Snap-on (SNA) 10-K risk factor changes: FY2022 vs FY2021

*The ongoing COVID-19 pandemic [removed: is expected to continue] [added: continues] 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: Existing] [added: While such restrictions have generally eased in many countries where we have operations, existing] measures may be extended in certain regions and additional measures may be imposed to combat the COVID-19 pandemic or future outbreaks of infectious diseases.

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

To the extent the [added: ongoing] COVID-19 pandemic, or a future [removed: outbreak,] [added: outbreak of an infectious disease,] adversely affects our business, financial condition, results of operations and cash flows, it may also heighten many of the other risks described in this section.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 13 | | |

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

Approximately [removed: 42%] [added: 43%] of our consolidated net revenues in [removed: 2021] [added: 2022] 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 [removed: worldwide] [added: multi-national] mobile tool distribution channel.

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

Any new products that we develop may not receive market acceptance or otherwise generate any meaningful net sales or profits for us relative to our expectations based on, among other [removed: things,] [added: factors,] existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotional programs and research and development.

In general, as a manufacturer and marketer of premium products and services, the expectations of Snap-on’s customers and its franchisees are [removed: high and continue to increase.][added: high.]

*Foreign operations are subject to political, [removed: economic] [added: economic, trade] and other risks that could adversely affect our business, financial condition, results of operations and cash flows.*

Approximately [removed: 31%] [added: 28%] of our revenues in [removed: 2021] [added: 2022] were generated outside of the United States.

Any prolonged disruption in the operations of our existing manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions, lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, climate or weather events, use and storage of hazardous materials, [removed: acts of war,] [added: armed conflicts,] sabotage, terrorism, civil unrest or other events), or other reasons, including outbreaks of infectious diseases, such as the ongoing COVID-19 pandemic, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 15 | | |

*Price [removed: fluctuations] [added: inflation] and shortages of raw materials, components, certain purchased finished goods and energy sources [added: have impacted, and in the future] could adversely [removed: affect] [added: affect,] the ability to [removed: obtain] [added: obtain, as well as the cost of,] needed materials or products [removed: and could adversely affect] [added: and, in turn,] our results of operations.*

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

Associated unexpected variability [added: has resulted, and in the future] could [removed: result] [added: result,] in an increase in product costs and require Snap-on to increase prices 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, climate change regulations, world [removed: events] [added: events, including armed conflicts,] and changes in governmental programs.

We depend heavily on information technology infrastructure to achieve our business objectives and to protect sensitive [removed: information,] [added: data,] and [added: we] continually invest in improving such systems.

[removed: Problems that impair or compromise this infrastructure, including natural disasters, power outages, major network failures, security breaches or malicious attacks, or during system upgrades and/or new system implementations,] [added: Such impacts] could [removed: impede] [added: interfere with] our ability to record or process orders, manufacture and ship in a timely manner, manage our financial services operations including originating, processing, accounting for and collecting receivables, protect sensitive data of the company, our customers, our suppliers and business partners, or otherwise carry on business in the normal course.

[removed: Any such events, if significant,] [added: The March 2022 incident did not have a significant impact on the results of our operations; however, future cyber events] could cause us to lose customers and/or revenue and could require us to incur significant expense to remediate, including as a result of legal or regulatory claims, proceedings, fines or penalties, and could also damage our reputation.

[removed: While] [added: In response to the evolving cyber threat environment,] we [removed: have taken steps] [added: continue] to [removed: maintain adequate] [added: invest in] data security and address these risks and uncertainties by implementing security technologies, internal controls, network and data center resiliency, and redundancy and recovery processes, as well as by securing [removed: insurance, these measures may be inadequate.][added: insurance.]

Snap-on’s success depends, in part, on the efforts and abilities of its senior management team and other key [removed: employees.][added: employees whose skills, experience and industry contacts significantly benefit our operations and administration.]

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 17 | | |

These allowances represent an estimate of [added: expected credit] losses over the remaining contractual [removed: lives] [added: life] of [removed: our receivables which include] [added: the receivables, using historical loss experience, asset specific risk characteristics,] current [removed: market conditions and estimates for] [added: conditions,] reasonable and supportable forecasts, [added: and an appropriate reversion period,] when [removed: appropriate.][added: applicable.]

The company’s allowances may not be adequate to cover actual losses, and future [removed: allowances] [added: provisions] for credit losses could materially and adversely affect our financial condition, results of operations and cash flows.

Substantial fluctuations in the value of the U.S. dollar or other transactional currencies [added: have had and, in the future,] could have a significant impact on the company’s financial condition and results of operations.

We are also affected by changes in inflation [removed: rates] and interest [removed: rates.][added: rates in non-U.S. jurisdictions.]

[removed: Additionally, cash] [added: Cash] generated in certain non-U.S. jurisdictions may be difficult to repatriate to the United States in a tax-efficient manner.

Significant and unanticipated changes in circumstances, such as [removed: significant] [added: declines in profitability] and [added: cash flow due to] long-term [removed: adverse changes] [added: deterioration] in [removed: business climate, adverse actions by regulators, unanticipated competition,] [added: macroeconomic, industry and market conditions,] the loss of key customers, [removed: and/or] changes in technology or markets, [added: changes in key personnel or litigation, a sustained decrease in share price and/or other events,] could require a provision for impairment in a future period that could substantially impact our reported earnings and reduce our consolidated net worth and shareholders’ equity.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 19 | | |

[removed: From time to time] [added: In the ordinary course of our business,] we are subject to legal disputes that are [removed: being] litigated and/or [removed: settled in the ordinary course of business.][added: settled.]

*The inability to successfully defend claims from taxing authorities [added: and changes in tax laws and rules] could adversely affect our financial condition, results of operations and cash flows.*

We, our franchisees and our customers, and the economy as a whole, also may be affected by future world or local events outside our control, such as tariffs and other trade protection measures put in place by the United States or other countries, acts of terrorism, developments in the war on terrorism, armed [removed: conflicts,] [added: conflicts (including the current war in Ukraine),] 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 regulations, [removed: including] [added: new or enhanced] regulations related to climate change and other sustainability matters, and changes in financial accounting standards.

The February 2022 Russian invasion of Ukraine and the ongoing conflict in the region has led to sanctions and actions taken against Russia and Belarus by the United States, the U.K., the European Union and others.

The war in Ukraine has not had a material impact on our business and operations; however, expansion of the conflict beyond its current geographic, political and economic scope could adversely impact our business, results of operations and financial condition.

Risks related to this situation include supply chain inefficiencies, price increases and shortages of raw materials and components, exchange rate volatility, energy shortages in Europe, an increase in cybersecurity incidents, and potential impairment of certain assets.

In the ordinary course of business, we collect and store sensitive data and information, including personally identifiable information about our employees and the company’s proprietary and regulated business information, as well as that of our customers, suppliers and business partners.

Our information systems, like those of other companies, are susceptible to malicious damage, intrusions and outages due to, among other events, viruses, cyber attacks, industrial espionage, phishing attempts, hacking, break-ins and similar events, as well as other breaches of security, natural disasters, power loss or telecommunications failures.

Techniques used to breach information technology systems are growing in sophistication and increasingly come from threat actors of all types, including individuals, criminal organizations and state-sponsored operatives.

In early March 2022, as previously disclosed, Snap-on detected unusual activity in some areas of its information technology environment, quickly took down its network connections as part of the company’s defense protocols, launched a comprehensive analysis assisted by a leading external forensics firm, and notified law enforcement.

The company continued to pursue its commercial activities and restored connections as system interfaces were cleared.

The information technology incident did not significantly affect the company’s financial results.

Future problems that impair or compromise the company’s information technology infrastructure, including those due to natural disasters, power outages, major network failures, security breaches or malicious attacks, or those occurring during system upgrades and/or new system implementations could impede our operations.

In response to COVID-19 and its variants, national and local governments around the world have instituted certain protective measures at various times.

| | | | | | | | | |

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

| | | | 2022 ANNUAL REPORT | | | 21 | | |

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 ultimate impact of COVID-19, as well as future outbreaks of infectious diseases, 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.

These risks may be heightened when associates work remotely.

Their skills, experience and industry contacts significantly benefit our operations and administration.

We believe our [removed: 2021] [added: 2022] operating [removed: results demonstrate] [added: performance demonstrates] the continued momentum of our [removed: operations and] [added: operations,] confirms the resilience of our [removed: markets] [added: markets,] and [removed: our] [added: reflects the] considerable capabilities [added: of our experienced team] to overcome the [removed: challenges] [added: uncertainties] of the [removed: COVID] [added: current] environment.

