 years, since 1939, Snap-on has paid quarterly
cash dividends without interruption or reduction. Our
dividend is an essential component of our approach to
capital allocation and it testifies to the continuing resilience
and strength of our operations, even during times of
turbulence. Our strong financial position and robust cash
generation have enabled us to reward our shareholders
with a consistently increasing cash dividend and to support
our ongoing strategic investments, organically and through
acquisitions. This 14th consecutive annual increase in our
dividend confirms our commitment to create long-term value
for our shareholders and demonstrates our firm belief that
we’re well positioned for the future.
In 2024, despite current uncertainties, we expect to make
continued progress along our runways for both growth and
improvement. We will wield the power of our advantages in
our products, our brands, and our people...driving growth
across our operations...we will leverage our Snap-on Value
Creation Processes, creating productivity and efficiency...
pursuing the balanced approach that has served us well in a
variety of environments. At the same time, we will maintain
our responsibility to our communities by pursuing gains in
the environmental, social, and governance arenas. We will
remain deeply dedicated to honoring and celebrating the
dignity of work, providing the makers and the fixers with
the innovative products necessary to solve their critical
tasks. And, we will endeavor to maintain the Snap-on brand
as the visible sign of the pride working men and women
take in their essential efforts that move our society forward.
Finally, as we turn to the possibilities of our future, I thank
our franchisees and associates around the world for their
contributions and dedication, our Board of Directors for their
support and counsel, and our customers and shareholders for
their confidence and commitment.
Chairman and Chief Executive Officer
9
SNAP-ON
VALUE CREATION
PRINCIPLES AND PROCESSES WE APPLY TO CREATE VALUE
Founded on our mission and beliefs, these are strategic processes we use daily
to create value across our Corporation.
SAFETY
QUALITY
CUSTOMER CONNECTION
INNOVATION
RAPID CONTINUOUS IMPROVEMENT
WHO WE ARE: OUR MISSION
THE MOST VALUED PRODUCTIVITY SOLUTIONS IN THE WORLD
VALUES
VISION
BELIEFS
WE DEEPLY BELIEVE IN:
Non-negotiable Product
and Workplace Safety
Uncompromising Quality
Passionate Customer Care
Fearless Innovation
OUR BEHAVIORS DEFINE
OUR SUCCESS:
We demonstrate Integrity.
We tell the Truth.
We respect the Individual.
We promote Teamwork.
Rapid Continuous Improvement
We Listen.
OPERATING
SEGMENTS
2023 REVENUES BY SEGMENT
Financial Services
6%
Snap-on
Tools Group
Repair Systems &
Information Group
31%
37%
26%
Commercial & Industrial Group
10
S T A R T 1 0 K
TO BE ACKNOWLEDGED
AS THE:
Brands of Choice
Employer of Choice
Franchisor of Choice
Business Partner of Choice
Investment of Choice
SNAP-ON
FACTS
FOUNDED IN 1920
SERVES PROFESSIONALS
IN OVER 130 COUNTRIES
13,200 ASSOCIATES
S&P 500 COMPANY
2023 NET SALES OF $4.7 BILLION
NYSE: SNA
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2023, or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7724
Snap-on Incorporated
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
2801 80th Street Kenosha Wisconsin
(Address of principal executive offices)
39-0622040
(I.R.S. Employer Identification No.)
53143
(Zip code)
(262) 656-5200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1.00 par value
Trading Symbol(s)
SNA
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of voting and non-voting common equity held by non-affiliates (excludes 954,861 shares held by directors and
executive officers) computed by reference to the price ($288.19) at which common equity was last sold as of the last business day of the
registrant’s most recently completed second fiscal quarter (July 1, 2023) was $15.0 billion.
The number of shares of Common Stock ($1.00 par value) of the registrant outstanding as of February 9, 2024, was 52,713,542 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K incorporates by reference certain information that will be set forth in Snap-on’s Proxy Statement,
which is expected to first be mailed to shareholders on or about March 12, 2024, prepared for the Annual Meeting of Shareholders scheduled
for April 25, 2024.
TABLE OF CONTENTS
Page
PART I
Item 1
Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 1C Cybersecurity
Item 2
Properties
Item 3
Legal Proceedings
Item 4 Mine Safety Disclosures
PART II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6
[Reserved]
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Item 8
Financial Statements and Supplementary Data
Item 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14 Principal Accountant Fees and Services
PART IV
Item 15 Exhibit and Financial Statement Schedules
Item 16 Form 10-K Summary
Signatures
Consent of Independent Registered Public Accounting Firm
Certifications
2
SNAP-ON INCORPORATED
4
13
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PART I
Safe Harbor
Statements in this document that are not historical facts, including statements that (i) are in the future tense, (ii) include the
words “expects,” “plans,” “targets,” “estimates,” “believes,” “anticipates,” or similar words that reference Snap-on Incorporated
(“Snap-on” or “the company”) or its management, (iii) are specifically identified as forward-looking, or (iv) describe Snap-on’s
or management’s future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Snap-on cautions the reader that any forward-looking statements included in
this document that are based upon assumptions and estimates were developed by management in good faith and are subject to
risks, uncertainties or other factors that could cause (and in some cases have caused) actual results to differ materially from
those described in any such statement. Accordingly, forward-looking statements should not be relied upon as a prediction of
actual results or regarded as a representation by the company or its management that the projected results will be achieved. For
those forward-looking statements, Snap-on cautions the reader that numerous important factors, such as those listed below, as
well as those factors discussed in this Annual Report on Form 10-K, particularly those in “Item 1A: Risk Factors,” could affect
the company’s actual results and could cause its actual consolidated results to differ materially from those expressed in any
forward-looking statement made by, or on behalf of, Snap-on.
Risks and uncertainties include, without limitation:
•
•
•
•
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• Uncertainties related to estimates, assumptions and projections generally;
•
The timing and progress with which Snap-on can attain value through its Snap-on Value Creation Processes, including
its ability to (i) realize efficiencies and savings from its rapid continuous improvement and other cost reduction
initiatives, (ii) improve workforce productivity, (iii) achieve improvements in the company’s manufacturing footprint
and greater efficiencies in its supply chain, and (iv) enhance machine maintenance, plant productivity and
manufacturing line set-up and change-over practices, any or all of which could result in production inefficiencies,
higher costs and/or lost revenues;
Snap-on’s capability to successfully implement future strategies with respect to its existing businesses;
Snap-on’s ability to refine its brand and franchise strategies, retain and attract franchisees, and further enhance service
and value to franchisees in order to help improve the sales and profitability of franchisees;
The company’s ability to introduce successful new products;
Significant changes in the current competitive environment;
Risks related to pursuing, completing and integrating acquisitions;
Inflation, interest rate changes and other monetary and market fluctuations;
Price and supply fluctuations related to raw materials, components and certain purchased finished goods, such as steel,
plastics, and electronics;
The effects of external economic factors, including adverse developments in world financial markets, disruptions
related to tariffs and other trade or sanctions issues, and global supply chain inefficiencies, including as a result of the
current war in Ukraine and other regional conflicts;
Snap-on’s ability to successfully manage changes in prices and the availability of energy sources, including gasoline;
Snap-on’s ability to withstand disruption arising from natural disasters, including climate-related events or other
unusual occurrences;
Risks associated with data security and technological systems and protections, including the effects of cyber incidents
and from new legislation, regulations or government-related developments;
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The impact of labor interruptions or challenges, and Snap-on’s ability to effectively manage human capital resources;
• Weakness in certain geographic areas, including as a result of localized recessions, and the impact of matters related to
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the United Kingdom’s exit from the European Union;
Changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes;
The amount, rate and growth of health care and postretirement costs, including continuing and potentially increasing
required contributions to pension and postretirement plans;
2023 ANNUAL REPORT
3
•
The effects of new requirements, legislation, regulations or government-related developments or issues, as well as
third party actions, including those addressing climate change;
Potential reputational damages and costs related to litigation;
The impact of outbreaks of infectious diseases as well as the effects of governmental actions related thereto on
Snap-on’s business, which could have the potential to amplify the impact of the other risks facing the company; and
• Other world or local events outside Snap-on’s control, including terrorist disruptions, armed conflicts and civil unrest.
•
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Snap-on disclaims any responsibility to update any forward-looking statement provided in this document, except as required by
law.
In addition, investors should be aware that generally accepted accounting principles in the United States of America (“GAAP”)
prescribe when a company should reserve for particular risks, including litigation exposures. Accordingly, results for a given
reporting period could be significantly affected if and when a reserve is established for a major contingency. Reported results,
therefore, may appear to be volatile in certain accounting periods.
Fiscal Year
Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31. Unless otherwise indicated, references in this
document to “fiscal 2023” or “2023” refer to the fiscal year ended December 30, 2023; references to “fiscal 2022” or “2022”
refer to the fiscal year ended December 31, 2022; and references to “fiscal 2021” or “2021” refer to the fiscal year ended
January 1, 2022. References in this document to 2023, 2022 and 2021 year end refer to December 30, 2023, December 31,
2022, and January 1, 2022, respectively. Snap-on’s 2023, 2022 and 2021 fiscal years each contained 52 weeks of operating
results.
Item 1: Business
Snap-on is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and
systems solutions for professional users performing critical tasks including those working in vehicle repair, aerospace, the
military, natural resources, and manufacturing. From its founding in 1920, Snap-on has been recognized as the mark of the
serious and the outward sign of the pride and dignity working men and women take in their professions. Products and services
are sold through the company’s network of widely recognized franchisee vans as well as through direct and distributor
channels, under a variety of notable brands. The company also provides financing programs to facilitate the sales of its products
and to support its franchise business.
Snap-on markets its products and brands worldwide in more than 130 countries. Snap-on’s largest geographic markets include
the United States, Europe, Canada and Asia Pacific.
The company began with the development of the original Snap-on interchangeable socket set and subsequently pioneered
mobile tool distribution in the automotive repair market, where well-stocked vans sell to professional vehicle technicians at
their place of business. Today, Snap-on defines its value proposition more broadly, extending its reach “beyond the garage” to
deliver a broad array of unique solutions that make work easier for serious professionals. The company’s “coherent growth”
strategy focuses on developing and expanding its professional customer base in its legacy automotive market, as well as in
adjacent markets, additional geographies and other areas, including in critical industries, where the cost and penalties for failure
can be high. In addition to its coherent growth strategy, Snap-on is committed to its “Value Creation Processes” – a set of
strategic principles and processes designed to create value and employed in the areas of (i) safety; (ii) quality; (iii) customer
connection; (iv) innovation; and (v) rapid continuous improvement (“RCI”). Snap-on’s RCI initiatives employ a structured set
of tools and processes across multiple businesses and geographies intended to eliminate waste and improve operations. Savings
from Snap-on’s RCI initiatives reflect benefits from a wide variety of ongoing efficiency, productivity and process
improvements, including savings generated from product design cost reductions, improved manufacturing line set-up and
change-over practices, lower-cost sourcing initiatives and facility consolidations.
4
SNAP-ON INCORPORATED
Snap-on’s primary customer segments include: (i) commercial and industrial customers, including professionals in critical
industries and in emerging markets; (ii) professional vehicle repair technicians who purchase products through the company’s
multinational mobile tool distribution network; and (iii) other professional customers related to vehicle repair, including owners
and managers of independent service and repair shops, as well as original equipment manufacturer (“OEM”) dealership service
and repair shops (“OEM dealerships”). Snap-on’s Financial Services customer segment includes: (i) franchisees’ customers,
principally serving vehicle repair technicians, and Snap-on customers who require financing for the purchase or lease of tools,
diagnostics, and equipment products on an extended-term payment plan; and (ii) franchisees who require financing options for
vehicle and business needs.
Snap-on’s business segments are based on the organization structure used by management for making operating and investment
decisions and for assessing performance. Snap-on’s reportable business segments are: (i) the Commercial & Industrial Group;
(ii) the Snap-on Tools Group; (iii) the Repair Systems & Information Group; and (iv) Financial Services. The Commercial &
Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide,
including customers in the aerospace, natural resources, government 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 multinational 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 Credit LLC (“SOC”), the company’s financial services business in the United States, and Snap-on’s other financial
services subsidiaries in those international markets where Snap-on has franchise operations. See Note 19 to the Consolidated
Financial Statements for information on business segments and foreign operations.
Snap-on evaluates the performance of its operating segments based on segment revenues and segment operating earnings. The
Snap-on Tools Group segment revenues include external net sales, while the Commercial & Industrial Group and the Repair
Systems & Information Group segment revenues include both external and intersegment net sales. Snap-on accounts for
intersegment net sales and transfers based primarily on standard costs with reasonable mark-ups established between the
segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Corporate
assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other
assets. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.
Recent Acquisitions
Snap-on has continued to broaden its business through a series of coherent acquisitions, which have expanded and enhanced
Snap-on’s capabilities in a variety of critical industries and in its business operations serving primarily owners and managers of
independent repair shops and OEM dealerships. For information regarding recent acquisitions, see Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial
Statements.
Information Available on the Company’s Website
Additional information about Snap-on, including its products and its environmental, health and safety, social responsibility,
governance and sustainability (collectively, “ESG”) commitment, is available on the company’s website at www.snapon.com.
Snap-on is not including the information contained on its website as a part of, or incorporating it by reference into, this Annual
Report on Form 10-K.
Snap-on’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements on Schedule 14A and Current
Reports on Form 8-K, as well as any amendments to those reports, are made available to the public at no charge through the
“Investors” section of the company’s website at www.snapon.com. Snap-on makes such material available on its website as
soon as reasonably practicable after it electronically files such material with, or furnishes it to, the Securities and Exchange
Commission (“SEC”). Copies of any materials the company files with the SEC can also be obtained free of charge through the
SEC’s website at www.sec.gov. In addition, Snap-on’s (i) charters for the Audit, Corporate Governance and Nominating, and
Organization and Executive Compensation Committees of the company’s Board of Directors; (ii) Corporate Governance
Guidelines; and (iii) Code of Business Conduct and Ethics are available on the company’s website. Snap-on will also post any
amendments to these documents, or information about any waivers granted to directors or executive officers with respect to the
Code of Business Conduct and Ethics, on the company’s website at www.snapon.com.
2023 ANNUAL REPORT
5
Products and Services
Tools; Diagnostics, Information and Management Systems; and Equipment
Snap-on offers a broad line of products and complementary services that are grouped into three product categories: (i) tools; (ii)
diagnostics, information and management systems; and (iii) equipment. Further product line information is not presented as it is
not practicable to do so. The following table shows the consolidated net sales of these product categories for the last three years:
(Amounts in millions)
Product Category:
Tools
Diagnostics, information and management systems
Equipment
2023
Net Sales
2022
2021
$
$
2,528.9 $
991.2
1,210.1
4,730.2 $
2,399.4 $
942.4
1,151.0
4,492.8 $
2,343.0
892.5
1,016.5
4,252.0
The tools product category includes hand tools, power tools, tool storage products and other similar products. Hand tools
include wrenches, sockets, ratchet wrenches, pliers, screwdrivers, punches and chisels, saws and cutting tools, pruning tools,
torque measuring instruments and other similar products. Power tools include cordless (battery), pneumatic (air), hydraulic and
corded (electric) tools, such as impact wrenches, ratchets, screwdrivers, drills, sanders, grinders and similar products. Tool
storage includes tool chests, roll cabinets and other similar products. For many industrial customers, Snap-on creates specific,
engineered solutions, including facility-level tool control and asset management hardware and software, custom kits in a wide
range of configurations, and custom-built tools designed to meet customer requirements. The majority of products are
manufactured by Snap-on and, in completing the product offering, other items are purchased from external manufacturers.
The diagnostics, information and management systems product category includes handheld and computer-based diagnostic
products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management
systems and services, point-of-sale systems, integrated systems for vehicle service shops, OEM purchasing facilitation services,
and warranty management systems and analytics to help OEM dealerships manage and track performance.
The equipment product category includes solutions for the service of vehicles and industrial equipment. Products include wheel
alignment equipment, wheel balancers, tire changers, vehicle lifts, test lane equipment, collision repair equipment, vehicle air
conditioning service equipment, brake service equipment, fluid exchange equipment, transmission troubleshooting equipment,
safety testing equipment, battery chargers and hoists.
Snap-on supports the sale of its diagnostics and vehicle service shop equipment by offering training programs as well as after-
sales support for its customers, primarily focusing on the technologies and the application of specific products developed and
marketed by Snap-on.
6
SNAP-ON INCORPORATED
Products are marketed under a number of brand names and trademarks, many of which are well known in the vehicle service
and industrial markets served. Some of the major trade names and trademarks and the products and services with which they are
associated include the following:
Names
Snap-on
ATI
AutoCrib
autoVHC
BAHCO
Blackhawk
Blue-Point
Products and Services
Hand tools, power tools, tool storage products (including tool control software and hardware), diagnostics, certain
equipment and related accessories, mobile tool stores, websites, electronic parts catalogs, warranty analytics
solutions, business management systems and services, OEM specialty tools and equipment development and
distribution, and OEM facilitation services
Aircraft hand tools and machine tools
Asset and tool control systems
Vehicle inspection and training services
Saw blades, cutting tools, pruning tools, hand tools, power tools and tool storage, including tool control systems
Collision repair equipment
Hand tools, power tools, tool storage, diagnostics, certain equipment and related accessories
Car-O-Liner
Collision repair equipment, and information and truck alignment systems
Cartec
CDI
Challenger
Cognitran
Dealer-FX
Safety testing, brake testers, test lane equipment, dynamometers, suspension testers, emission testers and other
equipment
Torque tools
Vehicle lifts
OEM SaaS products
Service operation solutions and OEM SaaS systems
Ecotechnics
Vehicle air conditioning service equipment
Fastorq
Hydraulic torque and tensioning products
Fish and Hook
Saw blades, cutting tools, pruning tools, hand tools, power tools and tool storage
Hofmann
Irimo
John Bean
Josam
Lindström
Mitchell1
Mountz
Nexiq
Norbar
Wheel balancers, vehicle lifts, tire changers, wheel aligners, brake testers and test lane equipment
Saw blades, cutting tools, hand tools, power tools and tool storage
Wheel balancers, vehicle lifts, tire changers, wheel aligners, brake testers and test lane equipment
Heavy duty alignment and collision repair solutions
Hand tools
Repair and service information, shop management systems and business services
Torque tools
Diagnostic tools, information and program distributions for fleet and heavy duty equipment
Torque tools
Power Hawk
Rescue tools and related equipment for military, government, fire and rescue
Pro-Cut
Sandflex
ShopKey
Sioux
Brake service equipment and accessories
Hacksaw blades, bandsaws, saw blades, hole saws and reciprocating saw blades
Repair and service information, shop management systems and business services
Power tools
Sturtevant Richmont
Torque tools
Sun
Diagnostic tools, wheel balancers, vehicle lifts, tire changers, wheel aligners, air conditioning products and
emission testers
TreadReader
Automotive tire drive-over ramps and handheld devices
TruckCam
Williams
Commercial vehicle OEM factory solutions
Hand tools, tool storage, certain equipment and related accessories
2023 ANNUAL REPORT
7
Financial Services
Snap-on also generates revenue from various financing programs that include: (i) installment sales and lease contracts arising
from franchisees’ customers and Snap-on customers who require financing for the purchase or lease of tools, diagnostics, and
equipment products on an extended-term payment plan; and (ii) business and vehicle loans and leases to franchisees. The
decision to finance through Snap-on or another financing source is solely by election of the customer. When assessing
customers for potential financing, Snap-on considers various factors regarding ability to pay, including the customers’ financial
condition, debt-servicing ability, past payment experience, and credit bureau and proprietary Snap-on credit model information,
as well as the value of the underlying collateral.
Snap-on offers financing through SOC and the company’s international finance subsidiaries in most markets where Snap-on has
franchise operations. Financing revenue from contract originations is recognized over the life of the underlying contracts, with
interest or finance charges computed primarily on the average daily balances of the underlying contracts.
Markets
Sales and Distribution
Snap-on markets and distributes its products and related services principally to professional tool and equipment users around
the world. The two largest market sectors are the vehicle service and repair sector and the industrial sector.
Vehicle Service and Repair Sector
The vehicle service and repair sector has three main customer groups: (i) professional technicians who purchase tools,
diagnostics, and equipment products for use in their work; (ii) other professional customers related to vehicle repair, including
owners and managers of independent repair shops and OEM dealerships who purchase tools, diagnostics, and equipment
products for use by multiple technicians within a service or repair facility; and (iii) OEMs.
Snap-on provides innovative tool, equipment and business solutions, as well as technical sales support and training, designed to
meet technicians’ evolving needs. Snap-on’s mobile tool distribution system offers technicians the convenience of purchasing
quality tools at their place of business with minimal disruption of their work routine. Snap-on also provides owners and
managers of repair shops, where technicians work, with tools, diagnostics, equipment, and repair and service information,
including electronic parts catalogs and shop management products. Snap-on’s OEM facilitation business provides OEMs and
OEM dealerships with products and services including special and essential tools as well as consulting and facilitation services,
which are comprised of product procurement, distribution and administrative support for dealership equipment programs.
The market for vehicle service and repair is driven by an accelerating rate of technological change, car and truck population
growth and increasing unit age, and the resulting effects of these changes on both our suppliers and customers. Snap-on has
historically benefited from the increasing complexity of car and truck fleets and the changing tools, technologies and data
needed to monitor, calibrate, service and repair evolving vehicle platforms. While new technologies, including those associated
with alternative energy drivetrains and greater vehicle autonomy, may alter the nature of certain service and repair for particular
vehicle types, we believe many of these new technologies provide opportunities to fulfill requirements for enhanced solutions
or greater precision. Snap-on believes it is well-positioned to innovate new products to address these changing needs and to
extend its leadership position in the expanding vehicle service and repair market sector.
Industrial Sector
Snap-on markets its products and services globally to a broad cross-section of commercial and industrial customers, including
maintenance and repair operations; manufacturing and assembly facilities; various government agencies, facilities and
operations, including military operations; schools with vocational and technical programs; aviation and aerospace operations;
oil and gas developers; mining operations; power generation operations, including those associated with alternative energies;
equipment fabricators and operators; railroad manufacturing and maintenance; customers in agriculture; infrastructure
construction companies; and other customers that require instrumentation, service tools and/or equipment for their products and
business needs. The industrial sector for Snap-on focuses on providing value-added products and services to an increasingly
expanding global base of customers in critical industries.
The industrial sector is characterized by a highly competitive environment with multiple suppliers offering either a full line or
industry-specific portfolios for tools and equipment. Industrial customers increasingly require specialized solutions that provide
repeatability and reliability in performing tasks of consequence that are specific to the particular end market in which they
operate. Snap-on believes it is a meaningful participant in the industrial tools and equipment market sector.
8
SNAP-ON INCORPORATED
Distribution Channels
Snap-on serves customers primarily through the following channels of distribution: (i) the mobile van channel; (ii) company
direct sales; (iii) distributors; and (iv) e-commerce. The following discussion summarizes Snap-on’s general approach for each
channel and is not intended to be all-inclusive.
Mobile Van Channel
In the United States, a significant portion of sales to the vehicle service and repair sector is conducted through Snap-on’s
mobile franchise van channel. Snap-on’s franchisees primarily serve vehicle repair technicians and vehicle service shop owners,
generally providing weekly contact at the customer’s place of business. Franchisees’ sales are concentrated in hand and power
tools, tool storage products, shop equipment, diagnostics, and repair information products, which can be transported in a van or
trailer and demonstrated during a sales call. Franchisees purchase Snap-on’s products at a discount from suggested list prices
and resell them at prices established by the franchisee. U.S. franchisees are provided a list of calls that serves as the basis of the
franchisee’s sales route. Snap-on’s franchisees also have the opportunity to add a limited number of additional franchises.
Snap-on charges nominal initial and ongoing monthly franchise fees. Franchise fee revenue, including nominal, non-refundable
initial and ongoing monthly fees (primarily for sales and business training, marketing and product promotion programs, and
technology support), is recognized as the fees are earned. Franchise fee revenue totaled $18.7 million, $18.4 million and $17.3
million in fiscal 2023, 2022 and 2021, respectively.
In addition to its mobile van channel in the United States, Snap-on has franchise distribution models in certain other countries,
including Canada, the United Kingdom, Japan, Australia, Germany, Netherlands, South Africa, New Zealand, Belgium and
Ireland. In many of these markets, as in the United States, purchase decisions are generally made or influenced by professional
vehicle service technicians as well as repair shop owners and managers.
Snap-on also has a company-owned route program that is designed to: (i) provide another pool of potential field organization
personnel; (ii) service customers in select new and/or open routes not currently serviced by franchisees; and (iii) allow Snap-on
to pilot new sales and promotional ideas before introducing them to franchisees. As of 2023 year end, company-owned routes
comprised approximately 5% of the total route population. Snap-on may elect to increase or reduce the number of company-
owned routes in the future. As of 2023 year end, Snap-on’s total route count was approximately 4,700, including
approximately 3,400 routes in the United States.
Through SOC, financing is available to U.S. franchisees, including financing for van leases, working capital loans and loans to
help enable new franchisees to fund the purchase of the franchise or the expansion of an existing franchise. In many
international markets, Snap-on offers a variety of financing options to its franchisees and/or customer networks through its
international finance subsidiaries. The decision to finance through Snap-on or another financing source is solely at the
customer’s election.
Snap-on supports its franchisees with a field organization of regional offices, franchise performance teams, customer care
centers and distribution centers. Snap-on also provides sales and business training, and marketing and product promotion
programs, as well as customer and franchisee financing programs through SOC and the company’s international finance
subsidiaries, all of which are designed to strengthen franchisee sales. National Franchise Advisory Councils in the United
States, the United Kingdom, Canada and Australia, composed primarily of franchisees that are elected by franchisees, assist
Snap-on in identifying and implementing enhancements to the franchise program.
Company Direct Sales
A significant proportion of shop equipment sales in North America under the Blackhawk, Car-O-Liner, Challenger, Hofmann,
John Bean and Pro-Cut brands, diagnostic products under the Snap-on brand, and information and shop management products
under the Mitchell1 brand are made by direct and independent sales forces that have responsibility for national and other
accounts. As the vehicle service and repair sector consolidates (with more business conducted by national chains and franchised
service centers), Snap-on believes these larger organizations can be serviced most effectively by sales people who can
demonstrate and sell the full line of diagnostics, equipment, and services. Snap-on also sells these products and services directly
to OEMs and their franchised dealers.
Snap-on brand tools and equipment are marketed to industrial and governmental customers worldwide through both industrial
sales associates and independent distributors. Selling activities focus on industrial customers whose main purchase criteria are
quality and integrated solutions. As of 2023 year end, Snap-on had industrial sales associates and independent distributors
primarily in the United States, Canada and in various European, Latin American, Middle Eastern, Asian and African countries,
with the United States representing the majority of Snap-on’s total industrial sales.
2023 ANNUAL REPORT
9
Snap-on also sells software, services and solutions to the automotive, commercial, heavy duty, agriculture, power equipment
and power sports segments. Products and services are marketed to targeted groups, including OEMs and their dealerships, fleets
and individual repair shops. To effectively reach OEMs, which frequently have a multinational presence, Snap-on has deployed
focused business teams globally.
Distributors
Sales of certain tools and equipment are made through independent distributors who purchase the items from Snap-on and resell
them to end users. Hand tools marketed under the ATI, BAHCO, CDI, Fastorq, Irimo, Lindström, Mountz, Norbar, Sioux,
Sturtevant Richmont and Williams brands and trade names, for example, are sold through distributors worldwide. Asset and
tool control solutions are sold under the AutoCrib brand primarily through distributors worldwide. Wheel service and other
vehicle service equipment are sold through distributors primarily under brands including Blackhawk, Car-O-Liner, Cartec,
Challenger, Ecotechnics, Hofmann, John Bean, and Pro-Cut. Diagnostics and equipment products are marketed through
distributors in South America and Asia, and through both a direct sales force and distributors in Europe under the Snap-on,
Blue-Point and Sun brands.
E-commerce
Snap-on offers current and prospective customers online access to research and purchase products through its public website,
www.snapon.com. The site features an online catalog of Snap-on hand tools, power tools, tool storage units and diagnostic
equipment available to customers in the United States, the United Kingdom, Canada and Australia. E-commerce and certain
other system enhancement initiatives are designed to improve productivity and further leverage the one-on-one relationships
and service Snap-on has with its current and prospective customers. Sales through the company’s e-commerce distribution
channel were not significant in any of the last three years.
Competition
Snap-on competes on the basis of its product quality and performance, product line breadth and depth, service, brand awareness
and imagery, technological innovation and availability of financing (through SOC or its international finance subsidiaries).
While Snap-on does not believe that any single company competes with it across all of its product lines and distribution
channels, various companies compete in one or more product categories and/or distribution channels.
Snap-on is a leading manufacturer and distributor of professional tools, tool storage, diagnostics, equipment products, and
repair software and solutions, offering a broad line of these products to both vehicle service and industrial marketplaces.
Various competitors target and sell to professional technicians in the vehicle service and repair sector through the mobile tool
distribution channel. Snap-on also competes with companies that sell tools and equipment to vehicle service and repair
technicians online and through retail stores, vehicle parts supply outlets and tool supply warehouses/distributorships. Within the
power tools category and the industrial sector, Snap-on has various other competitors, including companies with offerings that
overlap with other areas discussed herein. Major competitors selling diagnostics, shop equipment, and information to vehicle
dealerships and independent repair shops include OEMs and their proprietary electronic parts catalogs and diagnostics and
information systems, and other companies that offer products serving this sector.
Resources
Raw Materials and Purchased Product
Snap-on’s supply of raw materials, including steel, and purchased components are generally available from numerous suppliers
and the company continuously works to expand and enhance supplier relationships to meet its supply needs. Snap-on believes it
has secured a sufficient amount of raw materials and purchased components for the near future to meet the expected general
sales demand. While the company does experience raw material and component cost fluctuations, as well as availability
variations from time to time and from operation to operation, Snap-on endeavors to employ its RCI processes to improve
efficiencies and reduce waste to minimize the impact of any cost increases. The company does not currently anticipate any
significant impact in 2024 from raw material and purchased component cost or availability issues.
To date, the company has not observed any meaningful supply shortages or cost increases directly or indirectly resulting from
climate change factors.
10
SNAP-ON INCORPORATED
Patents, Trademarks and Other Intellectual Property
Snap-on vigorously pursues and relies on patent protection to safeguard its intellectual property and position in its markets. As
of 2023 year end, Snap-on and its subsidiaries held approximately 890 active and pending patents in the United States and
approximately 3,170 active and pending patents outside of the United States. Sales relating to any single patent did not
represent a material portion of Snap-on’s revenues in any of the last three years.
Examples of products that have features or designs that benefit from patent protection include hand tools, power tools, wheel
alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, collision measurement, test lane
equipment, brake lathes, electronic torque instruments, emissions-sensing devices and diagnostic equipment.
Much of the technology used in the manufacture of vehicle service tools and equipment is in the public domain. Snap-on relies
primarily on trade secret protection for proprietary processes used in manufacturing. Methods and processes are patented when
appropriate. Snap-on leverages trade secret and other protections, as well as contractual arrangements and confidentiality
procedures, for its proprietary software and other innovative solutions. Copyright protection is also utilized when appropriate.
Trademarks used by Snap-on are of continuing importance in the marketplace. Trademarks have been registered in the United
States and many other countries, and additional applications for trademark registrations are pending. Snap-on vigorously
polices proper use of its trademarks. Snap-on’s right to manufacture and sell certain products is dependent upon licenses from
others; however, these products under license do not represent a material portion of Snap-on’s net sales.
Domain names are a valuable corporate asset for companies around the world, including Snap-on. Domain names often contain
a trademark or service mark or even a corporate name and are often considered intellectual property. The recognition and value
of the Snap-on name, trademark and domain name are core strengths of the company.
Snap-on strategically licenses the Snap-on brand to carefully selected manufacturing and distribution companies for items such
as apparel and a variety of other goods, in order to further build brand awareness and market presence for the company’s
strongest brand.
Government Regulations
Snap-on is subject to various federal, state and local laws, such as those related to international trade, data privacy, tax and
government contracts, as well as environmental laws, ordinances, regulations, and requirements of government authorities in
the United States and other nations. At Snap-on, environmental liabilities are managed through the Snap-on Environmental,
Health and Safety Management System (“EH & SMS”), which is applied worldwide. The system is based upon continual
improvement and is certified to ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018, verified through Det Norske Veritas
(DNV) Certification, Inc.
Snap-on believes that it complies with applicable environmental and government requirements in its operations. Expenditures
on environmental and governmental matters through EH & SMS have not had a material effect upon Snap-on’s capital
expenditures, earnings or competitive position. However, the increasing global focus on climate change may result in new or
more stringent environmental or climate-related regulations or standards. While such regulations have historically created select
opportunities for our business operations, the company continually monitors developments in this area.
Human Capital Management
As of December 30, 2023, Snap-on employed approximately 13,200 people worldwide, of which approximately 7,500 were
employed in the United States and approximately 5,700 were outside the United States. Based on Snap-on’s most recently filed
EEO-1 data, which is available under “ESG Reporting” in the “Investors” section of the company’s website at
www.snapon.com, females constitute 26.4% and minorities constitute 25.2% of the company’s workforce in the United States.
Additionally, on a global basis, approximately 2,700 employees are represented by unions and/or covered under collective
bargaining agreements with varying expiration dates through 2026. In recent years, Snap-on has not experienced any significant
work slowdowns, stoppages or other labor disruptions.
Snap-on is guided by the beliefs and values in the company’s “Who We Are” mission statement and strives to be the “employer
of choice” for its current and future associates. Our “Who We Are” beliefs serve as the guidepost against which we evaluate
performance in operating reviews throughout the company. Furthermore, through our Snap-on Value Creation Processes, a suite
of principles we use every day, the company remains committed to the areas of safety, quality, customer connection, innovation
and RCI, which are closely linked to and contribute to improving employee engagement, productivity, and efficiency.
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Successful execution of our way forward is dependent on attracting, developing and retaining key employees and members of
our management team, which we achieve through the following:
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•
Snap-on believes strongly in workplace safety. As a permanent priority agenda item at all operational meetings, safety
comes first. Snap-on strives to maintain a safe workplace and expects its employees to broadly embrace the company’s
safety programs. Snap-on invests in its strong safety culture and in elevating the importance of worker safety
throughout all levels of the organization. For 2023, Snap-on had an overall safety incident rate of 1.16 (number of
injuries and illnesses multiplied by 200,000, divided by hours worked).
Snap-on is committed to its employees and provides developmental opportunities throughout the organization.
Leadership reviews to identify high potential talent in the organization are conducted on an ongoing basis with all
business units and on an annual basis with the Board of Directors. Snap-on offers competitive compensation and
benefits to its employees, including performance-based and stock-based management incentive plans, an employee
stock purchase plan for associates in the U.S. and Canada, as well as pension plans covering most U.S. employees and
certain employees in foreign countries. Additional information related to these plans is included in Notes 11 and 13 to
the Consolidated Financial Statements. Other benefits, including skill training and tuition assistance programs, are
available to employees, but vary from location to location.
Snap-on seeks to advance our progress on diversity and inclusion within our company and is committed to providing
equal opportunities. The company does not tolerate discrimination. As part of our efforts, Snap-on has instituted
company-wide training on inclusion and unconscious bias, and has expanded internship, mentorship and recruitment
activities for underrepresented groups. Additionally, to further our support of makers and fixers, both within and
outside our company, Snap-on is partnering with national nonprofit organizations and community colleges to leverage
career and technical education to expand the opportunities for underrepresented groups in our facilities, as well as in
the critical industries we serve and beyond. The company is also investing in and building relationships with several
Historically Black Colleges and Universities (HBCUs) to help advance their missions and broaden the pipeline of
Black engineers and other technically trained graduates.
Snap-on’s people and the behaviors they display define our success, including integrity, respect and teamwork. Annual
employee training is used to reinforce ethics, environmental matters, health and safety, human rights, information/
cyber security and regulatory compliance, which includes anti-corruption training for all relevant employees.
Social Responsibility and Sustainability Commitment
Snap-on is deeply dedicated to honoring and celebrating the dignity of work. The company supports upskilling the workforce
through collaborations with Career and Technical Education (CTE) schools across the United States and throughout the world,
and with SkillsUSA and World Skills to engage youth in order to enable and promote technical careers. Additionally, the
company is a founding partner of the National Coalition of Certification Centers (NC3), which aims to more effectively match
technical school curricula with the precise needs of the current and future workplace by developing, implementing, and
sustaining industry-recognized certifications with programs in automotive, aviation, energy, oil and gas, manufacturing and
other critical industries. To date, over 300,000 students have earned Snap-on certifications, preparing them for successful and
satisfying careers across various technical disciplines.
Snap-on is committed to conducting business and making decisions honestly, ethically, fairly and within the law, and is guided
by the company’s “Who We Are” mission statement, which is translated into multiple languages and prominently displayed in
its facilities around the world. Snap-on is dedicated to earning and keeping the trust and confidence of its shareholders,
customers, franchisees, distributors, retirees and associates, as well as of the communities where the company does business.
Snap-on’s Code of Business Conduct and Ethics provides guidelines and a framework for conducting business in an ethical
manner. These beliefs go beyond Snap-on and are expected of suppliers as detailed in the company’s Supplier Code of
Conduct. Snap-on has adopted policies that seek to eliminate human trafficking, slavery, forced labor and child labor from its
global supply chain, and has formalized its commitment to protecting human rights in the company’s Human Rights Policy.
Snap-on prioritizes continuous improvement in all facets of its operations, including environmental matters and health and
safety. The company strives to protect environmental quality and human welfare in its workplaces and in its communities by
implementing sound policies designed to prevent, mitigate and reduce the company’s impact on the environment. The company
has voluntarily reported Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions to the CDP (formerly known as the Carbon
Disclosure Project) on an annual basis since 2008. In 2023, the company’s total Scope 1 and Scope 2 GHG emissions of 99,021
metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 20.9 (metric tons of CO2e, divided by net sales in
millions).
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SNAP-ON INCORPORATED
Snap-on’s sustainability framework is focused on key areas impacting our industry, including energy management, employee
health and safety, and material management, and is aligned with the principles of the International Financial Reporting
Standards Foundation (formerly known as the Sustainability Accounting Standards Board or “SASB”), which has been
consolidated into the International Financial Reporting Standards Foundation. Snap-on’s SASB Index is available under “ESG
Reporting” in the “Investors” section of the company’s website at www.snapon.com.
Feedback on the evaluation of risks and/or opportunities related to ESG matters identified by the company’s internal
Environmental, Social and Governance Committee (the “ESGC”) and by the company’s operating units is included and
discussed as part of the company’s quarterly operations reviews with senior management. The ESGC reports to the company’s
Chief Executive Officer and updates the Corporate Governance and Nominating Committee about its plans and actions at least
two times per year. The full Board has ultimate oversight of the company’s strategy related to ESG matters and receives regular
reports on the subject from the Corporate Governance and Nominating Committee.
Additional information regarding the company’s sustainability commitment is available in the “Investors” section of the
company’s website at www.snapon.com.
Customers and Seasonality
Snap-on does not have any single customer or government on which its business was substantially dependent in any of the
indicated periods. Most of Snap-on’s businesses are not seasonal and their inventory needs are relatively constant.
Item 1A: Risk Factors
In evaluating the company, careful consideration should be given to the following risk factors, in addition to the other
information included in this Annual Report on Form 10-K, including the Consolidated Financial Statements and the related
notes. Each of these risk factors could adversely affect, and in some cases may have already affected, the company’s business,
operating results, cash flows and/or financial condition, as well as adversely affect the value of an investment in the company’s
common stock.
Business Risks
The sales of many of our products are dependent on the health of the vehicle repair market and the changing requirements of
vehicle repair.
We believe sales of many of our products are dependent on the changing vehicle repair requirements, the number of vehicles on
the road, the general aging of vehicles and the number of miles driven. These factors affect the frequency, type and amount of
service and repair performed on vehicles by technicians, and therefore affect the demand for the number of technicians, the
prosperity of technicians and, consequently, the demand technicians have for our tools, other products and services, as well as
the value technicians place on those products and services. The use of other methods of transportation, including more frequent
use of public transportation in the future, could result in a decrease in the use of privately-operated vehicles. A decrease in the
use of privately-operated vehicles may lead to fewer repairs and less demand for our products.
In addition, the number of electric and hybrid vehicles developed and sold has risen in recent years, and is expected to continue
to increase in the future. While we believe that advances in vehicle technologies provide us with opportunities to develop
innovative products and solutions for the vehicle repair market, if we are not able to effectively execute on those possibilities,
our business and results of operations could suffer.
