Snap-on (SNA) 10-K risk factor changes: FY2017 vs FY2016

We, our franchisees and our customers, and the economy as a whole, also may be affected by future world or local events outside our control, such as acts of terrorism, developments in the war on terrorism, conflicts in international [removed: situations] [added: situations, weather events] and natural disasters, as well as government-related developments or issues.

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 [removed: volatility beginning late in the second quarter of fiscal 2016.][added: volatility.]

Given the lack of comparable [removed: precedent,] [added: precedent and] the [added: status of the negotiations, the] implications of Brexit, or how such implications might affect Snap-on, [removed: are] [added: continue to remain] unclear at this time.

Approximately [removed: 44%] [added: 41%] of our consolidated net revenues in [removed: 2016] [added: 2017] 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, stricter and/or changed] [added: _Changes to] legislation and regulations may affect our business, reputation, results of operations and financial condition._

[removed: Increased] [added: Significant changes to] legislative and regulatory activity and compliance burdens, including those associated with sales to our government, military and defense contractor customers, as well as [removed: a more stringent] [added: the] manner in which they are applied, could significantly impact our business and the economy as a whole.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 13 |

Financial services businesses of all kinds are subject to [removed: increasing regulation] [added: significant] and [added: complex regulations and] enforcement.

These developments, and other potential future legislation and regulations, as well as the [removed: increasingly] [added: factors in the] strict regulatory environment, including the growing international regulation of privacy rights, may also adversely affect the customers to which, and the markets into which, we sell our products, and increase our costs and otherwise negatively affect our business, reputation, results of operations and financial condition, including in ways that cannot yet be foreseen.

At [removed: times in recent years,] [added: times,] world financial markets have been unstable and subject to uncertainty.

Problems that impair or compromise this infrastructure, including [removed: due to] natural disasters, power outages, major network failures, security breaches or malicious attacks, or during system upgrades and/or new system implementations, could impede our ability to record or process orders, manufacture and ship in a timely manner, account for and collect receivables, protect sensitive data of the company, our customers, our suppliers and business partners, or otherwise carry on business in the normal course.

Any prolonged disruption in the operations of our existing manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions, lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, [added: weather events,] use and storage of hazardous [removed: materials] [added: materials, acts of war, sabotage] or [added: terrorism, or] other events), or other reasons, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 15 |

Additionally, negative developments with respect to legal disputes and the costs incurred in defending [removed: ourselves] [added: ourselves, even if successful,] could have an adverse impact on the company and its reputation.

_Failure to adequately protect intellectual [removed: property] [added: property, or claims of infringement,] could adversely affect our [removed: business._][added: business, reputation, financial condition, results of operations and cash flows._]

Intellectual property rights are an important and integral component of our [added: business and failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our] business.

Adverse determinations in a judicial or administrative proceeding could prevent us from manufacturing and selling our [removed: products or] [added: products,] prevent us from stopping others from manufacturing and selling competing [removed: products.][added: products, and/or result in payments for damages.]

Approximately [removed: 30%] [added: 32%] of our revenues in [removed: 2016] [added: 2017] were generated outside of the United States.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 17 |

Negotiations are underway to determine the terms of Brexit.

In 2017, Canada, Mexico and the United States commenced negotiations to potentially modify the terms of the North American Free Trade Agreement (“NAFTA”).

It is difficult to predict what, if any, changes will be made to NAFTA as a result of these negotiations.

If the U.S. were to withdraw from NAFTA or if significant changes are made that, among other impacts, disrupt trade and the movement of goods and services between these countries, it could have a material adverse impact on our business.

These and other matters significantly impacting the regulation of trade could adversely affect our business and results of operations.

Snap-on’s results of operations could also be affected by changes in the company’s effective tax rate as a result of changes in statutory tax rates, laws and regulations, as well as related guidance.

The company is currently analyzing the impact of the December 2017 passage of “H.R.1”, formerly known as the Tax Cuts and Jobs Act in the United States (the “Tax Act”), which made significant changes to the U.S. Tax Code and affects, among other items, the company’s tax rate, previously unremitted foreign earnings and valuations of deferred tax assets and liabilities.

If new guidance is issued on the recently enacted tax revisions, depending on the circumstances, this (and other) tax legislation could adversely affect our results of operations.

Successful outcomes, at trial or on appeal, can never be assured.

In addition, we have been and in the future may be subject to claims of intellectual property infringement against us by third parties; whether or not these claims have merit, we could be required to expend significant resources in defense of those claims.

In the event of an infringement claim, we may also be required to spend significant resources to develop alternatives or obtain licenses which may not be available on reasonable terms or at all, and may reduce our sales and disrupt our production.

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| | | 2017 ANNUAL REPORT | | 19 |

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

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

Legislation has been proposed, and governmental regulatory action has been both proposed and taken, that may significantly impact environmental compliance in the United States; these actions could increase our costs of production by raising the cost of energy as well as by further restricting emissions or other processes that we currently use in our operations.

We [added: also] believe our [removed: 2016] [added: 2017] operating results [removed: 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 [removed: significant] progress in connecting with customers and translating the resulting insights into innovation that solves specific challenges in the repair [removed: facility. For example, the October 31, 2016 acquisition of Car-O-Liner Holding AB (“Car-O-Liner”) broadened our established capabilities in serving vehicle repair facilities and further expanded our presence with repair shop owners and managers;] [added: facility;] |

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

[removed: We also believe our year-over-year improvement in operating margin further validates the potential of] [added: Our strategic priorities and plans for 2018 will continue to build on] our Snap-on Value Creation Processes – our suite of strategic principles and processes we employ every day designed to create [removed: value] [added: value,] and employed in the areas of safety, quality, customer connection, innovation and rapid continuous [removed: improvement.][added: improvement (“Rapid Continuous Improvement” or “RCI”).]

| [removed: 26] [added: 54] | | SNAP-ON INCORPORATED | | |

On November 16, 2016, Snap-on acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a [removed: preliminary] cash purchase price of [removed: $12.9] [added: $13.0] million (or [removed: $12.5] [added: $12.6] million, net of cash acquired).

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

On October 31, 2016, Snap-on acquired Car-O-Liner [added: Holding AB (“Car-O-Liner”)] for a [removed: preliminary] cash purchase price of [removed: $151.8] [added: $152.0] million (or [removed: $147.9] [added: $148.1] million, net of cash acquired).

[removed: Ecotechnics] [added: Ecotechnics, based in Sesto Fiorentino, Italy,] designs and manufactures vehicle air conditioning service equipment for [removed: original equipment manufacturer (“OEM”)] [added: OEM] dealerships and the automotive aftermarket worldwide.

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

Consolidated net sales of [removed: $3,430.4] [added: $3,686.9] million in [removed: 2016] [added: 2017] increased [removed: $77.6] [added: $256.5] million, or [removed: 2.3%,] [added: 7.5%,] from [removed: 2015] [added: 2016] levels, reflecting a [removed: $96.2] [added: $115.0] million, or [removed: 2.9%,] [added: 3.4%,] increase in organic sales (a non-GAAP financial measure that excludes acquisition-related sales and the impact of foreign currency translation) and [removed: $32.9] [added: $141.5] million of acquisition-related [removed: sales, partially offset by $51.5 million of unfavorable foreign currency translation.][added: sales.]

Operating earnings [removed: before financial services] of [removed: $655.5] [added: $333.8] million in [removed: 2016 were up $60.9] [added: 2017 increased $36.0] million, or [removed: 10.2%,] [added: 12.1%,] from [removed: 2015] [added: 2016] levels, [removed: reflecting contributions from] [added: primarily due to] higher [removed: sales and improved operating margins,] [added: sales,] including [removed: contributions] [added: acquisition-related sales, and savings] from [removed: “Rapid Continuous Improvement” or “RCI”] [added: RCI] initiatives, partially offset by [removed: $21.5] [added: $1.1] million of unfavorable foreign currency effects.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 27 |

Operating earnings of $854.2 million in [removed: 2016] [added: 2016, including $23.3 million of unfavorable foreign currency effects,] increased $89.4 million, or 11.7%, from $764.8 million [removed: last year.][added: in 2015.]

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

Net earnings attributable to Snap-on [removed: Incorporated] in [removed: 2015] [added: 2016] were [removed: $478.7] [added: $546.4] million or [removed: $8.10] [added: $9.20] per diluted share.