Throughout the turbulence, we maintained and further [removed: developed] [added: extended] our ongoing advantages in our products, brands and people.

Our strategic priorities and plans for [removed: 2022] [added: 2023] 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”).

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 [removed: $20.7] [added: $20.2] million (or [removed: $16.2] [added: $15.7] million, net of cash acquired), and cash of [removed: $1.1] [added: $1.6] million.

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

Unless otherwise indicated, references in this document to “fiscal [removed: 2021”] [added: 2022”] or [removed: “2021”] [added: “2022”] refer to the fiscal year ended [removed: January 1,] [added: December 31,] 2022; 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;] and 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.]

References in this document to [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] year end refer to [added: December 31, 2022,] January 1, 2022, [added: and] January 2, 2021, [removed: and December 28, 2019,] respectively.

Snap-on’s [removed: 2021] [added: 2022] and [removed: 2019] [added: 2021] fiscal years each contained 52 weeks of operating results.

Fiscal [removed: 2020] [added: 2021] as Compared to Fiscal [removed: 2019][added: 2020]

A discussion regarding our financial condition and results of operations for fiscal [removed: 2020] [added: 2021] compared to fiscal [removed: 2019] [added: 2020] 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 January [removed: 2, 2021,] [added: 1, 2022,] which was filed with the SEC on February [removed: 11, 2021,] [added: 10, 2022,] and is available on the SEC’s website at www.sec.gov as well as in the “Investors” section of our [removed: corporate] website at www.snapon.com.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 27 | | |

Consolidated net sales of [removed: $4,252.0] [added: $4,492.8] million in [removed: 2021] [added: 2022] increased [removed: $659.5] [added: $240.8] million, or [removed: 18.4%,] [added: 5.7%,] from [removed: 2020] [added: 2021] levels, reflecting a [removed: $550.5] [added: $357.2] million, or [removed: 15.1%,] [added: 8.7%,] organic [removed: gain, $62.6] [added: gain and $8.5] million of acquisition-related [removed: sales and $46.4] [added: sales, partially offset by $124.9] million of [removed: favorable] [added: unfavorable] foreign currency translation.

As a percentage of net sales, operating earnings before financial services of [removed: 20.0%] [added: 20.9%] compared to [removed: 17.6%] [added: 20.0%] last year.

As a percentage of revenues, operating earnings of [removed: 24.4%,] [added: 24.9%] compared to [removed: 22.3%] [added: 24.4%] last year.

Net earnings attributable to Snap-on in [removed: 2021] [added: 2022] of [removed: $820.5] [added: $911.7] million, or [removed: $14.92] [added: $16.82] per diluted share, increased [removed: $193.5] [added: $91.2] million, or [removed: $3.48] [added: $1.90] per diluted share, from [removed: 2020] [added: 2021] levels.

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

Segment net sales of [removed: $1,406.3] [added: $1,666.9] million in [removed: 2021] [added: 2022] increased [removed: $171.7] [added: $163.8] million, or [removed: 13.9%,] [added: 10.9%,] from [removed: 2020] [added: 2021] levels, reflecting a [removed: $131.9] [added: $188.8] million, or [removed: 10.5%,] [added: 12.8%,] organic sales [removed: increase, $22.5] [added: increase and $8.5] million of acquisition-related [removed: sales and $17.3] [added: sales, partially offset by $33.5] million of [removed: favorable] [added: unfavorable foreign] currency translation.

The Commercial & Industrial Group intends to continue building on the following strategic priorities in [removed: 2022:][added: 2023:]

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

Segment net sales of [removed: $1,938.6] [added: $2,072.0] million in [removed: 2021] [added: 2022] increased [removed: $294.7] [added: $133.4] million, or [removed: 17.9%,] [added: 6.9%,] from [removed: 2020] [added: 2021] levels, reflecting a [removed: $274.4] [added: $162.5] million, or [removed: 16.5%,] [added: 8.5%,] organic sales [removed: gain and $20.3] [added: gain, partially offset by $29.1] million of [removed: favorable] [added: unfavorable] foreign currency translation.

The organic increase [removed: reflects] [added: is due to a] double-digit [removed: gains] [added: gain] in [removed: both] the U.S. [added: franchise business] and [added: a low single-digit increase in the segment’s] international operations.

Operating earnings of [removed: $411.1] [added: $458.7] million in [removed: 2021,] [added: 2022,] including [removed: $17.0] [added: $10.1] million of [removed: favorable] [added: unfavorable] foreign currency effects, increased [removed: $143.4] [added: $47.6] million, or [removed: 53.6%,] [added: 11.6%,] compared to [removed: $267.7] [added: $411.1] million in [removed: 2020.][added: 2021.]

In [removed: 2022,] [added: 2023,] the Snap-on Tools Group intends to continue [removed: these initiatives,] [added: its expansion] with specific focus on the [removed: following:][added: following initiatives:]

- Continuing to improve franchisee [removed: satisfaction,] [added: sales] productivity, [removed: profitability and] [added: profitability,] commercial [removed: health;][added: health, and satisfaction;]

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

Segment net sales of [removed: $1,503.1] [added: $1,666.9] million in [removed: 2021] [added: 2022] increased [removed: $264.9] [added: $163.8] million, or [removed: 21.4%] [added: 10.9%,] from [removed: 2020] [added: 2021] levels, reflecting a [removed: $211.3] [added: $188.8] million, or [removed: 16.9%,] [added: 12.8%,] organic sales [removed: increase, $40.1] [added: increase and $8.5] million of acquisition-related [removed: sales and $13.5] [added: sales, partially offset by $33.5] million of [removed: favorable] [added: unfavorable] foreign currency translation.

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

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 29 | | |

The Repair Systems & Information Group intends to focus on the following strategic priorities in [removed: 2022:][added: 2023:]

Financial services revenue was $349.7 million in both [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

Originations of [removed: $1,073.2] [added: $1,153.1] million in [removed: 2021] [added: 2022] increased [removed: $36.6] [added: $79.9] million, or [removed: 3.5%,] [added: 7.4%,] from [removed: 2020] [added: 2021] levels.

Operating earnings from financial services in [removed: 2021] [added: 2022] of [removed: $272.0] [added: $266.0] million, including [removed: $2.3] [added: $2.5] million of [removed: favorable] [added: unfavorable] foreign currency effects, [removed: increased $23.4] [added: decreased $6.0] million, or [removed: 9.4%,] [added: 2.2%,] compared to [removed: $248.6] [added: $272.0] million last year.

Financial Services intends to focus on the following strategic priorities in [removed: 2022:][added: 2023:]

Net cash provided by operating activities of [removed: $966.6] [added: $675.2] million in [removed: 2021] [added: 2022] decreased [removed: $42.0] [added: $291.4] million from [removed: $1,008.6] [added: $966.6] million in [removed: 2020.][added: 2021.]

The [removed: $42.0] [added: $291.4] million decrease is primarily due to a [removed: $253.6] [added: $354.5] million change in net operating assets and liabilities, partially offset by a [removed: $195.0] [added: $92.5] million increase in net earnings.

Net cash used by investing activities of $290.4 million in 2021 included additions to finance receivables of $878.1 million, partially offset by collections of $854.2 million, as well as [removed: a total of] $199.7 million for the acquisitions of Dealer-FX, AutoCrib Germany and Pradines.

Capital expenditures in [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] totaled [removed: $70.1] [added: $84.2] million and [removed: $65.6] [added: $70.1] million, respectively.

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

Net cash used by financing activities of [removed: $84.3] [added: $485.0] million in [removed: 2020] [added: 2022] included [removed: $243.3] [added: $313.1] million for dividend payments to [removed: shareholders, $187.2 million for repayments of notes payable and other short-term borrowings] [added: shareholders] and [removed: $174.3] [added: $198.1] million for the repurchase of [removed: 1,109,000] [added: 899,000] shares of Snap-on’s common stock.

[removed: 2021] [added: 2022] vs. [removed: 2020][added: 2021]

Operating earnings before financial services of $941.2 million in 2022 increased $89.7 million, or 10.5%, compared to $851.5 million in 2021.

Operating earnings of $1,207.2 million in 2022 increased $83.7 million, or 7.4%, compared to $1,123.5 million last year.

As a percentage of revenues (net sales plus financial services revenue), operating earnings of 24.9% compared to 24.4% last year.

Net earnings attributable to Snap-on in 2021 were $820.5 million, or $14.92 per diluted share.

Segment net sales of $1,399.2 million in 2022 decreased $7.1 million, or 0.5%, from 2021 levels, reflecting a $60.8 million, or 4.5%, organic sales increase, more than offset by $67.9 million of unfavorable currency translation.

