# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# x	ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

For	the	fiscal	year	ended	December	29,	2007,	or

# o	TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# Commission	File	Number	1-7724

	(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	of	incorporation)

2801	80 th 	Street,	Kenosha,	Wisconsin (Address	of	principal	executive	offices)

(I.R.S.	Employer	Identification	No.)

(Zip	code)

(Registrant's	telephone	number,	including	area	code)

# Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.		Yes	x		No	o

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	15(d)	of	the	Act.		Yes	o		No	x

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90 days.		Yes	x		No	o

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

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.		See	definitions	of "large	accelerated	filer,"	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer			x

Accelerated	filer			o Non-accelerated	filer			o Smaller	reporting	company			o

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	by	Rule	12b-2	of	the	Exchange	Act).		Yes	o		No	x

The	aggregate	market	value	of	voting	and	non-voting	common	equity	held	by	non-affiliates		(excludes	177,133	shares	held	by	directors	and	executive	officers)

computed	by	reference	to	the	price	($50.51)	at	which	common	equity	was	last	sold	as	of	the	last	business	day	of	the	registrant's	most	recently	completed	second	fiscal quarter	(June	30,	2007)	was:	$2.9	billion

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Part	III	of	this	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	around	March	19,	2008,	prepared	for	the	Annual	Meeting	of	Shareholders	scheduled	for	April	24,	2008.

# TABLE	OF	CONTENTS

# Signatures

Exhibit	Index

# PART	I

# Safe	Harbor

Statements	in	this	document	that	are	not	historical	facts,	including	statements	that	(i)	are	in	the	future	tense;	(ii)	include	the	words	"expects,"	"plans,"	"targets," "estimates,"	"believes,"	"anticipates,"	or	similar	words	that	reference	Snap-on	Incorporated	("Snap-on"	or	"the	company")	or	its	management;	(iii)	are	specifically identified	as	forward-looking;	or	(iv)	describe	Snap-on's	or	management's	future	outlook,	plans,	estimates,	objectives	or	goals,	are	forward-looking	statements	within the	meaning	of	the	Private	Securities	Litigation	Reform	Act	of	1995.		Snap-on	cautions	the	reader	that	any	forward-looking	statements	included	in	this	document	that are	based	upon	assumptions	and	estimates	were	developed	by	management	in	good	faith	and	are	subject	to	risks,	uncertainties	or	other	factors	that	could	cause	(and	in some	cases	have	caused)	actual	results	to	differ	materially	from	those	described	in	any	such	statement.	Accordingly,	forward-looking	statements	should	not	be	relied upon	as	a	prediction	of	actual	results	or	regarded	as	a	representation	by	the	company	or	its	management	that	the	projected	results	will	be	achieved.	For	those	forward- looking	statements,	Snap-on	cautions	the	reader	that	numerous	important	factors,	such	as	those	listed	below,	as	well	as	those	factors	discussed	in	this	Annual	Report	on Form	10-K,	particularly		those	in	"Item	1A:	Risk	Factors,"	could	affect	the	company's	actual	results	and	could	cause	its	actual	consolidated	results	to	differ	materially from	those	expressed	in	any	forward-looking	statement	made	by,	or	on	behalf	of,	Snap-on.

These	risks	and	uncertainties	include,	without	limitation,	uncertainties	related	to	estimates,	statements,	assumptions	and	projections	generally,	and	the	timing	and progress	with	which	Snap-on	can	attain	efficiencies	and	savings	from	its	Rapid	Continuous	Improvement	("RCI")	and	cost	reduction	actions,	including	its	ability	to achieve	improvements	in	the	company's	manufacturing	footprint	and	greater	efficiencies	in	its	supply	chain,	and	enhance	machine	maintenance,	plant	productivity	and manufacturing	line	set-up	and	change-over	practices,	any	or	all	of	which	could	result	in	production	inefficiencies,	higher	costs	and	lost	revenues.		These	risks	also include	uncertainties	related	to	Snap-on's	capability	to	implement	future	strategies	with	respect	to	its	existing	businesses,	its	ability	to	refine	its	brand	and	franchise strategies,	retain	and	attract	franchisees,	further	enhance	service	and	value	to	franchisees	and	thereby	enhance	their	sales	and	profitability,	introduce	successful	new products,	successfully	integrate	acquisitions	(including	the	company's	November	28,	2006,	acquisition	of	Snap-on	Business	Solutions	(formerly	ProQuest	Business Solutions)),	as	well	as	its	ability	to	withstand	disruption	arising	from	natural	disasters,	planned	facility	closures	or	other	labor	interruptions,	litigation	challenges	and external	negative	factors	including	significant	changes	in	the	current	competitive	environment,	inflation,	interest	rates	and	other	monetary	and	market	fluctuations;	and the	impact	of	legal	proceedings,	energy	and	raw	material	supply	and	pricing	(including	steel	and	gasoline),	the	amount,	rate	and	growth	of	general	and	administrative expenses,	including	health	care	and	postretirement	costs,	and	terrorist	disruptions	on	business.		Snap-on	disclaims	any	responsibility	to	update	any	forward-looking statement	provided	in	this	document,	except	as	required	by	law.

In	addition,	investors	should	be	aware	that	generally	accepted	accounting	principles	in	the	United	States	of	America	("U.S.	GAAP")	prescribe	when	a	company	should reserve	for	particular	risks,	including	litigation	exposures.		Accordingly,	results	for	a	given	reporting	period	could	be	significantly	affected	if	and	when	a	reserve	is established	for	a	major	contingency.	Reported	results,	therefore,	may	appear	to	be	volatile	in	certain	accounting	periods.

# Item	1:	Business

Snap-on	was	incorporated	under	the	laws	of	the	state	of	Wisconsin	in	1920	and	reincorporated	under	the	laws	of	the	state	of	Delaware	in	1930.		Snap-on	is	a	leading global	innovator,	manufacturer	and	marketer	of	tools,	diagnostics,	equipment,	software	and	service	solutions	for	professional	users.		Products	and	services	include	hand and	power	tools,	tool	storage,	diagnostics	software,	information	and	management	systems,	shop	equipment	and	other	solutions	for	vehicle	dealerships	and	repair	centers, as	well	as	customers	in	industry,	government,	agriculture,	aviation	and	natural	resources.		Snap-on	also	derives	income	from	various	financing	programs	to	facilitate	the sales	of	its	products.

Snap-on	markets	its	products	and	brands	through	multiple	distribution	sales	channels	in	more	than	130	countries.	Snap-on's	largest	geographic	markets	include	the United	States,	Australia,	Canada,	China,	France,	Germany,	Italy,	Japan,	the	Netherlands,	Spain,	Sweden	and	the	United	Kingdom.		Snap-on	also	reaches	its	customers through	the	company's	franchisee,	company-direct,	distributor	and	Internet	channels.		Snap-on	originated	the	mobile	van	tool	distribution	channel	in	the	automotive repair	market.

Snap-on's	business	segments	are	based	on	the	organization	structure	used	by	management	for	making	operating	and	investment	decisions	and	for	assessing performance.		Snap-on's	reportable	business	segments	include:	(i)	the	Commercial	&	Industrial	Group;	(ii)	the	Snap-on	Tools	Group;	(iii)	the	Diagnostics	&	Information Group;	and	(iv)	Financial	Services.	The	Commercial	&	Industrial	Group	consists	of	the	business	operations	providing	tools	and	equipment	products	and	equipment repair	services	to	a	broad	range	of	industrial	and	commercial	customers	worldwide	through	direct,	distributor	and	other	non-franchise	distribution	channels.	The	Snap-on Tools	Group	consists	of	the	business	operations	serving	the	worldwide	franchise	van	channel.		The	Diagnostics	&	Information	Group	consists	of	the	business	operations providing	diagnostics	equipment,	vehicle	service	information,	business	management	systems,	electronic	parts	catalogs,	and	other	solutions	for	vehicle	service	to customers	in	the	worldwide	vehicle	service	and	repair	marketplace.	Financial	Services	consists	of	the	business	operations	of	Snap-on	Credit	LLC	("SOC"),	a consolidated,	50%-owned	joint	venture	between	Snap-on	and	The	CIT	Group,	Inc.	("CIT"),	and	Snap-on's	wholly	owned	finance	subsidiaries	in	those	international markets	where	Snap-on	has	franchise	operations.		See	Note	18	to	the	Consolidated	Financial	Statements	for	information	on	business	segments	and	foreign	operations.