The performance of Snap-on’s mobile tool distribution business depends on the success of its franchisees.
Approximately 41% of our consolidated net revenues in 2023 were generated by the Snap-on Tools Group, which consists of
Snap-on’s business operations primarily serving vehicle service and repair technicians through the company’s multinational
mobile tool distribution channel. Snap-on’s success is dependent on its relationships with franchisees, individually and
collectively, as they are the primary sales and service link between the company and vehicle service and repair technicians, who
are an important class of end users for Snap-on’s products and services.
If our franchisees are not successful, or if we do not maintain an effective relationship with our franchisees, the delivery of
products, the collection of receivables and/or our relationship with end users could be adversely affected and thereby negatively
impact our business, financial condition, results of operations and cash flows.
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13
In addition, if we are unable to maintain effective relationships with franchisees, Snap-on or the franchisees may choose to
terminate the relationship, which may result in: (i) open routes, in which end-user customers are not provided reliable service;
(ii) litigation resulting from termination; (iii) reduced collections or increased charge-offs of franchisee receivables owed to
Snap-on; and/or (iv) reduced collections or increased charge-offs of finance and contract receivables.
The inability to continue to introduce new products that respond to customer needs and achieve market acceptance could result
in lower revenues and reduced profitability.
Sales from new products represent a significant portion of our net sales and are expected to continue to represent a significant
component of our future net sales. We may not be able to compete effectively unless we continue to enhance existing products
or introduce new products to the marketplace in a timely manner. Product improvements and new product introductions require
significant financial and other resources, including planning, design, development, sourcing and testing at the technological,
product and manufacturing process levels. Our competitors’ new products may beat our products to market, be more effective,
contain more features, be less expensive than our products, and/or render our products obsolete. Any new products that we
develop may not receive market acceptance or otherwise generate any meaningful net sales or profits for us relative to our
expectations based on, among other factors, existing and anticipated investments in manufacturing capacity and commitments
to fund advertising, marketing, promotional programs and research and development.
Failure to adequately protect intellectual property, or claims of infringement, could adversely affect our business, reputation,
financial condition, results of operations and cash flows.
Intellectual property rights are an important and integral component of our business and failure to obtain or maintain adequate
protection of our intellectual property rights for any reason could have a material adverse effect on our business. We attempt to
protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as
licensing agreements and third-party nondisclosure and assignment agreements. In addition, we have been, and in the future
may be, subject to claims of intellectual property infringement against us by third parties; whether or not these claims have
merit, we could be required to expend significant resources in defense of those claims. Adverse determinations in a judicial or
administrative proceeding or via a settlement could prevent us from manufacturing and selling our products, prevent us from
stopping others from manufacturing and selling competing products, and/or result in payments for damages. In the event of an
infringement claim, we may also be required to spend significant resources to develop alternatives or obtain licenses, which
may not be available on reasonable terms or at all, and may reduce our sales and disrupt our production.
The global tool, equipment, diagnostics, and repair information industries are competitive.
We face strong competition in all of our market segments. Price competition in our various industries is intense and pricing
pressures from competitors and customers continue to increase. In general, as a manufacturer and marketer of premium
products and services, the expectations of Snap-on’s customers and its franchisees are high. Any inability to maintain customer
satisfaction could diminish Snap-on’s premium image and reputation and could result in a lessening of our ability to command
premium pricing. In addition, technological developments and enhancements of products and service offerings in our industry
may require our expanded use of artificial intelligence (“AI”) and machine learning; if we are unable to keep pace with the rate
of these and other developments, our ability to effectively compete could be adversely affected. We expect that the level of
competition will remain high in the future, which, if not effectively matched or exceeded, could limit our ability to maintain or
increase market share or profitability.
Foreign operations are subject to political, economic, trade and other risks that could adversely affect our business, financial
condition, results of operations and cash flows.
Approximately 28% of our revenues in 2023 were generated outside of the United States. Future growth rates and success of
our business depends in large part on continued growth in our non-U.S. operations, including growth in emerging markets and
critical industries. Numerous risks and uncertainties affect our non-U.S. operations. These include political, economic and
social instability, such as acts of war, armed conflicts, civil disturbance or acts of terrorism, local labor conditions, and trade
relations with China. These also include changes in government policies and regulations, including those intended to address
climate change, imposition or increases in withholding and other taxes on remittances and other payments by international
subsidiaries, increases in trade sanctions and other related measures, as well as exposure to liabilities under anti-bribery and
anti-corruption laws in various countries, such as the U.S. Foreign Corrupt Practices Act. Risks related to our non-U.S.
operations could further include currency volatility, transportation delays or interruptions, sovereign debt uncertainties and
difficulties in enforcement of contract and intellectual property rights, as well as reputational risks related to, among other
factors, different standards and practices among countries. Should the economic environment in our non-U.S. markets
deteriorate from current levels, our results of operations and financial position could be materially impacted, including as a
result of the effects of potential impairment write-downs of goodwill and/or other intangible assets related to these businesses.
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SNAP-ON INCORPORATED
As part of the agreement related to the United Kingdom’s (“U.K.”) departure from the European Union (“Brexit”), there is a
new series of customs and regulatory checks, including rules of origin and stringent local content requirements. There are also
restrictions on the free movement of people and temporary visas for work-related purposes have been re-introduced. The
implications of Brexit, including disruptions to trade and the movement of goods, services and people between the U.K. and the
European Union or other countries, may lead to additional cost, delays and volatility in currency exchange rates, as well as
create legal and global economic uncertainty. These and other potential implications could adversely affect our business and
results of operations.
The February 2022 Russian invasion of Ukraine and the ongoing conflict in the region has led to sanctions and actions taken
against Russia and Belarus by the United States, the U.K., the European Union and others. The war in Ukraine has not had a
material impact on our business and operations; however, expansion of the conflict beyond its current geographic, political and
economic scope could adversely impact our business, results of operations and financial condition. Risks related to this
situation include supply chain inefficiencies, price increases and shortages of raw materials and components, increased trade
sanctions, exchange rate volatility, energy shortages in Europe, an increase in cybersecurity incidents, and potential impairment
of certain assets.
Our foreign operations are also subject to other risks and challenges, such as the need to staff and manage diverse workforces,
respond to the needs of multiple national and international marketplaces, and differing business climates and cultures in various
countries.
Operational Risks
Risks associated with the disruption of manufacturing operations could adversely affect our profitability or competitive
position.
We manufacture a significant portion of the products we sell. Any prolonged disruption in the operations of our existing
manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions, lack of raw
material or component availability, destruction of or damage to any facility (as a result of natural disasters, climate or weather
events, use and storage of hazardous materials, armed conflicts, sabotage, terrorism, civil unrest or other events), or other
reasons, including outbreaks of infectious diseases, could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
Price inflation and shortages of raw materials, components, certain purchased finished goods and energy sources have
impacted, and in the future could adversely affect, the ability to obtain, as well as the cost of, needed materials or products and,
in turn, our results of operations.
Snap-on’s supply of raw materials and purchased components are generally available from numerous suppliers, and the
company continuously works to expand its supplier base to ensure availability. The principal raw material used in the
manufacture of our products is steel, which we purchase in competitive, price-sensitive markets. To meet Snap-on’s high
quality standards, a portion of our steel needs include specialized alloys, which are available only from a limited group of
approved suppliers. Additionally, certain electronic components are sourced from a finite set of suppliers. Some of these
specialized materials and components have been, and in the future may be, in short supply, particularly in the event of mill
shutdowns or production cut backs. In addition, outbreaks of infectious diseases, weather events, armed conflicts, government
actions (including those affecting trade) or other circumstances beyond our control could also impact the availability of raw
materials and components. Physical risks of climate change may also impact the availability and cost of materials, sources and
supply of energy and could also increase operating costs. Raw materials, components and certain purchased finished goods can
exhibit price and demand cyclicality, including as a result of tariffs, other trade protection measures, inflationary factors, and
supply chain inefficiencies. Associated unexpected variability has resulted, and in the future could result, in an increase in
product costs and require Snap-on to increase prices to maintain margins.
We use various energy sources to transport, produce and distribute products, and some of our products have components that
are petroleum based. Petroleum and energy prices have periodically increased significantly over short periods of time; future
volatility and changes may be caused by market fluctuations, supply and demand, currency fluctuations, production and
transportation disruptions, climate change regulations, world events, including armed conflicts, and governmental actions.
Energy price increases raise both our operating costs and the costs of our materials, and we may not be able to increase our
prices enough to offset these costs in certain areas. Higher prices also may reduce the level of future customer orders and our
profitability.
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Failure to maintain effective distribution of products and services could adversely impact revenue, gross margin and
profitability.
We use a variety of distribution methods to sell our products and services. Successfully managing the interaction of our
distribution efforts to reach various potential customer segments for our products and services is a complex process. Moreover,
since each distribution method has distinct risks, costs and gross margins, our failure to implement the most advantageous
balance in the delivery model for our products and services could adversely affect our revenue, gross margins and profitability.
Data security and information technology infrastructure and security are critical to supporting business objectives; failure of
our systems, as well as those of third parties with which we do business, to operate effectively could adversely affect our
business and reputation.
We depend heavily on information technology infrastructure to achieve our business objectives and to protect sensitive data,
and we continually invest in improving such systems. In the ordinary course of business, we collect and store sensitive data and
information, including personally identifiable information about our employees and the company’s proprietary and regulated
business information, as well as that of our customers, suppliers and business partners. Our information systems, like those of
other companies and our third party service providers, are susceptible to malicious damage, intrusions and outages due to,
among other events, viruses, cyber attacks, industrial espionage, phishing attempts, hacking, break-ins and similar events, as
well as other breaches of security, natural disasters, power loss or telecommunications failures. Techniques used to breach
information technology systems are growing in sophistication from emerging technologies, such as advanced forms of AI, and
increasingly come from threat actors of all types, including individuals, criminal organizations and state-sponsored operatives.
In response to the evolving cyber threat environment, we continue to invest in data security and address these risks and
uncertainties by implementing security technologies, internal controls, network and data center resiliency, and redundancy and
recovery processes, as well as by securing insurance. Future problems that impair or compromise the company’s information
technology infrastructure, or that of our third party service providers, including those due to natural disasters, power outages,
major network failures, security breaches or malicious attacks, or those occurring during system upgrades and/or new system
implementations could impede our operations. Such impacts could interfere with our ability to record or process orders,
manufacture and ship in a timely manner, manage our financial services operations including originating, processing,
accounting for and collecting receivables, protect sensitive data of the company, our customers, our suppliers and business
partners, or otherwise carry on business in the normal course.
In the first quarter of 2022, as previously disclosed, Snap-on detected unusual activity in some areas of its information
technology environment, quickly took down its network connections as part of the company’s defense protocols, launched a
comprehensive analysis assisted by a leading external forensics firm, and notified law enforcement. The company continued to
pursue its commercial activities and restored connections as system interfaces were cleared. This incident did not have a
significant impact on the results of our operations, and we are not currently aware of a security breach at any third-party service
provider that we believe could significantly affect our operations. Future cyber events, however, could cause us to lose
customers and/or revenue and could require us to incur significant expense to remediate, including as a result of legal or
regulatory claims, proceedings, fines or penalties, and could also damage our reputation.
In association with initiatives to better integrate business units, optimize our operating footprint and improve responsiveness to
franchisees and customers, Snap-on is continually enhancing its global Enterprise Resource Planning (ERP) management
information systems. As we integrate, implement and deploy new information technology processes and enhance our
information infrastructure across our global operations, we could experience disruptions that could have an adverse effect on
our business, financial condition, results of operations and cash flows.
Failure to attract, retain and effectively manage qualified personnel could lead to a loss of revenue and/or profitability.
Snap-on’s success depends, in part, on the efforts and abilities of its senior management team and other key employees whose
skills, experience and industry contacts significantly benefit our operations and administration. The failure to attract and retain
members of our senior management team and other key employees, to effectively develop personnel and to execute succession
plans could have a negative effect on our operating results. In addition, transitions of important responsibilities to new
individuals inherently include the possibility of disruptions to our operations, which could negatively affect our business,
financial condition, results of operations and cash flows.
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SNAP-ON INCORPORATED
We may not successfully integrate businesses we acquire, which could have an adverse impact on our business, financial
condition, results of operations and cash flows.
The pursuit of growth through acquisitions, including participation in joint ventures, involves significant risks that could have a
material adverse effect on our business, financial condition, results of operations and cash flows. These risks include:
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Loss of the acquired businesses’ customers;
Inability to integrate successfully the acquired businesses’ operations;
Inability to coordinate management and integrate and retain employees of the acquired businesses;
Unforeseen or contingent liabilities of the acquired businesses;
Large write-offs or write-downs, or the impairment of goodwill or other intangible assets;
Difficulties in implementing and maintaining consistent standards, controls, procedures, policies and information
systems;
Failure to realize anticipated synergies, economies of scale or other anticipated benefits, or to maintain operating
margins;
Strain on our personnel, systems and resources, and diversion of attention from other priorities;
Incurrence of additional debt and related interest expense; and
The dilutive effect in the event of the issuance of additional equity securities.
The steps taken to restructure operations, rationalize operating footprint, lower operating expenses and achieve greater
efficiencies in the supply chain could disrupt business.
We have taken steps in the past, and may take additional steps in the future, intended to improve customer service and drive
further efficiencies as well as reduce costs, some of which could be disruptive to our business. Future efforts to reduce
components of expense could result in the recording of charges for inventory and technology-related write-offs, workforce
reduction costs or other charges relating to the consolidation or closure of facilities. If we were to incur a substantial charge or
are unable to effectively manage our cost reduction and restructuring efforts, our business, financial condition, results of
operations and cash flows could be adversely affected in certain periods.
Financial Risks
Our inability to provide acceptable financing alternatives to franchisees and other end-user customers could adversely impact
our operating results.
An integral component of our business and profitability is our ability to offer competitive financing alternatives to franchisees
and other end-user customers. The lack of our ability to offer such alternatives or obtain capital resources or other financing to
support our receivables on terms that we believe are attractive, whether resulting from the state of the financial markets, our
own operating performance, or other factors, would negatively affect our operating results and financial condition. Adverse
fluctuations in interest rates and/or our ability to provide competitive financing programs could also have an adverse impact on
our revenue and profitability.
Exposure to credit risks of customers and resellers may make it difficult to collect receivables, and our allowances for credit
losses for receivables may prove inadequate, which could adversely affect our operating results and financial condition.
A decline in industry and/or economic conditions has the potential to weaken the financial position of some of our customers,
including financial services customers. If circumstances surrounding our customers’ ability to repay their credit obligations
were to deteriorate and result in the write-down or write-off of such receivables, it would negatively affect our operating results
for the relevant period and, if large, could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
The company maintains allowances for credit losses for receivables to provide for defaults and nonperformance. These
allowances represent an estimate of 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. The determination of the appropriate levels of the allowances for credit losses involves a
high degree of subjectivity and judgement, and requires the company to make estimates of credit risks, which may undergo
material changes as a result of economic conditions and other factors. The company’s allowances may not be adequate to cover
actual losses, and future provisions for credit losses could materially and adversely affect our financial condition, results of
operations and cash flows.
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Foreign operations are subject to currency exchange, inflation, interest and other risks that could adversely affect our business,
financial condition, results of operations and cash flows.
The reporting currency for Snap-on’s consolidated financial statements is the U.S. dollar. Certain of the company’s assets,
liabilities, expenses and revenues are denominated in currencies other than the U.S. dollar. In preparing Snap-on’s Consolidated
Financial Statements, those assets, liabilities, expenses and revenues are translated into U.S. dollars at applicable exchange
rates. Increases or decreases in exchange rates between the U.S. dollar and other currencies affect the U.S. dollar value of those
items, as reflected in the Consolidated Financial Statements. Substantial fluctuations in the value of the U.S. dollar or other
transactional currencies have had and, in the future, could have a significant impact on the company’s financial condition and
results of operations. Cash generated in certain non-U.S. jurisdictions has been, and in the future may be, difficult to repatriate
to the United States in a tax-efficient manner as a result of, among other factors, restrictions on the movement of funds out of
certain countries put in place by foreign governments. Further, economic conditions in the markets in which we operate can
vary, including due to changes in currency exchange rates, local inflation, interest rates and other factors, which could adversely
affect our business, financial condition, results of operations and cash flows.
Adverse developments in the credit and financial markets could negatively impact the availability of credit that we and our
customers need to operate our businesses.
We depend upon the availability of credit to operate our business, including the financing of receivables from end-user
customers that are originated by our financial services businesses. Our end-user customers, franchisees and suppliers also
require access to credit for their businesses. At times, world financial markets have been unstable and subject to uncertainty.
Adverse developments in the credit and financial markets, or unfavorable changes in Snap-on’s credit rating, could negatively
impact the availability of future financing and the terms on which it might be available to Snap-on, its end-user customers,
franchisees and suppliers. Inability to access credit or capital markets, or a deterioration in the terms on which financing might
be available, could have an adverse impact on our business, financial condition, results of operations and cash flows.
Increasing our financial leverage could affect our operations and profitability.
Our $900 million multicurrency revolving credit facility contains an accordion feature that, subject to certain customary
conditions, may allow the maximum commitment to be increased by up to $450 million with the approval of the lenders
providing additional commitments. While there are no current borrowings under the credit facility, future borrowings and the
resulting increase in the company’s leverage ratio may affect both our availability of additional capital resources as well as our
operations in several ways, including:
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The terms on which credit may be available to us could be less attractive, both in the economic terms of the credit and
the covenants stipulated by the credit terms;
The possible lack of availability of additional credit or access to the commercial paper market;
The potential for higher levels of interest expense to service or maintain our outstanding debt;
The possibility of additional borrowings in the future to repay our indebtedness when it comes due; and
The possible diversion of capital resources from other uses.
While we believe we will have the ability to service our debt and obtain additional financial resources in the future if and when
needed, that will depend upon our results of operations and financial position at the time, the then-current state of the credit and
financial markets, and other factors that may be beyond our control. Therefore, we cannot give assurances that credit will be
available on terms that we consider attractive, or at all, if and when necessary or beneficial to us.
Failure to achieve expected investment returns on pension plan assets, as well as changes in interest rates or plan
demographics, could adversely impact our results of operations, financial condition and cash flows.
Snap-on sponsors various defined benefit pension plans (the “pension plans”). The assets of the pension plans are diversified in
an attempt to mitigate the risk of a large loss. Required funding for the company’s domestic defined benefit pension plans is
determined in accordance with guidelines set forth in the federal Employee Retirement Income Security Act (“ERISA”);
foreign defined benefit pension plans are funded in accordance with local statutes or practice. Additional contributions to
enhance the funded status of the pension plans can be made at the company’s discretion. However, there can be no assurance
that the value of the pension plan assets, or the investment returns on those plan assets, will be sufficient to meet the future
benefit obligations of such plans. In addition, during periods of adverse investment market conditions and declining interest
rates, the company may be required to make additional cash contributions to the pension plans that could reduce our financial
flexibility. Changes in plan demographics, including an increase in the number of retirements or changes in life expectancy
assumptions, may also increase the costs and funding requirements of the obligations related to the company’s pension plans.
18
SNAP-ON INCORPORATED
Our pension plan obligations are affected by changes in market interest rates. Significant fluctuations in market interest rates
have added, and may further add, volatility to our pension plan obligations. In periods of declining market interest rates, our
pension plan obligations generally increase; in periods of increasing market interest rates, our pension plan obligations
generally decrease. While our plan assets are broadly diversified, there are inherent market risks associated with investments; if
adverse market conditions occur, our plan assets could incur significant or material losses. Since we may need to make
additional contributions to address changes in obligations and/or a loss in plan assets, the combination of declining market
interest rates, past or future plan asset investment losses, and/or changes in plan demographics could adversely impact our
results of operations, financial condition and cash flows.
The company’s pension plan expense is comprised of the following factors: (i) service cost; (ii) interest on projected benefit
obligations; (iii) expected return on plan assets; (iv) the amortization of prior service costs and credits; (v) effects of actuarial
gains and losses; and (vi) settlement/curtailment costs, when applicable. The accounting for pensions involves the estimation of
a number of factors that are highly uncertain. Certain factors, such as the interest on projected benefit obligations and the
expected return on plan assets, are impacted by changes in market interest rates and the value of plan assets. A significant
decrease in market interest rates and a decrease in the fair value of plan assets would increase net pension expense and may
adversely affect the company’s future financial results. See Note 11 to the Consolidated Financial Statements for additional
information on the company’s pension plans.
The recognition of impairment charges on goodwill or other intangible assets could adversely impact our future financial
condition and results of operations.
We have a substantial amount of goodwill and purchased intangible assets, almost all of which are booked in the Commercial &
Industrial Group and in the Repair Systems & Information Group. We are required to perform impairment tests on our goodwill
and other intangible assets annually or at any time when events occur that could impact the value of our business segments. Our
determination of whether impairment has occurred is based on a comparison of each of our reporting units’ fair market value
with its carrying value.
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, could require a provision for
impairment in a future period that could substantially impact our reported earnings and reduce our consolidated net worth and
shareholders’ equity. Should the economic environment in these markets deteriorate, our results of operations and financial
position could be materially impacted, including as a result of the effects of potential impairment write-downs of goodwill and/
or other intangible assets related to these businesses.
Legal and Regulatory Risks
Legislation and regulations relating to our business and the countries where we operate, including those related to
sustainability matters, as well as any changes to such legislation or regulations, in addition to new compliance obligations or a
failure to maintain existing compliance requirements, may, if significant, affect our business, reputation, results of operations
and financial condition.
Significant changes to legislative and regulatory activity, and compliance burdens, including those associated with: (i) sales to
our government, military and defense contractor customers; and (ii) classification of third parties, including our franchisees, as
independent from the company, as well as the manner in which they are applied, could significantly impact our business and the
economy as a whole.
Financial services businesses of all kinds are subject to significant and complex regulations and enforcement. In addition to
potentially increasing the costs and other requirements of doing business due to compliance obligations, new laws and
regulations, or changes to existing laws and regulations, as well as the enforcement thereof, may affect the relationships
between creditors and debtors, inhibit the rights of creditors to collect amounts owed to them, expand liability for certain
actions or inaction, or limit the types of financial products or services offered, any or all of which could have a material adverse
effect on our financial condition, results of operations and cash flows. Failure to comply with any of these laws or regulations
could also result in civil, criminal, monetary and/or non-monetary penalties, damage to our reputation, and/or require significant
remediation costs.
2023 ANNUAL REPORT
19
In recent years there has been increased public awareness, concern and focus on environmental and sustainability issues,
including matters related to climate change, and we expect these trends to continue. The current focus on these matters is
expected to result in additional and/or more restrictive regulations, such as the Corporate Sustainability Reporting Directive
(CSRD) in the European Union and the proposed SEC regulations relating to climate change disclosures, and industry or third-
party requirements and standards to reduce or mitigate climate change as well as other environmental or sustainability risks.
The timing of certain of these regulations has yet to be determined.
Increased regulatory requirements or standards may result in increased compliance or input costs, including those related to
energy or raw materials, for us and our suppliers. If environmental laws or regulations or industry standards are either changed
or adopted, and impose significant operational restrictions and compliance requirements upon the company, the company's
business, reputation, results of operations, financial condition and competitive position could be negatively impacted. For
example, if significant increases in fuel economy requirements or changes to vehicle emissions requirements for internal
combustion engine vehicles were imposed, there could be a decrease in demand for such vehicles and a reduction in miles
driven, which could adversely impact the demand for certain of our products and services. Furthermore, an inability to
successfully manage climate change or sustainability matters, or to effectively respond to new, or changes in, legal or regulatory
requirements concerning sustainability matters, or increased operating or manufacturing costs due to changes in the regulatory
environment, could adversely affect our business.
These developments, and other potential future legislation and regulations, including the increasing global regulation of privacy
rights and use of AI, may also adversely affect the customers to which, and the markets into which, we sell our products, and
increase our costs and otherwise negatively affect our business, reputation, results of operations and financial condition,
including in ways that cannot yet be foreseen.
Product liability claims and litigation could affect our business, reputation, financial condition, results of operations and cash
flows.
The products that we design and/or manufacture, and/or the services we provide, can lead to product liability claims or other
legal claims being filed against us. To the extent that plaintiffs are successful in showing that a defect in a product’s design,
manufacture or warnings led to personal injury or property damage, or that our provision of services resulted in similar injury or
damage, we may be subject to claims for damages. Although we are insured for damages above a certain amount, we bear the
costs and expenses associated with defending claims, including frivolous lawsuits, and are responsible for damages up to the
insurance retention amount. In addition to claims concerning individual products, as a manufacturer, we can be subject to costs,
potential negative publicity and lawsuits related to product recalls, which could adversely impact our results of operations and
damage our reputation.
Legal disputes could adversely affect our business, reputation, financial condition, results of operations and cash flows.
In the ordinary course of our business, we are subject to legal disputes that are litigated and/or settled. Disputes or future
lawsuits could result in the diversion of management’s time and attention away from business operations. Additionally,
negative developments with respect to legal disputes and the costs incurred in defending ourselves, even if successful, could
have an adverse impact on the company and its reputation. Successful outcomes, at trial or on appeal, can never be assured.
Adverse outcomes or settlements could also require us to pay damages, potentially in excess of amounts reserved, or incur
liability for other remedies that could have a material adverse effect on our business, reputation, financial condition, results of
operations and cash flows.
Our operations expose us to the risk of environmental liabilities, costs, litigation and violations that could adversely affect our
financial condition, results of operations and reputation.
Certain of our operations are subject to environmental laws and regulations in the jurisdictions in which they operate, which
impose limitations on the discharge of pollutants into the ground, air and water and establish standards for the generation,
treatment, use, storage and disposal of hazardous wastes. We must also comply with various health and safety regulations in the
United States and abroad in connection with our operations. Failure to comply with any of these laws could result in civil and
criminal, monetary and non-monetary penalties and damage to our reputation. In addition, we may incur costs related to
remedial efforts or alleged environmental damage associated with past or current waste disposal practices. We cannot provide
assurance that our costs of complying with current or future environmental protection and health and safety laws will not
exceed our estimates.
20
SNAP-ON INCORPORATED
The inability to successfully defend claims from taxing authorities and changes in tax laws and rules could adversely affect our
financial condition, results of operations and cash flows.
We conduct business in many countries, which requires us to interpret the income tax laws and rulings in each of those taxing
jurisdictions. New tax laws, within the U.S. and the other jurisdictions in which we operate, such as Pillar Two of the Global
Anti-Base Erosion Rules released by the Organisation for Economic Cooperation and Development (OECD), which, once
adopted in various jurisdictions, will require a global minimum tax for multinational countries, could impact our operations.
Due to the subjectivity of tax laws in and between jurisdictions, as well as the subjectivity of factual interpretations, our
estimates of income tax liabilities may differ from actual payments or assessments. Claims from taxing authorities related to
these differences could have an adverse impact on our financial condition, results of operations and cash flows.
General Risk Factor
Economic conditions and world events could affect our operating results.
In addition to the specific risks above, we, our franchisees and our customers, may be adversely affected by changing economic
conditions, including conditions that may particularly impact specific regions. These conditions may result in reduced consumer
and investor confidence, instability in the credit and financial markets, volatile corporate profits, and reduced business and
consumer spending. We, our franchisees and our customers, and the economy as a whole, also may be affected by future world
or local events outside our control, such as tariffs and other trade protection measures put in place by the United States or other
countries, acts of terrorism, developments in the war on terrorism, armed conflicts (including the current war in Ukraine, an
escalation of the conflict in the Middle East, and other regional conflicts), civil unrest, conflicts in international situations,
weather events and natural disasters, outbreaks of infectious diseases, as well as government-related developments or issues,
including changes in tax laws and regulations, new or enhanced regulations related to climate change and other sustainability
matters, and changes in financial accounting standards. These factors may affect the results of operations by reducing our sales,
margins and/or net earnings as a result of a slowdown in customer orders or order cancellations, impact the availability and/or
pricing of raw materials and/or the supply chain, and could potentially lead to future impairment of goodwill or other intangible
assets. In addition, political, social turmoil, international conflicts and terrorist acts may put pressure on global economic
conditions. Unstable political, social and economic conditions may make it difficult for our franchisees, customers, suppliers
and us to accurately forecast and plan future business activities. If such conditions persist, our business, financial condition,
results of operations and cash flows could be negatively affected.
Item 1B: Unresolved Staff Comments
None.
Item 1C: Cybersecurity
Cybersecurity and related considerations are a component of Snap-on’s cross-functional approach to risk management. Our
cybersecurity policies and practices follow the cybersecurity framework of the Center for Internet Security (“CIS”) Controls
and are integrated into the Company’s enterprise risk management practices. These practices are designed to enable the
identification of, and provide management visibility into, the critical enterprise risks facing the Company, as well as to facilitate
the incorporation of risk considerations into Company strategy and decision making. The Company’s cybersecurity program is
designed to detect, contain and respond to cybersecurity threats and incidents in a prompt and effective manner with the
primary goals of protecting information assets, preventing the misuse and loss of those assets, minimizing disruptions to the
business, and establishing the basis for audits and risk assessments.
Elements of the cybersecurity program include:
•
•
•
A cross-functional approach to addressing and managing the risk from cybersecurity threats and incidents involving
management personnel from operations, legal, risk, finance, information technology and other key business functions,
and with oversight by the Board of Directors.
Collaboration mechanisms with public and private entities, including intelligence and enforcement agencies (such as
the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency), industry groups,
consultants and other third-party service providers to identify and assess cybersecurity risks.
Technical safeguards intended to protect the Company’s information systems from cybersecurity threats, including
data encryption, firewalls, threat monitoring, intrusion prevention and detection systems, anti-malware, access
controls, privilege management, network segmentation, asset and end point management, and ongoing system security
assessments.
2023 ANNUAL REPORT
21
•
•
•
Annual training for personnel regarding cybersecurity threats based on their roles, responsibilities, and levels of system
access.
A risk-based approach to identifying and monitoring cybersecurity risks presented by third parties, such as vendors
and service providers, that includes periodic assessments.
A data incident response plan that addresses the Company’s response to a cybersecurity threat or incident.
The Company’s Vice President and Chief Information Officer (the “CIO”) is principally responsible for overseeing the
Company’s cybersecurity risk management program. The Company’s CIO, along with multidisciplinary teams throughout the
Company, works collaboratively to implement a program designed to protect the Company’s information systems from, and
respond to, cybersecurity threats and incidents, including any originating at its third-party providers. The Company has also
appointed a Vice President, Information Technology Infrastructure and Security (the “VP of IT”), who oversees its Information
Security Team. The CIO, who reports to the company’s President and Chief Executive Officer, has served in her role since
2017, and has over 20 years of information technology experience in positions of increasing responsibility. The VP of IT has
served in information technology leadership roles at Snap-on for over 12 years. In addition to regularly updating senior
management on information security matters as part of the Company’s quarterly business review process, the CIO provides a
dedicated presentation to the Board of Directors on information security matters at least once per year. The Company’s Chief
Executive Officer and Chief Financial Officer each have many years of experience of managing risk at the Company, including
risks arising from cybersecurity threats. We believe that the CIO, the VP of IT, our other information technology business
leaders and members of senior management have the appropriate expertise, background and depth of experience to manage
risks arising from cybersecurity threats.
Each business group has a designated information security manager who is responsible for assessing the business unit’s
cybersecurity risks and reporting them to the president of the group. The Company holds quarterly gatherings involving, among
others, the CIO, VP of IT, representatives from the legal department, and the information security managers for our operating
groups. In addition, as noted above, cybersecurity considerations related to our business groups are incorporated into the
Company’s quarterly business review process, which involves senior management, including the Chief Executive Officer, the
Chief Financial Officer, the Vice President, General Counsel and Secretary, the CIO and the VP of IT.
A key part of the Company’s strategy for managing risks from cybersecurity threats is the ongoing assessments and testing of
the Company’s practices through auditing, ethical hacking, and other exercises focused on evaluating effectiveness. The
Company regularly engages third parties to assess its information security environment. The Company’s Internal Audit function
also annually evaluates compliance with the Company’s overall information technology policies, and the Vice President of
Internal Audit reports the results of these assessments to the Audit Committee.
In addition, the Company has established a data incident response plan, which provides employees with the process and
mechanism to report any suspected or confirmed cybersecurity threat or data incident. The Company’s response to
cybersecurity incidents is managed and coordinated by the CIO, in consultation with the Company’s Vice President, General
Counsel and Secretary, and, when appropriate, will discuss the situation with the Chief Executive Officer and Chief Financial
Officer. These leaders will determine whether to engage the Company’s Incident Response Team, a cross-functional group led
by the CIO that includes the VP of IT, as well as representatives from legal (including the Vice President, General Counsel and
Secretary), human resources, treasury, public relations, finance (including the Chief Financial Officer), and affected operations.
The Company’s Information Security Team also promptly takes steps to protect the Company’s systems and information by
containing and mitigating the impact of any incident. The Incident Response Team involves others, as appropriate, including
third parties, such as technical consultants and outside legal counsel, and determines when to notify law enforcement or
regulatory authorities. The Incident Response Team also coordinates communications with internal and external stakeholders.
The Incident Response Team leads the materiality assessment with input and guidance from senior management, including the
Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. In determining materiality, both quantitative
and qualitative factors are considered, including the potential impact of the incident on the Company’s operations, competitive
position, financial results, reputation, and customer or vendor relationships, as well as the nature of the information potentially
exposed and systems impacted. The Chief Executive Officer informs the Board of Directors and the Audit Committee regarding
any significant incidents as well as collaborates on management’s recommendations concerning materiality. Management also
facilitates external communications, as appropriate.
22
SNAP-ON INCORPORATED
Management of cybersecurity risk is overseen by the Company’s Board of Directors and is supported by the Audit Committee.
The Audit Committee is primarily responsible for evaluating the Company’s policies with respect to risk assessment and risk
management, and it reviews and discusses the Company’s major financial and other risk exposures, including those relating to
cybersecurity. Management annually briefs the Board on the Company’s enterprise risk practices, including cybersecurity
matters addressing a wide range of topics including new developments, evolving standards, vulnerability assessments, third-
party and independent reviews, threat environment summaries, and technological trends. As discussed above, and when
applicable, the Board and the Audit Committee also receive prompt information from the Chief Executive Officer regarding any
material cybersecurity incident and appropriate ongoing updates regarding the same.
In response to the rapidly evolving cyber threat environment, the Company continues to invest in data security and system
resiliency. See also Item 1A: Risk Factors for an additional discussion regarding risks related to information technology
systems.
Item 2: Properties
Snap-on maintains leased and owned manufacturing, software development, warehouse, distribution, research and development
and office facilities throughout the world. Snap-on believes that its facilities currently in use are suitable and have adequate
capacity to meet its present and foreseeable future demand. Snap-on’s facilities in the United States occupy approximately 4.3
million square feet, of which 71% is owned, including its corporate and general office facility located in Kenosha, Wisconsin.
Snap-on’s facilities outside the United States occupy approximately 4.4 million square feet, of which approximately 73% is
owned. Certain Snap-on facilities are leased through operating and finance lease agreements. See Note 16 to the Consolidated
Financial Statements for information on the company’s operating and finance leases. Snap-on management continually
monitors the company’s capacity needs and makes adjustments as dictated by market and other conditions.
2023 ANNUAL REPORT
23
The following table provides information about our corporate headquarters and financial services operations, and each of
Snap-on’s principal active manufacturing locations, distribution centers and software development locations (exceeding 50,000
square feet) as of 2023 year end:
Location
Principal Property Use
Owned/Leased
Segment*
U.S. Locations:
Elkmont, Alabama
Conway, Arkansas
City of Industry, California
San Diego, California
San Jose, California
Tustin, California
Columbus, Georgia
Crystal Lake, Illinois
Libertyville, Illinois
Lincolnshire, Illinois
Algona, Iowa
Louisville, Kentucky
Olive Branch, Mississippi
Carson City, Nevada
Murphy, North Carolina
Richfield, Ohio
Robesonia, Pennsylvania
Elizabethton, Tennessee
Kenosha, Wisconsin
Milwaukee, Wisconsin
Pleasant Prairie, Wisconsin
Non-U.S. Locations:
Santo Tome, Argentina
New South Wales, Australia
Minsk, Belarus
Santa Bárbara d’Oeste, Brazil
Calgary, Canada
Mississauga, Canada
Beijing, China
Kunshan, China
Xiaoshan, China
Banbury, England
Bramley, England
Kettering, England
Bauge-en-Anjou, France
Sopron, Hungary
Correggio, Italy
Tokyo, Japan
Helmond, Netherlands
Vila do Conde, Portugal
Irun, Spain
Placencia, Spain
Vitoria, Spain
Edsbyn, Sweden
Kungsör, Sweden
Lidköping, Sweden
* Segment abbreviations:
Manufacturing
Manufacturing and distribution
Manufacturing
Software development
Software development
Manufacturing and distribution
Distribution
Distribution
Financial services
Software development
Manufacturing and distribution
Manufacturing and distribution
Distribution
Distribution
Manufacturing and distribution
Software development
Distribution
Manufacturing
Distribution and corporate
Manufacturing
Distribution
Manufacturing
Distribution and financial services
Manufacturing
Manufacturing and distribution
Distribution
Distribution
Manufacturing and distribution
Manufacturing
Manufacturing
Manufacturing and distribution
Manufacturing
Distribution and financial services
Manufacturing
Manufacturing
Manufacturing
Distribution
Distribution
Manufacturing
Manufacturing
Manufacturing
Manufacturing and distribution
Manufacturing
Manufacturing and distribution
Manufacturing
Owned
Owned and leased
Leased
Owned
Leased
Leased
Owned
Owned and leased
Leased
Owned
Owned
Leased
Owned
Owned and leased
Owned and leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Leased
Leased
Leased
Owned
Owned
Owned
Owned
Owned and leased
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
SOT
RS&I
C&I
RS&I
RS&I
C&I
C&I
SOT
FS
RS&I
SOT
RS&I
SOT
SOT
C&I
RS&I
SOT
SOT
SOT, C&I, RS&I
SOT
SOT, C&I, RS&I
C&I
SOT, FS
C&I
RS&I
SOT
SOT, RS&I
C&I
C&I
C&I
C&I
C&I
SOT, C&I, FS
C&I
RS&I
RS&I
C&I
C&I
C&I
C&I
C&I
C&I
C&I
RS&I
C&I
C&I – Commercial & Industrial Group
SOT – Snap-on Tools Group
RS&I – Repair Systems & Information Group FS – Financial Services
24
SNAP-ON INCORPORATED
Item 3: Legal Proceedings
Snap-on is involved in various legal matters that are being litigated and/or settled in the ordinary course of business. Although it
is not possible to predict the outcome of these legal matters, management believes that the results of these legal matters will not
have a material impact on Snap-on’s consolidated financial position, results of operations or cash flows.
Item 4: Mine Safety Disclosures
Not applicable.
PART II
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Snap-on had 52,694,017 shares of common stock outstanding as of 2023 year end. Snap-on’s stock is listed on the New York
Stock Exchange under the ticker symbol “SNA.” At February 9, 2024, there were 3,992 registered holders of Snap-on common
stock.
Issuer Purchases of Equity Securities
The following chart discloses information regarding the shares of Snap-on’s common stock repurchased by the company during
the fourth quarter of fiscal 2023, all of which were purchased pursuant to the Board’s authorizations that the company has
publicly announced. Snap-on has undertaken stock repurchases from time to time to offset dilution related to equity plan
issuances and for other corporate purposes, as well as when the company believes market conditions are favorable. The
repurchase of Snap-on common stock is at the company’s discretion, subject to prevailing financial and market conditions, and
pursuant to the Board’s authorizations that the company has publicly announced.
Shares
purchased
32,000
86,000
99,000
217,000
Average price
per share
$252.77
$268.43
$282.48
$272.53
Shares purchased as
part of publicly
announced plans or
programs
32,000
86,000
99,000
217,000
Approximate
value of shares
that may yet be
purchased under
publicly
announced plans
or programs*
$296.3 million
$275.2 million
$282.9 million
N/A
Period
10/01/23 to 10/28/23
10/29/23 to 11/25/23
11/26/23 to 12/30/23
Total/Average
N/A: Not applicable
* Subject to further adjustment pursuant to the 1996 Authorization described below, as of December 30, 2023, the approximate value of shares that may yet be
purchased pursuant to the outstanding Board authorizations discussed below is $282.9 million.