Segment net sales of [removed: $1,148.3] [added: $1,265.0] million in [removed: 2016 decreased $15.3] [added: 2017 increased $116.7] million, or [removed: 1.3%,] [added: 10.2%,] from [removed: 2015] [added: 2016] levels, reflecting [removed: $20.6] [added: a $52.0 million, or 4.5%, organic sales gain and $65.5] million of [removed: unfavorable foreign currency translation] [added: acquisition-related sales,] partially offset by [removed: $4.2] [added: $0.8] million of [removed: acquisition-related sales and a $1.1 million, or 0.1%, organic sales gain.][added: unfavorable foreign currency translation.]

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

The Commercial & Industrial Group intends to continue building on the following strategic priorities in [removed: 2017:][added: 2018:]

Segment net sales of [removed: $1,633.9] [added: $1,265.0] million in [removed: 2016] [added: 2017] increased [removed: $65.2] [added: $116.7] million, or [removed: 4.2%,] [added: 10.2%,] from [removed: 2015] [added: 2016] levels, reflecting [removed: an $86.4 million,] [added: a $52.0 million] or [removed: 5.6%,] [added: 4.5%,] organic sales gain [added: and $65.5 million of acquisition-related sales,] partially offset by [removed: $21.2] [added: $0.8] million of unfavorable foreign currency translation.

The organic sales [removed: increase] [added: decrease] includes [removed: higher sales] [added: a decline] in [removed: both] the company’s U.S. [removed: and] [added: franchise operations that was partially offset by higher sales in the] international franchise operations.

[removed: Operating earnings] [added: Gross margin] of [removed: $281.1 million] [added: 49.8%] in 2016 [removed: increased $25.1 million, or 9.8%,] [added: improved 60 basis points] from [added: 49.2% in] 2015 [removed: levels, primarily] as [removed: a result of] [added: benefits from] higher sales and savings from RCI [removed: initiatives,] [added: initiatives were] partially offset by [removed: $15.3 million] [added: 20 bps] of unfavorable foreign currency effects.

[removed: The] [added: Despite the net sales challenges in 2017, the] Snap-on Tools Group [removed: made continued progress in 2016] [added: remained focused] on its fundamental, strategic initiatives to strengthen the franchise network and enhance franchisee profitability.

In [removed: 2017,] [added: 2018,] the Snap-on Tools Group intends to [removed: further build on the progress made in 2016,] [added: continue these initiatives,] with specific [removed: initiatives focused] [added: focus] on the following:

| | • | | [removed: Continuing to invest] [added: Increasing investment] in new product innovation and development; and |

| | • | | Increasing [removed: operational flexibility] [added: customer service levels and productivity] in back office support functions, manufacturing and the supply chain through RCI initiatives and investment. |

The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM [removed: dealership service and repair shops (“OEM dealerships”),] [added: dealerships] through direct and distributor channels.

Segment net sales of [removed: $1,179.9] [added: $1,347.2] million in [removed: 2016] [added: 2017] increased [removed: $66.7] [added: $167.3] million, or [removed: 6.0%,] [added: 14.2%,] from [removed: 2015] [added: 2016] levels, reflecting [removed: a $52.1] [added: an $89.6] million, or [removed: 4.7%,] [added: 7.6%,] organic sales [removed: gain and $28.7] [added: gain, $76.0] million of acquisition-related [removed: sales, partially offset by $14.1] [added: sales and $1.7] million of [removed: unfavorable] [added: favorable] foreign currency translation.

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

The Repair Systems & Information Group intends to focus on the following strategic priorities in [removed: 2017:][added: 2018:]

Financial Services revenue was [removed: $281.4] [added: $313.4] million in [removed: 2016] [added: 2017] and [removed: $240.3] [added: $281.4] million in [removed: 2015;] [added: 2016;] originations of [removed: $1,075.7] [added: $1,072.0] million in [removed: 2016 increased $82.0] [added: 2017 decreased $3.7] million, or [removed: 8.3%,] [added: 0.3%,] from [removed: 2015] [added: 2016] levels.

[removed: In 2016,] [added: Financial services] operating earnings [removed: from financial services] of $198.7 million [removed: increased $28.5 million, or 16.7%, from $170.2 million last year,] [added: in 2016,] including $1.8 million of unfavorable foreign currency [removed: effects.][added: effects, increased $28.5 million, or 16.7%, as compared to $170.2 million in 2015.]

Financial Services intends to focus on the following strategic priorities in [removed: 2017:][added: 2018:]

Net cash provided by operating activities of [removed: $576.1] [added: $608.5] million in [removed: 2016] [added: 2017] increased [removed: $68.9] [added: $32.4] million from [removed: $507.2] [added: $576.1] million in [removed: 2015 primarily due to $69.0 million of higher net earnings.][added: 2016.]

Net cash provided by operating activities was [removed: $403.1] [added: $507.2] million in [removed: 2014.][added: 2015.]

Net cash used by investing activities of [removed: $473.4] [added: $341.4] million in [removed: 2016] [added: 2017] included additions to finance receivables of [removed: $915.0] [added: $892.0] million, partially offset by collections of [removed: $671.7] [added: $712.7] million.

[removed: It also] [added: Net cash used by investing activities in 2016] 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.

Net cash used by investing activities of [removed: $273.2] [added: $473.4] million in [removed: 2014] [added: 2016] included additions to finance receivables of [removed: $746.2] [added: $915.0] million, partially offset by collections of [removed: $591.4] [added: $671.7] million, as well [removed: as $41.3] [added: as, on a preliminary basis, a total of $160.4] million [added: (net of $4.3 million of cash acquired)] for the [removed: acquisition] [added: acquisitions] of [removed: Pro-Cut.][added: Car-O-Liner and Sturtevant Richmont.]

Capital expenditures in [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] totaled [removed: $74.3] [added: $82.0] million, [removed: $80.4] [added: $74.3] million and [removed: $80.6] [added: $80.4] million, respectively.

Capital expenditures in all three years included investments to support the company’s execution of its strategic growth initiatives and Value Creation Processes around safety, quality, customer connection, innovation and [removed: RCI.][added: savings from the company’s RCI initiatives.]

We believe our operating results in 2017 demonstrate Snap-on’s continued progress in providing repeatability and reliability to a wide range of professional customers performing critical tasks in workplaces of consequence.

We expect to continue to deploy these processes in our existing operations as well as into our newly acquired businesses.

On July 28, 2017, Snap-on acquired Torque Control Specialists Pty Ltd (“TCS”) for a cash purchase price of $3.6 million (or $3.5 million, net of cash acquired).

TCS, based in Adelaide, Australia, distributes a full range of torque products, including wrenches, multipliers and calibrators, for use in critical industries.

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

On May 4, 2017, Snap-on acquired Norbar Torque Tools Holdings Limited, along with its U.S. and Chinese joint ventures (“Norbar”), for a cash purchase price of $71.6 million (or $69.9 million, net of cash acquired).

Norbar, based in Banbury, U.K., designs and manufactures a full range of torque products, including wrenches, multipliers and calibrators, for use in critical industries.

The acquisition of Norbar enhanced and expanded Snap-on’s capabilities in providing solutions that address torque requirements.

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

On January 30, 2017, Snap-on acquired BTC Global Limited (“BTC”) for a cash purchase price of $9.2 million.

BTC, based in Crewe, U.K., designs and implements automotive vehicle inspection and management software for original equipment manufacturer (“OEM”) franchise repair shops.

The acquisition of BTC enhanced Snap-on’s capabilities to grow enterprise revenues and add increased productivity for repair workshops.

For segment reporting purposes, the results of operations and assets of BTC have been included in the Repair Systems & Information Group since the acquisition date.

The acquisition of Sturtevant Richmont enhanced and expanded Snap-on’s capabilities in providing solutions that address torque requirements.

Foreign currency translation had no effect on net sales in 2017.

Fiscal 2017 results included a $30.9 million charge related to a judgment in a patent-related litigation matter and a $15.0 million charge related to a judgment in an employment-related litigation matter brought by an individual (collectively, the “legal matters”); both judgments are being appealed.

The company can provide no assurance as to the results of these appeals.

As a percentage of net sales, operating earnings before financial services of 18.0% in 2017 compared to 19.1% last year.

In 2017, net earnings attributable to Snap-on were $557.7 million, or $9.52 per diluted share, including $28.4 million, or $0.48 per diluted share, for the after-tax expense related to the legal matters, and $7.0 million, or $0.12 per diluted share, of tax expense as a result of the implementation of “H.R.1”, formerly known as the U.S. Tax Cuts and Jobs Act (the “Tax Act”).

_Impact of the Tax Act_

On December 22, 2017, the U.S. government passed the Tax Act.