Snap-on	evaluates	the	performance	of	its	reportable	segments	based	on	segment	revenues	and	operating	earnings.	For	the	Commercial	&	Industrial,	Snap-on	Tools,	and Diagnostics	&	Information	Groups,	segment	net	sales	include	both	external	and	intersegment	net	sales.		Snap-on	accounts	for	intersegment	sales	and	transfers	based primarily	on	standard	costs	with	reasonable	mark-ups	established	between	the	segments.		Identifiable	assets	by	segment	are	those	assets	used	in	the	respective	reportable

segment's	operations.		Intersegment	amounts	are	eliminated	to	arrive	at	consolidated	financial	results.

On	November	28,	2006,	Snap-on	acquired	the	ProQuest	Business	Solutions	business	and	certain	net	assets	(collectively,	"Snap-on	Business	Solutions"	or	"Business Solutions")	from	ProQuest	Company	for	an	initial	purchase	price	of	$516.0	million	of	cash	and	the	assumption	of	approximately	$19	million	of	debt.		Subsequent	to	the November	28,	2006,	closing,	the	cash	purchase	price	increased	by	$5.7	million	to	$521.7	million,	primarily	reflecting	a	higher	level	of	working	capital	received	by	Snap- on	at	closing.		For	segment	reporting,	Snap-on	Business	Solutions	is	included	in	the	Diagnostics	&	Information	Group.

Snap-on	Business	Solutions	is	a	world	leader	in	automotive	parts	and	service	information.		Its	products	are	aimed	at	assisting	original	equipment	manufacturers ("OEMs")	and	their	dealers	to	enhance	their	service	operations.		Business	Solutions'	products	include	integrated	software,	services	and	systems	that	transform	complex technical	data	for	parts	catalogs	into	easily	accessed	electronic	information	(electronic	parts	catalogs).	Other	products	and	services	include	warranty	management systems	and	analytics	to	help	dealerships	manage	and	track	the	complex	process	of	warranty	claims	management.		Over	35,000	automotive	dealerships	around	the	world use	Business	Solutions'	electronic	parts	catalogs,	which	are	available	in	26	different	languages	and	support	15	automotive	manufacturers	and	31	brands.		Business Solutions'	products	are	also	sold	to	over	85,000	dealers	in	the	power	equipment	and	power	sports	markets.	See	Note	2	to	the	Consolidated	Financial	Statements	for further	information	on	the	Snap-on	Business	Solutions	acquisition.

# Information	Available	on	the	Company's	Web	Site

Additional	information	regarding	Snap-on	and	its	products	is	available	on	the	company's	Web	site	at	www.snapon.com.		Snap-on	is	not	including	the	information contained	on	its	Web	site	as	a	part	of,	or	incorporating	it	by	reference	into,	this	Annual	Report	on	Form	10-K.		Snap-on's	Annual	Report	on	Form	10-K,	Quarterly Reports	on	Form	10-Q,	Definitive	Proxy	Statements	on	Schedule	14A,	Current	Reports	on	Form	8-K,	and	any	amendments	to	those	reports,	are	made	available	to	the public	at	no	charge,	other	than	an	investor's	own	Internet	access	charges,	through	the	Investor	Information	section	of	the	company's	Web	site	at www.snapon.com/investor.		Snap-on	makes	such	material	available	on	its	Web	site	as	soon	as	reasonably	practicable	after	it	electronically	files	such	material	with,	or furnishes	it	to,	the	Securities	and	Exchange	Commission	("SEC").		Copies	of	any	materials	the	company	files	with	the	SEC	can	also	be	obtained	free	of	charge	through the	SEC's	Web	site	at	www.sec.gov.		The	SEC's	Public	Reference	Room	can	be	contacted	at	100	F	Street,	N.E.,	Washington,	D.C.	20549,	or	by	calling	1-800-732- 0330.		In	addition,	the	company's	(i)	charters	for	the	Audit,	Corporate	Governance	and	Nominating,	and	Organization	and	Executive	Compensation	committees	of	the company's	Board	of	Directors;	(ii)	Corporate	Governance	Guidelines;	and	(iii)	Code	of	Business	Conduct	and	Ethics	are	available	on	Snap-on's	Web	site.		Snap-on	will also	post	any	amendments	to	these	documents,	or	information	about	any	waivers	granted	to	directors	or	executive	officers	with	respect	to	the	Code	of	Business	Conduct and	Ethics,	on	the	company's	Web	site	at	www.snapon.com.		These	documents	are	also	available	in	print	upon	written	request	directed	to	the	Corporate	Secretary,	2801 80 th 	Street,	Kenosha,	Wisconsin	53143.

# Products	and	Services

Snap-on	offers	a	broad	line	of	products	and	complementary	services	that	are	grouped	into	three	product	categories:	(i)	tools;	(ii)	diagnostics	and	repair	information;	and (iii)	equipment.		Further	product	line	information	is	not	presented	as	it	is	not	practicable	to	do	so.		The	following	table	shows	the	consolidated	net	sales	of	these	product categories	for	the	last	three	years:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Product\tCategory: |  |  |  |
| Tools | $1,632.2 | $1,453.1 | $1,387.3 |
| Diagnostics\tand\trepair\tinformation | 647.6 | 499.5 | 405.8 |
| Equipment | 561.4 | 502.5 | 487.9 |
|  | $2,841.2 | $2,455.1 | $2,281.0 |

The	tools	product	category	includes	hand	tools,	power	tools	and	tool	storage	products.	Hand	tools	include	wrenches,	screwdrivers,	sockets,	pliers,	ratchets,	saws	and cutting	tools,	pruning	tools,	torque	measuring	instruments	and	other	similar	products.	Power	tools	include	pneumatic	(air),	cordless	(battery)	and	corded	(electric)	tools such	as	impact	wrenches,	ratchets,	chisels,	drills,	sanders,	polishers	and	similar	products.	Tool	storage	includes	tool	chests,	roll	cabinets	and	other	similar	products.		The majority	of	products	are	manufactured	by	Snap-on	and,	in	completing	the	product	line,	other	items	are	purchased	from	external	manufacturers.

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

Snap-on	supports	the	sale	of	its	diagnostics	and	vehicle	service	shop	equipment	by	offering	training	programs	as	well	as	after	sales	support	for	its	customers,	primarily focusing	on	the	technologies	and	the	application	of	specific	products	developed	and	marketed	by	Snap-on.

The	equipment	product	category	includes	solutions	for	the	diagnosis	and	service	of	automotive	and	industrial	equipment.	Products	include	wheel	alignment	equipment, wheel	balancers,	tire	changers,	vehicle	lifts,	test	lane	systems,	collision	repair	equipment,	air	conditioning	service	equipment,	brake	service	equipment,	fluid	exchange equipment,	transmission	troubleshooting	equipment,	safety	testing	equipment,	battery	chargers	and	hoists.

Products	are	marketed	under	a	number	of	brand	names	and	trademarks,	many	of	which	are	well	known	in	the	vehicle	service	and	industrial	markets	served.	Some	of	the major	trade	names	and	trademarks	and	the	products	and	services	with	which	they	are	associated	include	the	following:

In	addition	to	its	sales	of	tool,	diagnostic,	service	and	equipment	solutions,	Snap-on	also	generates	revenue	from	various	financing	activities	that	include	(i)	loans	to franchisees;	(ii)	loans	to	the	franchisees'	customers;	and	(iii)	loans	to	Snap-on's	industrial	and	other	customers	for	the	purchase	of	tools,	equipment	and	diagnostics products	on	an	extended-term	payment	plan.

Franchise	fee	revenue,	including	nominal,	non-refundable	initial	and	ongoing	monthly	fees	(primarily	for	sales	and	business	training	and	marketing	and	product promotion	programs),	is	recognized	as	the	fees	are	earned.

# Sales	and	Distribution

Snap-on	markets	and	distributes	its	products	and	related	services	principally	to	professional	tool	and	equipment	users	around	the	world.		The	two	largest	market	sectors are	the	vehicle	service	and	repair	sector	and	the	industrial	sector.