•
•
In 1996, the Board authorized the company to repurchase shares of the company’s common stock periodically in the open market or in privately
negotiated transactions (“the 1996 Authorization”). The 1996 Authorization allows the repurchase of up to the number of shares issued or delivered
from treasury under the various plans the company has in place that call for the issuance of the company’s common stock. Because the number of
shares that are purchased pursuant to the 1996 Authorization will change as (i) the company issues shares under its various plans; and (ii) shares are
repurchased pursuant to this authorization, the number of shares authorized to be repurchased will vary from time to time. The 1996 Authorization
will expire when terminated by the Board.
On November 4, 2021, the Board authorized the repurchase of up to $500 million of the company’s common stock (the “2021 Authorization”). The
2021 Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board.
2023 ANNUAL REPORT
25
Other Purchases or Sales of Equity Securities
The following chart discloses information regarding transactions by a counterparty in shares of Snap-on’s common stock during
the fourth quarter of fiscal 2023 pursuant to a prepaid equity forward agreement (the “Agreement”) that is intended to reduce
the impact of market risk associated with the stock-based portion of the company’s deferred compensation plans. The
company’s stock-based deferred compensation liabilities increase as the company’s stock price rises and decrease as the
company’s stock price declines. Pursuant to the Agreement, the counterparty may purchase or sell shares of the company’s
common stock for its account in the market or in privately negotiated transactions. At termination, the Agreement settles in cash
and does not provide for Snap-on to purchase or repurchase its shares.
Period
10/01/23 to 10/28/23
10/29/23 to 11/25/23
11/26/23 to 12/30/23
Total/Average
Shares
Purchased (Sold)
—
(1,000)
500
(500)
Average Price
per Share
—
$252.03
$279.25
$261.10
26
SNAP-ON INCORPORATED
Five-year Stock Performance Graph
The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, 2018, of a
$100 investment, assuming that dividends were reinvested quarterly. The graph compares Snap-on’s performance to that of the
Standard & Poor’s 500 Industrials Index (“S&P 500 Industrials”) and Standard & Poor’s 500 Stock Index (“S&P 500”).
Fiscal Year Ended (1)
December 31, 2018
December 31, 2019
December 31, 2020
December 31, 2021
December 31, 2022
December 31, 2023
Snap-on
Incorporated
$100.00
$119.54
$124.33
$160.19
$174.47
$226.27
S&P 500
Industrials
$100.00
$129.37
$143.68
$174.02
$164.49
$194.31
S&P 500
$100.00
$131.49
$155.68
$200.37
$164.08
$207.21
(1) The company’s fiscal year ends on the Saturday that is on or nearest to December 31 of each year; for ease of calculation, the fiscal year end is assumed to
be December 31.
Item 6: [Reserved]
2023 ANNUAL REPORT
27
DollarsSNAP-ON INCORPORATEDS&P 500IndustrialsS&P 50020182019202020212022202350100150200250 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management Overview
We believe our 2023 operating performance demonstrates the continuing momentum of our business, confirms the special
resilience of our markets, and reflects the considerable capability of our combined operations and our experienced team to
overcome the uncertainties of the current environment. Throughout the variability, we maintained and further extended our
ongoing advantages in our products, in our brands and in our people. At the same time, we leveraged existing proficiencies to
focus on expanding our professional customer base, not only in automotive repair, but in adjacent markets, additional
geographies and other areas, including critical industries, where the cost and penalties for failure can be high. Snap-on’s value
proposition of making work easier for serious professionals is an ongoing strength as we move forward along our runways for
coherent growth:
•
•
•
•
Enhancing the franchise network, where we continued to focus on helping our franchisees extend their reach through
innovative selling processes and productivity initiatives that break the traditional time and space barriers inherent in a
mobile van;
Expanding with repair shop owners and managers, where we continued to make progress in connecting with customers
and translating the resulting insights into innovation that solves specific challenges in the repair facility;
Further extending to critical industries, where we continued to grow our lines of products customized for specific
industries, including through further integration of acquisitions; and
Building in emerging markets, where we continued to maintain manufacturing capacity, as well as refine product lines
and distribution capabilities.
Our strategic priorities and plans for 2024 involve continuing to build on our Snap-on Value Creation Processes – our suite of
strategic principles and processes we employ every day designed to create value, and employed in the areas of safety, quality,
customer connection, innovation and Rapid Continuous Improvement (“RCI”). We expect to continue to deploy these processes
in our existing operations as well as into our recently acquired businesses.
Snap-on’s RCI initiatives employ a structured set of tools and processes across multiple businesses and geographies intended to
eliminate waste and improve operations. Savings from Snap-on’s RCI initiatives reflect benefits from a wide variety of ongoing
efficiency, productivity and process improvements, including savings generated from product design cost reductions, improved
manufacturing line set-up and change-over practices, lower-cost sourcing initiatives and facility consolidations. Unless
individually significant, it is not practicable to disclose each RCI activity that generated savings and/or segregate RCI savings
embedded in sales volume increases.
Our global financial services operations continue to serve a significant strategic role in offering financing options to our
franchisees, to their customers, and to customers in other parts of our business. We expect that our global financial services
business, which includes both Snap-on Credit LLC (“SOC”) in the United States and our other international finance
subsidiaries, will continue to be a meaningful contributor to our operating earnings going forward.
Snap-on has significant international operations and is subject to risks inherent with foreign operations, including foreign
currency translation fluctuations.
Recent Acquisitions
On November 20, 2023, Snap-on acquired certain assets of SAVTEQ, Inc. (“SAVTEQ”), for a cash purchase price of $3.0
million. SAVTEQ, based in Lexington, Kentucky, provides precise non-contact measuring capabilities that Snap-on intends to
leverage in its product offerings.
On November 1, 2023, Snap-on acquired Mountz, Inc. (“Mountz”) for a cash purchase price of $39.6 million. Mountz, based in
San Jose, California, is a leading developer, manufacturer and marketer of high-precision torque tools, including measurement,
calibration and documentation products. The acquisition of Mountz complements and expands Snap-on’s torque offerings to
customers in a variety of critical industries including aerospace, transportation and advanced manufacturing.
For segment reporting purposes, the results of operations and assets of SAVTEQ have been included in the Repair Systems &
Information Group and those of Mountz 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, individually and collectively,
were neither significant nor material to Snap-on’s results of operations or financial position.
28
SNAP-ON INCORPORATED
Fiscal Year
Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31. Unless otherwise indicated, references in this
document to “fiscal 2023” or “2023” refer to the fiscal year ended December 30, 2023; references to “fiscal 2022” or “2022”
refer to the fiscal year ended December 31, 2022; and references to “fiscal 2021” or “2021” refer to the fiscal year ended
January 1, 2022. References in this document to 2023, 2022 and 2021 year end refer to December 30, 2023, December 31,
2022, and January 1, 2022, respectively. Snap-on’s 2023, 2022 and 2021 fiscal years each contained 52 weeks of operating
results.
Fiscal 2022 as Compared to Fiscal 2021
A discussion regarding our financial condition and results of operations for fiscal 2022 compared to fiscal 2021 can be found
under “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our
Annual Report on the Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 9,
2023, and is available on the SEC’s website at www.sec.gov as well as in the “Investors” section of our website at
www.snapon.com.
Non-GAAP Measures
References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “organic sales”
refer to sales from continuing operations calculated in accordance with GAAP, adjusted to exclude acquisition-related sales and
the impact of foreign currency translation. Management evaluates the company’s sales performance based on organic sales
growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, expanded
customer base, geographic expansion, new product development and pricing changes, and excludes sales contributions from
acquired operations the company did not own as of the comparable prior-year reporting period. Organic sales also exclude the
effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying
business trends. Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it
provides them with useful information to aid in identifying underlying growth trends in the company’s businesses and
facilitates comparisons of its sales performance with prior periods.
Summary of Consolidated Performance
Consolidated net sales of $4,730.2 million in 2023 represented an increase of $237.4 million, or 5.3%, from 2022 levels,
reflecting a $250.7 million, or 5.6%, organic gain and $5.5 million of acquisition-related sales, partially offset by $18.8 million
of unfavorable foreign currency translation.
Operating earnings before financial services of $1,039.9 million in 2023 compared to $941.2 million in 2022, an increase of
$98.7 million or 10.5%. As a percentage of net sales, operating earnings before financial services were 22.0% compared to
20.9% last year.
Operating earnings of $1,310.4 million in 2023 compared to $1,207.2 million in 2022, an increase of $103.2 million or 8.5%.
As a percentage of revenues (net sales plus financial services revenue), operating earnings were 25.7% compared to 24.9% last
year.
Net earnings attributable to Snap-on of $1,011.1 million, or $18.76 per diluted share, in 2023 compared to $911.7 million, or
$16.82 per diluted share, in 2022, an increase of $99.4 million or $1.94 per diluted share.
2023 ANNUAL REPORT
29
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Summary of Segment Performance
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. Segment net sales of $1,458.3 million in 2023 represented an increase of $59.1 million, or 4.2%, from
2022 levels, reflecting a $69.7 million, or 5.0%, organic gain and $5.5 million of acquisition-related sales, partially offset by
$16.1 million of unfavorable currency translation. The organic increase primarily reflects a double-digit gain in sales to
customers in critical industries. Operating earnings of $226.1 million in 2023, including $9.0 million of unfavorable foreign
currency effects, compared to $197.6 million in 2022, an increase of $28.5 million or 14.4%.
The Commercial & Industrial Group intends to focus on the following strategic priorities in 2024:
•
•
•
•
•
•
Expanding our business with existing customers and reaching new customers in critical industries and other market
segments;
Continuing to invest in emerging market growth initiatives;
Broadening our product offering designed particularly for critical industry segments;
Increasing our customer-connection-driven understanding of work across multiple industries;
Investing in innovation that, guided by that understanding of work, delivers an ongoing stream of productivity-
enhancing custom engineered solutions; and
Continuing to reduce structural and operating costs, as well as improve efficiencies, through RCI initiatives.
The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the
company’s multinational mobile tool distribution channel. Segment net sales of $2,088.8 million in 2023 represented an
increase of $16.8 million, or 0.8%, from 2022 levels, reflecting a $25.0 million, or 1.2%, organic sales gain, partially offset by
$8.2 million of unfavorable foreign currency translation. The organic increase is primarily due to a mid single-digit gain in the
segment’s international operations, while activity in the U.S. operations was essentially flat. Operating earnings of $493.8
million in 2023, including $12.5 million of unfavorable foreign currency effects, compared to $458.7 million in 2022, an
increase of $35.1 million or 7.7%.
The Snap-on Tools Group intends to focus on the following strategic priorities in 2024:
•
•
•
•
Enhancing franchisee sales productivity, profitability, commercial health, and satisfaction;
Developing new programs and products to expand market coverage, reaching new technician customers and increasing
penetration with existing customers;
Increasing investment in new product innovation and development; and
Improving customer service levels and productivity in back office support functions, manufacturing and the supply
chain through RCI initiatives and capacity investment.
The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers
worldwide, primarily owners and managers of independent repair shops and OEM dealership service and repair shops (“OEM
dealerships”) through direct and distributor channels. Segment net sales of $1,781.2 million in 2023 represented an increase of
$114.3 million, or 6.9%, from 2022 levels, reflecting a $111.7 million, or 6.7%, organic sales increase and $2.6 million of
favorable foreign currency translation. The organic gain primarily reflects double-digit increases in sales of undercar equipment
and high single-digit gains in activity with OEM dealerships. Operating earnings of $433.2 million in 2023, including
$1.3 million of favorable foreign currency effects, compared to $393.3 million in 2022, an increase of $39.9 million or 10.1%.
The Repair Systems & Information Group intends to focus on the following strategic priorities in 2024:
•
•
•
•
•
Expanding the product offering with new products and services, thereby providing more to sell to repair shop owners
and managers;
Continuing software and hardware upgrades to further improve functionality, performance and efficiency;
Leveraging integration of software solutions;
Continuing productivity advancements through RCI initiatives and leveraging of resources; and
Increasing geographic penetration, including in emerging markets.
30
SNAP-ON INCORPORATED
Financial Services generates revenue from various financing programs and is a strategic partner of the company’s mobile
franchise van channel. Financial services revenue of $378.1 million in 2023 compared to $349.7 million in 2022. Originations
of $1,235.5 million in 2023 represented an increase of $82.4 million, or 7.1%, from 2022 levels. Operating earnings from
financial services of $270.5 million in 2023 compared to $266.0 million last year.
Financial Services intends to focus on the following strategic priorities in 2024:
•
•
Delivering financial products and services that attract and sustain profitable franchisees and support Snap-on’s
strategies for expanding market coverage and penetration;
Improving productivity levels and ensuring high quality in all financial products and processes through the use of RCI
initiatives; and
• Maintaining healthy portfolio performance levels.
Cash Flows
Net cash provided by operating activities of $1,154.2 million in 2023 compared to $675.2 million in 2022. The $479.0 million
increase is primarily due to a $352.9 million change in net operating assets and liabilities, and a $100.7 million increase in net
earnings.
Net cash used by investing activities of $331.8 million in 2023 included additions to finance receivables of $1,029.0 million,
which were partially offset by collections of $833.5 million, as well as a use of cash of $42.6 million for the acquisitions of
Mountz and SAVTEQ. Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables
of $955.8 million, partially offset by collections of $826.9 million, as well as $0.5 million of cash provided by acquisitions.
Capital expenditures in 2023 and 2022 totaled $95.0 million and $84.2 million, respectively. Capital expenditures in both years
included continued investments related to the company’s execution of its strategic growth initiatives and Value Creation
Processes around safety, quality, customer connection, innovation and RCI.
Net cash used by financing activities of $572.9 million in 2023 included $355.6 million for dividend payments to shareholders,
$294.7 million for the repurchase of 1,126,000 shares of Snap-on’s common stock, and net repayments of other short-term
borrowings of $1.7 million. These amounts were partially offset by $113.6 million of proceeds from stock purchase plan and
stock option exercises. Net cash used by financing activities of $485.0 million in 2022 included $313.1 million for dividend
payments to shareholders and $198.1 million for the repurchase of 899,000 shares of Snap-on’s common stock. These amounts
were partially offset by $55.0 million of proceeds from stock purchase plan and stock option exercises and net proceeds from
other short-term borrowings of $1.6 million.
2023 ANNUAL REPORT
31
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Results of Operations
2023 vs. 2022
Results of operations for 2023 and 2022 are as follows:
(Amounts in millions)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating earnings before financial services
$ 4,730.2
(2,381.1)
2,349.1
(1,309.2)
1,039.9
100.0 % $ 4,492.8
(50.3) % (2,311.7)
49.7 % 2,181.1
(27.7) % (1,239.9)
941.2
22.0 %
100.0 % $
(51.5) %
48.5 %
(27.6) %
20.9 %
2023
2022
Change
Financial services revenue
Financial services expenses
Operating earnings from financial services
378.1
(107.6)
270.5
100.0 %
(28.5) %
71.5 %
349.7
(83.7)
266.0
100.0 %
(23.9) %
76.1 %
Operating earnings
Interest expense
Other income (expense) – net
Earnings before income taxes and equity
earnings
Income tax expense
Net earnings
Net earnings attributable to noncontrolling
interests
Net earnings attributable to Snap-on Inc.
1,310.4
(49.9)
67.5
1,328.0
(293.4)
1,034.6
25.7 % 1,207.2
(47.1)
(1.0) %
42.5
1.3 %
26.0 % 1,202.6
(268.7)
(5.7) %
933.9
20.3 %
24.9 %
(1.0) %
0.9 %
24.8 %
(5.5) %
19.3 %
(23.5)
$ 1,011.1
(0.5) %
19.8 % $
(22.2)
911.7
(0.5) %
18.8 % $
(1.3)
99.4
237.4
(69.4)
168.0
(69.3)
98.7
28.4
(23.9)
4.5
103.2
(2.8)
25.0
125.4
(24.7)
100.7
5.3 %
(3.0) %
7.7 %
(5.6) %
10.5 %
8.1 %
(28.6) %
1.7 %
8.5 %
(5.9) %
58.8 %
10.4 %
(9.2) %
10.8 %
(5.9) %
10.9 %
Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of
the sum of Net sales and Financial services revenue.
Net sales of $4,730.2 million in 2023 represented an increase of $237.4 million, or 5.3%, from 2022 levels, reflecting a $250.7
million, or 5.6%, organic gain and $5.5 million of acquisition-related sales, partially offset by $18.8 million of unfavorable
foreign currency translation.
Gross profit of $2,349.1 million in 2023 compared to $2,181.1 million last year, an increase of $168.0 million or 7.7%. Gross
margin (gross profit as a percentage of net sales) improved 120 basis points (100 basis points (“bps”) equals 1.0 percent) from
2022 primarily due to increased sales volumes and pricing actions, lower material and other costs, and benefits from the
company’s RCI initiatives. These improvements were partially offset by 30 bps of unfavorable foreign currency effects.
Operating expenses of $1,309.2 million in 2023 compared to $1,239.9 million last year. Operating expenses as a percentage of
net sales rose 10 bps from last year, primarily reflecting increased personnel and other costs, partially offset by benefits from
higher sales volumes.
Operating earnings before financial services of $1,039.9 million in 2023 compared to $941.2 million in 2022, an increase of
$98.7 million or 10.5%. As a percentage of net sales, operating earnings before financial services were 22.0% compared to
20.9% last year.
Financial services revenue of $378.1 million in 2023 compared to $349.7 million last year. Financial services operating
earnings of $270.5 million in 2023 compared to $266.0 million in 2022.
Operating earnings of $1,310.4 million in 2023 compared to $1,207.2 million in 2022, an increase of $103.2 million or 8.5%.
As a percentage of revenues, operating earnings were 25.7% compared to 24.9% last year.
Interest expense in 2023 increased $2.8 million compared to last year. See Note 9 to the Consolidated Financial Statements for
additional information on debt and credit facilities.
32
SNAP-ON INCORPORATED
Other income (expense) – net primarily includes net gains and losses associated with hedging and currency exchange rate
transactions, non-service components of net periodic benefit costs, and interest income. See Note 17 to the Consolidated
Financial Statements for additional information on Other income (expense) – net.
The effective income tax rate on earnings attributable to Snap-on was 22.5% in 2023 and 22.8% in 2022. See Note 8 to the
Consolidated Financial Statements for additional information on income taxes.
Net earnings attributable to Snap-on of $1,011.1 million, or $18.76 per diluted share, in 2023 compared to $911.7 million, or
$16.82 per diluted share, in 2022, an increase of $99.4 million or $1.94 per diluted share.
Segment Results
Snap-on’s business segments are based on the organization structure used by management for making operating and investment
decisions and for assessing performance. Snap-on’s reportable business segments are: (i) the Commercial & Industrial Group;
(ii) the Snap-on Tools Group; (iii) the Repair Systems & Information Group; and (iv) Financial Services. The Commercial &
Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide,
including customers in the aerospace, natural resources, government and military, power generation, transportation and
technical education market segments, 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 multinational 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.
Snap-on evaluates the performance of its operating segments based on segment revenues and segment operating earnings. The
Snap-on Tools Group segment revenues include external net sales, while the Commercial & Industrial Group and the Repair
Systems & Information Group segment revenues include both external and intersegment net sales. Snap-on accounts for
intersegment net sales and transfers based primarily on standard costs with reasonable mark-ups established between the
segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Corporate
assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other
assets. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.
Commercial & Industrial Group
(Amounts in millions)
External net sales
Intersegment net sales
Segment net sales
Cost of goods sold
Gross profit
Operating expenses
Segment operating earnings
2023
2022
Change
$
$
1,145.6
312.7
1,458.3
(887.5)
570.8
(344.7)
226.1
78.6 % $
21.4 %
100.0 %
(60.9) %
39.1 %
(23.6) %
15.5 % $
1,058.3
340.9
1,399.2
(880.5)
518.7
(321.1)
197.6
75.6 % $
24.4 %
100.0 %
(62.9) %
37.1 %
(23.0) %
14.1 % $
87.3
(28.2)
59.1
(7.0)
52.1
(23.6)
28.5
8.2 %
(8.3) %
4.2 %
(0.8) %
10.0 %
(7.3) %
14.4 %
Segment net sales of $1,458.3 million in 2023 represented an increase of $59.1 million, or 4.2%, from 2022 levels, reflecting a
$69.7 million, or 5.0%, organic gain and $5.5 million of acquisition-related sales, partially offset by $16.1 million of
unfavorable currency translation. The organic increase primarily reflects a double-digit gain in sales to customers in critical
industries.
Segment gross margin in 2023 improved 200 bps from last year, primarily due to increased sales volumes in the higher-gross-
margin critical industry sector, pricing actions, and benefits from the segment’s RCI initiatives. These improvements were
partially offset by 40 bps of unfavorable foreign currency effects.
Segment operating expenses as a percentage of net sales in 2023 rose 60 bps as compared to 2022 primarily reflecting increased
sales in higher-expense businesses, as well as increased personnel and other costs.
As a result of these factors, segment operating earnings of $226.1 million in 2023, including $9.0 million of unfavorable foreign
currency effects, compared to $197.6 million in 2022, an increase of $28.5 million or 14.4%. Operating margin (segment
operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.5% in 2023 compared to
14.1% last year.
2023 ANNUAL REPORT
33
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Snap-on Tools Group
(Amounts in millions)
Segment net sales
Cost of goods sold
Gross profit
Operating expenses
Segment operating earnings
2023
2022
Change
$
$
2,088.8
(1,107.7)
981.1
(487.3)
493.8
100.0 % $
(53.0) %
47.0 %
(23.4) %
23.6 % $
2,072.0
(1,141.7)
930.3
(471.6)
458.7
100.0 % $
(55.1) %
44.9 %
(22.8) %
22.1 % $
16.8
34.0
50.8
(15.7)
35.1
0.8 %
3.0 %
5.5 %
(3.3) %
7.7 %
Segment net sales of $2,088.8 million in 2023 represented an increase of $16.8 million, or 0.8%, from 2022 levels, reflecting a
$25.0 million, or 1.2%, organic sales gain, partially offset by $8.2 million of unfavorable foreign currency translation. The
organic increase is primarily due to a mid single-digit gain in the segment’s international operations, while activity in the U.S.
operations was essentially flat.
Segment gross margin in 2023 improved 210 bps from last year, primarily reflecting increased sales of higher-gross-margin
products, benefits from sales volumes and pricing actions, and lower material and other costs. These improvements were
partially offset by 50 bps of unfavorable foreign currency effects.
Segment operating expenses as a percentage of net sales in 2023 rose 60 bps from last year primarily due to increased personnel
and other costs.
As a result of these factors, segment operating earnings of $493.8 million in 2023, including $12.5 million of unfavorable
foreign currency effects, compared to $458.7 million in 2022, an increase of $35.1 million or 7.7%. Operating margin for the
Snap-on Tools Group of 23.6% in 2023 compared to 22.1% last year.
Repair Systems & Information Group
(Amounts in millions)
External net sales
Intersegment net sales
Segment net sales
Cost of goods sold
Gross profit
Operating expenses
Segment operating earnings
2023
2022
Change
$
$
1,495.8
285.4
1,781.2
(984.0)
797.2
(364.0)
433.2
84.0 % $
16.0 %
100.0 %
(55.2) %
44.8 %
(20.5) %
24.3 % $
1,362.5
304.4
1,666.9
(934.8)
732.1
(338.8)
393.3
81.7 % $
18.3 %
100.0 %
(56.1) %
43.9 %
(20.3) %
23.6 % $
133.3
(19.0)
114.3
(49.2)
65.1
(25.2)
39.9
9.8 %
(6.2) %
6.9 %
(5.3) %
8.9 %
(7.4) %
10.1 %
Segment net sales of $1,781.2 million in 2023 represented an increase of $114.3 million, or 6.9%, from 2022 levels, reflecting a
$111.7 million, or 6.7%, organic sales increase and $2.6 million of favorable foreign currency translation. The organic gain
primarily reflects double-digit increases in sales of undercar equipment and high single-digit gains in activity with OEM
dealerships.
Segment gross margin in 2023 improved 90 bps from last year primarily due to lower material and other costs, increased sales
volumes and pricing actions, and savings from RCI initiatives.
Segment operating expenses as a percentage of net sales in 2023 rose 20 bps from 2022, primarily reflecting increased
personnel and other costs, partially offset by benefits from sales volume leverage.
As a result of these factors, segment operating earnings of $433.2 million in 2023, including $1.3 million of favorable foreign
currency effects, compared to $393.3 million in 2022, an increase of $39.9 million or 10.1%. Operating margin for the Repair
Systems & Information Group of 24.3% in 2023 compared to 23.6% last year.
34
SNAP-ON INCORPORATED
Financial Services
(Amounts in millions)
Financial services revenue
Financial services expenses
Segment operating earnings
$
$
2023
378.1
(107.6)
270.5
100.0 % $
(28.5) %
71.5 % $
2022
349.7
(83.7)
266.0
100.0 % $
(23.9) %
76.1 % $
Change
28.4
(23.9)
4.5
8.1 %
(28.6) %
1.7 %
Financial services revenue is generally dependent on the size of the average financial services portfolio during the period, as
well as on the average yield on receivables. Financial services revenue of $378.1 million in 2023 increased $28.4 million, or
8.1%, from 2022. In 2023 and 2022, the respective average yields on finance receivables were 17.7% and 17.6%. In 2023 and
2022, the average yields on contract receivables were 8.8% and 8.5%, respectively. Originations of $1,235.5 million in 2023
represented an increase of $82.4 million, or 7.1%, from 2022 levels.
Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provisions
for credit losses. These expenses are generally more dependent on changes in the size of the financial services portfolio than
they are on the revenue of the segment. Financial services expenses in 2023 increased primarily due to higher provisions for
credit losses as compared to those recorded in 2022. The increase in provisions reflects both the growth of the portfolio, as well
as a return to more typical pre-pandemic rates of provision. As a percentage of the average financial services portfolio, financial
services expenses were 4.5% in 2023 and 3.7% in 2022.
As a result of these factors, segment operating earnings in 2023, including $0.6 million of unfavorable foreign currency effects,
increased $4.5 million, or 1.7%, from 2022 levels.
See Note 1 and Note 4 to the Consolidated Financial Statements for additional information on financial services.
Corporate
Snap-on’s general corporate expenses in 2023 of $113.2 million compared to $108.4 million recorded in 2022. The year-over-
year increase primarily reflects higher stock-based and performance-based compensation expense.
2023 ANNUAL REPORT
35
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Quarterly Data
(Amounts in millions, except per share data)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
2023
Net sales
Gross profit
Financial services revenue
Financial services expenses
Net earnings
Net earnings attributable to Snap-on Incorporated
Earnings per share – basic*
Earnings per share – diluted*
Cash dividends paid per share
2022
Net sales
Gross profit
Financial services revenue
Financial services expenses
Net earnings
Net earnings attributable to Snap-on Incorporated
Earnings per share – basic*
Earnings per share – diluted*
Cash dividends paid per share
$
1,183.0 $
1,191.3 $
1,159.3 $
1,196.6 $
4,730.2
589.6
92.6
603.7
93.4
578.2
94.9
577.6
97.2
2,349.1
378.1
(26.3)
(26.5)
(25.5)
(29.3)
(107.6)
254.3
248.7
4.69
4.60
1.62
269.9
264.0
4.98
4.89
1.62
249.1
243.1
4.60
4.51
1.62
261.3
255.3
4.84
4.75
1.86
1,034.6
1,011.1
19.11
18.76
6.72
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
$
1,097.8 $
1,136.6 $
1,102.5 $
1,155.9 $
4,492.8
534.3
87.7
553.5
86.4
532.6
87.3
560.7
88.3
(17.3)
(21.1)
(20.9)
(24.4)
222.7
217.4
4.07
4.00
1.42
237.2
231.5
4.34
4.27
1.42
229.5
223.9
4.21
4.14
1.42
244.5
238.9
4.50
4.42
1.62
2,181.1
349.7
(83.7)
933.9
911.7
17.14
16.82
5.88
* Amounts may not total to annual earnings per share because each quarter and year are calculated separately based on basic and diluted
weighted-average common shares outstanding during each respective period.
36
SNAP-ON INCORPORATED
Fourth Quarter
Results of operations for the fourth quarters of 2023 and 2022 are as follows:
Fourth Quarter
(Amounts in millions)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating earnings before financial services
2023
2022
Change
$ 1,196.6
(619.0)
577.6
(319.7)
257.9
100.0 % $ 1,155.9
(595.2)
(51.7) %
560.7
48.3 %
(312.7)
(26.7) %
248.0
21.6 %
100.0 % $
(51.5) %
48.5 %
(27.0) %
21.5 %
40.7
(23.8)
16.9
(7.0)
9.9
Financial services revenue
Financial services expenses
Operating earnings from financial services
97.2
(29.3)
67.9
100.0 %
(30.1) %
69.9 %
88.3
(24.4)
63.9
100.0 %
(27.6) %
72.4 %
Operating earnings
Interest expense
Other income (expense) – net
Earnings before income taxes
Income tax expense
Net earnings
Net earnings attributable to noncontrolling
interests
Net earnings attributable to Snap-on Inc.
325.8
(12.5)
17.5
330.8
(69.5)
261.3
25.2 %
(1.0) %
1.4 %
25.6 %
(5.4) %
20.2 %
311.9
(12.0)
11.8
311.7
(67.2)
244.5
25.1 %
(1.0) %
1.0 %
25.1 %
(5.4) %
19.7 %
(6.0)
255.3
$
(0.5) %
19.7 % $
(5.6)
238.9
(0.5) %
19.2 % $
8.9
(4.9)
4.0
13.9
(0.5)
5.7
19.1
(2.3)
16.8
(0.4)
16.4
Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a
percentage of the sum of Net sales and Financial services revenue.
3.5 %
(4.0) %
3.0 %
(2.2) %
4.0 %
10.1 %
(20.1) %
6.3 %
4.5 %
(4.2) %
48.3 %
6.1 %
(3.4) %
6.9 %
(7.1) %
6.9 %
Net sales of $1,196.6 million in the fourth quarter of 2023 represented an increase of $40.7 million, or 3.5%, from 2022 levels,
reflecting a $26.1 million, or 2.2%, organic gain, $5.5 million of acquisition-related sales, and $9.1 million of favorable foreign
currency translation.
Gross profit of $577.6 million in the fourth quarter of 2023 compared to $560.7 million last year, an increase of $16.9 million
or 3.0%. Gross margin in the quarter declined 20 bps from the fourth quarter of 2022 primarily due to 20 bps of unfavorable
foreign currency effects. Benefits from lower material and other costs, and savings from the company’s RCI initiatives, were
offset by increased sales in lower-gross-margin businesses.
Operating expenses of $319.7 million in the fourth quarter of 2023 compared to $312.7 million in 2022. Operating expenses as
a percentage of net sales improved 30 bps from last year, primarily reflecting lower corporate expenses and benefits from
higher sales volumes, partially offset by increased personnel and other costs.
Operating earnings before financial services of $257.9 million in the fourth quarter of 2023 compared to $248.0 million in
2022, an increase of $9.9 million or 4.0%. As a percentage of net sales, operating earnings before financial services were 21.6%
compared to 21.5% last year.
Financial services revenue of $97.2 million in the fourth quarter of 2023 compared to $88.3 million last year. Financial services
operating earnings of $67.9 million in the period compared to $63.9 million in 2022.
Operating earnings of $325.8 million in the fourth quarter of 2023 compared to $311.9 million in 2022, an increase of $13.9
million or 4.5%. As a percentage of revenues, operating earnings were 25.2% in the quarter compared to 25.1% last year.
Interest expense in the fourth quarter of 2023 increased $0.5 million compared to last year. See Note 9 to the Consolidated
Financial Statements for additional information on debt and credit facilities.
Other income (expense) – net primarily includes net gains and losses associated with hedging and currency exchange rate
transactions, non-service components of net periodic benefit costs, and interest income. See Note 17 to the Consolidated
Financial Statements for additional information on Other income (expense) – net.
2023 ANNUAL REPORT
37
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
The effective income tax rate on earnings attributable to Snap-on in the fourth quarter was 21.4% in 2023 and 22.0% in 2022.
See Note 8 to the Consolidated Financial Statements for additional information on income taxes.
Net earnings attributable to Snap-on of $255.3 million, or $4.75 per diluted share, in the fourth quarter of 2023 compared to
$238.9 million, or $4.42 per diluted share, in 2022, an increase of $16.4 million or $0.33 per diluted share.
Segment Results
Commercial & Industrial Group
Fourth Quarter
(Amounts in millions)
External net sales
Intersegment net sales
Segment net sales
Cost of goods sold
Gross profit
Operating expenses
Segment operating earnings
2023
2022
Change
$
$
296.7
67.2
363.9
(221.3)
142.6
(88.5)
54.1
81.5 % $
18.5 %
100.0 %
(60.8) %
39.2 %
(24.3) %
14.9 % $
258.2
85.0
343.2
(213.8)
129.4
(81.5)
47.9
75.2 % $
24.8 %
100.0 %
(62.3) %
37.7 %
(23.7) %
14.0 % $
38.5
(17.8)
20.7
(7.5)
13.2
(7.0)
6.2
14.9 %
(20.9) %
6.0 %
(3.5) %
10.2 %
(8.6) %
12.9 %
Segment net sales of $363.9 million in the fourth quarter of 2023 represented an increase of $20.7 million, or 6.0%, from 2022
levels, reflecting an $11.6 million, or 3.3%, organic gain, $5.5 million of acquisition-related sales, and $3.6 million of favorable
foreign currency translation. The organic increase is primarily due to a double-digit gain in sales to customers in critical
industries, partially offset by a double-digit decline in sales of power tools.
Segment gross margin in the fourth quarter improved 150 bps from last year, primarily reflecting increased sales volumes in the
higher-gross-margin critical industry sector, pricing actions, savings from the segment’s RCI initiatives, and 30 bps of benefits
from acquisitions. These improvements were partially offset by 60 bps of unfavorable foreign currency effects.
Segment operating expenses as a percentage of net sales in the fourth quarter rose 60 bps as compared to 2022 primarily due to
a 30 bps impact from acquisitions and increased personnel and other costs.
As a result of these factors, segment operating earnings of $54.1 million in the fourth quarter of 2023, including $1.4 million of
unfavorable foreign currency effects, compared to $47.9 million in 2022, an increase of $6.2 million or 12.9%. Operating
margin for the Commercial & Industrial Group of 14.9% in the quarter compared to 14.0% last year.
Snap-on Tools Group
Fourth Quarter
(Amounts in millions)
Segment net sales
Cost of goods sold
Gross profit
Operating expenses
Segment operating earnings
2023
513.3
(281.2)
232.1
(121.1)
111.0
$
$
100.0 % $
(54.8) %
45.2 %
(23.6) %
21.6 % $
2022
542.7
(308.3)
234.4
(118.3)
116.1
100.0 % $
(56.8) %
43.2 %
(21.8) %
21.4 % $
Change
(29.4)
27.1
(2.3)
(2.8)
(5.1)
(5.4) %
8.8 %
(1.0) %
(2.4) %
(4.4) %
Segment net sales of $513.3 million in the fourth quarter of 2023 represented a decrease of $29.4 million, or 5.4%, from 2022
levels, reflecting a $31.0 million, or 5.7%, organic sales decline, partially offset by $1.6 million of favorable foreign currency
translation. The organic decrease is due to a high single-digit decline in the U.S. operations, partially offset by a mid single-
digit gain in the segment’s international operations.
Segment gross margin in the fourth quarter improved 200 bps from last year, primarily reflecting decreased sales of lower-
gross-margin products.
Segment operating expenses as a percentage of net sales in the fourth quarter rose 180 bps as compared to 2022 primarily due to
the lower sales volumes.
38
SNAP-ON INCORPORATED
As a result of these factors, segment operating earnings of $111.0 million in the fourth quarter of 2023, including $0.1 million
of unfavorable foreign currency effects, compared to $116.1 million in 2022, a decrease of $5.1 million, or 4.4%. Operating
margin for the Snap-on Tools Group of 21.6% in the quarter compared to 21.4% last year.
Repair Systems & Information Group
Fourth Quarter
(Amounts in millions)
External net sales
Intersegment net sales
Segment net sales
Cost of goods sold
Gross profit
Operating expenses
Segment operating earnings
2023
2022
Change
$
$
386.6
64.2
450.8
(247.9)
202.9
(89.6)
113.3
85.8 % $
14.2 %
100.0 %
(55.0) %
45.0 %
(19.9) %
25.1 % $
355.0
82.9
437.9
(241.0)
196.9
(86.3)
110.6
81.1 % $
18.9 %
100.0 %
(55.0) %
45.0 %
(19.7) %
25.3 % $
31.6
(18.7)
12.9
(6.9)
6.0
(3.3)
2.7
8.9 %
(22.6) %
2.9 %
(2.9) %
3.0 %
(3.8) %
2.4 %
Segment net sales of $450.8 million in the fourth quarter of 2023 represented an increase of $12.9 million, or 2.9%, from 2022
levels, reflecting an $8.8 million, or 2.0%, organic sales increase and $4.1 million of favorable foreign currency translation. The
organic gain includes a high single-digit increase in activity with OEM dealerships and a mid single-digit gain in sales of
undercar equipment, partially offset by a high single-digit decline in sales of diagnostic and repair information products to
independent repair shop owners and managers.
Segment gross margin in the fourth quarter was unchanged from last year with benefits from lower material and other costs and
savings from RCI initiatives, offset by increased sales in lower-gross-margin businesses.
Segment operating expenses as a percentage of net sales in the fourth quarter rose 20 bps from 2022, primarily reflecting
increased personnel and other costs.
As a result of these factors, segment operating earnings of $113.3 million in the fourth quarter of 2023, including $0.4 million
of favorable foreign currency effects, compared to $110.6 million in 2022, an increase of $2.7 million or 2.4%. Operating
margin for the Repair Systems & Information Group of 25.1% in the quarter compared to 25.3% last year.
Financial Services
Fourth Quarter
(Amounts in millions)
Financial services revenue
Financial services expenses
Segment operating earnings
$
$
2023
97.2
(29.3)
67.9
100.0 % $
(30.1) %
69.9 % $
2022
88.3
(24.4)
63.9
100.0 % $
(27.6) %
72.4 % $
Change
8.9
(4.9)
4.0
10.1 %
(20.1) %
6.3 %
Financial services revenue of $97.2 million in the fourth quarter of 2023 increased $8.9 million, or 10.1%, from last year. In the
fourth quarters of 2023 and 2022, the respective average yields on finance receivables were 17.8% and 17.6%. In the fourth
quarters of 2023 and 2022, the average yields on contract receivables were 8.9% and 8.6%, respectively. Originations of $303.1
million in the fourth quarter of 2023 represented an increase of $3.4 million, or 1.1%, from 2022 levels.
Financial services expenses in the fourth quarter of 2023 increased primarily due to higher provisions for credit losses as
compared to those recorded in the fourth quarter of 2022. The increase in provisions reflects both the growth of the portfolio, as
well as a return to more typical pre-pandemic rates of provision. As a percentage of the average financial services portfolio,
financial services expenses were 1.2% in the fourth quarter of 2023 and 1.1% in 2022.
As a result of these factors, segment operating earnings in the fourth quarter of 2023 increased $4.0 million, or 6.3%, from 2022
levels.
See Note 1 and Note 4 to the Consolidated Financial Statements for additional information on financial services.
2023 ANNUAL REPORT
39
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Corporate
Snap-on’s fourth quarter 2023 general corporate expenses of $20.5 million compared to $26.6 million last year. The year-over-
year decrease in corporate expenses primarily reflects the recovery of costs associated with a legal matter.
Non-GAAP Supplemental Data
The following non-GAAP supplemental data is presented for informational purposes to provide readers with insight into the
information used by management for assessing the operating performance of Snap-on’s non-financial services (“Operations”)
and Financial Services businesses.
The supplemental Operations data reflects the results of operations and financial position of Snap-on’s tools, diagnostics,
equipment products, software, and other non-financial services operations with Financial Services presented on the equity
method. The supplemental Financial Services data reflects the results of operations and financial position of Snap-on’s U.S. and
international financial services operations. The financing needs of Financial Services are met through intersegment borrowings
and cash generated from Operations; Financial Services is charged interest expense on intersegment borrowings at market rates.
Income taxes are charged to Financial Services on the basis of the specific tax attributes generated by the U.S. and international
financial services businesses. Transactions between the Operations and Financial Services businesses are eliminated to arrive at
the Consolidated Financial Statements.