The organic growth primarily reflects a double-digit gain in the segment’s specialty tools business, a high single-digit increase in the segment’s Asia Pacific operations, and low single-digit gains in the segment’s European-based hand tools business and in sales to customers in critical industries, despite lower activity with the military.

Operating earnings of $197.6 million in 2022, including $8.6 million of unfavorable foreign currency effects, decreased $12.3 million, or 5.9%, compared to $209.9 million in 2021.

The organic increase includes a double-digit gain in the U.S. franchise business, while sales in the segment’s international operations were mixed, but overall essentially flat.

Operating earnings of $393.3 million in 2022, including $4.8 million of favorable foreign currency effects, increased $44.7 million, or 12.8%, from $348.6 million in 2021.

Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million, as well as $0.5 million of cash provided by acquisitions.

These amounts were partially offset by $55.0 million of proceeds from stock purchase and option plan exercises and net proceeds from other short-term borrowings of $1.6 million.

| Net sales | | | | | | $ | 4,492.8 | | | | | 100.0 | | % | | | | $ | 4,252.0 | | | | | 100.0 | | % | | | | $ | 240.8 | | | | | 5.7 | | % |

| Cost of goods sold | | | | | | (2,311.7) | | | | | | (51.5) | | % | | | | (2,141.2) | | | | | | (50.4) | | % | | | | (170.5) | | | | | | (8.0) | | % |

| Gross profit | | | | | | 2,181.1 | | | | | | 48.5 | | % | | | | 2,110.8 | | | | | | 49.6 | | % | | | | 70.3 | | | | | | 3.3 | | % |

| Operating expenses | | | | | | (1,239.9) | | | | | | (27.6) | | % | | | | (1,259.3) | | | | | | (29.6) | | % | | | | 19.4 | | | | | | 1.5 | | % |

| Financial services expenses | | | | | | (83.7) | | | | | | (23.9) | | % | | | | (77.7) | | | | | | (22.2) | | % | | | | (6.0) | | | | | | (7.7) | | % |

| Operating earnings | | | | | | 1,207.2 | | | | | | 24.9 | | % | | | | 1,123.5 | | | | | | 24.4 | | % | | | | 83.7 | | | | | | 7.4 | | % |

| Interest expense | | | | | | (47.1) | | | | | | (1.0) | | % | | | | (53.1) | | | | | | (1.2) | | % | | | | 6.0 | | | | | | 11.3 | | % |

| Income tax expense | | | | | | (268.7) | | | | | | (5.5) | | % | | | | (247.0) | | | | | | (5.3) | | % | | | | (21.7) | | | | | | (8.8) | | % |

| Earnings before equity earnings | | | | | | 933.9 | | | | | | 19.3 | | % | | | | 839.9 | | | | | | 18.3 | | % | | | | 94.0 | | | | | | 11.2 | | % |

| Net earnings | | | | | | 933.9 | | | | | | 19.3 | | % | | | | 841.4 | | | | | | 18.3 | | % | | | | 92.5 | | | | | | 11.0 | | % |

Operating earnings before financial services of $941.2 million in 2022 increased $89.7 million, or 10.5%, compared to $851.5 million in 2021.

Operating earnings of $1,207.2 million in 2022 increased $83.7 million, or 7.4%, compared to $1,123.5 million last year.

Net earnings attributable to Snap-on in 2022 of $911.7 million, or $16.82 per diluted share, increased $91.2 million, or $1.90 per diluted share, from $820.5 million, or $14.92 per diluted share, in 2021.

| *(Amounts in millions)* | | | | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | | | | | Change | | | | | | | | |

| External net sales | | | | | | $ | 1,058.3 | | | | | 75.6 | | % | | | | $ | 1,095.6 | | | | | 77.9 | | % | | | | $ | (37.3) | | | | | (3.4) | | % |

| Cost of goods sold | | | | | | (880.5) | | | | | | (62.9) | | % | | | | (868.9) | | | | | | (61.8) | | % | | | | (11.6) | | | | | | (1.3) | | % |

| Gross profit | | | | | | 518.7 | | | | | | 37.1 | | % | | | | 537.4 | | | | | | 38.2 | | % | | | | (18.7) | | | | | | (3.5) | | % |

| Operating expenses | | | | | | (321.1) | | | | | | (23.0) | | % | | | | (327.5) | | | | | | (23.3) | | % | | | | 6.4 | | | | | | 2.0 | | % |

| Segment operating earnings | | | | | | $ | 197.6 | | | | | 14.1 | | % | | | | $ | 209.9 | | | | | 14.9 | | % | | | | $ | (12.3) | | | | | (5.9) | | % |

Segment net sales of $1,399.2 million in 2022 decreased $7.1 million, or 0.5%, from 2021 levels, reflecting a $60.8 million, or 4.5%, organic sales gain, more than offset by $67.9 million of unfavorable currency translation.

The organic growth primarily reflects a double-digit gain in the segment’s specialty tools business, a high single-digit increase in the segment’s Asia Pacific operations, and low single-digit gains in the segment’s European-based hand tools business and in sales to customers in critical industries, despite lower activity with the military.

| *(Amounts in millions)* | | | | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | | | | | Change | | | | | | | | |

| Cost of goods sold | | | | | | (1,141.7) | | | | | | (55.1) | | % | | | | (1,055.0) | | | | | | (54.4) | | % | | | | (86.7) | | | | | | (8.2) | | % |

| Gross profit | | | | | | 930.3 | | | | | | 44.9 | | % | | | | 883.6 | | | | | | 45.6 | | % | | | | 46.7 | | | | | | 5.3 | | % |

| Operating expenses | | | | | | (471.6) | | | | | | (22.8) | | % | | | | (472.5) | | | | | | (24.4) | | % | | | | 0.9 | | | | | | 0.2 | | % |

| Segment operating earnings | | | | | | $ | 458.7 | | | | | 22.1 | | % | | | | $ | 411.1 | | | | | 21.2 | | % | | | | $ | 47.6 | | | | | 11.6 | | % |

Segment net sales of $2,072.0 million in 2022 increased $133.4 million, or 6.9%, from 2021 levels, reflecting a $162.5 million, or 8.5%, organic sales gain, partially offset by $29.1 million of unfavorable foreign currency translation.

The organic increase includes a double-digit gain in the U.S. franchise business, while sales in the segment’s international operations were mixed, but overall essentially flat.

| *(Amounts in millions)* | | | | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | | | | | Change | | | | | | | | |

| | | | | | | | | |

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

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

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.

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.

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 2020 were $627.0 million, or $11.44 per diluted share and included a $10.3 million, or $0.19 per diluted share, after-tax charge related to the restructuring actions.

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.

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.

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 AutoCrib, and a $0.2 million working capital adjustment for the 2019 Cognitran acquisition.

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 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.

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

| Interest expense | | | | | | (53.1) | | | | | | (1.2) | | % | | | | (54.0) | | | | | | (1.3) | | % | | | | 0.9 | | | | | | 1.7 | | % |

| Income tax expense | | | | | | (247.0) | | | | | | (5.3) | | % | | | | (189.1) | | | | | | (4.8) | | % | | | | (57.9) | | | | | | (30.6) | | % |

| Earnings before equity earnings | | | | | | 839.9 | | | | | | 18.3 | | % | | | | 646.1 | | | | | | 16.4 | | % | | | | 193.8 | | | | | | 30.0 | | % |

| Net earnings | | | | | | 841.4 | | | | | | 18.3 | | % | | | | 646.4 | | | | | | 16.4 | | % | | | | 195.0 | | | | | | 30.2 | | % |

These items were partially offset by costs associated with higher stock-based expenses and 50 bps of unfavorable acquisition effects.

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 charges for restructuring actions.

As a percentage of revenues, operating earnings of 24.4% improved 210 bps from 22.3% last year, which included 30 bps of costs from restructuring actions.

The 2020 effective tax rate included a 10 bps increase related to restructuring actions.

Net earnings attributable to Snap-on in 2020 were $627.0 million, or $11.44 per diluted share, which included a $10.3 million, or $0.19 per diluted share, after-tax charge related to the restructuring actions.

Exit and Disposal Activities

Snap-on did not record any costs for exit and disposal activities in 2021.