The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax on certain unremitted earnings of foreign subsidiaries; and (iii) bonus depreciation that will allow for full expensing of qualified property.

The Tax Act also established new tax laws that will affect 2018, including, but not limited to: (i) the reduction of the U.S. federal corporate tax rate discussed above; (ii) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (iii) a new provision designed to tax global intangible low-taxed income (“GILTI”); (iv) the repeal of the domestic production activity deductions; (v) limitations on the deductibility of certain executive compensation; (vi) limitations on the use of foreign tax credits to reduce the U.S. income tax liability; and (vii) a new provision that allows a domestic corporation an immediate deduction for a portion of its foreign derived intangible income (“FDII”).

The Securities and Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Act.

SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the related accounting under ASC 740, _Accounting for Income Taxes_.

In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete.

To the extent that a company’s accounting for a certain income tax effect of the Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The company’s accounting for certain elements of the Tax Act is incomplete.

However, the company was able to make reasonable estimates of the effects and, therefore, recorded provisional estimates for these items.

In connection with its initial analysis of the impact of the Tax Act, the company has recorded a provisional discrete net tax expense of $7.0 million in the period ended December 30, 2017.

This provisional estimate consists of a net expense of $13.7 million for the one-time transition tax and a net benefit of $6.7 million related to revaluation of deferred tax assets and liabilities, caused by the new lower corporate tax rate.

To determine the transition tax, the company must determine the amount of post-1986 accumulated earnings and profits of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings.

While the company was able to make a reasonable estimate of the transition tax, it is continuing to gather additional information to more precisely compute the final amount.

Likewise, while the company was able to make a reasonable estimate of the impact of the reduction to the corporate tax rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, the state tax effect of adjustments made to federal temporary differences.

Due to the complexity of the new GILTI tax rules, the company is continuing to evaluate this provision of the Tax Act and the application of ASC 740.

Under GAAP, the company is allowed to make an accounting policy choice to either: (1) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”); or (2) factor in such amounts into a company’s measurement of its deferred taxes (the “deferred method”).

The company’s selection of an accounting policy with respect to the new GILTI tax rules is dependent on additional analysis and potential future modifications to existing structure, which are not currently known.

Accordingly, the company has not made any adjustments related to potential GILTI tax in our financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI.

The company will continue to analyze the full effects of the Tax Act on its financial statements.

We believe our growth in 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, as continued strengthening in the automotive repair sector combined with headwinds in certain industrial end markets that were most pronounced in the first half of the year.

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.

On May 28, 2014, Snap-on acquired substantially all of the assets of Pro-Cut International Inc. (“Pro-Cut”) for a cash purchase price of $41.3 million.

Pro-Cut designs, manufactures and distributes on-car brake lathes, related equipment and accessories used in brake servicing by automotive repair facilities.

The acquisition of the Pro-Cut product line complemented and increased Snap-on’s existing undercar equipment product offering, broadened its established capabilities in serving vehicle repair facilities and expanded the company’s presence with repair shop owners and managers.

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.

Operating earnings of $297.8 million in 2016 increased $24.4 million, or 8.9%, from 2015 levels, primarily due to higher sales, including acquisition-related sales, and savings from RCI initiatives, partially offset by $5.1 million of unfavorable foreign currency effects.

Snap-on’s 2014 fiscal year contained 53 weeks of operating results; the impact of the additional week of operations was not material to Snap-on’s full year 2014 net sales or net earnings.

Exit and Disposal Activities

In 2016, the company’s Repair Systems & Information Group recorded $0.9 million of severance costs for exit and disposal activities, all of which qualified for accrual treatment; no costs for exit and disposal activities were recorded in 2015.

The exit and disposal accrual of $2.8 million as of 2016 year end is expected to be fully utilized in 2017.

Snap-on anticipates funding the remaining cash requirements of its exit and disposal activities with available cash on hand, cash flows from operations and borrowings under the company’s existing credit facilities.

The estimated costs for the exit and disposal activities were based on management’s best business judgment under prevailing circumstances.

| Cost of goods sold | | | (445.9) | | | | \-50.1% | | | | (439.4) | | | | \-51.6% | | | | (6.5) | | | | \-1.5% | |

| Gross profit | | | 443.9 | | | | 49.9% | | | | 412.3 | | | | 48.4% | | | | 31.6 | | | | 7.7% | |

| Operating expenses | | | (267.8) | | | | \-30.1% | | | | (250.0) | | | | \-29.3% | | | | (17.8) | | | | \-7.1% | |

| Financial services expenses | | | (22.6) | | | | \-30.5% | | | | (18.1) | | | | \-28.7% | | | | (4.5) | | | | \-24.9% | |

| Operating earnings | | | 227.7 | | | | 23.6% | | | | 207.3 | | | | 22.7% | | | | 20.4 | | | | 9.8% | |

| Interest expense | | | (13.1) | | | | \-1.4% | | | | (13.0) | | | | \-1.4% | | | | (0.1) | | | | \-0.8% | |

| Income tax expense | | | (64.9) | | | | \-6.7% | | | | (59.3) | | | | \-6.5% | | | | (5.6) | | | | \-9.4% | |

| Earnings before equity earnings | | | 149.4 | | | | 15.5% | | | | 134.5 | | | | 14.7% | | | | 14.9 | | | | 11.1% | |

| Net earnings | | | 149.7 | | | | 15.5% | | | | 134.5 | | | | 14.7% | | | | 15.2 | | | | 11.3% | |

The operating expense margin of 30.1% in the quarter increased 80 bps from 29.3% last year primarily due to 60 bps of higher acquisition-related and other expenses, including operating expenses for Car-O-Liner and Sturtevant Richmont, and a 30 bps benefit realized in the fourth quarter of 2015 primarily from a gain on the sale of a former manufacturing facility, partially offset by 20 bps of lower pension expense.

Net earnings attributable to Snap-on in the fourth quarter of 2015 were $131.4 million or $2.22 per diluted share.

| External net sales | | $ | 218.5 | | | | 76.3% | | | $ | 212.0 | | | | 75.2% | | | $ | 6.5 | | | | 3.1% | |

| Intersegment net sales | | | 67.8 | | | | 23.7% | | | | 69.8 | | | | 24.8% | | | | (2.0) | | | | \-2.9% | |

| Cost of goods sold | | | (170.9) | | | | \-59.7% | | | | (174.2) | | | | \-61.8% | | | | 3.3 | | | | 1.9% | |

| Gross profit | | | 115.4 | | | | 40.3% | | | | 107.6 | | | | 38.2% | | | | 7.8 | | | | 7.2% | |

| Operating expenses | | | (71.5) | | | | \-25.0% | | | | (65.7) | | | | \-23.3% | | | | (5.8) | | | | \-8.8% | |

The operating expense margin of 25.0% in the quarter increased 170 bps from 23.3% last year primarily due to higher costs, including operating expenses for Car-O-Liner and Sturtevant Richmont, a 70 bps benefit realized in the fourth quarter of 2015 from a gain on the sale of a former manufacturing facility, and 10 bps of unfavorable foreign currency effects.

| Cost of goods sold | | | (242.0) | | | | \-58.0% | | | | (237.5) | | | | \-57.8% | | | | (4.5) | | | | \-1.9% | |

| Gross profit | | | 175.5 | | | | 42.0% | | | | 173.7 | | | | 42.2% | | | | 1.8 | | | | 1.0% | |

| Segment operating earnings | | $ | 73.5 | | | | 17.6% | | | $ | 71.9 | | | | 17.5% | | | $ | 1.6 | | | | 2.2% | |

| External net sales | | $ | 253.8 | | | | 79.4% | | | $ | 228.5 | | | | 81.4% | | | $ | 25.3 | | | | 11.1% | |

| Intersegment net sales | | | 66.0 | | | | 20.6% | | | | 52.1 | | | | 18.6% | | | | 13.9 | | | | 26.7% | |

| Cost of goods sold | | | (166.8) | | | | \-52.2% | | | | (149.6) | | | | \-53.3% | | | | (17.2) | | | | \-11.5% | |

| Gross profit | | | 153.0 | | | | 47.8% | | | | 131.0 | | | | 46.7% | | | | 22.0 | | | | 16.8% | |

| Operating expenses | | | (70.5) | | | | \-22.0% | | | | (58.9) | | | | \-21.0% | | | | (11.6) | | | | \-19.7% | |

| Segment operating earnings | | $ | 82.5 | | | | 25.8% | | | $ | 72.1 | | | | 25.7% | | | $ | 10.4 | | | | 14.4% | |

Gross margin of 47.8% in the quarter improved 110 bps from 46.7% last year primarily due to benefits from higher sales and savings from RCI initiatives.

