Snap-on (SNA) 10-K risk factor changes: FY2016 vs FY2016

Petroleum and energy prices have periodically increased significantly over short periods of time; [removed: further] [added: future] volatility and changes may be caused by market fluctuations, supply and demand, currency [removed: fluctuation,] [added: fluctuations,] production and transportation [removed: disruption,] [added: disruptions,] world events and changes in governmental programs.

Approximately 44% of our consolidated [added: net] revenues in [removed: 2015] [added: 2016] 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 worldwide mobile tool distribution channel.

[removed: _New and] [added: _New,] stricter [added: and/or changed] legislation and regulations may affect our business, reputation, results of operations and financial condition._

Failure to comply with any of these laws or regulations could also result in [removed: penalties and] [added: civil, criminal, monetary and/or non-monetary penalties,] damage to our reputation, and/or the incurrence of remediation costs.

The assets of the pension plans are [removed: broadly] diversified in an attempt to mitigate the risk of a large loss.

The company’s pension plan expense is comprised of the following factors: (i) service cost; (ii) interest on projected benefit obligations; (iii) [removed: the] expected return on plan assets; (iv) the amortization of prior service costs and credits; (v) [removed: the] effects of actuarial gains and losses; and (vi) settlement/curtailment costs, when applicable.

Certain factors, such as the interest on projected benefit obligations and the expected return on [removed: pension] 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 [removed: pension] plan assets would increase net pension expense and may adversely affect the company’s future results of operations.

| | • | | The possible lack of availability of additional [removed: credit;] [added: credit or access to the commercial paper market;] |

As we integrate, implement and deploy new information technology processes and [removed: a] [added: enhance our] common information infrastructure across our global operations, we could experience disruptions in our business that could have an adverse effect on our business, financial condition, results of operations and cash flows.

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 [removed: below] [added: 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 [added: of operations] and damage our reputation.

Approximately [removed: 31%] [added: 30%] of our revenues in [removed: 2015] [added: 2016] were generated outside of the United States.

| | • | | Incurrence of additional debt and related interest expense; [added: and] |

| | • | | The dilutive effect [added: in the event] of the issuance of additional equity [removed: securities;] [added: securities.] |

| | • | | Unforeseen or contingent liabilities of the acquired businesses; [removed: and] |

| | • | | Large write-offs or write-downs, or the impairment of goodwill or other intangible [removed: assets.] [added: assets;] |

In June 2016, the United Kingdom voted in a referendum to exit the European Union (“Brexit”), which resulted in significant currency exchange rate fluctuations and volatility beginning late in the second quarter of fiscal 2016.

Subject to parliamentary approval, the British government is expected to commence negotiations to determine the terms of Brexit.

Given the lack of comparable precedent, the implications of Brexit, or how such implications might affect Snap-on, are unclear at this time.

Brexit could, among other impacts, disrupt trade and the movement of goods, services and people between the United Kingdom and the European Union or other countries as well as create legal and global economic uncertainty.

These and other potential implications could adversely affect our business and results of operations.

The size of our financial services portfolio has increased significantly in recent years.

For example, the Affordable Care Act (the “ACA”), which continues to be phased in, significantly affects the provision of both health care services and benefits in the United States; the ACA may impact our cost of providing our employees and retirees with health insurance and/or benefits, and may also impact various other aspects of our business.

The ACA did not have a material impact on our fiscal 2015, 2014 or 2013 financial results; however, we are continuing to assess the impact of the ACA on our health care benefit costs.

The assets are invested in equity securities, debt securities, hedge funds, real estate and other real assets, insurance contracts, and cash and cash equivalents.

We believe our [removed: broad-based organic sales] growth in [removed: 2015] [added: 2016] demonstrates Snap-on’s continued progress in providing repeatability and reliability to a wide range of professional customers performing critical tasks in workplaces of consequence, [removed: while overcoming] [added: as continued strengthening in the automotive repair sector combined with] headwinds in certain [added: industrial] end markets [removed: and geographies] that [removed: surfaced] [added: were most pronounced] in the [removed: overall macroeconomic environment, particularly during the latter] [added: first] half of the year.

We believe our [removed: 2015] [added: 2016] operating results also provide continued evidence that Snap-on’s value proposition of making work easier for serious professionals in workplaces of consequence is an ongoing strength as we move forward along our runways for coherent growth:

| | • | | Expanding in the vehicle repair garage, where we continued to make significant progress in connecting with customers and translating the resulting insights into [removed: new] innovation that solves specific challenges in the repair facility. For example, the [removed: July 2015] [added: October 31, 2016] acquisition of [removed: Ecotechnics S.p.A. (“Ecotechnics”) further] [added: Car-O-Liner Holding AB (“Car-O-Liner”)] broadened our established capabilities in serving vehicle repair facilities and [added: further] expanded our presence with repair shop owners and managers; |

| | • | | [removed: Extending to] [added: Further extending in] critical industries, where we continued to grow our lines of products customized for specific industries, despite near-term challenges in certain industrial end markets; and |

We also believe our year-over-year improvement in operating margin further [removed: evidences] [added: validates] the potential of 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.

The acquisition of [removed: the Challenger vehicle lift product line] [added: Car-O-Liner] complemented and increased Snap-on’s existing [removed: undercar] equipment [added: and repair and service information] product [removed: offering,] [added: offerings,] broadened its established capabilities in serving vehicle repair facilities and [added: further] expanded the company’s presence with repair shop owners and managers.

For segment reporting purposes, the results of operations and assets of [removed: Ecotechnics, Pro-Cut] [added: Ecotechnics] and [removed: Challenger] [added: Pro-Cut] have been included in the Repair Systems & Information Group since the respective acquisition dates.

Pro forma financial information has not been presented [added: for any of these acquisitions] as the net [removed: effects of these acquisitions, both] [added: effects,] individually and collectively, were neither significant nor material to Snap-on’s results of operations or financial position.

[removed: Consolidated net] [added: Net] sales of $3,352.8 million in 2015 increased $75.1 million, or 2.3%, from 2014 levels, [removed: including an unfavorable $157.7 million impact from foreign currency translation] [added: reflecting a $220.8 million, or 7.1%, organic sales gain] and $12.0 million of acquisition-related [removed: sales.][added: sales, partially offset by $157.7 million of unfavorable foreign currency translation.]

Operating earnings before financial services of [removed: $594.6] [added: $655.5] million in [removed: 2015] [added: 2016] were up [removed: $59.0] [added: $60.9] million, or [removed: 11.0%,] [added: 10.2%,] from [removed: 2014] [added: 2015] levels, reflecting contributions from higher sales and improved operating margins, including contributions from “Rapid Continuous Improvement” or [removed: “RCI initiatives,”] [added: “RCI” initiatives,] partially offset by [added: $21.5 million of] unfavorable foreign currency effects.

Operating earnings of [removed: $764.8] [added: $854.2] million in [removed: 2015] [added: 2016] increased [removed: $80.1] [added: $89.4] million, or 11.7%, from [removed: $684.7] [added: $764.8] million last year.

[removed: In 2015, net] [added: Net] earnings attributable to Snap-on Incorporated [added: in 2015] were $478.7 million or $8.10 per diluted share.

[removed: Net] [added: In 2016, net] earnings attributable to Snap-on Incorporated [removed: in 2014] were [removed: $421.9] [added: $546.4] million or [removed: $7.14] [added: $9.20] per diluted share.

The [removed: Commercial &] [added: Commercial &] Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, [removed: government] [added: government, power generation, transportation] and technical education market segments (collectively, “critical [removed: industries”).][added: industries”), primarily through direct and distributor channels.]

Segment net sales of $1,163.6 million in 2015 decreased $11.2 million, or 1.0%, from 2014 [removed: levels.][added: levels, reflecting $75.3 million of unfavorable foreign currency translation partially offset by a $64.1 million, or 5.8%, organic sales gain.]

[removed: Excluding $75.3 million of unfavorable foreign currency translation,] [added: The] organic sales [removed: in 2015 increased $64.1 million, or 5.8%, due to higher sales] [added: increase primarily included a double-digit gain] in the segment’s power tools [added: operations] and [removed: Asia/Pacific operations, as well as increased sales] [added: high single-digit increases] from [added: both] the segment’s European-based hand tools [removed: business;] [added: business and Asia/Pacific operations;] sales to customers in critical industries were essentially flat, as sales gains in several market segments were generally offset by lower sales to customers in the oil and gas sector of our natural resources market segment.

Operating earnings of [removed: $169.4] [added: $281.1] million in [removed: 2015] [added: 2016] increased [removed: $10.8] [added: $25.1] million, or [removed: 6.8%,] [added: 9.8%,] from [removed: 2014 levels] [added: 2015 levels,] primarily as a result of higher [removed: organic] sales and savings from RCI initiatives, partially offset by [added: $15.3 million of] unfavorable foreign currency effects.

The Commercial & Industrial Group intends to continue building on the following strategic priorities in [removed: 2016:][added: 2017:]

| | • | | Continuing to reduce structural and operating costs through RCI [removed: and restructuring] initiatives. |

[removed: Excluding $40.7 million of unfavorable foreign currency translation,] [added: The] organic sales [removed: in 2015 increased $154.2 million, or 10.9%, reflecting] [added: increase includes] higher sales in both the company’s U.S. and international franchise operations.

Operating earnings of [removed: $256.0] [added: $297.8] million in [removed: 2015] [added: 2016] increased [removed: $32.9] [added: $24.4] million, or [removed: 14.7%,] [added: 8.9%,] from [removed: 2014] [added: 2015] levels, primarily [removed: as a result of the] [added: due to] higher [removed: sales] [added: sales, including acquisition-related sales,] and savings from RCI initiatives, partially offset by [added: $5.1 million of] unfavorable foreign currency effects.

The Snap-on Tools Group made continued progress in [removed: 2015] [added: 2016] on its fundamental, strategic initiatives to strengthen the franchise network and enhance franchisee profitability.

