Snap-on (SNA) 10-K risk factor changes: FY2021 vs FY2020

Each of these risk factors could adversely [removed: affect] [added: affect, and in some cases may have already affected,] the company’s business, operating results, cash flows and/or financial condition, as well as adversely affect the value of an investment in the company’s common stock.

*The [added: ongoing] COVID-19 pandemic [removed: has adversely affected, and] is expected to continue to pose risks to our business, results of operations, financial condition and cash flows, and other epidemics or outbreaks of infectious diseases may have a similar impact.*

[removed: The duration of these] [added: Existing] measures may be extended [added: in certain regions] and additional measures may be imposed to combat the COVID-19 pandemic or future outbreaks of infectious diseases.

[removed: - Reduced] [added: Among the effects of COVID-19, and potential effects of other similar outbreaks, on the company could include, but are not limited to, reduced] consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, [added: supply chain inefficiencies,] and reduced business and consumer spending, which [removed: may] [added: could] adversely affect our results of operations by reducing our sales, margins and/or net income as a result of [added: rising costs,] a slowdown in customer orders or order cancellations.

The ultimate impact of COVID-19, as well as future outbreaks of infectious diseases, [removed: on our business, results of operations, financial condition and cash flows] is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.

The use of other methods of transportation, including more frequent use of public transportation in the future, could result in a decrease in the use of [removed: privately operated] [added: privately-operated] vehicles.

A decrease in the use of [removed: privately operated] [added: privately-operated] vehicles may lead to fewer repairs and less demand for our products.

Approximately 42% of our consolidated net revenues in [removed: 2020] [added: 2021] 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.

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Product improvements and new product introductions require significant financial and other resources, including significant planning, design, development, [added: sourcing] and testing at the technological, product and manufacturing process levels.

*The global tool, equipment, [removed: and diagnostics] [added: diagnostics,] and repair information industries are competitive.*

Approximately [removed: 30%] [added: 31%] of our revenues in [removed: 2020] [added: 2021] were generated outside of the United States.

These [removed: risks and uncertainties] include political, economic and social instability, such as acts of war, [added: armed conflicts,] civil disturbance or acts of terrorism, local labor conditions, trade relations with China, changes in government policies and regulations, including [added: those intended to address climate change,] imposition or increases in withholding and other taxes on remittances and other payments by international subsidiaries, as well as exposure to liabilities under anti-bribery and anti-corruption laws in various countries, such as the U.S. Foreign Corrupt Practices Act, currency volatility, transportation delays or interruptions, sovereign debt uncertainties and difficulties in enforcement of contract and intellectual property rights, reputational risks related to, among other factors, different standards and practices among countries, as well as natural [removed: disasters] [added: disasters, weather events] and outbreaks of infectious diseases.

The United Kingdom (“U.K.”) [added: has] formally left the European Union [removed: (“Brexit”) on January 31, 2020, and was in a transition period until December 31, 2020.][added: (“Brexit”).]

As part of the [removed: agreement,] [added: agreement between the U.K. and the European Union regarding Brexit,] there [removed: will be] [added: is] a new series of customs and regulatory checks, including rules of origin and stringent local content requirements.

There [removed: will] [added: are] also [removed: be] restrictions on the free movement of people and temporary visas for work-related purposes [removed: are being] [added: have been] re-introduced.

[removed: In addition to] [added: The implications of Brexit, including] disruptions to trade and the movement of goods, services and people between the U.K. and the European Union or other countries, [removed: Brexit, among other impacts, could] [added: may] lead to additional cost, delays and volatility in currency exchange rates, as well as create legal and global economic uncertainty.

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: climate or] weather events, use and storage of hazardous materials, acts of war, sabotage, [removed: or] terrorism, civil unrest or other events), or other reasons, including outbreaks of infectious diseases, such as the [removed: current] [added: ongoing] COVID-19 pandemic, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

*Price fluctuations and shortages of raw materials, components, certain [added: purchased] finished goods [removed: inventory] and energy sources could adversely affect the ability to obtain needed materials or products and could adversely affect our results of operations.*

In addition, outbreaks of infectious diseases, weather events or other circumstances beyond our control could also impact the availability of raw [removed: materials.][added: materials and components.]

[removed: These and other raw] [added: Raw] materials, components and certain [added: purchased] finished goods [removed: inventory] can exhibit price and demand cyclicality, including as a result of [removed: tariffs and] [added: tariffs,] other trade protection [removed: measures.][added: measures, inflationary factors, and supply chain inefficiencies.]

Associated unexpected [removed: price increases] [added: variability] could result in an [removed: erosion of] [added: increase in] product [removed: margins or] [added: costs and] require Snap-on to increase prices to [removed: customers to] maintain margins.

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

Energy price increases raise both our operating costs and the costs of our materials, and we may not be able to increase our prices enough to offset these [removed: costs.][added: costs in certain areas.]

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We have taken steps in the past, and [removed: expect to] [added: may] take additional steps in the future, intended to improve customer service and drive further efficiencies as well as reduce costs, some of which could be disruptive to our [removed: business or adversely impact our results in certain periods.][added: business.]

[removed: Efforts] [added: Future efforts] to reduce components of expense could result in the recording of charges for inventory and technology-related write-offs, workforce reduction costs or other charges relating to the consolidation or closure of facilities.

If we were to incur a substantial charge [removed: to further these efforts] or are unable to effectively manage our cost reduction and restructuring efforts, our business, financial condition, results of operations and cash flows could be adversely [removed: affected.][added: affected in certain periods.]

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 17 | | |

At times, world financial markets have been unstable and subject to [removed: uncertainty, such as during the COVID-19 pandemic in 2020.][added: uncertainty.]

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 19 | | |

*Legislation and regulations relating to our business and the countries where we operate, [added: including those related to sustainability matters,] as well as any changes to such legislation or regulations, in addition to new compliance obligations or a failure to maintain existing compliance requirements, may, if significant, affect our business, reputation, results of operations and financial condition.*

We, our franchisees and our customers, and the economy as a whole, also may be affected by future world or local events outside our control, such as tariffs and other trade protection measures put in place by the United States or other countries, acts of terrorism, developments in the war on terrorism, [added: armed conflicts,] civil unrest, conflicts in international situations, weather events and natural disasters, outbreaks of infectious diseases such as the ongoing COVID-19 pandemic, as well as government-related developments or issues, including changes in tax laws and [removed: regulations.][added: regulations, including regulations related to climate change and other sustainability matters, and changes in financial accounting standards.]

These factors may affect [removed: our] [added: the] results of operations by reducing our sales, margins and/or net earnings as a result of a slowdown in customer orders or order cancellations, impact the availability and/or pricing of raw materials and/or the supply chain, and could potentially lead to future impairment of goodwill or other intangible assets.

In addition, the number of electric and hybrid vehicles developed and sold has risen in recent years, and is expected to continue to increase in the future.

While we believe that advances in vehicle technologies provide us with opportunities to provide innovative products and solutions to the vehicle repair market, if we are not able to execute on those possibilities, our business and results of operations could suffer.

Snap-on’s supply of raw materials and purchased components are generally available from numerous suppliers, and the company continuously works to expand its supplier base to ensure availability.

Physical risks of climate change may also impact the availability and cost of materials, sources and supply of energy and could also increase operating costs.

These risks may be heightened when associates work remotely.

In recent years there has been increased public awareness, concern and focus on environmental and sustainability issues, including matters related to global climate change.

The current focus on these matters is expected to result in additional and/or more restrictive regulations, requirements and/or industry or third-party standards to reduce or mitigate global warming and other environmental or sustainability risks, though the timing is uncertain.

Increased regulatory requirements or standards may result in increased compliance or input costs, including those related to energy or raw materials, for us and our suppliers.

If environmental laws or regulations or industry standards are either changed or adopted, and impose significant operational restrictions and compliance requirements upon the company, the company's business, reputation, results of operations, financial condition and competitive position could be negatively impacted.

For example, if significant increases in fuel economy requirements or changes to vehicle emissions requirements for internal combustion engine vehicles were imposed, there could be a decrease in demand for such vehicles and a reduction in miles driven, which could adversely impact the demand for certain of our products and services.

Furthermore, an inability to successfully manage climate change or sustainability matters, or to effectively respond to new, or changes in, legal or regulatory requirements concerning sustainability matters, or increased operating or manufacturing costs due to changes in the regulatory environment, could adversely affect our business.

COVID-19 spread across the globe during 2020 and continues to impact economic activity worldwide.

COVID-19 caused disruption and volatility in the global capital markets, and authored an economic slowdown during 2020.

The COVID-19 pandemic and its associated economic uncertainty negatively impacted Snap-on’s sales volumes in 2020 in most geographies and across a variety of customers, including those in automotive repair with the impact most pronounced in the first and second quarters of 2020.

These measures resulted in attenuating activity and, in some cases, required temporary closures of certain of our facilities, among other impacts in 2020.

Among the effects of COVID-19, and potential effects of other similar outbreaks, on the company include, but are not limited to, the following:

In addition, volatility in the financial markets could increase the cost of capital and/or limit its availability.

- Economic uncertainties that make it difficult for our franchisees, customers, suppliers and the company to accurately forecast and plan future business activities.

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| 12 | | | SNAP-ON INCORPORATED | | | | | |

- As a result of government orders and social distancing, some of our franchisees would be expected to make fewer in-person sales calls during any such outbreak reflecting the reluctance of some customers to receive franchisee visits.

Further, shelter-in-place orders could cause vehicle owners to temporarily refrain from bringing cars to repair shops.

To the extent that there is significantly reduced driving due to shelter-in-place and similar orders and the aftermath of such orders, there could be fewer repairs and there could be a decrease in demand for our products; in addition, some repair shops may not be able to stay in business if these conditions continue to exist for an extended period of time.

- The potential to weaken the financial position of some of our customers, including customers utilizing our financing programs.

If circumstances surrounding our customers’ financial capabilities were to deteriorate, write-downs or write-offs could negatively affect our operating results and, if large, or ongoing for extended periods, could have a material adverse effect on our business, financial condition, results of operations and cash flow.

- Disruptions could occur to our supply chain in connection with the sourcing of materials from geographic areas that continue to be impacted by an outbreak and by efforts to contain its spread.

- Volatility related to pension plan assets.

While our plan assets are broadly diversified, there are inherent market risks associated with investments.

We may need to make additional contributions to address an increase in obligations and/or a loss in plan assets as a result of the combination of declining market interest rates and/or past or future plan asset investment losses, which could adversely impact our financial condition, results of operations and cash flows.

- The need to incur additional restructuring charges to optimize our cost structure.

The U.K. and the European Union reached an agreement regarding Brexit on December 24, 2020.

The implications of Brexit, or how such implications are expected to affect Snap-on, continue to be reviewed by the company.

As some steel alloys require specialized manufacturing procedures, we could experience inventory shortages if we were required to use an alternative manufacturer on short notice.

These risks may be heightened as greater numbers of associates work remotely in response to safety measures adopted to address the COVID-19 pandemic.

These actions, collectively across our operating groups, are focused on the following:

- Continuing to invest in initiatives focused on building a strong sales and operating presence in emerging growth markets;

- Continuing to enhance service and value to our franchisees and customers;

- Continuing to implement productivity initiatives throughout the company to drive further efficiencies and reduce energy and other operating costs;

- Continuing on the company’s existing path to improve and transform global manufacturing and the supply chain into a market-demand-based replenishment system with lower costs;

- Continuing to invest in developing and marketing new, innovative, higher-value-added products and advanced technologies;

- Extending our products and services into additional and/or adjacent markets or to new customers; and

- Continuing to provide financing for, and grow our portfolio of, receivables within our financial services businesses.

A failure to succeed in the implementation of any or all of these actions could result in an inability to achieve our financial goals and could be disruptive to the business.

In addition, any future reductions to headcount and other cost reduction measures may result in the loss of technical expertise and could adversely affect our research and development efforts as well as our ability to meet product development schedules.

Furthermore, a portion of our indebtedness bears interest at rates that fluctuate with changes in certain short-term prevailing interest rates, including the London Interbank Offer Rate (“LIBOR”).

Although we attempt to manage our exposure to rate fluctuations via hedging arrangements, such arrangements may be ineffective or may not protect us to the extent we expect.

In addition, the United Kingdom’s Financial Conduct Authority announced that after 2021 it would no longer persuade or compel panel banks to submit the rates required to calculate LIBOR, and it is unclear whether the banks currently reporting information used to set LIBOR will stop doing so after 2021.