The estimated maximum potential one-day loss in fair value, calculated using the VAR model, as of [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] year end was [removed: $0.4] [added: $1.5] million and [removed: $0.6] [added: $0.4] million, respectively, on interest rate-sensitive financial instruments, and [removed: $0.8] [added: $0.1] million and [removed: $0.5] [added: $0.8] 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 [removed: deferred] compensation expense that may result from such mark-to-market changes.

| [removed: 54] [added: 58] | | SNAP-ON INCORPORATED | | |

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

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | [removed: 55] [added: 57] |

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

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.

Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, [removed: including] [added: such as] aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education.

Snap-on’s primary customer segments include: (i) commercial and industrial customers, including professionals in critical industries and emerging markets; (ii) professional vehicle repair technicians who purchase products through the company’s [removed: worldwide] mobile tool distribution network; and (iii) other professional customers related to vehicle repair, including owners and managers of independent and original equipment manufacturer (“OEM”) dealership service and repair shops (“OEM dealerships”).

Snap-on’s Financial Services customer segment includes: (i) franchisees’ [removed: customers] [added: customers, principally serving vehicle repair technicians,] and [removed: certain other customers of] Snap-on [added: customers] 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 [removed: business loans and] vehicle [removed: leases.][added: leases and business loans.]

On November 16, 2016, Snap-on acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a [removed: preliminary] cash purchase price of [removed: $12.9] [added: $13.0] million (or [removed: $12.5] [added: $12.6] million, net of cash acquired).

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

On October 31, 2016, Snap-on acquired Car-O-Liner Holding AB (“Car-O-Liner”) for a [removed: preliminary] cash purchase price of [removed: $151.8] [added: $152.0] million (or [removed: $147.9] [added: $148.1] million, net of cash acquired).

Car-O-Liner, [removed: headquartered] [added: based] in Gothenburg, Sweden, designs and manufactures collision repair equipment, and information and truck alignment systems.

[removed: Ecotechnics] [added: Ecotechnics, based in Sesto Fiorentino, Italy,] designs and manufactures vehicle air conditioning service equipment for OEM dealerships and the automotive aftermarket worldwide.

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

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 5 |

Snap-on’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements on Schedule 14A and Current Reports on Form 8-K, as well as any amendments to those reports, are made available to the public at no charge, other than an investor’s own internet access charges, through the [removed: Investor Information] [added: Investors] section of the company’s website at www.snapon.com.

[removed: _Tools, Diagnostics] [added: _Tools; Diagnostics, Information] and [removed: Repair Information,] [added: Management Systems;] and Equipment_

Snap-on offers a broad line of products and complementary services that are grouped into three product categories: (i) tools; (ii) [removed: diagnostics] [added: diagnostics, information] and [removed: repair information;] [added: management systems;] and (iii) equipment.

| _(Amounts in millions)_ | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Tools | | $ | [removed: 1,899.2] [added: 1,946.7] | | | $ | [removed: 1,910.1] [added: 1,899.2] | | | $ | [removed: 1,868.5] [added: 1,910.1] | |

| [removed: Diagnostics and repair] [added: Diagnostics,] information [added: and management systems] | | | [removed: 748.2] [added: 800.4] | | | | [removed: 689.6] [added: 748.2] | | | | [removed: 689.5] [added: 689.6] | |

| Equipment | | | [removed: 783.0] [added: 939.8] | | | | [removed: 753.1] [added: 783.0] | | | | [removed: 719.7] [added: 753.1] | |

| | | $ | [removed: 3,430.4] [added: 3,686.9] | | | $ | [removed: 3,352.8] [added: 3,430.4] | | | $ | [removed: 3,277.7] [added: 3,352.8] | |

The _tools_ product category includes hand tools, power [removed: tools and] [added: tools,] tool storage [added: products and other similar] products.

The [removed: _diagnostics] [added: _diagnostics, information] and [removed: repair information_] [added: management systems_] product category includes handheld and PC-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, OEM purchasing facilitation services, and warranty management systems and analytics to help OEM dealerships manage and track performance.

The _equipment_ product category includes solutions for the [removed: diagnosis and] service of vehicles and industrial equipment.

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

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 7 |

Snap-on also generates revenue from various financing programs that include: (i) installment sales and lease contracts arising from franchisees’ customers and [removed: certain other customers of] Snap-on [added: customers] who require financing for the purchase or lease of 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 source is solely [removed: at] [added: election of] the [removed: customer’s election.][added: customer.]

Snap-on’s OEM facilitation business provides OEMs with products and services including [removed: tools,] [added: special and essential tools as well as] consulting and facilitation services, which include product procurement, distribution and administrative support to customers for their dealership equipment programs.

The following discussion summarizes Snap-on’s general approach for each [removed: channel,] [added: channel] and is not intended to be all-inclusive.

Franchise fee revenue totaled [removed: $13.9] [added: $15.2] million, [removed: $12.7] [added: $13.9] million and [removed: $12.1] [added: $12.7] million in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

As of [removed: 2016] [added: 2017] year end, company-owned routes comprised 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.

As of [removed: 2016] [added: 2017] year end, Snap-on’s worldwide route count was approximately 4,900, including approximately 3,500 routes in the United States.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 9 |

As of [removed: 2016] [added: 2017] year end, Snap-on had industrial sales associates and independent distributors primarily in the United States and in various European, Latin American, Middle Eastern, Asian and African countries, with the United States representing the majority of Snap-on’s total industrial sales.

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

The company does not currently anticipate experiencing any significant impact in [removed: 2017] [added: 2018] from steel pricing or availability issues.

As of [removed: 2016] [added: 2017] year end, Snap-on and its subsidiaries held approximately 700 active and pending patents in the United States and approximately 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 [added: hand tools (including sealed ratchets and ratcheting screwdrivers), power tools,] wheel alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, collision measurement, test lanes, brake lathes, [removed: sealed ratchets,] electronic torque instruments, [removed: ratcheting screwdrivers,] emissions-sensing devices and diagnostic equipment.

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

Snap-on employed approximately [removed: 12,100] [added: 12,600] people at the end of January [removed: 2017;] [added: 2018;] Snap-on employed approximately [removed: 11,500] [added: 12,100] people at the end of January [removed: 2016.][added: 2017.]

The year-over-year increase in employees primarily reflects [removed: the Car-O-Liner and Sturtevant Richmont acquisitions.][added: acquisitions during 2017.]

Approximately [removed: 2,800] [added: 2,700] employees, or [removed: 23%] [added: 21%] of Snap-on’s worldwide workforce, are represented by unions and/or covered under collective bargaining agreements.

On July 28, 2017, Snap-on acquired Torque Control Specialists Pty Ltd (“TCS”) for a cash purchase price of $3.6 million (or $3.5 million, net of cash acquired).

TCS, based in Adelaide, Australia, distributes a full range of torque products, including wrenches, multipliers and calibrators, for use in critical industries.

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

On May 4, 2017, Snap-on acquired Norbar Torque Tools Holdings Limited, along with its U.S. and Chinese joint ventures (“Norbar”), for a cash purchase price of $71.6 million (or $69.9 million, net of cash acquired).

Norbar, based in Banbury, U.K., designs and manufactures a full range of torque products, including wrenches, multipliers and calibrators, for use in critical industries.

The acquisition of Norbar enhanced and expanded Snap-on’s capabilities in providing solutions that address torque requirements.

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

On January 30, 2017, Snap-on acquired BTC Global Limited (“BTC”) for a cash purchase price of $9.2 million.

BTC, based in Crewe, U.K., designs and implements automotive vehicle inspection and management software for OEM franchise repair shops.

The acquisition of BTC enhanced Snap-on’s capabilities to grow enterprise revenues and add increased productivity for repair workshops.

For segment reporting purposes, the results of operations and assets of BTC have been included in the Repair Systems & Information Group since the acquisition date.

The acquisition of Sturtevant Richmont enhanced and expanded Snap-on’s capabilities in providing solutions that address torque requirements.

| autoVHC | | Vehicle inspection and training services |

| Norbar | | Torque tools |

| | | |

| | | |

The industrial sector is characterized by a highly competitive environment with multiple suppliers offering a full line or industry specific portfolios for tools and equipment.

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.

On May 28, 2014, Snap-on acquired substantially all of the assets of Pro-Cut International, Inc. (“Pro-Cut”) for a cash purchase price of $41.3 million.