In [removed: 2016,] [added: 2017,] the Snap-on Tools Group intends to further build on the progress made in [removed: 2015,] [added: 2016,] with specific initiatives focused on the following:

By focusing on these areas, we believe that Snap-on, as well as [removed: our] [added: its] franchisees, will have the opportunity to continue to serve customers more effectively, more profitably and with improved satisfaction.

[removed: Excluding $45.8 million] [added: Segment net sales] of [removed: unfavorable foreign currency translation] [added: $1,113.2 million in 2015 increased $18.0 million, or 1.6%, from 2014 levels, reflecting a $51.8 million, or 4.9%, organic sales gain] and $12.0 million of acquisition-related sales, [removed: organic sales increased $51.8] [added: partially offset by $45.8] million [removed: or 4.9%.][added: of unfavorable foreign currency translation.]

The organic sales increase primarily reflects higher sales to [removed: OEM dealership service and] [added: independent] repair [removed: shops (“OEM dealerships”),] [added: shop owners and managers,] as well as increased sales to [removed: independent repair shop owners and managers,] [added: OEM dealerships,] including higher sales of diagnostic and repair information products, and increased sales of undercar equipment.

[removed: Operating earnings] [added: Gross margin] of [removed: $273.4 million] [added: 43.5%] in 2015 [removed: increased $22.2 million, or 8.8%,] [added: improved 20 bps] from [added: 43.3% in] 2014 [removed: levels,] primarily due to [added: benefits from] higher [removed: sales, including acquisition-related sales,] [added: sales] and savings from RCI initiatives, partially offset by [added: 90 bps of] unfavorable foreign currency effects.

The Repair Systems & Information Group intends to focus on the following strategic priorities in [removed: 2016:][added: 2017:]

| | • | | Continuing software and hardware [removed: upgrades;] [added: upgrades to further improve functionality, performance and efficiency;] |

Financial Services revenue was [removed: $240.3] [added: $281.4] million in [removed: 2015] [added: 2016] and [removed: $214.9] [added: $240.3] million in [removed: 2014;] [added: 2015;] originations of [removed: $993.7] [added: $1,075.7] million in [removed: 2015] [added: 2016] increased [removed: $105.1] [added: $82.0] million, or [removed: 11.8%,] [added: 8.3%,] from [removed: 2014] [added: 2015] levels.

[removed: In 2015,] [added: Financial services] operating earnings [removed: from financial services] of $170.2 million [added: in 2015, including $2.6 million of unfavorable foreign currency effects,] increased $21.1 million, or 14.2%, [removed: from] [added: as compared to] $149.1 million [removed: last year.][added: in 2014.]

Financial Services intends to focus on the following strategic priorities in [removed: 2016:][added: 2017:]

Net cash provided by operating activities [removed: in 2013] was [removed: $392.6 million.][added: $403.1 million in 2014.]

Net cash used by investing activities of $306.4 million in 2015 included additions [removed: to, and collections of,] [added: to] finance receivables of $844.2 [removed: million and] [added: million, partially offset by collections of] $624.8 million, [removed: respectively,] as well as [removed: an] $11.8 million [removed: use of cash] for the acquisition of Ecotechnics.

Net cash used by investing activities of $273.2 million in 2014 included additions [removed: to, and collections of] [added: to] finance receivables of $746.2 [removed: million and] [added: million, partially offset by collections of] $591.4 million, [removed: respectively,] as well as [removed: a] $41.3 million [removed: use of cash] for the acquisition of Pro-Cut.

Capital expenditures in [removed: 2015 of $80.4 million reflect continued spending] [added: all three years included investments] to support the company’s execution of its strategic growth initiatives and Value Creation [removed: Processes, including continued investments focused on] [added: Processes around] safety, quality, customer connection, innovation and RCI.

Net cash used by financing activities of [removed: $226.0] [added: $236.7] million in 2015 included $127.9 million for dividend payments to shareholders, $110.4 million for the repurchase of 723,000 shares of Snap-on’s common stock and $34.0 million from a net decrease in notes payable and other short-term borrowings, partially offset by $41.6 million of proceeds from stock purchase and option plan exercises.

Net cash used by financing activities of [removed: $206.9] [added: $212.1] million in 2014 included the [removed: March 2014] repayment of [removed: $100.0] [added: $100] million of unsecured notes at maturity.

Net cash used by financing activities of [removed: $137.8] [added: $116.0] million in [removed: 2013] [added: 2016] included [removed: $92.0] [added: $147.5] million for dividend payments to shareholders and [removed: $82.6] [added: $120.4] million for the repurchase of [removed: 926,000] [added: 758,000] shares of Snap-on’s common stock, partially offset by [removed: $29.2] [added: $134.2] million of proceeds from [added: a net increase in notes payable and other short-term borrowings and $41.8 million of proceeds from] stock purchase and option plan exercises.

Unless otherwise indicated, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “fiscal [removed: 2015”] [added: 2016”] or [removed: “2015”] [added: “2016”] refer to the fiscal year ended [removed: January 2,] [added: December 31,] 2016; references to “fiscal [removed: 2014”] [added: 2015”] or [removed: “2014”] [added: “2015”] refer to the fiscal year ended January [removed: 3, 2015;] [added: 2, 2016;] and references to “fiscal [removed: 2013”] [added: 2014”] or [removed: “2013”] [added: “2014”] refer to the fiscal year ended [removed: December 28, 2013.][added: January 3, 2015.]

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 generally accepted accounting principles in the United States of America (“GAAP”), excluding acquisition-related sales and the impact of foreign currency translation.

Management evaluates the company’s sales performance based on organic sales growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, customer base and geographic expansion, new product development and/or pricing, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period.

The company’s organic sales disclosures also exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends.

Management believes that 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 our businesses and facilitating comparisons of our sales performance with prior periods.

On November 16, 2016, Snap-on acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a preliminary cash purchase price of $12.9 million (or $12.5 million, net of cash acquired).

The preliminary purchase price is subject to change based upon the finalization of a working capital adjustment that is expected to be completed in the first quarter of 2017.

Sturtevant Richmont, based in Carol Stream, Illinois, designs, manufactures and distributes mechanical and electronic torque wrenches as well as wireless torque error proofing systems for a variety of industrial applications.

The acquisition of Sturtevant Richmont enhanced and expanded Snap-on’s capabilities in providing solutions that address torque requirements, which are increasingly essential to critical mechanical performance.

For segment reporting purposes, the results of operations and assets of Sturtevant Richmont have been included in the Commercial & Industrial Group since the acquisition date.

On October 31, 2016, Snap-on acquired Car-O-Liner for a preliminary cash purchase price of $151.8 million (or $147.9 million, net of cash acquired).

The preliminary purchase price is subject to change based upon the finalization of a working capital adjustment that is expected to be completed in the first quarter of 2017.

Car-O-Liner, based in Gothenburg, Sweden, designs and manufactures collision repair equipment, and information and truck alignment systems.

For segment reporting purposes, substantially all of Car-O-Liner’s results of operations and assets have been included in the Repair Systems & Information Group since the acquisition date, with the remaining portions included in the Commercial & Industrial Group.

On July 27, 2015, Snap-on acquired the assets of Ecotechnics S.p.A.

(“Ecotechnics”) for a cash purchase price of $11.8 million.

Consolidated net sales of $3,430.4 million in 2016 increased $77.6 million, or 2.3%, from 2015 levels, reflecting a $96.2 million, or 2.9%, increase in organic sales (a non-GAAP financial measure that excludes acquisition-related sales and the impact of foreign currency translation) and $32.9 million of acquisition-related sales, partially offset by $51.5 million of unfavorable foreign currency translation.

Segment net sales of $1,148.3 million in 2016 decreased $15.3 million, or 1.3%, from 2015 levels, reflecting $20.6 million of unfavorable foreign currency translation partially offset by $4.2 million of acquisition-related sales and a $1.1 million, or 0.1%, organic sales gain.

The organic sales increase primarily includes higher sales in the segment’s European-based hand tools business and in its Asia/Pacific and power tools operations, largely offset by lower sales to customers in critical industries, primarily in the international aerospace and natural resources market segments.

Operating earnings of $168.0 million in 2016 decreased $1.4 million, or 0.8%, from 2015 levels, including $1.1 million of unfavorable foreign currency effects.

| | • | | Continuing to invest in emerging market growth initiatives; |

The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s worldwide mobile tool distribution channel.

Segment net sales of $1,633.9 million in 2016 increased $65.2 million, or 4.2%, from 2015 levels, reflecting an $86.4 million, or 5.6%, organic sales gain partially offset by $21.2 million of unfavorable foreign currency translation.

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 $1,179.9 million in 2016 increased $66.7 million, or 6.0%, from 2015 levels, reflecting a $52.1 million, or 4.7%, organic sales gain and $28.7 million of acquisition-related sales, partially offset by $14.1 million of unfavorable foreign currency translation.

In 2016, operating earnings from financial services of $198.7 million increased $28.5 million, or 16.7%, from $170.2 million last year, including $1.8 million of unfavorable foreign currency effects.

Net cash provided by operating activities of $576.1 million in 2016 increased $68.9 million from $507.2 million in 2015 primarily due to $69.0 million of higher net earnings.

It also included, on a preliminary basis, a total of $160.4 million (net of $4.3 million of cash acquired) for the acquisitions of Car-O-Liner and Sturtevant Richmont.