The United States (“U.S.”) Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee composed of large U.S. financial institutions, is considering replacing the U.S. dollar LIBOR with a new index, the Secured Overnight Financing Rate (“SOFR”), calculated using short-term repurchase agreements backed by Treasury securities.

Although the consequences of these developments cannot be predicted at this time, the rates under our variable rate indebtedness could increase and access to capital could be limited.

[removed: Leveraging] [added: Snap-on expects to make continued progress in 2022 along its defined runways for coherent growth, leveraging] capabilities already demonstrated in the automotive repair [removed: arena, our strategy continued to focus on] [added: arena and] developing and expanding [removed: our] [added: its] professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including [added: extending in] critical industries, where the cost and penalties for failure can be high.

- Further extending to critical industries, where we continued to grow our lines of products customized for specific industries, including through [added: further integration of] acquisitions; and

Our strategic priorities and plans for [removed: 2021] [added: 2022] involve continuing to build on our Snap-on Value Creation Processes – our suite of strategic principles and processes we employ every day designed to create value, and employed in the areas of safety, quality, customer connection, innovation and rapid continuous improvement (“Rapid Continuous Improvement” or “RCI”).

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 27 | | |

For segment reporting purposes, the results of operations and assets of [removed: Sigmavision, Cognitran] [added: Dealer-FX] and [removed: TMB] [added: Sigmavision] have been included in the Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of AutoCrib [added: Germany, Pradines,] and [removed: Power Hawk] [added: AutoCrib] have been included in the Commercial & Industrial Group since the respective acquisition dates.

Fiscal [removed: 2019] [added: 2020] as Compared to Fiscal [removed: 2018][added: 2019]

A discussion regarding our financial condition and results of operations for fiscal [removed: 2019] [added: 2020] compared to fiscal [removed: 2018] [added: 2019] can be found under “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on the Form 10-K for the fiscal year ended [removed: December 28, 2019,] [added: January 2, 2021,] which was filed with the SEC on February [removed: 13, 2020,] [added: 11, 2021,] and is available on the SEC’s website at www.sec.gov as well as in the “Investors” section of our corporate website at www.snapon.com.

References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “organic sales” refer to sales from continuing operations calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), [removed: excluding] [added: adjusted to exclude] acquisition-related sales and the impact of foreign currency translation.

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

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

Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying growth trends in [removed: our] [added: the company’s] businesses and [removed: facilitating] [added: facilitates] comparisons of [removed: our] [added: its] sales performance with prior periods.

Unless otherwise indicated, references in this document to “fiscal [removed: 2020”] [added: 2021”] or [removed: “2020”] [added: “2021”] refer to the fiscal year ended January [removed: 2, 2021;] [added: 1, 2022;] references to “fiscal [removed: 2019”] [added: 2020”] or [removed: “2019”] [added: “2020”] refer to the fiscal year ended [removed: December 28, 2019;] [added: January 2, 2021;] and references to “fiscal [removed: 2018”] [added: 2019”] or [removed: “2018”] [added: “2019”] refer to the fiscal year ended December [removed: 29, 2018.][added: 28, 2019.]

References in this document to [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] year end refer to January [added: 1, 2022, January] 2, 2021, [added: and] December 28, 2019, [removed: and December 29, 2018,] respectively.

Snap-on’s [removed: 2019] [added: 2021] and [removed: 2018] [added: 2019] fiscal years each contained 52 weeks of operating results.

The company [removed: accommodated] [added: sustained the accommodation of] its operations to the virus environment, continuing without significant disruption to serve its franchisees and other professional customers as they performed [added: their] essential work, while taking what it believes to be appropriate measures to ensure the health and safety of its [removed: personnel.][added: people.]

As a percentage of net sales, operating earnings before financial services of [removed: 17.6%,] [added: 20.0%] compared to [removed: 19.2%] [added: 17.6%] last year.

As a percentage of revenues, operating earnings of [removed: 22.3%,] [added: 24.4%,] compared to [removed: 23.7%] [added: 22.3%] last year.

Net earnings attributable to Snap-on in 2020 [removed: of] [added: were] $627.0 million, or $11.44 per diluted [removed: share,] [added: share and] included a $10.3 million, or $0.19 per diluted share, after-tax charge related to [added: the] restructuring actions.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 29 | | |

The organic [removed: sales] decrease primarily [removed: includes a double-digit decline in the segment’s Asia Pacific operations,] [added: reflects] a [removed: high] [added: low] single-digit [removed: decrease] [added: decline] in sales to customers in critical [removed: industries and a low single-digit decline in] [added: industries, including lower] sales [removed: in] [added: to] the [removed: segment’s European-based hand tools business.][added: military.]

The Commercial & Industrial Group intends to continue building on the following strategic priorities in [removed: 2021:][added: 2022:]

The organic [removed: sales] increase [removed: reflects] [added: is due to] a low single-digit gain in the U.S. franchise [removed: operations,] [added: business,] partially offset by a low single-digit decline in the segment’s international operations.

In [removed: 2021,] [added: 2022,] the Snap-on Tools Group intends to continue these initiatives, with specific focus on the following:

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

The Repair Systems & Information Group intends to focus on the following strategic priorities in [removed: 2021:][added: 2022:]

[removed: Financial Services] [added: Financial services] revenue was $349.7 million in [removed: 2020] [added: both 2021] and [removed: $337.7 million in 2019.][added: 2020.]

Originations of [removed: $1,036.6] [added: $1,073.2] million in [removed: 2020] [added: 2021] increased [removed: $4.8] [added: $36.6] million, or [removed: 0.5%,] [added: 3.5%,] from [removed: 2019] [added: 2020] levels.

[removed: Operating earnings from financial] [added: Financial] services [removed: in 2020] [added: operating earnings] of [removed: $248.6 million,] [added: $272.0 million in 2021] compared to [removed: $245.9] [added: $248.6] million last year.

Financial Services intends to focus on the following strategic priorities in [removed: 2021:][added: 2022:]

- Delivering financial products and services that attract and sustain profitable franchisees and support [removed: Snap-on’s] [added: Snap‑on’s] strategies for expanding market coverage and penetration;

Net cash provided by operating activities of [removed: $1,008.6] [added: $966.6] million in [removed: 2020 increased $334.0] [added: 2021 decreased $42.0] million from [removed: $674.6] [added: $1,008.6] million in [removed: 2019.][added: 2020.]

The [removed: $334.0] [added: $42.0] million [removed: increase] [added: decrease] is primarily due to [removed: $430.2] [added: a $253.6] million [removed: from net changes] [added: change] in [added: net] operating assets and liabilities, partially offset by a [removed: $64.8] [added: $195.0] million [removed: decrease] [added: increase] in net earnings.

Net cash used by investing activities of $187.8 million in 2020 included additions to finance receivables of $835.0 million, partially offset by collections of $750.3 million, as well as a total of $41.5 million for the acquisitions of Sigmavision and [removed: AutoCrib] [added: AutoCrib,] and a $0.2 million working capital adjustment for the 2019 Cognitran acquisition.

Net cash used by investing activities of [removed: $222.1] [added: $290.4] million in [removed: 2019] [added: 2021] included additions to finance receivables of [removed: $841.9] [added: $878.1] million, partially offset by collections of [removed: $754.3] [added: $854.2] million, as well as a total of [removed: $38.6 million (net of $1.0] [added: $199.7] million [removed: of cash acquired)] for the acquisitions of [removed: TMB, Power Hawk] [added: Dealer-FX, AutoCrib Germany] and [removed: Cognitran.][added: Pradines.]

Capital expenditures in [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] totaled [removed: $65.6] [added: $70.1] million and [removed: $99.4] [added: $65.6] million, respectively.

These amounts were partially offset by Snap-on’s sale, on April 27, 2020, of $500 million of unsecured 3.10% notes that mature on May 1, 2050 (the “2050 [removed: Notes”)] [added: Notes”),] at a discount, from which Snap-on received $489.9 million of net proceeds, reflecting $4.4 million of transaction costs, and $55.8 million of proceeds from stock purchase and option plan exercises.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 31 | | |

[removed: 2020] [added: 2021] vs. [removed: 2019][added: 2020]

Results of operations for [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] are as follows:

| *(Amounts in millions)* | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | Change | | | | | | | | |

We believe our 2021 operating results demonstrate the continued momentum of our operations and confirms the resilience of our markets and our considerable capabilities to overcome the challenges of the COVID environment.

Throughout the turbulence, we maintained and further developed our ongoing advantages in our products, brands and people.

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

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

The acquisition of AutoCrib Germany, a former independent distributor, enhanced and expanded Snap-on’s capabilities in providing solutions for the company’s existing tool control offerings.

On July 1, 2021, Snap-on exchanged its 35% equity interest in Deville S.A., valued at $21.8 million, for 100% ownership of Secateurs Pradines (“Pradines”), a wholly owned subsidiary of Deville S.A. with a fair value of $20.7 million (or $16.2 million, net of cash acquired), and cash of $1.1 million.

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

Pradines has been the primary supplier of pruning products to Snap‑on and the acquisition allows the company to improve and expand its pruning tool offering.

| 26 | | | SNAP-ON INCORPORATED | | | | | |

On February 26, 2021, Snap-on acquired Dealer-FX Group, Inc. (“Dealer-FX”) for a cash purchase price of $200.1 million (or $200.0 million, net of cash acquired).

Dealer-FX, based in Markham, Ontario, is a leading developer, marketer and provider of service-operations software solutions for automotive original equipment manufacturer (“OEM”) customers and their dealers.

Dealer-FX specializes in software as a service (SaaS) management systems, communications platforms, extensive data integrations, and offers a digitalized solution that increases productivity and enhances the vehicle owners’ experience.

The acquisition of Dealer-FX complemented and expanded Snap-on’s existing OEM and dealership business that provides electronic parts catalogs, essential tool and diagnostic programs, and custom analytics to OEMs and dealerships.

Effect of COVID-19

Our markets and our operations possess and, indeed, have demonstrated considerable resilience against the effects of the pandemic.

During 2021, the impact on sales and the need for remediating costs associated with the pandemic have lessened, particularly from the heavily-impacted second quarter of 2020.

Throughout the pandemic, Snap-on has generally maintained its workforce and manufacturing capacity, as well as its investments in brand building and product development.

As the global supply chain inefficiencies and associated cost increases caused by the COVID-19 pandemic have developed, the company has taken steps to ensure access to raw materials, components and purchased finished goods, and to provide for counterbalancing price and efficiency offsets.

See also Part I, Item 1A: Risk Factors - Risk related to COVID-19 and Other Infectious Diseases.

Consolidated net sales of $4,252.0 million in 2021 increased $659.5 million, or 18.4%, from 2020 levels, reflecting a $550.5 million, or 15.1%, organic gain, $62.6 million of acquisition-related sales and $46.4 million of favorable foreign currency translation.

Operating earnings before financial services of $851.5 million in 2021 increased $219.6 million, or 34.8%, compared to $631.9 million in 2020, which included $12.5 million of exit and disposal (“restructuring”) charges.

Operating earnings of $1,123.5 million in 2021 increased $243.0 million, or 27.6%, compared to $880.5 million last year, which included $12.5 million of charges for restructuring actions.

Net earnings attributable to Snap-on in 2021 of $820.5 million, or $14.92 per diluted share, increased $193.5 million, or $3.48 per diluted share, from 2020 levels.

Segment net sales of $1,406.3 million in 2021 increased $171.7 million, or 13.9%, from 2020 levels, reflecting a $131.9 million, or 10.5%, organic sales increase, $22.5 million of acquisition-related sales and $17.3 million of favorable currency translation.

The organic gain reflects higher activity in all of the segment’s operations and includes mid single-digit increases in sales to customers in critical industries.

Operating earnings of $209.9 million in 2021, including $3.8 million of unfavorable foreign currency effects, increased $56.2 million, or 36.6%, compared to $153.7 million in 2020, which included $6.4 million of restructuring charges.

Segment net sales of $1,938.6 million in 2021 increased $294.7 million, or 17.9%, from 2020 levels, reflecting a $274.4 million, or 16.5%, organic sales gain and $20.3 million of favorable foreign currency translation.

Operating earnings of $411.1 million in 2021, including $17.0 million of favorable foreign currency effects, increased $143.4 million, or 53.6%, compared to $267.7 million in 2020.