Pro-Cut designs, manufactures and distributes on-car brake lathes, related equipment and accessories used in brake servicing by automotive repair facilities.

The acquisition of the Pro-Cut product line complemented and increased Snap-on’s existing undercar equipment product offering, broadened its established capabilities in serving vehicle repair facilities and expanded the company’s presence with repair shop owners and managers.

The industrial sector is characterized by a highly competitive, cost-conscious environment, and a trend toward customers making many of their tool and equipment purchases through one integrated supplier.

For the fiscal year ended December [removed: 31, 2016,] [added: 30, 2017,] or

[removed: ][added: ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer”,] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b-2 of the Exchange Act.

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

The aggregate market value of voting and non-voting common equity held by non-affiliates (excludes [removed: 503,411] [added: 564,907] shares held by directors and executive officers) computed by reference to the price ($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: 2, 2016)] [added: 1, 2017)] was [removed: $9.1] [added: $9.0] billion.

The number of shares of Common Stock ($1.00 par value) of the registrant outstanding as of February [removed: 3, 2017,] [added: 9, 2018,] was [removed: 57,970,318] [added: 56,721,048] 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: 10, 2017,] [added: 9, 2018,] prepared for the Annual Meeting of Shareholders scheduled for April [removed: 27, 2017.][added: 26, 2018.]

| | | Item 1 | | [removed: [Business](#tx308837_1)] [added: [Business](#tx491312_1)] | | | 4 | |

| | | Item 1A | | [Risk [removed: Factors](#tx308837_2)] [added: Factors](#tx491312_2)] | | | 12 | |

| | | Item 1B | | [Unresolved Staff [removed: Comments](#tx308837_3)] [added: Comments](#tx491312_3)] | | | [removed: 19] [added: 20] | |

| | | Item 2 | | [removed: [Properties](#tx308837_4)] [added: [Properties](#tx491312_4)] | | | [removed: 19] [added: 20] | |

| | | Item 3 | | [Legal [removed: Proceedings](#tx308837_5)] [added: Proceedings](#tx491312_5)] | | | [removed: 21] [added: 22] | |

| | | Item 4 | | [Mine Safety [removed: Disclosures](#tx308837_6)] [added: Disclosures](#tx491312_6)] | | | [removed: 21] [added: 22] | |

| | | Item 5 | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx308837_7)] [added: Securities](#tx491312_7)] | | | [removed: 21] [added: 22] | |

| | | Item 6 | | [Selected Financial [removed: Data](#tx308837_8)] [added: Data](#tx491312_8)] | | | [removed: 25] [added: 26] | |

| | | Item 7 | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx308837_9)] [added: Operations](#tx491312_9)] | | | [removed: 26] [added: 27] | |

| | | Item 7A | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx308837_10)] [added: Risk](#tx491312_10)] | | | [removed: 54] [added: 57] | |

| | | Item 8 | | [Financial Statements and Supplementary [removed: Data](#tx308837_11)] [added: Data](#tx491312_11)] | | | [removed: 56] [added: 59] | |

| | | Item 9 | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#tx308837_12)] [added: Disclosure](#tx491312_12)] | | | [removed: 56] [added: 59] | |

| | | Item 9A | | [Controls and [removed: Procedures](#tx308837_13)] [added: Procedures](#tx491312_13)] | | | [removed: 56] [added: 59] | |

| | | Item 9B | | [Other [removed: Information](#tx308837_14)] [added: Information](#tx491312_14)] | | | [removed: 58] [added: 61] | |

| | | Item 10 | | [Directors, Executive Officers and Corporate [removed: Governance](#tx308837_15)] [added: Governance](#tx491312_15)] | | | [removed: 58] [added: 61] | |

| | | Item 11 | | [Executive [removed: Compensation](#tx308837_16)] [added: Compensation](#tx491312_16)] | | | [removed: 59] [added: 62] | |

| | | Item 12 | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx308837_17)] [added: Matters](#tx491312_17)] | | | [removed: 59] [added: 62] | |

| | | Item 13 | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx308837_18)] [added: Independence](#tx491312_18)] | | | [removed: 60] [added: 63] | |

| | | Item 14 | | [Principal Accounting Fees and [removed: Services](#tx308837_19)] [added: Services](#tx491312_19)] | | | [removed: 60] [added: 63] | |

| | | Item 15 | | [Exhibits, Financial Statement [removed: Schedules](#tx308837_20)] [added: Schedules](#tx491312_20)] | | | [removed: 60] [added: 63] | |

| | | Item 16 | | [Form 10-K [removed: Summary](#tx308837_21)] [added: Summary](#tx491312_21)] | | | [removed: 60] [added: 66] | |

| [Computation of Ratio of Earnings to Fixed [removed: Charges](#tx308837_24)] [added: Charges](#tx491312_23)] | | | | | | | [removed: 115] [added: 120] | |

| [Consent of Independent Registered Public Accounting [removed: Firm](#tx308837_25)] [added: Firm](#tx491312_24)] | | | | | | | [removed: 119] [added: 124] | |

[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 [removed: disasters,] [added: disasters (such as the recent hurricanes in the southern United States and the Caribbean),] planned facility closures or other labor interruptions, the effects of external negative factors, including adverse developments in world financial markets, weakness in certain areas of the global economy (including as a result of the United Kingdom’s [removed: vote to] [added: pending] exit [added: from] the European Union), and significant changes in the current competitive environment, inflation, interest rates and other monetary and market fluctuations, changes in tax [removed: rates] [added: rates, laws] and [removed: regulations,] [added: regulations as well as uncertainty surrounding potential changes,] 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 ongoing implementation or [added: potential] 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, [added: potential reputational damages] and [added: costs related to litigation as well as an inability to assure that costs will be reduced or eliminated on appeal, and] other world or local events outside Snap-on’s control, including terrorist disruptions.

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

Unless otherwise indicated, references in this document to “fiscal [removed: 2016”] [added: 2017”] or [removed: “2016”] [added: “2017”] refer to the fiscal year ended December [removed: 31, 2016;] [added: 30, 2017;] references to “fiscal [removed: 2015”] [added: 2016”] or [removed: “2015”] [added: “2016”] refer to the fiscal year ended [removed: January 2,] [added: December 31,] 2016; and 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.]

Snap-on’s [added: 2017,] 2016 and 2015 fiscal years each contained 52 weeks of operating [removed: results; Snap-on’s 2014 fiscal year contained 53 weeks of operating] results.

References in this document to [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] year end refer to December [added: 30, 2017, December] 31, 2016, [added: and] January 2, 2016, [removed: and January 3, 2015,] respectively.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | 3 |

10-K 1 d491312d10k.htm 10-K

Smaller reporting company ☐ Emerging growth company ☐

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

| [Signatures](#tx491312_22) | | | | | | | 118 | |

| [Certifications](#tx491312_25) | | | | | | | 125 | |

10-K 1 d308837d10k.htm FORM 10-K

| | | | | | | | | |

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

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

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

Snap-on maintains leased and owned [removed: manufacturing (including] [added: manufacturing,] software [removed: products),] [added: development,] warehouse, distribution, research and development and office facilities throughout the world.

Snap-on’s facilities in the United States occupy approximately [removed: 3.3] [added: 3.4] million square feet, of which [removed: 75%] [added: 73%] is owned, including its corporate and general office facility located in Kenosha, Wisconsin.

Snap-on’s facilities outside the United States occupy approximately 4.5 million square feet, of which approximately [removed: 71%] [added: 73%] is owned.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | [removed: 19] [added: 21] |

The following table provides information about our corporate headquarters and financial services operations, and each of Snap-on’s principal active manufacturing [removed: locations and] [added: locations,] distribution centers [added: and software development locations] (exceeding 50,000 square feet) as of [removed: 2016] [added: 2017] year end:

| Conway, Arkansas | | Manufacturing [added: and distribution] | | Owned | | RS&I |

| [removed: Poway, California] [added: Beijing, China] | | Manufacturing and distribution | | Leased | | [removed: RS&I] [added: C&I] |

| San Jose, California | | [removed: Manufacturing and distribution] [added: Software development] | | Leased | | RS&I |

| [removed: Richfield, Ohio] [added: Banbury, England] | | Manufacturing and distribution | | Owned | | [removed: RS&I] [added: C&I] |

| Kungsör, Sweden | | Manufacturing [added: and distribution] | | Owned | | RS&I |

| Poway, California | | Software development | | Leased | | RS&I |

| Richfield, Ohio | | Software development | | Owned | | RS&I |

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

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

Snap-on had [removed: 57,949,857] [added: 56,690,249] shares of common stock outstanding as of [removed: 2016] [added: 2017] year end.