# Vehicle	Service	and	Repair	Sector

The	vehicle	service	and	repair	sector	has	three	main	customer	groups:	(i)	professional	technicians	who	purchase	tools	and	equipment	for	themselves;	(ii)	vehicle	service and	repair	shop	owners	and	managers	-	including	independent	shops,	national	chains	and	automotive	dealerships	-	who	purchase	tools,	equipment	and	diagnostics products	for	use	by	multiple	technicians	within	a	service	or	repair	facility;	and	(iii)	OEMs.

Snap-on	provides	innovative	tool,	equipment	and	business	solutions,	as	well	as	technical	sales	support	and	training,	to	meet	technicians'	evolving	needs.	Snap-on's franchise	van	distribution	system	offers	technicians	the	convenience	of	purchasing	quality	tools	with	minimal	disruption	of	their	work	routine.	Snap-on	also	provides owners	and	managers	of	shops,	where	technicians	work,	with	tools,	diagnostics	equipment,	repair	and	service	information,	including	electronic	parts	catalogs,	and	shop management	products.	Through	its	Equipment	Solutions	("OEM	facilitation")	business,	Snap-on	provides	OEMs	with	products	and	services	including	tools,	consulting services	and	facilitation	services.		Snap-on's	facilitation	services	include	product	procurement,	distribution	and	administrative	support	to	customers	for	their	dealership equipment	programs.

Major	challenges	for	Snap-on	and	the	vehicle	service	and	repair	sector	include	the	increasing	rate	of	technological	change	within	motor	vehicles,	vehicle	population growth,	vehicle	life	and	the	resulting	impact	on	the	businesses	of	both	our	suppliers	and	customers	that	is	necessitated	by	such	change.		Snap-on	believes	it	is	a meaningful	participant	in	the	market	sector	for	vehicle	service	and	repair.

# Industrial	Sector

Snap-on	markets	its	products	globally	to	a	broad	cross-section	of	industrial	and	commercial	customers	including		maintenance	and	repair	operations;	manufacturing	and assembly	facilities;	various	government	agencies,	facilities	and	operations,	including	military	operations;	vocational	and	technical	schools;	aerospace	and	aviation;	OEM and	repair	customers;	oil	and	gas	developers;	mining	operations;	energy	and	power	generation	equipment	fabricators;	agriculture;	infrastructure	construction	companies; and	other	customers	that	require	instrumentation,	service	tools	and/or	equipment	for	their	products.

The	industrial	sector	for	Snap-on	has	achieved	growth	in	recent	years	by	providing	value-added	products	and	services	to	an	increasingly	expanding	global	base	of customers,	particularly	those	in	the	market	segments	of	natural	resources,	aerospace,	government	and	education.		Through	its	experienced	and	dispersed	sales organization,	industrial	"solutioneers"	strive	to	develop	unique	and	highly	valued	productivity	solutions	for	customers	worldwide	that	leverage	Snap-on's	product, service	and	development	capabilities.

Major	challenges	in	the	industrial	sector	include	a	highly	competitive,	cost-conscious	environment,	and	a	trend	toward	customers	making	many	of	their	tool	and equipment	purchases	through	one	integrated	supplier.	Snap-on	believes	it	is	a	meaningful	participant	in	the	market	sector	for	industrial	tools	and	equipment.

# Distribution	Channels

Snap-on	serves	customers	primarily	through	the	following	channels	of	distribution:	the	mobile	franchise	van	channel,		company-direct	sales,	distributors	and	e- commerce.		The	following	discussion	summarizes	Snap-on's	general	approach	for	each	channel,	and	is	not	intended	to	be	all-inclusive.

# Franchisees

In	the	United	States,	the	majority	of	sales	to	the	vehicle	service	and	repair	sector	are	conducted	through	Snap-on's	franchise	van	distribution	system.		Snap-on's franchisees	primarily	serve	vehicle	service	technicians	and	vehicle	service	shop	owners,	generally	providing	weekly	contact	at	the	customer's	place	of	business. Franchisees'	sales	are	concentrated	in	hand	and	power	tools,	tool	storage	units,	small	diagnostic	and	shop	equipment,	and	diagnostics	and	repair	information	products, which	can	easily	be	transported	in	a	van	and	demonstrated	during	a	brief	sales	call.		Franchisees	purchase	Snap-on's	products	at	a	discount	from	suggested	list	prices	and resell	them	at	prices	established	by	the	franchisee.	Most	U.S.	franchisees	are	provided	a	list	of	places	of	business	that	serves	as	the	basis	of	the	franchisee's	sales	route, although	some	franchisees	have	sales	areas	defined	by	other	methods.

Snap-on	also	offers	a	trial	franchise	option	–	termed	the	"Gateway	Program"	–		to	potential	U.S.	franchisees	that	do	not	meet	the	franchise	qualification	requirements. Gateway	Program	participants	have	less	upfront	investment	and	are	provided	an	initial	base	level	of	consigned	inventory	from	Snap-on	to	assist	them in	gaining	experience	and	building	equity	toward	the	future	purchase	of	a	standard	franchise.	Snap-on	also	provides	certain	franchisees	the	opportunity	to	add	vans	to their	franchise	or	to	add	a	limited	number	of	franchises.		Snap-on	charges	nominal	initial	and	ongoing	monthly	license	fees.		Since	1991,	new	U.S.	franchisees,	and	a majority	of	the	pre-1991	U.S.	franchisees,	have	been	enrolled	as	franchisees	of	Snap-on.		At	2007	year	end,	3,269	U.S.	franchisees	(approximately	96%)	were	enrolled as	franchisees,	or	employed	by	franchisees,	as	compared	with	3,308	U.S.	franchisees	(approximately	95%)	at	year-end	2006.

Snap-on	has	replicated	its	U.S.	franchise	van	distribution	model	in	certain	other	countries	including	Australia,	Canada,	Japan,	the	Netherlands,	South	Africa	and	the

United	Kingdom.	In	many	of	these	markets,	as	in	the	United	States,	purchase	decisions	are	generally	made	or	influenced	by	professional	vehicle	service	technicians	and shop	owners.	Snap-on	markets	products	in	certain	other	countries	through	its	subsidiary,	Snap-on	Tools	International	LLC,	which	sells	to	foreign	distributors	under license	or	contract	with	Snap-on.

Through	SOC,	financing	is	available	to	U.S.	franchisees,	including	financing	for	van	and	truck	leases,	working	capital	loans,	and	loans	to	enable	new	franchisees	to	fund the	purchase	of	the	franchise.		Internationally,	Snap-on	offers	financing	to	its	franchisees	and	customer	networks	through	its	wholly	owned	finance	subsidiaries.		While Snap-on	offers	financing	to	qualified	franchisees	and	their	customers	through	SOC	and	its	wholly	owned	international	finance	subsidiaries,	the	decision	to	finance through	Snap-on	or	another	financing	entity	is	solely	at	the	election	of	the	customer.

Snap-on	supports	its	franchisees	with	a	field	organization	of	regional	offices,	franchise	performance	teams,	Diagnostic	Sales	Developers	("DSDs"),	service	centers	and distribution	centers.		Snap-on	also	provides	sales	and	business	training,	and	marketing	and	product	promotion	programs,	as	well	as	customer	and	franchisee	financing programs	through	SOC	and	its	wholly	owned	international	finance	subsidiaries,	all	of	which	are	designed	to	strengthen	franchisee	sales.		In	the	United	States	and Canada,	the	National	Franchise	Advisory	Council	and	the	Snap-on	Tools	Canadian	Franchise	Advisory	Council,	both	of	which	are	composed	of	franchisees	that	are elected	by	franchisees,	assist	Snap-on	in	identifying	and	implementing	enhancements	to	the	franchise	program.

In	the	United	States,	franchisees	work	closely	with	the	DSDs.		The	DSD	specialists	demonstrate	and	sell	higher-price-point	diagnostics	and	vehicle	service	shop management	information	systems.		DSDs	work	independently	and	with	franchisees	to	identify	and	generate	sales	leads	among	vehicle	service	shop	owners	and managers.		DSDs	are	Snap-on	employees	who,	beginning	in	2008,	are	compensated	through	a	combination	of	base	salary	and	commission;	a	franchisee	receives	a brokerage	fee	from	certain	sales	made	by	the	DSDs	to	the	franchisee's	customers.		Most	products	sold	through	franchisees	and	the	DSDs	are	sold	under	the	Snap-on, Blue-Point	and	Sun	brand	names.