Segment net sales of $1,503.1 million in 2021 increased $264.9 million, or 21.4% from 2020 levels, reflecting a $211.3 million, or 16.9%, organic sales increase, $40.1 million of acquisition-related sales and $13.5 million of favorable foreign currency translation.

The organic gain reflects an increase of more than 25% in sales of undercar equipment, as well as double-digit gains in both sales of diagnostic and repair information products to independent repair shop owners and managers and in activity focused on OEM dealerships.

Operating earnings of $348.6 million in 2021, including $1.6 million of unfavorable foreign currency effects, increased $50.6 million, or 17.0%, from $298.0 million in 2020, which included $5.5 million of restructuring charges.

Financial Services generates revenue from various financing programs and is a strategic partner of the company’s mobile franchise van channel.

Net cash used by financing activities of $818.8 million in 2021 included $431.3 million for the repurchase of 1,943,900 shares of Snap-on’s common stock, $275.8 million for dividend payments to shareholders and the September 2021 repayment of $250.0 million of 6.125% unsecured notes upon maturity (the “2021 Notes”).

These amounts were partially offset by $162.4 million of proceeds from stock purchase and option plan exercises and net proceeds from notes payable and other short-term borrowings of $3.3 million.

| Net sales | | | | | | $ | 4,252.0 | | | | | 100.0 | | % | | | | $ | 3,592.5 | | | | | 100.0 | | % | | | | $ | 659.5 | | | | | 18.4 | | % |

| Cost of goods sold | | | | | | (2,141.2) | | | | | | (50.4) | | % | | | | (1,844.0) | | | | | | (51.3) | | % | | | | (297.2) | | | | | | (16.1) | | % |

| Gross profit | | | | | | 2,110.8 | | | | | | 49.6 | | % | | | | 1,748.5 | | | | | | 48.7 | | % | | | | 362.3 | | | | | | 20.7 | | % |

| Operating expenses | | | | | | (1,259.3) | | | | | | (29.6) | | % | | | | (1,116.6) | | | | | | (31.1) | | % | | | | (142.7) | | | | | | (12.8) | | % |

| Financial services expenses | | | | | | (77.7) | | | | | | (22.2) | | % | | | | (101.1) | | | | | | (28.9) | | % | | | | 23.4 | | | | | | 23.1 | | % |

| Operating earnings | | | | | | 1,123.5 | | | | | | 24.4 | | % | | | | 880.5 | | | | | | 22.3 | | % | | | | 243.0 | | | | | | 27.6 | | % |

In 2020, the COVID-19 pandemic impacted the company’s sales and earnings as a result of decreased activity in the first half of the year.

By safely pursuing opportunities in the COVID-19 environment, we believe our 2020 operating results demonstrate our continued commitment to providing repeatability and reliability to a wide range of professional customers performing critical and essential tasks in workplaces of consequence.

On August 7, 2019, Snap-on acquired Cognitran Limited (“Cognitran”) for a cash purchase price of $30.6 million (or $29.6 million, net of cash acquired), which reflects a $0.2 million working capital adjustment finalized in fiscal 2020.

Cognitran, based in Chelmsford, U.K., specializes in flexible, modular and highly scalable “Software as a Service” (SaaS) products for Original Equipment Manufacturer (“OEM”) customers and their dealers, focused on the creation and delivery of service, diagnostics, parts and repair information to the OEM dealers and connected vehicle platforms.

The acquisition of Cognitran enhanced and expanded Snap-on’s capabilities in providing shop efficiency solutions through integrated upstream services to OEM customers in automotive, heavy duty, agricultural and recreational applications.

On April 2, 2019, Snap-on acquired Power Hawk Technologies, Inc. (“Power Hawk”) for a cash purchase price of $7.9 million.

Power Hawk, based in Rockaway, New Jersey, designs, manufactures and distributes rescue tools and related equipment for a variety of military, governmental, fire and rescue, and emergency operations.

The acquisition of the Power Hawk product line complemented and increased Snap-on’s existing product offering and broadened its established capabilities in serving critical industries.

On January 25, 2019, Snap-on acquired substantially all of the assets of TMB GeoMarketing Limited (“TMB”) for a cash purchase price of $1.3 million.

TMB, based in Dorking, U.K., designs planning software used by OEMs to optimize dealer locations and manage the performance of dealer outlets.

The acquisition of TMB extended Snap-on’s product line in its core dealer network solutions business.

Impact of COVID-19

As discussed in Part I, Item 1A: Risk Factors, the company faces risks related to outbreaks of infectious diseases, including the ongoing COVID-19 pandemic, which caused disruption and volatility in the global capital markets and authored an economic slowdown.

In response to COVID-19, national and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing.

The challenges posed by the COVID-19 pandemic on the global economy increased significantly in the first quarter of 2020, impacting Snap-on’s sales volumes in most geographies and across a variety of customers, including those in automotive repair.

In addition, the impact of economic uncertainty caused by COVID-19 led to an increase in the credit reserve requirements for the company’s financial services portfolio.

During the second quarter of 2020, the COVID-19 pandemic and associated government measures to limit the spread of the virus heavily impacted Snap-on’s sales and earnings and, as anticipated, resulted in substantially lower performance in that period as compared to 2019.

Snap-on also provided direct assistance to its franchisees as they accommodated the turbulence caused by the virus to enable continued service to their essential technician customers.

As a result of these accommodations, the impact of the virus on operations lessened as the year progressed.

The company has invested in offsetting the virus impact, including absorbing temporary closures of certain facilities, wages for quarantined associates, event cancellation fees, as well as other related costs (collectively, “direct COVID-19-related costs” or “direct costs associated with COVID-19”).

Snap-on has generally maintained its headcount, manufacturing capacity and product development, in anticipation of the return to pre-COVID-19 demand levels.

The company’s supply chain and distribution channels have not been materially impacted by the pandemic, and the company has taken steps to ensure access to raw materials and components, but it cannot provide assurances with respect to the future due to the evolving nature of the pandemic.

The ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.

Consolidated net sales of $3,592.5 million in 2020, reflecting a $140.9 million, or 3.8%, decrease in organic sales and $10.9 million of unfavorable foreign currency translation, partially offset by $14.3 million of acquisition-related sales, compared to $3,730.0 million in 2019.

The lower sales volume is primarily due to decreased activity in the first half of the year as a result of the initial economic impact associated with the COVID-19 pandemic.

Operating earnings before financial services of $631.9 million in 2020, including $12.5 million of exit and disposal (“restructuring”) charges, $11.9 million of direct costs associated with COVID-19 and $13.1 million of unfavorable foreign currency effects, compared to $716.4 million in 2019, which included an $11.6 million benefit from a legal settlement in a patent-related litigation matter that was being appealed (the “legal settlement”).

Operating earnings of $880.5 million in 2020, including $12.5 million of restructuring charges, $11.9 million of direct costs associated with COVID-19 and $13.2 million of unfavorable foreign currency effects, compared to $962.3 million last year, which included the benefit from the $11.6 million legal settlement.

Net earnings attributable to Snap-on in 2019 were $693.5 million, or $12.41 per diluted share and included an $8.7 million, or $0.15 per diluted share, after-tax benefit from the legal settlement.

Segment net sales of $1,234.6 million in 2020, reflecting a $115.8 million, or 8.6%, organic sales decline and $3.5 million of unfavorable currency translation, partially offset by $8.2 million of acquisition-related sales, compared to $1,345.7 million in 2019.

Operating earnings of $153.7 million in 2020, including $6.5 million of direct costs associated with COVID-19, $6.4 million of restructuring charges and $5.8 million of unfavorable foreign currency effects, compared to $188.7 million in 2019.

Segment net sales of $1,643.9 million in 2020, reflecting a $32.8 million, or 2.0%, organic sales gain, partially offset by $1.8 million of unfavorable foreign currency translation, compared to $1,612.9 million in 2019.

Operating earnings of $267.7 million in 2020, including $3.5 million of direct costs associated with COVID-19, $0.6 million of restructuring charges and $5.4 million of unfavorable foreign currency effects, compared to $245.8 million in 2019.

Segment net sales of $1,238.2 million in 2020, reflecting a $97.6 million, or 7.3%, organic sales decline and $4.8 million of unfavorable foreign currency translation, partially offset by $6.1 million of acquisition-related sales, compared to $1,334.5 million in 2019.

The organic sales decrease includes double-digit declines in both sales of undercar equipment and in sales to OEM dealerships.

Sales of diagnostic and repair information products to independent repair shop owners and managers were essentially flat.

Operating earnings of $298.0 million in 2020, including $5.5 million of costs related to restructuring actions, $1.2 million of direct costs associated with COVID-19 and $1.9 million of unfavorable foreign currency effects, compared to $342.7 million in 2019.

In 2020, financial services expenses included higher provisions for credit losses related to the company’s adoption of ASU No. 2016-13, *Financial Instruments - Credit Losses (Topic 326*), and $2.6 million of higher credit reserve requirements associated with the COVID-19 pandemic, which were recorded in the first quarter of 2020.

Snap-on continues to grow its financial services portfolio by providing financing for finance and contract receivables originated by our global financial services operations.

Net cash used by financing activities of $409.4 million in 2019 included $238.4 million for the repurchase of 1,495,000 shares of Snap-on’s common stock and $216.6 million for dividend payments to shareholders, partially offset by $51.4 million of proceeds from stock purchase and option plan exercises and $17.6 million of net proceeds from other short-term borrowings.

| Operating earnings | | | | | | 880.5 | | | | | | 22.3 | | % | | | | 962.3 | | | | | | 23.7 | | % | | | | (81.8) | | | | | | (8.5) | | % |

Treasury lock agreements are used from time to time to manage the potential change in interest rates in anticipation of the [removed: possible] issuance of fixed rate debt.

The estimated maximum potential [added: net] one-day loss in fair value, calculated using the VAR model, as of [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] year end was [removed: $13.9] [added: $20.6] million and [removed: $9.9] [added: $13.9] million, respectively, on interest rate-sensitive financial instruments, and [removed: $0.1] [added: $0.3] million and [removed: $0.2] [added: $0.1] million, respectively, on foreign currency-sensitive financial instruments.

Since stock-based deferred compensation liabilities increase as the company’s stock price rises and decrease as the company’s stock price declines, the equity forwards are intended to mitigate the potential impact on [added: deferred] compensation expense that may result from such mark-to-market changes.

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

[removed: Snap-on] [added: Snap‑on] evaluates credit quality through the use of an internal proprietary measuring system that provides a framework to analyze finance receivables on the basis of risk factors of the individual obligor as well as transaction specific risk.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 51 | | |

For example, the company is monitoring the impact of and developments related to the [added: ongoing] COVID-19 pandemic, which [removed: has created] [added: continues to have an impact on the] global [removed: economic uncertainty.][added: economy.]

In addition, the company [removed: is monitoring the effects of] [added: continues to monitor developments related to] the United Kingdom’s exit from the European Union, [removed: although it is too soon to know what] [added: and the] effects this [removed: might] [added: may] have on the world economy [removed: or] [added: and] the company.

Snap-on’s supply of raw materials and purchased components are generally and readily available from numerous [removed: suppliers.][added: suppliers, and the company continuously works to expand and enhance supplier relationships to meet its supply needs.]

To meet Snap-on’s high quality standards, the company’s steel [removed: needs] [added: requirements] range from specialized alloys, which are available only from a limited group of approved suppliers, to common alloys, which are available from multiple suppliers.

Some of these materials have been, and in the future may be, in short supply, particularly in the event of mill shutdowns or production cut [removed: backs.][added: backs, as well as from supply chain disruptions or inefficiencies, some of which may be associated with significant weather or climate-related events.]

As some steel alloys require specialized manufacturing procedures, Snap-on could experience [removed: inventory] shortages if it were required to use an alternative manufacturer on short notice.

Steel and other raw materials, components and certain finished goods [removed: inventory] can exhibit price and demand cyclicality, including as a result of tariffs and other trade protection measures.

While inflation has become more prevalent in the world economy, Snap-on has taken steps to control and offset associated cost increases through its supply chain management, pricing actions, and deployment of Rapid Continuous Improvement (“RCI”).

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| 52 | | | SNAP-ON INCORPORATED | | | | | |

Inflation has not had a significant impact on the company.

Snap-on believes its ability to sell product is also dependent on the changing vehicle repair requirements, the number of vehicles on the road, the general aging of vehicles and the number of miles driven.

These factors affect the frequency, type and amount of service and repair performed on vehicles by technicians, and therefore affect the demand for the number of technicians, the prosperity of the technicians and, consequently, the demand technicians have for the company’s tools, other products and services, and the value technicians place on those products and services.