2016 vs. 2015

| Net sales | | $ | 3,430.4 | | | | 100.0% | | | $ | 3,352.8 | | | | 100.0% | | | $ | 77.6 | | | | 2.3% | |

| Cost of goods sold | | | (1,720.8) | | | | \-50.2% | | | | (1,704.5) | | | | \-50.8% | | | | (16.3) | | | | \-1.0% | |

| Gross profit | | | 1,709.6 | | | | 49.8% | | | | 1,648.3 | | | | 49.2% | | | | 61.3 | | | | 3.7% | |

| Operating expenses | | | (1,054.1) | | | | \-30.7% | | | | (1,053.7) | | | | \-31.5% | | | | (0.4) | | | | – | |

| Financial services expenses | | | (82.7) | | | | \-29.4% | | | | (70.1) | | | | \-29.2% | | | | (12.6) | | | | \-18.0% | |

| Operating earnings | | | 854.2 | | | | 23.0% | | | | 764.8 | | | | 21.3% | | | | 89.4 | | | | 11.7% | |

| Interest expense | | | (52.2) | | | | \-1.4% | | | | (51.9) | | | | \-1.4% | | | | (0.3) | | | | \-0.6% | |

| Earnings before income taxes and equity earnings | | | 801.4 | | | | 21.6% | | | | 710.5 | | | | 19.8% | | | | 90.9 | | | | 12.8% | |

| Income tax expense | | | (244.3) | | | | \-6.6% | | | | (221.2) | | | | \-6.2% | | | | (23.1) | | | | \-10.4% | |

| Earnings before equity earnings | | | 557.1 | | | | 15.0% | | | | 489.3 | | | | 13.6% | | | | 67.8 | | | | 13.9% | |

| Net earnings | | | 559.6 | | | | 15.1% | | | | 490.6 | | | | 13.6% | | | | 69.0 | | | | 14.1% | |

| Net earnings attributable to Snap-on Inc. | | $ | 546.4 | | | | 14.7% | | | $ | 478.7 | | | | 13.3% | | | $ | 67.7 | | | | 14.1% | |

On July 27, 2015, Snap-on acquired the assets of Ecotechnics for a cash purchase price of $11.8 million, which reflects the finalization of a working capital adjustment that was completed in the fourth quarter of 2015.

On May 13, 2013, Snap-on acquired Challenger Lifts, Inc. (“Challenger”) for a cash purchase price of $38.2 million.

Challenger designs, manufactures and distributes a comprehensive line of vehicle lifts and accessories to a diverse customer base in the automotive repair sector.

Organic sales (excluding foreign currency translation impacts and acquisition-related sales) increased $220.8 million or 7.1%.

| | • | | Investing in emerging market growth initiatives, including in China, India, Eastern Europe, the Middle East and Latin America; |

In the Snap-on Tools Group, segment net sales of $1,568.7 million in 2015 increased $113.5 million, or 7.8%, from 2014 levels.

In the Repair Systems & Information Group, segment net sales of $1,113.2 million in 2015 increased $18.0 million, or 1.6%, from 2014 levels.

Net cash provided by operating activities of $496.5 million in 2015 increased $98.6 million from prior-year levels primarily as a result of higher 2015 net earnings and net changes in operating assets and liabilities.

Net cash used by investing activities of $250.4 million in 2013 included additions to, and collections of, finance receivables of $651.3 million and $508.8 million, respectively, as well as a $38.2 million use of cash for the acquisition of Challenger.

| | | | | | | | | | | | | | | | | | | | | | | | | |

Snap-on’s 2014 fiscal year contained 53 weeks of operating results.

Organic sales (excluding foreign currency translation impacts and acquisition-related sales) in 2015 increased $220.8 million, or 7.1%, from 2014 levels.

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

Segment net sales of $1,163.6 million in 2015 decreased $11.2 million, or 1.0%, from 2014 levels.

Excluding $75.3 million of unfavorable foreign currency translation, organic sales increased $64.1 million, or 5.8%, primarily due to a double-digit gain in the segment’s power tools operations and high single-digit increases from both the segment’s European-based hand tools business and Asia/Pacific operations; sales to customers in critical industries were essentially flat, as sales gains in several market segments were generally offset by lower sales to customers in the oil and gas sector of our natural resources market segment.

Segment net sales of $1,113.2 million in 2015 increased $18.0 million, or 1.6%, from 2014 levels.

Excluding $45.8 million of unfavorable foreign currency translation and $12.0 million of acquisition-related sales, organic sales increased $51.8 million or 4.9%.

| Gross profit | | | 412.3 | | | | 48.4% | | | | 411.3 | | | | 48.0% | | | | 1.0 | | | | 0.2% | |

| Operating expenses | | | (250.0) | | | | \-29.3% | | | | (266.1) | | | | \-31.1% | | | | 16.1 | | | | 6.1% | |

| Financial services expenses | | | (18.1) | | | | \-28.7% | | | | (17.2) | | | | \-29.0% | | | | (0.9) | | | | \-5.2% | |

| Operating earnings | | | 207.3 | | | | 22.7% | | | | 187.4 | | | | 20.4% | | | | 19.9 | | | | 10.6% | |

| Interest expense | | | (13.0) | | | | \-1.4% | | | | (13.8) | | | | \-1.5% | | | | 0.8 | | | | 5.8% | |

| Income tax expense | | | (59.3) | | | | \-6.5% | | | | (54.9) | | | | \-5.9% | | | | (4.4) | | | | \-8.0% | |

| Earnings before equity earnings | | | 134.5 | | | | 14.7% | | | | 118.5 | | | | 13.0% | | | | 16.0 | | | | 13.5% | |

| Net earnings | | | 134.5 | | | | 14.7% | | | | 118.7 | | | | 13.0% | | | | 15.8 | | | | 13.3% | |

Snap-on’s 2014 fiscal year contained 53 weeks of operating results, with the extra week occurring in the fourth quarter.

The impact of the additional week of operations in fiscal 2014 was not material to Snap-on’s fourth quarter 2014 net sales or net earnings.

Net sales of $851.7 million in the fourth quarter of 2015 decreased $5.7 million, or 0.7%, from 2014 levels, including $33.2 million of unfavorable foreign currency translation and $2.2 million of acquisition-related sales.

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

These improvements in operating expense margin were partially offset by 20 bps of higher pension expense.

| External net sales | | $ | 212.0 | | | | 75.2% | | | $ | 237.9 | | | | 79.8% | | | $ | (25.9) | | | | \-10.9% | |

| Intersegment net sales | | | 69.8 | | | | 24.8% | | | | 60.3 | | | | 20.2% | | | | 9.5 | | | | 15.8% | |

| Cost of goods sold | | | (174.2) | | | | \-61.8% | | | | (184.8) | | | | \-62.0% | | | | 10.6 | | | | 5.7% | |

| Gross profit | | | 107.6 | | | | 38.2% | | | | 113.4 | | | | 38.0% | | | | (5.8) | | | | \-5.1% | |

| Operating expenses | | | (65.7) | | | | \-23.3% | | | | (72.9) | | | | \-24.4% | | | | 7.2 | | | | 9.9% | |

| Segment operating earnings | | $ | 41.9 | | | | 14.9% | | | $ | 40.5 | | | | 13.6% | | | $ | 1.4 | | | | 3.5% | |

Segment net sales of $281.8 million in the fourth quarter of 2015 decreased $16.4 million, or 5.5%, from 2014 levels.

Excluding $14.7 million of unfavorable foreign currency translation, organic sales decreased $1.7 million, or 0.6%, primarily due to a high single-digit decline in sales to customers in critical industries, largely as a result of lower sales to the military and to customers in the oil and gas sector of our natural resources market segment.

Gross margin of 38.2% in the quarter improved 20 bps from 38.0% last year, as savings from RCI initiatives and 20 bps of lower restructuring costs were partially offset by a shift in sales that included a decrease in higher gross margin sales to customers in critical industries and an increase in lower gross margin sales from the segment’s power tools operations.

| Cost of goods sold | | | (237.5) | | | | \-57.8% | | | | (221.1) | | | | \-57.1% | | | | (16.4) | | | | \-7.4% | |

Foreign [added: 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.

Treasury lock agreements are used from time to time to manage [added: the] potential [removed: changes] [added: change] in interest rates in anticipation of the [added: possible] issuance [removed: or sale] of [removed: certain financial instruments.][added: fixed rate debt.]

The estimated maximum potential one-day loss in fair value, calculated using the VAR model, as of [removed: 2015] [added: 2016] and [removed: 2014] [added: 2015] year end was [removed: $0.6] [added: $0.4] million and [removed: $1.2] [added: $0.6] million, respectively, on interest rate-sensitive financial instruments, and [removed: $0.5] [added: $0.8] million and [removed: $0.4] [added: $0.5] million, respectively, on foreign currency-sensitive financial instruments.

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 [added: deferred] compensation expense that may result from such mark-to-market changes.

Prior to extending credit, each customer is evaluated, taking into consideration [added: various factors, including] the customer’s financial condition, [removed: collateral,] debt-servicing ability, past payment experience, credit bureau information, and other financial and qualitative factors that may affect the customer’s ability to [removed: repay.][added: repay, as well as the value of the underlying collateral.]

Credit risk is also monitored regularly through the use of internal [removed: proprietary,] [added: proprietary] custom scoring models [removed: used] to evaluate each transaction at the time of the application for credit and by periodically updating those credit scores for ongoing monitoring purposes.

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 [added: agreements, treasury lock] agreements and prepaid equity forward agreements.

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, [removed: aluminum] [added: aluminum, nickel, copper] and others.

Some of these materials have been, and in the future may be, in short supply, particularly in the event of [removed: a general economic recovery,] mill shutdowns or production cut backs.

Snap-on is exposed to market risk from changes in interest rates and foreign currency exchange rates, including as a result of the recent weakening of the British pound vis-à-vis the U.S. dollar following the United Kingdom’s referendum vote to exit from the European Union.

Snap-on continually monitors its exposure in these markets; for example, the company will be monitoring the potential effects of the United Kingdom’s referendum vote to exit from the European Union, although it is too soon to know what effects the results of the referendum will have on the world economy or the company.

Snap-on is exposed to market risk from changes in foreign currency exchange rates and interest rates.

Snap-on continually monitors its exposure in these markets.

Snap-on markets its products and brands [added: worldwide] through multiple sales distribution channels in more than 130 countries.

[added: Today,] Snap-on [removed: now] 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 performing critical tasks.