Snap-on recorded costs for exit and disposal activities outside of the United States of $12.5 million in 2020.

| External net sales | | | | | | $ | 1,095.6 | | | | | 77.9 | | % | | | | $ | 951.4 | | | | | 77.1 | | % | | | | $ | 144.2 | | | | | 15.2 | | % |

| Cost of goods sold | | | | | | (868.9) | | | | | | (61.8) | | % | | | | (781.2) | | | | | | (63.3) | | % | | | | (87.7) | | | | | | (11.2) | | % |

| Gross profit | | | | | | 537.4 | | | | | | 38.2 | | % | | | | 453.4 | | | | | | 36.7 | | % | | | | 84.0 | | | | | | 18.5 | | % |

| Operating expenses | | | | | | (327.5) | | | | | | (23.3) | | % | | | | (299.7) | | | | | | (24.3) | | % | | | | (27.8) | | | | | | (9.3) | | % |

| Segment operating earnings | | | | | | $ | 209.9 | | | | | 14.9 | | % | | | | $ | 153.7 | | | | | 12.4 | | % | | | | $ | 56.2 | | | | | 36.6 | | % |

| Cost of goods sold | | | | | | (1,055.0) | | | | | | (54.4) | | % | | | | (932.1) | | | | | | (56.7) | | % | | | | (122.9) | | | | | | (13.2) | | % |

| Gross profit | | | | | | 883.6 | | | | | | 45.6 | | % | | | | 711.8 | | | | | | 43.3 | | % | | | | 171.8 | | | | | | 24.1 | | % |

| Operating expenses | | | | | | (472.5) | | | | | | (24.4) | | % | | | | (444.1) | | | | | | (27.0) | | % | | | | (28.4) | | | | | | (6.4) | | % |

| Segment operating earnings | | | | | | $ | 411.1 | | | | | 21.2 | | % | | | | $ | 267.7 | | | | | 16.3 | | % | | | | $ | 143.4 | | | | | 53.6 | | % |

Snap-on [removed: aims to control funding costs by managing] [added: may manage] the exposure created by the differing maturities and interest rate structures of Snap-on’s borrowings through the use of interest rate swap agreements.

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

The estimated maximum potential net one-day loss in fair value, calculated using the VAR model, as of [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] year end was [removed: $20.6] [added: $18.0] million and [removed: $13.9] [added: $20.6] million, respectively, on interest rate-sensitive financial instruments, and [removed: $0.3] [added: $0.2] million and [removed: $0.1] [added: $0.3] million, respectively, on foreign currency-sensitive financial instruments.

Snap-on [removed: aims to manage] [added: manages] market risk associated with the stock-based portion of its deferred compensation plans through the use of equity forwards.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 51 | | |

For example, the company is monitoring the impact of and developments related to [added: Russia’s invasion of Ukraine and] the ongoing COVID-19 pandemic, which [removed: continues] [added: continue] to have an impact on the global economy.

In addition, the company continues to monitor developments [removed: related to] [added: resulting from] the United Kingdom’s exit from the European Union, and the effects this may have on the world economy and the company.

Snap-on is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical [removed: tasks.][added: tasks including those working in vehicle repair, aerospace, the military, natural resources, and manufacturing.]

[removed: Snap-on] [added: The company] also [removed: derives income from various] [added: provides] financing programs [removed: designed] to facilitate the sales of its products and [added: to] support its franchise business.

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

The company began with the development of the original Snap-on interchangeable socket set [removed: in 1920] and subsequently pioneered mobile tool distribution in the automotive repair market, where well-stocked vans sell to professional vehicle technicians at their place of business.

Today, Snap-on defines its value proposition more broadly, extending its reach “beyond the garage” to deliver a broad array of unique solutions that make work easier for serious [removed: professionals performing critical tasks.][added: professionals.]

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

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

Additional information about Snap-on, including its products and its [added: environmental, health and safety, social responsibility, governance and] sustainability [added: (collectively, “ESG”)] commitment, is available on the company’s website at www.snapon.com.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 5 | | |

| *(Amounts in millions)* | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Tools | | | | | | $ | [removed: 2,343.0] [added: 2,399.4] | | | | | $ | [removed: 1,984.7] [added: 2,343.0] | | | | | $ | [removed: 2,017.5] [added: 1,984.7] | |

| Diagnostics, information and management systems | | | | | | [removed: 892.5] [added: 942.4] | | | | | | [removed: 783.8] [added: 892.5] | | | | | | [removed: 827.5] [added: 783.8] | | |

| Equipment | | | | | | [removed: 1,016.5] [added: 1,151.0] | | | | | | [removed: 824.0] [added: 1,016.5] | | | | | | [removed: 885.0] [added: 824.0] | | |

| | | | | | | $ | [removed: 4,252.0] [added: 4,492.8] | | | | | $ | [removed: 3,592.5] [added: 4,252.0] | | | | | $ | [removed: 3,730.0] [added: 3,592.5] | |

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 7 | | |

Franchisees’ sales are concentrated in hand and power tools, tool storage products, shop equipment, [removed: diagnostics] [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: $17.3] [added: $18.4] million, [removed: $16.2] [added: $17.3] million and [removed: $15.4] [added: $16.2] million in fiscal [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] respectively.

As of [removed: 2021] [added: 2022] year end, company-owned routes comprised approximately 4% of the total route population.

As of [removed: 2021] [added: 2022] year end, Snap-on’s worldwide route count was approximately [removed: 4,775,] [added: 4,725,] including approximately [removed: 3,425] [added: 3,400] routes in the United States.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 9 | | |

As of [removed: 2021] [added: 2022] 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.

Hand tools [removed: sold] [added: marketed] under the BAHCO, Irimo, Lindström, CDI, ATI, Fastorq, Norbar, Sioux, Sturtevant Richmont and Williams brands and trade names, for example, are sold through distributors worldwide.

While the company does experience raw material and component cost [removed: fluctuations] [added: fluctuations, as well as availability variations] from time to time and from operation to operation, including [removed: during] [added: due to] the ongoing COVID-19 [removed: pandemic, it] [added: pandemic and its impact on the global supply chain, Snap-on] endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.

The company does not currently anticipate experiencing any significant impact in [removed: 2022] [added: 2023] from raw material and purchased component cost or availability issues.

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

Snap-on vigorously pursues and relies on patent protection to [removed: protect] [added: safeguard] its intellectual property and position in its markets.

As of [removed: 2021] [added: 2022] year end, Snap-on and its subsidiaries held approximately [removed: 850] [added: 870] active and pending patents in the United States and approximately [removed: 2,550] [added: 2,780] active and pending patents outside of the United States.

The system is based upon continual improvement and is certified to ISO [added: 9001:2015, ISO] 14001:2015 and ISO 45001:2018, verified through Det Norske Veritas (DNV) Certification, Inc.

As of [removed: January 1,] [added: December 31,] 2022, Snap-on employed approximately [removed: 12,800] [added: 12,900] people worldwide, of which approximately [removed: 7,000] [added: 7,200] were employed in the United States and approximately [removed: 5,800] [added: 5,700] were outside the United States.

Based on [removed: the] [added: Snap-on’s] most recently filed EEO-1 data, which is available [added: under “ESG Reporting”] in the “Investors” section [removed: on] [added: of] the company’s website at www.snapon.com, females constitute [removed: 25.8%] [added: 26.0%] and minorities constitute [removed: 22.4%] [added: 23.5%] of the [added: company’s] workforce in the United States.

Additionally, on a global basis, approximately [removed: 2,700] [added: 2,600] employees are represented by unions and/or covered under collective bargaining agreements with varying expiration dates through [removed: 2023.][added: 2025.]

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 11 | | |

For [removed: 2021,] [added: 2022,] Snap-on had an overall safety incident rate of [removed: 1.01] [added: 1.12] (number of injuries and illnesses multiplied by 200,000, divided by hours worked).

Annual employee training is used to reinforce ethics, environmental matters, health and safety, [added: human rights,] information security and regulatory compliance, which includes anti-corruption training for all relevant employees.

To date, [removed: nearly 200,000] [added: over 250,000] students have earned Snap-on certifications, preparing them for successful and satisfying careers across various technical disciplines.

Snap-on is committed to conducting business and making decisions honestly, ethically, fairly and within the law, and is guided by the company’s “Who We Are” mission statement, which is translated into multiple languages and prominently displayed in [removed: our] [added: its] facilities around the world.

These beliefs go beyond Snap-on and are expected of [removed: our] suppliers as detailed in the company’s Supplier Code of Conduct.

Snap-on has adopted policies that seek to eliminate human trafficking, slavery, forced labor and child labor from its global supply [removed: chain.][added: chain, and has formalized its commitment to protecting human rights in the company’s Human Rights Policy.]

[removed: As reported to the CDP in 2021,] [added: In 2022,] the company’s total GHG emissions of [removed: 102,137] [added: 101,805] metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of [removed: 28.4] [added: 22.7] (metric tons of CO2e, divided by net sales in millions), which is [removed: 30%] [added: over 40%] lower than when initially reported in 2008.