The use of other methods of transportation, including more frequent use of public transportation, could result in a decrease in the use of privately operated vehicles.

A decrease in the use of privately operated vehicles may lead to fewer repairs and less demand for the company’s products.

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

Snap-on’s Financial Services customer segment includes: (i) franchisees’ customers, principally serving vehicle repair technicians, and Snap-on customers who require financing for the purchase or lease of [removed: tools and diagnostics] [added: tools, diagnostics,] and equipment products on an extended-term payment plan; and (ii) franchisees who require financing options for vehicle and business needs.

[removed: Intersegment] [added: All intersegment] amounts are eliminated to arrive at Snap-on’s consolidated financial results.

Additional information [removed: regarding Snap-on and] [added: about Snap-on, including] its products [added: and its sustainability commitment,] is available on the company’s website at www.snapon.com.

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

[removed: Snap-on] [added: Snap‑on] makes such material available on its website as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the Securities and Exchange Commission (“SEC”).

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 5 | | |

| *(Amounts in millions)* | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Tools | | | | | | $ | [removed: 1,984.7] [added: 2,343.0] | | | | | $ | [removed: 2,017.5] [added: 1,984.7] | | | | | $ | [removed: 2,021.2] [added: 2,017.5] | |

| Diagnostics, information and management systems | | | | | | [removed: 783.8] [added: 892.5] | | | | | | [removed: 827.5] [added: 783.8] | | | | | | [removed: 797.9] [added: 827.5] | | |

| Equipment | | | | | | [removed: 824.0] [added: 1,016.5] | | | | | | [removed: 885.0] [added: 824.0] | | | | | | [removed: 921.6] [added: 885.0] | | |

| | | | | | | $ | [removed: 3,592.5] [added: 4,252.0] | | | | | $ | [removed: 3,730.0] [added: 3,592.5] | | | | | $ | [removed: 3,740.7] [added: 3,730.0] | |

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

| | | | [removed: 2020] [added: 2021] 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 Snap-on customers who require financing for the purchase or lease of [removed: tools and diagnostic] [added: tools, diagnostics,] and equipment products on an extended-term payment plan; and (ii) business and vehicle loans and leases to franchisees.

The vehicle service and repair sector has three main customer groups: (i) professional technicians who purchase [removed: tools and diagnostic] [added: tools, diagnostics,] and equipment products for use in their work; (ii) other professional customers related to vehicle repair, including owners and managers of independent repair shops and OEM dealerships who purchase [removed: tools and diagnostic] [added: tools, diagnostics,] and equipment products for use by multiple technicians within a service or repair facility; and (iii) OEMs.

Snap-on also provides owners and managers of repair shops, where technicians work, with tools, [removed: diagnostic] [added: diagnostics,] equipment, and repair and service information, including electronic parts catalogs and shop management products.

The [added: market for] vehicle service and repair [removed: sector] is [removed: characterized] [added: driven] by an increasing rate of technological [removed: change within motor vehicles, vehicle] [added: change, car and truck] population growth and increasing [removed: vehicle] [added: unit] life, and the resulting effects of these changes on the businesses of both our suppliers and customers.

Snap-on markets its products and services globally to a broad cross-section of commercial and industrial customers, including maintenance and repair operations; manufacturing and assembly facilities; various government agencies, facilities and operations, including military operations; schools with vocational and technical programs; aviation and aerospace operations; oil and gas developers; mining operations; [removed: energy and] power generation [removed: operations;] [added: operations, including those associated with alternative energies;] equipment fabricators and operators; railroad manufacturing and maintenance; customers in agriculture; infrastructure construction companies; and other customers that require instrumentation, service tools and/or equipment for their products and business needs.

The industrial sector is characterized by a highly competitive environment with multiple suppliers offering either a full line or [removed: industry specific] [added: industry-specific] portfolios for tools and equipment.

In the United States, a significant portion of sales to the vehicle service and repair sector is conducted through [removed: Snap-on’s] [added: Snap‑on’s] mobile franchise van channel.

Franchisees’ sales are concentrated in hand and power tools, tool storage products, shop equipment, [removed: and diagnostic] [added: diagnostics] and repair information products, which can be transported in a van or trailer and demonstrated during a sales call.

Franchise fee revenue totaled [removed: $16.2] [added: $17.3] million, [removed: $15.4] [added: $16.2] million and [removed: $16.2] [added: $15.4] million in fiscal [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] respectively.

Snap-on also has a company-owned route program that is designed to: (i) provide another pool of potential field organization personnel; (ii) service customers in select new and/or open routes not currently serviced by franchisees; and (iii) allow [removed: Snap-on] [added: Snap‑on] to pilot new sales and promotional ideas prior to introducing them to franchisees.

As of [removed: 2020] [added: 2021] year end, company-owned routes comprised approximately 4% of the total route population.

As of [removed: 2020] [added: 2021] year end, Snap-on’s worldwide route count was approximately 4,775, including approximately 3,425 routes in the United States.

As the vehicle service and repair sector consolidates (with more business conducted by national chains and franchised service centers), Snap-on believes these larger organizations can be serviced most effectively by sales people who can demonstrate and sell the full line of [removed: diagnostic and equipment products] [added: diagnostics, equipment,] and services.

As of [removed: 2020] [added: 2021] year end, Snap-on had industrial sales associates and independent distributors primarily in the United States, Canada and in various European, Latin American, Middle Eastern, Asian and African countries, with the United States representing the majority of Snap-on’s total industrial sales.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 9 | | |

[removed: Diagnostic] [added: Diagnostics] and equipment products are marketed through distributors in South America and Asia, and through both a direct sales force and distributors in Europe under the Snap-on, Sun and Blue-Point brands.

Snap-on believes it is a leading manufacturer and distributor of professional tools, tool storage, [removed: diagnostic and] [added: diagnostics,] equipment products, and repair software and solutions, offering a broad line of these products to both vehicle service and industrial marketplaces.

Major competitors selling diagnostics, shop [removed: equipment] [added: equipment,] and information to vehicle dealerships and independent repair shops include OEMs and their proprietary electronic parts catalogs and diagnostics and information systems, and other companies that offer products serving this sector.

Snap-on’s supply of raw [removed: materials] [added: materials, including steel,] and purchased components are generally [removed: and readily] available from numerous [removed: suppliers.][added: suppliers and the company continuously works to expand and enhance supplier relationships to meet its supply needs.]

As of [removed: 2020] [added: 2021] year end, Snap-on and its subsidiaries held approximately [removed: 800] [added: 850] active and pending patents in the United States and approximately [removed: 2,350] [added: 2,550] active and pending patents outside of the United States.

[removed: Environmental and Government] [added: Government] Regulations

Snap-on is subject to various [added: federal, state and local laws, such as those related to international trade, data privacy, tax and government contracts, as well as] environmental laws, ordinances, regulations, and requirements of government authorities in the United States and other nations.

At Snap-on, [removed: these] environmental liabilities are managed through the Snap-on Environmental, Health and Safety Management System (“EH & SMS”), which is applied worldwide.

The system is based upon continual improvement and is certified to ISO 14001:2015 and [removed: OHSAS 18001:2007,] [added: ISO 45001:2018,] verified through Det Norske Veritas (DNV) Certification, Inc.

Expenditures on environmental and governmental matters through EH & SMS have not [removed: had, and Snap-on does not for the foreseeable future expect them to have,] [added: had] a material effect upon Snap-on’s capital expenditures, earnings or competitive position.

As of January [removed: 2, 2021,] [added: 1, 2022,] Snap-on employed approximately [removed: 12,300] [added: 12,800] people worldwide, of which approximately [removed: 6,800] [added: 7,000] were employed in the United States and approximately [removed: 5,500] [added: 5,800] were outside the United States.

Snap-on has continued to broaden its business through a series of coherent acquisitions, which have expanded and enhanced Snap-on’s capabilities in a variety of critical industries and in its business operations serving primarily owners and managers of independent repair shops and OEM dealerships.

For information regarding recent acquisitions, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements.

| Dealer-FX | | | | | | Service operation solutions and OEM SaaS systems | | |

In recent years, there has been an increase in the development and sales of electric and hybrid vehicles and this trend is expected to continue.

Snap-on has historically benefited from the increasing complexity of car and truck fleets and the changing tools, technologies and data needed to monitor, calibrate, service and repair evolving vehicle platforms.

While new technologies, including those associated with alternative energy drivetrains and greater vehicle autonomy, may alter the nature of certain service and repair for particular vehicle types, we believe many of these new technologies provide opportunities to fulfill requirements for enhanced solutions or increased precision.

Snap-on believes it is well-positioned to innovate new products to address these changing needs and to extend its leadership position in the expanding vehicle service and repair market sector.

Snap-on believes it has secured a sufficient amount of raw materials and purchased components for the near future to meet the expected general sales demand.

While the company does experience raw material and component cost fluctuations from time to time and from operation to operation, including during the ongoing COVID-19 pandemic, it endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.

The company does not currently anticipate experiencing any significant impact in 2022 from raw material and purchased component cost or availability issues.

In addition, to date, the company has not observed any meaningful supply shortages or cost increases directly or indirectly resulting from climate change factors.

However, the increasing global focus on climate change may result in new or more stringent environmental or climate-related regulations or standards.

While such regulations have historically created select opportunities for our business operations, the company continually monitors developments in this area.

Based on the most recently filed EEO-1 data, which is available in the “Investors” section on the company’s website at www.snapon.com, females constitute 25.8% and minorities constitute 22.4% of the workforce in the United States.

Our “Who We Are” beliefs serve as the guidepost against which we evaluate performance in operating reviews throughout the company.

| | | | | | | | | |

- Snap-on seeks to advance our progress on diversity and inclusion within our company and is committed to providing equal opportunities.

The company does not tolerate discrimination.

As part of our efforts, Snap-on has instituted company-wide training on inclusion and unconscious bias, and has expanded internship, mentorship and recruitment activities for underrepresented groups.

Additionally, to further our support of makers and fixers, both within and outside our company, Snap-on is partnering with national nonprofit organizations and community colleges to leverage career and technical education to expand the opportunities for underrepresented groups in our facilities, as well as in the critical industries we serve and beyond.

The company is also investing in and building relationships with several Historically Black Colleges and Universities (HBCUs) to help advance their missions and broaden the pipeline of Black engineers and other technically trained graduates.

Snap-on is deeply dedicated to honoring and celebrating the dignity of work.

The company supports upskilling the workforce through collaborations with Career and Technical Education (CTE) schools across the United States and throughout the world, and with SkillsUSA and World Skills to engage youth in order to enable and promote technical careers.

Additionally, the company is a founding partner of the National Coalition of Certification Centers (NC3), which aims to more effectively match technical school curricula with the precise needs of the current and future workplace by developing, implementing, and sustaining industry-recognized certifications with programs in automotive, aviation, energy, oil and gas, manufacturing and other critical industries.

To date, nearly 200,000 students have earned Snap-on certifications, preparing them for successful and satisfying careers across various technical disciplines.

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| 12 | | | SNAP-ON INCORPORATED | | | | | |

Snap-on prioritizes continuous improvement in all facets of its operations, including environmental matters and health and safety.

The company strives to protect environmental quality and human welfare in its workplaces and in its communities by implementing sound policies designed to prevent, mitigate and reduce the company’s impact on the environment.

The company has voluntarily reported Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions to the CDP (formerly known as the Carbon Disclosure Project) on an annual basis since 2008.

As reported to the CDP in 2021, the company’s total GHG emissions of 102,137 metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 28.4 (metric tons of CO2e, divided by net sales in millions), which is 30% lower than when initially reported in 2008.

Snap-on’s SASB Index, along with additional information regarding the company’s sustainability commitment, is available in the “Investors” section on the company’s website at www.snapon.com.

Snap-on has continued to expand its business throughout the years via acquisitions.

Below are acquisitions completed in the last three fiscal years:

On September 28, 2020, Snap-on acquired substantially all of the assets of AutoCrib, Inc. (“AutoCrib”) for a cash purchase price of $35.4 million.

AutoCrib, based in Tustin, California, designs, manufactures and markets asset and tool control solutions.

The acquisition of AutoCrib complemented and expanded Snap-on’s existing tool control offering to customers in a variety of industrial applications, including aerospace, automotive, military, natural resources and general industry.

On January 31, 2020, Snap-on acquired substantially all of the assets related to the TreadReader product line from Sigmavision Limited (“Sigmavision”) for a cash purchase price of $5.9 million.