# Company	Direct	Sales

In	the	United	States,	a	significant	proportion	of	shop	equipment	sales	under	the	Sun,	John	Bean	and	Blackhawk	brands	and	information	products	under	the	Mitchell1 brand	are	made	by	a	direct	sales	force	that	has	responsibility	for	national	accounts.	As	the	vehicle	service	and	repair	sector	consolidates	(with	more	business	conducted by	national	chains,	automotive	dealerships	and	franchised	service	centers),	the	company	believes	these	larger	organizations	can	be	serviced

most	effectively	by	sales	people	who	can	demonstrate	and	sell	the	full	line	of	equipment	and	diagnostic	products	and	services.		Snap-on	also	sells	these	products	and services	directly	to	OEMs.

Snap-on	brand	tools	and	equipment	are	marketed	to	industrial	and	governmental	customers	in	the	United	States	through	both	industrial	sales	representatives,	who	are employees,	and	independent	industrial	distributors.	In	most	markets	outside	the	United	States,	industrial	sales	are	conducted	through	independent	distributors.	The	sales representatives	focus	on	industrial	customers	whose	main	purchase	criteria	are	quality	and	service.	At	the	end	of	2007,	Snap-on	had	industrial	sales	representatives	in	the United	States,	Australia,	Canada,	Japan,	Mexico,	Puerto	Rico	and	some	European,	Asian,	Latin	American	and	Middle	Eastern	countries,	with	the	United	States representing	the	majority	of	Snap-on's	total	industrial	sales.

Business	Solutions	sells	automotive,	power	equipment	and	power	sports	software	solutions,	both	domestically	and	internationally,	through	an	internal	sales	force. Products	and	services	are	marketed	to	two	targeted	groups:	OEMs	and	individual	dealerships.	To	effectively	reach	the	large	OEMs	in	the	automotive	segment,	such	as General	Motors	Corporation,	Daimler	AG,	Ford	Motor	Company,	Chrysler	LLC,	and	Toyota	Motor	Corporation,	Business	Solutions	has	deployed	a	team	of	business development	professionals	in	the	world's	principal	automotive	centers	in	the	United	States,	the	United	Kingdom,	Germany,	Italy,	France,	Spain	and	Japan.		In	the	United States	and	Canada,	automotive		products	and	services	are	sold	directly	to	individual	dealerships	using	an	experienced	sales	force.		In	reaching	customers	such	as	John Deere	(Deere	&	Company),	JC	Bamford	Excavators	Ltd.	(JCB)	and	Yamaha	Corporation	of	America	(Yamaha)	in	the	power	equipment	and	power	sports	segments, teams	are	also	positioned	to	support	the	90+	brands	that	Business	Solutions	distributes	to	globally.		Business	management	solutions	are	sold	directly	to	the	automotive OEMs	in	the	United	States	and	throughout	Europe,	including	the	United	Kingdom.

# Distributors

Sales	of	certain	tools	and	equipment	are	made	through	independent	vehicle	service	and	industrial	distributors	who	purchase	the	items	from	Snap-on	and	resell	them	to end	users.		Hand	tools	under	the	Bahco,	Fish	and	Hook,	Pradines	and	Lindstrom	brands	and	trade	names,	for	example,	are	sold	through	distributors	in	Europe,	North	and South	America,	Asia	and	certain	other	parts	of	the	world.		Wheel	service	and	other	vehicle	service	equipment	are	sold	through	distributors	primarily	under	brands including	Hofmann,	Kansas	Jack,	John	Bean	and	Blackhawk.	Sun-branded	equipment	is	marketed	through	distributors	in	South	America	and	Asia,	and	through	both	a direct	sales	force	and	distributors	in	Europe.

# E-commerce

Snap-on's	e-commerce	development	initiatives	allow	Snap-on	to	combine	the	capabilities	of	the	Internet	with	Snap-on's	existing	brand	sales	and	distribution	strengths	to reach	new	and	under-served	customer	segments.	Snap-on	offers	current	and	prospective	customers	online,	around-the-clock	access	to	purchase	products	through	its public	Internet	Web	site	at	www.snapon.com.		The	site	features	an	online	catalog	containing	nearly	14,000	products,	including	Snap-on	hand	tools,	power	tools,	tool storage	units	and	diagnostic	equipment	available	to	consumers	and	professionals	in	the	United	States,	the	United	Kingdom,	Canada	and	Australia.		At	the	end	of	2007, Snap-on	had	more	than	468,000	registered	users,	including	approximately	38,000	industrial	accounts.		E-commerce	and	certain	other	system	enhancement	initiatives	are designed	to	improve	productivity	and	further	leverage	the	one-on-one	relationships	and	service	Snap-on	has	with	its	current	and	prospective	customers.	Through business-to-business	and	business-to-consumer	capabilities,	Snap-on	and	its	franchisees	are	enhancing	communications	with	customers	on	a	real-time,	24-hour,	7-day	a week	basis.

# Competition

Snap-on	competes	on	the	basis	of	its	product	quality	and	performance,	product	line	breadth	and	depth,	service,	brand	awareness	and	imagery,	and	technological innovation.	While	no	single	company	competes	with	Snap-on	across	all	of	its	product	lines	and	distribution	channels,	various	companies	compete	in	one	or	more	product categories	and/or	distribution	channels.

Snap-on	believes	it	is	a	leading	manufacturer	and	distributor	of	professional	tools,	diagnostics,	equipment	and	repair	solutions,	offering	the	broadest	line	of	these products	to	the	vehicle	service	industry.		The	major	competitors	selling	to	professional	technicians	in	the	automotive	service	and	repair	sector	through	the	mobile	van channel	include	MAC	Tools	(The	Stanley	Works),	Matco	(Danaher	Corporation),	and	Cornwell.		Snap-on	also	competes	with	companies	that	sell	tools	and	equipment	to automotive	technicians	through	non-mobile	van	distributors	including	Craftsman	(Sears	Brands	LLC),	RIDGID	and	Husky	(The	Home	Depot,	Inc.),	and	Kobalt	(Lowes Companies,	Inc.),	auto	parts	supply	outlets	(such	as	NAPA,	AutoZone,	Inc.	and	Pep	Boys),	and	tool	supply	warehouses/distributorships	(such	as	MEDCO	and	Integrated Supply	Network,	Inc.	(ISN)).		Within	the	power	tools	category,	Snap-on's	major	competitors	include	Ingersoll-Rand	Co.	Limited,	The	Black	&	Decker	Corp.,	Makita Corp.,	Chicago	Pneumatic	(Atlas	Copco),	and	Milwaukee	Electric	(Techtronic	Industries	Co.	Ltd.).		In	the	industrial	sector,	major	competitors	include	Facom	Tools	and Proto	(The	Stanley	Works),	Armstrong	(Danaher	Corporation),	IRWIN	(Newell	Rubbermaid,	Inc.),	Cooper	Industries,	Ltd.,	and	Westward	(W.W.	Grainger,	Inc.).		The

major	competitors	selling	diagnostics	and	shop	equipment	and	information	to	shop	owners	and	managers	in	the	vehicle	service	and	repair	sector	include	Corghi	S.p.A., Fluke	and	Hennessy	(Danaher	Corporation),	Robinair	and	OTC	(SPX	Corporation),	Hunter	Engineering,	Rotary	Lift	and	Chief	Automotive	(Dover	Corporation),	Car- O-Liner	AB,	Lexcom	GmbH,	Infomedia	Ltd.,	ALLDATA	(AutoZone,	Inc.),	and	the	proprietary	diagnostic	and	information	systems	of	OEMs.

# Raw	Materials	and	Purchased	Product

Snap-on's	supply	of	raw	materials	and	purchased	components	are	generally	and	readily	available	from	numerous	suppliers.		During	2006	and	2007,	Snap-on experienced	higher	pricing	related	to	certain	grades	and	alloys	of	steel.		Snap-on	has	secured	an	ample	supply	of	both	bar	and	coil	steel	for	the	near	future	to	ensure stable	supply	to	meet	material	demands.		While	Snap-on	believes	that	steel	prices	will	continue	to	remain	high	for	2008,	the	company	does	not	anticipate	experiencing any	significant	steel	pricing	or	availability	issues	in	2008.