Snap-on’s stock is listed on the New York Stock Exchange under the ticker symbol “SNA.” At February [removed: 3, 2017,] [added: 9, 2018,] there were [removed: 5,040] [added: 4,884] registered holders of Snap-on common stock.

| First | | $ | [removed: 168.53] [added: 181.53] | | | $ | [removed: 135.41] [added: 164.91] | | | $ | [removed: 148.29] [added: 168.53] | | | $ | [removed: 131.45] [added: 135.41] | |

| Second | | | [removed: 164.39] [added: 175.26] | | | | [removed: 148.03] [added: 153.24] | | | | [removed: 162.19] [added: 164.39] | | | | [removed: 146.16] [added: 148.03] | |

| Third | | | [removed: 162.70] [added: 159.02] | | | | [removed: 146.76] [added: 141.51] | | | | [removed: 169.99] [added: 162.70] | | | | [removed: 148.90] [added: 146.76] | |

| Fourth | | | [removed: 176.20] [added: 175.88] | | | | [removed: 145.97] [added: 147.90] | | | | [removed: 174.09] [added: 176.20] | | | | [removed: 154.57] [added: 145.97] | |

Quarterly dividends in [removed: 2015] [added: 2017] were [removed: $0.61] [added: $0.82] per share in the fourth quarter and [removed: $0.53] [added: $0.71] per share in each of the first three quarters [removed: ($2.20] [added: ($2.95] per share for the year).

Cash dividends paid in [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] totaled [removed: $147.5] [added: $169.4] million and [removed: $127.9] [added: $147.5] million, respectively.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | [removed: 21] [added: 23] |

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: 2016,] [added: 2017,] all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.

Snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans, [removed: stock options] and [added: equity plans, and for] other corporate purposes, as well as [removed: to repurchase shares] when the company believes market conditions are favorable.

| Total/Average | | | [removed: 266,000] [added: 472,000] | | | $ | [removed: 165.28] [added: 159.50] | | | [removed: 266,000] [added: 472,000] | | | N/A | |

| * | Subject to further adjustment pursuant to the 1996 Authorization described below, as of December [removed: 31, 2016,] [added: 30, 2017,] the approximate value of shares that may yet be purchased pursuant to the [removed: three] [added: two] outstanding Board authorizations discussed below is [removed: $207.2] [added: $390.7] million. |

| | • | | In 1996, the Board authorized the company to repurchase shares of the company’s common stock from time to time in the open market or in privately negotiated transactions (“the 1996 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: $153.21, $170.58] [added: $158.45, $159.70] and [removed: $171.27] [added: $174.30] per share of common stock as of the end of the fiscal [removed: 2016] [added: 2017] months ended October [removed: 29, 2016,] [added: 28, 2017,] November [removed: 26, 2016,] [added: 25, 2017,] and December [removed: 31, 2016,] [added: 30, 2017,] respectively. |

| | • | | In [removed: 1998,] [added: 2017,] the Board authorized the repurchase of an aggregate of [removed: $100] [added: up to $500] million of the company’s common stock (“the [removed: 1998] [added: 2017] Authorization”). The [removed: 1998] [added: 2017] Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board. |

The following chart discloses information regarding transactions in shares of Snap-on’s common stock by Citibank, N.A. (“Citibank”) during the fourth quarter of [removed: 2016] [added: 2017] 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.

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | [removed: 23] [added: 25] |

The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, [removed: 2011,] [added: 2012,] assuming that dividends were reinvested.

The graph compares Snap-on’s performance to that of [removed: a Peer Group,] [added: the] 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) | | Snap-on Incorporated | |] [added: (2)] | | [removed: Peer Group (3)] [added: Snap-on Incorporated] | | | | [removed: S&P] [added: S&P] 500 [removed: Industrials] [added: Industrials] | | | | [removed: S&P 500] [added: S&P 500] | | |

| December 31, [removed: 2011 | | $ | 100.00 |] [added: 2012] | | $ | 100.00 | | | $ | 100.00 | | | $ | 100.00 | |

| (1) | Assumes $100 was invested on December 31, [removed: 2011,] [added: 2012,] and that dividends were reinvested quarterly. |

| | | 2017 | | | | | | | | 2016 | | | | | | |

| 10/01/17 to 10/28/17 | | | 80,000 | | | $ | 160.86 | | | 80,000 | | $ | 427.2 million | |

| 10/29/17 to 11/25/17 | | | 330,000 | | | $ | 157.89 | | | 330,000 | | $ | 375.9 million | |

| 11/26/17 to 12/30/17 | | | 62,000 | | | $ | 166.34 | | | 62,000 | | $ | 390.7 million | |

| 10/01/17 to 10/28/17 | | | – | | | | – | |

| 10/29/17 to 11/25/17 | | | – | | | | – | |

| 11/26/17 to 12/30/17 | | | 18,600 | | | $ | 167.53 | |

| Total/Average | | | 18,600 | | | $ | 167.53 | |

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

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

| December 31, 2013 | | | 141.06 | | | | 140.68 | | | | 132.39 | |

| December 31, 2014 | | | 178.82 | | | | 154.50 | | | | 150.51 | |

| December 31, 2015 | | | 227.32 | | | | 150.59 | | | | 152.59 | |

| December 31, 2016 | | | 230.82 | | | | 178.99 | | | | 170.84 | |

| December 31, 2017 | | | 239.25 | | | | 216.64 | | | | 208.14 | |

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

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

| | | 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 | |

| --- | --- |

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

| | • | | In 1999, the Board authorized the repurchase of an aggregate of $50 million of the company’s common stock (“the 1999 Authorization”). The 1999 Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board. |

| 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 | |

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

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.” [removed: 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: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net sales | | $ | [removed: 3,430.4] [added: 3,686.9] | | | $ | [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] | |

| Gross profit | | | [removed: 1,709.6] [added: 1,824.9] | | | | [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] | |

| Operating expenses | | | [removed: 1,054.1] [added: 1,160.9] | | | | [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] | |

| Operating earnings before financial services | | | [removed: 655.5] [added: 664.0] | | | | [removed: 594.6] [added: 655.5] | | | | [removed: 535.6] [added: 594.6] | | | | [removed: 460.5] [added: 535.6] | | | | [removed: 409.7] [added: 460.5] | |

| Financial services revenue | | | [removed: 281.4] [added: 313.4] | | | | [removed: 240.3] [added: 281.4] | | | | [removed: 214.9] [added: 240.3] | | | | [removed: 181.0] [added: 214.9] | | | | [removed: 161.3] [added: 181.0] | |

| Financial services expenses | | | [removed: 82.7] [added: 95.9] | | | | [removed: 70.1] [added: 82.7] | | | | [removed: 65.8] [added: 70.1] | | | | [removed: 55.3] [added: 65.8] | | | | [removed: 54.6] [added: 55.3] | |

| Operating earnings from financial services | | | [removed: 198.7] [added: 217.5] | | | | [removed: 170.2] [added: 198.7] | | | | [removed: 149.1] [added: 170.2] | | | | [removed: 125.7] [added: 149.1] | | | | [removed: 106.7] [added: 125.7] | |

| Operating earnings | | | [removed: 854.2] [added: 881.5] | | | | [removed: 764.8] [added: 854.2] | | | | [removed: 684.7] [added: 764.8] | | | | [removed: 586.2] [added: 684.7] | | | | [removed: 516.4] [added: 586.2] | |

| Interest expense | | | [removed: 52.2] [added: 52.4] | | | | [removed: 51.9] [added: 52.2] | | | | [removed: 52.9] [added: 51.9] | | | | [removed: 56.1] [added: 52.9] | | | | [removed: 55.8] [added: 56.1] | |

| Earnings before income taxes and equity earnings | | | [removed: 801.4] [added: 821.9] | | | | [removed: 710.5] [added: 801.4] | | | | [removed: 630.9] [added: 710.5] | | | | [removed: 526.2] [added: 630.9] | | | | [removed: 460.2] [added: 526.2] | |

| Income tax expense | | | [removed: 244.3] [added: 250.9] | | | | [removed: 221.2] [added: 244.3] | | | | [removed: 199.5] [added: 221.2] | | | | [removed: 166.7] [added: 199.5] | | | | [removed: 148.2] [added: 166.7] | |

| Earnings before equity earnings | | | [removed: 557.1] [added: 571.0] | | | | [removed: 489.3] [added: 557.1] | | | | [removed: 431.4] [added: 489.3] | | | | [removed: 359.5] [added: 431.4] | | | | [removed: 312.0] [added: 359.5] | |