Snap-on’s Financial Services customer segment includes: (i) franchisees’ customers and [removed: Snap-on’s industrial and] [added: certain] other customers [added: of Snap-on] who require financing for the purchase or lease of tools and diagnostics and equipment products on an extended-term payment plan; and (ii) franchisees who require financing for business loans and vehicle leases.

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, [removed: government] [added: government, power generation, transportation] and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels.

The acquisition of [removed: the Challenger vehicle lift product line] [added: Car-O-Liner] complemented and increased Snap-on’s existing [removed: undercar] equipment [added: and repair and service information] product [removed: offering,] [added: offerings,] broadened its established capabilities in serving vehicle repair facilities and [added: further] expanded the company’s presence with repair shop owners and managers.

For segment reporting purposes, the results of operations and assets of [removed: Ecotechnics, Pro-Cut] [added: Ecotechnics] and [removed: Challenger] [added: Pro-Cut] have been included in the Repair Systems & Information Group since the respective acquisition dates.

Pro forma financial information has not been presented [added: for any of these acquisitions] as the net [removed: effects of these acquisitions, both] [added: effects,] individually and collectively, were neither significant nor material to Snap-on’s results of operations or financial position.

| _(Amounts in millions)_ | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Tools | | $ | [removed: 1,910.1] [added: 1,899.2] | | | $ | [removed: 1,868.5] [added: 1,910.1] | | | $ | [removed: 1,743.3] [added: 1,868.5] | |

| Diagnostics and repair information | | | [removed: 689.6] [added: 748.2] | | | | [removed: 689.5] [added: 689.6] | | | | [removed: 652.0] [added: 689.5] | |

| Equipment | | | [removed: 753.1] [added: 783.0] | | | | [removed: 719.7] [added: 753.1] | | | | [removed: 661.2] [added: 719.7] | |

| | | $ | [removed: 3,352.8] [added: 3,430.4] | | | $ | [removed: 3,277.7] [added: 3,352.8] | | | $ | [removed: 3,056.5] [added: 3,277.7] | |

| [removed: Names] [added: _Names_] | | [removed: Products] [added: _Products] and [removed: Services] [added: Services_] |

Snap-on also generates revenue from various financing programs that include: (i) installment sales and lease contracts arising from franchisees’ customers and [removed: Snap-on’s industrial and] [added: certain] other customers [added: of Snap-on who require financing] for the purchase or lease of [removed: tools, including tool storage,] [added: tools] and diagnostic and equipment products on an extended-term payment plan; and (ii) business loans and vehicle leases to franchisees.

The decision to finance through Snap-on or another financing [removed: entity] [added: source] is solely at the customer’s election.

When assessing customers for potential financing, Snap-on considers various factors [added: regarding ability to pay,] including [added: the customers’] financial condition, [removed: collateral,] debt-servicing ability, past payment experience, [added: and] credit bureau [removed: information] and proprietary [added: Snap-on] credit [removed: models.][added: model information, as well as the value of the underlying collateral.]

Financing revenue from contract originations is recognized over the life of the [added: underlying] contracts, with interest computed primarily on the average daily balances of the underlying contracts.

The vehicle service and repair sector has three main customer groups: (i) professional technicians who purchase tools and diagnostic and equipment products for [removed: themselves;] [added: 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 and diagnostic and equipment products for use by multiple technicians within a service or repair facility; and (iii) OEMs.

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; vocational and technical schools; aviation and aerospace operations; [removed: OEM and service and repair customers;] oil and gas developers; mining operations; energy and power [removed: generation,] [added: generation;] 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 product and business needs.

Franchise fee revenue totaled [removed: $12.7] [added: $13.9] million, [removed: $12.1] [added: $12.7] million and [removed: $11.9] [added: $12.1] million in fiscal [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively.

As of [removed: 2015] [added: 2016] year end, company-owned routes comprised [removed: approximately] [added: less than] 3% of the total route population; Snap-on may elect to increase or reduce the number of company-owned routes in the future.

In addition to its mobile van channel in the United States, Snap-on has replicated its U.S. franchise distribution model in certain other countries including the United Kingdom, Canada, Japan, Australia, Germany, [removed: the] Netherlands, South Africa, New Zealand, Belgium and Ireland.

As of [removed: 2015] [added: 2016] year end, Snap-on’s worldwide route count was approximately [removed: 4,800,] [added: 4,900,] including approximately 3,500 routes in the United States.

The decision to finance through Snap-on or another financing [removed: entity] [added: source] is solely at the customer’s election.

A significant proportion of shop equipment sales in North America under the John Bean, Hofmann, Blackhawk, [added: Car-O-Liner,] Challenger and Pro-Cut brands, diagnostic products under the Snap-on brand and information products under the Mitchell1 brand are made by direct and independent sales forces that have responsibility for national and other accounts.

Snap-on brand tools and equipment are marketed to industrial and governmental customers [removed: in the United States] [added: worldwide] through both industrial sales [removed: representatives, who are employees,] [added: associates] and independent [removed: industrial] distributors.

[removed: Sales representatives] [added: Selling activities] focus on industrial customers whose main purchase criteria are quality and integrated solutions.

As of [removed: 2015] [added: 2016] year end, Snap-on had industrial sales [removed: representatives] [added: associates and independent distributors primarily] in the United [removed: States, Australia, Canada, Japan, Mexico, Puerto Rico] [added: States] and [added: in] various European, [removed: Asian,] Latin American, Middle [removed: Eastern] [added: Eastern, Asian] and African countries, with the United States representing the majority of Snap-on’s total industrial sales.

Hand tools sold under the BAHCO, Fish and Hook, Irimo, [removed: Lindström] [added: Lindström, CDI, ATI, Sioux, Sturtevant Richmont] and Williams brands and trade names, for example, are sold through distributors in Europe, North and South America, Asia and certain other parts of the world.

Wheel service and other vehicle service equipment are sold through distributors primarily under brands including Hofmann, John Bean, [added: Car-O-Liner,] Challenger, Pro-Cut, Cartec, Blackhawk and Ecotechnics.

Diagnostic 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, [removed: Sun, BAHCO] [added: Sun] and Blue-Point brands.

[removed: 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.

The company does not currently anticipate experiencing any significant impact in [removed: 2016] [added: 2017] from steel pricing or availability issues.

As of [removed: 2015] [added: 2016] year end, Snap-on and its subsidiaries held approximately 700 active and pending patents in the United States and approximately [removed: 1,550] [added: 1,600] active and pending patents outside of the United States.

Examples of products that have features or designs that benefit from patent protection include wheel alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, [added: collision measurement,] test lanes, brake lathes, sealed ratchets, electronic torque instruments, ratcheting screwdrivers, emissions-sensing devices and diagnostic equipment.

Trademarks have been registered in the United States and [removed: more than 120] [added: many] other countries, and additional applications for trademark registrations are pending.

Snap-on strategically licenses the Snap-on brand to carefully selected manufacturing and distribution companies for items such as apparel, work boots, lighting and a variety of other goods, in order to further build [removed: equity] [added: brand awareness] and market presence for the company’s strongest brand.

Snap-on employed approximately [removed: 11,500] [added: 12,100] people at the end of January [removed: 2016;] [added: 2017;] Snap-on employed approximately [removed: 11,400] [added: 11,500] people at the end of January [removed: 2015.][added: 2016.]

Approximately [removed: 2,600] [added: 2,800] employees, or 23% 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 [removed: 1,400] [added: 2,100] employees in [removed: 2016, 700] [added: 2017, 500] employees in [removed: 2017,] [added: 2018,] and [removed: 500] [added: 200] employees in [removed: 2018;] [added: 2019;] there are no contracts currently scheduled to expire in [removed: 2019] [added: 2020] or [removed: 2020.][added: 2021.]

Snap-on’s largest geographic markets include the United States, Europe, Canada and Asia/Pacific.

On November 16, 2016, Snap-on acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a preliminary cash purchase price of $12.9 million (or $12.5 million, net of cash acquired).

The preliminary purchase price is subject to change based upon the finalization of a working capital adjustment that is expected to be completed in the first quarter of 2017.

Sturtevant Richmont, based in Carol Stream, Illinois, designs, manufactures and distributes mechanical and electronic torque wrenches as well as wireless torque error proofing systems for a variety of industrial applications.

The acquisition of Sturtevant Richmont enhanced and expanded Snap-on’s capabilities in providing solutions that address torque requirements, which are increasingly essential to critical mechanical performance.

For segment reporting purposes, the results of operations and assets of Sturtevant Richmont have been included in the Commercial & Industrial Group since the acquisition date.

On October 31, 2016, Snap-on acquired Car-O-Liner Holding AB (“Car-O-Liner”) for a preliminary cash purchase price of $151.8 million (or $147.9 million, net of cash acquired).

The preliminary purchase price is subject to change based upon the finalization of a working capital adjustment that is expected to be completed in the first quarter of 2017.

Car-O-Liner, headquartered in Gothenburg, Sweden, designs and manufactures collision repair equipment, and information and truck alignment systems.

For segment reporting purposes, substantially all of Car-O-Liner’s results of operations and assets have been included in the Repair Systems & Information Group since the acquisition date, with the remaining portions included in the Commercial & Industrial Group.

| Car-O-Liner | | Collision repair equipment, and information and truck alignment systems |

| Josam | | Heavy duty alignment and collision repair solutions |

| | | |

| Sturtevant Richmont | | Torque tools |

| | | |

| | | |

| TruckCam | | Commercial OEM factory solutions |

| | | |

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.

Various competitors target and sell to professional technicians in the vehicle service and repair sector through the mobile tool distribution channel.

The year-over-year increase in employees primarily reflects the Car-O-Liner and Sturtevant Richmont acquisitions.

Snap-on’s largest geographic markets include the United States, the United Kingdom, Canada, Germany, Australia, France, Japan, Spain, Brazil, Sweden, Italy, China, Argentina, Saudi Arabia, Mexico, the Netherlands, Denmark, India, Norway, Finland, Indonesia, Belgium and Poland.