Sigmavision designs and manufactures handheld devices and drive-over ramps that provide tire information for use in the automotive industry.

The acquisition of the TreadReader product line enhanced and expanded Snap-on’s existing capabilities in serving vehicle repair facilities and expanded the company’s presence with repair shop owners and managers.

On August 7, 2019, Snap-on acquired Cognitran Limited (“Cognitran”) for a cash purchase price of $30.6 million (or $29.6 million, net of cash acquired).

Cognitran, based in Chelmsford, U.K., specializes in flexible, modular and highly scalable “Software as a Service” (SaaS) products for OEM customers and their dealers, focused on the creation and delivery of service, diagnostics, parts and repair information to the OEM dealers and connected vehicle platforms.

The acquisition of Cognitran enhanced and expanded Snap-on’s capabilities in providing shop efficiency solutions through integrated upstream services to OEM customers in automotive, heavy duty, agricultural and recreational applications.

On April 2, 2019, Snap-on acquired Power Hawk Technologies, Inc. (“Power Hawk”) for a cash purchase price of $7.9 million.

Power Hawk, based in Rockaway, New Jersey, designs, manufactures and distributes rescue tools and related equipment for a variety of military, governmental, fire and rescue, and emergency operations.

The acquisition of the Power Hawk product line complemented and increased Snap-on’s existing product offering and broadened its established capabilities in serving critical industries.

On January 25, 2019, Snap-on acquired substantially all of the assets of TMB GeoMarketing Limited (“TMB”) for a cash purchase price of $1.3 million.

TMB, based in Dorking, U.K., designs planning software used by OEMs to optimize dealer locations and manage the performance of dealer outlets.

The acquisition of TMB extended Snap-on’s product line in its core dealer network solutions business.

On January 31, 2018, Snap-on acquired substantially all of the assets of George A.

Sturdevant, Inc. (d/b/a Fastorq) for a cash purchase price of $3.0 million.

Fastorq, based in New Caney, Texas, designs, assembles and distributes hydraulic torque and hydraulic tensioning products for use in critical industries.

The acquisition of the Fastorq product line complemented and increased Snap-on’s existing torque product offering and broadened its established capabilities in serving in critical industries.

For segment reporting purposes, the results of operations and assets of Sigmavision, Cognitran and TMB have been included in the Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of AutoCrib, Power Hawk and Fastorq have been included in the Commercial & Industrial Group since the respective acquisition dates.

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

Snap-on believes it is a meaningful participant in the vehicle service and repair market sector.

Snap-on believes it has secured an ample supply of both bar and coil steel for the near future to ensure stable supply to meet material demands.

The company does not currently anticipate experiencing any significant impact in 2021 from steel pricing or availability issues, though it is continuing to monitor the impact of tariffs and other trade protection measures put in place by the U.S. and other countries.

Snap-on also provided direct assistance to its franchisees as they accommodated the turbulence caused by the virus to enable continued service to their essential technician customers.

Snap-on’s sustainability metrics are available on the company’s website at www.snapon.com.

For the fiscal year ended January [removed: 2, 2021,] [added: 1, 2022,] or

The aggregate market value of voting and non-voting common equity held by non-affiliates (excludes [removed: 710,101] [added: 797,583] shares held by directors and executive officers) computed by reference to the price [removed: ($133.56)] [added: ($223.91)] at which common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter [removed: (June 26, 2020)] [added: (July 3, 2021)] was [removed: $7.2] [added: $11.9] billion.

The number of shares of Common Stock ($1.00 par value) of the registrant outstanding as of February [removed: 5, 2021,] [added: 4, 2022,] was [removed: 54,203,094] [added: 53,438,639] 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: 12, 2021,] [added: 11, 2022,] prepared for the Annual Meeting of Shareholders scheduled for April [removed: 29, 2021.][added: 28, 2022.]

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| [Item [removed: 16](#ia8d1390c271349b7b4007d6009c2ae0f_103)] [added: 16](#ie113c2dc1a534e74a4b95aaa6885fb5f_103)] | | | [Form 10-K [removed: Summary](#ia8d1390c271349b7b4007d6009c2ae0f_103)] [added: Summary](#ie113c2dc1a534e74a4b95aaa6885fb5f_103)] | | | [removed: [59](#ia8d1390c271349b7b4007d6009c2ae0f_103)] [added: [59](#ie113c2dc1a534e74a4b95aaa6885fb5f_103)] | | |

| Consent of Independent Registered Public Accounting Firm | | | | | | [removed: 125] [added: 120] | | |

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

Statements in this document that are not historical facts, including statements that (i) are in the future [removed: tense;] [added: tense,] (ii) include the words “expects,” “plans,” “targets,” “estimates,” “believes,” “anticipates,” or similar words that reference Snap-on Incorporated (“Snap-on” or “the company”) or its [removed: management;] [added: management,] (iii) are specifically identified as [removed: forward-looking;] [added: forward-looking,] or (iv) describe [removed: Snap-on’s] [added: Snap‑on’s] or management’s future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

[removed: These risks and uncertainties include, without limitation, uncertainties related to estimates, statements, assumptions and projections generally, and the] [added: - The] timing and progress with which Snap-on can attain value through its Snap-on Value Creation Processes, including its ability to [added: (i)] realize efficiencies and savings from its rapid continuous improvement and other cost reduction initiatives, [added: (ii)] improve workforce productivity, [added: (iii)] achieve improvements in the company’s manufacturing footprint and greater efficiencies in its supply chain, and [added: (iv)] enhance machine maintenance, plant productivity and manufacturing line set-up and change-over practices, any or all of which could result in production inefficiencies, higher costs and/or lost [removed: revenues.][added: revenues;]

[removed: These risks include the] [added: - The] evolving impact and unknown duration of the [added: ongoing] coronavirus (“COVID-19”) pandemic, [added: as well as the effects of governmental actions related thereto on Snap-on’s business,] which has the potential to amplify the impact of the other risks facing the [removed: company.][added: company;]

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

Unless otherwise indicated, references in this document to “fiscal [removed: 2020”] [added: 2021”] or [removed: “2020”] [added: “2021”] refer to the fiscal year ended January [removed: 2, 2021;] [added: 1, 2022;] references to “fiscal [removed: 2019”] [added: 2020”] or [removed: “2019”] [added: “2020”] refer to the fiscal year ended [removed: December 28, 2019;] [added: January 2, 2021;] and references to “fiscal [removed: 2018”] [added: 2019”] or [removed: “2018”] [added: “2019”] refer to the fiscal year ended December [removed: 29, 2018.][added: 28, 2019.]

References in this document to [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] year end refer to January [added: 1, 2022, January] 2, 2021, [added: and] December 28, 2019, [removed: and December 29, 2018,] respectively.

Snap-on’s [removed: 2019] [added: 2021] and [removed: 2018] [added: 2019] fiscal years each contained 52 weeks of operating results.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 3 | | |

| [Item 6](#ie113c2dc1a534e74a4b95aaa6885fb5f_37) | | | [\[Reserved\]](#ie113c2dc1a534e74a4b95aaa6885fb5f_37) | | | [25](#ie113c2dc1a534e74a4b95aaa6885fb5f_37) | | |

| [Item 9C](#ie113c2dc1a534e74a4b95aaa6885fb5f_1533) | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ie113c2dc1a534e74a4b95aaa6885fb5f_1533) | | | [55](#ie113c2dc1a534e74a4b95aaa6885fb5f_1533) | | |

| [Signatures](#ie113c2dc1a534e74a4b95aaa6885fb5f_196) | | | | | | [115](#ie113c2dc1a534e74a4b95aaa6885fb5f_196) | | |

| Certifications | | | | | | 121 | | |

Risks and uncertainties include, without limitation:

- Uncertainties related to estimates, assumptions and projections generally;

- Snap-on’s capability to successfully implement future strategies with respect to its existing businesses;

- Snap-on’s ability to refine its brand and franchise strategies, retain and attract franchisees, and further enhance service and value to franchisees in order to help improve the sales and profitability of franchisees;

- The company’s ability to introduce successful new products;

- Risks related to pursuing, completing and integrating acquisitions;

- Snap-on’s ability to withstand disruption arising from natural disasters, including climate-related events or other unusual occurrences, impacting our operations;

- The impact of labor interruptions or challenges;

- Snap-on’s ability to successfully manage planned facility closures or to withstand disruptions from unexpected closures;

- The effects of external economic factors, including adverse developments in world financial markets, disruptions related to tariffs and other trade issues, and global supply chain interruptions;

- Weakness in certain geographic areas, including as a result of armed conflicts, localized recessions, and the impact of matters related to the United Kingdom’s exit from the European Union;

- Significant changes in the current competitive environment;

- Inflation, interest rate changes and other monetary and market fluctuations;

- Changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes;

- Price and supply fluctuations related to raw materials, components and certain purchased finished goods, such as steel, plastics, and electronics;

- Snap-on’s ability to successfully manage changes in prices and the availability of energy sources, including gasoline;

- The amount, rate and growth of Snap-on’s general and administrative expenses, including health care and postretirement costs, and continuing and potentially increasing required contributions to pension and postretirement plans;

| | | | | | | | | |

- The effects of new requirements, legislation, regulations or government-related developments or issues, as well as third party actions, including those addressing climate change;

- Risks associated with data security and technological systems and protections, including the effects of new legislation, regulations or government-related developments;

- Potential reputational damages and costs related to litigation;

- The ability to effectively manage human capital resources; and

- Other world or local events outside Snap-on’s control, including terrorist disruptions, other outbreaks of infectious diseases and civil unrest.

| [Item 6](#ia8d1390c271349b7b4007d6009c2ae0f_37) | | | [Selected Financial Data](#ia8d1390c271349b7b4007d6009c2ae0f_37) | | | [26](#ia8d1390c271349b7b4007d6009c2ae0f_37) | | |

| [Signatures](#ia8d1390c271349b7b4007d6009c2ae0f_190) | | | | | | [120](#ia8d1390c271349b7b4007d6009c2ae0f_190) | | |

| Certifications | | | | | | 126 | | |

These risks also include the impact of governmental actions related thereto on Snap-on’s business, as well as uncertainties related to Snap-on’s capability to implement future strategies with respect to its existing businesses, its ability to refine its brand and franchise strategies, retain and attract franchisees, further enhance service and value to franchisees and thereby help improve their sales and profitability, introduce successful new products, successfully pursue, complete and integrate acquisitions, as well as its ability to withstand disruption arising from natural disasters, planned facility closures or other labor interruptions, the effects of external negative factors, including adverse developments in world financial markets, developments related to tariffs and other trade issues or disputes, weakness in certain areas of the global economy (including as a result of the United Kingdom’s exit from the European Union and the COVID-19 pandemic), and significant changes in the current competitive environment, inflation, interest rates and other monetary and market fluctuations, changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes, and the impact of energy and raw material supply and pricing, including steel (as a result of U.S. tariffs imposed on certain steel imports or otherwise) 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 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, potential reputational damages and costs related to litigation as well as an inability to assure that costs will be reduced or eliminated on appeal, the impact of changes in financial accounting standards, the ability to effectively manage human capital resources, and other world or local events outside Snap-on’s control, including terrorist disruptions, other outbreaks of infectious diseases and civil unrest.

Snap-on’s facilities in the United States occupy approximately 3.9 million square feet, of which [removed: 75%] [added: 74%] is owned, including its corporate and general office facility located in Kenosha, Wisconsin.

Snap-on’s facilities outside the United States occupy approximately [removed: 4.5] [added: 4.6] million square feet, of which approximately [removed: 73%] [added: 74%] is owned.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 21 | | |

The following table provides information about our corporate headquarters and financial services operations, and each of Snap-on’s principal active manufacturing locations, distribution centers and software development locations (exceeding 50,000 square feet) as of [removed: 2020] [added: 2021] year end:

| Bauge-en-Anjou, France | | | | | | Manufacturing | | | | | | Owned | | | | | | C&I | | |

Snap-on had [removed: 54,102,099] [added: 53,429,650] shares of common stock outstanding as of [removed: 2020] [added: 2021] year end.

Snap-on’s stock is listed on the New York Stock Exchange under the ticker symbol “SNA.” At February [removed: 5, 2021,] [added: 4, 2022,] there were [removed: 4,400] [added: 4,226] registered holders of Snap-on common stock.