# Patents,	Trademarks	and	Other	Intellectual	Property

Snap-on	vigorously	pursues	and	relies	on	patent	protection	to	protect	its	intellectual	property	and	its	position	in	its	markets.	As	of	December	29,	2007,	Snap-on	and	its subsidiaries	held	over	800	active	and	pending	patents	in	the	United	States	and	over	1,600	active	and	pending	patents	outside	of	the	United	States.		Sales	relating	to	any single	patent	did	not	represent	a	material	portion	of	Snap-on's	revenues	in	the	last	three	years.

Examples	of	products	that	have	features	or	designs	that	benefit	from	patent	protection	include	wheel	alignment	systems,	wheel	balancers,	tire	changers,	lifts,	test	lanes, sealed	ratchets,	electronic	torque	instruments,	ratcheting	screwdrivers,	emissions-sensing	devices	and	diagnostic	equipment.

Much	of	the	technology	used	in	the	manufacture	of	vehicle	service	tools	and	equipment	is	in	the	public	domain.	Snap-on	relies	primarily	on	trade	secret	protection	to protect	proprietary	processes	used	in	manufacturing.		Methods	and	processes	are	patented	when	appropriate.		Copyright	protection	is	also	utilized	when	appropriate.

Trademarks	used	by	Snap-on	are	of	continuing	importance	to	Snap-on	in	the	marketplace.		Trademarks	have	been	registered	in	the	United	States	and	more	than	100 other	countries,	and	additional	applications	for	trademark	registrations	are	pending.		Snap-on	vigorously	polices	proper	use	of	its	trademarks.		Snap-on's	right	to manufacture	and	sell	certain	products	is	dependent	upon	licenses	from	others;	however,	these	products	under	license	do	not	represent	a	material	portion	of	Snap-on's	net sales.

Domain	names	have	become	a	valuable	corporate	asset	for	companies	around	the	world,	including	Snap-on.		Domain	names	often	contain	a	trademark	or	service	mark	or even	a	corporate	name	and	are	often	considered	intellectual	property.	The	recognition	and	value	of	the	Snap-on	name,	trademark,	and	domain	name	are	core	strengths	of the	company.

Snap-on	is	selectively	and	strategically	licensing	the	Snap-on	brand	to	carefully	selected	manufacturing	and	distribution	companies	for	items	such	as	apparel,	work	boots and	a	variety	of	other	goods,	in	order	to	further	build	equity	and	market	presence	for	the	company's	strongest	brand.

# Environment

Snap-on	is	subject	to	various	environmental	laws,	ordinances,	regulations,	and	other	requirements	of	government	authorities	in	the	United	States	and	other	nations.		At Snap-on,	these	environmental	liabilities	are	managed	through	the	Snap-on	Environmental,	Hygiene,	and	Safety	Management	System	("EH	&	SMS"),	which	is	applied worldwide.		The	system	is	based	upon	continual	improvement	and	is	certified	to	ISO	14001:1996	and	OHSAS	18001:1999,	verified	through	Det	Norske	Veritas	(DNV) Certification,	Inc.

Snap-on	believes	that	it	complies	with	applicable	environmental	control	requirements	in	its	operations.		Expenditures	on	environmental	matters	through	EH	&	SMS	have not	had,	and	Snap-on	does	not	for	the	foreseeable	future	expect	them	to	have,	a	material	effect	upon	Snap-on's	capital	expenditures,	earnings	or	competitive	position.

# Employees

At	the	end	of	January	2008,	Snap-on	employed	approximately	11,600	people	compared	to	approximately	12,400	people	at	the	end	of	January	2007.		The	year-over-year decrease	primarily	reflects	the	impacts	of	restructuring-related	and	management	realignment	actions	at	various	Snap-on	facilities,	as	well	as	the	June	2007	sale	of	a	non- strategic	business	based	in	the	Netherlands.

Approximately	3,100	employees,	or	27%	of	Snap-on's	worldwide	workforce,	are	represented	by	unions	and/or	covered	under	collective	bargaining	agreements. 	Approximately	1,100	employees	are	covered	under	agreements	expiring	in	2008.	In	recent	years,	Snap-on	has	not	experienced	any	significant	work	slow-downs, stoppages	or	other	labor	disruptions.

The	number	of	covered	union	employees	whose	contracts	expire	within	the	next	five	years	approximates	1,100	employees	in	2008;	500	employees	in	2009;	650 employees	in	2010;	100	employees	in	2011;	and	zero	employees	in	2012.

There	can	be	no	assurance	that	future	contracts	with	Snap-on's	unions	will	be	renegotiated	upon	terms	acceptable	to	Snap-on.

# Working	Capital

As	most	of	Snap-on's	business	is	not	seasonal	and	its	inventory	needs	are	relatively	constant,	no	unusual	working	capital	needs	arise	during	the	year.		Snap-on	did	not have	a	significant	backlog	of	orders	at	December	29,	2007.

Snap-on's	financial	condition	and	use	of	working	capital	are	discussed	herein	in	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of Operations."

Neither	Snap-on	nor	any	of	its	segments,	except	Financial	Services,	depend	on	any	single	customer,	small	group	of	customers	or	government	for	any	material	part	of	its revenues.		As	a	result	of	SOC's	relationship	with	CIT,	Snap-on's	Financial	Services	segment	depends	on	CIT	for	more	than	10%	of	its	revenues.

# Item	1A:	Risk	Factors

In	evaluating	the	company,	careful	consideration	should	be	given	to	the	following	risk	factors,	in	addition	to	the	other	information	included	in	this	Annual	Report	on Form	10-K,	including	the	Consolidated	Financial	Statements	and	the	related	notes.		Each	of	these	risk	factors	could	adversely	affect	the	company's	business,	operating results,	cash	flows	and/or	financial	condition,	as	well	as	adversely	affect	the	value	of	an	investment	in	the	company's	common	stock.

The	success	of	Snap-on's	mobile	van	tool	distribution	business	depends	on	the	success	of	its	franchisees.

Approximately	38%	of	our	2007	revenues	were	generated	by	the	Snap-on	Tools	Group,	which	consists	of	Snap-on's	business	operations	serving	the	worldwide	franchise van	channel.	Except	in	limited	circumstances,	each	of	our	mobile	tool	vans	is	operated	by	a	franchisee	pursuant	to	a	franchise	agreement.	Snap-on's	success	is	dependent on	its	relationships	with	franchisees,	individually	and	collectively,	as	they	are	the	primary	sales	and	service	link	between	the	company	and	vehicle	service	and	repair

technicians,	who	are	an	important	class	of	end	users	for	Snap-on's	products	and	services.	If	our	franchisees	are	not	successful,	or	if	we	do	not	maintain	an	effective relationship	with	our	franchisees,	the	delivery	of	products,	the	collection	of	receivables	and/or	our	relationship	with	end	users	could	be	adversely	affected	and	thereby negatively	impact	our	financial	results.

In	addition,	if	we	are	unable	to	maintain	effective	relationships	with	franchisees,	the	company	or	the	franchisees	may	choose	to	terminate	the	relationship,	which	may result	in	(i)	open	routes,	in	which	end-use	customers	are	not	provided	reliable	service;	(ii)	litigation	resulting	from	termination;	and/or	(iii)	reduced	collections	or increased	write-offs	of	franchisee	receivables	owed	to	Snap-on.		As	Snap-on	has	approximately	4,700	franchisees	worldwide	and	most	of	these	franchise	relationships are	governed	by	contract,	it	is	not	uncommon	for	litigation	to	result	from	the	termination	of	these	relationships.

We	may	not	successfully	integrate	businesses	we	acquire,	which	could	have	an	adverse	impact	on	our	results	of	operations	and	financial	position.