On May 13, 2013, Snap-on acquired Challenger Lifts, Inc. (“Challenger”) for a cash purchase price of $38.2 million.

Challenger designs, manufactures and distributes a comprehensive line of vehicle lifts and accessories to a diverse customer base in the automotive repair sector.

Outside of the United States, industrial sales are also conducted through other independent distributors.

| [removed: x] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended [removed: January 2,] [added: December 31,] 2016, or

| [removed: ¨] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

[removed: ][added: ]

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: x][added: ☒]

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in a definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: x]

Large accelerated filer [removed: x] [added: ☒] Accelerated filer [removed: ¨] [added: ☐] Non-accelerated filer [removed: ¨] [added: ☐] Smaller reporting company [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: x][added: ☒]

The aggregate market value of voting and non-voting common equity held by non-affiliates (excludes [removed: 450,073] [added: 503,411] shares held by directors and executive officers) computed by reference to the price [removed: ($160.79)] [added: ($158.00)] at which common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter (July [removed: 4, 2015)] [added: 2, 2016)] was [removed: $9.3] [added: $9.1] billion.

The number of shares of Common Stock ($1.00 par value) of the registrant outstanding as of February [removed: 5, 2016,] [added: 3, 2017,] was [removed: 58,092,025] [added: 57,970,318] shares.

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 [removed: 11, 2016,] [added: 10, 2017,] prepared for the Annual Meeting of Shareholders scheduled for April [removed: 28, 2016.][added: 27, 2017.]

| | | Item 1 | | [removed: [Business](#tx58704_1)] [added: [Business](#tx308837_1)] | | | 4 | |

| | | Item 1A | | [Risk [removed: Factors](#tx58704_2)] [added: Factors](#tx308837_2)] | | | 12 | |

| | | Item 1B | | [Unresolved Staff [removed: Comments](#tx58704_3)] [added: Comments](#tx308837_3)] | | | 19 | |

| | | Item 2 | | [removed: [Properties](#tx58704_4)] [added: [Properties](#tx308837_4)] | | | 19 | |

| | | Item 3 | | [Legal [removed: Proceedings](#tx58704_5)] [added: Proceedings](#tx308837_5)] | | | 21 | |

| | | Item 4 | | [Mine Safety [removed: Disclosures](#tx58704_6)] [added: Disclosures](#tx308837_6)] | | | 21 | |

| | | Item 5 | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx58704_7)] [added: Securities](#tx308837_7)] | | | 21 | |

| | | Item 6 | | [Selected Financial [removed: Data](#tx58704_8)] [added: Data](#tx308837_8)] | | | 25 | |

| | | Item 7 | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx58704_9)] [added: Operations](#tx308837_9)] | | | 26 | |

| | | Item 7A | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx58704_10)] [added: Risk](#tx308837_10)] | | | 54 | |

| | | Item 8 | | [Financial Statements and Supplementary [removed: Data](#tx58704_11)] [added: Data](#tx308837_11)] | | | 56 | |

| | | Item 9 | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#tx58704_12)] [added: Disclosure](#tx308837_12)] | | | 56 | |

| | | Item 9A | | [Controls and [removed: Procedures](#tx58704_13)] [added: Procedures](#tx308837_13)] | | | 56 | |

| | | Item 9B | | [Other [removed: Information](#tx58704_14)] [added: Information](#tx308837_14)] | | | 58 | |

| | | Item 10 | | [Directors, Executive Officers and Corporate [removed: Governance](#tx58704_15)] [added: Governance](#tx308837_15)] | | | 58 | |

| | | Item 11 | | [Executive [removed: Compensation](#tx58704_16)] [added: Compensation](#tx308837_16)] | | | 59 | |

| | | Item 12 | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx58704_17)] [added: Matters](#tx308837_17)] | | | 59 | |

| | | Item 13 | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx58704_18)] [added: Independence](#tx308837_18)] | | | 60 | |

| | | Item 14 | | [Principal Accounting Fees and [removed: Services](#tx58704_19)] [added: Services](#tx308837_19)] | | | 60 | |

| | | Item 15 | | [Exhibits, Financial Statement [removed: Schedules](#tx58704_20)] [added: Schedules](#tx308837_20)] | | | 60 | |

| [Computation of Ratio of Earnings to Fixed [removed: Charges](#tx58704_23)] [added: Charges](#tx308837_24)] | | | | | | | [removed: 113] [added: 115] | |

| [Consent of Independent Registered Public Accounting [removed: Firm](#tx58704_24)] [added: Firm](#tx308837_25)] | | | | | | | [removed: 116] [added: 119] | |

[removed: Safe Harbor][added: Safe Harbor]

These risks also include uncertainties related to Snap-on’s capability to implement future strategies with respect to its existing businesses, its ability to refine its brand and franchise strategies, retain and attract franchisees, further enhance service and value to franchisees and thereby help improve their sales and profitability, introduce successful new products, successfully pursue, complete and integrate acquisitions, as well as its ability to withstand disruption arising from natural disasters, planned facility closures or other labor interruptions, the effects of external negative factors, including adverse developments in world financial markets, weakness in certain areas of the global [removed: economy,] [added: economy (including as a result of the United Kingdom’s vote to exit the European Union),] and significant changes in the current competitive environment, inflation, interest rates and other monetary and market fluctuations, changes in tax rates and regulations, and the impact of energy and raw material supply and pricing, including steel and gasoline, the amount, rate and growth of Snap-on’s general and administrative expenses, including health care and postretirement costs (resulting from, among other matters, U.S. health care legislation and its [removed: implementation),] [added: ongoing implementation or reform),] continuing and potentially increasing required contributions to pension and postretirement plans, the impacts of non-strategic business and/or product line rationalizations, and the effects on business as a result of new legislation, regulations or government-related developments or issues, risks associated with data security and technological systems and protections, and other world or local events outside Snap-on’s control, including terrorist disruptions.

In addition, investors should be aware that generally accepted accounting principles in the United States of America [removed: (“U.S. GAAP”)] [added: (“GAAP”)] prescribe when a company should reserve for particular risks, including litigation exposures.

[removed: Fiscal Year][added: Fiscal Year]

10-K 1 d308837d10k.htm FORM 10-K

| | | Item 16 | | [Form 10-K Summary](#tx308837_21) | | | 60 | |

| [Signatures](#tx308837_22) | | | | | | | 110 | |

| [Exhibit Index](#tx308837_23) | | | | | | | 112 | |

| | | | | | | | | |

| [Certifications](#tx308837_26) | | | | | | | 120 | |

10-K 1 d58704d10k.htm 10-K

| [Signatures](#tx58704_21) | | | | | | | 108 | |

| [Exhibit Index](#tx58704_22) | | | | | | | 110 | |

| [Certifications](#tx58704_25) | | | | | | | 117 | |

Snap-on’s facilities in the United States occupy approximately 3.3 million square feet, of which [removed: 72%] [added: 75%] is owned, including its corporate and general office facility located in Kenosha, Wisconsin.

Snap-on’s facilities outside the United States occupy approximately [removed: 3.9] [added: 4.5] million square feet, of which approximately [removed: 74%] [added: 71%] is owned.

The following table provides information about our corporate headquarters and financial services operations, and each of Snap-on’s principal active manufacturing locations and distribution centers (exceeding 50,000 square feet) as of [removed: 2015] [added: 2016] year end:

| Mississauga, Canada | | [removed: Manufacturing and distribution] [added: Distribution] | | Leased | | SOT, RS&I |

| Kettering, England | | Distribution and financial services | | Owned [added: and leased] | | SOT, C&I, FS |

| Helmond, [removed: the] Netherlands | | Distribution | | Owned | | C&I |

| Beijing, China | | Manufacturing | | Leased | | C&I |

| Kungsör, Sweden | | Manufacturing | | Owned | | RS&I |

| Örebro, Sweden | | Manufacturing | | Owned | | RS&I |

Snap-on had [removed: 58,086,046] [added: 57,949,857] shares of common stock outstanding as of [removed: 2015] [added: 2016] year end.

Snap-on’s stock is listed on the New York Stock Exchange under the ticker symbol “SNA.” At February [removed: 5, 2016,] [added: 3, 2017,] there were [removed: 5,206] [added: 5,040] registered holders of Snap-on common stock.

| First | | $ | [removed: 148.29] [added: 168.53] | | | $ | [removed: 131.45] [added: 135.41] | | | $ | [removed: 114.18] [added: 148.29] | | | $ | [removed: 97.23] [added: 131.45] | |

| Second | | | [removed: 162.19] [added: 164.39] | | | | [removed: 146.16] [added: 148.03] | | | | [removed: 119.46] [added: 162.19] | | | | [removed: 109.36] [added: 146.16] | |

| Third | | | [removed: 169.99] [added: 162.70] | | | | [removed: 148.90] [added: 146.76] | | | | [removed: 127.01] [added: 169.99] | | | | [removed: 117.84] [added: 148.90] | |

| Fourth | | | [removed: 174.09] [added: 176.20] | | | | [removed: 154.57] [added: 145.97] | | | | [removed: 139.35] [added: 174.09] | | | | [removed: 113.28] [added: 154.57] | |

Quarterly dividends in [removed: 2014] [added: 2016] were [removed: $0.53] [added: $0.71] per share in the fourth quarter and [removed: $0.44] [added: $0.61] per share in each of the first three quarters [removed: ($1.85] [added: ($2.54] per share for the year).

Cash dividends paid in [removed: 2015, 2014] [added: 2016] and [removed: 2013] [added: 2015] totaled [removed: $127.9 million, $107.6] [added: $147.5] million and [removed: $92.0] [added: $127.9] million, respectively.