Non-GAAP Supplemental Consolidating Data – Supplemental Statements of Earnings information for 2023 and 2022 is as
follows:
(Amounts in millions)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating earnings before financial services
Financial services revenue
Financial services expenses
Operating earnings from financial services
Operating earnings
Interest expense
Intersegment interest income (expense) – net
Other income (expense) – net
Earnings before income taxes and equity
earnings
Income tax expense
Earnings before equity earnings
Financial services – net earnings attributable to
Snap-on
Net earnings
Net earnings attributable to noncontrolling
interests
Net earnings attributable to Snap-on
Operations*
Financial Services
2023
2022
2023
2022
$
4,730.2 $
(2,381.1)
2,349.1
(1,309.2)
1,039.9
$
4,492.8
(2,311.7)
2,181.1
(1,239.9)
941.2
— $
—
—
—
—
—
—
—
1,039.9
(49.9)
63.9
67.3
1,121.2
(241.6)
879.6
155.0
1,034.6
—
—
—
941.2
(47.1)
59.3
42.3
995.7
(215.6)
780.1
153.8
933.9
378.1
(107.6)
270.5
270.5
—
(63.9)
0.2
206.8
(51.8)
155.0
—
155.0
(23.5)
1,011.1 $
$
(22.2)
911.7
$
—
155.0 $
—
—
—
—
—
349.7
(83.7)
266.0
266.0
—
(59.3)
0.2
206.9
(53.1)
153.8
—
153.8
—
153.8
* Snap-on with Financial Services presented on the equity method.
40
SNAP-ON INCORPORATED
Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheet Information as of 2023 and 2022 year end is as
follows:
$
(Amounts in millions)
ASSETS
Current assets:
Cash and cash equivalents
Intersegment receivables
Trade and other accounts receivable – net
Finance receivables – net
Contract receivables – net
Inventories – net
Prepaid expenses and other current assets
Total current assets
Property and equipment – net
Operating lease right-of-use assets
Investment in Financial Services
Deferred income tax assets
Intersegment long-term notes receivable
Long-term finance receivables – net
Long-term contract receivables – net
Goodwill
Other intangible assets – net
Pension assets
Other long-term assets
Total assets
$
* Snap-on with Financial Services presented on the equity method.
Operations*
Financial Services
2023
2022
2023
2022
1,001.3 $
15.7
790.6
—
5.5
1,005.9
143.2
2,962.2
536.5
73.8
393.9
51.3
785.6
—
8.3
1,097.4
268.9
130.5
30.2
6,338.6 $
757.1 $
13.4
761.1
—
5.9
1,033.1
149.2
2,719.8
510.7
60.1
363.9
48.4
635.9
—
9.6
1,045.3
275.6
70.6
27.1
5,767.0 $
0.2 $
—
0.7
594.1
115.3
—
7.4
717.7
2.8
0.9
—
24.7
—
1,284.2
399.6
—
—
—
0.1
2,430.0 $
0.1
—
0.6
562.2
104.0
—
5.8
672.7
1.9
1.4
—
21.6
—
1,170.8
374.2
—
—
—
0.1
2,242.7
2023 ANNUAL REPORT
41
—
1.2
13.4
—
3.0
—
25.8
43.4
1,819.7
—
—
—
1.1
14.6
1,878.8
363.9
—
363.9
2,242.7
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheet Information (continued):
(Amounts in millions)
LIABILITIES AND EQUITY
Current liabilities:
Notes payable
Accounts payable
Intersegment payables
Accrued benefits
Accrued compensation
Franchisee deposits
Other accrued liabilities
Total current liabilities
Operations*
Financial Services
2023
2022
2023
2022
$
15.6 $
236.2
—
64.4
99.9
73.3
432.2
921.6
17.2 $
285.8
—
58.6
95.6
73.8
420.8
951.8
— $
1.8
15.7
—
3.0
—
27.4
47.9
Long-term debt and intersegment long-term debt
Deferred income tax liabilities
Retiree health care benefits
Pension liabilities
Operating lease liabilities
Other long-term liabilities
Total liabilities
—
79.2
21.8
82.3
54.0
86.3
1,245.2
—
82.1
23.4
78.6
43.6
84.0
1,263.5
1,970.2
—
—
—
0.6
17.4
2,036.1
Total shareholders’ equity attributable to Snap-on
Noncontrolling interests
Total equity
Total liabilities and equity
5,071.3
22.1
5,093.4
6,338.6 $
4,481.3
22.2
4,503.5
5,767.0 $
393.9
—
393.9
2,430.0 $
$
* Snap-on with Financial Services presented on the equity method.
42
SNAP-ON INCORPORATED
Liquidity and Capital Resources
Snap-on’s growth has historically been funded by a combination of cash provided by operating activities and debt financing.
Snap-on believes that its cash from operations and collections of finance receivables, coupled with its sources of borrowings
and available cash on hand, are sufficient to fund its currently anticipated requirements for scheduled debt repayments,
payments of interest and dividends, new receivables originated by our financial services businesses, capital expenditures,
working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.
Due to Snap-on’s credit rating over the years, external funds have been available at an acceptable cost. As of February 9, 2024,
Snap-on’s long-term debt and commercial paper were rated, respectively: A2 and P-1 by Moody’s Investors Service; A- and
A-2 by Standard & Poor’s; and A and F1 by Fitch Ratings. Snap-on believes that its current credit arrangements are sound and
that the strength of its balance sheet affords the company the financial flexibility, including through access to financial markets
for potential new financing, to respond to both internal growth opportunities and those available through acquisitions. However,
Snap-on cannot provide any assurance that financing will be available in the future on acceptable terms, or that its debt ratings
will not decrease.
The following discussion focuses on information included in the accompanying Consolidated Balance Sheets.
As of 2023 year end, working capital (current assets less current liabilities) of $2,710.4 million represented an increase of
$313.1 million from $2,397.3 million as of 2022 year end primarily as a result of other net changes in working capital discussed
below.
The following represents the company’s working capital position as of 2023 and 2022 year end:
(Amounts in millions)
Cash and cash equivalents
Trade and other accounts receivable – net
Finance receivables – net
Contract receivables – net
Inventories – net
Prepaid expenses and other current assets
Total current assets
Notes payable
Accounts payable
Other current liabilities
Total current liabilities
Working capital
2023
2022
$
$
1,001.5 $
791.3
594.1
120.8
1,005.9
138.4
3,652.0
(15.6)
(238.0)
(688.0)
(941.6)
2,710.4 $
757.2
761.7
562.2
109.9
1,033.1
144.8
3,368.9
(17.2)
(287.0)
(667.4)
(971.6)
2,397.3
Cash and cash equivalents of $1,001.5 million as of 2023 year end represented an increase of $244.3 million from 2022 year-
end levels primarily due to: (i) $1,154.2 million of cash generated from operations; (ii) $833.5 million of cash from collections
of finance receivables; and (iii) $113.6 million of cash proceeds from stock purchase plan and stock option exercises. These
increases in cash and cash equivalents were partially offset by: (i) the funding of $1,029.0 million of new finance receivables;
(ii) dividend payments to shareholders of $355.6 million; (iii) the repurchase of 1,126,000 shares of the company’s common
stock for $294.7 million; (iv) the funding of $95.0 million for capital expenditures; (v) the funding of $42.6 million for
acquisitions; and (vi) net repayments of other short-term borrowings of $1.7 million.
Of the $1,001.5 million of cash and cash equivalents as of 2023 year end, $394.9 million was held outside of the United States.
Snap-on maintains non-U.S. funds in its foreign operations to: (i) provide adequate working capital; (ii) satisfy various
regulatory requirements; and/or (iii) take advantage of business expansion opportunities as they arise. Although the Tax Cuts
and Jobs Act (“Tax Act”) generally eliminated U.S. federal taxation of dividends from foreign subsidiaries, such dividends may
still be subject to state income taxation and foreign withholding taxes. Snap-on periodically evaluates its cash held outside the
United States and may pursue opportunities to repatriate certain foreign cash amounts to the extent that it can be accomplished
in a tax efficient manner.
2023 ANNUAL REPORT
43
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Trade and other accounts receivable – net of $791.3 million as of 2023 year end represented an increase of $29.6 million from
2022 year-end levels primarily due to higher sales, $9.3 million of foreign currency translation and $4.1 million from
acquisitions. Days sales outstanding (trade and other accounts receivable – net as of the respective period end, divided by the
respective trailing 12 months sales, times 360 days) was 60 days and 61 days at the respective 2023 and 2022 year ends.
The current portions of net finance and contract receivables of $714.9 million as of 2023 year end compared to $672.1 million
at 2022 year end. The long-term portions of net finance and contract receivables of $1,692.1 million as of 2023 year end
compared to $1,554.6 million at 2022 year end. The combined $180.3 million increase in net current and long-term finance and
contract receivables compared to 2022 year-end levels is primarily due to an increase in net receivable originations and $9.1
million of foreign currency translation.
Inventories – net of $1,005.9 million as of 2023 year end decreased $27.2 million from 2022 year-end levels primarily due to
$47.8 million of inventory reductions as a result of easing supply chain disruptions, partially offset by $16.6 million of foreign
currency translation and $4.0 million related to acquisitions. As of 2023 and 2022 year end, inventory turns (trailing 12 months
of cost of goods sold, divided by the average of the beginning and ending inventory balance for the trailing 12 months) were 2.3
turns and 2.5 turns, respectively. Inventories accounted for using the first-in, first-out (“FIFO”) method as of 2023 and 2022
year end approximated 59% and 61% of total inventories, respectively. All other inventories are accounted for using the last-in,
first-out (“LIFO”) method. The company’s LIFO reserve was $115.9 million and $108.6 million at 2023 and 2022 year end,
respectively.
Notes payable of $15.6 million as of 2023 year end compared to $17.2 million as of 2022 year end. Average notes payable
outstanding were $17.5 million and $18.6 million in 2023 and 2022, respectively. The 2023 weighted-average interest rate on
such borrowings of 11.0% compared with 9.9% in 2022. At 2023 year end, the weighted-average rate on outstanding notes
payable of 11.1% compared with 10.9% in 2022.
Accounts payable of $238.0 million as of 2023 year end represented a decrease of $49.0 million from 2022 year-end levels,
primarily due to the timing of payments, partially offset by $3.0 million of foreign currency translation and $1.6 million related
to acquisitions.
Other accrued liabilities of $447.4 million as of 2023 year end represented an increase of $11.0 million from 2022 year-end
levels, primarily due to higher income tax and other tax accruals, $3.7 million of foreign currency translation and $0.8 million
related to acquisitions.
Long-term debt of $1,184.6 million as of 2023 year end consisted of: (i) $300.0 million of unsecured 3.25% notes that mature
on March 1, 2027 (the “2027 Notes”); (ii) $400.0 million of unsecured 4.10% notes that mature on March 1, 2048 (“the 2048
Notes”); and (iii) $500.0 million of 3.10% notes that mature on May 1, 2050 (the “2050 Notes”), partially offset by $15.4
million of unamortized debt issuance costs and issuance discounts.
On September 12, 2023, Snap-on entered into a $900 million multicurrency revolving credit facility that terminates on
September 12, 2028 (the “Credit Facility”), which amended and restated in its entirety Snap-on’s previous $800 million
multicurrency revolving credit facility that was set to terminate on September 16, 2024. The Credit Facility contains an
accordion feature that, subject to certain customary conditions, may allow the maximum commitment to be increased by up to
$450 million with the approval of the lenders providing additional commitments. No amounts were borrowed or outstanding
under either Credit Facility during the years ended and as of December 30, 2023 or December 31, 2022.
Borrowings under the Credit Facility bear interest at varying rates based on either: (i) Snap-on’s then-current, long-term debt
ratings; or (ii) Snap-on’s then-current ratio of consolidated debt net of certain cash adjustments (“Consolidated Net Debt”) to
earnings before interest, taxes, depreciation, amortization and certain other adjustments for the preceding four fiscal quarters
then ended (the “Consolidated Net Debt to EBITDA Ratio”). The Credit Facility’s financial covenant requires that Snap-on
maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of Consolidated Net Debt to the sum of
Consolidated Net Debt plus total equity and less accumulated other comprehensive income or loss (the “Leverage Ratio”); or
(ii) a Consolidated Net Debt to EBITDA Ratio not greater than 3.50 to 1.00. Snap-on may, up to two times during any five-year
period during the term of the Credit Facility (including any extensions thereof), elect to increase the maximum 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 December 30,
2023, the company’s actual ratios of 0.05 and 0.18 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. There was no commercial paper issued or outstanding
during the years ended and as of December 30, 2023 or December 31, 2022.
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SNAP-ON INCORPORATED
Snap-on’s Credit Facility and other debt agreements also contain certain usual and customary borrowing, affirmative, negative
and maintenance covenants. As of 2023 year end, Snap-on was in compliance with all covenants of its Credit Facility and other
debt agreements.
Snap-on believes it has sufficient available cash and access to both committed and uncommitted credit facilities to cover its
expected funding needs on both a short-term and long-term basis. Snap-on manages its aggregate short-term borrowings so as
not to exceed its availability under the Credit Facility. Snap-on believes that it can access short-term debt markets,
predominantly through commercial paper issuances and existing lines of credit, to fund its short-term requirements and to
ensure near-term liquidity. Snap-on regularly monitors the credit and financial markets and, if it believes conditions are
favorable, it may take advantage of such conditions to issue long-term debt to further improve its liquidity and capital
resources. Near-term liquidity requirements for Snap-on include payments of interest and dividends, funding to support new
receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans,
and funding for share repurchases and acquisitions, if and as they arise. Snap-on intends to make contributions of $6.0 million
to its foreign pension plans and $3.7 million to its domestic pension plans in 2024, as required by law. Depending on market
and other conditions, Snap-on may make discretionary cash contributions to its pension plans in 2024.
Snap-on’s long-term financing strategy is to maintain continuous access to the debt markets to accommodate its liquidity needs,
including the potential use of commercial paper, additional fixed-term debt and/or securitizations.
The following discussion focuses on information included in the accompanying Consolidated Statements of Cash Flows.
Operating Activities
Net cash provided by operating activities of $1,154.2 million in 2023 increased $479.0 million from $675.2 million in 2022.
The $479.0 million increase is primarily due to a $352.9 million change in net operating assets and liabilities, and a $100.7
million increase in net earnings.
Depreciation expense was $72.2 million in 2023 and $71.5 million in 2022. Amortization expense was $27.1 million in 2023
and $28.7 million in 2022. See Note 6 and Note 7 to the Consolidated Financial Statements for information on property and
equipment and goodwill and other intangible assets.
Investing Activities
Net cash used by investing activities of $331.8 million in 2023 included additions to finance receivables of $1,029.0 million,
partially offset by collections of $833.5 million. Net cash used by investing activities of $206.2 million in 2022 included
additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million. Finance receivables are
comprised of extended-term installment payment contracts to both technicians and independent shop owners (i.e., franchisees’
customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, with
average payment terms of approximately four years.
Net cash used by investing activities in 2023 also included $42.6 million for the acquisitions of Mountz and SAVTEQ. Net cash
used by investing activities in 2022 included $0.5 million of cash provided by acquisitions. See Note 3 to the Consolidated
Financial Statements for information about acquisitions.
Capital expenditures in 2023 and 2022 totaled $95.0 million and $84.2 million, respectively. Capital expenditures in both years
included continued investments related to the company’s execution of its strategic Value Creation Processes. The company also
invested in: (i) new product, efficiency, safety and cost reduction initiatives that are intended to expand and improve its
manufacturing and distribution capabilities worldwide; (ii) new production and machine tooling to enhance manufacturing
operations, as well as ongoing replacements of manufacturing and distribution equipment, particularly in the United States; and
(iii) the ongoing enhancement of the company’s global enterprise resource planning (ERP) management information systems.
Snap-on believes that its cash generated from operations, as well as its available cash on hand and funds available from its
credit facilities will be sufficient to fund the company’s capital expenditure requirements in 2024.
Financing Activities
Net cash used by financing activities of $572.9 million in 2023 included net repayments of other short-term borrowings of $1.7
million. Net cash used by financing activities of $485.0 million in 2022 included net proceeds from other short-term borrowings
of $1.6 million.
2023 ANNUAL REPORT
45
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Proceeds from stock purchase plan and stock option exercises totaled $113.6 million in 2023 and $55.0 million in 2022. In
2023, Snap-on repurchased 1,126,000 shares of its common stock for $294.7 million under its previously announced share
repurchase programs. As of 2023 year end, Snap-on had remaining availability to repurchase up to an additional $282.9 million
in common stock pursuant to its Board’s authorizations. Snap-on repurchased 899,000 shares of its common stock for $198.1
million in 2022. The repurchase of Snap-on common stock to offset dilution related to equity plan issuances or for other
corporate purposes is at the company’s discretion, subject to prevailing financial and market conditions. Snap-on believes that
its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to
fund the company’s additional share repurchases, if any.
Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. Cash dividends paid in
2023 and 2022 totaled $355.6 million and $313.1 million, respectively. On November 2, 2023, the company announced that its
Board increased the quarterly cash dividend by 14.8% to $1.86 per share ($7.44 per share annualized). Quarterly dividends in
2023 were $1.86 per share in the fourth quarter and $1.62 per share in the first three quarters ($6.72 per share for the year).
Quarterly dividends in 2022 were $1.62 per share in the fourth quarter and $1.42 per share in the first three quarters ($5.88 per
share for the year).
Cash dividends paid per common share
Cash dividends paid as a percentage of prior-year retained earnings
2023
2022
$
$
6.72
5.6%
5.88
5.5%
Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities,
will be sufficient to pay dividends in 2024.
Contractual Obligations and Commitments
Snap-on’s contractual obligations for long-term debt and operating and finance leases are reflected in the Consolidated Balance
Sheets; see Note 9 and Note 16 to the Consolidated Financial Statements for information on the company’s long-term debt and
leases. Snap-on also enters into contracts for future purchases in the normal course of business. As of year-end 2023, the
company had $138.0 million in purchase commitments to be paid in 2024 and $11.4 million to be paid thereafter.
Snap-on intends to make contributions of $6.0 million to its foreign pension plans and $3.7 million to its domestic pension
plans in 2024, as required by law. Depending on market and other conditions, Snap-on may make additional discretionary cash
contributions to its pension plans in 2024; see Note 11 and Note 12 to the Consolidated Financial Statements for information
on the company’s benefit plans and payments.
Due to the uncertainty of the timing of settlements with taxing authorities, Snap-on is unable to make reasonably reliable
estimates of the period of cash settlement of unrecognized tax benefits totaling $7.5 million for its remaining uncertain tax
liabilities. See Note 8 to the Consolidated Financial Statements for information on income taxes.
Environmental Matters
Snap-on is subject to various federal, state and local government requirements regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment. Snap-on’s policy is to comply with these requirements
and the company believes that, as a general matter, its policies, practices and procedures are properly designed to prevent
unreasonable risk of environmental damage, and of resulting financial liability, in connection with its business. Some risk of
environmental damage is, however, inherent in some of Snap-on’s operations and products, as it is with other companies
engaged in similar businesses.
Snap-on is and has been engaged in the handling, manufacture, use and disposal of many substances classified as hazardous or
toxic by one or more regulatory agencies. Snap-on believes that, as a general matter, its handling, manufacture, use and disposal
of these substances are in accordance with environmental laws and regulations. It is possible, however, that future knowledge or
other developments, such as improved capability to detect substances in the environment or increasingly strict environmental
laws and standards and enforcement policies, could affect the company’s handling, manufacture, use or disposal of these
substances.
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SNAP-ON INCORPORATED
In recent years there has been increased public awareness, concern and focus on environmental and sustainability issues,
including matters related to climate change. The current focus on these matters is expected to result in additional and/or more
restrictive regulations, and industry or third-party requirements and standards to reduce or mitigate climate change as well as
other environmental or sustainability risks. The timing of certain of these regulations and requirements has yet to be
determined. Snap-on is monitoring developments in this area.
New Accounting Standards
See Note 1 to the Consolidated Financial Statements for information on new accounting standards.
Critical Accounting Policies and Estimates
The Consolidated Financial Statements and related notes contain information that is pertinent to management’s discussion and
analysis. The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. These estimates are generally based on historical experience,
current conditions and on various other assumptions that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from
other sources, as well as identifying and assessing our accounting treatment with respect to commitments and contingencies.
Actual results could differ from those estimates.
In addition to the company’s significant accounting policies described in Note 1 to the Consolidated Financial Statements,
Snap-on considers the following policies and estimates to be the most critical in understanding the judgments that are involved
in the preparation of the company’s consolidated financial statements and the uncertainties that could impact the company’s
financial position, results of operations and cash flows.
Allowance for Credit Losses on Finance Receivables: The allowance for credit losses on finance receivables is maintained at a
level management believes is adequate to cover expected losses in Snap-on’s finance receivables portfolio as of the reporting
date. The allowance represents management’s estimate of the expected losses in the company’s finance receivables portfolio
based on ongoing assessments and evaluations of credit losses over the remaining contractual life of the receivables portfolio
considering collectability, historical loss experience, current conditions and future market changes. Determination of the proper
level of allowance requires management to exercise judgment about the timing, frequency and severity of credit losses that
could materially affect the provision for credit losses and, as a result, net earnings. The allowance takes into consideration
numerous quantitative and qualitative factors that include receivable type, historical loss experience, delinquency trends,
collection experience, current and future economic conditions and credit risk characteristics. Some of these factors are
influenced by items such as the customers’ financial condition, past payment experience, credit bureau and proprietary Snap-on
credit model information, as well as the value of the underlying collateral. Changes in economic conditions and assumptions,
including the resulting credit quality metrics relative to the performance of the finance receivables portfolio, create uncertainty
and could result in changes to both the allowance for credit losses and provision for credit losses.
Management utilizes established policies and procedures in an effort to ensure the estimates and assumptions are well
controlled, reviewed and consistently applied. As of December 30, 2023, the ratio of the allowance for credit losses to finance
receivables was 3.48%. As of December 31, 2022, the allowance ratio was 3.39%. While management believes it exercises
prudent judgment and applies reasonable assumptions in establishing its estimates for allowances for finance receivables, there
can be no assurance that changes in economic conditions or other factors would not adversely impact the financial health of our
customers and result in changes to the estimates used in the allowance calculation. For reference, a 100 bps increase in the
allowance ratios for finance receivables as of December 30, 2023, would have increased Snap-on’s 2023 provision for credit
losses and related allowance for credit losses by approximately $19.4 million.
For additional information on Snap-on’s allowances for credit losses, see Note 1 and Note 4 to the Consolidated Financial
Statements.
Impairment of Goodwill: Goodwill is tested for impairment annually or more frequently if events or changes in circumstances
indicate that the assets might be impaired. Annual impairment tests are performed by the company in the second quarter of each
year using information available as of April month end.
2023 ANNUAL REPORT
47
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Snap-on evaluates the recoverability of goodwill by estimating the future discounted cash flows of the businesses to which the
goodwill relates. Estimated cash flows and related goodwill are grouped at the reporting unit level. The company has
determined that its reporting units for testing goodwill impairment are its operating segments or components of an operating
segment that constitute a business for which discrete financial information is available and for which segment management
regularly reviews the operating results. Within its four reportable operating segments, the company has identified 11 reporting
units.
Snap-on evaluates the recoverability of goodwill by utilizing an income approach that estimates the fair value of the future
discounted cash flows of the reporting units to which the goodwill relates. The future projections, which are based on both past
performance and the projections and assumptions used in the company’s operating plans, are subject to change as a result of
changing economic and competitive conditions. This approach reflects management’s internal outlook at the reporting units,
which management believes provides the best determination of value due to management’s insight and experience with the
reporting units. Significant estimates used by management in the discounted cash flows methodology include estimates of
future cash flows based on expected growth rates, price increases, working capital levels, expected benefits from RCI
initiatives, and a weighted-average cost of capital that reflects the risk profile of the reporting unit being tested. The company’s
methodologies for valuing goodwill are applied consistently on a year-over-year basis; the assumptions used in performing the
second quarter 2023 impairment calculations were evaluated in light of then-current market and business conditions. Snap-on
continues to believe that the future discounted cash flow valuation model provides the most reasonable and meaningful fair
value estimate based upon the reporting units’ projections of future operating results and cash flows and replicates how market
participants would value the company’s reporting units in an orderly transaction.
In the event the fair value of a reporting unit is less than the carrying value, including goodwill, the company would then record
an impairment charge based on the excess of a reporting units carrying amount over its fair value.
Inherent in fair value determinations are significant judgments and estimates, including material assumptions about future
revenue, profitability and cash flows, the company’s operational plans and its interpretation of current economic indicators.
Should the operations of the businesses with which goodwill is associated incur 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, some or all of the recorded goodwill could be subject to impairment and
could result in a material adverse effect on Snap-on’s financial position or results of operations.
Snap-on completed its annual impairment testing of goodwill in the second quarter of 2023, the results of which did not result
in any impairment. As of 2023 year end, the company has no accumulated impairment losses. Although the company
consistently uses the same methods in developing the assumptions and estimates underlying the fair value calculations, such
estimates are uncertain by nature and can vary from actual results. In performing its annual impairment testing the company
performed a sensitivity analysis on the material assumptions used in the discounted cash flow valuation models for each of its
11 reporting units. Based on the company’s second quarter 2023 impairment testing, and assuming a hypothetical 10% decrease
in the estimated fair values of each of its 11 reporting units, the hypothetical fair value of each of the company’s 11 reporting
units would have been greater than its carrying value. See Note 7 to the Consolidated Financial Statements for additional
information about goodwill.
Pension Benefits: The pension benefit obligation and related pension expense are calculated in accordance with GAAP and are
impacted by certain actuarial assumptions. Changes in these assumptions are primarily influenced by factors outside of
Snap-on’s control, such as changes in economic conditions, and can have a significant effect on the amounts reported in the
financial statements. Snap-on believes that the two most critical assumptions are (i) the expected return on plan assets; and
(ii) the assumed discount rate.
Snap-on’s domestic pension plans have a long-term investment horizon and a total return strategy that emphasizes a capital
growth objective. In 2023, the long-term investment performance objective for Snap-on’s domestic plans’ assets was to achieve
net of expense returns that met or exceeded the 7.5% domestic expected return on plan assets assumption. Snap-on uses a three-
year, market-related value asset method of amortizing the difference between actual and expected returns on its domestic plans’
assets. As of 2023 year end, Snap-on’s domestic pension plans’ assets comprised approximately 86% of the company’s
worldwide pension plan assets.
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SNAP-ON INCORPORATED
Based on forward-looking capital market expectations, Snap-on selected an expected return on plan assets assumption for its
U.S. pension plans of 7.5%, the same rate used in 2023, to be used in determining pension expense for 2024. In estimating the
domestic expected return on plan assets, Snap-on utilizes a nominal returns forecasting method. For each asset class, future
returns are estimated by identifying the premium of riskier asset classes over lower risk alternatives. The methodology
constructs expected returns using a “building block” approach to the individual components of total return. These forecasts are
stated in both nominal and real (after inflation) terms. This process first considers the long-term historical return premium based
on the longest set of data available for each asset class. These premiums, calculated using the geometric mean, are then adjusted
based on current relative valuation levels, macro-economic conditions, and the expected alpha related to active investment
management. The asset return assumption is also adjusted by an implicit expense load for estimated administrative and
investment-related expenses. Since asset allocation is a key determinant of expected investment returns, the current and
expected mix of plan assets are also considered when setting the assumption.
Pension expense increases as the expected rate of return on plan assets decreases. Lowering the expected rate of return
assumption for Snap-on’s domestic pension plans’ assets by 50 bps would have increased Snap-on’s 2023 domestic pension
expense by approximately $6.2 million.
The objective of Snap-on’s discount rate assumption is to reflect the rate at which the pension benefits could be effectively
settled. The domestic discount rate as of 2023 and 2022 year end was selected based on a cash flow matching methodology
developed by the company’s outside actuaries that incorporates a review of current economic conditions. This methodology
matches the plans’ yearly projected cash flows for benefits and service costs to those of hypothetical bond portfolios using
high-quality, AA rated or better, corporate bonds from either Moody’s Investors Service or Standard & Poor’s credit rating
agencies available at the measurement date. This technique calculates bond portfolios that produce adequate cash flows to pay
the plans’ projected yearly benefits and then selects the portfolio with the highest yield and uses that yield as the recommended
discount rate.
The selection of the 5.5% weighted-average discount rate for Snap-on’s domestic pension plans as of 2023 year end (compared
to 5.5% as of 2022 year end) represents the single rate that produces the same present value of cash flows as the estimated
benefit plan payments. Lowering Snap-on’s domestic discount rate assumption by 50 bps would have increased Snap-on’s 2023
domestic pension expense and projected benefit obligation by approximately $1.5 million and $48.1 million, respectively. As of
2023 year end, Snap-on’s domestic projected benefit obligation comprised approximately 84% of Snap-on’s worldwide
projected benefit obligation. The weighted-average discount rate for Snap-on’s foreign pension plans of 4.3% (compared to
4.8% as of 2022 year end) represents the single rate that produces the same present value of cash flows as the estimated benefit
plan payments. Lowering Snap-on’s foreign discount rate assumption by 50 bps would have increased Snap-on’s 2023 foreign
pension expense and projected benefit obligation by approximately $0.9 million and $13.5 million, respectively.
Actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or market-related value of
assets are amortized on a straight-line basis over the average remaining service period of active participants or over the average
remaining life expectancy for plans with primarily inactive participants. Prior service costs and credits resulting from plan
amendments are amortized in equal annual amounts over the average remaining service period of active participants or over the
average remaining life expectancy for plans with primarily inactive participants.
Pension income in 2023 was $19.0 million and Snap-on expects to have pension income of approximately $8.0 million in 2024,
primarily reflecting higher amortization of pension actuarial losses. The projected 2024 pension income is based on benefit plan
status, weighted average discount rates, expected returns on plan assets, and other factors. To determine the 2024 net periodic
benefit cost, Snap-on is using weighted-average discount rates for its domestic and foreign pension plans of 5.5% and 4.3%,
respectively, and an expected return on plan assets for its domestic pension plans of 7.5%. The expected returns on plan assets
for foreign pension plans ranged from 2.2% to 6.7% as of 2023 year end. See Note 11 to the Consolidated Financial Statements
for additional information on pension plans.
2023 ANNUAL REPORT
49
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Outlook
We believe that our markets and our operations possess and have demonstrated continuing and considerable resilience against
the uncertainties of the current environment. In 2024, Snap-on expects to make ongoing progress along its defined runways for
coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its
professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas,
including extending in critical industries, where the cost and penalties for failure can be high. In pursuit of these initiatives, it is
projected that capital expenditures in 2024 will be in a range of $100 million to $110 million.
Snap-on currently anticipates that its full-year 2024 effective income tax rate will be in the range of 22% to 23%.
50
SNAP-ON INCORPORATED
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
Market, Credit and Economic Risks
Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments.
Snap-on is exposed to market risk from changes in interest rates and foreign currency exchange rates. Snap-on is also exposed
to market risk associated with the stock-based portion of its deferred compensation plans. Snap-on monitors its exposure to
these risks and attempts to manage the underlying economic exposures through the use of financial instruments such as foreign
currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements
(“equity forwards”). Snap-on does not use derivative instruments for speculative or trading purposes. Snap-on’s broad-based
business activities help to reduce the impact that volatility in any particular area or related areas may have on its operating
earnings as a whole. Snap-on’s management takes an active role in the risk management process and has developed policies and
procedures that require specific administrative and business functions to assist in the identification, assessment and control of
various risks.
Foreign Currency Risk Management
Snap-on has significant international operations and is subject to certain risks inherent with foreign operations that include
currency fluctuations. Foreign currency exchange risk exists to the extent that Snap-on has payment obligations or receipts
denominated in currencies other than the functional currency, including intercompany loans denominated in foreign currencies.
To manage these exposures, Snap-on identifies naturally offsetting positions and then purchases hedging instruments to protect
the residual net exposures. See Note 10 to the Consolidated Financial Statements for information on foreign currency risk
management.
Interest Rate Risk Management
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. Treasury lock agreements may be used to manage the potential change in
interest rates in anticipation of the issuance of fixed rate debt. See Note 10 to the Consolidated Financial Statements for
information on interest rate risk management.
Snap-on utilizes a Value-at-Risk (“VAR”) model to determine the potential one-day loss in the fair value of its interest rate and
foreign exchange-sensitive financial instruments from adverse changes in market factors. The VAR model estimates were made
assuming normal market conditions and a 95% confidence level. Snap-on’s computations are based on the inter-relationships
among movements in various currencies and interest rates (variance/co-variance technique). These inter-relationships were
determined by observing interest rate and foreign currency market changes over the preceding quarter.
The estimated maximum potential net one-day loss in fair value, calculated using the VAR model, as of 2023 and 2022 year
end was $15.2 million, consisting of a $15.8 million loss on interest rate-sensitive financial instruments and a $0.6 million gain
on foreign currency-sensitive financial instruments; and $18.2 million, consisting of a $18.0 million loss on interest rate-
sensitive financial instruments and a $0.2 million loss on foreign currency-sensitive financial instruments, respectively. The
VAR model is a risk management tool and does not purport to represent actual losses in fair value that will be incurred by
Snap-on, nor does it consider the potential effect of favorable changes in market factors.
Stock-based Deferred Compensation Risk Management
Snap-on manages market risk associated with the stock-based portion of its deferred compensation plans through the use of
equity forwards. Equity forwards are used to aid in offsetting the 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. See Note 10 to the
Consolidated Financial Statements for additional information on stock-based deferred compensation risk management.
2023 ANNUAL REPORT
51
Credit Risk
Credit risk is the possibility of loss from a customer’s failure to make payments according to contract terms. Prior to extending
credit, each customer is evaluated, taking into consideration various factors, including the customer’s financial condition, past
payment experience, credit bureau information, and other financial and qualitative factors that may affect the customer’s ability
to repay, as well as the value of the underlying collateral. Finance receivable credit risk is also monitored regularly through the
use of internal proprietary custom scoring models to evaluate each transaction at the time of the application for credit. Snap-on
evaluates credit quality through the use of an internal proprietary measuring system that provides a framework to analyze
finance receivables on the basis of risk factors of the individual obligor as well as transaction specific risk. The finance
receivables are typically monitored through an asset quality review process that closely monitors past due accounts and initiates
a progressive collection action process when appropriate.
Counterparty Risk
Snap-on is exposed to credit losses in the event of non-performance by the counterparties to its various financial agreements,
including its foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity
forward agreements. Snap-on does not obtain collateral or other security to support financial instruments subject to credit risk,
but monitors the credit standing of the counterparties and generally enters into agreements with financial institution
counterparties with a credit rating of A- or better. Snap-on does not anticipate non-performance by its counterparties, but cannot
provide assurances.
Economic Risk
Economic risk is the possibility of loss resulting from economic instability in certain areas of the world. Snap-on continually
monitors its exposure in these markets. For example, the company is monitoring the continuing global economic impact of and
developments related to Russia’s invasion of Ukraine and the conflict in the Middle East. While inflation has become more
prevalent in the world economy, Snap-on has taken steps to control and offset associated cost increases through its supply chain
management, pricing actions, and deployment of Rapid Continuous Improvement (“RCI”). In addition, the company continues
to monitor developments resulting from the United Kingdom’s exit from the European Union, and the effects this may have on
the world economy and the company.
As a result of the above market, credit and economic risks, net earnings and revenues in any particular period may not be
representative of full-year results and may vary significantly from year to year.
Commodity Risk
Snap-on is a purchaser of certain commodities such as steel, natural gas and electricity. The company is also a purchaser
of components and parts that are integrated into the company’s end products, as well as the purchaser of certain finished goods,
all of which may contain various commodities including steel, aluminum, nickel, copper and others. Snap-on’s supply of raw
materials and purchased components are generally and readily available from numerous suppliers, and the company
continuously works to expand and enhance supplier relationships to meet its supply needs.
The principal raw material used in the manufacture of the company’s products is steel, which the company purchases in
competitive, price-sensitive markets. To meet Snap-on’s high quality standards, the company’s steel requirements range from
specialized alloys, which are available only from a limited group of approved suppliers, to common alloys, which are available
from multiple suppliers. Some of these materials have been, and in the future may be, in short supply, particularly in the event
of mill shutdowns or production cut backs, as well as from supply chain disruptions or inefficiencies, some of which may be
associated with significant weather or climate-related events. As some steel alloys require specialized manufacturing
procedures, Snap-on could experience shortages if it were required to use an alternative manufacturer on short notice. Steel and
other raw materials, components and certain finished goods can exhibit price and demand cyclicality, including as a result of
tariffs and other trade protection measures. Associated unexpected price increases could result in an erosion of product margins
or require Snap-on to increase prices to customers to maintain margins.
To the extent that commodity prices increase and the company does not have firm pricing agreements with its suppliers, the
company may experience margin declines to the extent that it is not able to increase the selling prices of its products.
52
SNAP-ON INCORPORATED
Item 8: Financial Statements and Supplementary Data
The financial statements and schedules are listed in Part IV, Item 15(a) and are incorporated by reference into this Item 8.
Item 9: Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A: Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Snap-on maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that material
information relating to the company and its consolidated subsidiaries is timely communicated to the officers who certify
Snap-on’s financial reports and to other members of senior management and the Board, as appropriate.
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the company’s management
evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and
operation of the company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of December 30, 2023. Based upon their evaluation of these disclosure controls and procedures, the Chief
Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of
December 30, 2023, to ensure that information required to be disclosed by the company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and
Exchange Commission rules and forms, and to ensure that information required to be disclosed by the company in the reports it
files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its
principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure.
Changes in Internal Control
There has been no change in the company’s internal control over financial reporting during the quarter ended December 30,
2023, that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial
reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)).
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Under the supervision
and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated
the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on this assessment, the
company’s management believes that, as of December 30, 2023, our internal control over financial reporting was effective at a
reasonable assurance level. The company’s internal control over financial reporting as of December 30, 2023, has been audited
by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its attestation report, which is
included herein.
Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our internal control
over financial reporting will prevent all errors or fraud. Because of inherent limitations, a system of internal control over
financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of
changes in conditions, the effectiveness of internal control over financial reporting may vary over time.
2023 ANNUAL REPORT
53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Snap-on Incorporated:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Snap-on Incorporated and subsidiaries (the “Company”) as of
December 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 30, 2023, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 30, 2023, of the Company and our
report dated February 15, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 15, 2024
54
SNAP-ON INCORPORATED
Item 9B: Other Information
Executive Officer and Director Rule 10b5-1 Trading Arrangements
Historically, the company’s executive officers and directors have entered into Rule 10b5-1 trading arrangements periodically.
Now, in accordance with the new disclosure requirement set forth in Item 408(a) of Regulation S-K, the following table
discloses any officer (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) or director who
adopted a contract, instruction or written plan for the sale of securities of the company intended to satisfy the affirmative
defense conditions of Rule 10b5-1(c) during the quarterly period ended December 30, 2023:
Name and Title
Type of Plan
Adoption
Date*
Duration or
End Date
Aggregate Number of
Securities to be Sold
Nicholas T. Pinchuk
Chairman, President and
Chief Executive Officer
Rule 10b5-1
trading
arrangement
October 26,
2023
December 11,
2024
130,000
Aldo J. Pagliari
Senior Vice President -
Finance and Chief
Financial Officer
Rule 10b5-1
trading
arrangement
October 24,
2023
February 12,
2025
34,000
Description of
Trading Arrangement
Exercises of vested
stock options expiring
in February 2025, and
sales of shares to cover
exercise price and
estimated tax
withholding
Exercises of vested
stock options expiring
in February 2025, and
sales of shares to cover
exercise price and
estimated tax
withholding
*Trading under the Rule 10b5-1 trading arrangement will not commence until after the applicable waiting period and the
conclusion of each officer’s prior Rule 10b5-1 trading arrangement.
Other than as disclosed above, no other officer or director adopted, modified or terminated a contract, instruction or written plan
for the purchase or sale of securities of the company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or
a non-Rule 10b5-1 trading arrangement.
Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
2023 ANNUAL REPORT
55
PART III
Item 10: Directors, Executive Officers and Corporate Governance
Incorporated by reference to the sections entitled “Item 1: Election of Directors,” “Corporate Governance Practices and Board
Information” and “Other Information” in Snap-on’s 2024 Annual Meeting Proxy Statement, which is expected to be mailed to
shareholders on or about March 12, 2024 (the “2024 Proxy Statement”).
The Section 16(a) filing compliance disclosure pursuant to Item 405 of Regulation S-K is contained in Snap-on’s 2024 Proxy
Statement in the section entitled “Other Information – Delinquent Section 16(a) Reports,” and is incorporated herein by
reference.