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: 2020,] [added: 2021,] all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.

| Total/Average | | | | | | [removed: 460,000] [added: 355,000] | | | | | | [removed: $171.00] [added: $212.80] | | | | | | [removed: 460,000] [added: 355,000] | | | | | | N/A | | |

* Subject to further adjustment pursuant to the 1996 Authorization described below, as of January [removed: 2, 2021,] [added: 1, 2022,] the approximate value of shares that may yet be purchased pursuant to the outstanding Board authorizations discussed below is [removed: $275.7] [added: $454.9] million.

When calculating the approximate value of shares that the company may yet purchase under the 1996 Authorization, the company assumed a price of [removed: $169.39, $172.92] [added: $203.23, $211.30] and [removed: $171.14] [added: $215.38] per share of common stock as of the end of the fiscal [removed: 2020] [added: 2021] months ended October [removed: 24, 2020,] [added: 30, 2021,] November [removed: 21, 2020,] [added: 27, 2021,] and January [removed: 2, 2021,] [added: 1, 2022,] respectively.

The [added: 2021 Authorization replaced the] 2019 Authorization [added: (under which approximately $179 million remained available at the time of replacement) and,] will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 23 | | |

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: 2020] [added: 2021] 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.

| Total/Average | | | | | | [removed: 19,900] [added: 8,900] | | | | | | [removed: $171.99] [added: $206.06] | | |

The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, [removed: 2015,] [added: 2016,] of a $100 investment, assuming that dividends were reinvested quarterly.

[removed: ][added: ]

| December 31, [removed: 2015] [added: 2016] | | | | | | $100.00 | | | | | | $100.00 | | | | | | $100.00 | | |

| 10/03/21 to 10/30/21 | | | | | | 40,000 | | | | | | $206.07 | | | | | | 40,000 | | | | | | $188.8 million | | |

| 10/31/21 to 11/27/21 | | | | | | 155,000 | | | | | | $215.30 | | | | | | 155,000 | | | | | | $476.9 million | | |

| 11/28/21 to 01/01/22 | | | | | | 160,000 | | | | | | $212.06 | | | | | | 160,000 | | | | | | $454.9 million | | |

On November 4, 2021, the Board authorized the repurchase of up to $500 million of the company’s common stock (the “2021 Authorization”).

| 10/03/21 to 10/30/21 | | | | | | — | | | | | | — | | |

| 10/31/21 to 11/27/21 | | | | | | 5,000 | | | | | | $203.00 | | |

| 11/28/21 to 01/01/22 | | | | | | 3,900 | | | | | | $209.99 | | |

| December 31, 2017 | | | | | | $103.65 | | | | | | $121.03 | | | | | | $121.83 | | |

| December 31, 2018 | | | | | | $88.26 | | | | | | $104.95 | | | | | | $116.49 | | |

| December 31, 2019 | | | | | | $105.50 | | | | | | $135.77 | | | | | | $153.17 | | |

| December 31, 2020 | | | | | | $109.73 | | | | | | $150.79 | | | | | | $181.35 | | |

| December 31, 2021 | | | | | | $141.38 | | | | | | $182.63 | | | | | | $233.41 | | |

| 09/27/20 to 10/24/20 | | | | | | — | | | | | | — | | | | | | — | | | | | | $307.2 million | | |

| 10/25/19 to 11/21/20 | | | | | | 250,000 | | | | | | $165.61 | | | | | | 250,000 | | | | | | $283.9 million | | |

| 11/22/20 to 1/2/21 | | | | | | 210,000 | | | | | | $177.42 | | | | | | 210,000 | | | | | | $275.7 million | | |

The 2019 Authorization replaced the Board’s 2017 $500 million authorization, under which $206 million of the authorization remained at the time of its replacement.

| | | | | | | | | |

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

| 09/27/20 to 10/24/20 | | | | | | — | | | | | | — | | |

| 10/25/19 to 11/21/20 | | | | | | 14,000 | | | | | | $172.37 | | |

| 11/22/20 to 1/2/21 | | | | | | 5,900 | | | | | | $171.10 | | |

| December 31, 2016 | | | | | | $101.54 | | | | | | $118.86 | | | | | | $111.96 | | |

| December 31, 2017 | | | | | | $105.24 | | | | | | $143.86 | | | | | | $136.40 | | |

| December 31, 2018 | | | | | | $89.61 | | | | | | $124.74 | | | | | | $130.42 | | |

| December 31, 2019 | | | | | | $107.12 | | | | | | $161.38 | | | | | | $171.49 | | |

| December 31, 2020 | | | | | | $111.42 | | | | | | $179.23 | | | | | | $203.04 | | |

| | | | 2020 ANNUAL REPORT | | | 25 | | |

| | | | 2021 ANNUAL REPORT | | | 25 | | |

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.”

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| *Five-year Data* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| *(Amounts in millions, except per share data)* | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| Results of Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net sales | | | | | | | | | $ | 3,592.5 | | | | | $ | 3,730.0 | | | | | $ | 3,740.7 | | | | | $ | 3,686.9 | | | | | $ | 3,430.4 | |

| Gross profit | | | | | | | | | 1,748.5 | | | | | | 1,844.0 | | | | | | 1,870.0 | | | | | | 1,825.9 | | | | | | 1,710.4 | | |

| Operating expenses | | | | | | | | | 1,116.6 | | | | | | 1,127.6 | | | | | | 1,144.0 | | | | | | 1,161.3 | | | | | | 1,048.0 | | |

| Operating earnings before financial services | | | | | | | | | 631.9 | | | | | | 716.4 | | | | | | 726.0 | | | | | | 664.6 | | | | | | 662.4 | | |

| Financial services revenue | | | | | | | | | 349.7 | | | | | | 337.7 | | | | | | 329.7 | | | | | | 313.4 | | | | | | 281.4 | | |

| Financial services expenses | | | | | | | | | 101.1 | | | | | | 91.8 | | | | | | 99.6 | | | | | | 95.9 | | | | | | 82.7 | | |

| Operating earnings from financial services | | | | | | | | | 248.6 | | | | | | 245.9 | | | | | | 230.1 | | | | | | 217.5 | | | | | | 198.7 | | |

| Operating earnings | | | | | | | | | 880.5 | | | | | | 962.3 | | | | | | 956.1 | | | | | | 882.1 | | | | | | 861.1 | | |

| Interest expense | | | | | | | | | 54.0 | | | | | | 49.0 | | | | | | 50.4 | | | | | | 52.4 | | | | | | 52.2 | | |

| Earnings before income taxes and equity earnings | | | | | | | | | 835.2 | | | | | | 922.1 | | | | | | 909.9 | | | | | | 821.9 | | | | | | 801.4 | | |

| Income tax expense | | | | | | | | | 189.1 | | | | | | 211.8 | | | | | | 214.4 | | | | | | 250.9 | | | | | | 244.3 | | |

| Earnings before equity earnings | | | | | | | | | 646.1 | | | | | | 710.3 | | | | | | 695.5 | | | | | | 571.0 | | | | | | 557.1 | | |

| Equity earnings, net of tax | | | | | | | | | 0.3 | | | | | | 0.9 | | | | | | 0.7 | | | | | | 1.2 | | | | | | 2.5 | | |

| Net earnings | | | | | | | | | 646.4 | | | | | | 711.2 | | | | | | 696.2 | | | | | | 572.2 | | | | | | 559.6 | | |

| Net earnings attributable to noncontrolling interests | | | | | | | | | (19.4) | | | | | | (17.7) | | | | | | (16.3) | | | | | | (14.5) | | | | | | (13.2) | | |

| Net earnings attributable to Snap-on | | | | | | | | | 627.0 | | | | | | 693.5 | | | | | | 679.9 | | | | | | 557.7 | | | | | | 546.4 | | |

| Financial Position | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | | | | | | | | $ | 923.4 | | | | | $ | 184.5 | | | | | $ | 140.9 | | | | | $ | 92.0 | | | | | $ | 77.6 | |

| Trade and other accounts receivable – net | | | | | | | | | 640.7 | | | | | | 694.6 | | | | | | 692.6 | | | | | | 675.6 | | | | | | 598.8 | | |

| Finance receivables – net (current) | | | | | | | | | 530.2 | | | | | | 530.1 | | | | | | 518.5 | | | | | | 505.4 | | | | | | 472.5 | | |

| Contract receivables – net (current) | | | | | | | | | 112.5 | | | | | | 100.7 | | | | | | 98.3 | | | | | | 96.8 | | | | | | 88.1 | | |

| Inventories – net | | | | | | | | | 746.5 | | | | | | 760.4 | | | | | | 673.8 | | | | | | 638.8 | | | | | | 530.5 | | |

| Property and equipment – net | | | | | | | | | 526.2 | | | | | | 521.5 | | | | | | 495.1 | | | | | | 484.4 | | | | | | 425.2 | | |

| Long-term finance receivables – net | | | | | | | | | 1,136.3 | | | | | | 1,103.5 | | | | | | 1,074.4 | | | | | | 1,039.2 | | | | | | 934.5 | | |

| Long-term contract receivables – net | | | | | | | | | 374.7 | | | | | | 360.1 | | | | | | 344.9 | | | | | | 322.6 | | | | | | 286.7 | | |

| Total assets | | | | | | | | | 6,557.3 | | | | | | 5,693.5 | | | | | | 5,373.1 | | | | | | 5,249.1 | | | | | | 4,723.2 | | |

| Notes payable and current maturities of long-term debt | | | | | | | | | 268.5 | | | | | | 202.9 | | | | | | 186.3 | | | | | | 433.2 | | | | | | 301.4 | | |

| Accounts payable | | | | | | | | | 222.9 | | | | | | 198.5 | | | | | | 201.1 | | | | | | 178.2 | | | | | | 170.9 | | |

| Long-term debt | | | | | | | | | 1,182.1 | | | | | | 946.9 | | | | | | 946.0 | | | | | | 753.6 | | | | | | 708.8 | | |

| Total debt | | | | | | | | | 1,450.6 | | | | | | 1,149.8 | | | | | | 1,132.3 | | | | | | 1,186.8 | | | | | | 1,010.2 | | |

| Total shareholders’ equity attributable to Snap-on | | | | | | | | | 3,824.9 | | | | | | 3,409.1 | | | | | | 3,098.8 | | | | | | 2,953.9 | | | | | | 2,617.2 | | |

| Common Share Summary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Weighted-average shares outstanding – diluted | | | | | | | | | 54.8 | | | | | | 55.9 | | | | | | 57.3 | | | | | | 58.6 | | | | | | 59.4 | | |

| Net earnings per share attributable to Snap-on: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| 52 | | | SNAP-ON INCORPORATED | | | | | |

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 January [removed: 2, 2021.][added: 1, 2022.]

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 January [removed: 2, 2021,] [added: 1, 2022,] to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

There has not been any change in the company’s internal control over financial reporting during the quarter ended January [removed: 2, 2021,] [added: 1, 2022,] that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)).

Based on this assessment, the company’s management believes that, as of January [removed: 2, 2021,] [added: 1, 2022,] our internal control over financial reporting was effective at a reasonable assurance level.

The company’s internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its attestation report, which is included herein.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 53 | | |

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

We have audited the internal control over financial reporting of Snap-on Incorporated and subsidiaries (the “Company”) as of January [removed: 2, 2021,] [added: 1, 2022,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements as of and for the year ended January [removed: 2, 2021,] [added: 1, 2022,] of the Company and our report dated February [removed: 11, 2021,] [added: 10, 2022,] expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of Accounting Standard Update No. 2016-13, *Financial Instruments – Credit Losses* (Topic 326).

The company’s February 26, 2021, acquisition of Dealer-FX Group, Inc. (which represented 3% of total assets at January 1, 2022, and 0.9% of 2021 net sales) was excluded from the scope of management’s assessment of internal control over financial reporting as of January 1, 2022.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Dealer-FX Group, Inc. (“Dealer-FX”), which was acquired on February 26, 2021, and whose financial statements represents 3% of total assets and 0.9% of net sales of the consolidated financial statement amounts as of and for the year ended January 1, 2022.

Accordingly, our audit did not include the internal control over financial reporting at Dealer-FX.

| February 10, 2022 | | | | | | | | |

| February 11, 2021 | | | | | | | | |

PART III

Not applicable

PART III

Incorporated by reference to the sections entitled “Item 1: Election of Directors,” “Corporate Governance Practices and Board Information” and “Other Information” in Snap-on’s [removed: 2021] [added: 2022] Annual Meeting Proxy Statement, which is expected to be mailed to shareholders on or about March [removed: 12, 2021] [added: 11, 2022] (the [removed: “2021] [added: “2022] Proxy Statement”).