The following chart discloses information regarding the shares of Snap-on’s common stock repurchased by the company during the fourth quarter of fiscal [removed: 2015,] [added: 2016,] all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.

| Period | | Shares purchased | | | | Average price per share | | | | Shares purchased as part of publicly announced plans or programs | | [removed: | |] Approximate value of shares that may yet be purchased under publicly announced plans or programs* | | |

| Total/Average | | | [removed: 53,000] [added: 266,000] | | | $ | [removed: 167.15 | |] [added: 165.28] | | [removed: 53,000] | [added: 266,000] | | | N/A | |

| * | Subject to further adjustment pursuant to the 1996 Authorization described below, as of [removed: January 2,] [added: December 31,] 2016, the approximate value of shares that may yet be purchased pursuant to the three outstanding Board authorizations discussed below is [removed: $230.6] [added: $207.2] million. |

| | • | | In 1996, the Board authorized the company to repurchase shares of the company’s common stock from time to time in the open market or in privately negotiated transactions (“the 1996 Authorization”). The 1996 Authorization allows the repurchase of up to the number of shares issued or delivered from treasury from time to time under the various plans the company has in place that call for the issuance of the company’s common stock. Because the number of shares that are purchased pursuant to the 1996 Authorization will change from time to time as (i) the company issues shares under its various plans; and (ii) shares are repurchased pursuant to this authorization, the number of shares authorized to be repurchased will vary from time to time. The 1996 Authorization will expire when terminated by the Board. When calculating the approximate value of shares that the company may yet purchase under the 1996 Authorization, the company assumed a price of [removed: $165.89, $171.76] [added: $153.21, $170.58] and [removed: $171.43] [added: $171.27] per share of common stock as of the end of the fiscal [removed: 2015] [added: 2016] months ended October [removed: 31, 2015,] [added: 29, 2016,] November [removed: 28, 2015,] [added: 26, 2016,] and [removed: January 2,] [added: December 31,] 2016, respectively. |

The following chart discloses information regarding [added: transactions in] shares of Snap-on’s common stock [removed: that were sold] by Citibank, N.A. (“Citibank”) during the fourth quarter of [removed: 2015] [added: 2016] pursuant to a prepaid equity forward agreement (the “Agreement”) with Citibank that is intended to reduce the impact of market risk associated with the stock-based portion of the company’s deferred compensation plans.

| Period | | [removed: | |] Shares sold | | | | Average price per share | | |

The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, [removed: 2010,] [added: 2011,] assuming that dividends were reinvested.

The graph compares Snap-on’s performance to that of a Peer [removed: Group] [added: Group, Standard & Poor’s 500 Industrials Index (“S&P 500 Industrials”)] and Standard & Poor’s 500 Stock Index (“S&P 500”).

[removed: ][added: ]

| [removed: Fiscal] [added: Fiscal] Year Ended [removed: (2)] [added: (2)] | | [removed: Snap-on Incorporated] [added: Snap-on Incorporated] | | | | [removed: Peer] [added: Peer] Group [removed: (3)] [added: (3)] | | | | [removed: S&P] [added: S&P] 500 [added: Industrials] | | | [added: | S&P 500 | | |]

| December 31, [removed: 2010] [added: 2011] | | $ | 100.00 | | | $ | 100.00 | | | $ | 100.00 | | [added: | $ | 100.00 | |]

| (1) | Assumes $100 was invested on December 31, [removed: 2010,] [added: 2011,] and that dividends were reinvested quarterly. |

| (3) | The Peer Group consists of: Stanley Black & Decker, Inc., Danaher Corporation, Emerson Electric Co., Genuine Parts Company, Newell [removed: Rubbermaid] [added: Brands] Inc., Pentair plc, SPX Corporation and W.W. Grainger, Inc. |

| | | 2016 | | | | | | | | 2015 | | | | | | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 10/02/16 to 10/29/16 | | | 65,000 | | | $ | 156.36 | | | 65,000 | | $ | 201.2 million | |

| 10/30/16 to 11/26/16 | | | 61,000 | | | $ | 165.64 | | | 61,000 | | $ | 217.0 million | |

| 11/27/16 to 12/31/16 | | | 140,000 | | | $ | 169.27 | | | 140,000 | | $ | 207.2 million | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 10/02/16 to 10/29/16 | | | – | | | | – | |

| 10/30/16 to 11/26/16 | | | 3,800 | | | $ | 165.52 | |

| 11/27/16 to 12/31/16 | | | 3,000 | | | $ | 168.99 | |

| | | | | | | | | |

| Total/Average | | | 6,800 | | | $ | 167.05 | |

| | | | | | | | | |

As a result of acquisitions and other transactions impacting companies that comprise the Peer Group listed below, Snap-on believes that the S&P 500 Industrials Index, of which Snap-on is a member, is a more relevant source of comparative performance.

In accordance with SEC rules, Snap-on is presenting information for both the Peer Group and the S&P 500 Industrials Index this year; going forward, only the S&P 500 Industrials Index will be presented along with Snap-on and the S&P 500.

| December 31, 2012 | | | 159.41 | | | | 117.59 | | | | 115.35 | | | | 116.00 | |

| December 31, 2013 | | | 224.87 | | | | 160.15 | | | | 162.27 | | | | 153.58 | |

| December 31, 2014 | | | 285.06 | | | | 167.54 | | | | 178.21 | | | | 174.60 | |

| December 31, 2015 | | | 362.38 | | | | 158.07 | | | | 173.70 | | | | 177.01 | |

| December 31, 2016 | | | 367.95 | | | | 179.83 | | | | 206.46 | | | | 198.18 | |

| | | | | | | | | | | | | | | | | |

| | | 2015 | | | | | | | | 2014 | | | | | | |

Quarterly dividends in 2013 were $0.44 per share in the fourth quarter and $0.38 per share in each of the first three quarters ($1.58 per share for the year).

| | | | | | | | | | | | | | | | | |

| 10/04/15 to 10/31/15 | | | 5,000 | | | $ | 164.56 | | | | 5,000 | | | $ | 224.9 million | |

| 11/01/15 to 11/28/15 | | | 48,000 | | | $ | 167.42 | | | | 48,000 | | | $ | 222.0 million | |

| 11/29/15 to 01/02/16 | | | – | | | | – | | | | – | | | $ | 230.6 million | |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 10/04/15 to 10/31/15 | | | | | – | | | | – | |

| 11/01/15 to 11/28/15 | | | | | 6,700 | | | $ | 170.28 | |

| 11/29/15 to 01/02/16 | | | | | 11,200 | | | $ | 171.94 | |

| | | | | | | | | | | |

| Total/Average | | | | | 17,900 | | | $ | 171.32 | |

| | | | | | | | | | | |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| December 31, 2011 | | | 91.62 | | | | 97.93 | | | | 102.11 | |

| December 31, 2012 | | | 146.06 | | | | 115.15 | | | | 118.45 | |

| December 31, 2013 | | | 206.03 | | | | 156.88 | | | | 156.82 | |

| December 31, 2014 | | | 261.18 | | | | 164.08 | | | | 178.29 | |

| December 31, 2015 | | | 332.03 | | | | 154.72 | | | | 180.75 | |

The selected financial data presented below has been derived from, and should be read in conjunction with, the respective historical consolidated financial statements of the company, including the notes thereto, and “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.” [added: In the following table, “Total assets” was adjusted on a retrospective basis for all years presented to reflect the company’s 2016 adoption of Accounting Standards Update (“ASU”) No. 2015-17, _Balance Sheet Classification of Deferred Taxes (Topic 740)_.]

| _(Amounts in millions, except per share data)_ | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Net sales | | $ | [removed: 3,352.8] [added: 3,430.4] | | | $ | [removed: 3,277.7] [added: 3,352.8] | | | $ | [removed: 3,056.5] [added: 3,277.7] | | | $ | [removed: 2,937.9] [added: 3,056.5] | | | $ | [removed: 2,854.2] [added: 2,937.9] | |

| Gross profit | | | [removed: 1,648.3] [added: 1,709.6] | | | | [removed: 1,584.3] [added: 1,648.3] | | | | [removed: 1,472.9] [added: 1,584.3] | | | | [removed: 1,390.0] [added: 1,472.9] | | | | [removed: 1,337.9] [added: 1,390.0] | |

| Operating expenses | | | [removed: 1,053.7] [added: 1,054.1] | | | | [removed: 1,048.7] [added: 1,053.7] | | | | [removed: 1,012.4] [added: 1,048.7] | | | | [removed: 980.3] [added: 1,012.4] | | | | [removed: 953.7] [added: 980.3] | |

| Operating earnings before financial services | | | [removed: 594.6] [added: 655.5] | | | | [removed: 535.6] [added: 594.6] | | | | [removed: 460.5] [added: 535.6] | | | | [removed: 409.7] [added: 460.5] | | | | [removed: 384.2] [added: 409.7] | |

| Financial services revenue | | | [removed: 240.3] [added: 281.4] | | | | [removed: 214.9] [added: 240.3] | | | | [removed: 181.0] [added: 214.9] | | | | [removed: 161.3] [added: 181.0] | | | | [removed: 124.3] [added: 161.3] | |

| Financial services expenses | | | [removed: 70.1] [added: 82.7] | | | | [removed: 65.8] [added: 70.1] | | | | [removed: 55.3] [added: 65.8] | | | | [removed: 54.6] [added: 55.3] | | | | [removed: 51.4] [added: 54.6] | |

| Operating earnings from financial services | | | [removed: 170.2] [added: 198.7] | | | | [removed: 149.1] [added: 170.2] | | | | [removed: 125.7] [added: 149.1] | | | | [removed: 106.7] [added: 125.7] | | | | [removed: 90.9] [added: 106.7] | |

| Operating earnings | | | [removed: 764.8] [added: 854.2] | | | | [removed: 684.7] [added: 764.8] | | | | [removed: 586.2] [added: 684.7] | | | | [removed: 516.4] [added: 586.2] | | | | [removed: 475.1] [added: 516.4] | |

| Interest expense | | | [removed: 51.9] [added: 52.2] | | | | [removed: 52.9] [added: 51.9] | | | | [removed: 56.1] [added: 52.9] | | | | [removed: 55.8] [added: 56.1] | | | | [removed: 61.2] [added: 55.8] | |