| Equity earnings, net of tax | | | [removed: 2.5] [added: 1.2] | | | | [removed: 1.3] [added: 2.5] | | | | [removed: 0.7] [added: 1.3] | | | | [removed: 0.2] [added: 0.7] | | | | [removed: 2.6] [added: 0.2] | |

| Net earnings | | | [removed: 559.6] [added: 572.2] | | | | [removed: 490.6] [added: 559.6] | | | | [removed: 432.1] [added: 490.6] | | | | [removed: 359.7] [added: 432.1] | | | | [removed: 314.6] [added: 359.7] | |

| Net earnings attributable to noncontrolling interests | | | [removed: (13.2)] [added: (14.5)] | | | | [removed: (11.9)] [added: (13.2)] | | | | [removed: (10.2)] [added: (11.9)] | | | | [removed: (9.4)] [added: (10.2)] | | | | [removed: (8.5)] [added: (9.4)] | |

| Net earnings attributable to Snap-on | | | [removed: 546.4] [added: 557.7] | | | | [removed: 478.7] [added: 546.4] | | | | [removed: 421.9] [added: 478.7] | | | | [removed: 350.3] [added: 421.9] | | | | [removed: 306.1] [added: 350.3] | |

| Cash and cash equivalents | | $ | [removed: 77.6] [added: 92.0] | | | $ | [removed: 92.8] [added: 77.6] | | | $ | [removed: 132.9] [added: 92.8] | | | $ | [removed: 217.6] [added: 132.9] | | | $ | [removed: 214.5] [added: 217.6] | |

| Trade and other accounts receivable – net | | | [removed: 598.8] [added: 675.6] | | | | [removed: 562.5] [added: 598.8] | | | | [removed: 550.8] [added: 562.5] | | | | [removed: 531.6] [added: 550.8] | | | | [removed: 497.9] [added: 531.6] | |

| Finance receivables – net (current) | | | [removed: 472.5] [added: 505.4] | | | | [removed: 447.3] [added: 472.5] | | | | [removed: 402.4] [added: 447.3] | | | | [removed: 374.6] [added: 402.4] | | | | [removed: 323.1] [added: 374.6] | |

| Contract receivables – net (current) | | | [removed: 88.1] [added: 96.8] | | | | [removed: 82.1] [added: 88.1] | | | | [removed: 74.5] [added: 82.1] | | | | [removed: 68.4] [added: 74.5] | | | | [removed: 62.7] [added: 68.4] | |

| Inventories – net | | | [removed: 530.5] [added: 638.8] | | | | [removed: 497.8] [added: 530.5] | | | | [removed: 475.5] [added: 497.8] | | | | [removed: 434.4] [added: 475.5] | | | | [removed: 404.2] [added: 434.4] | |

| Property and equipment – net | | | [removed: 425.2] [added: 484.4] | | | | [removed: 413.5] [added: 425.2] | | | | [removed: 404.5] [added: 413.5] | | | | [removed: 392.5] [added: 404.5] | | | | [removed: 375.2] [added: 392.5] | |

| Long-term finance receivables – net | | | [removed: 934.5] [added: 1,039.2] | | | | [removed: 772.7] [added: 934.5] | | | | [removed: 650.5] [added: 772.7] | | | | [removed: 560.6] [added: 650.5] | | | | [removed: 494.6] [added: 560.6] | |

| Long-term contract receivables – net | | | [removed: 286.7] [added: 322.6] | | | | [removed: 266.6] [added: 286.7] | | | | [removed: 242.0] [added: 266.6] | | | | [removed: 217.1] [added: 242.0] | | | | [removed: 194.4] [added: 217.1] | |

| Total assets | | | [removed: 4,723.2] [added: 5,249.1] | | | | [removed: 4,331.1] [added: 4,723.2] | | | | [removed: 4,162.0] [added: 4,331.1] | | | | [removed: 3,994.5] [added: 4,162.0] | | | | [removed: 3,789.7] [added: 3,994.5] | |

| Notes payable and current maturities of long-term debt | | | [removed: 301.4] [added: 433.2] | | | | [removed: 18.4] [added: 301.4] | | | | [removed: 56.6] [added: 18.4] | | | | [removed: 113.1] [added: 56.6] | | | | [removed: 5.2] [added: 113.1] | |

| Accounts payable | | | [removed: 170.9] [added: 178.2] | | | | [removed: 148.3] [added: 170.9] | | | | [removed: 145.0] [added: 148.3] | | | | [removed: 155.6] [added: 145.0] | | | | [removed: 142.5] [added: 155.6] | |

| Long-term debt | | | [removed: 708.8] [added: 753.6] | | | | [removed: 861.7] [added: 708.8] | | | | [removed: 862.7] [added: 861.7] | | | | [removed: 858.9] [added: 862.7] | | | | [removed: 970.4] [added: 858.9] | |

| Total debt | | | [removed: 1,010.2] [added: 1,186.8] | | | | [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] | |

| Total shareholders’ equity attributable to Snap-on | | | [removed: 2,617.2] [added: 2,953.9] | | | | [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] | |

| Weighted-average shares outstanding – diluted | | | [removed: 59.4] [added: 58.6] | | | | [removed: 59.1] [added: 59.4] | | | | 59.1 | | | | 59.1 | | | | [removed: 58.9] [added: 59.1] | |

| Basic | | $ | [removed: 9.40] [added: 9.72] | | | $ | [removed: 8.24] [added: 9.40] | | | $ | [removed: 7.26] [added: 8.24] | | | $ | [removed: 6.02] [added: 7.26] | | | $ | [removed: 5.26] [added: 6.02] | |

| Diluted | | | [removed: 9.20] [added: 9.52] | | | | [removed: 8.10] [added: 9.20] | | | | [removed: 7.14] [added: 8.10] | | | | [removed: 5.93] [added: 7.14] | | | | [removed: 5.20] [added: 5.93] | |

| Cash dividends paid per share | | | [removed: 2.54] [added: 2.95] | | | | [removed: 2.20] [added: 2.54] | | | | [removed: 1.85] [added: 2.20] | | | | [removed: 1.58] [added: 1.85] | | | | [removed: 1.40] [added: 1.58] | |

| Shareholders’ equity per basic share | | | [removed: 45.05] [added: 51.46] | | | | [removed: 41.53] [added: 45.05] | | | | [removed: 38.00] [added: 41.53] | | | | [removed: 36.31] [added: 38.00] | | | | [removed: 30.96] [added: 36.31] | |

| 26 | | SNAP-ON INCORPORATED | | |

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

| | | 2016 ANNUAL REPORT | | 25 |

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December [removed: 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).][added: 30, 2017.]

Based upon their evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December [removed: 31, 2016,] [added: 30, 2017,] 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 [removed: has not been any change] [added: were no other changes] in [removed: the company’s] internal [removed: control over financial reporting] [added: controls] during the quarter ended December [removed: 31, 2016,] [added: 30, 2017,] that [removed: has] [added: have] materially affected, or [removed: is] [added: are] 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)).

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in _Internal Control [removed: –] [added: -] Integrated Framework (2013)_.

Based on this assessment, the company’s management believes that, as of December [removed: 31, 2016,] [added: 30, 2017,] our internal control over financial reporting was effective at a reasonable assurance level.

The company’s internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its attestation report, which is included herein.

| [removed: 56] [added: 60] | | SNAP-ON INCORPORATED | | |

To the Board of Directors and Shareholders of [added: Snap-on Incorporated:]

We have audited the internal control over financial reporting of Snap-on Incorporated and subsidiaries (the “Company”) as of December [removed: 31, 2016,] [added: 30, 2017,] based on criteria established in _Internal [removed: Control_ _–] [added: Control —] Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission.][added: Commission (“COSO”).]

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

A company’s internal control over financial reporting is a process designed [removed: by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel] to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Also, projections of any evaluation of [removed: the] effectiveness [removed: of the internal control over financial reporting] to future periods are subject to the risk that [removed: the] controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] based on [removed: the] criteria established in _Internal [removed: Control_ _–] [added: Control —] Integrated Framework (2013)_ issued by [removed: the Committee of Sponsoring Organizations of the Treadway Commission.][added: COSO.]