Information about our Executive Officers
Information regarding Snap-on’s executive officers, including their ages, business experience (for at least the last five years)
and titles as of December 30, 2023, is presented below:
Nicholas T. Pinchuk (77) – Chairman of the Board of Directors since 2009, President and Chief Executive Officer since
December 2007, and President and Chief Operating Officer during 2007. Senior Vice President and President – Worldwide
Commercial & Industrial Group from 2002 to 2007. Prior to joining Snap-on, Mr. Pinchuk held various positions, including
President of Global Refrigeration Operations and President of Asia Pacific Operations, at Carrier Corporation, a producer of air
conditioning, heating and refrigeration systems, and a subsidiary of United Technologies Corporation. Mr. Pinchuk served as an
officer of the U.S. Army in Vietnam.
Aldo J. Pagliari (69) – Senior Vice President – Finance and Chief Financial Officer since 2010.
Jesus M. Arregui (58) – Senior Vice President and President – Commercial Group since 2019. President of SNA Europe from
2015 to 2019.
Anup R. Banerjee (73) – Senior Vice President – Human Resources and Chief Development Officer since 2015.
Iain Boyd (61) – Vice President – Operations Development since 2015.
Timothy L. Chambers (59) – Senior Vice President and President – Snap-on Tools Group since 2019. President of Commercial
Group from 2015 to 2019.
June C. Lemerand (61) – Vice President and Chief Information Officer since 2017.
Richard T. Miller (53) – Vice President, General Counsel and Secretary since 2018.
Marty V. Ozolins (52) – Vice President and Controller since 2021. Vice President, and formerly Director, of Internal Audit from
2016 to 2021.
Thomas J. Ward (71) – Senior Vice President and President – Repair Systems & Information Group since 2010.
Snap-on’s executive officers include a woman, a veteran of the U.S. Army, and two executives who are ethnically diverse.
Additionally, there is no family relationship among the executive officers and there has been no involvement in legal
proceedings during the past 10 years that would be material to the evaluation of the ability or integrity of any of the executive
officers. Executive officers may either be elected by the Board or may be appointed by the Chief Executive Officer at the
regular meeting of the Board that follows the Annual Shareholders’ Meeting, which is ordinarily held in April each year, or at
such other times as new positions are created or vacancies must be filled.
Code of Ethics and Website Disclosure
Snap-on has adopted a written code of ethics that applies to its Chief Executive Officer, Chief Financial Officer, Vice President
and Controller, and all other financial officers and executives performing similar functions. Snap-on has posted a copy of the
code of ethics in the “Investors” section of the company’s website at www.snapon.com. Snap-on will also post any amendments
to these documents, or information about any waivers granted to directors or executive officers with respect to the Code of
Business Conduct and Ethics, on the company’s website at www.snapon.com.
Snap-on intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding amendments to, or waivers from,
the code of ethics by posting such information in the “Investors” section of the company’s website at www.snapon.com.
56
SNAP-ON INCORPORATED
Item 11: Executive Compensation
The information required by Item 11 is contained in Snap-on’s 2024 Proxy Statement in the sections entitled “Executive
Compensation,” “Board Compensation,” “Compensation Committee Report,” and “Other Information” and is incorporated
herein by reference.
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information about Snap-on’s equity compensation plans at 2023 year end:
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
2,324,586 (1)
$179.53(2)
3,380,444 (3)
62,015 (4)
Not Applicable
- (5)
2,386,601
$179.53 (2)
3,380,444 (5)
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved by
security holders
Total
(1)
Includes (i) stock options and stock appreciation rights (“SARs”) to acquire 2,236,949 shares granted under the 2011 Incentive Stock and Awards Plan
(the “2011 Plan”); (ii) 80,623 shares represented by restricted stock units granted under the 2011 Plan; and (iii) 7,014 shares represented by deferred
share units under the Directors’ Fee Plan. Excludes 314,451 shares issuable in connection with the vesting of performance share awards under the 2011
Plan. Also excludes shares of common stock that may be issuable under the employee and franchisee stock purchase plans.
(2) Reflects only the weighted-average exercise price of outstanding stock options and SARs granted under the 2011 Plan and does not include shares
represented by deferred share units under the Directors’ Fee Plan and shares issuable in connection with the vesting of restricted stock units or
performance units under the 2011 Plan for which there are no exercise prices. Also excludes shares of common stock that may be issuable under the
employee and franchisee stock purchase plans.
Includes (i) 2,633,565 shares reserved for issuance under the 2011 Plan; (ii) 195,281 shares reserved for issuance under the Directors’ Fee Plan; and (iii)
551,598 shares reserved for issuance under the employee stock purchase plan.
(3)
(4) Consists of deferred share units under Snap-on’s Deferred Compensation Plan, which allows elected and appointed officers of Snap-on to defer all or a
percentage of their respective annual salary and/or incentive compensation. The deferred share units are payable in shares of Snap-on common stock on
a one-for-one basis and are calculated at fair market value. Shares of common stock delivered under the Deferred Compensation Plan are previously
issued shares reacquired and held by Snap-on.
(5) The Deferred Compensation Plan provides that Snap-on will make available, as and when required, a sufficient number of shares of common stock to
meet the needs of the plan. It further provides that such shares shall be previously issued shares reacquired and held by Snap-on.
The additional information required by Item 12 is contained in Snap-on’s 2024 Proxy Statement in the sections entitled
“Executive Compensation,” “Security Ownership of Certain Beneficial Owners and Management,” and “Other Information,”
and is incorporated herein by reference.
Item 13: Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference to the sections entitled “Corporate Governance Practices and Board Information – Board
Information” and “Other Information – Transactions with the Company” in Snap-on’s 2024 Proxy Statement.
Item 14: Principal Accountant Fees and Services
Incorporated by reference to the section entitled “Deloitte & Touche LLP Fee Disclosure” in Snap-on’s 2024 Proxy Statement.
2023 ANNUAL REPORT
57
PART IV
Item 15: Exhibit and Financial Statement Schedules
Item 15(a): Documents Filed as Part of This Report:
1. List of Financial Statements
Unless otherwise indicated, references to “fiscal 2023” or “2023” refer to the fiscal year ended December 30, 2023; references
to “fiscal 2022” or “2022” refer to the fiscal year ended December 31, 2022; and references to “fiscal 2021” or “2021” refer to
the fiscal year ended January 1, 2022. References to 2023, 2022 and 2021 year end refer to December 30, 2023, December 31,
2022, and January 1, 2022, respectively.
The following consolidated financial statements of Snap-on and the Report of Independent Registered Public Accounting Firm
thereon, are filed as part of this report:
•
•
•
•
•
•
•
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34).
Consolidated Statements of Earnings for the 2023, 2022 and 2021 fiscal years.
Consolidated Statements of Comprehensive Income for the 2023, 2022 and 2021 fiscal years.
Consolidated Balance Sheets as of 2023 and 2022 year end.
Consolidated Statements of Equity for the 2023, 2022 and 2021 fiscal years.
Consolidated Statements of Cash Flows for the 2023, 2022 and 2021 fiscal years.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
All schedules are omitted because they are not applicable, or the required information is included in the consolidated financial
statements or notes thereto.
3. List of Exhibits(*)
(3)
(4)
(a)
(b)
(a)
(b)
(c)
(d)
(e)
(e)(1)
(e)(2)
(e)(3)
(e)(4)
Restated Certificate of Incorporation of Snap-on Incorporated, as amended through April 25, 2013 (incorporated by
reference to Exhibit 3.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended September 28,
2013 (Commission File No. 1-7724))
Bylaws of Snap-on Incorporated, as amended and restated as of April 27, 2023 (incorporated by reference to
Exhibit 3.1 to Snap-on’s Current Report on Form 8-K dated April 27, 2023 (Commission File No. 1-7724))
Indenture, dated as of January 8, 2007, between Snap-on Incorporated and U.S. Bank National Association as
trustee (incorporated by reference to Exhibit (4)(b) to Form S-3 Registration Statement (Registration No.
333-139863))
Officer’s Certificate, dated as of February 21, 2017, providing for the $300,000,000 3.25% Notes due 2027 (the
“2027 Notes”) (incorporated by reference to Exhibit 4.2 to Snap-on’s Current Report on Form 8-K dated February
15, 2017 (Commission File No. 1-7724))
Officer’s Certificate, dated as of February 26, 2018, providing for the $400,000,000 4.10% Notes due 2048 (the
“2048 Notes”) (incorporated by reference to Exhibit 4.2 to Snap-on’s Current Report on Form 8-K dated February
20, 2018 (Commission File No. 1-7724))
Officer’s Certificate, dated as of April 30, 2020, providing for the $500,000,000 3.10% Notes due 2050 (the “2050
Notes”) (incorporated by reference to Exhibit 4.2 to Snap-on’s Current Report on Form 8-K dated April 27, 2020
(Commission File No. 1-7724))
Description of Securities
Description of Common Stock (incorporated by reference to Exhibit 4(e)(1) to Snap-on’s Annual Report on Form
10-K for the fiscal year ended December 28, 2019 (Commission File No. 1-7724))
Description of 2027 Notes (incorporated by reference to Exhibit 4(e)(3) to Snap-on’s Annual Report on Form 10-K
for the fiscal year ended December 28, 2019 (Commission File No. 1-7724))
Description of 2048 Notes (incorporated by reference to Exhibit 4(e)(4) to Snap-on’s Annual Report on Form 10-K
for the fiscal year ended December 28, 2019 (Commission File No. 1-7724))
Description of 2050 Notes (incorporated by reference to Exhibit 4(f)(5) to Snap-on’s Annual Report on Form 10-K
for the fiscal year ended January 2, 2021 (Commission File No. 1-7724))
58
SNAP-ON INCORPORATED
Except for the foregoing, Snap-on and its subsidiaries have no unregistered long-term debt agreement for which the related
outstanding debt exceeds 10% of consolidated total assets as of December 30, 2023. Copies of debt instruments for which the
related debt is less than 10% of consolidated total assets will be furnished to the Commission upon request.
(10)
Material Contracts
(a)
(b)
(c)
(d)(1)
(d)(2)
(e)(1)
(e)(2)
(f)(1)
(f)(2)
(g)
(h)
(i)
(j)
(k)
(l)
Amended and Restated Snap-on Incorporated 2001 Incentive Stock and Awards Plan (Amended and Restated as of
April 27, 2006, as further amended on August 6, 2009) (incorporated by reference to Exhibit 10.1 to Snap-on’s
Quarterly Report on Form 10-Q for the quarterly period ended October 3, 2009 (Commission File No. 1-7724))**
(superseded except as to outstanding awards)
Snap-on Incorporated 2011 Incentive Stock and Awards Plan (As Amended and Restated) (incorporated by
reference to Exhibit 10.1 to Snap-on’s Current Report on Form 8-K dated April 29, 2021 (Commission File No.
1-7724))**
Form of Restated Executive Agreement between Snap-on Incorporated and each of its executive officers**
(incorporated by reference to Exhibit 10(c) to Snap-on’s Annual Report on Form 10-K for the fiscal year ended
December 30, 2017 (Commission File No. 1-7724))**
Form of Indemnification Agreement between Snap-on Incorporated and certain executive officers (incorporated by
reference to Exhibit 10.1 to Snap-on’s Annual Report on Form 10-K for the fiscal year ended January 1, 2011
(Commission File No. 1-7724))**
Form of Indemnification Agreement between Snap-on Incorporated and directors (incorporated by reference to
Exhibit 10.1 to Snap-on’s Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (Commission File
No. 1-7724))**
Amended and Restated Snap-on Incorporated Directors’ 1993 Fee Plan (as amended through August 5, 2010)
(incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period
ended October 2, 2010 (Commission File No. 1-7724))**
Amendment to Amended and Restated Snap-on Incorporated Directors’ 1993 Fee Plan (incorporated by reference to
Exhibit 10(e)(2) to Snap-on’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013
(Commission File No. 1-7724))**
Snap-on Incorporated Deferred Compensation Plan (as amended and restated as of September 1, 2011)
(incorporated by reference to Exhibit 10(g) to Snap-on’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2011 (Commission File No. 1-7724))**
Amendment to Snap-on Incorporated Deferred Compensation Plan (incorporated by reference to Exhibit 10(f)(2) to
Snap-on’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013 (Commission File No.
1-7724))**
Snap-on Incorporated Supplemental Retirement Plan for Officers (as amended through June 11, 2010) (incorporated
by reference to Exhibit 10.2 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended July 3,
2010 (Commission File No. 1-7724))**
Form of Restricted Stock Unit Agreement for Directors under the 2001 Incentive Stock and Awards Plan (and
accompanying Restricted Stock Unit Offer Letter) (incorporated by reference to Exhibit 10.2 to Snap-on’s Quarterly
Report on Form 10-Q for the quarterly period ended October 3, 2009 (Commission File No. 1-7724))** (superseded
except as to outstanding awards)
Form of Non-Qualified Stock Option Agreement under the 2011 Incentive Stock and Awards Plan (and
accompanying Non-Qualified Stock Option Grant Offer Letter) (incorporated by reference to Exhibit 10.1 to
Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended October 1, 2011 (Commission File No.
1-7724))**
Form of Performance Share Unit Award Agreement under the 2011 Incentive Stock and Awards Plan (incorporated
by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2012 (Commission File No. 1-7724))**
Form of Performance-Based Restricted Unit Award Agreement for Executive Officers under the 2011 Incentive
Stock and Awards Plan (incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2012 (Commission File No. 1-7724))**
Form of Restricted Unit Award Agreement for Directors under the 2011 Incentive Stock and Awards Plan
(incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2012 (Commission File No. 1-7724))**
2023 ANNUAL REPORT
59
(m)
(n)
(o)
Form of Restricted Stock Award Agreement for Directors under the 2011 Incentive Stock and Awards Plan
(incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period
ended March 30, 2013 (Commission File No. 1-7724))**
Form of Restricted Stock Unit Award Agreement for Executive Officers and Key Employees under the 2011
Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10(o) to Snap-on's Annual Report on Form
10-K for the fiscal year ended January 2, 2021 Commission File No. 1-7724))**
Fourth Amended and Restated Five Year Credit Agreement, dated as of September 12, 2023 among Snap-on
Incorporated and each lenders and agents listed on the signature pages thereof, and JPMorgan Chase Bank, N.A.,
Citibank N.A. and U.S. Bank National Association as joint lead arrangers and joint bookrunners (incorporated by
reference to Exhibit 10.1 to Snap-on’s Current Report on Form 8-K dated September 12, 2023 (Commission File
No. 1-7724))
Snap-on Incorporated Section 406 of the Sarbanes-Oxley Act Code of Ethics (incorporated by reference to Exhibit 10(aa) to
Snap-on’s Annual Report on Form 10-K for the fiscal year ended January 3, 2004 (Commission File No. 1-7724))
Snap-on Incorporated Insider Trading Policy
Subsidiaries of the Corporation
Consent of Independent Registered Public Accounting Firm
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(14)
(19)
(21)
(23)
(31.1)
(31.2)
(32.1)
(32.2)
(97)
Snap-on Incorporated Clawback Policy for Erroneously Awarded Compensation
(101.INS)
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL
(Extensible Business Reporting Language) tags are embedded within the Inline XBRL document
(101.SCH)
Inline XBRL Taxonomy Extension Schema Document
(101.CAL)
Inline XBRL Taxonomy Extension Calculation Linkbase Document
(101.DEF)
Inline XBRL Taxonomy Extension Definition Linkbase Document
(101.LAB)
Inline XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)
Inline XBRL Taxonomy Extension Presentation Linkbase Document
(104)
Cover Page Interactive Data File (contained in Exhibit 101)
*
Filed electronically or incorporated by reference as an exhibit to this Annual Report on Form 10-K. Copies of any materials the company files with the
SEC can also be obtained free of charge through the SEC’s website at www.sec.gov.
** Represents a management compensatory plan or agreement.
Item 16: Form 10-K Summary
None.
60
SNAP-ON INCORPORATED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Snap-on Incorporated:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Snap-on Incorporated and subsidiaries (the “Company”) as
of December 30, 2023 and December 31, 2022, the related consolidated statements of earnings, comprehensive income, equity,
and cash flows for each of the three years in the period ended December 30, 2023, and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 30, 2023, and December 31, 2022, and the results of its operations and its cash flows
for each of the three years in the period ended December 30, 2023, in conformity with accounting principles generally accepted
in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 30, 2023, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 15, 2024, expressed an unqualified opinion on the Company’s internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
2023 ANNUAL REPORT
61
Finance Receivables, Net - Allowance - Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
The Company’s finance receivables are comprised of extended-term installment payment contracts to both technicians and
independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products
on an extended-term payment plan, with average payment terms of approximately four years. The receivables are generally
secured by the underlying tools, diagnostics and/or equipment products financed. At December 30, 2023, these finance
receivables totaled $1,946.1 million with an allowance of $67.8 million recorded against the receivables. Determining the
proper level of allowance requires management to exercise judgment about the timing, frequency and severity of credit losses
expected to occur over the life of the contracts. The Company estimates and records an allowance for credit losses over the
remaining contractual life of their contracts considering collectability, historical loss experience, current conditions and future
market changes.
Evaluating the judgments related to the finance receivable allowance for credit losses is subjective and requires auditor
judgment to effectively evaluate whether management’s judgments were reasonable.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the finance receivables allowance for credit losses balance included the following procedures,
among others:
• We tested the design, implementation and operating effectiveness of management’s controls over the allowance
for credit losses including controls over the completeness and accuracy of underlying data.
• Where appropriate, we assessed the reasonableness of, and evaluated support for, qualitative adjustments based on
market conditions and/or portfolio performance metrics.
• We tested the completeness and accuracy and evaluated the relevance of the key data used as inputs in
management’s allowance for credit losses calculation, including finance receivables balances, recoveries, charge-
offs, portfolio characteristics and other data.
• We tested the mathematical accuracy of the allowance for credit losses and developed an expectation of the
allowance for credit losses and compared it to the recorded balance.
• We evaluated management’s ability to accurately forecast credit losses by performing a retrospective review,
which involved comparing actual credit losses to historical estimates.
/s/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 15, 2024
We have served as the Company’s auditor since 2002.
62
SNAP-ON INCORPORATED
Snap-on Incorporated – Consolidated Statements of Earnings
(Amounts in millions, except per share data)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating earnings before financial services
Financial services revenue
Financial services expenses
Operating earnings from financial services
Operating earnings
Interest expense
Other income (expense) – net
Earnings before income taxes and equity earnings
Income tax expense
Earnings before equity earnings
Equity earnings, net of tax
Net earnings
Net earnings attributable to noncontrolling interests
Net earnings attributable to Snap-on Incorporated
Net earnings per share attributable to Snap-on Incorporated:
Basic
Diluted
Weighted-average shares outstanding:
Basic
Effect of dilutive securities
Diluted
$
$
$
2023
2022
2021
4,730.2 $
(2,381.1)
2,349.1
(1,309.2)
1,039.9
378.1
(107.6)
270.5
1,310.4
(49.9)
67.5
1,328.0
(293.4)
1,034.6
—
1,034.6
(23.5)
1,011.1 $
4,492.8 $
(2,311.7)
2,181.1
(1,239.9)
941.2
349.7
(83.7)
266.0
1,207.2
(47.1)
42.5
1,202.6
(268.7)
933.9
—
933.9
(22.2)
911.7 $
19.11 $
18.76
17.14 $
16.82
52.9
1.0
53.9
53.2
1.0
54.2
4,252.0
(2,141.2)
2,110.8
(1,259.3)
851.5
349.7
(77.7)
272.0
1,123.5
(53.1)
16.5
1,086.9
(247.0)
839.9
1.5
841.4
(20.9)
820.5
15.22
14.92
53.9
1.1
55.0
See Notes to Consolidated Financial Statements.
2023 ANNUAL REPORT
63
Snap-on Incorporated – Consolidated Statements of Comprehensive Income
(Amounts in millions)
Comprehensive income (loss):
Net earnings
Other comprehensive income (loss):
Foreign currency translation
Reclassification of foreign currency translation loss from
sale of equity interest to net earnings
Reclassification of cash flow hedges to net earnings
Defined benefit pension and postretirement plans:
Net prior service costs and credits and unrecognized gain
(loss)
Income tax benefit (expense)
Net of tax
Amortization of unrecognized loss and net prior service
costs included in net periodic benefit cost
Income tax benefit
Net of tax
Total comprehensive income
2023
2022
2021
$
1,034.6 $
933.9 $
841.4
60.7
(127.4)
(69.4)
—
(1.6)
26.1
(6.8)
19.3
0.5
(0.1)
0.4
1,113.4
—
(1.6)
(92.8)
23.8
(69.0)
18.1
(4.5)
13.6
749.5
(1.0)
(1.6)
85.1
(18.6)
66.5
36.4
(9.0)
27.4
863.3
(20.9)
842.4
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Snap-on Incorporated
$
(23.5)
1,089.9 $
(22.2)
727.3 $
See Notes to Consolidated Financial Statements.
64
SNAP-ON INCORPORATED
Snap-on Incorporated – Consolidated Balance Sheets
(Amounts in millions, except share data)
ASSETS
Current assets:
Cash and cash equivalents
Trade and other accounts receivable – net
Finance receivables – net
Contract receivables – net
Inventories – net
Prepaid expenses and other current assets
Total current assets
Property and equipment – net
Operating lease right-of-use assets
Deferred income tax assets
Long-term finance receivables – net
Long-term contract receivables – net
Goodwill
Other intangible assets – net
Pension assets
Other long-term assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Notes payable
Accounts payable
Accrued benefits
Accrued compensation
Franchisee deposits
Other accrued liabilities
Total current liabilities
Long-term debt
Deferred income tax liabilities
Retiree health care benefits
Pension liabilities
Operating lease liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 15)
Equity
Shareholders’ equity attributable to Snap-on Incorporated:
Preferred stock (authorized 15,000,000 shares of $1 par value; none outstanding)
Common stock (authorized 250,000,000 shares of $1 par value; issued 67,450,999
and 67,444,966 shares, respectively)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock at cost (14,756,982 and 14,442,386 shares, respectively)
Total shareholders’ equity attributable to Snap-on Incorporated
Noncontrolling interests
Total equity
Total liabilities and equity
Fiscal Year End
2023
2022
1,001.5 $
791.3
594.1
120.8
1,005.9
138.4
3,652.0
539.3
74.7
76.0
1,284.2
407.9
1,097.4
268.9
130.5
14.0
7,544.9 $
15.6 $
238.0
64.4
102.9
73.3
447.4
941.6
1,184.6
79.2
21.8
82.3
54.6
87.4
2,451.5
757.2
761.7
562.2
109.9
1,033.1
144.8
3,368.9
512.6
61.5
70.0
1,170.8
383.8
1,045.3
275.6
70.6
13.7
6,972.8
17.2
287.0
58.6
98.6
73.8
436.4
971.6
1,183.8
82.1
23.4
78.6
44.7
85.1
2,469.3
—
—
67.5
545.5
6,948.5
(449.5)
(2,040.7)
5,071.3
22.1
5,093.4
7,544.9 $
67.4
499.9
6,296.2
(528.3)
(1,853.9)
4,481.3
22.2
4,503.5
6,972.8
$
$
$
$
See Notes to Consolidated Financial Statements.
2023 ANNUAL REPORT
65
Snap-on Incorporated – Consolidated Statements of Equity
Shareholders’ Equity Attributable to Snap-on Incorporated
(Amounts in millions, except share data)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Noncontrolling
Interests
Total
Equity
Balance at January 2, 2021
$
67.4 $
391.7 $
5,156.9 $
(365.8) $
(1,425.3) $
21.7 $
3,846.6
Net earnings for 2021
Other comprehensive income
Cash dividends – $5.11 per share
Stock compensation plans
Share repurchases – 1,943,900 shares
Other
Balance at January 1, 2022
Net earnings for 2022
Other comprehensive loss
Cash dividends – $5.88 per share
Stock compensation plans
Share repurchases – 899,000 shares
Other
—
—
—
—
—
—
—
—
—
81.0
—
—
67.4
472.7
—
—
—
—
—
—
—
—
—
27.2
—
—
Balance at December 31, 2022
67.4
499.9
Net earnings for 2023
Other comprehensive income
Cash dividends – $6.72 per share
Stock compensation plans
Share repurchases – 1,126,000 shares
Other
—
—
—
—
—
0.1
—
—
—
45.6
—
—
820.5
—
(275.8)
—
—
(1.7)
5,699.9
911.7
—
(313.1)
—
—
(2.3)
6,296.2
1,011.1
—
(355.6)
—
—
(3.2)
—
21.9
—
—
—
—
—
—
—
142.4
(431.3)
—
(343.9)
(1,714.2)
—
(184.4)
—
—
—
—
—
—
—
58.4
(198.1)
—
(528.3)
(1,853.9)
—
78.8
—
—
—
—
—
—
—
107.9
(294.7)
—
20.9
—
—
—
—
(20.7)
21.9
22.2
—
—
—
—
(21.9)
22.2
23.5
—
—
—
—
(23.6)
841.4
21.9
(275.8)
223.4
(431.3)
(22.4)
4,203.8
933.9
(184.4)
(313.1)
85.6
(198.1)
(24.2)
4,503.5
1,034.6
78.8
(355.6)
153.5
(294.7)
(26.7)
Balance at December 30, 2023
$
67.5 $
545.5 $
6,948.5 $
(449.5) $
(2,040.7) $
22.1 $
5,093.4
See Notes to Consolidated Financial Statements.
66
SNAP-ON INCORPORATED
Snap-on Incorporated – Consolidated Statements of Cash Flows
(Amounts in millions)
Operating activities:
Net earnings
Adjustments to reconcile net earnings to net cash provided (used) by operating
activities:
2023
2022
2021
$ 1,034.6 $
933.9 $
841.4
Depreciation
Amortization of other intangible assets
Provision for losses on finance receivables
Provision for losses on non-finance receivables
Stock-based compensation expense
Deferred income tax provision (benefit)
(Gain) loss on sales of assets
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade and other accounts receivable
Contract receivables
Inventories
Prepaid expenses and other current assets
Accounts payable
Accruals and other liabilities
Net cash provided by operating activities
Investing activities:
Additions to finance receivables
Collections of finance receivables
Capital expenditures
Acquisitions of businesses, net of cash acquired
Disposals of property and equipment
Other
Net cash used by investing activities
Financing activities:
Repayments of long-term debt
Net increase (decrease) in other short-term borrowings
Cash dividends paid
Purchases of treasury stock
Proceeds from stock purchase plan and stock option exercises
Other
Net cash used by financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental cash flow disclosures:
Cash paid for interest
Net cash paid for income taxes
72.2
27.1
57.2
19.2
44.7
(18.7)
(1.0)
(45.2)
(34.0)
23.3
35.1
(48.1)
(12.2)
1,154.2
(1,029.0)
833.5
(95.0)
(42.6)
2.7
(1.4)
(331.8)
—
(1.7)
(355.6)
(294.7)
113.6
(34.5)
(572.9)
71.5
28.7
37.7
16.8
34.0
(10.3)
(3.1)
(120.0)
(11.8)
(272.1)
(6.3)
17.7
(41.5)
675.2
(955.8)
826.9
(84.2)
0.5
5.1
1.3
(206.2)
—
1.6
(313.1)
(198.1)
55.0
(30.4)
(485.0)
(5.2)
244.3
757.2
$ 1,001.5 $
(6.8)
(22.8)
780.0
757.2 $
75.6
29.2
32.1
16.3
41.4
8.4
1.7
(61.4)
(3.1)
(75.4)
(10.7)
56.8
14.3
966.6
(878.1)
854.2
(70.1)
(199.7)
2.1
1.2
(290.4)
(250.0)
3.3
(275.8)
(431.3)
162.4
(27.4)
(818.8)
(0.8)
(143.4)
923.4
780.0
$
(44.5) $
(300.9)
(44.7) $
(261.2)
(55.9)
(249.0)
See Notes to Consolidated Financial Statements.
2023 ANNUAL REPORT
67
Notes to Consolidated Financial Statements
Note 1: Summary of Accounting Policies
Principles of consolidation and presentation: The Consolidated Financial Statements include the accounts of Snap-on
Incorporated and its wholly-owned and majority-owned subsidiaries (collectively, “Snap-on” or “the company”). The
Consolidated Financial Statements do not include the accounts of the company’s independent franchisees. Snap-on’s
Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United
States of America (“GAAP”). Intercompany accounts and transactions have been eliminated.
Fiscal year accounting period: Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31. The 2023
fiscal year ended on December 30, 2023 (“2023”), the 2022 fiscal year ended on December 31, 2022 (“2022”), and the 2021
fiscal year ended on January 1, 2022 (“2021”). The 2023, 2022 and 2021 fiscal years each contained 52 weeks of operating
results.
Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Financial instruments: The fair value of the company’s derivative financial instruments is generally determined using quoted
prices in active markets for similar assets and liabilities. The carrying value of the company’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 10 for additional information on financial instruments.
Revenue recognition: Snap-on recognizes revenue from the sale of tools, diagnostics, equipment, and related services based on
when control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the
consideration expected to be received in exchange for such goods or services. See Note 2 for information on revenue
recognition.
Financial services revenue: Snap-on generates revenue from various financing programs that include: (i) installment sales and
lease contracts arising from franchisees’ customers and Snap-on customers who require financing for the purchase or lease of
tools, diagnostics, and equipment products on an extended-term payment plan; and (ii) business and vehicle loans and leases to
franchisees. These financing programs are offered through Snap-on’s wholly owned finance subsidiaries. Financial services
revenue consists primarily of interest income on finance and contract receivables and is recognized over the life of the
underlying contracts, with interest computed primarily on the average daily balances of the underlying contracts.
The decision to finance through Snap-on or another financing source is solely at the election of the customer. When assessing
customers for potential financing, Snap-on considers various factors regarding ability to pay, including the customers’ financial
condition, past payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of
the underlying collateral. For finance and contract receivables, Snap-on assesses quantitative and qualitative factors through the
use of credit quality indicators consisting primarily of collection experience and related internal metrics. Delinquency is the
primary indicator of credit quality for finance and contract receivables. Snap-on conducts monthly reviews of credit and
collection performance for both the finance and contract receivable portfolios, focusing on data such as delinquency trends,
nonaccrual receivables, and write-off and recovery activity.
Financial services lease arrangements: Snap-on accounts for its financial services leases as sales-type leases. The company
recognizes the net investment in the lease as the present value of the lease payments not yet received plus the present value of
the unguaranteed residual value, using the interest rate implicit in the lease. The difference between the undiscounted lease
payments received over the lease term and the related net investment in the lease is reported as unearned finance charges.
Unearned finance charges are amortized to income over the life of the contract. The default covenants included in the lease
arrangements are usual and customary, consistent with industry practice, and do not impact the lease classification. Except in
circumstances where the company has concluded that a lessee’s financial condition has deteriorated, the other default covenants
under Snap-on’s lease arrangements are objectively determinable. See Notes 4 and 16 for additional information on finance and
contract receivables and lessor accounting.
Research and engineering: Snap-on incurred research and engineering costs of $64.7 million, $60.1 million and $61.1 million
in 2023, 2022 and 2021, respectively. Research and engineering costs are included in “Operating expenses” on the
accompanying Consolidated Statements of Earnings.
68
SNAP-ON INCORPORATED
Internally developed software: Costs incurred in the development of software that will ultimately be sold are capitalized from
the time technological feasibility has been attained and capitalization ceases when the related product is ready for general
release. During 2023, 2022 and 2021, Snap-on capitalized $11.0 million, $10.2 million and $10.9 million, respectively, of such
costs. Amortization of capitalized software development costs, which is included in “Cost of goods sold” on the accompanying
Consolidated Statements of Earnings, was $10.5 million in 2023, $11.6 million in 2022 and $11.4 million in 2021. Unamortized
capitalized software development costs of $43.1 million as of 2023 year end and $42.4 million as of 2022 year end are included
in “Other intangible assets – net” on the accompanying Consolidated Balance Sheets.
Internal-use software: Costs that are incurred in creating software solutions and enhancements to those solutions are
capitalized only for the application development stage of the project.
Shipping and handling: Amounts billed to customers for shipping and handling are included as a component of sales. Costs
incurred by Snap-on for shipping and handling are included as a component of cost of goods sold when the costs relate to
manufacturing activities. In 2023, 2022 and 2021, Snap-on incurred shipping and handling charges of $72.0 million, $77.6
million and $69.9 million, respectively, that were recorded in “Cost of goods sold” on the accompanying Consolidated
Statements of Earnings. Shipping and handling costs incurred in conjunction with selling or distribution activities are included
as a component of operating expenses. Shipping and handling charges were $107.8 million in 2023, $104.9 million in 2022 and
$100.9 million in 2021; these charges were recorded in “Operating expenses” on the accompanying Consolidated Statements of
Earnings.
Advertising and promotion: Production costs of future media advertising are deferred until the advertising occurs. All other
advertising and promotion costs are expensed when incurred. For 2023, 2022 and 2021, advertising and promotion expenses
totaled $44.5 million, $39.3 million and $33.2 million, respectively. Advertising and promotion costs are included in
“Operating expenses” on the accompanying Consolidated Statements of Earnings.
Warranties: Snap-on provides product warranties for specific product lines and accrues for estimated future warranty costs in
the period in which the sale is recorded. See Notes 2 and 15 for information on warranties.
Foreign currency: The financial statements of Snap-on’s foreign subsidiaries are translated into U.S. dollars. Assets and
liabilities of foreign subsidiaries are translated at current rates of exchange, and income and expense items are translated at the
average exchange rates for the period. The resulting translation adjustments are recorded directly into “Accumulated other
comprehensive loss” on the accompanying Consolidated Balance Sheets. Foreign exchange transactions, net of foreign currency
hedges, resulted in pretax losses of $11.0 million, $7.5 million and $1.2 million in 2023, 2022 and 2021, respectively. Foreign
exchange transaction gains and losses are reported in “Other income (expense) – net” on the accompanying Consolidated
Statements of Earnings.
Income taxes: Current tax assets and liabilities are based upon an estimate of taxes refundable or payable for each of the
jurisdictions in which the company is subject to tax. In the ordinary course of business, there is inherent uncertainty in
quantifying income tax positions. Snap-on assesses income tax positions and records tax benefits for all years subject to
examination based upon management’s evaluation of the facts, circumstances and information available at the reporting dates.
For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, Snap-on records the largest amount
of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full
knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will
be sustained, no tax benefit is recognized in the financial statements. When applicable, associated interest and penalties are
recognized as a component of income tax expense. Accrued interest and penalties are included within the related tax asset or
liability on the accompanying Consolidated Balance Sheets.
Deferred income taxes are provided for temporary differences arising from differences in bases of assets and liabilities for tax
and financial reporting purposes. Deferred income taxes are recorded on temporary differences using enacted tax rates in effect
for the year in which the temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets
and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax
assets will not be realized. See Note 8 for additional information on income taxes.
2023 ANNUAL REPORT
69
Notes to Consolidated Financial Statements (continued)
Per share data: Basic earnings per share calculations were computed by dividing net earnings attributable to Snap-on
Incorporated by the corresponding weighted-average number of common shares outstanding for the period. The dilutive effect
of the potential exercise of outstanding stock options and stock-settled stock appreciation rights (“SARs”) to purchase common
shares is calculated using the treasury stock method. As of December 30, 2023, December 31, 2022, and January 1, 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. Snap-on had dilutive securities totaling
1,060,072 shares, 945,250 shares and 1,058,553 shares, as of the end of 2023, 2022 and 2021, respectively. See Note 13 for
additional information on equity awards.
Stock-based compensation: Snap-on recognizes the cost of employee services in exchange for awards of equity instruments
based on the grant date fair value of those awards. That cost, based on the estimated number of awards that are expected to vest,
is recognized on a straight-line basis over the period during which the employee is required to provide the service in exchange
for the award. No compensation cost is recognized for awards for which employees do not render the requisite service. The
grant date fair value of employee stock options and similar instruments is estimated using the Black-Scholes valuation model.
The Black-Scholes valuation model requires the input of subjective assumptions, including the expected life of the stock-based
award and stock price volatility. The assumptions used are management’s best estimates, but the estimates involve inherent
uncertainties and the application of management judgment. As a result, if other assumptions had been used, the recorded stock-
based compensation expense could have been materially different from that depicted in the financial statements. See Note 13
for additional information on stock-based compensation.
Derivatives: Snap-on may utilize derivative financial instruments, including foreign currency forward contracts, interest rate
swap agreements, treasury lock agreements and prepaid equity forward agreements to manage its exposures to foreign currency
exchange rate risks, interest rate risks, and market risk associated with the stock-based portion of its deferred compensation
plans. Snap-on accounts for its derivative instruments at fair value. Snap-on does not use financial instruments for speculative
or trading purposes. See Note 10 for additional information on derivatives.
Cash equivalents: Snap-on considers all highly liquid investments with an original maturity of three months or less to be cash
equivalents. Cash and cash equivalents consisted of investments in money market funds and bank deposits at December 30,
2023 and December 31, 2022.
Receivables and allowances for credit losses: All trade, finance and contract receivables are reported on the Consolidated
Balance Sheets at their amortized cost adjusted for any write-offs and net of allowances for credit losses. The amortized costs
for finance and contract receivables is the amount originated adjusted for applicable accrued interest and net of deferred fees or
costs, net of collections and write-offs.
Snap-on maintains allowances for credit losses, which represent an estimate of expected credit losses over the remaining
contractual life of its receivables considering current conditions and supportable forecasts when appropriate. The estimate is a
result of the company’s ongoing assessments and evaluations of collectability, historical loss experience, and future
expectations in estimating credit losses in each of its receivable portfolios (trade, finance and contract receivables). For trade
receivables, Snap-on uses historical loss experience rates by portfolio and applies them to a related aging analysis while also
considering customer and/or economic risk where appropriate. Snap-on uses a vintage loss experience methodology for finance
receivables. For contract receivables, Snap-on primarily uses a Weighted-Average Remaining Maturity (“WARM”)
methodology. Determination of the proper amount of allowances by portfolio requires management to exercise judgment about
the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, net
earnings. The allowances take into consideration numerous quantitative and qualitative factors that include receivable type,
historical loss experience, delinquency trends, collection experience, current conditions, supportable forecasts, when
appropriate, and credit risk characteristics.
Snap-on evaluates the credit risk of the customer when extending credit based on a combination of various financial and
qualitative factors that may affect its customers’ ability to pay. These factors may include the customer’s financial condition,
past payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of the
underlying collateral.
70
SNAP-ON INCORPORATED
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. Monthly reviews of credit and collection performance are
conducted for both its finance and contract receivable portfolios focusing on data such as delinquency trends, non-performing
assets, and write-off and recovery activity. These reviews allow for the formulation of collection strategies and potential
collection policy modifications in response to changing risk profiles in the finance and contract receivable portfolios. 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 generally written off when an account becomes 120 days past due. Repossessed
accounts are typically written off 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 no later than when the receivable becomes 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 when the receivable becomes 180 days past due. Changes to the allowances for credit
losses are maintained through adjustments to the provisions for credit losses.
Actual amounts as of the balance sheet dates may be materially different than the amounts reported in future periods due to the
uncertainty in the estimation process. Also, future amounts could differ materially from those estimates due to changes in
circumstances after the balance sheet date.
Snap-on does not believe that its trade, finance or contract receivables represent significant concentrations of credit risk because
of the diversified portfolio of individual customers and geographical areas. See Note 4 for additional information on receivables
and allowances for credit losses.
Other accrued liabilities: Supplemental balance sheet information for “Other accrued liabilities” as of 2023 and 2022 year end
is as follows:
(Amounts in millions)
Income taxes
Operating lease liabilities
Deferred subscription revenue
Accrued new tool return
Accrued property, payroll and other taxes
Accrued selling and promotion expense
Other
Total other accrued liabilities
2023
2022
35.3 $
23.8
58.4
59.1
31.2
37.2
202.4
447.4 $
33.4
19.4
57.1
53.9
27.7
37.7
207.2
436.4
$
$
Inventories: Snap-on values its inventory at the lower of cost or net realizable value and adjusts for the value of inventory that
is estimated to be excess, obsolete or otherwise unmarketable. Snap-on records allowances for excess and obsolete inventory
based on historical and estimated future demand and market conditions. Allowances for raw materials are largely based on an
analysis of raw material age and actual physical inspection of raw material for fitness for use. As part of evaluating the
adequacy of allowances for work-in-progress and finished goods, management reviews individual product stock-keeping units
(SKUs) by product category and product life cycle. Cost adjustments for each product category/product life-cycle state are
generally established and maintained based on a combination of historical experience, forecasted sales and promotions,
technological obsolescence, inventory age and other actual known conditions and circumstances. Should actual product
marketability and raw material fitness for use be affected by conditions that are different from management estimates, further
adjustments to inventory allowances may be required.