| Earnings before income taxes and equity earnings | | | [removed: 710.5] [added: 801.4] | | | | [removed: 630.9] [added: 710.5] | | | | [removed: 526.2] [added: 630.9] | | | | [removed: 460.2] [added: 526.2] | | | | [removed: 412.9] [added: 460.2] | |

| Income tax expense | | | [removed: 221.2] [added: 244.3] | | | | [removed: 199.5] [added: 221.2] | | | | [removed: 166.7] [added: 199.5] | | | | [removed: 148.2] [added: 166.7] | | | | [removed: 133.7] [added: 148.2] | |

| Earnings before equity earnings | | | [removed: 489.3] [added: 557.1] | | | | [removed: 431.4] [added: 489.3] | | | | [removed: 359.5] [added: 431.4] | | | | [removed: 312.0] [added: 359.5] | | | | [removed: 279.2] [added: 312.0] | |

| Equity earnings, net of tax | | | [removed: 1.3] [added: 2.5] | | | | [removed: 0.7] [added: 1.3] | | | | [removed: 0.2] [added: 0.7] | | | | [removed: 2.6] [added: 0.2] | | | | [removed: 4.6] [added: 2.6] | |

| Net earnings | | | [removed: 490.6] [added: 559.6] | | | | [removed: 432.1] [added: 490.6] | | | | [removed: 359.7] [added: 432.1] | | | | [removed: 314.6] [added: 359.7] | | | | [removed: 283.8] [added: 314.6] | |

| Net earnings attributable to noncontrolling interests | | | [removed: (11.9)] [added: (13.2)] | | | | [removed: (10.2)] [added: (11.9)] | | | | [removed: (9.4)] [added: (10.2)] | | | | [removed: (8.5)] [added: (9.4)] | | | | [removed: (7.5)] [added: (8.5)] | |

| Net earnings attributable to Snap-on | | | [removed: 478.7] [added: 546.4] | | | | [removed: 421.9] [added: 478.7] | | | | [removed: 350.3] [added: 421.9] | | | | [removed: 306.1] [added: 350.3] | | | | [removed: 276.3] [added: 306.1] | |

| Cash and cash equivalents | | $ | [removed: 92.8] [added: 77.6] | | | $ | [removed: 132.9] [added: 92.8] | | | $ | [removed: 217.6] [added: 132.9] | | | $ | [removed: 214.5] [added: 217.6] | | | $ | [removed: 185.6] [added: 214.5] | |

| Trade and other accounts receivable – net | | | [removed: 562.5] [added: 598.8] | | | | [removed: 550.8] [added: 562.5] | | | | [removed: 531.6] [added: 550.8] | | | | [removed: 497.9] [added: 531.6] | | | | [removed: 463.5] [added: 497.9] | |

| Finance receivables – net (current) | | | [removed: 447.3] [added: 472.5] | | | | [removed: 402.4] [added: 447.3] | | | | [removed: 374.6] [added: 402.4] | | | | [removed: 323.1] [added: 374.6] | | | | [removed: 277.2] [added: 323.1] | |

| Contract receivables – net (current) | | | [removed: 82.1] [added: 88.1] | | | | [removed: 74.5] [added: 82.1] | | | | [removed: 68.4] [added: 74.5] | | | | [removed: 62.7] [added: 68.4] | | | | [removed: 49.7] [added: 62.7] | |

| Inventories – net | | | [removed: 497.8] [added: 530.5] | | | | [removed: 475.5] [added: 497.8] | | | | [removed: 434.4] [added: 475.5] | | | | [removed: 404.2] [added: 434.4] | | | | [removed: 386.4] [added: 404.2] | |

| Property and equipment – net | | | [removed: 413.5] [added: 425.2] | | | | [removed: 404.5] [added: 413.5] | | | | [removed: 392.5] [added: 404.5] | | | | [removed: 375.2] [added: 392.5] | | | | [removed: 352.9] [added: 375.2] | |

| Long-term finance receivables – net | | | [removed: 772.7] [added: 934.5] | | | | [removed: 650.5] [added: 772.7] | | | | [removed: 560.6] [added: 650.5] | | | | [removed: 494.6] [added: 560.6] | | | | [removed: 431.8] [added: 494.6] | |

| Long-term contract receivables – net | | | [removed: 266.6] [added: 286.7] | | | | [removed: 242.0] [added: 266.6] | | | | [removed: 217.1] [added: 242.0] | | | | [removed: 194.4] [added: 217.1] | | | | [removed: 165.1] [added: 194.4] | |

| Notes payable and current maturities of long-term debt | | | [removed: 18.4] [added: 301.4] | | | | [removed: 56.6] [added: 18.4] | | | | [removed: 113.1] [added: 56.6] | | | | [removed: 5.2] [added: 113.1] | | | | [removed: 16.2] [added: 5.2] | |

| Accounts payable | | | [removed: 148.3] [added: 170.9] | | | | [removed: 145.0] [added: 148.3] | | | | [removed: 155.6] [added: 145.0] | | | | [removed: 142.5] [added: 155.6] | | | | [removed: 124.6] [added: 142.5] | |

| Long-term debt | | | [removed: 861.7] [added: 708.8] | | | | [removed: 862.7] [added: 861.7] | | | | [removed: 858.9] [added: 862.7] | | | | [removed: 970.4] [added: 858.9] | | | | [removed: 967.9] [added: 970.4] | |

| Total debt | | | [removed: 880.1] [added: 1,010.2] | | | | [removed: 919.3] [added: 880.1] | | | | [removed: 972.0] [added: 919.3] | | | | [removed: 975.6] [added: 972.0] | | | | [removed: 984.1] [added: 975.6] | |

| Total shareholders’ equity attributable to Snap-on | | | [removed: 2,412.7] [added: 2,617.2] | | | | [removed: 2,207.8] [added: 2,412.7] | | | | [removed: 2,113.2] [added: 2,207.8] | | | | [removed: 1,802.1] [added: 2,113.2] | | | | [removed: 1,530.9] [added: 1,802.1] | |

| Weighted-average shares outstanding – diluted | | | [removed: 59.1] [added: 59.4] | | | | 59.1 | | | | 59.1 | | | | [removed: 58.9] [added: 59.1] | | | | [removed: 58.7] [added: 58.9] | |

| Basic | | $ | [removed: 8.24] [added: 9.40] | | | $ | [removed: 7.26] [added: 8.24] | | | $ | [removed: 6.02] [added: 7.26] | | | $ | [removed: 5.26] [added: 6.02] | | | $ | [removed: 4.75] [added: 5.26] | |

| Diluted | | | [removed: 8.10] [added: 9.20] | | | | [removed: 7.14] [added: 8.10] | | | | [removed: 5.93] [added: 7.14] | | | | [removed: 5.20] [added: 5.93] | | | | [removed: 4.71] [added: 5.20] | |

| Cash dividends paid per share | | | [removed: 2.20] [added: 2.54] | | | | [removed: 1.85] [added: 2.20] | | | | [removed: 1.58] [added: 1.85] | | | | [removed: 1.40] [added: 1.58] | | | | [removed: 1.30] [added: 1.40] | |

| Shareholders’ equity per basic share | | | [removed: 41.53] [added: 45.05] | | | | [removed: 38.00] [added: 41.53] | | | | [removed: 36.31] [added: 38.00] | | | | [removed: 30.96] [added: 36.31] | | | | [removed: 26.30] [added: 30.96] | |

See Note 1 to the Consolidated Financial Statements for information on the company’s adoption of ASU No. 2015-17.

| Total assets | | | 4,723.2 | | | | 4,331.1 | | | | 4,162.0 | | | | 3,994.5 | | | | 3,789.7 | |

| Financial services – arbitration settlement gain* | | | – | | | | – | | | | – | | | | – | | | | 18.0 | |

| Total assets | | | 4,486.9 | | | | 4,310.1 | | | | 4,110.0 | | | | 3,902.3 | | | | 3,672.9 | |

| * | In 2011, Snap-on settled a dispute with its former financial services joint venture partner and recorded an $18.0 million pretax arbitration settlement gain ($11.1 million after tax or $0.19 per diluted share). |

| --- | --- |

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 [removed: January 2, 2016.][added: December 31, 2016 and, as permitted by the Public Company Accounting Oversight Board auditing standards, excluded from its assessment the company’s October 31, 2016, acquisition of Car-O-Liner Holding AB (which represented less than 4% of total assets at December 31, 2016, and less than 1% of 2016 net sales).]

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 [removed: January 2,] [added: December 31,] 2016, 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.

There has not been any change in the company’s internal control over financial reporting during the quarter ended [removed: January 2,] [added: December 31,] 2016, 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)).

Based on this assessment, the company’s management believes that, as of [removed: January 2,] [added: December 31,] 2016, our internal control over financial reporting was effective at a reasonable assurance level.

The company’s internal control over financial reporting as of [removed: January 2,] [added: December 31,] 2016, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in [removed: their] [added: its] attestation report, which is included herein.

We have audited the internal control over financial reporting of Snap-on Incorporated and subsidiaries (the “Company”) as of [removed: January 2,] [added: December 31,] 2016, based on criteria established in _Internal [removed: Control –] [added: Control_ _–] Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of [removed: January 2,] [added: December 31,] 2016, based on the criteria established in _Internal [removed: Control –] [added: Control_ _–] Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended [removed: January 2,] [added: December 31,] 2016, and our report dated February [removed: 11, 2016,] [added: 9, 2017] expressed an unqualified opinion on those financial statements.

| [removed: _/s/ Deloitte] [added: /s/ DELOITTE] & [removed: Touche LLP_] [added: TOUCHE LLP] | | |

As permitted by the Public Company Accounting Oversight Board auditing standards, the company’s October 31, 2016, acquisition of Car-O-Liner Holding AB (which represented less than 4% of total assets at December 31, 2016, and less than 1% of 2016 net sales) was excluded from the scope of management’s assessment of internal control over financial reporting as of December 31, 2016.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Car-O-Liner Holding AB, which was acquired on October 31, 2016, and whose financial statements constitute less than 4% of the Company’s total assets as of December 31, 2016, and less than 1% of the Company’s 2016 net sales.