If	we	pursue	future	growth	through	further	acquisitions,	including	participation	in	joint	ventures,	this	would	involve	significant	risks	that	could	have	a	material	adverse effect	on	our	business,	results	of	operations	and	financial	position.		These	risks	include:

·																		An	inability	to	integrate	successfully	the	acquired	businesses'	operations;

·																		Inability	to	coordinate	management	and	integrate	and	retain	employees	of	the	acquired	businesses;

·																		Difficulties	in	implementing	and	maintaining	consistent	standards,	controls,	procedures,	policies	and	information	systems;

·																		Failure	to	realize	anticipated	synergies,	economies	of	scale	or	other	anticipated	benefits,	or	to	maintain	operating	margins;

·																		Strain	on	our	personnel,	systems	and	resources,	and	diversion	of	attention	from	other	priorities;

·																		Incurrence	of	additional	debt	and	related	interest	expense;

·																		The	dilutive	effect	of	the	issuance	of	additional	equity	securities;

·																		Unforeseen	or	contingent	liabilities	of	the	acquired	businesses;	and

·																		Large	write-offs	or	write-downs,	or	the	impairment	of	goodwill	or	other	intangible	assets.

# Information	technology	infrastructure	is	critical	to	supporting	business	objectives.

We	depend	heavily	on	information	technology	infrastructure	to	achieve	our	business	objectives.		If	a	problem	occurs	that	impairs	this	infrastructure,	the	resulting disruption	could	impede	our	ability	to	record	or	process	orders,	manufacture	and	ship	in	a	timely	manner,	or	otherwise	carry	on	business	in	the	normal	course.		Any	such events	could	cause	us	to	lose	customers	or	revenue	and	could	require	us	to	incur	significant	expense	to	remediate.

In	association	with	initiatives	to	better	integrate	business	units,	rationalize	operating	footprint	and	improve	responsiveness	to	franchisees	and	customers,	Snap-on	is replacing	and	enhancing	its	existing	global	Enterprise	Resource	Planning	(ERP)	management	information	system.		The	integration,	implementation	and	deployment	of new	information	technology	processes	and	a	common	information	infrastructure,	which	began	in	2006,	is	occurring	over	a	multi-year	period.		We	could	experience disruptions	in	our	business	as	we	implement	the	system	enhancements,	which	could	have	an	adverse	effect	on	our	business	and	results	of	operations.

The	recognition	of	impairment	charges	on	goodwill	or	other	intangible	assets	would	adversely	impact	future	financial	position	and	results	of	operations.

We	are	required	to	perform	impairment	tests	on	our	goodwill	and	other	intangibles	annually	or	at	any	time	when	events	occur,	which	could	impact	the	value	of	our business	segments.	Our	determination	of	whether	impairment	has	occurred	is	based	on	a	comparison	of	each	of	our	reporting	units'	fair	market	value	with	its	carrying value.	Significant	and	unanticipated	changes	could	require	a	provision	for	impairment	in	a	future	period	that	could	substantially	affect	our	reported	earnings	and	reduce our	consolidated	net	worth	and	shareholders'	equity.

The	steps	taken	to	restructure	operations,	rationalize	operating	footprint,	lower	operating	expenses,	and	achieve	greater	efficiencies	in	the	supply	chain	could	disrupt business.

We	have	taken	steps	in	the	past,	and	expect	to	take	additional	steps	in	2008,	intended	to	improve	customer	service	and	to	drive	further	efficiencies	and	reduce	costs, some	of	which	could	be	disruptive	to	our	business.		These	actions,	collectively	across	our	operating	groups,	are	focused	on	the	following:

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

·																		Continue	to	enhance	service	and	value	to	Snap-on's	franchisees	and	customers;

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

·																		Continue	to	implement	RCI	activities	throughout	the	organization	to	drive	further	efficiencies	and	reduce	costs;

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

·																		Extend	Snap-on's	products	and	services	into	additional	and/or	adjacent	markets	or	to	new	customers.

Specific	initiatives	in	each	of	these	areas	are	underway.		Snap-on	believes	that	by	executing	on	these	focus	areas,	along	with	a	continued	commitment	to	new	innovative products	and	RCI	to	drive	higher	levels	of	productivity	and	lower	costs,	the	company	and	its	franchisees	will	realize	stronger	growth	and	profitability.		However,	failure to	succeed	in	the	implementation	of	any	or	all	of	these	actions	could	result	in	an	inability	to	achieve	our	financial	goals	and	could	be	disruptive	to	the	business.

In	addition,	reductions	to	headcount	and	other	cost	reduction	measures	may	result	in	the	loss	of	technical	expertise	that	could	adversely	affect	our	research	and development	efforts	and	ability	to	meet	product	development	schedules.	Efforts	to	reduce	components	of	expense	could	result	in	the	recording	of	charges	for	inventory and	technology-related	write-offs,	workforce	reduction	costs	or	other	charges	relating	to	the	consolidation	of	facilities.	If	we	were	to	incur	a	substantial	charge	to	further these	efforts,	our	earnings	(or	loss)	per	share	would	be	adversely	affected	in	such	period.	If	we	are	unable	to	effectively	manage	our	cost	reduction	and	restructuring efforts,	our	business,	results	of	operations	and	financial	condition	could	be	harmed.

Exposure	to	credit	risks	of	customers	and	resellers	may	make	it	difficult	to	collect	receivables	and	could	adversely	affect	operating	results	and	financial	condition.

Industry	and	economic	conditions	have	the	potential	to	weaken	the	financial	position	of	some	of	our	customers.	If	circumstances	surrounding	our	customers'	financial capabilities	were	to	deteriorate,	such	write-downs	or	write-offs	would	negatively	affect	our	operating	results	for	the	period	in	which	they	occur	and,	if	large,	could	have	a material	adverse	effect	on	our	operating	results	and	financial	condition.

Failure	to	maintain	effective	distribution	of	products	and	services	could	adversely	impact	revenue,	gross	margin	and	profitability.

We	use	a	variety	of	distribution	methods	to	sell	our	products	and	services.	Successfully	managing	the	interaction	of	our	distribution	efforts	to	reach	various	potential customer	segments	for	our	products	and	services	is	a	complex	process.	Moreover,	since	each	distribution	method	has	distinct	risks	and	gross	margins,	our	failure	to

implement	the	most	advantageous	balance	in	the	delivery	model	for	our	products	and	services	could	adversely	affect	our	revenue	and	gross	margins	and	therefore	our profitability.

# Risks	associated	with	the	disruption	of	manufacturing	operations	could	adversely	affect	profitability	or	competitive	position.

We	manufacture	a	significant	portion	of	the	products	we	sell.	Any	prolonged	disruption	in	the	operations	of	our	existing	manufacturing	facilities,	whether	due	to technical	or	labor	difficulties,	lack	of	raw	material	or	component	availability,	destruction	of	or	damage	to	any	facility	(including	natural	disasters,	use	and	storage	of hazardous	materials	or	other	events),	or	other	reasons,	could	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.

The	inability	to	provide	acceptable	financing	alternatives	to	end-user	customers	and	franchisees	could	adversely	impact	operating	results.

An	integral	component	of	Snap-on's	business	and	profitability	is	its	ability	to	offer	financing	alternatives	to	end-user	customers	and	franchisees	which,	for	its	domestic financing	operations,	are	managed	through	a	joint	venture	with	CIT.		Historically,	CIT	has	been	the	exclusive	purchaser	of	the	credit	and	installment	financing	arranged by	SOC.		A	deterioration	of	the	relationship	between	the	joint	venture	partners,	or	if	the	joint	venture	should	be	unexpectedly	dissolved,	could	have	an	adverse	impact on	Snap-on's	results	of	operations	and	ability	to	provide	financing	to	end-user	customers	and	franchisees	in	the	United	States.		Adverse	fluctuations	in	interest	rates and/or	the	ability	to	provide	competitive	financing	programs	could	also	have	an	adverse	impact	on	Snap-on's	revenue	and	profitability.

# The	global	tool,	equipment,	and	diagnostics	and	repair	industry	is	competitive.

We	face	strong	competition	in	all	of	our	market	segments.		Price	competition	in	our	various	industries	is	intense	and	pricing	pressures	from	competitors	and	customers are	increasing.	In	general,	as	a	manufacturer	and	marketer	of	premium	products	and	services,	the	expectations	of	Snap-on's	customers	and	its	franchisees	are	high	and increasing.		Any	inability	to	maintain	customer	satisfaction	could	diminish	Snap-on's	premium	image	and	reputation	and	could	result	in	a	lessening	of	its	ability	to command	premium	pricing.	We	expect	that	the	level	of	competition	will	remain	high	in	the	future,	which	could	limit	our	ability	to	maintain	or	increase	market	share	or profitability.