The Section 16(a) filing compliance disclosure pursuant to Item 405 of Regulation S-K is contained in Snap-on’s [removed: 2021] [added: 2022] Proxy Statement in the section entitled “Other Information – Delinquent Section 16(a) Reports,” 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 January [removed: 2, 2021,] [added: 1, 2022,] is presented below:

Pinchuk* [removed: (74)] [added: (75)] – Chairman of the Board of Directors since 2009, President and Chief Executive Officer since December 2007, and President and Chief Operating Officer during 2007.

Pagliari* [removed: (66)] [added: (67)] – Senior Vice President – Finance and Chief Financial Officer since 2010.

Arregui* [removed: (55)] [added: (56)] – Senior Vice President and President – Commercial Group since [removed: 2019, President, SNA Europe from 2015 to 2019, and Vice President, SNA Europe Operations from 2008 to 2015.][added: 2019.]

Banerjee* [removed: (70)] [added: (71)] – Senior Vice [removed: President,] [added: President –] Human Resources and Chief Development Officer since [removed: 2015, and President, Commercial Group from 2011 to] 2015.

*Iain Boyd* [removed: (58)] [added: (59)] – Vice President – Operations Development since 2015.

Chambers* [removed: (56)] [added: (57)] – Senior Vice President and President – Snap-on Tools Group since [removed: 2019, President, Commercial Group from 2015 to 2019 and President, Equipment from 2014 to 2015.][added: 2019.]

Lemerand* [removed: (58)] [added: (59)] – Vice President and Chief Information Officer since 2017.

Vice President of Information Technology Services from 2015 to [removed: 2017, and Senior Director, Information Technology Sales and Marketing Applications from 2005 to 2015.][added: 2017.]

Miller* [removed: (50)] [added: (51)] – Vice President, General Counsel and Secretary since 2018.

[removed: Strege* (63)] [added: Ozolins* (50)] – Vice President and Controller since [removed: 2017.][added: 2021.]

Vice President, [removed: Internal Audit, Controls] and [removed: Compliance] [added: formerly Director, of Internal Audit] from [removed: 2007] [added: 2016] to [removed: 2017.][added: 2021.]

Ward* [removed: (68)] [added: (69)] *–* Senior Vice President and President – Repair Systems & Information Group since 2010.

[removed: There] [added: Additionally, there] is no family relationship among the executive officers and there has been no involvement in legal proceedings during the past ten years that would be material to the evaluation of the ability or integrity of any of the executive officers.

Snap-on has posted a copy of the code of ethics in the [removed: Investors/Corporate Governance] [added: “Investors”] section on the company’s website at www.snapon.com.

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 55 | | |

Mr. Pinchuk served as an officer of the U.S. Army in Vietnam.

President of SNA Europe from 2015 to 2019.

President of Commercial Group from 2015 to 2019.

*Marty V.

Snap-on’s executive officers include a woman, a veteran of the U.S. Army, and two executives who are ethnically diverse.

Vice President, Human Resources from 2007 to 2015.

*Richard K.

The information required by Item 11 is contained in Snap-on’s [removed: 2021] [added: 2022] Proxy Statement in the sections entitled “Executive Compensation,” “Board Compensation,” “Compensation Committee Report,” and “Other Information” and is incorporated herein by reference.

The [added: additional] information required by Item 12 is contained in Snap-on’s [removed: 2021] [added: 2022] Proxy Statement in the sections entitled “Executive Compensation,” “Security Ownership of Certain Beneficial Owners and Management,” [removed: “Other Information”] and [removed: “Item 4: Approval of the Amendment to, and Restatement of, the Snap-on Incorporated 2011 Incentive Stock and Awards Plan,”] [added: “Other Information,”] and is incorporated herein by reference.

The following table sets forth information about Snap-on’s equity compensation plans at 2021 year end:

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| Plan Category | | | | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | | | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | | | | | Number securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | |

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

| Equity compensation plans approved by security holders | | | | | | 2,874,019 (1) | | | | | | $152.55 (2) | | | | | | 4,430,957 (3) | | |

| Equity compensation plans not approved by security holders | | | | | | 54,920 (4) | | | | | | Not Applicable | | | | | | \- (5) | | |

| Total | | | | | | 2,928,939 | | | | | | $152.55 (2) | | | | | | 4,430,957 (5) | | |

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(1)Includes (i) options and stock appreciation rights (“SARs”) to acquire 2,828,710 shares granted under the 2011 Incentive Stock and Awards Plan (the “2011 Plan”); (ii) 32,265 shares represented by time-based restricted stock units granted under the 2011 Plan; and (iii) 13,044 shares represented by deferred share units under the Directors’ Fee Plan.

Excludes 229,106 shares issuable in connection with the vesting of performance share awards under the 2011 Plan.

Also excludes shares of common stock that may be issuable under the employee and franchisee stock purchase plans.

(2)Reflects only the weighted-average exercise price of outstanding stock options and SARs granted under the 2011 Plan and does not include shares represented by deferred share units under the Directors’ Fee Plan and shares issuable in connection with the vesting of restricted stock units or performance units under the 2011 Plan for which there are no exercise prices.

Also excludes shares of common stock that may be issuable under the employee and franchisee stock purchase plans.

(3)Includes (i) 3,643,845 shares reserved for issuance under the 2011 Plan; (ii) 189,837 shares reserved for issuance under the Directors’ Fee Plan; and (iii) 597,275 shares reserved for issuance under the employee stock purchase plan.

(4)Consists of deferred share units under Snap-on’s Deferred Compensation Plan, which allows elected and appointed officers of Snap-on to defer all or a percentage of their respective annual salary and/or incentive compensation.

The deferred share units are payable in shares of Snap-on common stock on a one-for-one basis and are calculated at fair market value.

Shares of common stock delivered under the Deferred Compensation Plan are previously issued shares reacquired and held by Snap-on.

(5)The Deferred Compensation Plan provides that Snap-on will make available, as and when required, a sufficient number of shares of common stock to meet the needs of the plan.

It further provides that such shares shall be previously issued shares reacquired and held by Snap-on.

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: 2021] [added: 2022] Proxy Statement.

Incorporated by reference to the section entitled “Deloitte & Touche LLP Fee Disclosure” in Snap-on’s [removed: 2021] [added: 2022] Proxy Statement.

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| 56 | | | SNAP-ON INCORPORATED | | | | | |

Unless otherwise indicated, references to “fiscal [removed: 2020”] [added: 2021”] or [removed: “2020”] [added: “2021”] refer to the fiscal year ended January [removed: 2, 2021;] [added: 1, 2022;] references to “fiscal [removed: 2019”] [added: 2020”] or [removed: “2019”] [added: “2020”] refer to the fiscal year ended [removed: December 28, 2019;] [added: January 2, 2021;] and references to “fiscal [removed: 2018”] [added: 2019”] or [removed: “2018”] [added: “2019”] refer to the fiscal year ended December [removed: 29, 2018.][added: 28, 2019.]

References to [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] year end refer to January [added: 1, 2022, January] 2, 2021, [added: and] December 28, 2019, [removed: and December 29, 2018,] respectively.

- Report of Independent Registered Public Accounting [removed: Firm.][added: Firm (PCAOB ID No. 34)]

- Consolidated Statements of Earnings for the [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] fiscal years.

- Consolidated Statements of Comprehensive Income for the [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] fiscal years.

- Consolidated Balance Sheets as of [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] year end.

- Consolidated Statements of Equity for the [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] fiscal years.

- Consolidated Statements of Cash Flows for the [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] fiscal years.

| | | | | | | (b) | | | | | | [Officer’s Certificate, dated as of [removed: August 14, 2009,] [added: February 21, 2017,] providing for the [removed: $250,000,000 6.125%] [added: $300,000,000 3.25%] Notes due [removed: 2021] [added: 2027] (the [removed: “2021] [added: “2027] Notes”) (incorporated by reference to Exhibit [removed: 4.1] [added: 4.2] to Snap-on’s Current Report on Form 8-K dated [removed: August 11, 2009] [added: February 15, 2017] (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000089706909001316/cmw4454b.htm)] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312517049758/d351106dex42.htm)] | | |

| | | | | | | (c) | | | | | | [Officer’s Certificate, dated as of February [removed: 21, 2017,] [added: 26, 2018,] providing for the [removed: $300,000,000 3.25%] [added: $400,000,000 4.10%] Notes due [removed: 2027] [added: 2048] (the [removed: “2027] [added: “2048] Notes”) (incorporated by reference to Exhibit 4.2 to Snap-on’s Current Report on Form 8-K dated February [removed: 15, 2017] [added: 20, 2018] (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312517049758/d351106dex42.htm)] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312518057792/d514019dex42.htm)] | | |

| | | | | | | (d) | | | | | | [Officer’s Certificate, dated as of [removed: February 26, 2018,] [added: April 30, 2020,] providing for the [removed: $400,000,000 4.10%] [added: $500,000,000 3.10%] Notes due [removed: 2048] [added: 2050] (the [removed: “2048] [added: “2050] Notes”) (incorporated by reference to Exhibit 4.2 to [removed: Snap-on’s] [added: Snap‑on’s] Current Report on Form [removed: 8-K] [added: 8‑K] dated [removed: February 20, 2018] [added: April 27, 2020] (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312518057792/d514019dex42.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000119312520128786/d868937dex42.htm)] | | |

| | | | | | | [removed: (e)] [added: (e)(4)] | | | | | | [removed: [Officer’s Certificate, dated as] [added: [Description] of [removed: April 30, 2020, providing for the $500,000,000 3.10% Notes due] 2050 [removed: (the “2050 Notes”) (incorporated] [added: Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit4f5.htm) [](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit4f5.htm)[(incorporated] by reference to Exhibit [removed: 4.2] [added: 4(f)(5)] to Snap‑on’s [removed: Current] [added: Annual] Report on Form [removed: 8‑K dated April 27, 2020] [added: 10‑K for the fiscal year ended January 2, 2021] (Commission File No. [removed: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000119312520128786/d868937dex42.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit4f5.htm)] | | |

| | | | | | | [removed: (f)] [added: (e)] | | | | | | Description of Securities | | |

| | | | | | | [removed: (f)(1)] [added: (e)(1)] | | | | | | [Description of Common Stock](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm) [removed: [](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)[(incorporated] [added: [(incorporated] by reference to Exhibit 4(e)(1) to [removed: Snap‑on](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)[’](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)[s] [added: Snap‑on’s] Annual Report on [removed: Form](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm) [10](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)[‑K](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm) [for] [added: Form 10‑K for] the fiscal year ended December 28, [removed: 2019](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm) [(Commission] [added: 2019 (Commission] File No. [removed: 1-7724)](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)[)](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e1.htm)] | | |

| | | | | | | [removed: (f)(2)] [added: (e)(2)] | | | | | | [Description of [removed: 2021 Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm) [](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm)[(incorporated] [added: 2027 Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm) [(incorporated] by reference to Exhibit [removed: 4(e)(](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm)[2](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm)[)] [added: 4(e)(3)] to [removed: Snap‑on](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm)[’](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm)[s] [added: Snap‑on’s] Annual Report on Form 10‑K for the fiscal year ended December 28, 2019 (Commission File No. [removed: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e2.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)] | | |

| | | | | | | [removed: (f)(3)] [added: (e)(3)] | | | | | | [Description of [removed: 2027 Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm) [](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)[(incorporated] [added: 2048 Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm) [(incorporated] by reference to Exhibit [removed: 4(e)(](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)[3](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)[)] [added: 4(e)(4)] to [removed: Snap‑on](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)[’](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)[s] [added: Snap‑on’s] Annual Report on Form 10‑K for the fiscal year ended December 28, 2019 (Commission File No. [removed: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e3.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)] | | |

| | | | | | | [removed: (f)(4)] [added: (n)] | | | | | | [removed: [Description] [added: [Form] of [removed: 2048 Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm) [](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)[(incorporated] [added: Restricted Stock Unit Award Agreement for Executive Officers and Key Employees under the 2011 Incentive Stock and Awards Plan (incorporated] by reference to Exhibit [removed: 4(e)(](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)[4](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)[)] [added: 10(o)] to [removed: Snap‑on](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)[’](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)[s] [added: Snap-on's] Annual Report on Form [removed: 10‑K] [added: 10-K] for the fiscal year ended [removed: December 28, 2019 (Commission] [added: January 2, 2021 Commission] File No. [removed: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144020000004/snafy19exhibit4e4.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit10o.htm)] | | | [added: | | |]