2023 ANNUAL REPORT
71
Notes to Consolidated Financial Statements (continued)
Snap-on adopted the “last-in, first-out” (“LIFO”) inventory valuation method in 1973 for its U.S. locations. Snap-on’s U.S.
inventories accounted for on a LIFO basis consist of purchased product and inventory manufactured at the company’s heritage
U.S. manufacturing facilities (primarily hand tools and tool storage). Since the 1990s, the company has used the “first-in, first-
out” (“FIFO”) inventory valuation methodology for acquisitions; the company does not adopt the LIFO inventory valuation
methodology for new acquisitions. See Note 5 for additional information on inventories.
Property and equipment: Property and equipment is stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are provided on a straight-line basis over estimated useful lives. Major repairs that extend the
useful life of an asset are capitalized, while routine maintenance and repairs are expensed as incurred. Capitalized software
included in property and equipment reflects costs related to internally developed or purchased software for internal use and is
amortized on a straight-line basis over their estimated useful lives. Long-lived assets, including operating lease right-of-use
assets, are evaluated for impairment when events or circumstances indicate that the carrying amount of the long-lived asset may
not be recoverable. See Note 6 for additional information on property and equipment.
Goodwill and other intangible assets: Goodwill and other indefinite-lived assets are tested for impairment annually or more
frequently if events or changes in circumstances indicate that the assets might be impaired. Annual impairment tests are
performed by the company in the second quarter of each year using information available as of April month end. Snap-on
evaluates the existence of goodwill and indefinite-lived intangible asset impairment on the basis of whether the assets are fully
recoverable from projected, discounted cash flows of the related reportable unit or asset. Intangible assets with finite lives are
amortized over their estimated useful lives using the straight-line method. Intangible assets with finite lives are evaluated for
impairment when events or circumstances indicate that the carrying amount of the intangible asset may not be recoverable. See
Note 7 for additional information on goodwill and other intangible assets.
New accounting standards: 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.
The adoption of this ASU did not have a significant impact on Snap-on’s Consolidated Financial Statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures, which requires the disclosure of additional segment information. ASU No. 2023-07 is effective for fiscal years
beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024; this ASU
allows for early adoption. The adoption of this ASU is not expected to have a material impact on Snap-on’s Consolidated
Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures,
which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on
income taxes paid. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance is to be
applied on a prospective basis with the option to apply the standard retrospectively; this ASU allows for early adoption. The
adoption of this ASU is not expected to have a material impact on Snap-on’s Consolidated Financial Statements.
Note 2: Revenue Recognition
Snap-on recognizes revenue from the sale of tools, diagnostics, equipment, and related services based on when control of the
product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected
to be received in exchange for such goods or services.
72
SNAP-ON INCORPORATED
Revenue disaggregation
The following table shows the consolidated revenues by revenue source:
(Amounts in millions)
Revenue from contracts with customers
Other revenues
Total net sales
Financial services revenue
Total revenues
2023
2022
4,703.2 $
27.0
4,730.2
378.1
5,108.3 $
4,468.6
24.2
4,492.8
349.7
4,842.5
$
$
Snap-on evaluates the performance of its operating segments based on segment revenues and segment operating earnings. The
Snap-on Tools Group segment revenues include external net sales, while the Commercial & Industrial Group and the Repair
Systems & Information Group segment revenues include both external and intersegment net sales. Snap-on accounts for both
intersegment net sales and transfers based primarily on standard costs with reasonable mark-ups established between the
segments. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.
The following table represents external net sales disaggregated by geography, based on the customers’ billing addresses:
Commercial &
Snap-on
Repair Systems
2023
Industrial
Group
Tools
Group
& Information
Financial
Snap-on
Group
Services
Eliminations
Incorporated
(Amounts in millions)
Net sales:
North America*
$
580.5 $
1,839.2 $
1,146.5 $
— $
— $
3,566.2
Europe
All other
External net sales
Intersegment net sales
Total net sales
Financial services revenue
295.7
269.4
1,145.6
312.7
1,458.3
—
149.7
99.9
2,088.8
—
2,088.8
—
243.5
105.8
1,495.8
285.4
1,781.2
—
—
—
—
—
—
378.1
—
—
—
(598.1)
(598.1)
—
688.9
475.1
4,730.2
—
4,730.2
378.1
Total revenue
$
1,458.3 $
2,088.8 $
1,781.2 $
378.1 $
(598.1) $
5,108.3
Commercial &
Snap-on
Repair Systems
2022
Industrial
Group
Tools
Group
& Information
Financial
Snap-on
Group
Services
Eliminations
Incorporated
(Amounts in millions)
Net sales:
North America*
$
498.3 $
1,840.3 $
1,046.1 $
— $
— $
3,384.7
Europe
All other
External net sales
Intersegment net sales
Total net sales
284.9
275.1
137.9
93.8
1,058.3
2,072.0
340.9
—
1,399.2
2,072.0
227.5
88.9
1,362.5
304.4
1,666.9
—
—
—
—
—
—
—
—
(645.3)
650.3
457.8
4,492.8
—
(645.3)
4,492.8
Financial services revenue
—
—
—
349.7
—
349.7
Total revenue
$
1,399.2 $
2,072.0 $
1,666.9 $
349.7 $
(645.3) $
4,842.5
* North America is comprised of the United States, Canada and Mexico.
2023 ANNUAL REPORT
73
Notes to Consolidated Financial Statements (continued)
The following table represents external net sales disaggregated by customer type:
Commercial &
Snap-on
Repair Systems
2023
Industrial
Group
Tools
Group
& Information
Financial
Snap-on
Group
Services
Eliminations
Incorporated
(Amounts in millions)
Net sales:
Vehicle service professionals
$
82.5 $ 2,088.8 $
1,495.8 $
— $
— $
3,667.1
All other professionals
External net sales
Intersegment net sales
Total net sales
Financial services revenue
1,063.1
1,145.6
312.7
1,458.3
—
—
2,088.8
—
2,088.8
—
—
1,495.8
285.4
1,781.2
—
—
—
—
—
378.1
—
—
(598.1)
(598.1)
—
1,063.1
4,730.2
—
4,730.2
378.1
Total revenue
$
1,458.3 $ 2,088.8 $
1,781.2 $
378.1 $
(598.1) $
5,108.3
Commercial &
Snap-on
Repair Systems
2022
Industrial
Group
Tools
Group
& Information
Financial
Snap-on
Group
Services
Eliminations
Incorporated
(Amounts in millions)
Net sales:
Vehicle service professionals
$
90.8 $
2,072.0 $
1,362.5 $
— $
— $
3,525.3
All other professionals
External net sales
Intersegment net sales
Total net sales
967.5
—
1,058.3
2,072.0
340.9
—
1,399.2
2,072.0
—
1,362.5
304.4
1,666.9
—
—
—
—
—
—
(645.3)
967.5
4,492.8
—
(645.3)
4,492.8
Financial services revenue
—
—
—
349.7
—
349.7
Total revenue
$
1,399.2 $
2,072.0 $
1,666.9 $
349.7 $
(645.3) $
4,842.5
Nature of goods and services: Snap-on derives net sales from a broad line of products and complementary services that are
grouped into three categories: (i) tools; (ii) diagnostics, information and management systems; and (iii) equipment. The tools
product category includes hand tools, power tools, tool storage products and other similar products. The diagnostics,
information and management systems product category includes handheld and computer-based diagnostic products, service and
repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and
services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer (“OEM”)
purchasing facilitation services, and warranty management systems and analytics to help OEM dealership service and repair
shops (“OEM dealerships”) manage and track performance. The equipment product category includes solutions for the service
of vehicles and industrial equipment. Snap-on supports the sale of its diagnostics and vehicle service shop equipment by
offering training programs as well as after-sales support to its customers. Through its financial services businesses, Snap-on
derives revenue from various financing programs designed to facilitate the sales of its products and support its franchise
business.
Approximately 90% of Snap-on’s net sales are products sold at a point in time through ship-and-bill performance obligations
that also include repair services. The remaining sales revenue is earned over time primarily for software subscriptions, other
subscription service agreements and extended warranty programs.
Snap-on enters into contracts related to the selling of tools, diagnostics, repair information, equipment and related services. At
contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a
performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods
or services). To identify the performance obligations, Snap-on considers all of the goods or services promised in the contract
regardless of whether they are explicitly stated or are implied by customary business practices. Contracts with customers are
comprised of customer purchase orders, invoices and written contracts.
74
SNAP-ON INCORPORATED
For certain performance obligations related to software subscriptions, extended warranty and other subscription agreements that
are settled over time, Snap-on has elected not to disclose the value of unsatisfied performance obligations for: (i) contracts that
have an original expected length of one year or less; (ii) contracts where revenue is recognized as invoiced; and (iii) contracts
with variable consideration related to unsatisfied performance obligations. The remaining duration of these unsatisfied
performance obligations range from one month up to 60 months. Snap-on had approximately $185.0 million of long-term
contracts that have fixed consideration that extends beyond one year as of December 30, 2023. Snap-on expects to recognize
approximately 75% of these contracts as revenue by the end of fiscal 2025, an additional 20% by the end of fiscal 2027 and the
balance thereafter.
Snap-on typically expenses incremental direct costs of obtaining a contract (sales commissions) when incurred because the
amortization period is generally 12 months or less. Capitalized long-term contract costs are not significant. Contract costs are
expensed or amortized in “Operating expenses” on the accompanying Consolidated Statements of Earnings.
When performance obligations are satisfied: For performance obligations related to the majority of ship-and-bill products,
including repair services contracts, control transfers at a point in time when title transfers upon shipment of the product to the
customer, and for some sales, control transfers when title is transferred at time of receipt by customer. Once a product or
repaired product has shipped or has been delivered, the customer is able to direct the use of, and obtain substantially all of the
remaining benefits from the asset, revenue is recognized. Snap-on considers control to have transferred upon shipment or
delivery when Snap-on has a present right to payment, the customer has legal title to the asset, Snap-on has transferred physical
possession of the asset, and the customer has significant risk and rewards of ownership of the asset.
For performance obligations related to software subscriptions, extended warranties and other subscription agreements, Snap-on
transfers control and recognizes revenue over time on a ratable basis using a time-based output method. The performance
obligations are typically satisfied as services are rendered on a straight-line basis over the contract term, which is generally for
12 months but can be for a term up to 60 months.
Significant payment terms: For ship-and-bill type contracts with customers, the contract states the final terms of the sale,
including the description, quantity, and price of each product or service purchased. Payment terms are typically due upon
delivery or up to 30 days after delivery but can range up to 120 days after delivery.
For subscription contracts, payment terms are in advance or in arrears of services on a monthly, quarterly or annual basis over
the contract term, which is generally for 12 months but can be for a term up to 60 months depending on the product or service.
The customer typically agrees to a stated rate and price in the contract that does not vary over the contract term. In some cases,
customers prepay for their licenses, or in other cases, pay on a monthly or quarterly basis. When the timing of the payment
made by the customer precedes the delivery of the performance obligation, a contract liability is recognized.
Variable consideration: In some cases, the nature of Snap-on’s contracts give rise to variable consideration, including rebates,
credits, allowances for returns or other similar items that generally decrease the transaction price. These variable amounts
generally are credited to the customer, based on achieving certain levels of sales activity, product returns and making payments
within specific terms.
In the normal course of business, Snap-on allows franchisees to return product per the provisions in the franchise agreement
that allow for the return of product in a saleable condition. For other customers, product returns are generally not accepted
unless the item is defective as manufactured. Where applicable, Snap-on establishes provisions for estimated sales returns.
Estimated product returns are recorded as a reduction in reported revenues at the time of sale based upon historical product
return experience and is adjusted for known trends to arrive at the amount of consideration that Snap-on expects to receive.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in
the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when
the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of
whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance
and all information (historical, current and forecasted) that is reasonably available.
Warranties: Snap-on allows customers to return product when the product is defective as manufactured. Where applicable,
Snap-on establishes provisions for estimated warranties. Estimated product warranties are provided for specific product lines
and Snap-on accrues for estimated future warranty cost in the period in which the sale is recorded. The costs are included in
“Cost of goods sold” on the accompanying Consolidated Statements of Earnings. 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 does not typically provide customers with the right to a
refund.
2023 ANNUAL REPORT
75
Notes to Consolidated Financial Statements (continued)
Contract liabilities: Contract liabilities are recorded when cash payments are received in advance of Snap-on’s performance.
The timing of payment is typically on a monthly, quarterly or annual basis. The balance of total contract liabilities was $63.3
million at both December 30, 2023, and December 31, 2022. 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 Consolidated Balance Sheets. In 2023, Snap-on recognized revenue of $56.5 million that was included in the
contract liability balance at December 31, 2022, which was primarily from the amortization of software subscriptions, extended
warranties and other subscription agreements.
Franchise fee revenue, including nominal, non-refundable initial fees, is recognized upon the granting of a franchise, which is
when the company has performed substantially all initial services required by the franchise agreement. Franchise fee revenue
also includes ongoing monthly fees (primarily for sales and business training as well as marketing and product promotion
programs) that are recognized as the fees are earned. Franchise fee revenue in 2023, 2022 and 2021 totaled $18.7 million, $18.4
million and $17.3 million, respectively.
Note 3: Acquisitions
On November 20, 2023, Snap-on acquired certain assets of SAVTEQ, Inc. (“SAVTEQ”) for a cash purchase price of
$3.0 million. SAVTEQ, based in Lexington, Kentucky, provides precise non-contact measuring capabilities. In fiscal 2023, the
company completed the purchase accounting valuations for the acquired net assets of SAVTEQ. The $1.7 million excess of the
purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Consolidated
Balance Sheets. The goodwill will be deductible for tax purposes.
On November 1, 2023, Snap-on acquired Mountz, Inc. (“Mountz”) for a cash purchase price of $39.6 million. Mountz, based in
San Jose, California, is a leading developer, manufacturer and marketer of high-precision torque tools, including measurement,
calibration and documentation products. The company anticipates completing the purchase accounting for the acquired net
assets of Mountz, including intangible assets, in the first half of 2024. The presentation of Mountz in the accompanying
Consolidated Financial Statements has been prepared on a preliminary basis and changes to allocations may occur as fair value
estimates of the acquired net assets are determined. On a preliminary basis, the $33.0 million excess of the purchase price over
the net assets acquired was recorded in “Goodwill” on the accompanying Consolidated Balance Sheets. The company does not
expect that the goodwill will be deductible for tax purposes.
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 fiscal 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 was recorded in
“Goodwill” on the accompanying 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 fiscal 2022, and cash of $1.6
million. Pradines, located in Bauge-en-Anjou, France, designs and manufactures horticultural hand tools for professionals and
individuals. In fiscal 2022, the company completed the purchase accounting valuations for the acquired net assets of Pradines.
The $10.2 million excess of the purchase price over the fair value of net assets acquired was recorded in “Goodwill” in the
accompanying Consolidated Balance Sheets. Snap-on previously accounted for Deville S.A. as an equity method investment.
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 fiscal 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 was recorded in “Goodwill” on the
accompanying Consolidated Balance Sheets.
76
SNAP-ON INCORPORATED
For segment reporting purposes, the results of operations and assets of SAVTEQ and Dealer-FX have been included in the
Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of Mountz,
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 any of these acquisitions as the net effects, individually and
collectively, were neither significant nor material to Snap-on’s results of operations or financial position. See Note 7 for
additional information on goodwill and other intangible assets.
Note 4: Receivables
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 2023 and 2022 year end are as follows:
(Amounts in millions)
Trade and other accounts receivable
Allowances for credit losses
Total trade and other accounts receivable – net
2023
2022
$
$
826.2 $
(34.9)
791.3 $
792.8
(31.1)
761.7
The following is a rollforward of the allowances for credit losses related to trade and other accounts receivable for 2023 and
2022:
(Amounts in millions)
Allowances for credit losses:
Beginning of year
Provision for credit losses
Charge-offs
Recoveries
Currency translation
End of year
2023
2022
$
$
$
31.1
17.3
(14.2)
0.2
0.5
34.9
$
27.3
16.3
(11.8)
—
(0.7)
31.1
Finance and contract receivables: Snap-on Credit LLC (“SOC”), the company’s financial services operation in the United
States, originates extended-term finance and contract receivables on sales of Snap-on’s products sold through the U.S.
franchisee network and to certain other customers of Snap-on; Snap-on’s foreign finance subsidiaries provide similar financing
internationally. Interest income on finance and contract receivables is included in “Financial services revenue” on the
accompanying Consolidated Statements of Earnings.
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 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.
2023 ANNUAL REPORT
77
Notes to Consolidated Financial Statements (continued)
The components of Snap-on’s current finance and contract receivables as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Finance installment receivables
Finance lease receivables, net of unearned finance charges of $3.4 million and
$0.5 million, respectively
Total finance receivables
Contract installment receivables
Contract lease receivables, net of unearned finance charges of $21.1 million and
$19.1 million, respectively
Total contract receivables
Total
Allowances for credit losses:
Finance installment receivables
Finance lease receivables
Total finance allowance for credit losses
Contract installment receivables
Contract lease receivables
Total contract allowance for credit losses
Total allowances for credit losses
Total current finance and contract receivables – net
Finance receivables – net
Contract receivables – net
Total current finance and contract receivables – net
2023
2022
$
605.2 $
578.6
10.1
615.3
59.9
62.7
122.6
737.9
(21.1)
(0.1)
(21.2)
(0.9)
(0.9)
(1.8)
(23.0)
714.9 $
594.1 $
120.8
714.9 $
3.2
581.8
51.3
60.3
111.6
693.4
(19.5)
(0.1)
(19.6)
(0.8)
(0.9)
(1.7)
(21.3)
672.1
562.2
109.9
672.1
$
$
$
78
SNAP-ON INCORPORATED
The components of Snap-on’s finance and contract receivables with payment terms beyond one year as of 2023 and 2022 year
end are as follows:
(Amounts in millions)
Finance installment receivables
Finance lease receivables, net of unearned finance charges of $2.8 million and
2023
2022
$
1,318.5 $
1,210.4
$0.2 million, respectively
Total finance receivables
Contract installment receivables
Contract lease receivables, net of unearned finance charges of $35.1 million and
$30.7 million, respectively
Total contract receivables
Total
Allowances for credit losses:
Finance installment receivables
Finance lease receivables
Total finance allowance for credit losses
Contract installment receivables
Contract lease receivables
Total contract allowance for credit losses
Total allowances for credit losses
Total long-term finance and contract receivables – net
Finance receivables – net
Contract receivables – net
Total long-term finance and contract receivables – net
12.3
1,330.8
1.7
1,212.1
216.0
202.1
196.8
412.8
1,743.6
186.6
388.7
1,600.8
(46.4)
(0.2)
(46.6)
(3.1)
(1.8)
(4.9)
(51.5)
(41.3)
—
(41.3)
(3.1)
(1.8)
(4.9)
(46.2)
$
$
$
1,692.1 $
1,554.6
1,284.2 $
407.9
1,692.1 $
1,170.8
383.8
1,554.6
2023 ANNUAL REPORT
79
Notes to Consolidated Financial Statements (continued)
Long-term finance and contract receivables installments, net of unearned finance charges, as of 2023 and 2022 year end are
scheduled as follows:
(Amounts in millions)
Due in Months:
13 – 24
25 – 36
37 – 48
49 – 60
Thereafter
Total
2023
2022
Finance
Receivables
Contract
Receivables
Finance
Receivables
Contract
Receivables
$
$
475.0 $
405.7
288.8
156.7
4.6
1,330.8 $
95.0 $
84.8
72.7
57.0
103.3
412.8 $
441.6 $
374.3
256.2
135.8
4.2
1,212.1 $
92.6
80.1
67.5
53.9
94.6
388.7
Credit quality: The company’s receivable portfolio is comprised of two portfolio segments, finance and contract receivables,
which are the same segments used to estimate expected credit losses reported in the allowances for credit losses. The amortized
cost basis for finance and contract receivables is the amount originated adjusted for applicable accrued interest and net of
deferred fees or costs, collections, and write-offs. The company monitors and assesses credit risk based on the characteristics of
each portfolio segment.
When extending credit, Snap-on evaluates the collectability of the receivables based on a combination of various financial and
qualitative factors that may affect a customer’s ability to pay. These factors may include the customer’s financial condition, past
payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of the underlying
collateral.
For finance and contract receivables, Snap-on assesses quantitative and qualitative factors through the use of credit quality
indicators consisting primarily of delinquency classification, collection experience and credit exposure by customer.
Delinquency is the primary indicator of credit quality for finance and contract receivables. Snap-on conducts monthly reviews
of credit and collection performance for both the finance and contract receivable portfolios focusing on data such as
delinquency trends, nonaccrual receivables, and write-off and recovery activity. These reviews allow for the formulation of
collection strategies and potential collection policy modifications in response to changing risk profiles in the finance and
contract receivable portfolios. The company also maintains a system that aggregates credit exposure and provides delinquency
data by days past due aging categories. A receivable 30 days or more past due is considered delinquent. However, customer
receivables are monitored prior to becoming 30 days past due.
The amortized cost basis of finance and contract receivables by origination year as of 2023 year end and charge-offs recorded in
2023 by origination year, are as follows:
(Amounts in millions)
Finance Receivables:
Delinquent
Non-delinquent
2023
2022
2021
2020
2019
Prior
Total
$
22.2 $
18.6 $
9.3 $
5.2 $
2.2 $
0.8 $
58.3
1,299.6
374.8
136.3
59.3
14.9
2.9
1,887.8
Total Finance receivables
$ 1,321.8 $
393.4 $
145.6 $
64.5 $
17.1 $
3.7 $ 1,946.1
Finance receivables charge-offs
$
6.3 $
25.3 $
13.9 $
7.6 $
3.2 $
2.5 $
58.8
Contract receivables:
Delinquent
Non-delinquent
Total Contract receivables
Contract receivables charge-offs
$
$
$
0.4 $
0.9 $
195.3
195.7 $
126.6
127.5 $
1.3 $
86.4
87.7 $
0.3 $
58.5
58.8 $
0.2 $
35.4
35.6 $
0.2 $
29.9
30.1 $
3.3
532.1
535.4
0.1 $
0.4 $
0.9 $
0.5 $
0.1 $
0.3 $
2.3
80
SNAP-ON INCORPORATED
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. 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 no later than when the receivable becomes 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 when the receivable becomes 180 days past due. 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. Vintage analysis aims
to calculate losses based on the timing of the losses relative to the origination of the receivables. The finance receivable
portfolio contains a substantial amount of homogeneous contracts which fits well with the vintage analysis.
For contract receivables the company primarily uses a WARM methodology. 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 contract
receivables have limited loss experience over generally longer terms and, therefore, the predictive loss patterns are more
difficult to estimate.
The company performed a correlation analysis to compare historical losses to many economic factors. The primary economic
factors considered were real gross domestic product, civilian unemployment, industrial production index, and repair and
maintenance employment rate; the company determined that there is limited correlation between the historical losses and
economic factors. As a result, consideration was given to qualitative factors to adjust the reserve balance for asset specific risk
characteristics, current conditions and future expectations. Similar qualitative factors are considered for both finance and
contract receivables. The qualitative factors used in determining the estimate of expected credit losses are influenced by the
changes in the composition of the portfolio, underwriting practices, and other relevant conditions that were different from the
historical periods.
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 2023 and 2022:
(Amounts in millions)
Allowances for credit losses:
Beginning of year
Provision for credit losses
Charge-offs
Recoveries
Currency translation
End of year
2023
2022
Finance
Receivables
Contract
Receivables
Finance
Receivables
Contract
Receivables
$
$
60.9 $
57.2
(58.8)
8.4
0.1
67.8 $
6.6 $
1.9
(2.3)
0.4
0.1
6.7 $
67.3 $
37.7
(52.7)
8.9
(0.3)
60.9 $
8.4
0.5
(2.5)
0.3
(0.1)
6.6
2023 ANNUAL REPORT
81
Notes to Consolidated Financial Statements (continued)
Past due: Depending on the contract, payments for finance and contract receivables are due on a monthly or weekly basis.
Weekly payments are converted into a monthly equivalent for purposes of calculating delinquency. Delinquencies are assessed
at the end of each month following the monthly equivalent contractual payment due date. The entire receivable balance of a
contract is considered delinquent when contractual payments become 30 days past due. Removal from delinquent status occurs
when the cumulative amount of monthly contractual payments then due have been received by the company.
It is the general practice of Snap-on’s financial services business not to engage in contract or loan modifications. In limited
instances, Snap-on’s financial services business may modify certain receivables. The amount and number of finance and
contract receivable modifications as of 2023 and 2022 year end were immaterial to both the financial services portfolio and the
company’s results of operations and financial position.
The aging of finance and contract receivables as of 2023 and 2022 year end is as follows:
30-59
Days Past
Due
60-90
Days Past
Due
Greater
Than 90
Days Past
Due
Total Past
Due
Total Not
Past
Due
Total
Greater
Than 90
Days Past
Due and
Accruing
$
$
21.5 $
1.5
13.6 $
0.6
23.2 $
1.2
58.3 $
3.3
1,887.8 $
532.1
1,946.1 $
535.4
19.9
0.2
17.2 $
1.2
11.2 $
0.3
19.5 $
2.2
47.9 $
3.7
1,746.0 $
496.6
1,793.9 $
500.3
16.5
0.3
(Amounts in millions)
2023 year end:
Finance receivables
Contract receivables
2022 year end:
Finance receivables
Contract receivables
Nonaccrual: SOC maintains the accrual of interest income during the progression through the various stages of delinquency
prior to processing for write-off. At the time of write-off, the entire balance including the accrued but unpaid interest income
amount is recorded as a loss.
Finance receivables are generally placed on nonaccrual status (nonaccrual of interest and other fees): (i) when a customer is
placed on repossession status; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer;
or (iv) in other instances in which management concludes collectability is not reasonably assured.
Contract receivables are generally placed on nonaccrual status: (i) when a receivable is more than 90 days past due or at the
point a customer’s account is placed on terminated status regardless of its delinquency status; (ii) upon notification of the death
of a customer; or (iii) in other instances in which management concludes collectability is not reasonably assured.
The accrual of interest and other fees is resumed when the finance or contract receivable becomes contractually current and
collection of all remaining contractual amounts due is reasonably assured. 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 applicable
agreement. 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 2023 and 2022 year end is as follows:
(Amounts in millions)
Finance receivables
Contract receivables
2023
2022
$
10.6 $
3.3
8.7
3.3
82
SNAP-ON INCORPORATED
Note 5: Inventories
Inventories by major classification as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Finished goods
Work in progress
Raw materials
Total FIFO value
Excess of current cost over LIFO cost
Total inventories – net
2023
2022
874.6 $
76.1
171.1
1,121.8
(115.9)
1,005.9 $
882.2
77.2
182.3
1,141.7
(108.6)
1,033.1
$
$
Inventories accounted for using the FIFO method approximated 59% and 61% of total inventories as of 2023 and 2022 year
end, respectively. The company accounts for its non-U.S. inventory on the FIFO method. As of 2023 year end, approximately
36% of the company’s U.S. inventory was accounted for using the FIFO method and 64% was accounted for using the LIFO
method. There were no LIFO inventory liquidations in 2023, 2022 or 2021.
Note 6: Property and Equipment
Property and equipment (which are carried at cost) as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Land
Buildings and improvements
Machinery, equipment and computer software
Property and equipment – gross
Accumulated depreciation and amortization
Property and equipment – net
2023
2022
$
$
34.5 $
452.8
1,083.1
1,570.4
(1,031.1)
539.3 $
32.6
434.7
1,069.3
1,536.6
(1,024.0)
512.6
The estimated service lives of property and equipment are principally as follows:
Buildings and improvements
Machinery, equipment and computer software
3 to 50 years
2 to 15 years
Depreciation expense was $72.2 million, $71.5 million and $75.6 million in 2023, 2022 and 2021, respectively.
2023 ANNUAL REPORT
83
Notes to Consolidated Financial Statements (continued)
Note 7: Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill by segment for 2023 and 2022 are as follows:
(Amounts in millions)
Balance as of 2021 year end
Currency translation
Acquisition adjustments
Balance as of 2022 year end
Currency translation
Acquisition adjustments
Balance as of 2023 year end
Commercial
& Industrial
Group
Snap-on
Tools Group
Repair Systems
& Information
Group
Total
$
$
$
325.8 $
(22.4)
(0.5)
302.9 $
10.7
33.0
346.6 $
12.4 $
—
—
12.4 $
—
—
12.4 $
778.3 $
(15.7)
(32.6)
730.0 $
6.7
1.7
738.4 $
1,116.5
(38.1)
(33.1)
1,045.3
17.4
34.7
1,097.4
Goodwill of $1,097.4 million as of 2023 year end included $33.0 million, on a preliminary basis, from the acquisition of
Mountz and $1.7 million from the acquisition of SAVTEQ. The goodwill from Mountz and SAVTEQ is included in the
Commercial & Industrial Group and Repair Systems & Information Group, respectively.
The purchase accounting valuations for the acquired net assets of AutoCrib Germany, Dealer-FX and Pradines were completed
in 2022. The purchase accounting valuations for the acquired net assets of Dealer-FX resulted in a reduction of goodwill of
$32.6 million from 2021 year end. The purchase accounting valuations for the acquired net assets of Pradines resulted 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 AutoCrib Germany and Pradines is included in the Commercial & Industrial Group.
See Note 3 for additional information on acquisitions.
Additional disclosures related to other intangible assets as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Amortized other intangible assets:
Customer relationships
Developed technology
Internally developed software
Patents
Trademarks
Other
Total
Non-amortized trademarks
Total other intangible assets
2023
2022
Gross
Carrying Value
Accumulated
Amortization
Net
Carrying Value
Gross
Carrying Value
Accumulated
Amortization
Net
Carrying Value
$
214.5 $
(163.6) $
50.9 $
212.1 $
(150.8) $
36.2
191.3
53.0
4.0
6.2
505.2
137.4
(29.8)
(148.2)
(26.8)
(2.5)
(2.8)
(373.7)
—
6.4
43.1
26.2
1.5
3.4
131.5
137.4
35.8
179.6
48.4
3.9
7.7
487.5
134.1
(26.0)
(137.2)
(25.6)
(2.4)
(4.0)
(346.0)
—
$
642.6 $
(373.7) $
268.9 $
621.6 $
(346.0) $
61.3
9.8
42.4
22.8
1.5
3.7
141.5
134.1
275.6
The gross carrying value of patents as of year end 2023 includes $1.1 million related to the SAVTEQ 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, changes in key
personnel or litigation, a sustained decrease in share price and/or other events. As of 2023 year end, the company had no
accumulated impairment losses.
84
SNAP-ON INCORPORATED
The weighted-average amortization periods related to other intangible assets are as follows:
Customer relationships
Developed technology
Internally developed software
Patents
Trademarks
Other
In Years
14
5
6
15
9
39
The weighted-average amortization period for all amortizable intangible assets on a combined basis is 12 years. Intangible asset
renewal costs are expensed as incurred.
The aggregate amortization expense was $27.1 million in 2023, $28.7 million in 2022 and $29.2 million in 2021. Based on
current levels of amortizable intangible assets and estimated weighted-average useful lives, estimated annual amortization
expense is expected to be $22.6 million in 2024, $16.3 million in 2025, $12.3 million in 2026, $10.6 million in 2027, and $9.3
million in 2028.
Note 8: Income Taxes
The source of earnings before income taxes and equity earnings consisted of the following:
(Amounts in millions)
United States
Foreign
Total
The provision (benefit) for income taxes consisted of the following:
(Amounts in millions)
Current:
Federal
Foreign
State
Total current
Deferred:
Federal
Foreign
State
Total deferred
Total income tax provision
2023
2022
2021
1,143.7 $
184.3
1,328.0 $
1,028.7 $
173.9
1,202.6 $
911.4
175.5
1,086.9
2023
2022
2021
215.4 $
55.2
41.5
312.1
(14.5)
(3.9)
(0.3)
(18.7)
293.4 $
185.4 $
45.2
48.4
279.0
(8.5)
(2.1)
0.3
(10.3)
268.7 $
152.9
48.2
37.5
238.6
6.1
(0.3)
2.6
8.4
247.0
$
$
$
$
2023 ANNUAL REPORT
85
Notes to Consolidated Financial Statements (continued)
The following is a reconciliation of the statutory federal income tax rate to Snap-on’s effective tax rate:
Statutory federal income tax rate
Increase (decrease) in tax rate resulting from:
State income taxes, net of federal benefit
Noncontrolling interests
Repatriation of foreign earnings
Change in valuation allowance for deferred tax assets
Adjustments to tax accruals and reserves
Foreign rate differences
Excess tax benefits related to equity compensation
Other
Effective tax rate
2023
21.0%
2.6
(0.4)
(0.3)
0.2
(0.6)
0.7
(0.8)
(0.3)
22.1%
2022
21.0%
3.0
(0.4)
(0.3)
0.3
(0.7)
0.4
(0.5)
(0.5)
22.3%
2021
21.0%
2.8
(0.4)
(0.5)
0.2
0.3
0.5
(1.0)
(0.2)
22.7%
Snap-on’s effective income tax rate on earnings attributable to Snap-on Incorporated was 22.5% in 2023, 22.8% in 2022, and
23.2% in 2021.
Temporary differences that give rise to the net deferred income tax liability as of 2023, 2022 and 2021 year end are as follows:
(Amounts in millions)
Deferred income tax assets (liabilities):
Inventories
Accruals not currently deductible
Tax credit carryforward
Employee benefits
Net operating losses
Depreciation and amortization
Valuation allowance
Equity-based compensation
Undistributed non-U.S. earnings
Other
Net deferred income tax liability
2023
2022
2021
$
$
43.2 $
68.6
5.2
1.4
48.0
(156.4)
(27.2)
16.2
(3.9)
1.7
(3.2) $
34.0 $
66.9
4.2
16.7
47.9
(170.1)
(23.5)
14.7
(4.2)
1.3
(12.1) $
37.5
77.6
1.2
6.4
35.0
(213.2)
(24.5)
13.1
(4.4)
(1.9)
(73.2)
As of 2023 year end, Snap-on had tax net operating loss carryforwards totaling $180.4 million as follows:
(Amounts in millions)
Year of expiration:
2024-2028
2029-2033
2034-2038
2039-2043
2044-2048
Indefinite
Total net operating loss carryforwards
State
Federal
Foreign
Total
$
$
0.3 $
—
—
—
—
—
0.3 $
— $
—
—
—
—
—
— $
32.6 $
20.7
34.8
41.5
6.6
43.9
180.1 $
32.9
20.7
34.8
41.5
6.6
43.9
180.4
86
SNAP-ON INCORPORATED
A valuation allowance totaling $27.2 million, $23.5 million and $24.5 million as of 2023, 2022 and 2021 year end, respectively,
has been established for deferred income tax assets primarily related to certain subsidiary loss carryforwards that may not be
realized. Realization of the net deferred income tax assets is dependent on generating sufficient taxable income prior to their
expiration. Although realization is not assured, management believes it is more-likely-than-not that the net deferred income tax
assets will be realized. The amount of the net deferred income tax assets considered realizable, however, could change in the
near term if estimates of future taxable income during the carryforward period fluctuate.
The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2023, 2022 and 2021:
(Amounts in millions)
Unrecognized tax benefits at beginning of year
Gross increases – tax positions in prior periods
Gross decreases – tax positions in prior periods
Gross increases – tax positions in the current period
Settlements with taxing authorities
Lapsing of statutes of limitations
Unrecognized tax benefits at end of year
2023
2022
2021
5.6 $
1.2
—
0.7
—
—
7.5 $
8.9 $
—
(0.3)
0.6
(3.0)
(0.6)
5.6 $
9.1
0.4
(0.4)
0.4
—
(0.6)
8.9
$
$
The unrecognized tax benefits of $7.5 million, $5.6 million and $8.9 million as of 2023, 2022 and 2021 year end, respectively,
would impact the effective income tax rate if recognized. As of December 30, 2023, unrecognized tax benefits of $1.2 million
and $6.3 million were included in “Deferred income tax assets” and “Other long-term liabilities,” respectively, on the
accompanying Consolidated Balance Sheets. Interest and penalties related to unrecognized tax benefits are recorded in income
tax expense. As of 2023, 2022 and 2021 year end, the company had provided for $1.2 million, $0.9 million and $1.4 million,
respectively, of accrued interest and penalties related to unrecognized tax benefits. As of December 30, 2023, $1.2 million of
accrued interest and penalties were included in “Other long-term liabilities” on the accompanying Consolidated Balance Sheets.
Snap-on and its subsidiaries file income tax returns in the United States and in various state, local and foreign jurisdictions. It is
reasonably possible that certain unrecognized tax benefits may either be settled with taxing authorities or the statutes of
limitations for such items may lapse within the next 12 months, causing Snap-on’s gross unrecognized tax benefits to decrease
by a range of zero to $0.9 million. Over the next 12 months, Snap-on anticipates taking certain tax positions on various tax
returns for which the related tax benefit does not meet the recognition threshold. Accordingly, Snap-on’s gross unrecognized
tax benefits may increase by a range of zero to $0.9 million over the next 12 months for uncertain tax positions expected to be
taken in future tax filings.
With few exceptions, Snap-on is no longer subject to U.S. federal and state/local income tax examinations by tax authorities for
years prior to 2018, and Snap-on is no longer subject to non-U.S. income tax examinations by tax authorities for years prior to
2012.
In general, it is Snap-on’s practice and intention to reinvest certain earnings of its non-U.S. subsidiaries in those operations. As
of 2023 year end, the company has not made a provision for incremental U.S. income taxes or additional foreign withholding
taxes on approximately $471.9 million of such undistributed earnings that is deemed indefinitely reinvested. Determination of
the amount of unrecognized deferred tax liability related to these earnings is not practicable. As a result of the Tax Act, which
subjected the majority of the company’s undistributed foreign earnings to taxation for the 2017 tax year, the company can now
repatriate non-U.S. cash in a tax efficient manner. Accordingly, the company does not have an indefinitely reinvested assertion
on the majority of undistributed earnings for its non-U.S. subsidiaries and has recorded a deferred tax liability of $3.9 million
for the incremental tax costs associated with the future potential repatriation of such earnings.
2023 ANNUAL REPORT
87
Notes to Consolidated Financial Statements (continued)
Note 9: Short-term and Long-term Debt
Short-term and long-term debt as of 2023 and 2022 year end consisted of the following:
(Amounts in millions)
3.25% unsecured notes due 2027
4.10% unsecured notes due 2048
3.10% unsecured notes due 2050
Other debt*
Less: notes payable
Total long-term debt
2023
2022
300.0 $
400.0
500.0
0.2
1,200.2
(15.6)
1,184.6 $
300.0
400.0
500.0
1.0
1,201.0
(17.2)
1,183.8
$
$
* Includes unamortized debt issuance costs and issuance discounts.
Snap-on’s long-term debt and notes payable maturities in the next five years include a $300.0 million note that matures in 2027.
Average notes payable outstanding were $17.5 million and $18.6 million in 2023 and 2022, respectively. The 2023 weighted-
average interest rate on such borrowings of 11.0% compared with 9.9% in 2022. At 2023 year end, the weighted-average rate
on outstanding notes payable of 11.1% compared with 10.9% in 2022.
On September 12, 2023, Snap-on entered into a $900 million multicurrency revolving credit facility that terminates on
September 12, 2028 (the “Credit Facility”), which amended and restated in its entirety Snap-on’s previous $800 million
multicurrency revolving credit facility that was set to terminate on September 16, 2024. The Credit Facility contains an
accordion feature that, subject to certain customary conditions, may allow the maximum commitment to be increased by up to
$450 million with the approval of the lenders providing additional commitments. No amounts were borrowed or outstanding
under either Credit Facility during the years ended and as of December 30, 2023 or December 31, 2022.
Borrowings under the Credit Facility bear interest at varying rates based on either: (i) Snap-on’s then-current, long-term debt
ratings; or (ii) Snap-on’s then-current ratio of consolidated debt net of certain cash adjustments (“Consolidated Net Debt”) to
earnings before interest, taxes, depreciation, amortization and certain other adjustments for the preceding four fiscal quarters
then ended (the “Consolidated Net Debt to EBITDA Ratio”). The Credit Facility’s financial covenant requires that Snap-on
maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of Consolidated Net Debt to the sum of
Consolidated Net Debt plus total equity and less accumulated other comprehensive income or loss (the “Leverage Ratio”); or
(ii) a Consolidated Net Debt to EBITDA Ratio not greater than 3.50 to 1.00. Snap-on may, up to two times during any five-year
period during the term of the Credit Facility (including any extensions thereof), elect to increase the maximum 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 December 30,
2023, the company’s actual ratios of 0.05 and 0.18 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. There was no commercial paper issued or outstanding
during the years ended and as of December 30, 2023 or December 31, 2022.