Snap-on’s sustainability framework is focused on key areas impacting our industry, including energy management, employee health and safety, and material management, and is aligned with the standards of the Value Reporting Foundation (formerly known as the Sustainability Accounting Standards Board or [removed: “SASB”).][added: “SASB”), which has been consolidated into the International Financial Reporting Standards Foundation.]

From its founding in 1920, Snap-on has been recognized as the mark of the serious and the outward sign of the pride and dignity working men and women take in their professions.

Products and services are sold through the company’s network of widely recognized franchisee vans as well as through direct and distributor channels, under a variety of notable brands.

Asset and tool control solutions are sold under the AutoCrib brand primarily through distributors worldwide.

Snap-on leverages trade secret and other protections, as well as contractual arrangements and confidentiality procedures, for its proprietary software and other innovative solutions.

Snap-on’s SASB Index is available under “ESG Reporting” in the “Investors” section on the company’s website at www.snapon.com.

Feedback on the evaluation of risks and/or opportunities related to ESG matters identified by the company’s internal Environmental, Social and Governance Committee (the “ESGC”) and by the company’s operating units is included and discussed as part of the company’s quarterly operations reviews with senior management.

The ESGC reports to the company’s Chief Executive Officer and updates the Corporate Governance and Nominating Committee about its plans and actions at least two times per year.

The full Board has ultimate oversight of the company’s strategy related to ESG matters and receives regular reports on the subject from the Corporate Governance and Nominating Committee.

Products and services include hand and power tools, tool storage, diagnostic software, handheld and 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 reaches its customers through the company’s franchised, company-direct, distributor and internet channels.

Throughout the COVID-19 pandemic, Snap-on has generally maintained its headcount and has accommodated its operations to the virus environment.

Snap-on has taken what it believes to be appropriate measures to ensure the health and safety of its personnel, including enhancing cleaning protocols, providing protective equipment and providing wages for quarantined associates.

Refer to the “Impact of the COVID-19” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on actions taken by the company in response to the COVID-19 pandemic.

For the fiscal year ended [removed: January 1,] [added: December 31,] 2022, or

The aggregate market value of voting and non-voting common equity held by non-affiliates (excludes [removed: 797,583] [added: 861,593] shares held by directors and executive officers) computed by reference to the price [removed: ($223.91)] [added: ($198.24)] at which common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter (July [removed: 3, 2021)] [added: 2, 2022)] was [removed: $11.9] [added: $10.4] billion.

The number of shares of Common Stock ($1.00 par value) of the registrant outstanding as of February [removed: 4, 2022,] [added: 3, 2023,] was [removed: 53,438,639] [added: 53,114,455] shares.

Part III of this Annual Report on Form 10-K incorporates by reference certain information that will be set forth in Snap-on’s Proxy Statement, which is expected to first be mailed to shareholders on or about March [removed: 11, 2022,] [added: 10, 2023,] prepared for the Annual Meeting of Shareholders scheduled for April [removed: 28, 2022.][added: 27, 2023.]

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

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

- 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 [removed: interruptions;][added: inefficiencies, including as a result of the current war in Ukraine;]

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

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

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 3 | | |

- Risks associated with data security and technological systems and protections, including the effects of [added: cyber incidents and from] new legislation, regulations or government-related developments;

- The [added: impact of labor interruptions or challenges, and Snap-on’s] ability to effectively manage human capital resources; [removed: and]

- Other world or local events outside Snap-on’s control, including terrorist disruptions, [removed: other outbreaks of infectious diseases] [added: armed conflicts] and civil unrest.

Unless otherwise indicated, references in this document to “fiscal [removed: 2021”] [added: 2022”] or [removed: “2021”] [added: “2022”] refer to the fiscal year ended [removed: January 1,] [added: December 31,] 2022; 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;] and 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.]

References in this document to [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] year end refer to [added: December 31, 2022,] January 1, 2022, [added: and] January 2, 2021, [removed: and December 28, 2019,] respectively.

Snap-on’s [removed: 2021] [added: 2022] and [removed: 2019] [added: 2021] fiscal years each contained 52 weeks of operating results.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

- The impact of labor interruptions or challenges;

Snap-on’s facilities in the United States occupy approximately [removed: 3.9] [added: 4.1] million square feet, of which [removed: 74%] [added: 73%] is owned, including its corporate and general office facility located in Kenosha, Wisconsin.

Snap-on’s facilities outside the United States occupy approximately [removed: 4.6] [added: 4.4] million square feet, of which approximately [removed: 74%] [added: 73%] is owned.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | [removed: 21] [added: 23] | | |

The following table provides information about our corporate headquarters and financial services operations, and each of Snap-on’s principal active manufacturing locations, distribution centers and software development locations (exceeding 50,000 square feet) as of [removed: 2021] [added: 2022] year end:

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

| Bollnäs, Sweden | | | | | | Manufacturing | | | | | | Owned | | | | | | C&I | | |

Snap-on had [removed: 53,429,650] [added: 53,002,580] shares of common stock outstanding as of [removed: 2021] [added: 2022] year end.

Snap-on’s stock is listed on the New York Stock Exchange under the ticker symbol “SNA.” At February [removed: 4, 2022,] [added: 3, 2023,] there were [removed: 4,226] [added: 4,113] 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: 2021,] [added: 2022,] all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.

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

The repurchase of Snap-on common stock is at the company’s discretion, subject to prevailing financial and market [removed: conditions.][added: conditions, and pursuant to the Board’s authorizations that the company has publicly announced.]

| Total/Average | | | | | | [removed: 355,000] [added: 284,000] | | | | | | [removed: $212.80] [added: $229.66] | | | | | | [removed: 355,000] [added: 284,000] | | | | | | N/A | | |

* Subject to further adjustment pursuant to the 1996 Authorization described below, as of [removed: January 1,] [added: December 31,] 2022, the approximate value of shares that may yet be purchased pursuant to the outstanding Board authorizations discussed below is [removed: $454.9] [added: $362.4] million.

- In 1996, the Board authorized the company to repurchase shares of the company’s common stock [removed: from time to time] [added: periodically] in the open market or in privately negotiated transactions (“the 1996 Authorization”).

The 1996 Authorization allows the repurchase of up to the number of shares issued or delivered from treasury [removed: from time to time] under the various plans the company has in place that call for the issuance of the company’s common stock.

Because the number of shares that are purchased pursuant to the 1996 Authorization will change [removed: from time to time] as (i) the company issues shares under its various plans; and (ii) shares are repurchased pursuant to this authorization, the number of shares authorized to be repurchased will vary from time to time.

- On [removed: February 14, 2019,] [added: November 4, 2021,] the Board authorized the repurchase of [removed: an aggregate of] up to $500 million of the company’s common stock (the [removed: “2019] [added: “2021] Authorization”).

The 2021 Authorization [removed: replaced the 2019 Authorization (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: 2021] [added: 2022] ANNUAL REPORT | | | [removed: 23] [added: 25] | | |

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: 2021] [added: 2022] 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.

Citibank [removed: Sales] [added: Purchases (Sales)] of Snap-on Stock

| Period | | | | | | Shares [removed: Sold] [added: Purchased (Sold)] | | | | | | Average Price per Share | | |

| Total/Average | | | | | | [removed: 8,900] [added: (5,900)] | | | | | | [removed: $206.06] [added: $229.11] | | |

The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, [removed: 2016,] [added: 2017,] of a $100 investment, assuming that dividends were reinvested quarterly.

[removed: ][added: ]

| December 31, [removed: 2016] [added: 2017] | | | | | | $100.00 | | | | | | $100.00 | | | | | | $100.00 | | |

| 10/02/22 to 10/29/22 | | | | | | 50,000 | | | | | | $216.45 | | | | | | 50,000 | | | | | | $385.6 million | | |

| 10/30/22 to 11/26/22 | | | | | | 87,000 | | | | | | $231.48 | | | | | | 87,000 | | | | | | $387.6 million | | |

| 11/27/22 to 12/31/22 | | | | | | 147,000 | | | | | | $233.07 | | | | | | 147,000 | | | | | | $362.4 million | | |

| 10/02/22 to 10/29/22 | | | | | | — | | | | | | — | | |

| 10/30/22 to 11/26/22 | | | | | | (6,400) | | | | | | $228.61 | | |

| 11/27/22 to 12/31/22 | | | | | | 500 | | | | | | $235.45 | | |

| December 31, 2018 | | | | | | $85.15 | | | | | | $86.71 | | | | | | $95.62 | | |

| December 31, 2019 | | | | | | $101.79 | | | | | | $112.17 | | | | | | $125.72 | | |

| December 31, 2020 | | | | | | $105.86 | | | | | | $124.59 | | | | | | $148.85 | | |

| December 31, 2021 | | | | | | $136.40 | | | | | | $150.89 | | | | | | $191.58 | | |

| December 31, 2022 | | | | | | $148.55 | | | | | | $142.63 | | | | | | $156.89 | | |

| 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 | | |

When calculating the approximate value of shares that the company may yet purchase under the 1996 Authorization, the company assumed a price of $203.23, $211.30 and $215.38 per share of common stock as of the end of the fiscal 2021 months ended October 30, 2021, November 27, 2021, and January 1, 2022, respectively.