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 57 | | |

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 January [removed: 2, 2021.][added: 1, 2022.]

| | | | | | | [removed: (b)] [added: (m)] | | | | | | [removed: [Snap-on Incorporated] [added: [Form of Restricted Stock Award Agreement for Directors under the] 2011 Incentive Stock and Awards Plan [removed: (As Amended and Restated)] (incorporated by reference to Exhibit [removed: 10(b)] [added: 10.1] to Snap-on’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K] [added: 10-Q] for the [removed: fiscal year] [added: quarterly period] ended [removed: December] [added: March] 30, [removed: 2017] [added: 2013] (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312518047130/d491312dex10b.htm)] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312513160206/d507261dex101.htm)] | | | | | |

| | | | | | | [removed: (h)] [added: (i)] | | | | | | [Form of Non-Qualified Stock Option Agreement under the [removed: 2001] [added: 2011] Incentive Stock and Awards Plan (and accompanying Non-Qualified Stock Option Grant Offer Letter) (incorporated by reference to Exhibit 10.1 to [removed: Snap-on’s] [added: Snap‑on’s] Quarterly Report on Form 10-Q for the quarterly period ended [removed: March 31, 2007] [added: October 1, 2011] (Commission File No. [removed: 1-7724)) (superseded except as to outstanding awards)](http://www.sec.gov/Archives/edgar/data/91440/000110465907030712/a07-11842_1ex10d1.htm)] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312511275890/d234288dex101.htm)] | | | | | |

| | | | | | | [removed: (i)] [added: (h)] | | | | | | [Form of Restricted Stock Unit Agreement for Directors under the 2001 Incentive Stock and Awards Plan (and accompanying Restricted Stock Unit Offer Letter) (incorporated by reference to Exhibit 10.2 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended October 3, 2009 (Commission File No. 1-7724)) (superseded except as to outstanding awards)](http://www.sec.gov/Archives/edgar/data/91440/000119312509217103/dex102.htm) | | | | | |

| | | | | | | (j) | | | | | | [Form of [removed: Non-Qualified Stock Option] [added: Performance Share Unit Award] Agreement under the 2011 Incentive Stock and Awards Plan [removed: (and accompanying Non-Qualified Stock Option Grant Offer Letter)] (incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended [removed: October 1, 2011] [added: March 31, 2012] (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312511275890/d234288dex101.htm)] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312512170165/d319660dex101.htm)] | | | | | |

| | | | | | | [removed: (k)] [added: (l)] | | | | | | [Form of [removed: Performance Share] [added: Restricted] Unit Award Agreement [added: for Directors] under the 2011 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312512170165/d319660dex101.htm)] [added: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312512170165/d319660dex103.htm)] | | | | | |

| | | | | | | [removed: (l)] [added: (k)] | | | | | | [Form of [added: Performance-Based] Restricted Unit Award Agreement for Executive Officers under the 2011 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (Commission File No. 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312512170165/d319660dex102.htm) | | | | | |

| | | | | | | [removed: (m)] [added: (b)] | | | | | | [removed: [Form of Restricted Unit Award Agreement for Directors under the] [added: [Snap-on Incorporated] 2011 Incentive Stock and Awards Plan [added: (As Amended and Restated)] (incorporated by reference to Exhibit 10.1 to Snap-on’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q for the quarterly period ended March 31, 2012] [added: 8-K dated April 29, 2021] (Commission File No. [removed: 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312512170165/d319660dex103.htm)] [added: 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144021000014/sna_2021xproxyvotexex101.htm)] | | | | | |

| | | | | | | [removed: (p)] [added: (o)] | | | | | | [Third Amended and Restated Five Year Credit Agreement, dated as of September 16, 2019, among Snap-on Incorporated and the lenders and agents listed on the signature pages thereof, and JPMorgan Chase Bank, N.A., Citibank N.A. and U.S. Bank National Association as joint lead arrangers and joint bookrunners (incorporated by reference to Exhibit 10.1 to Snap-on’s Current Report on Form 8-K dated September 16, 2019 (Commission File No. 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312519247311/d805398dex101.htm) | | | | | |

| (21) | | | | | | [Subsidiaries of the [removed: Corporation](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/snafy20ex21.htm)] [added: Corporation](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex21.htm)] | | | | | | | | | | | |

| (23) | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/snafy20ex23.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex23.htm)] | | | | | | | | | | | |

| (31.1) | | | | | | [Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/snafy20ex311.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex311.htm)] | | | | | | | | | | | |

| (31.2) | | | | | | [Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/snafy20ex312.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex312.htm)] | | | | | | | | | | | |

| (32.1) | | | | | | [Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/snafy20ex321.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex321.htm)] | | | | | | | | | | | |

| (32.2) | | | | | | [Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/snafy20ex322.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex322.htm)] | | | | | | | | | | | |

| | | | | | | | | |

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

| 56 | | | SNAP-ON INCORPORATED | | | | | |

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

| | | | | | | (f)(5) | | | | | | [Description of 2050 Notes](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit4f5.htm) | | |

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

| | | | | | | (n) | | | | | | [Form of Restricted Stock Award Agreement for Directors under the 2011 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.1 to Snap-on’s Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2013 (Commission File No. 1-7724))](http://www.sec.gov/Archives/edgar/data/91440/000119312513160206/d507261dex101.htm) | | | | | |

| | | | | | | (o) | | | | | | [Form of Restricted Stock Unit Award Agreement for Executive Officers and Key Employees under the 2011 Incentive Stock and Awards Plan](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit10o.htm) *[(form of award agreement consistent with the terms of the 2011 Incentive Stock and Awards Plan)](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit10o.htm)*[](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit10o.htm) | | | | | |

| | | | | | | (q) | | | | | | [Underwriting Agreement, dated as of April 27, 2020, among Snap-on Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and U.S. Bancorp Investments, Inc., as representatives of the several underwriters named therein (incorporated by reference to Exhibit 1.1 to Snap-on’s Current Report on Form 8-K dated April 27, 2020 (Commission File No. 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000119312520128786/d868937dex11.htm) | | | | | |

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 59 | | |

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

We have audited the accompanying consolidated balance sheets of Snap-on Incorporated and subsidiaries (the “Company”) as of January [added: 1, 2022, and January] 2, 2021, and [removed: December 28, 2019, and] the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the three years in the period ended January [removed: 2, 2021,] [added: 1, 2022,] and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January [added: 1, 2022, and January] 2, 2021, and [removed: December 28, 2019, and] the results of its operations and its cash flows for each of the three years in the period ended January [removed: 2, 2021,] [added: 1, 2022,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 11, 2021,] [added: 10, 2022,] expressed an unqualified opinion on the Company’s internal control over financial reporting.

As discussed in Note [removed: 1] [added: 4] to the consolidated financial statements, the Company changed its method of accounting for credit losses in the year ended January 2, 2021, due to the adoption of Accounting Standard Update No. 2016-13, *Financial Instruments – Credit Losses* (Topic 326) under the modified retrospective adoption method.

The receivables are generally secured by the underlying [removed: tools] [added: tools, diagnostics] and/or [removed: diagnostic or] equipment products financed.

At January [removed: 2, 2021,] [added: 1, 2022,] these loans totaled [removed: $1,742.8] [added: $1,723.6] million with an allowance of [removed: $76.3] [added: $67.3] million recorded against the receivables.

- We tested the mathematical accuracy of the allowance for credit losses calculation [removed: with the assistance of our credit specialists] and developed an expectation of the allowance for credit losses and compared it to the recorded balance.

| [removed: February 11,] [added: | | | | | |] 2021 | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | [removed: 2020] [added: 2021] ANNUAL REPORT | | | 61 | | |

| *(Amounts in millions, except per share data)* | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Net sales | | | | | | $ | [removed: 3,592.5] [added: 4,252.0] | | | | | $ | [removed: 3,730.0] [added: 3,592.5] | | | | | $ | [removed: 3,740.7] [added: 3,730.0] | |

| Cost of goods sold | | | | | | [removed: (1,844.0)] [added: (2,141.2)] | | | | | | [removed: (1,886.0)] [added: (1,844.0)] | | | | | | [removed: (1,870.7)] [added: (1,886.0)] | | |

| Gross profit | | | | | | [removed: 1,748.5] [added: 2,110.8] | | | | | | [removed: 1,844.0] [added: 1,748.5] | | | | | | [removed: 1,870.0] [added: 1,844.0] | | |

| Operating expenses | | | | | | [removed: (1,116.6)] [added: (1,259.3)] | | | | | | [removed: (1,127.6)] [added: (1,116.6)] | | | | | | [removed: (1,144.0)] [added: (1,127.6)] | | |

| Operating earnings before financial services | | | | | | [removed: 631.9] [added: 851.5] | | | | | | [removed: 716.4] [added: 631.9] | | | | | | [removed: 726.0] [added: 716.4] | | |

| Financial services revenue | | | | | | 349.7 | | | | | | [removed: 337.7] [added: 349.7] | | | | | | [removed: 329.7] [added: 337.7] | | |

| Financial services expenses | | | | | | [removed: (101.1)] [added: (77.7)] | | | | | | [removed: (91.8)] [added: (101.1)] | | | | | | [removed: (99.6)] [added: (91.8)] | | |

| Operating earnings from financial services | | | | | | [removed: 248.6] [added: 272.0] | | | | | | [removed: 245.9] [added: 248.6] | | | | | | [removed: 230.1] [added: 245.9] | | |

| Operating earnings | | | | | | [removed: 880.5] [added: 1,123.5] | | | | | | [removed: 962.3] [added: 880.5] | | | | | | [removed: 956.1] [added: 962.3] | | |

| Interest expense | | | | | | [removed: (54.0)] [added: (53.1)] | | | | | | [removed: (49.0)] [added: (54.0)] | | | | | | [removed: (50.4)] [added: (49.0)] | | |

| Other income (expense) – net | | | | | | [removed: 8.7] [added: 16.5] | | | | | | [removed: 8.8] [added: 8.7] | | | | | | [removed: 4.2] [added: 8.8] | | |

| Earnings before income taxes and equity earnings | | | | | | [removed: 835.2] [added: 1,086.9] | | | | | | [removed: 922.1] [added: 835.2] | | | | | | [removed: 909.9] [added: 922.1] | | |

| Income tax expense | | | | | | [removed: (189.1)] [added: (247.0)] | | | | | | [removed: (211.8)] [added: (189.1)] | | | | | | [removed: (214.4)] [added: (211.8)] | | |

| Earnings before equity earnings | | | | | | [removed: 646.1] [added: 839.9] | | | | | | [removed: 710.3] [added: 646.1] | | | | | | [removed: 695.5] [added: 710.3] | | |

| Equity earnings, net of tax | | | | | | [removed: 0.3] [added: 1.5] | | | | | | [removed: 0.9] [added: 0.3] | | | | | | [removed: 0.7] [added: 0.9] | | |

| Net earnings | | | | | | [removed: 646.4] [added: 841.4] | | | | | | [removed: 711.2] [added: 646.4] | | | | | | [removed: 696.2] [added: 711.2] | | |

| Net earnings attributable to noncontrolling interests | | | | | | [removed: (19.4)] [added: (20.9)] | | | | | | [removed: (17.7)] [added: (19.4)] | | | | | | [removed: (16.3)] [added: (17.7)] | | |

| Net earnings attributable to Snap-on Incorporated | | | | | | $ | [removed: 627.0] [added: 820.5] | | | | | $ | [removed: 693.5] [added: 627.0] | | | | | $ | [removed: 679.9] [added: 693.5] | |

| Basic | | | | | | $ | [removed: 11.55] [added: 15.22] | | | | | $ | [removed: 12.59] [added: 11.55] | | | | | $ | [removed: 12.08] [added: 12.59] | |

| Diluted | | | | | | [removed: 11.44] [added: 14.92] | | | | | | [removed: 12.41] [added: 11.44] | | | | | | [removed: 11.87] [added: 12.41] | | |

| Basic | | | | | | [removed: 54.3] [added: 53.9] | | | | | | [removed: 55.1] [added: 54.3] | | | | | | [removed: 56.3] [added: 55.1] | | |

| Effect of dilutive securities | | | | | | [removed: 0.5] [added: 1.1] | | | | | | [removed: 0.8] [added: 0.5] | | | | | | [removed: 1.0] [added: 0.8] | | |