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (“PCAOB”),] the consolidated financial statements [removed: of the Company] as of and for the year ended December [removed: 31, 2016,] [added: 30, 2017, of the Company] and our report dated February [removed: 9, 2017] [added: 15, 2018,] expressed an unqualified opinion on those financial statements.

| Milwaukee, Wisconsin [removed: February 9, 2017] | | |

| | | [removed: 2016] [added: 2017] ANNUAL REPORT | | [removed: 57] [added: 59] |

During the quarter ended December 30, 2017, the company implemented a plan that calls for modifications and additions to internal control over financial reporting related to the accounting for revenues as a result of the new revenue recognition standard, ASC 606.

The modified and new controls have been designed to address risks associated with recognizing revenue under the new standard.

The company has added additional controls over financial reporting by enhancing the contract review process to include the attributes related to revenue recognition as well as to provide for the gathering of the disclosure information needed under the new requirements.

Opinion on Internal Control over Financial Reporting

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

| February 15, 2018 | | |

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.

Snap-on Incorporated:

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.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.

Incorporated by reference to sections entitled “Item 1: Election of Directors,” “Corporate Governance Practices and Board Information” and “Other Information” in Snap-on’s 2017 Annual Meeting Proxy Statement, which is expected to be mailed to shareholders on or about March [removed: 10, 2017] [added: 9, 2018] (the [removed: “2017] [added: “2018] Proxy Statement”).

The Section 16(a) filing compliance disclosure pursuant to Item 405 of Regulation S-K is contained in Snap-on’s [removed: 2017] [added: 2018] 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 December [removed: 31, 2016,] [added: 30, 2017,] is presented below:

Pinchuk_ [removed: (70)] [added: (71)] – 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: (62)] [added: (63)] – Senior Vice President – Finance and Chief Financial Officer since 2010.

Banerjee_ [removed: (66)] [added: (67)] – Senior Vice President, Human Resources and Chief Development Officer since 2015, and President, Commercial Group from 2011 to 2015.

_Iain Boyd_ [removed: (54)] [added: (55)] – Vice President, Operations Development since 2015.

[removed: Johnsen_ (59)] [added: Strege_ (60)] – Vice President and Controller since [removed: 2003.][added: 2017.]

_Kassouf_ [removed: (64)] [added: (65)] – Senior Vice President and President – Snap-on Tools Group since 2010.

[removed: Moreno_ (62)] [added: Lemerand_ (55)] – Vice President and Chief Information Officer since [removed: 2005.][added: 2017.]

Shur_ [removed: (58)] [added: (59)] – Vice President, General Counsel and Secretary since 2008.

Ward_ [removed: (64)] [added: (65)] _–_ Senior Vice President and President – Repair Systems & Information Group since 2010.

_June C.

Vice President of Information Technology Services from 2015 to 2017, and Senior Director, Information Technology Sales and Marketing Applications from 2005 to 2015.

_Richard K.

Vice President, Internal Audit, Controls and Compliance from 2007 to 2017.

| | | 2017 ANNUAL REPORT | | 61 |

_Constance R.

_Jeanne M.

| 58 | | SNAP-ON INCORPORATED | | |

The information required by Item 11 is contained in Snap-on’s [removed: 2017] [added: 2018] 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: 2016] [added: 2017] year end:

| Equity compensation plans [added: not] approved by security holders | | [removed: 3,366,358 (1)] [added: 62,807 (4)] | | [removed: $ 103.03 (2)] [added: Not Applicable] | | | [removed: 5,059,920 (3)] [added: – (5)] | |

| Equity compensation plans [removed: not] approved by security holders | | [removed: 53,439 (4)] [added: 3,606,096 (1)] | | [removed: Not Applicable] [added: $ 117.66 (2)] | | | [removed: – (5)] [added: 4,219,539 (3)] | |

| (1) | Includes (i) options to acquire [removed: 589,784] [added: 476,028] shares granted under the 2001 Incentive Stock and Awards Plan (the “2001 Plan”); (ii) options and stock appreciation rights to acquire [removed: 2,724,530] [added: 3,081,885] 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: 52,044] [added: 48,183] shares represented by deferred share units under the Directors’ Fee Plan. Excludes 50,528 shares issuable in connection with the vesting of restricted stock units and restricted stock under the 2001 Plan, and [removed: 288,072] [added: 207,335] 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: 4,121,252] [added: 3,296,859] shares reserved for issuance under the 2011 Plan; (ii) [removed: 158,105] [added: 169,080] shares reserved for issuance under the Directors’ Fee Plan; and (iii) [removed: 780,563] [added: 753,600] shares reserved for issuance under the employee stock purchase plan. |

The additional information required by Item 12 is contained in Snap-on’s [removed: 2017] [added: 2018] 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 | | 3,668,903 | | $ 117.66 (2) | | | 4,219,539 (5) | |

| 62 | | SNAP-ON INCORPORATED | | |

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

| | | 2016 ANNUAL REPORT | | 59 |

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: 2017] [added: 2018] Proxy Statement.

Incorporated by reference to the section entitled “Deloitte & Touche LLP Fee Disclosure” in Snap-on’s [removed: 2017] [added: 2018] 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.

| (3) | | (a) | | [removed: Restated] [added: [Restated] Certificate of Incorporation of Snap-on Incorporated, as amended through April 25, 2013 (incorporated by reference to Exhibit 3.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended September 28, 2013 (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312513401902/d594575dex31.htm)] |

| | | (b) | | [removed: Bylaws] [added: [Bylaws] of Snap-on Incorporated, as amended and restated as of April 25, 2013 (incorporated by reference to Exhibit 3.2 to Snap-on’s Current Report on Form 8-K dated April 25, 2013 (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312513177803/d527267dex32.htm)] |

| (4) | | (a) | | [removed: Indenture,] [added: [Indenture,] dated as of January 8, 2007, between Snap-on Incorporated and U.S. Bank National Association as trustee (incorporated by reference to Exhibit (4)(b) to Form S-3 Registration Statement (Registration No. [removed: 333-139863))] [added: 333-139863))](http://www.sec.gov/Archives/edgar/data/91440/000110465907001412/a07-1136_1ex4db.htm)] |

| | | (b) | | [removed: Officer’s] [added: [Officer’s] Certificate, dated as of February 24, 2009, providing for the $200,000,000 6.70% Notes due 2019 (incorporated by reference to Exhibit 4.2 to Snap-on’s Current Report on Form 8-K dated February 19, 2009 (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000095013709001266/c49601exv4w2.htm)] |

| | | (c) | | [removed: Officer’s] [added: [Officer’s] Certificate, dated as of August 14, 2009, providing for the $250,000,000 6.125% Notes due 2021 (incorporated by reference to Exhibit 4.1 to Snap-on’s Current Report on Form 8-K dated August 11, 2009 (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000089706909001316/cmw4454b.htm)] |

| | | (d) | | [removed: Officer’s] [added: [Officer’s] Certificate, dated as of [removed: December 14, 2010,] [added: February 21, 2017,] providing for the [removed: $250,000,000 4.25%] [added: $300,000,000 3.25%] Notes due [removed: 2018] [added: 2027] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.2] to Snap-on’s Current Report on Form 8-K dated [removed: December 9, 2010] [added: February 15, 2017] (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312517049758/d351106dex42.htm)] |

Except for the foregoing, Snap-on and its subsidiaries have no unregistered long-term debt agreement for which the related outstanding debt exceeds 10% of consolidated total assets as of December [removed: 31, 2016.][added: 30, 2017.]

| | | (a) | | [removed: Amended] [added: [Amended] and Restated Snap-on Incorporated 2001 Incentive Stock and Awards Plan (Amended and Restated as of April 27, 2006, as further amended on August 6, 2009) (incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended October 3, 2009 (Commission File No. 1-7724)) (superseded except as to outstanding [removed: awards)] [added: awards)](http://www.sec.gov/Archives/edgar/data/91440/000119312509217103/dex101.htm)] |

| | | [removed: (c)] [added: (d)(1)] | | [removed: Form] [added: [Form] of [removed: Restated Executive] [added: Indemnification] Agreement between Snap-on Incorporated and [removed: each of its] [added: certain] executive officers (incorporated by reference to Exhibit 10.1 to Snap-on’s [removed: Current] [added: Annual] Report on Form [removed: 8-K dated] [added: 10-K for the fiscal year ended] January [removed: 31, 2008] [added: 1, 2011] (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312511038686/dex10d1.htm)] |

| | | [removed: (d)(1)] [added: (d)(2)] | | [removed: Form] [added: [Form] of Indemnification Agreement between Snap-on Incorporated and [removed: certain executive officers] [added: directors] (incorporated by reference to Exhibit 10.1 to Snap-on’s Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (Commission File No. [removed: 1-7724))] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312511038686/dex10d2.htm)] |