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 | | |

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

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

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of [removed: January 1,] [added: December 31,] 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 [removed: January 1,] [added: December 31,] 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 [removed: January 1,] [added: December 31,] 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 [removed: January 1,] [added: December 31,] 2022, our internal control over financial reporting was effective at a reasonable assurance level.

The company’s internal control over financial reporting as of [removed: January 1,] [added: December 31,] 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: 2021] [added: 2022] ANNUAL REPORT | | | 53 | | |

We have audited the internal control over financial reporting of Snap-on Incorporated and subsidiaries (the “Company”) as of [removed: January 1,] [added: December 31,] 2022, based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (“COSO”).][added: (COSO).]

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of [removed: January 1,] [added: December 31,] 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) [removed: (“PCAOB”),] [added: (PCAOB),] the consolidated financial statements as of and for the year ended [removed: January 1,] [added: December 31,] 2022, of the Company and our report dated February [removed: 10, 2022,] [added: 9, 2023,] 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).

| February 9, 2023 | | | | | | | | |

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 | | | | | | | | |

Not applicable.

Not applicable

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: 2022] [added: 2023] Annual Meeting Proxy Statement, which is expected to be mailed to shareholders on or about March [removed: 11, 2022] [added: 10, 2023] (the [removed: “2022] [added: “2023] Proxy Statement”).

The Section 16(a) filing compliance disclosure pursuant to Item 405 of Regulation S-K is contained in Snap-on’s [removed: 2022] [added: 2023] 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 [removed: January 1,] [added: December 31,] 2022, is presented below:

Pinchuk* [removed: (75)] [added: (76)] – 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: (67)] [added: (68)] – Senior Vice President – Finance and Chief Financial Officer since 2010.

Arregui* [removed: (56)] [added: (57)] – Senior Vice President and President – Commercial Group since 2019.

Banerjee* [removed: (71)] [added: (72)] – Senior Vice President – Human Resources and Chief Development Officer since 2015.

*Iain Boyd* [removed: (59)] [added: (60)] – Vice President – Operations Development since 2015.

Chambers* [removed: (57)] [added: (58)] – Senior Vice President and President – Snap-on Tools Group since 2019.

Lemerand* [removed: (59)] [added: (60)] – Vice President and Chief Information Officer since 2017.

Miller* [removed: (51)] [added: (52)] – Vice President, General Counsel and Secretary since 2018.

Ozolins* [removed: (50)] [added: (51)] – Vice President and Controller since 2021.

Ward* [removed: (69)] [added: (70)] *–* Senior Vice President and President – Repair Systems & Information Group since 2010.

Additionally, there is no family relationship among the executive officers and there has been no involvement in legal proceedings during the past [removed: ten] [added: 10] years that would be material to the evaluation of the ability or integrity of any of the executive officers.

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 55 | | |

Mr. Pinchuk serves on the board of directors of Columbus McKinnon Corporation.

Vice President of Information Technology Services from 2015 to 2017.

The information required by Item 11 is contained in Snap-on’s [removed: 2022] [added: 2023] Proxy Statement in the sections entitled “Executive Compensation,” “Board Compensation,” “Compensation Committee Report,” and “Other Information” and is incorporated herein by reference.

The following table sets forth information about Snap-on’s equity compensation plans at [removed: 2021] [added: 2022] year end:

| Equity compensation plans [added: not] approved by security holders | | | | | | [removed: 2,874,019 (1)] [added: 58,092 (4)] | | | | | | [removed: $152.55 (2)] [added: Not Applicable] | | | | | | [removed: 4,430,957 (3)] [added: \- (5)] | | |

| Equity compensation plans [removed: not] approved by security holders | | | | | | [removed: 54,920 (4)] [added: 2,798,989 (1)] | | | | | | [removed: Not Applicable] [added: $164.06 (2)] | | | | | | [removed: \- (5)] [added: 3,897,146 (3)] | | |

(1)Includes (i) options and stock appreciation rights (“SARs”) to acquire [removed: 2,828,710] [added: 2,733,876] shares granted under the 2011 Incentive Stock and Awards Plan (the “2011 Plan”); (ii) [removed: 32,265] [added: 58,275] shares represented by time-based restricted stock units granted under the 2011 Plan; and (iii) [removed: 13,044] [added: 6,838] shares represented by deferred share units under the Directors’ Fee Plan.

Excludes [removed: 229,106] [added: 261,275] shares issuable in connection with the vesting of performance share awards under the 2011 Plan.

(3)Includes (i) [removed: 3,643,845] [added: 3,122,593] shares reserved for issuance under the 2011 Plan; (ii) [removed: 189,837] [added: 195,730] shares reserved for issuance under the Directors’ Fee Plan; and (iii) [removed: 597,275] [added: 578,823] shares reserved for issuance under the employee stock purchase plan.

The additional information required by Item 12 is contained in Snap-on’s [removed: 2022] [added: 2023] Proxy Statement in the sections entitled “Executive Compensation,” “Security Ownership of Certain Beneficial Owners and Management,” and “Other Information,” and is incorporated herein by reference.

| Total | | | | | | 2,857,081 | | | | | | $164.06 (2) | | | | | | 3,897,146 (5) | | |

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

Incorporated by reference to the sections entitled “Corporate Governance Practices and Board Information – Board Information” and “Other Information – Transactions with the Company” in Snap-on’s [removed: 2022] [added: 2023] Proxy Statement.

Incorporated by reference to the section entitled “Deloitte & Touche LLP Fee Disclosure” in Snap-on’s [removed: 2022] [added: 2023] Proxy Statement.

Item 15: [removed: Exhibits,] [added: Exhibit and] Financial Statement Schedules

Unless otherwise indicated, references to “fiscal [removed: 2021”] [added: 2022”] or [removed: “2021”] [added: “2022”] refer to the fiscal year ended [removed: January 1,] [added: December 31,] 2022; 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;] and 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.]

References to [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] year end refer to [added: December 31, 2022,] January 1, 2022, [added: and] January 2, 2021, [removed: and December 28, 2019,] respectively.

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

- Consolidated Statements of Earnings for the [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] fiscal years.

- Consolidated Statements of Comprehensive Income for the [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] fiscal years.

- Consolidated Balance Sheets as of [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] year end.

- Consolidated Statements of Equity for the [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] fiscal years.

- Consolidated Statements of Cash Flows for the [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] fiscal years.

| | | | | | | (e)(4) | | | | | | [Description of 2050 [removed: 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] [added: Notes (incorporated] by reference to Exhibit 4(f)(5) to Snap‑on’s Annual Report on Form 10‑K for the fiscal year ended January 2, 2021 (Commission File No. 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144021000005/sna_fy20x10kxexhibit4f5.htm) | | |

| | | | [removed: 2021] [added: 2022] 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 [removed: January 1,] [added: December 31,] 2022.

| | | | | | | [removed: (o)] [added: (o)(1)] | | | | | | [Third Amended and Restated Five Year Credit Agreement, dated as of September 16, [removed: 2019, among] [added: 2019,](http://www.sec.gov/Archives/edgar/data/91440/000119312519247311/d805398dex101.htm) [by and](http://www.sec.gov/Archives/edgar/data/91440/000119312519247311/d805398dex101.htm) [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/91440/000009144022000005/snafy21ex21.htm)] [added: Corporation](https://www.sec.gov/Archives/edgar/data/91440/000009144023000005/snafy22ex21.htm)] | | | | | | | | | | | |

| (23) | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/91440/000009144022000005/snafy21ex23.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/91440/000009144023000005/snafy22ex23.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/91440/000009144022000005/snafy21ex311.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144023000005/snafy22ex311.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/91440/000009144022000005/snafy21ex312.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144023000005/snafy22ex312.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/91440/000009144022000005/snafy21ex321.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144023000005/snafy22ex321.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/91440/000009144022000005/snafy21ex322.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/91440/000009144023000005/snafy22ex322.htm)] | | | | | | | | | | | |

| | | | | | | (o)(2) | | | | | | [Amendment No. 1, dated as of September 15, 2022, by and among Snap-on Incorporated, the lenders party thereto and JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the lenders, to Third Amended and Restated Five Year Credit Agreement, dated as of September 16, 2019, by and 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 Quarterly Report on Form 10-Q for the quarterly period ended](https://www.sec.gov/Archives/edgar/data/91440/000009144022000031/q3_fy22xex101.htm) [October 1, 2022 (Commission File No. 1-7724))](https://www.sec.gov/Archives/edgar/data/91440/000009144022000031/q3_fy22xex101.htm) | | | | | |