Accordingly, our audit did not include the internal control over financial reporting at Car-O-Liner Holding AB.

| Milwaukee, Wisconsin February 9, 2017 | | |

| DELOITTE & TOUCHE LLP Milwaukee, Wisconsin February 11, 2016 | | |

Incorporated by reference to sections entitled “Item 1: Election of Directors,” “Corporate Governance Practices and Board Information” and “Other Information” in Snap-on’s [removed: 2016] [added: 2017] Annual Meeting Proxy Statement, which is expected to be mailed to shareholders on or about March [removed: 11, 2016] [added: 10, 2017] (the [removed: “2016] [added: “2017] Proxy Statement”).

The Section 16(a) filing compliance disclosure pursuant to Item 405 of Regulation S-K is contained in Snap-on’s [removed: 2016] [added: 2017] Proxy Statement in the section entitled “Other Information – Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

Information regarding Snap-on’s executive officers, including their ages, business experience (for at least the last five years) and titles as of [removed: January 2,] [added: December 31,] 2016, is presented below:

Pinchuk_ [removed: (69)] [added: (70)] – Chairman of the Board of Directors since 2009, President and Chief Executive Officer since December 2007 and President and Chief Operating Officer from April to December 2007.

Pagliari_ [removed: (61)] [added: (62)] – Senior Vice President – Finance and Chief Financial Officer since 2010.

Banerjee_ [removed: (65)] [added: (66)] – Senior Vice President, Human Resources and Chief Development Officer since [removed: August] [added: 2015, and President, Commercial Group from 2011 to] 2015.

_Iain Boyd_ [removed: (53)] [added: (54)] – Vice President, Operations Development since [removed: August] 2015.

Vice President – Human Resources from 2007 to [removed: August] 2015.

Johnsen_ [removed: (58)] [added: (59)] – Vice President and Controller since 2003.

_Kassouf_ [removed: (63)] [added: (64)] – Senior Vice President and President – Snap-on Tools Group since 2010.

Moreno_ [removed: (61)] [added: (62)] – Vice President and Chief Information Officer since 2005.

Shur_ [removed: (57)] [added: (58)] – Vice President, General Counsel and Secretary since 2008.

Ward_ [removed: (63)] [added: (64)] _–_ Senior Vice President and President – Repair Systems & Information Group since 2010.

President – Snap-on Equipment from 2007 to 2010, and Group Controller / Director of Finance – Commercial & Industrial Group from 2002 to 2007.

President, Commercial Group from 2011 to August 2015 and Vice President, Operations Process from 2007 to 2011.

Senior Vice President and President – Commercial Division from 2007 to 2010.

Senior Vice President and President – Snap-on Tools Group from 2007 to 2010.

The information required by Item 11 is contained in Snap-on’s [removed: 2016] [added: 2017] Proxy Statement in the sections entitled “Executive Compensation,” “Board Compensation,” “Compensation Committee Report,” and “Other Information” and is incorporated herein by reference.

The following table sets forth information about Snap-on’s equity compensation plans at [removed: 2015] [added: 2016] year end:

| Equity compensation plans [added: not] approved by security holders | | [removed: 3,141,106 (1)] [added: 53,439 (4)] | | [removed: $ 90.81 (2)] [added: Not Applicable] | | | [removed: 5,995,188 (3)] [added: – (5)] | |

| Equity compensation plans [removed: not] approved by security holders | | [removed: 61,006 (4)] [added: 3,366,358 (1)] | | [removed: Not Applicable] [added: $ 103.03 (2)] | | | [removed: – (5)] [added: 5,059,920 (3)] | |

| (1) | Includes (i) options to acquire [removed: 779,225] [added: 589,784] shares granted under the 2001 Incentive Stock and Awards Plan (the “2001 Plan”); (ii) options and stock appreciation rights to acquire [removed: 2,300,541] [added: 2,724,530] shares granted under the 2011 Incentive Stock and Awards Plan (the “2011 Plan,” and collectively with the 2001 Plan, the “Incentive Plans”); and (iii) [removed: 61,340] [added: 52,044] shares represented by deferred share units under the Directors’ Fee Plan. Excludes [removed: 63,886] [added: 50,528] shares issuable in connection with the vesting of restricted stock units and restricted stock under the 2001 Plan, and [removed: 382,663] [added: 288,072] shares issuable in connection with the vesting of performance share awards, restricted stock units and restricted stock under the 2011 Plan. Also excludes shares of common stock that may be issuable under the employee and franchisee stock purchase plans. |

| (3) | Includes (i) [removed: 5,031,957] [added: 4,121,252] shares reserved for issuance under the 2011 Plan; (ii) [removed: 155,512] [added: 158,105] shares reserved for issuance under the Directors’ Fee Plan; and (iii) [removed: 807,719] [added: 780,563] shares reserved for issuance under the employee stock purchase plan. [removed: No further awards may be granted under the 2001 Plan.] |

The additional information required by Item 12 is contained in Snap-on’s [removed: 2016] [added: 2017] 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.

| Total | | 3,419,797 | | $ 103.03 (2) | | | 5,059,920 (5) | |

| Total | | 3,202,112 | | $ 90.81 (2) | | | 5,995,188 (5) | |

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 [removed: 2016] [added: 2017] Proxy Statement.

Incorporated by reference to the section entitled “Deloitte & Touche LLP Fee Disclosure” in Snap-on’s [removed: 2016] [added: 2017] Proxy Statement.

| Item 15(a): | Documents Filed as Part of This Report: |

| --- | --- |

1.

List of Financial Statements

Unless otherwise indicated, references to “fiscal 2016” or “2016” refer to the fiscal year ended December 31, 2016; references to “fiscal 2015” or “2015” refer to the fiscal year ended January 2, 2016; and references to “fiscal 2014” or “2014” refer to the fiscal year ended January 3, 2015.

References to 2016, 2015 and 2014 year end refer to December 31, 2016, January 2, 2016, and January 3, 2015, 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. |

| --- | --- | --- | --- |

| | • | | Consolidated Statements of Earnings for the 2016, 2015 and 2014 fiscal years. |

| --- | --- | --- | --- |

| | • | | Consolidated Statements of Comprehensive Income for the 2016, 2015 and 2014 fiscal years. |

| --- | --- | --- | --- |

| | • | | Consolidated Balance Sheets as of 2016 and 2015 year end. |

| --- | --- | --- | --- |

| | • | | Consolidated Statements of Equity for the 2016, 2015 and 2014 fiscal years. |

| --- | --- | --- | --- |

| | • | | Consolidated Statements of Cash Flows for the 2016, 2015 and 2014 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

The exhibits filed with or incorporated by reference in this report are as specified in the exhibit index included herein.

None.

| | | | | |

| --- | --- | --- | --- | --- |

##### [Table of Contents](#toc)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Snap-on Incorporated:

We have audited the accompanying consolidated balance sheets of Snap-on Incorporated and subsidiaries (the “Company”) as of December 31, 2016, and January 2, 2016, and the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2016.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Snap-on Incorporated and subsidiaries as of December 31, 2016, and January 2, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, 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), the Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established in _Internal Control – Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 9, 2017 expressed an unqualified opinion on the Company’s internal control over financial reporting.

| | | |

| --- | --- | --- |

| /s/ DELOITTE & TOUCHE LLP | | |

| Milwaukee, Wisconsin February 9, 2017 | | |

| | | | | |

| --- | --- | --- | --- | --- |

##### [Table of Contents](#toc)

Snap-on Incorporated – Consolidated Statements of Earnings

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| _(Amounts in millions, except per share data)_ | | 2016 | | | | 2015 | | | | 2014 | | |

| Net sales | | $ | 3,430.4 | | | $ | 3,352.8 | | | $ | 3,277.7 | |

| Cost of goods sold | | | (1,720.8) | | | | (1,704.5) | | | | (1,693.4) | |

| | | | | | | | | | | | | |

| Gross profit | | | 1,709.6 | | | | 1,648.3 | | | | 1,584.3 | |

| Operating expenses | | | (1,054.1) | | | | (1,053.7) | | | | (1,048.7) | |

| | | | | | | | | | | | | |

| Operating earnings before financial services | | | 655.5 | | | | 594.6 | | | | 535.6 | |

| | | | | | | | | | | | | |

| Financial services revenue | | | 281.4 | | | | 240.3 | | | | 214.9 | |

| Financial services expenses | | | (82.7) | | | | (70.1) | | | | (65.8) | |

| | | | | | | | | | | | | |

| Operating earnings from financial services | | | 198.7 | | | | 170.2 | | | | 149.1 | |

| [removed: | •] [added: (23)] | | [removed: Report] [added: Consent] of Independent Registered Public Accounting [removed: Firm.] [added: Firm] |

| | | (b) | | Officer’s Certificate, dated [removed: January 12, 2007, creating] [added: as of February 24, 2009, providing for] the [removed: $150,000,000 5.50%] [added: $200,000,000 6.70%] Notes due [removed: 2017] [added: 2019] (incorporated by reference to Exhibit 4.2 to Snap-on’s Current Report on Form [removed: 8-K/A] [added: 8-K] dated [removed: January 9, 2007] [added: February 19, 2009] (Commission File No. 1-7724)) |

| | | (c) | | Officer’s Certificate, dated as of [removed: February 24,] [added: August 14,] 2009, providing for the [removed: $200,000,000 6.70%] [added: $250,000,000 6.125%] Notes due [removed: 2019] [added: 2021] (incorporated by reference to Exhibit [removed: 4.2] [added: 4.1] to Snap-on’s Current Report on Form 8-K dated [removed: February 19,] [added: August 11,] 2009 (Commission File No. 1-7724)) |