The	inability	to	continue	to	introduce	new	products	that	respond	to	customer	needs	and	achieve	market	acceptance	could	result	in	lower	revenues	and	reduced profitability.

Sales	from	new	products	represent	a	significant	portion	of	our	net	sales	and	are	expected	to	continue	to	represent	a	significant	component	of	our	future	net	sales.	We	may not	be	able	to	compete	effectively	unless	we	continue	to	enhance	existing	products	or	introduce	new	products	to	the	marketplace	in	a	timely	manner.	Product improvements	and	new	product	introductions	require	significant	financial	and	other	resources	including	significant	planning,	design,	development,	and	testing	at	the technological,	product,	and	manufacturing	process	levels.	Our	competitors'	new	products	may	beat	our	products	to	market,	be	more	effective	with	more	features,	be	less expensive	than	our	products,	and/or	render	our	products	obsolete.	Any	new	products	that	we	develop	may	not	receive	market	acceptance	or	otherwise	generate	any meaningful	net	sales	or	profits	for	us	relative	to	our	expectations	based	on,	among	other	things,	existing	and	anticipated	investments	in	manufacturing	capacity	and commitments	to	fund	advertising,	marketing,	promotional	programs,	and	research	and	development.

# Economic	conditions	and	world	events	could	affect	our	operating	results.

We,	our	franchisees	and	our	customers,	may	be	adversely	affected	by	an	economic	downturn	such	as	changes	in	consumer	and	investor	confidence,	volatile	corporate profits,	and	reduced	business	and	consumer	spending.		We,	our	franchisees	and	customers,	and	the	economy	as	a	whole,	also	may	be	affected	by	future	world	events such	as	acts	of	terrorism,	developments	in	the	war	on	terrorism,	conflicts	in	the	Middle	East	and	other	international	situations,	and	by	natural	disasters.		These	factors may	affect	our	results	of	operations	by	reducing	our	sales,	margins	and/or	net	income	as	a	result	of	a	slowdown	in	customer	orders	or	order	cancellations.		In	addition, political	and	social	turmoil	related	to	international	conflicts	and	terrorist	acts	may	put	further	pressure	on	economic	conditions	abroad.	Unstable	political,	social	and economic	conditions	may	make	it	difficult	for	our	franchisees,	customers,	suppliers	and	us	to	accurately	forecast	and	plan	future	business	activities.	If	such	conditions persist,	our	business,	financial	condition,	results	of	operations	and	cash	flow	could	be	negatively	affected.

Raw	material	and	energy	price	fluctuations	and	shortages	(including	steel	and	various	fuel	sources)	could	adversely	affect	the	ability	to	obtain	needed	manufacturing materials	and	could	adversely	affect	results	of	operations.

The	principal	raw	material	used	in	the	manufacture	of	our	products	is	steel,	which	we	purchase	in	competitive,	price-sensitive	markets.	To	meet	Snap-on's	high	quality standards,	our	steel	needs	range	from	specialized	alloys,	which	are	available	only	from	a	limited	group	of	approved	suppliers,	to	commodity	types	of	alloys.	These	raw materials	have	historically	exhibited	price	and	demand	cyclicality.	Some	of	these	materials	have	been,	and	in	the	future	may	be,	in	short	supply.	As	some	steel	alloys require	specialized	manufacturing	procedures,	we	could	experience	inventory	shortages	if	we	were	required	to	use	an	alternative	manufacturer	on	short	notice. Additionally,	unexpected	price	increases	could	result	in	higher	prices	to	our	customers	or	an	erosion	of	the	margins	on	our	products.

We	believe	our	ability	to	sell	our	products	is	also	dependent	on	the	number	of	vehicles	on	the	road,	the	number	of	miles	driven	and	the	general	aging	of	vehicles.	These factors	affect	the	frequency,	type	and	amount	of	service	and	repair	performed	on	vehicles	by	technicians,	and	therefore	affect	the	demand	for	the	number	of	technicians, the	prosperity	of	the	technicians	and,	subsequently,	the	demand	technicians	have	for	our	tools,	other	products	and	services,	and	the	value	technicians	place	on	those products	and	services.	To	the	extent	that	gasoline	prices	increase,	consumers	may	turn	to	other,	non-gasoline	based,	methods	of	transportation,	including	more	frequent use	of	public	transportation.		A	decrease	in	the	use	of	gasoline	consuming	vehicles	may	lead	to	fewer	repairs	and	less	demand	for	our	products.

We	use	various	energy	sources	to	transport,	produce	and	distribute	products,	and	some	of	our	products	have	components	that	are	petroleum	based.		Petroleum	and energy	prices	have	recently	been	volatile	and	have	generally	increased;	further	volatility	and	increases	may	be	caused	by	market	fluctuations,	supply	and	demand, currency	fluctuation,	production	and	transportation	disruption,	world	events,	and	changes	in	governmental	programs.		Price	increases	raise	both	our	operating	costs	and the	costs	of	our	materials,	and	we	may	not	be	able	to	increase	our	prices	enough	to	offset	these	costs.		Higher	prices	also	may	reduce	the	level	of	future	customer	orders and	our	profitability.

Our	operations	expose	us	to	the	risk	of	environmental	liabilities,	costs,	litigation	and	violations	that	could	adversely	affect	our	financial	condition,	results	of	operations and	reputation.

Certain	of	our	operations	are	subject	to	environmental	laws	and	regulations	in	the	jurisdictions	in	which	they	operate,	which	impose	limitations	on	the	discharge	of pollutants	into	the	ground,	air	and	water	and	establish	standards	for	the	generation,	treatment,	use,	storage	and	disposal	of	hazardous	wastes.	We	must	also	comply	with various	health	and	safety	regulations	in	the	United	States	and	abroad	in	connection	with	our	operations.		Failure	to	comply	with	any	of	these	laws	could	result	in	civil	and criminal,	monetary	and	non-monetary	penalties	and	damage	to	our	reputation.	In	addition,	we	may	incur	costs	related	to	remedial	efforts	or	alleged	environmental damage	associated	with	past	or	current	waste	disposal	practices.		We	cannot	provide	assurance	that	our	costs	of	complying	with	current	or	future	environmental protection	and	health	and	safety	laws	will	not	exceed	our	estimates	or	adversely	affect	our	financial	condition	and	results	of	operations.

Foreign	operations	are	subject	to	currency	exchange,	political	and	other	risks	that	could	adversely	affect	results	of	operations.

Approximately	43%	of	our	revenues	in	2007	were	generated	outside	of	the	United	States.		Future	growth	rates	and	success	of	our	business	depends	in	large	part	on continued	growth	in	our	non-U.S.	operations,	including	growth	in	emerging	markets.	Numerous	risks	and	uncertainties	affect	our	non-U.S.	operations.	These	risks	and uncertainties	include	political,	economic	and	social	instability,	including	acts	of	war,	civil	disturbance	or	acts	of	terrorism,	local	labor	conditions,	changes	in	government policies	and	regulations,	including	imposition	or	increases	in	withholding	and	other	taxes	on	remittances	and	other	payments	by	international	subsidiaries,	transportation delays	or	interruptions	and	difficulties	in	enforcement	of	contract	and	intellectual	property	rights.	We	are	also	affected	by	changes	in	foreign	currency	exchange	rates, inflation	rates	and	interest	rates.	Additionally,	cash	generated	in	non-U.S.	jurisdictions	may	be	difficult	to	repatriate	to	the	United	States	in	a	tax-efficient	manner.		Our foreign	operations	are	also	subject	to	other	risks	and	challenges,	such	as	the	need	to	staff	and	manage	diverse	workforces,	respond	to	the	needs	of	multiple	national	and international	marketplaces,	and	differing	business	climates	and	cultures	in	various	countries.