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

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 59 | | |

We have audited the accompanying consolidated balance sheets of Snap-on Incorporated and subsidiaries (the “Company”) as of [added: December 31, 2022 and] January 1, 2022, [removed: and January 2, 2021, and] the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the three years in the period ended [removed: January 1,] [added: December 31,] 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 [removed: January 1,] [added: December 31,] 2022, and January [removed: 2, 2021,] [added: 1, 2022,] and the results of its operations and its cash flows for each of the three years in the period ended [removed: January 1,] [added: December 31,] 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) [removed: (“PCAOB”),] [added: (PCAOB),] the Company’s internal control over financial reporting as of [removed: January 1,] [added: December 31,] 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: 10, 2022,] [added: 9, 2023,] expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting [removed: Principles][added: Principle]

Finance [removed: Receivables -] [added: Receivables,] Net - [added: Allowance -] Refer to Notes 1 and 4 to the financial statements

The Company’s finance receivables are comprised of extended-term installment payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, [removed: generally] with average payment terms of approximately four years.

At [removed: January 1,] [added: December 31,] 2022, these loans totaled [removed: $1,723.6] [added: $1,793.9] million with an allowance of [removed: $67.3] [added: $60.9] million recorded against the receivables.

The Company estimates and records an allowance for credit losses over the [removed: expected] [added: remaining] contractual life of their contracts considering collectability, historical loss experience, current conditions and future market changes.

- We tested the mathematical accuracy of the allowance for credit losses calculation [added: 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 10,] [added: | | | | | |] 2022 | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | [removed: 2021] [added: 2022] ANNUAL REPORT | | | 61 | | |

| *(Amounts in millions, except per share data)* | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Net sales | | | | | | $ | [removed: 4,252.0] [added: 4,492.8] | | | | | $ | [removed: 3,592.5] [added: 4,252.0] | | | | | $ | [removed: 3,730.0] [added: 3,592.5] | |

| Cost of goods sold | | | | | | [removed: (2,141.2)] [added: (2,311.7)] | | | | | | [removed: (1,844.0)] [added: (2,141.2)] | | | | | | [removed: (1,886.0)] [added: (1,844.0)] | | |

| Gross profit | | | | | | [removed: 2,110.8] [added: 2,181.1] | | | | | | [removed: 1,748.5] [added: 2,110.8] | | | | | | [removed: 1,844.0] [added: 1,748.5] | | |

| Operating expenses | | | | | | [removed: (1,259.3)] [added: (1,239.9)] | | | | | | [removed: (1,116.6)] [added: (1,259.3)] | | | | | | [removed: (1,127.6)] [added: (1,116.6)] | | |

| Operating earnings before financial services | | | | | | [removed: 851.5] [added: 941.2] | | | | | | [removed: 631.9] [added: 851.5] | | | | | | [removed: 716.4] [added: 631.9] | | |

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

| Financial services expenses | | | | | | [removed: (77.7)] [added: (83.7)] | | | | | | [removed: (101.1)] [added: (77.7)] | | | | | | [removed: (91.8)] [added: (101.1)] | | |

| Operating earnings from financial services | | | | | | [removed: 272.0] [added: 266.0] | | | | | | [removed: 248.6] [added: 272.0] | | | | | | [removed: 245.9] [added: 248.6] | | |

| Operating earnings | | | | | | [removed: 1,123.5] [added: 1,207.2] | | | | | | [removed: 880.5] [added: 1,123.5] | | | | | | [removed: 962.3] [added: 880.5] | | |

| Interest expense | | | | | | [removed: (53.1)] [added: (47.1)] | | | | | | [removed: (54.0)] [added: (53.1)] | | | | | | [removed: (49.0)] [added: (54.0)] | | |

| Other income (expense) – net | | | | | | [removed: 16.5] [added: 42.5] | | | | | | [removed: 8.7] [added: 16.5] | | | | | | [removed: 8.8] [added: 8.7] | | |

| Earnings before income taxes and equity earnings | | | | | | [removed: 1,086.9] [added: 1,202.6] | | | | | | [removed: 835.2] [added: 1,086.9] | | | | | | [removed: 922.1] [added: 835.2] | | |

| Income tax expense | | | | | | [removed: (247.0)] [added: (268.7)] | | | | | | [removed: (189.1)] [added: (247.0)] | | | | | | [removed: (211.8)] [added: (189.1)] | | |

| Earnings before equity earnings | | | | | | [removed: 839.9] [added: 933.9] | | | | | | [removed: 646.1] [added: 839.9] | | | | | | [removed: 710.3] [added: 646.1] | | |

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

| Net earnings | | | | | | [removed: 841.4] [added: 933.9] | | | | | | [removed: 646.4] [added: 841.4] | | | | | | [removed: 711.2] [added: 646.4] | | |

| Net earnings attributable to noncontrolling interests | | | | | | [removed: (20.9)] [added: (22.2)] | | | | | | [removed: (19.4)] [added: (20.9)] | | | | | | [removed: (17.7)] [added: (19.4)] | | |

| Net earnings attributable to Snap-on Incorporated | | | | | | $ | [removed: 820.5] [added: 911.7] | | | | | $ | [removed: 627.0] [added: 820.5] | | | | | $ | [removed: 693.5] [added: 627.0] | |

| Basic | | | | | | $ | [removed: 15.22] [added: 17.14] | | | | | $ | [removed: 11.55] [added: 15.22] | | | | | $ | [removed: 12.59] [added: 11.55] | |

| Diluted | | | | | | [removed: 14.92] [added: 16.82] | | | | | | [removed: 11.44] [added: 14.92] | | | | | | [removed: 12.41] [added: 11.44] | | |

| Basic | | | | | | [removed: 53.9] [added: 53.2] | | | | | | [removed: 54.3] [added: 53.9] | | | | | | [removed: 55.1] [added: 54.3] | | |

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

| Diluted | | | | | | [removed: 55.0] [added: 54.2] | | | | | | [removed: 54.8] [added: 55.0] | | | | | | [removed: 55.9] [added: 54.8] | | |

| *(Amounts in millions)* | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Net earnings | | | | | | $ | [removed: 841.4] [added: 933.9] | | | | | $ | [removed: 646.4] [added: 841.4] | | | | | $ | [removed: 711.2] [added: 646.4] | |

| Foreign currency translation | | | | | | [removed: (69.4)] [added: (127.4)] | | | | | | [removed: 112.7] [added: (69.4)] | | | | | | [removed: (9.5)] [added: 112.7] | | |

| Reclassification of foreign currency translation loss from sale of equity interest to net earnings | | | | | | [removed: (1.0)] [added: —] | | | | | | [removed: —] [added: (1.0)] | | | | | | — | | |

- We evaluated management’s ability to accurately forecast credit losses by performing a retrospective review, which involved comparing actual credit losses to historical estimates.

| February 9, 2023 | | | | | | | | |

| Pension assets | | | | | | 70.6 | | | | | | 160.7 | | |

| Other assets | | | | | | 13.7 | | | | | | 15.6 | | |

| Notes payable | | | | | | $ | 17.2 | | | | | $ | 17.4 | |

| Net earnings for 2022 | | | | | | — | | | | | | — | | | | | | 911.7 | | | | | | — | | | | | | — | | | | | | 22.2 | | | | | | 933.9 | | |

| Other comprehensive loss | | | | | | — | | | | | | — | | | | | | — | | | | | | (184.4) | | | | | | — | | | | | | — | | | | | | (184.4) | | |

| Stock compensation plans | | | | | | — | | | | | | 27.2 | | | | | | — | | | | | | — | | | | | | 58.4 | | | | | | — | | | | | | 85.6 | | |

| Other | | | | | | — | | | | | | — | | | | | | (2.3) | | | | | | — | | | | | | — | | | | | | (21.9) | | | | | | (24.2) | | |

| Balance at December 31, 2022 | | | | | | $ | 67.4 | | | | | $ | 499.9 | | | | | $ | 6,296.2 | | | | | $ | (528.3) | | | | | $ | (1,853.9) | | | | | $ | 22.2 | | | | | $ | 4,503.5 | |

| Net earnings | | | | | | $ | 933.9 | | | | | $ | 841.4 | | | | | $ | 646.4 | |

For finance receivables only, write-offs are partially offset by recourse from franchisees.