Note 10: Financial Instruments
Derivatives: All derivative instruments are reported in the Consolidated Financial Statements at fair value. Changes in the fair
value of derivatives are recorded each period in earnings or on the accompanying Consolidated Balance Sheets, depending on
whether the derivative is designated and effective as part of a hedged transaction. Gains or losses on derivative instruments
recorded in earnings are presented in the same Consolidated Statement of Earnings line that is used to present the earnings
effect of the hedged item. Gains or losses on derivative instruments in accumulated other comprehensive income (loss)
(“Accumulated OCI”) are reclassified to earnings in the period in which earnings are affected by the underlying hedged item.
The criteria used to determine if hedge accounting treatment is appropriate are: (i) the designation of the hedge to an underlying
exposure; (ii) whether or not overall risk is being reduced; and (iii) if there is a correlation between the value of the derivative
instrument and the underlying hedged item. Once a derivative contract is entered into, Snap-on designates the derivative as a
fair value hedge, a cash flow hedge, a hedge of a net investment in a foreign operation, or a natural hedging instrument whose
change in fair value is recognized as an economic hedge against changes in the value of the hedged item. Snap-on does not use
derivative instruments for speculative or trading purposes.
88
SNAP-ON INCORPORATED
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. The company uses derivatives to manage financial exposures that occur in the normal course of
business. The primary risks managed by using derivative instruments are foreign currency risk, interest rate risk and stock-
based deferred compensation risk.
Foreign currency risk management: Snap-on has significant international operations and is subject to certain risks inherent
with foreign operations that include currency fluctuations. Foreign currency exchange risk exists to the extent that Snap-on has
payment obligations or receipts denominated in currencies other than the functional currency, including intercompany loans
denominated in foreign currencies. To manage these exposures, Snap-on identifies naturally offsetting positions and then
purchases hedging instruments to protect the residual net exposures. Snap-on manages most of these exposures on a
consolidated basis, which allows for netting of certain exposures to take advantage of natural offsets. Foreign currency forward
contracts (“foreign currency forwards”) are used to hedge the net exposures. Gains or losses on net foreign currency hedges are
intended to offset losses or gains on the underlying net exposures in an effort to reduce the earnings volatility resulting from
fluctuating foreign currency exchange rates. Snap-on’s foreign currency forwards are typically not designated as hedges. The
fair value changes of these contracts are reported in earnings as foreign exchange gain or loss, which is included in “Other
income (expense) – net” on the accompanying Consolidated Statements of Earnings. See Note 17 for additional information on
Other income (expense) – net.
As of 2023 year end, Snap-on had $133.3 million of net foreign currency forward buy contracts outstanding comprised of buy
contracts including $101.2 million in British pounds, $67.2 million in Swedish kronor, $44.6 million in Hong Kong dollars,
$27.2 million in Chinese renminbi, $24.9 million in Australian dollars, $17.0 million in Singapore dollars, $6.4 million in
Norwegian kroner, $6.1 million in Danish kroner, and $5.1 million in other currencies, and sell contracts including $116.9
million in Canadian dollars, $17.6 million in euros, $15.5 million in Hungarian forints, $10.1 million in Indian rupees, and $6.3
million in other currencies. As of 2022 year end, Snap-on had $92.7 million of net foreign currency forward sell contracts
outstanding comprised of sell contracts including $250.0 million in Canadian dollars, $39.2 million in euros, $8.5 million in
Hungarian forints, $5.4 million in Indian rupees, and $3.9 million in other currencies, and buy contracts comprised of $72.0
million in British pounds, $41.3 million in Swedish kronor, $36.5 million in Hong Kong dollars, $26.8 million in Chinese
renminbi, $16.0 million in Singapore dollars, $6.7 million in Australian dollars, $5.9 million in Norwegian kroner, $4.7 million
in Danish kroner, and $4.4 million in other currencies.
Interest rate risk management: 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: Snap-on may enter into interest rate swaps to manage risks associated with changing interest rates related to
the company’s fixed rate borrowings. Interest rate swaps are accounted for as fair value hedges. The differentials paid or
received on interest rate swaps are recognized as adjustments to “Interest expense” on the accompanying Consolidated
Statements of Earnings. The change in the fair value of the derivative is recorded in “Long-term debt” on the accompanying
Consolidated Balance Sheets. There were no outstanding interest rate swaps as of both 2023 and 2022 year end.
Treasury locks: Snap-on may use treasury locks to manage the potential change in interest rates in anticipation of the issuance
of fixed rate debt. Treasury locks are accounted for as cash flow hedges. The differentials to be paid or received on treasury
locks related to the anticipated issuance of fixed rate debt are initially recorded in Accumulated OCI for derivative instruments
that are designated and qualify as cash flow hedges. Upon the issuance of debt, the related amount in Accumulated OCI is
released over the term of the debt and recognized as an adjustment to interest expense on the Consolidated Statements of
Earnings. There were no treasury locks outstanding as of both 2023 and 2022 year end. See Note 17 for additional information
on Other income (expense) – net.
Stock-based deferred compensation risk management: 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 2023 and 2022 year end, Snap-on had equity
forwards in place intended to manage market risk with respect to 68,900 shares and 64,900 shares, respectively, of Snap-on
common stock associated with its deferred compensation plans.
2023 ANNUAL REPORT
89
Notes to Consolidated Financial Statements (continued)
Counterparty risk: Snap-on is exposed to credit losses in the event of non-performance by the counterparties to its various
financial agreements, including its foreign currency forward contracts, interest rate swap agreements, treasury lock agreements
and prepaid equity forward agreements. Snap-on does not obtain collateral or other security to support financial instruments
subject to credit risk, but monitors the credit standing of the counterparties and generally enters into agreements with financial
institution counterparties with a credit rating of A- or better. Snap-on does not anticipate non-performance by its counterparties,
but cannot provide assurances.
Fair value measurements: The fair value measurement hierarchy prioritizes the inputs used to measure fair value. The
hierarchy gives the highest priority (“Level 1”) to unadjusted quoted prices in active markets for identical assets and liabilities
and the lowest priority (“Level 3”) to unobservable inputs. Fair value measurements primarily based on observable market
information are given a “Level 2” priority.
Snap-on has derivative assets and liabilities related to treasury locks, foreign currency forwards and equity forwards that are
measured at Level 2 fair value on a recurring basis. The fair values of derivative instruments included within the accompanying
Consolidated Balance Sheets as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Derivatives not designated as
hedging instruments:
Foreign currency forwards
Foreign currency forwards
Equity forwards
Total derivative instruments
2023
2022
Balance Sheet
Presentation
Derivative
Assets
Fair Value
Derivative
Liability
Fair Value
Derivative
Assets
Fair Value
Derivative
Liability
Fair Value
Prepaid expenses and
other current assets
Other accrued liabilities
Prepaid expenses and
other current assets
$
17.9 $
— $
18.5 $
—
11.9
—
19.9
37.8 $
—
11.9 $
14.8
33.3 $
$
—
16.9
—
16.9
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between participants at the measurement date. Level 2 fair value measurements for derivative assets and liabilities are measured
using quoted prices in active markets for similar assets and liabilities. Foreign currency forwards are valued based on exchange
rates quoted by domestic and foreign banks for similar instruments. Equity forwards are valued using a market approach based
primarily on the company’s stock price at the reporting date. The company did not have any derivative assets or liabilities
measured at Level 1 or Level 3, nor did it implement any changes in its valuation techniques in 2023 and 2022, respectively.
90
SNAP-ON INCORPORATED
The effect of derivative instruments designated as fair value and cash flow hedges as included in the Consolidated Statements of
Earnings is as follows:
Gain (Loss) Recognized in Income on Fair Value
and Cash Flow Hedging Relationships
2023
2022
2021
Other
income
(expense)
– net
Interest
expense
Other
income
(expense)
– net
Interest
expense
Other
income
(expense)
– net
Interest
expense
$
(49.9) $
67.5 $
(47.1) $
42.5 $
(53.1) $
16.5
$
— $
— $
— $
— $
(10.2) $
—
—
—
—
2.7
—
—
$
1.6 $
— $
1.6 $
— $
1.6 $
—
(Amounts in millions)
Total amounts of income and expense
presented in the Consolidated Statements of
Earnings:
Gain (loss) on fair value hedging
relationships:
Interest rate swaps
Long-term debt
Derivatives designated as hedging
instruments
Gain on cash flow hedging relationships:
Treasury locks
Gain reclassified from accumulated OCI
into income
During the next 12 months, Snap-on expects to reclassify into earnings net gains from Accumulated OCI of approximately $1.2
million after tax at the time the underlying hedge transactions are realized.
The effects of derivative instruments not designated as hedging instruments as included in the Consolidated Statements of
Earnings are as follows:
(Amounts in millions)
Gain (loss) on derivative relationships:
Foreign currency forwards
Net exposures
Statement of
Earnings
Presentation
Other income
(expense) – net
Other income
(expense) – net
Gain (Loss) Recognized in
Income on Derivatives
2023
2022
2021
$
6.0 $
(17.6) $
(10.8)
(17.0)
10.1
Equity forwards
Operating expenses
$
4.5 $
1.4 $
Stock-based deferred compensation
liabilities
Operating expenses
(4.5)
(1.4)
(4.3)
2023 ANNUAL REPORT
91
9.6
4.1
Notes to Consolidated Financial Statements (continued)
Snap-on’s foreign currency forwards are typically not designated as hedges for financial reporting purposes. The fair value
changes of foreign currency forwards not designated as hedging instruments are reported in earnings as foreign exchange gain
or loss in “Other income (expense) – net” on the accompanying Consolidated Statements of Earnings. See Note 17 for
additional information on “Other income (expense) – net.”
Snap-on’s equity forwards are not designated as hedges for financial reporting purposes. Fair value changes of both the equity
forwards and related stock-based (mark-to-market) deferred compensation liabilities are reported in “Operating expenses” on
the accompanying Consolidated Statements of Earnings.
Fair value of financial instruments: The fair values of financial instruments that do not approximate the carrying values in the
financial statements as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Finance receivables – net
Contract receivables – net
Long-term debt and notes payable
2023
2022
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
$
1,878.3 $
528.7
1,200.2
2,138.7 $
561.6
1,031.5
1,733.0 $
493.7
1,201.0
1,983.9
520.4
982.1
The following methods and assumptions are used in estimating the fair value of financial instruments:
•
•
•
Finance and contract receivables include both short-term and long-term receivables. The fair value estimates of finance
and contract receivables are derived utilizing discounted cash flow analyses performed on groupings of receivables
that are similar in terms of loan type and characteristics. The cash flow analyses consider recent prepayment trends
where applicable. The cash flows are discounted over the average life of the receivables using a current market
discount rate of a similar term adjusted for credit quality. Significant inputs to the fair value measurements of the
receivables are unobservable and, as such, are classified as Level 3.
Fair value of long-term debt 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
and issuance discounts. The fair value of notes payable approximates such instruments’ carrying value due to their
short-term nature.
The fair value of all other financial instruments, including trade and other accounts receivable, accounts payable and
other financial instruments, approximates such instruments’ carrying value due to their short-term nature.
92
SNAP-ON INCORPORATED
Note 11: Pension Plans
Snap-on has several non-contributory defined benefit pension plans covering most U.S. employees and certain employees in
foreign countries. Snap-on also has foreign contributory defined benefit pension plans covering certain foreign employees.
Retirement benefits are generally provided based on employees’ years of service and average earnings or stated amounts for
years of service. Normal retirement age is 65, with provisions for earlier retirement.
The status of Snap-on’s pension plans as of 2023 and 2022 year end is as follows:
(Amounts in millions)
Change in projected benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participant contributions
Benefits paid
Actuarial (gain) loss
Foreign currency impact
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual gain (loss) on plan assets
Employer contributions
Plan participant contributions
Benefits paid
Foreign currency impact
Fair value of plan assets at end of year
Funded (unfunded) status at end of year
2023
2022
1,254.6 $
18.8
65.3
0.4
(79.2)
24.0
8.0
1,291.9 $
1,241.7 $
155.3
8.1
0.4
(79.3)
7.7
1,333.9 $
42.0 $
1,667.1
26.5
44.4
0.4
(77.7)
(382.4)
(23.7)
1,254.6
1,710.9
(384.1)
10.8
0.4
(77.7)
(18.6)
1,241.7
(12.9)
$
$
$
$
$
The increase in the defined benefit pension plans benefit obligations in 2023 was primarily due to a decrease in the discount rate
in 2023 as compared to 2022.
Amounts recognized in the Consolidated Balance Sheets as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Pension assets
Accrued benefits
Pension liabilities
Net asset (liability)
2023
2022
$
$
130.5 $
(6.2)
(82.3)
42.0 $
70.6
(4.9)
(78.6)
(12.9)
Amounts included in Accumulated OCI on the accompanying Consolidated Balance Sheets as of 2023 and 2022 year end are as
follows:
(Amounts in millions)
Net loss, net of tax of $81.8 million and $88.8 million, respectively
Prior service cost, net of tax of $0.2 million and $0.2 million, respectively
Total amount included in Accumulated OCI
2023
2022
$
$
(249.1) $
(0.5)
(249.6) $
(269.0)
(0.5)
(269.5)
2023 ANNUAL REPORT
93
Notes to Consolidated Financial Statements (continued)
The accumulated benefit obligation for Snap-on’s pension plans as of 2023 and 2022 year end was $1,239.0 million and
$1,201.8 million, respectively.
The accumulated benefit obligation, projected benefit obligation and fair value of plan assets for Snap-on’s pension plans as of
2023 and 2022 year end are as follows:
(Amounts in millions)
Pension plans with accumulated benefit obligations in excess of plan assets:
2023
2022
Accumulated benefit obligation
Fair value of plan assets
Pension plans with projected benefit obligations in excess of plans assets:
Projected benefit obligation
Fair value of plan assets
$
$
103.3 $
18.4
106.9 $
18.4
94.9
15.1
98.6
15.1
The components of net periodic benefit cost (credit) and changes recognized in “Other comprehensive income (loss)” (“OCI”)
are as follows:
(Amounts in millions)
Net periodic benefit cost (credit):
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized loss
Amortization of prior service cost
Net periodic benefit cost (credit)
Changes in benefit obligations recognized in OCI, net of tax:
Net (gain) loss
Prior service credit
Total recognized in OCI
2023
2022
2021
$
$
$
$
18.8 $
65.3
(104.7)
1.5
0.1
(19.0) $
(19.9) $
—
(19.9) $
26.5 $
44.4
(99.2)
18.0
0.1
(10.2) $
59.6 $
(0.1)
59.5 $
28.8
42.3
(94.4)
36.3
0.1
13.1
(92.8)
(0.1)
(92.9)
The components of net periodic pension cost (credit), other than the service cost component, are included in “Other income
(expense) – net” on the accompanying Consolidated Statements of Earnings. See Note 17 for additional information on Other
income (expense) – net.
The worldwide weighted-average assumptions used to determine Snap-on’s full-year pension costs are as follows:
Discount rate
Expected return on plan assets
Rate of compensation increase
Interest crediting rate - U.S. cash balance plan
2023
5.4%
7.4%
3.2%
3.8%
2022
2.8%
6.2%
3.4%
3.8%
2021
2.5%
6.5%
3.4%
3.8%
The worldwide weighted-average assumptions used to determine Snap-on’s projected benefit obligation as of 2023 and 2022
year end are as follows:
Discount rate
Rate of compensation increase
Interest crediting rate - U.S. cash balance plan
2023
5.3%
3.2%
3.8%
2022
5.4%
3.2%
3.8%
94
SNAP-ON INCORPORATED
The objective of Snap-on’s discount rate assumption is to reflect the rate at which the pension benefits could be effectively
settled. The domestic discount rate as of 2023 and 2022 year end was selected based on a cash flow matching methodology
developed by the company’s outside actuaries that incorporates a review of current economic conditions. This methodology
matches the plans’ yearly projected cash flows for benefits and service costs to those of hypothetical bond portfolios using
high-quality, AA rated or better, corporate bonds from either Moody’s Investors Service or Standard & Poor’s credit rating
agencies available at the measurement date. This technique calculates bond portfolios that produce adequate cash flows to pay
the plans’ projected yearly benefits and then selects the portfolio with the highest yield and uses that yield as the recommended
discount rate.The weighted-average discount rate for Snap-on’s domestic pension plans of 5.5% represents the single rate that
produces the same present value of cash flows as the estimated benefit plan payments. Lowering Snap-on’s domestic discount
rate assumption by 50 basis points (100 basis points (“bps”) equals 1.0 percent) would have increased Snap-on’s 2023 domestic
pension expense and projected benefit obligation by approximately $1.5 million and $48.1 million, respectively. As of 2023
year end, Snap-on’s domestic projected benefit obligation comprised approximately 84% of Snap-on’s worldwide projected
benefit obligation. The weighted-average discount rate for Snap-on’s foreign pension plans of 4.3% represents the single rate
that produces the same present value of cash flows as the estimated benefit plan payments. Lowering Snap-on’s foreign
discount rate assumption by 50 bps would have increased Snap-on’s 2023 foreign pension expense and projected benefit
obligation by approximately $0.9 million and $13.5 million, respectively.
Actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or market-related value of
assets are amortized on a straight-line basis over the average remaining service period of active participants or over the average
remaining life expectancy for plans with primarily inactive participants. Prior service costs and credits resulting from plan
amendments are amortized in equal annual amounts over the average remaining service period of active participants or over the
average remaining life expectancy for plans with primarily inactive participants.
As a practical expedient, Snap-on uses the calendar year end as the measurement date for its plans. Snap-on funds its pension
plans as required by governmental regulation and may consider discretionary contributions as conditions warrant. Snap-on
intends to make contributions of $6.0 million to its foreign pension plans and $3.7 million to its domestic pension plans in 2024,
as required by law. Depending on market and other conditions, Snap-on may make discretionary cash contributions to its
pension plans in 2024.
The following benefit payments, which reflect expected future service, are expected to be paid as follows:
(Amounts in millions)
Year:
2024
2025
2026
2027
2028
2029-2033
Amount
$
91.2
95.6
96.4
98.2
99.8
504.7
Snap-on’s domestic pension plans have a long-term investment horizon and a total return strategy that emphasizes a capital
growth objective. The long-term investment performance objective for Snap-on’s domestic plans’ assets is to achieve net of
expense returns that meet or exceed the 7.5% domestic long-term return on plan assets assumption used for reporting purposes.
Snap-on uses a three-year, market-related value asset method of amortizing the difference between actual and expected returns
on its domestic plans’ assets. As of 2023 year end, Snap-on’s domestic pension plans’ assets comprised approximately 86% of
the company’s worldwide pension plan assets.
The basis for determining the overall expected long-term return on plan assets assumption is a nominal returns forecasting
method. For each asset class, future returns are estimated by identifying the premium of riskier asset classes over lower risk
alternatives. The methodology constructs expected returns using a “building block” approach to the individual components of
total return. These forecasts are stated in both nominal and real (after inflation) terms. This process first considers the long-term
historical return premium based on the longest set of data available for each asset class. These premiums, which are calculated
using the geometric mean, are then adjusted based on current relative valuation levels, macro-economic conditions, and the
expected alpha related to active investment management. The asset return assumption is also adjusted by an implicit expense
load for estimated administrative and investment-related expenses.
2023 ANNUAL REPORT
95
Notes to Consolidated Financial Statements (continued)
For risk and correlation assumptions, the actual experience for each asset class is reviewed for the longest time period available.
Expected relationships for a 10 to 20 year time horizon are determined based upon historical results, with adjustments made for
material changes.
Investments are diversified to attempt to minimize the risk of large losses. Since asset allocation is a key determinant of
expected investment returns, assets are periodically rebalanced to the targeted allocation to correct significant deviations from
the asset allocation policy that are caused by market fluctuations and cash flow. Asset/liability studies are conducted
periodically to determine if any revisions to the strategic asset allocation policy are necessary.
Snap-on’s domestic pension plans’ target allocation and actual weighted-average asset allocation by asset category and fair
value of plan assets as of 2023 and 2022 year end are as follows:
Asset category:
Equity securities
Debt securities and cash and cash equivalents
Hedge funds
Total
Target
49%
46%
5%
100%
2023
46%
46%
8%
100%
2022
45%
47%
8%
100%
Fair value of plan assets (Amounts in millions)
$
1,143.7 $
1,074.9
The fair value measurement hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority
(Level 1) to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority (Level 3) to
unobservable inputs. Fair value measurements primarily based on observable market information are given a Level 2 priority.
Certain equity and debt securities are valued at quoted per share or unit market prices for which an official close or last trade
pricing on an active exchange is available and are categorized as Level 1 in the fair value hierarchy. If quoted market prices are
not readily available for specific securities, values are estimated using quoted prices of securities with similar characteristics
and are categorized as Level 2 in the fair value hierarchy. Insurance contracts are valued at the present value of the estimated
future cash flows promised under the terms of the insurance contracts and are categorized as Level 2 in the fair value hierarchy.
Commingled equity securities and commingled multi-strategy funds are valued at the Net Asset Value (“NAV”) per share or
unit multiplied by the number of shares or units held as of the measurement date, as reported by the fund managers. The share
or unit price is quoted on a private market and is based on the value of the underlying investments, which are primarily based
on observable inputs; such investments that are measured at fair value using the NAV per share (or its equivalent) practical
expedient have not been classified in the fair value hierarchy.
Private equity partnership funds, hedge funds, and real estate and other real assets are valued at the NAV as reported by the
fund managers. Private equity partnership funds, certain hedge funds, and certain real estate and other real assets are valued
based on the proportionate interest or share of net assets held by the pension plan, which is based on the estimated fair market
value of the underlying investments. Certain other hedge funds and real estate and other real assets are valued at the NAV per
share or unit multiplied by the number of shares or units held as of the measurement date, based on the estimated value of the
underlying investments as reported by the fund managers. These investments are measured at fair value using the NAV per
share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy.
The company regularly reviews fund performance directly with its investment advisor and the fund managers, and performs
qualitative analysis to corroborate the reasonableness of the reported NAVs. For funds for which the company did not receive a
year-end NAV, the company recorded an estimate of the change in fair value for the latest period based on return estimates and
other fund activity obtained from the fund managers.
The columns labeled “Investments Measured at NAV” in the following tables reflect certain investments that are measured at
fair value using the NAV per share (or its equivalent) practical expedient and have not been categorized in the fair value
hierarchy. The fair value amounts presented in these tables are intended to permit a reconciliation of the fair value hierarchy to
the pension plan assets.
96
SNAP-ON INCORPORATED
The following is a summary, by asset category, of the fair value and the level within the fair value hierarchy of Snap-on’s
domestic pension plans’ assets as of 2023 year end:
(Amounts in millions)
Asset category:
Cash and cash equivalents
Equity securities:
Domestic
Foreign
Commingled funds – domestic
Commingled funds – foreign
Private equity partnerships
Debt securities:
Government
Corporate bonds
Real estate and other real assets
Hedge funds
Total
Quoted
Prices for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Investments
Measured at
NAV
Total
$
12.2 $
— $
— $
12.2
72.9
1.5
—
—
—
162.6
—
—
—
249.2 $
—
—
—
—
—
4.8
350.4
—
—
355.2 $
—
—
203.8
233.3
9.1
—
—
0.7
92.4
539.3 $
72.9
1.5
203.8
233.3
9.1
167.4
350.4
0.7
92.4
1,143.7
$
The following is a summary, by asset category, of the fair value and the level within the fair value hierarchy of Snap-on’s
domestic pension plans’ assets as of 2022 year end:
(Amounts in millions)
Asset category:
Cash and cash equivalents
Equity securities:
Domestic
Foreign
Commingled funds – domestic
Commingled funds – foreign
Private equity partnerships
Debt securities:
Government
Corporate bonds
Real estate and other real assets
Hedge funds
Total
Quoted
Prices for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Investments
Measured at
NAV
Total
$
14.3 $
— $
— $
14.3
67.1
39.2
—
—
—
158.7
—
—
—
279.3 $
—
—
—
—
—
6.0
319.7
—
—
325.7 $
—
—
189.1
180.6
11.0
—
—
2.5
86.7
469.9 $
67.1
39.2
189.1
180.6
11.0
164.7
319.7
2.5
86.7
1,074.9
$
Snap-on’s primary investment objective for its foreign pension plans’ assets is to meet the projected obligations to the
beneficiaries over a long period of time, and to do so in a manner that is consistent with the company’s risk tolerance. The
foreign asset allocation policies consider the company’s financial strength and long-term asset class risk/return expectations,
since the obligations are long term in nature. The company believes the foreign pension plans’ assets, which are managed
locally by professional investment firms, are well diversified.
2023 ANNUAL REPORT
97
Notes to Consolidated Financial Statements (continued)
The expected long-term rates of return on foreign plans’ assets, which range from 2.2% to 6.7% as of 2023 year end, reflect
management’s expectations of long-term average rates of return on funds invested to provide benefits included in the plans’
projected benefit obligation. The expected returns are based on outlooks for inflation, fixed income returns and equity returns,
asset allocations and investment strategies. Differences between actual and expected returns on foreign pension plans’ assets are
recorded as an actuarial gain or loss and amortized accordingly.
Snap-on’s foreign pension plans’ target allocation and actual weighted-average asset allocation by asset category and fair value
of plan assets as of 2023 and 2022 year end are as follows:
Asset category:
Equity securities*
Debt securities* and cash and cash equivalents
Insurance contracts
Total
Target
29%
59%
12%
100%
2023
30%
58%
12%
100%
2022
40%
49%
11%
100%
Fair value of plan assets (Amounts in millions)
$
190.2 $
166.8
* Includes commingled funds - multi-strategy
The following is a summary, by asset category, of the fair value and the level within the fair value hierarchy of Snap-on’s
foreign pension plans’ assets as of 2023 year end:
(Amounts in millions)
Asset category:
Cash and cash equivalents
Commingled funds – multi-strategy
Debt securities:
Government
Corporate bonds
Insurance contracts
Total
Quoted
Prices for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Investments
Measured at
NAV
Total
$
$
1.9 $
—
20.4
—
—
22.3 $
— $
—
—
26.3
21.8
48.1 $
— $
119.8
—
—
—
119.8 $
1.9
119.8
20.4
26.3
21.8
190.2
The following is a summary, by asset category, of the fair value and the level within the fair value hierarchy of Snap-on’s
foreign pension plans’ assets as of 2022 year end:
(Amounts in millions)
Asset category:
Cash and cash equivalents
Commingled funds – multi-strategy
Debt securities:
Government
Corporate bonds
Insurance contracts
Total
98
Quoted
Prices for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Investments
Measured at
NAV
Total
$
$
0.5 $
—
11.6
—
—
12.1 $
— $
—
—
23.1
18.2
41.3 $
— $
113.4
—
—
—
113.4 $
0.5
113.4
11.6
23.1
18.2
166.8
SNAP-ON INCORPORATED
Snap-on has several 401(k) plans covering certain U.S. employees. Snap-on’s employer match to the 401(k) plans is made with
cash contributions. For 2023, 2022 and 2021, Snap-on recognized $12.3 million, $11.8 million and $11.3 million, respectively,
of expense related to its 401(k) plans.
Note 12: Postretirement Plans
Certain eligible U.S. retirees have been provided with an account for the reimbursement of qualifying medical expenses during
retirement. Upon achieving specific age and service requirements, certain active associates are eligible for this account upon
retirement from the company. Snap-on maintains other health care benefit plans for certain retired U.S. employees.
Snap-on has a Voluntary Employees Beneficiary Association (“VEBA”) trust for the funding of existing postretirement health
care benefits for certain union retirees in the United States; all other retiree health care plans are unfunded.
The status of Snap-on’s U.S. postretirement health care plans as of 2023 and 2022 year end is as follows:
(Amounts in millions)
Change in accumulated postretirement benefit obligation:
2023
2022
Benefit obligation at beginning of year
Interest cost
Plan participant contributions
Benefits paid
Actuarial gain
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual gain (loss) on plan assets
Employer contributions
Plan participant contributions
Benefits paid
Fair value of plan assets at end of year
Unfunded status at end of year
$
$
$
$
$
37.3 $
1.9
0.2
(3.3)
(0.3)
35.8 $
11.2 $
1.0
2.3
0.2
(3.3)
11.4 $
(24.4) $
Amounts recognized in the Consolidated Balance Sheets as of 2023 and 2022 year end are as follows:
(Amounts in millions)
Accrued benefits
Retiree health care benefits
Net liability
2023
2022
$
$
(2.6) $
(21.8)
(24.4) $
47.5
1.2
0.2
(3.8)
(7.8)
37.3
13.7
(1.7)
2.8
0.2
(3.8)
11.2
(26.1)
(2.7)
(23.4)
(26.1)
Amounts included in Accumulated OCI on the accompanying Consolidated Balance Sheets as of 2023 and 2022 year end are as
follows:
(Amounts in millions)
Net gain, net of tax of $2.1 million and $2.2 million, respectively
2023
2022
$
6.2 $
6.4
2023 ANNUAL REPORT
99
Notes to Consolidated Financial Statements (continued)
The components of net periodic benefit cost and changes recognized in OCI are as follows:
(Amounts in millions)
Net periodic benefit cost:
Interest cost
Expected return on plan assets
Amortization of unrecognized gain
Net periodic benefit cost
Changes in benefit obligations recognized in OCI, net of tax:
Net (gain) loss
2023
2022
2021
$
$
$
1.9 $
(0.6)
(1.1)
0.2 $
1.2 $
(0.6)
—
0.6 $
1.1
(0.6)
—
0.5
0.2 $
(4.1) $
(1.0)
The components of net periodic postretirement health care cost, other than the service cost component, are included in “Other
income (expense) – net” on the accompanying Consolidated Statements of Earnings. See Note 17 for additional information on
Other income (expense) – net.
The weighted-average discount rate used to determine Snap-on’s postretirement health care expense is as follows:
Discount rate
2023
5.3%
2022
2.7%
The weighted-average discount rate used to determine Snap-on’s accumulated benefit obligation is as follows:
Discount rate
2023
5.3%
2021
2.3%
2022
5.3%
The methodology for selecting the year-end 2023 and 2022 weighted-average discount rate for the company’s domestic
postretirement plans was to match the plans’ yearly projected cash flows for benefits and service costs to those of hypothetical
bond portfolios using high-quality, AA rated or better, corporate bonds from either Moody’s Investors Service or Standard &
Poor’s credit rating agencies available at the measurement date. As a practical expedient, Snap-on uses the calendar year end as
the measurement date for its plans.
For 2024, the actuarial calculations assume a pre-65 health care cost trend rate of 6.8% and a post-65 health care cost trend rate
of 6.7%, both decreasing gradually to 4.0% in 2047 and thereafter.
The following benefit payments, which reflect expected future service, are expected to be paid as follows:
(Amounts in millions)
Year:
2024
2025
2026
2027
2028
2029-2033
Amount
$
3.3
3.4
3.4
3.4
3.5
16.8
100
SNAP-ON INCORPORATED
The objective of the VEBA trust is to achieve net of expense returns that meet or exceed the 5.8% long-term return on plan
assets assumption used for reporting purposes. Investments are diversified to attempt to minimize the risk of large losses. Since
asset allocation is a key determinant of expected investment returns, assets are periodically rebalanced to the targeted allocation
to correct significant deviations from the asset allocation policy that are caused by market fluctuations and cash flow.
The basis for determining the overall expected long-term return on plan assets assumption is a nominal returns forecasting
method. For each asset class, future returns are estimated by identifying the premium of riskier asset classes over lower risk
alternatives. The methodology constructs expected returns using a “building block” approach to the individual components of
total return. These forecasts are stated in both nominal and real (after inflation) terms. This process first considers the long-term
historical return premium based on the longest set of data available for each asset class. These premiums, which are calculated
using the geometric mean, are then adjusted based on current relative valuation levels and macro-economic conditions. The
asset return assumption is also adjusted by an implicit expense load for estimated administrative and investment-related
expenses.
Snap-on’s VEBA plan target allocation and actual weighted-average asset allocation by asset category and fair value of plan
assets as of 2023 and 2022 year end are as follows:
Asset category:
Debt securities and cash and cash equivalents
Equity securities
Hedge funds
Total
Target
46%
29%
25%
100%
2023
46%
29%
25%
100%
2022
48%
29%
23%
100%
Fair value of plan assets (Amounts in millions)
$
11.4 $
11.2
The fair value measurement hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority
(Level 1) to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority (Level 3) to
unobservable inputs. Fair value measurements primarily based on observable market information are given a Level 2 priority.
Debt securities are valued at quoted per share or unit market prices for which an official close or last trade pricing on an active
exchange is available and are categorized as Level 1 in the fair value hierarchy.
Equity securities are valued at the NAV per share or unit multiplied by the number of shares or units held as of the
measurement date, as reported by the fund managers. The share or unit price is quoted on a private market and is based on the
value of the underlying investments, which are primarily based on observable inputs; such investments that are measured at fair
value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
Hedge funds are stated at the NAV per share or unit (based on the estimated fair market value of the underlying investments)
multiplied by the number of shares or units held as of the measurement date, as reported by the fund managers. These
investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been
classified in the fair value hierarchy.
The company regularly reviews fund performance directly with its investment advisor and the fund managers, and performs
qualitative analysis to corroborate the reasonableness of the reported NAVs. For funds for which the company did not receive a
year-end NAV, the company recorded an estimate of the change in fair value for the latest period based on return estimates and
other fund activity obtained from the fund managers.
The columns labeled “Investments Measured at NAV” in the following tables are measured at fair value using the NAV per
share (or its equivalent) practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts
presented in these tables are intended to permit a reconciliation of the fair value hierarchy to the VEBA plan assets.
2023 ANNUAL REPORT
101
Notes to Consolidated Financial Statements (continued)
The following is a summary, by asset category, of the fair value and the level within the fair value hierarchy of the VEBA plan
assets as of 2023 year end:
(Amounts in millions)
Asset category:
Cash and cash equivalents
Debt securities
Equity securities
Hedge fund
Total
Quoted
Prices for
Identical
Assets
(Level 1)
Investments
Measured at
NAV
Total
$
$
0.2 $
5.1
—
—
5.3 $
— $
—
3.2
2.9
6.1 $
0.2
5.1
3.2
2.9
11.4
The following is a summary, by asset category, of the fair value and the level within the fair value hierarchy of the VEBA plan
assets as of 2022 year end:
(Amounts in millions)
Asset category:
Cash and cash equivalents
Debt securities
Equity securities
Hedge fund
Total
Quoted
Prices for
Identical
Assets
(Level 1)
Investments
Measured at
NAV
Total
$
$
0.4 $
4.9
—
—
5.3 $
— $
—
3.3
2.6
5.9 $
0.4
4.9
3.3
2.6
11.2
Note 13: Stock-based Compensation and Other Stock Plans
The 2011 Incentive Stock and Awards Plan (the “2011 Plan”) provides for the grant of stock options, performance share units
(“PSUs”), stock appreciation rights (“SARs”) and restricted stock awards (which may be designated as “restricted stock units”
or “RSUs”). As of 2023 year end, the 2011 Plan had 2,633,565 shares available for future grants. The company uses treasury
stock to deliver shares under the 2011 Plan.
Net stock-based compensation expense was $44.7 million in 2023, $34.0 million in 2022 and $41.4 million in 2021. Cash
received from stock purchase plan and stock option exercises was $113.6 million in 2023, $55.0 million in 2022 and $162.4
million in 2021. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $16.9
million in 2023, $10.7 million in 2022 and $18.2 million in 2021.
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 10 years. Stock option grants vest ratably on the first, second and third
anniversaries of the date of grant.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model. The
company uses historical data regarding stock option exercise and forfeiture behaviors for different participating groups to
estimate the period of time that 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 stock option. The
expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as
of the date of grant. The risk-free interest rate is based on the U.S. treasury yield curve on the grant date for the expected term
of the stock option.
102
SNAP-ON INCORPORATED
The following weighted-average assumptions were used in calculating the fair value of stock options granted during 2023, 2022
and 2021, using the Black-Scholes valuation model:
Expected term of stock option (in years)
Expected volatility factor
Expected dividend yield
Risk-free interest rate
2023
4.89
23.99%
2.60%
3.99%
2022
5.14
22.61%
2.68%
2.00%
2021
5.33
21.80%
2.59%
0.67%
A summary of stock option activity during 2023 is presented below:
Outstanding at beginning of year
Granted
Exercised
Forfeited or expired
Outstanding at end of year
Exercisable at end of year
* Weighted-average
Shares
(in thousands)
Exercise
Price per
Share*
Remaining
Contractual
Term*
(in years)
Aggregate
Intrinsic
Value
(in millions)
2,349 $
241
(652)
(22)
1,916
1,407
163.07
249.28
149.89
218.12
177.79
160.77
5.3 $
4.2
212.8
180.2
The weighted-average grant date fair value of stock options granted was $51.09 in 2023, $34.35 in 2022 and $26.19 in 2021.
The intrinsic value of stock options exercised was $74.3 million in 2023, $37.5 million in 2022 and $76.1 million in 2021. The
fair value of stock options vested was $9.1 million in 2023, $10.5 million in 2022 and $12.5 million in 2021.
As of 2023 year end, there was $12.1 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 1.4 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. Vesting of the PSUs is dependent upon performance relative to pre-defined goals
for revenue growth and return on net assets for the applicable performance period. For performance achieved above specified
levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially
granted. The PSUs have a three-year performance period based on the results of the consolidated financial metrics of the
company.
The 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 2023, 2022 and 2021, was $249.26, $211.67 and $183.13, respectively.
Earned PSUs as of year end 2023, 2022, and 2021 totaled 137,096 shares, 61,839 shares and 46,343 shares, 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”). PSUs related to
60,402 shares and 46,217 shares were paid out in 2023 and 2022, respectively. There were no PSUs paid out in 2021.
2023 ANNUAL REPORT
103
Notes to Consolidated Financial Statements (continued)
Changes to the company’s non-vested PSUs in 2023 are as follows:
Non-vested PSUs at beginning of year
Granted
Performance assumption change **
Vested
Cancellations and other
Non-vested PSUs at end of year
* Weighted-average
Shares
(in thousands)
Fair Value
Price per
Share*
199 $
58
61
(137)
(4)
177
196.51
249.26
220.42
189.89
215.56
226.81
** Reflects the number of PSUs above target levels based on performance metrics.
As of 2023 year end, there was $19.3 million of unrecognized compensation cost related to non-vested PSUs that is expected to
be recognized as a charge to earnings over a weighted-average period of 1.4 years.
Restricted stock units: RSUs are earned and expensed using the fair value of the award over a contractual term of three years.
Vesting of the RSUs is dependent upon continued employment for the 3-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 RSUs granted during 2023, 2022 and 2021, was $249.26, $211.67 and $189.89, respectively.
Changes to the company’s non-vested RSUs in 2023 are as follows:
Non-vested RSUs at beginning of year
Granted
Vested
Cancellations and other
Non-vested RSUs at end of year
* Weighted-average
Shares
(in thousands)
Fair Value
Price per
Share*
58 $
26
(2)
(2)
80
200.16
249.26
196.64
215.96
215.84
As of 2023 year end, there was $6.6 million of unrecognized compensation cost related to non-vested RSUs that is expected to
be recognized as a charge to earnings over a weighted-average period of 1.1 years.
Stock appreciation rights: The company also issues stock-settled and cash-settled SARs to certain key non-U.S. employees.
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.
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. Stock-settled SARs have an effect on dilutive
shares and shares outstanding as any appreciation of Snap-on’s common stock value over the exercise price will be settled in
shares of common stock. Cash-settled SARs provide for the cash payment of the excess of the fair market value of Snap-on’s
common stock price on the date of exercise over the grant price. Cash-settled SARs have no effect on dilutive shares or shares
outstanding as any appreciation of Snap-on’s common stock over the grant price is paid in cash and not in common stock.
104
SNAP-ON INCORPORATED
The fair value of stock-settled SARs is estimated on the date of grant using the Black-Scholes valuation model. The fair value
of cash-settled SARs is revalued (mark-to-market) each reporting period using the Black-Scholes valuation model based on
Snap-on’s period-end stock price. The company uses historical data regarding SARs exercise and forfeiture behaviors for
different participating groups to estimate the expected term of the SARs granted based on the period of time that similar
instruments granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s
stock for the length of time corresponding to the expected term of the SARs. The expected dividend yield is based on the
expected annual dividend as a percentage of the market value of our common stock as of the date of grant (for stock-settled
SARs) or reporting date (for cash-settled SARs). The risk-free interest rate is based on the U.S. treasury yield curve in effect as
of the grant date (for stock-settled SARs) or reporting date (for cash-settled SARs) for the length of time corresponding to the
expected term of the SARs.
The following weighted-average assumptions were used in calculating the fair value of stock-settled SARs granted during 2023,
2022 and 2021, using the Black-Scholes valuation model:
Expected term of stock-settled SARs (in years)
Expected volatility factor
Expected dividend yield
Risk-free interest rate
Changes to the company’s stock-settled SARs in 2023 are as follows:
2023
4.08
24.68%
2.60%
3.87%
2022
4.02
23.09%
2.68%
1.96%
2021
3.94
22.50%
2.59%
0.19%
Outstanding at beginning of year
Granted
Exercised
Forfeited or expired
Outstanding at end of year
Exercisable at end of year
* Weighted-average
Stock-settled
SARs
(in thousands)
Exercise
Price per
Share*
Remaining
Contractual
Term*
(in years)
Aggregate
Intrinsic
Value
(in millions)
385 $
62
(50)
(76)
321
189
170.11
249.26
152.69
162.15
189.93
165.34
6.5 $
5.1
31.8
23.4
The weighted-average grant date fair value of stock-settled SARs granted was $48.85 in 2023, $32.63 in 2022 and $24.05 in
2021. The intrinsic value of stock-settled SARs exercised was $5.3 million in 2023, $1.7 million in 2022 and $3.1 million in
2021. The fair value of stock-settled SARs vested was $1.9 million in 2023, $2.0 million in 2022 and $2.1 million in 2021.
As of 2023 year end, there was $3.0 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 1.4 years.
The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs granted during 2023,
2022 and 2021, using the Black-Scholes valuation model:
Expected term of cash-settled SARs (in years)
Expected volatility factor
Expected dividend yield
Risk-free interest rate
2023
3.30
22.51%
2.58%
4.01%
2022
3.10
23.67%
2.84%
4.22%
2021
3.09
22.49%
2.64%
0.97%
The intrinsic value of cash-settled SARs exercised was $0.4 million in 2023, $0.6 million in 2022 and $0.6 million in 2021. The
fair value of cash-settled SARs vested during 2023, 2022 and 2021 was $0.1 million, $0.1 million and $0.1 million,
respectively.
2023 ANNUAL REPORT
105
Notes to Consolidated Financial Statements (continued)
Changes to the company’s non-vested cash-settled SARs in 2023 are as follows:
Non-vested cash-settled SARs at beginning of year
Granted
Vested
Non-vested cash-settled SARs at end of year
* Weighted-average
Cash-settled
SARs
(in thousands)
Fair Value
Price per
Share*
2 $
1
(1)
2
53.24
66.83
107.13
79.16
As of 2023 year end, 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 1.4 years.
Restricted stock awards – non-employee directors: The company awarded 5,760 shares, 6,525 shares and 6,858 shares of
restricted stock to non-employee directors in 2023, 2022 and 2021, respectively. 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. All restrictions for the restricted stock
generally lapse upon the earlier of the first anniversary of the grant date, the recipient’s death or disability or in the event of a
change in control, as defined in the 2011 Plan. If termination of the recipient’s service occurs prior to the first anniversary of the
grant date for any reason other than death or disability, the shares of restricted stock would be forfeited, unless otherwise
determined by the Board.
Directors’ fee plan: Under the Directors’ 1993 Fee Plan, as amended, non-employee directors may elect to receive up to 100%
of their fees and retainer in shares of Snap-on’s common stock. Directors may elect to defer receipt of all or part of these shares.
For 2023, 2022 and 2021, issuances under the Directors’ Fee Plan totaled 449 shares, 621 shares and 1,235 shares, respectively,
of which 176 shares, 309 shares and 922 shares, respectively, were deferred. As of 2023 year end, shares reserved for issuance
to directors under this plan totaled 195,281 shares.
Employee stock purchase plan: Substantially all Snap-on employees in the United States and Canada are eligible to
participate in an employee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser
of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of
each plan year. The company records compensation expense when Snap-on’s period-end stock price is greater than the plan
purchase price. For 2023, 2022 and 2021, issuances under this plan totaled 27,225 shares, 18,452 shares and 82,286 shares,
respectively. As of 2023 year end, 551,598 shares were reserved for issuance under this plan and Snap-on held participant
contributions of approximately $2.2 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 $1.4 million in
2023, $0.2 million in 2022 and $9.6 million in 2021.
Franchisee stock purchase plan: All franchisees in the United States and Canada are eligible to participate in a franchisee
stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high
and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. The
company records mark-to-market expense when Snap-on’s period-end stock price is greater than the plan purchase price. For
2023, 2022 and 2021, issuances under this plan totaled 46,510 shares, 44,937 shares and 143,388 shares, respectively. As of
2023 year end, 178,715 shares were reserved for issuance under this plan and Snap-on held participant contributions of
approximately $7.3 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 mark-to-market expense of $2.5 million in
2023, $0.4 million in 2022, and $16.7 million in 2021.
Note 14: Capital Stock
Snap-on has undertaken repurchases of Snap-on common stock from time to time to offset dilution created by shares issued for
employee and franchisee stock purchase plans, stock awards and other corporate purposes, as well as when the company
believes market conditions are favorable. Snap-on repurchased 1,126,000 shares, 899,000 shares and 1,943,900 shares in 2023,
2022 and 2021, respectively. As of 2023 year end, Snap-on has remaining availability to repurchase up to an additional $282.9
million in common stock pursuant to Board authorizations. The purchase of Snap-on common stock is at the company’s
discretion, subject to prevailing financial and market conditions.
106
SNAP-ON INCORPORATED
Cash dividends paid in 2023, 2022 and 2021 totaled $355.6 million, $313.1 million and $275.8 million, respectively. Cash
dividends per share in 2023, 2022 and 2021 were $6.72, $5.88 and $5.11, respectively. On February 15, 2024, the company’s
Board declared a quarterly dividend of $1.86 per share, payable on March 11, 2024, to shareholders of record on February 26,
2024.
Note 15: Commitments and Contingencies
Snap-on provides product warranties for specific product lines and accrues for estimated future warranty cost in the period in
which the sale is recorded. Snap-on calculates its accrual requirements based on historic warranty loss experience that is
periodically adjusted for recent actual experience, including the timing of claims during the warranty period and actual costs
incurred. Snap-on’s product warranty accrual activity for 2023, 2022 and 2021 is as follows:
(Amounts in millions)
Warranty accrual:
Beginning of year
Additions
Usage
End of year
2023
2022
2021
$
$
14.3 $
14.7
(14.3)
14.7 $
17.3 $
9.8
(12.8)
14.3 $
17.6
13.7
(14.0)
17.3
Approximately 2,700 employees, or 20% of Snap-on’s worldwide workforce, are represented by unions and/or covered under
collective bargaining agreements. The number of covered union employees whose contracts expire over the next five years
approximates 1,350 employees in 2024, 800 employees in 2025, and 550 employees in 2026; there are no contracts currently
scheduled to expire in 2027 or 2028. In recent years, Snap-on has not experienced any significant work slowdowns, stoppages
or other labor disruptions.
In the ordinary course of our business, Snap-on is subject to legal disputes that are 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.
Note 16: Leases
Lessee accounting: Snap-on determines if an arrangement is a lease at inception. Snap-on has operating and finance leases for
manufacturing plants, distribution centers, software development facilities, financial services offices, data centers, company
store vans and certain equipment. Snap-on’s leases have lease terms of one year to 20 years and some include options to extend
and/or terminate the lease. The exercise of lease renewal options is at the company’s sole discretion. Certain leases also include
options to purchase the leased property. When deemed reasonably certain of exercise, the renewal and purchase options are
included in the determination of the lease term and lease payment obligation, respectively. The depreciable life of assets and
leasehold improvements are limited to the expected term, unless there is a transfer of title or purchase option reasonably certain
of exercise. The company’s lease agreements do not contain any material variable lease payments, material residual value
guarantees or any material restrictive covenants.
Right-of-use (“ROU”) assets represent Snap-on’s right to use an underlying asset for the lease term and lease liabilities
represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are
recognized at commencement date of the lease based on the present value of lease payments over the lease term. When readily
determinable, Snap-on uses the implicit rate in determining the present value of lease payments. When leases do not provide an
implicit rate, Snap-on uses its country specific incremental borrowing rate based on the information available at the lease
commencement date, including the lease term. The operating lease ROU asset also includes any lease payments made and
excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Snap-on has lease agreements with lease and non-lease components, which are generally accounted for separately. For all
equipment leases, including vehicles, Snap-on accounts for the lease and non-lease components as a single lease component.
2023 ANNUAL REPORT
107
Notes to Consolidated Financial Statements (continued)
Total lease costs for 2023, 2022 and 2021 consist of the following:
(Amounts in millions)
Finance lease costs:
Amortization of ROU assets
Interest on lease liabilities
Operating lease costs*
Total lease costs
2023
2022
2021
$
$
1.5 $
0.1
27.4
29.0 $
1.5 $
0.2
24.3
26.0 $
* Includes short-term leases, variable lease costs and sublease income, which are immaterial.
Supplemental cash flow information related to leases in 2023, 2022 and 2021 is as follows:
(Amounts in millions)
Cash paid for amounts included in the measurement of lease
liabilities:
Financing cash flows from finance leases
Operating cash flows from finance leases
Operating cash flows from operating leases
ROU assets obtained in exchange for new lease obligations:
Finance lease liabilities
Operating lease liabilities
$
$
2023
2022
2021
2.0 $
0.1
24.7
0.8 $
36.0
2.4 $
0.2
22.2
0.2 $
33.5
Supplemental balance sheet information related to leases in 2023 and 2022 is as follows:
(Amounts in millions)
Finance leases:
Property and equipment – gross
Accumulated depreciation and amortization
Property and equipment – net
Other accrued liabilities
Other long-term liabilities
Total finance lease liabilities
Operating leases:
Operating lease right-of-use assets
Other accrued liabilities
Operating lease liabilities
Total operating lease liabilities
2023
2022
$
$
$
$
$
$
$
19.1 $
(16.8)
2.3 $
1.6 $
1.1
2.7 $
74.7 $
23.8 $
54.6
78.4 $
1.7
0.3
25.4
27.4
3.1
0.3
23.5
0.3
23.4
19.4
(16.4)
3.0
2.0
1.9
3.9
61.5
19.4
44.7
64.1
108
SNAP-ON INCORPORATED
Weighted-average lease terms and discount rates in 2023 and 2022 are as follows:
Weighted-average remaining lease terms:
Finance leases
Operating leases
Weighted-average discount rates:
Finance leases
Operating leases
2023
2022
2021
2.5 years
3.8 years
2.1 years
4.0 years
2.9 years
3.3 years
4.1%
4.0%
3.1%
2.9%
3.1%
1.9%
Maturities of lease liabilities as of December 30, 2023, are as follows:
(Amounts in millions)
Year:
2024
2025
2026
2027
2028
2029 and thereafter
Total lease payments
Less: amount representing interest
Total lease liabilities
Operating
Leases
Finance
Leases
$
$
26.3 $
20.6
15.9
11.5
6.8
3.7
84.8
(6.4)
78.4 $
1.7
0.5
0.3
0.2
0.1
—
2.8
(0.1)
2.7
In 2023, Snap-on did not have any significant additional operating or finance leases that have not yet commenced.
Lessor accounting: Snap-on’s Financial Services business offers its customers lease financing for the lease of tools,
diagnostics, and equipment products and to franchisees who require financing for vehicle leases. Snap-on accounts for its
financial services leases as sales-type leases. In certain circumstances, the lessee has the option to terminate the lease. In the
event of the lessee’s deteriorated financial condition or default, Snap-on has the right to terminate the lease. The leases contain
an end-of-term purchase option that is generally insignificant and is reasonably certain to be exercised by the lessee.
The company recognizes the net investment in the lease as the present value of the lease payments not yet received plus the
present value of the unguaranteed residual value, using the interest rate implicit in the lease. The difference between the
undiscounted lease payments received over the lease term and the related net investment in the lease is reported as unearned
finance charges. Unearned finance charges are amortized to income over the life of the contract and are included as a
component of “Financial services revenue” on the accompanying Consolidated Statements of Earnings.
Sales-type leases are included in both “Finance receivables – net” and “Long-term finance receivables – net” on the
accompanying Consolidated Balance Sheets, with lease terms of up to five years. In 2023 and 2022, finance receivables have
future minimum lease payments, including unguaranteed residual value, of $28.6 million and $5.6 million, respectively, and
unearned finance charges of $6.2 million and $0.7 million, respectively.
Sales-type leases are included in both “Contract receivables – net” and “Long-term contract receivables – net” on the
accompanying Consolidated Balance Sheets, with lease terms of up to seven years. In 2023 and 2022, contract receivables have
future minimum lease payments, including unguaranteed residual value, of $315.7 million and $296.7 million, respectively, and
unearned finance charges of $56.2 million and $49.8 million, respectively.
2023 ANNUAL REPORT
109
Notes to Consolidated Financial Statements (continued)
Future minimum lease payments as of December 30, 2023 are as follows:
(Amounts in millions)
Year:
2024
2025
2026
2027
2028
2029 and thereafter
Total lease payments
Less: unearned finance charges
Net investment in leases
$
$
Lease
Receivables
See Note 4 for additional information on finance and contract receivables.
Note 17: Other Income (Expense) – Net
“Other income (expense) – net” on the accompanying Consolidated Statements of Earnings consists of the following:
(Amounts in millions)
Interest income
Net foreign exchange loss
Net periodic pension and postretirement benefits - non-service
Foreign currency translation loss from sale of equity interest
Other
Total other income (expense) – net
$
$
2023
2022
2021
40.2 $
(11.0)
37.6
—
0.7
67.5 $
13.0 $
(7.5)
36.1
—
0.9
42.5 $
Note 18: Accumulated Other Comprehensive Income (Loss)
The following is a summary of net changes in Accumulated OCI by component and net of tax for 2023 and 2022:
97.3
83.0
65.2
46.8
30.1
21.9
344.3
(62.4)
281.9
2.1
(1.2)
15.2
(1.0)
1.4
16.5
(Amounts in millions)
Balance at beginning of 2022
Other comprehensive loss before reclassifications
Amounts reclassified from Accumulated OCI
Net other comprehensive loss
Balance as of 2022 year end
Other comprehensive income before reclassifications
Amounts reclassified from Accumulated OCI
Net other comprehensive income (loss)
Balance as of 2023 year end
Foreign
Currency
Translation
Cash Flow
Hedges
Defined
Benefit
Pension and
Postretirement
Plans
$
(145.1) $
8.9 $
(207.7) $
(127.4)
—
(127.4)
—
(1.6)
(1.6)
(69.0)
13.6
(55.4)
$
(272.5) $
7.3 $
(263.1) $
60.7
—
60.7
—
(1.6)
(1.6)
19.3
0.4
19.7
Total
(343.9)
(196.4)
12.0
(184.4)
(528.3)
80.0
(1.2)
78.8
$
(211.8) $
5.7 $
(243.4) $
(449.5)
110
SNAP-ON INCORPORATED
The reclassifications out of Accumulated OCI in 2023 and 2022 are as follows:
(Amounts in millions)
Gains on cash flow hedges:
Treasury locks
Income tax expense
Net of tax
$
Amortization of net unrecognized losses and prior
service credits
Income tax benefit
Net of tax
Total reclassifications for the period, net of tax
$
Amounts Reclassified from
Accumulated OCI
2023
2022
Statement of Earnings
Presentation
1.6 $
—
1.6
(0.5)
0.1
(0.4)
1.2 $
Interest expense
Income tax expense
1.6
—
1.6
(18.1) See footnote below*
Income tax expense
4.5
(13.6)
(12.0)
* These Accumulated OCI components are included in the computation of net periodic pension and postretirement health care costs; see Note 11 and
Note 12 for additional information.
Note 19: Segments
Snap-on’s business segments are based on the organization structure used by management for making operating and investment
decisions and for assessing performance. Snap-on’s reportable business segments are: (i) the Commercial & Industrial Group;
(ii) the Snap-on Tools Group; (iii) the Repair Systems & Information Group; and (iv) Financial Services. The Commercial &
Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide,
including customers in the aerospace, natural resources, government 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 multinational 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.
Snap-on evaluates the performance of its operating segments based on segment revenues and segment operating earnings. The
Snap-on Tools Group segment revenues include external net sales, while the Commercial & Industrial Group and the Repair
Systems & Information Group segment revenues include both external and intersegment net sales. Snap-on accounts for
intersegment net sales and transfers based primarily on standard costs with reasonable mark-ups established between the
segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Corporate
assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other
assets. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.
Snap-on does not have any single customer or government that represents 10% or more of its revenues in any of the indicated
periods.
2023 ANNUAL REPORT
111
Notes to Consolidated Financial Statements (continued)
Financial Data by Segment:
(Amounts in millions)
Net sales:
Commercial & Industrial Group
Snap-on Tools Group
Repair Systems & Information Group
Segment net sales
Intersegment eliminations
Total net sales
Financial Services revenue
Total revenues
Operating earnings:
Commercial & Industrial Group
Snap-on Tools Group
Repair Systems & Information Group
Financial Services
Segment operating earnings
Corporate
Operating earnings
Interest expense
Other income (expense) – net
Earnings before income taxes and equity earnings
(Amounts in millions)
Assets:
Commercial & Industrial Group
Snap-on Tools Group
Repair Systems & Information Group
Financial Services
Total assets from reportable segments
Corporate
Elimination of intersegment receivables
Total assets
2023
2022
2021
$
$
$
$
1,458.3 $
2,088.8
1,781.2
5,328.3
(598.1)
4,730.2
378.1
5,108.3 $
226.1 $
493.8
433.2
270.5
1,423.6
(113.2)
1,310.4
(49.9)
67.5
1,328.0 $
1,399.2 $
2,072.0
1,666.9
5,138.1
(645.3)
4,492.8
349.7
4,842.5 $
197.6 $
458.7
393.3
266.0
1,315.6
(108.4)
1,207.2
(47.1)
42.5
1,202.6 $
1,406.3
1,938.6
1,503.1
4,848.0
(596.0)
4,252.0
349.7
4,601.7
209.9
411.1
348.6
272.0
1,241.6
(118.1)
1,123.5
(53.1)
16.5
1,086.9
2023
2022
$
$
1,293.7 $
941.8
1,680.0
2,430.0
6,345.5
1,285.0
(85.6)
7,544.9 $
1,245.8
912.9
1,678.1
2,242.7
6,079.5
972.9
(79.6)
6,972.8
112
SNAP-ON INCORPORATED
Financial Data by Segment (continued):
(Amounts in millions)
Capital expenditures:
Commercial & Industrial Group
Snap-on Tools Group
Repair Systems & Information Group
Financial Services
Total from reportable segments
Corporate
Total capital expenditures
Depreciation and amortization:
Commercial & Industrial Group
Snap-on Tools Group
Repair Systems & Information Group
Financial Services
Total from reportable segments
Corporate
Total depreciation and amortization
Revenues by geographic region:*
United States
Europe
All other
Total revenues
(Amounts in millions)
Long-lived assets:**
United States
Europe
All other
Total long-lived assets
$
$
$
$
$
$
2023
2022
2021
22.5 $
46.1
20.3
1.8
90.7
4.3
95.0 $
25.7 $
29.3
39.4
0.9
95.3
4.0
99.3 $
26.0 $
35.0
18.3
1.1
80.4
3.8
84.2 $
26.1 $
29.3
40.1
0.9
96.4
3.8
100.2 $
24.3
27.1
15.4
0.8
67.6
2.5
70.1
28.2
31.2
40.9
0.9
101.2
3.6
104.8
3,664.3 $
760.9
683.1
5,108.3 $
3,465.4 $
723.3
653.8
4,842.5 $
3,153.0
808.5
640.2
4,601.7
2023
2022
$
$
394.2 $
172.1
47.7
614.0 $
361.9
161.3
50.9
574.1
*
Revenues are attributed to countries based on origin of the sale.
** Long-lived assets consist of Property and equipment – net and Operating lease right-of-use assets.
2023 ANNUAL REPORT
113
Notes to Consolidated Financial Statements (continued)
Products and Services: Snap-on derives net sales from a broad line of products and complementary services that are grouped
into three categories: (i) tools; (ii) diagnostics, information and management systems; and (iii) equipment. The tools product
category includes hand tools, power tools, tool storage products and other similar products. The diagnostics, information and
management systems product category includes handheld and computer-based diagnostic products, service and repair
information products, diagnostic software solutions, electronic parts catalogs, business management systems and services,
point-of-sale systems, integrated systems for vehicle service shops, OEM purchasing facilitation services, and warranty
management systems and analytics to help OEM dealerships manage and track performance. The equipment product category
includes solutions for the service of vehicles and industrial equipment. Snap-on supports the sale of its diagnostics and vehicle
service shop equipment by offering training programs as well as after-sales support for its customers. Through its financial
services businesses, Snap-on also derives revenue from various financing programs designed to facilitate the sales of its
products and support its franchise business. Further product line information is not presented as it is not practicable to do so.
The following table shows the consolidated net sales and revenues of these product groups in the last three years:
(Amounts in millions)
Net sales:
Tools
Diagnostics, information and management systems
Equipment
Total net sales
Financial services revenue
Total revenues
2023
2022
2021
$
$
2,528.9 $
991.2
1,210.1
4,730.2
378.1
5,108.3 $
2,399.4 $
942.4
1,151.0
4,492.8
349.7
4,842.5 $
2,343.0
892.5
1,016.5
4,252.0
349.7
4,601.7
114
SNAP-ON INCORPORATED
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Snap-on has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
SNAP-ON INCORPORATED
By:
/s/ Nicholas T. Pinchuk
Nicholas T. Pinchuk, Chairman, President
and Chief Executive Officer
Date: February 15, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of Snap-on and in the capacities and on the date indicated.
/s/ Nicholas T. Pinchuk
Nicholas T. Pinchuk, Chairman, President
and Chief Executive Officer
/s/ Aldo J. Pagliari
Aldo J. Pagliari, Principal Financial Officer, Senior
Vice President – Finance and Chief Financial Officer
/s/ Marty V. Ozolins
Marty V. Ozolins, Principal Accounting Officer,
Vice President and Controller
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
2023 ANNUAL REPORT
115
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of Snap-on and in the capacities and on the date indicated.
SIGNATURES
By:
/s/ David C. Adams
David C. Adams, Director
By:
/s/ Karen L. Daniel
Karen L. Daniel, Director
By:
/s/ Ruth Ann M. Gillis
Ruth Ann M. Gillis, Director
By:
/s/ James P. Holden
James P. Holden, Director
By:
/s/ Nathan J. Jones
Nathan J. Jones, Director
By:
/s/ Henry W. Knueppel
Henry W. Knueppel, Director
By:
/s/ W. Dudley Lehman
W. Dudley Lehman, Director
By:
/s/ Nicholas T. Pinchuk
Nicholas T. Pinchuk, Director
By:
/s/ Gregg M. Sherrill
Gregg M. Sherrill, Director
By:
/s/ Donald J. Stebbins
Donald J. Stebbins, Director
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
Date: February 15, 2024
116
SNAP-ON INCORPORATED
SUBSIDIARIES OF THE CORPORATION
As of December 30, 2023
(Does not include inactive subsidiaries)
EXHIBIT 21
Name
AutoCrib EMEA GmBH
Bahco Bisov Svenska AB
Bonita IP LLC
BTC Global Limited
BTC Solutions Limited
Car-O-Liner APAC Distribution Center Co., Ltd.
Car-O-Liner B.V.
Car-O-Liner Commercial AB
Car-O-Liner Deutschland GmbH
Car-O-Liner Group AB
Car-O-Liner Holding AB
Car-O-Liner Holding (Thailand) Co., Ltd.
Car-O-Liner India Private Limited
Car-O-Liner KB
Car-O-Liner MEA (FZE)
Car-O-Liner Norge AS
Car-O-Liner (Thailand) Co., Ltd.
Car-O-Liner (UK) Limited
Challenger Lifts, Inc.
Creditcorp SPC, LLC
Cognitran Inc.
Cognitran Limited
Cognitran Sp z o.o.
Dealer-FX North America Group Inc.
Dealer-FX Incorporated
IDSC Holdings LLC (Snap-on Industrial)
CJSC SNA Europe Industries Bisov
Josam Richttecknik GmbH
Kapman AB
Mitchell Repair Information Company, LLC
Mountz Torque Limited
Mountz Torque Tools Canada, Inc.
Mountz, Inc.
New Creditcorp SPC, LLC
Norbar Torque Tools (Australia) Pty Ltd
Norbar Torque Tools (China) Limited
Norbar Torque Tools (NZ) Limited
Norbar Torque Tools (Shanghai) Ltd
Norbar Torque Tools Holdings Limited
Norbar Torque Tools India Private Limited
Norbar Torque Tools Limited
Norbar Torque Tools, Inc.
P-Alignment 2012 AB
Power Hawk Technologies, Inc.
State or other jurisdiction of organization
Germany
Sweden
Delaware
United Kingdom
United Kingdom
Thailand
Netherlands
Sweden
Germany
Sweden
Sweden
Thailand
India
Sweden
United Arab Emirates
Norway
Thailand
United Kingdom
Kentucky
Wisconsin
Michigan
United Kingdom
Poland
British Columbia
Nevada
Wisconsin
Belarus
Germany
Sweden
Delaware
United Kingdom
Canada
California
Delaware
Australia
United Kingdom
New Zealand
China
United Kingdom
India
United Kingdom
Ohio
Sweden
Delaware
2023 ANNUAL REPORT
117
Name
Pro-Cut International, LLC
Property Holdings, LLC
Ryeson Corporation (d/b/a Sturtevant Richmont)
Secateurs Pradines
SN SecureCorp Insurance Malta Limited
SN SecureCorp Sales Limited
SNA-E (Argentina) S.R.L.
SNA-E Chile Ltda.
SNAEurope Technologies S.r.l
SNA E Endustriyel Mamuller Ticaret Limited Sirketi
SNA Europe
SNA Europe (Benelux) B.V.
SNA Europe [Czech Republic] s.r.o.
SNA Europe (Denmark) A/S
SNA Europe (Finland) Oy
SNA Europe (France)
SNA Europe Holdings AB
SNA Europe [Industries], Lda.
SNA Europe (Industries) AB
SNA Europe [Italia] SpA
SNA Europe (Norway) AS
SNA Europe - Poland Sp. z o.o.
SNA Europe [RUS] LLC
SNA Europe [Slovakia], s.r.o.
SNA Europe Iberia Holdings, S.L.
SNA Europe Industries Iberia, S.A.
SNA Germany GmbH
SNA Investment Holding UK Limited Partnership
(Dissolved as of December 31, 2023)
SNA Solutions UK Limited
SNA Tools Belgium BVBA
Snap-on (Thailand) Company Limited
Snap-on Africa (Proprietary) Limited
Snap-on Asia Manufacturing (Kunshan) Co. Ltd.
Snap-on Asia Manufacturing (Zhejiang) Co., Ltd.
Snap-on Asia Pacific Holding Pte. Ltd.
Snap-on Business Solutions Inc.
Snap-on Business Solutions India Private Limited
Snap-on Business Solutions Limited
Snap-on Business Solutions Japan Company
Snap-on Business Solutions GmbH
Snap-on Business Solutions SRL
Snap-on Business Solutions SARL
Snap-on Business Solutions SL
Snap-on Business Solutions (Syncata) Inc.
Snap-on Capital Corp.
Snap-on Climate Solutions S.r.l.
Snap-on Credit Canada Ltd.
State or other jurisdiction of organization
Delaware
Wisconsin
Illinois
France
Malta
United Kingdom
Argentina
Chile
Romania
Turkey
France
Netherlands
Czech Republic
Denmark
Finland
France
Sweden
Portugal
Sweden
Italy
Norway
Poland
Russia
Slovakia
Spain
Spain
Germany
United Kingdom
United Kingdom
Belgium
Thailand
South Africa
China
China
Singapore
Delaware
India
United Kingdom
Japan
Germany
Italy
France
Spain
California
Delaware
Italy
Ontario
118
SNAP-ON INCORPORATED
Name
Snap-on Credit LLC
Snap-on do Brasil Comercio e Industria Ltda.
Snap-on Equipment Austria GmbH
Snap-on Equipment Europe Limited
Snap-on Equipment France
Snap-on Equipment GmbH
Snap-on Equipment Holdings B.V.
Snap-on Equipment Hungary Kft.
Snap-on Equipment Inc.
Snap-on Equipment Ltd.
Snap-on Equipment S.r.l.
Snap-on Finance B.V.
Snap-on Finance UK Limited
Snap-on Global Holdings, Inc.
Snap-on Holdings AB
Snap-on Illinois Holdings LLC
Snap-on Illinois Services LLC
Snap-on International Middle East FZE
Snap-on Investment Limited
Snap-on Lendco LLC
Snap-on Lendco Singapore Pte. Ltd.
Snap-on Logistics Company
Snap-on Malta Limited
Snap-on Power Tools Inc.
Snap-on SecureCorp Insurance Company Ltd.
Snap-on SecureCorp, Inc.
Snap-on Service GmbH
Snap-on Tools (Australia) Pty. Ltd.
Snap-on Tools (New Zealand) Limited
Snap-on Tools B.V.
Snap-on Tools China Trading (Shanghai) Co. Ltd.
Snap-on Tools Company LLC
Snap-on Tools Hong Kong Limited
Snap-on Tools International LLC
Snap-on Tools Italia S.r.l.
Snap-on Tools Japan K.K.
Snap-on Tools Korea Ltd.
Snap-on Tools of Canada Co.
Snap-on Tools Private Limited
Snap-on Tools Singapore Pte Ltd
Snap-on Trading (Shanghai) Co., Ltd.
Snap-on U.K. Holdings Limited
Snap-on/Sun de Mexico, S.A. de C.V.
State or other jurisdiction of organization
Delaware
Brazil
Austria
Ireland
France
Germany
Netherlands
Hungary
Delaware
United Kingdom
Italy
Netherlands
United Kingdom
Delaware
Sweden
Illinois
Illinois
United Arab Emirates
United Kingdom
Wisconsin
Singapore
Wisconsin
Malta
Iowa
Bermuda
Wisconsin
Germany
Australia
New Zealand
Netherlands
China
Delaware
Hong Kong
Delaware
Italy
Japan
Korea
Canada
India
Singapore
China
United Kingdom
Mexico
2023 ANNUAL REPORT
119
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EXHIBIT 23
We consent to the incorporation by reference in Registration Statement Nos. 33-37924, 333-21285, and 333-261567 on Form
S-3 and Registration Statement Nos. 33-57898, 33-58939, 333-21277, 333-62098, 333-91712, 333-142412, 333-177794,
333-177795, 333-208479 and 333-261566 on Form S-8 of our reports dated February 15, 2024, relating to the consolidated
financial statements of Snap-on Incorporated and the effectiveness of Snap-on Incorporated’s internal control over financial
reporting, appearing in this Annual Report on Form 10-K of Snap-on Incorporated for the year ended December 30, 2023.
/s/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 15, 2024
120
SNAP-ON INCORPORATED
EXHIBIT 31.1
Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Nicholas T. Pinchuk, certify that:
1. I have reviewed this annual report on Form 10-K of Snap-on Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 15, 2024
/s/ Nicholas T. Pinchuk
Nicholas T. Pinchuk
Chief Executive Officer
2023 ANNUAL REPORT
121
Certification of the Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
EXHIBIT 31.2
I, Aldo J. Pagliari, certify that:
1. I have reviewed this annual report on Form 10-K of Snap-on Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 15, 2024
/s/ Aldo J. Pagliari
Aldo J. Pagliari
Principal Financial Officer
122
SNAP-ON INCORPORATED
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
EXHIBIT 32.1
In connection with the Annual Report of Snap-on Incorporated (the “Company”) on Form 10-K for the period ended December
30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Nicholas T. Pinchuk as
Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Nicholas T. Pinchuk
Nicholas T. Pinchuk
Chief Executive Officer
February 15, 2024
2023 ANNUAL REPORT
123
Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
EXHIBIT 32.2
In connection with the Annual Report of Snap-on Incorporated (the “Company”) on Form 10-K for the period ended December
30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Aldo J. Pagliari as Principal
Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
Oxley Act of 2002, to the best of his knowledge, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Aldo J. Pagliari
Aldo J. Pagliari
Principal Financial Officer
February 15, 2024
124
SNAP-ON INCORPORATED
INVESTOR INFORMATION
EXCHANGE LISTING
Snap-on Incorporated’s common stock is listed on the New
York Stock Exchange under the ticker symbol SNA.
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006, U.S.A.
Shareholders with questions may call our transfer agent,
Computershare Trust Company, N.A.,
toll-free at
800-446-2617 (in the United States) or 781-575-2723
(outside the United States). The deaf and hearing impaired
may call 800-952-9245. An interactive automated system
is available 24 hours a day, every day. Operators are
available Monday through Friday, 8:30 a.m. to 6 p.m. U.S.
is available at
Eastern Time. More
www.computershare.com/investor.
information
CERTIFICATE TRANSFERS
First Class/Registered/Certified Mail:
Computershare Investor Services
P.O. Box 43006
Providence, RI 02940-3006, U.S.A.
By overnight mail or private courier:
Computershare Investor Services
150 Royall St., Suite 101
Canton, MA 02021, U.S.A.
a
through
no-commission
COMPUTERSHARE INVESTMENT PLAN
Investors may purchase Snap-on stock and increase their
investment
dividend
reinvestment and direct stock purchase plan sponsored by
Computershare Trust Company, N.A. All fees and
brokerage commissions in connection with the purchase of
stock, as well as most administrative costs, are paid by
for
Snap-on. Visit www.computershare.com/investor
more information or write to:
Computershare Investor Services
P.O. Box 43006
Providence, RI 02940-3006, U.S.A.
ANTICIPATED DIVIDEND RECORD AND
PAYMENT DATES FOR 2024
Quarter
First
Second
Third
Fourth
Record Date
February 26
May 20
August 19
November 21
Payment Date
March 11
June 10
September 10
December 10
FINANCIAL PUBLICATIONS
Publications are available without charge. Contact the
Snap-on investor relations department at 2801 80th Street,
Kenosha, WI 53143, visit our website, or send an e-mail
to InvestorRelations@snapon.com.
WEBSITE
Snap-on’s website contains Form 10-Qs, Form 10-Ks,
news releases, annual reports, proxy statements and other
information about Snap-on. Our website address is
www.snapon.com.
INDEPENDENT AUDITORS
Deloitte & Touche LLP
555 East Wells Street, Suite 1400
Milwaukee, WI 53202-3824, U.S.A.
INVESTOR RELATIONS
Investors and other interested parties should direct
inquiries to:
Sara M. Verbsky
Vice President, Investor Relations
InvestorRelations@snapon.com
ANNUAL MEETING
The Annual Meeting of Shareholders will be held on
Thursday, April 25, 2024. Please see the Notice of 2024
Annual Meeting of Shareholders and Proxy Statement for
more details.
CORPORATE OFFICES
2801 80th Street
Kenosha, WI 53143, U.S.A.
262-656-5200
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION:
Statements in this Report that are not historical facts are
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
statements include those that are in the future tense;
include
the words “expects,” “plans,” “targets,”
“estimates,” “believes,” “anticipates,” or similar words;
are specifically identified as forward-looking; or describe
Snap-on’s or management’s outlook, plans, estimates,
objectives, or goals. These forward-looking statements
are subject to risks, uncertainties or other factors that could
cause actual results to differ materially from those
described. Numerous important factors, such as those in
the Annual Report on Form 10-K (forming part of this
Report) in Part I under "Safe Harbor" or Item 1A: "Risk
Factors," could affect Snap-on's actual results and could
cause its actual results to differ materially from those
expressed in any forward-looking statement.
SNAP-ON INCORPORATED
E N D 1 0 K
BOA RD O F
D IREC TO R S
NICHOLAS T. PINCHUK
Chairman of the Board
and Chief Executive Officer
Snap-on Incorporated
Director since 2007
DAVID C. ADAMS (C)*
Retired Chairman of the Board
and Chief Executive Officer
Curtiss-Wright Corporation
Director since 2016
KAREN L. DANIEL (B)*
Retired Division President
and Chief Financial Officer
Black & Veatch Corporation
Director since 2005
RUTH ANN M. GILLIS (A)
Retired Executive Vice
President and Chief
Administrative Officer
Exelon Corporation
Director since 2014
JAMES P. HOLDEN (C)
Lead Director
Retired President and
Chief Executive Officer
DaimlerChrysler Corporation
Director since 2007
NATHAN J. JONES (A)*
Retired President,
Worldwide Commercial
& Consumer Equipment Division
Deere & Company
Director since 2008
HENRY W. KNUEPPEL (C)
Retired Chairman of the Board
and Chief Executive Officer
Regal Beloit Corporation
Director since 2011
W. DUDLEY LEHMAN (B)
Retired Group President
Kimberly-Clark Corporation
Director since 2003
GREGG M. SHERRILL (B)
Retired Chairman of the Board
and Chief Executive Officer
Tenneco Inc.
Director since 2010
DONALD J. STEBBINS (A)
Retired President and
Chief Executive Officer
Superior Industries
International, Inc.
Director since 2015
M A N AGE ME NT T E A M
EUGENIO AMADOR
President –
Equipment
JESUS ARREGUI
Senior Vice President
and President –
Commercial Group
ROBERT J. HAMILTON
Vice President –
Finance
Snap-on Tools Group
PATRICK F. HEALY
Director –
Worldwide Strategic
Sourcing
ANUP R. BANERJEE
Senior Vice President –
Human Resources and
Chief Development Officer
GARY S. HENNING
Vice President –
Manufacturing Development
MARY E. BAUERSCHMIDT
Vice President –
Human Resources
DAVID T. HIETPAS
President –
Power and Specialty Tools
SAMUEL E. BOTTUM
Vice President and
Chief Marketing Officer
IAIN BOYD
Vice President –
Operations Development
BENNETT L. BRENTON
Vice President –
Innovation
JOSEPH J. BURGER
President –
Snap-on Credit
JEFFREY W. HOWE
Vice President –
North American Sales
and Franchising
Snap-on Tools Group
HOLLY J. JUDT
Vice President –
Finance
Repair Systems &
Information Group
JEFFREY F. KOSTRZEWA
Vice President –
Risk Management
and Treasurer
TIMOTHY L. CHAMBERS
Senior Vice President
and President –
Snap-on Tools Group
JON M. LARUE
President –
Mitchell 1
RAUL COLON
Vice President –
Environmental,
Social and Governance
MICHAEL G. GENTILE
President –
Operations and
Product Management
Snap-on Tools Group
JACOB L. GUNIA
Director –
Rapid Continuous
Improvement
JUNE C. LEMERAND
Vice President and
Chief Information Officer
BRAD R. LEWIS
Executive Vice President –
Business Operations
and Technology
Repair Systems &
Information Group
ANDREW R. LOBO
President –
Industrial
RICHARD T. MILLER
Vice President,
General Counsel
and Secretary
JAMES NG
President –
Snap-on Asia Pacific
BENNY OH
Chairman –
Snap-on Asia Pacific
MART Y V. OZOLINS
Vice President
and Controller
ALDO J. PAGLIARI
Senior Vice President –
Finance and
Chief Financial Officer
NICHOLAS T. PINCHUK
Chairman and
Chief Executive Officer
SCOTT R. RUGG
Vice President –
Corporate Tax
KEVIN L. THATCHER
Vice President –
Business Development
SARA M. VERBSKY
Vice President –
Investor Relations
MARIA J. VIEIRA
Vice President –
Operations
Commercial Group
THOMAS J. WARD
Senior Vice President
and President –
Repair Systems &
Information Group
MARIAN T. WELLS
President –
SNA Europe
JOHN A. WOLF
President –
Repair Systems
JEFFERY J. ZUEHLS
President –
Diagnostics
Board Committees:
(A) Audit Committee
(B) Organization and Executive Compensation Committee
(C) Corporate Governance and Nominating Committee
* Denotes Chair
© 2024 Snap‑on Incorporated; All rights reserved
Snap‑on as well as other marks are trademarks, registered in the United States and other countries,
of Snap‑on Incorporated. All other marks are marks of their respective holders.
SNAP‑ON INCORPORATED
2801 80TH STREET
KENOSHA, WI 53143 U.S.A.
SNAPON.COM