Repossessed accounts are typically written off within 60 days of asset repossession.

| *(Amounts in millions)* | | | | | | 2022 | | | | | | 2021 | | |

New accounting standards: In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): *Troubled Debt Restructurings and Vintage Disclosures*, which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty and eliminates certain current recognition and measurement accounting guidance.

This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases.

ASU No. 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

| *(Amounts in millions)* | | | | | | 2022 | | | | | | 2021 | | |

| Total revenues | | | | | | $ | 4,842.5 | | | | | $ | 4,601.7 | |

| North America* | | | | | | $ | 498.3 | | | | | $ | 1,840.3 | | | | | $ | 1,046.1 | | | | | $ | — | | | | | $ | — | | | | | $ | 3,384.7 | |

| Europe | | | | | | 284.9 | | | | | | 137.9 | | | | | | 227.5 | | | | | | — | | | | | | — | | | | | | 650.3 | | |

| All other | | | | | | 275.1 | | | | | | 93.8 | | | | | | 88.9 | | | | | | — | | | | | | — | | | | | | 457.8 | | |

| External net sales | | | | | | 1,058.3 | | | | | | 2,072.0 | | | | | | 1,362.5 | | | | | | — | | | | | | — | | | | | | 4,492.8 | | |

| Intersegment net sales | | | | | | 340.9 | | | | | | — | | | | | | 304.4 | | | | | | — | | | | | | (645.3) | | | | | | — | | |

| Total net sales | | | | | | 1,399.2 | | | | | | 2,072.0 | | | | | | 1,666.9 | | | | | | — | | | | | | (645.3) | | | | | | 4,492.8 | | |

| Total revenue | | | | | | $ | 1,399.2 | | | | | $ | 2,072.0 | | | | | $ | 1,666.9 | | | | | $ | 349.7 | | | | | $ | (645.3) | | | | | $ | 4,842.5 | |

| Vehicle service professionals | | | | | | $ | 90.8 | | | | | $ | 2,072.0 | | | | | $ | 1,362.5 | | | | | $ | — | | | | | $ | — | | | | | $ | 3,525.3 | |

| External net sales | | | | | | 1,058.3 | | | | | | 2,072.0 | | | | | | 1,362.5 | | | | | | — | | | | | | — | | | | | | 4,492.8 | | |

| Intersegment net sales | | | | | | 340.9 | | | | | | — | | | | | | 304.4 | | | | | | — | | | | | | (645.3) | | | | | | — | | |

| Total net sales | | | | | | 1,399.2 | | | | | | 2,072.0 | | | | | | 1,666.9 | | | | | | — | | | | | | (645.3) | | | | | | 4,492.8 | | |

| Total revenue | | | | | | $ | 1,399.2 | | | | | $ | 2,072.0 | | | | | $ | 1,666.9 | | | | | $ | 349.7 | | | | | $ | (645.3) | | | | | $ | 4,842.5 | |

Snap-on previously accounted for Deville S.A. as an equity method investment.

The following is a summary of the values of the assets acquired and liabilities assumed of Dealer-FX, including adjustments recorded as of December 31, 2022, as a result of new information obtained about facts and circumstances that existed as of the February 26, 2021 acquisition date:

| | | | Amounts as of | | |

| *(Amounts in millions)* | | | February 26, 2021 | | |

| Assets acquired: | | | | | |

| Cash | | | $ | 0.1 | |

| Trade and other accounts receivable | | | 8.0 | | |

| Property and equipment | | | 0.7 | | |

| Deferred income tax assets | | | 16.5 | | |

- We performed a retrospective review based on net losses as compared to estimates in the Company’s allowance to highlight any inconsistencies.

| Balance at December 29, 2018 | | | | | | $ | 67.4 | | | | | $ | 359.4 | | | | | $ | 4,257.6 | | | | | $ | (462.2) | | | | | $ | (1,123.4) | | | | | $ | 19.8 | | | | | $ | 3,118.6 | |

| Impact of the Tax Act on Accumulated Other Comprehensive Income (ASU No. 2018-02) | | | | | | — | | | | | | — | | | | | | 45.9 | | | | | | (45.9) | | | | | | — | | | | | | — | | | | | | — | | |

| Balance at December 30, 2018 | | | | | | 67.4 | | | | | | 359.4 | | | | | | 4,303.5 | | | | | | (508.1) | | | | | | (1,123.4) | | | | | | 19.8 | | | | | | 3,118.6 | | |

| Net earnings for 2019 | | | | | | — | | | | | | — | | | | | | 693.5 | | | | | | — | | | | | | — | | | | | | 17.7 | | | | | | 711.2 | | |

| Other comprehensive income | | | | | | — | | | | | | — | | | | | | — | | | | | | 0.2 | | | | | | — | | | | | | — | | | | | | 0.2 | | |

| Stock compensation plans | | | | | | — | | | | | | 19.7 | | | | | | — | | | | | | — | | | | | | 52.6 | | | | | | — | | | | | | 72.3 | | |

| Other | | | | | | — | | | | | | — | | | | | | (0.7) | | | | | | — | | | | | | — | | | | | | (15.8) | | | | | | (16.5) | | |

Snap-on accounts for investments in unconsolidated affiliates where the company has a non-significant ownership interest under the equity method of accounting.

An investment in an unconsolidated affiliate of $21.8 million as of July 1, 2021, was exchanged for 100% ownership of a wholly owned subsidiary of the unconsolidated affiliate.

Investments in unconsolidated affiliates of $21.0 million as of January 2, 2021, are included in “Other assets” on the accompanying Consolidated Balance Sheets; no equity investment dividends were received in any period presented.

See Note 3 for further information on acquisitions.

In the normal course of business, the company may purchase products or services from, or sell products or services to, unconsolidated affiliates.

Purchases from unconsolidated affiliates were $7.7 million, $9.3 million and $10.4 million in 2021, 2020 and 2019, respectively, and sales to unconsolidated affiliates were $0.6 million in 2021, $0.5 million in 2020 and $0.6 million in 2019.

New accounting standards

On January 3, 2021, the beginning of Snap-on’s 2021 fiscal year, the company adopted ASU No. 2019-12, *Simplifying the Accounting for Income Taxes*, which is designed to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

| | | | | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| North America* | | | | | | $ | 432.3 | | | | | $ | 1,442.8 | | | | | $ | 720.7 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,595.8 | |

| Europe | | | | | | 276.2 | | | | | | 125.7 | | | | | | 214.9 | | | | | | — | | | | | | — | | | | | | 616.8 | | |

| All other | | | | | | 242.9 | | | | | | 75.4 | | | | | | 61.6 | | | | | | — | | | | | | — | | | | | | 379.9 | | |

| External net sales | | | | | | 951.4 | | | | | | 1,643.9 | | | | | | 997.2 | | | | | | — | | | | | | — | | | | | | 3,592.5 | | |

| Intersegment net sales | | | | | | 283.2 | | | | | | — | | | | | | 241.0 | | | | | | — | | | | | | (524.2) | | | | | | — | | |

| Total revenue | | | | | | $ | 1,234.6 | | | | | $ | 1,643.9 | | | | | $ | 1,238.2 | | | | | $ | 349.7 | | | | | $ | (524.2) | | | | | $ | 3,942.2 | |

| Vehicle service professionals | | | | | | $ | 87.2 | | | | | $ | 1,643.9 | | | | | $ | 997.2 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,728.3 | |

Final purchase accounting valuations are expected to be completed in the first quarter of 2022, including the evaluation of tax benefits associated with net operating loss carryforwards.

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 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 $14.5 million excess of the purchase price over the fair value of the net assets acquired in “Goodwill” on the accompanying Consolidated Balance Sheets.

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.

In fiscal 2019, the company completed the purchase accounting valuations for the acquired net assets of Power Hawk, including intangible assets.

The $6.4 million excess of the purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Consolidated Balance Sheets.

On 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.

In fiscal 2019, the company completed the purchase accounting valuations for the acquired net assets of TMB.

Substantially all of the purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Consolidated Balance Sheets.

At the beginning of fiscal 2020, Snap-on adopted ASU No. 2016-13, *Financial Instruments - Credit Losses (Topic 326)*.

The adoption did not have a significant impact on the company’s consolidated financial statements.

Under ASU No. 2016-13, Snap-on is required to determine expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts.

| Beginning of period | | | $ | 26.3 | | | | | $ | 20.9 | |