# Failure	to	adequately	protect	intellectual	property	could	adversely	affect	business.

Intellectual	property	rights	are	an	important	and	integral	component	of	our	business.	We	attempt	to	protect	our	intellectual	property	rights	through	a	combination	of patent,	trademark,	copyright	and	trade	secret	laws,	as	well	as	licensing	agreements	and	third-party	nondisclosure	and	assignment	agreements.	Adverse	determinations	in a	judicial	or	administrative	proceeding	could	prevent	us	from	manufacturing	and	selling	our	products	or	prevent	us	from	stopping	others	from	manufacturing	and	selling competing	products.	Failure	to	obtain	or	maintain	adequate	protection	of	our	intellectual	property	rights	for	any	reason	could	have	a	material	adverse	effect	on	our business,	results	of	operations	and	financial	condition.

The	inability	to	successfully	defend	claims	from	taxing	authorities	could	adversely	affect	operating	results	and	financial	position.

We	conduct	business	in	many	countries,	which	requires	us	to	interpret	the	income	tax	laws	and	rulings	in	each	of	those	taxing	jurisdictions.	Due	to	the	subjectivity	of	tax laws	between	those	jurisdictions,	as	well	as	the	subjectivity	of	factual

interpretations,	our	estimates	of	income	tax	liabilities	may	differ	from	actual	payments	or	assessments.	Claims	from	taxing	authorities	related	to	these	differences	could have	an	adverse	impact	on	our	operating	results	and	financial	position.

# Failure	to	attract	and	retain	qualified	personnel	could	lead	to	a	loss	of	revenue	and/or	profitability.

Snap-on's	success	depends,	in	part,	on	the	efforts	and	abilities	of	its	senior	management	team	and	other	key	employees.	Their	skills,	experience	and	industry	contacts significantly	benefit	our	operations	and	administration.		The	failure	to	attract	and	retain	members	of	our	senior	management	team	and	other	key	employees	could	have	a negative	effect	on	our	operating	results.		In	addition,	transitions	of	important	responsibilities	to	new	individuals	inherently	include	the	possibility	of	disruptions	to	our business	and	operations,	which	could	negatively	affect	our	operating	results	and	financial	position.

Failure	to	achieve	expected	investment	returns	on	pension	plan	assets,	as	well	as	changes	in	interest	rates,	could	adversely	impact	our	results	of	operations,	financial position	and	cash	flow.

Snap-on	sponsors	various	pension	benefit	plans.	The	assets	of	the	pension	plans	are	broadly	diversified	in	an	attempt	to	mitigate	the	risk	of	a	large	loss.		The	assets	are invested	in	equity	securities,	fixed	income	securities,	real	estate	and	other	real	assets,	other	alternative	investments	and	cash.		Required	funding	for	the	company's defined	benefit	pension	plans	is	determined	in	accordance	with	guidelines	set	forth	in	the	federal	Employee	Retirement	Income	Security	Act	(ERISA).	Additional contributions	to	enhance	the	funded	status	of	the	pension	plans	can	be	made	at	the	company's	discretion.	However,	there	can	be	no	assurance	that	the	value	of	the pension	plan	assets,	or	the	investment	returns	on	those	plan	assets,	will	be	sufficient	to	meet	the	future	benefit	obligations	of	such	plans.		In	addition,	during	periods	of adverse	investment	market	conditions	and	declining	interest	rates,	the	company	may	be	required	to	make	additional	cash	contributions	to	the	plans	that	would	reduce	our financial	flexibility.

Our	defined	benefit	pension	plan	obligations	are	affected	by	changes	in	market	interest	rates.		Significant	fluctuations	in	market	interest	rates	will	add	volatility	to	our pension	plan	obligations.		Declining	market	interest	rates	will	increase	our	pension	plan	obligations.		While	our	plan	assets	are	broadly	diversified,	there	is	inherent market	risks	associated	with	investments.		If	adverse	market	conditions	develop,	our	plan	assets	could	incur	a	loss.		The	combination	of	declining	market	interest	rates and	plan	asset	investment	losses	may	adversely	impact	our	financial	position	and	results	of	operations.

The	company's	defined	benefit	pension	expense	is	calculated	by	netting	five	factors:	(i)	service	cost;	(ii)	interest	on	projected	benefit	obligations;	(iii)	the	expected	return on	plan	assets;	(iv)	the	amortization	of	prior	service	costs;	and	(v)	the	effects	of	actuarial	gains	and	losses.		The	accounting	for	pensions	involves	the	estimation	of	a number	of	factors	that	are	highly	uncertain.		Certain	factors,	such	as	the	interest	cost	and	the	expected	return	on	plan	assets,	are	impacted	by	changes	in	market	interest rates	and	the	value	of	plan	assets.		A	significant	decrease	in	market	interest	rates	and	a	decrease	in	the	fair	value	of	plan	assets	would	increase	net	pension	expense	and may	adversely	affect	the	company's	future	results	of	operations.		See	Note	11	to	the	Consolidated	Financial	Statements	for	further	information	on	the	company's	pension benefit	plans.

# Item	1B:	Unresolved	Staff	Comments

# None.

# Item	2:	Properties

Snap-on	maintains	leased	and	owned	manufacturing,	warehouse,	distribution	and	office	facilities	throughout	the	world.	Snap-on	believes	that	its	facilities	currently	in use	are	suitable	and	have	adequate	capacity	to	meet	its	present	and	foreseeable	future	demand.		Snap-on's	facilities	in	the	United	States	occupy	approximately	3.6 million	square	feet,	of	which	67%	is	owned,	including	its	corporate	and	general	office	facility	located	in	Kenosha,	Wisconsin.		Snap-on's	facilities	outside	the	United States	occupy	approximately	3.5	million	square	feet,	of	which	approximately	63%	is	owned.		Certain	Snap-on	facilities	are	leased	through	operating	lease	agreements. See	Note	15	to	the	Consolidated	Financial	Statements	for	information	on	the	company's	operating	and	capital	leases.		Snap-on	management	continually	monitors	the company's	capacity	needs	and	makes	adjustments	as	dictated	by	market	and	other	conditions.

The	following	table	provides	information	about	each	of	Snap-on's	principal	manufacturing	locations	and	distribution	centers	(exceeding	50,000	square	feet)	as	of December	29,	2007:

# Location

Type	of	Property

Owned/Leased Segment*

U.S.	Locations:

Elkmont,	Alabama Manufacturing Owned SOT Conway,	Arkansas Manufacturing Leased C&I    City	of	Industry,	California Manufacturing Leased C&I Escondido,	California Manufacturing Leased C&I

*	Segment	abbreviations:

C&I	—	Commercial	&	Industrial	Group

SOT	—	Snap-on	Tools	Group

D&I	—	Diagnostics	&	Information	Group

In	2007,	the	company	sold	its	former	manufacturing	facilities	located	in	(i)	Enköping,	Sweden;	(ii)	Lidköping,	Sweden;	and	(iii)	Mt.	Carmel,	Illinois;	the	company	also sold	its	former	corporate	office	located	in	Pleasant	Prairie,	Wisconsin.		The	Johnson	City,	Tennessee,	manufacturing	facility	was	closed	in	2007	and	is	currently	for	sale.

# Item	3:	Legal	Proceedings

See	Note	15	to	the	Consolidated	Financial	Statements	for	information	on	legal	proceedings.

Snap-on	is	involved	in	various	legal	matters	that	are	being	litigated	and/or	settled	in	the	ordinary	course	of	business.		Although	it	is	not	possible	to	predict	the	outcome	of these	legal	matters,	management	believes	that	the	results	will	not	have	a	material	impact	on	Snap-on's	consolidated	financial	position	or	results	of	operations.

# Item	4:	Submission	of	Matters	to	a	Vote	of	Security	Holders

No	matters	were	submitted	to	a	vote	of	shareholders	during	the	fourth	quarter	of	the	fiscal	year	ended	December	29,	2007.

# PART	II

# Item	5:	Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities

At	December	29,	2007,	Snap-on	had	57,429,139	shares	of	common	stock	outstanding.		Snap-on's	stock	is	listed	on	the	New	York	Stock	Exchange	under	the	ticker symbol	"SNA."		As	of	February	15,	2008,	there	were	7,194	registered	holders	of	Snap-on	common	stock.

Snap-on's	common	stock	high	and	low	prices,	as	of	the	close	of	trading,	for	the	last	two	fiscal	years	by	quarter	were	as	follows:

| Quarter | High | Low | High | Low |
| :--- | :--- | :--- | :--- | :--- |
| First | $51.51 | $46.85 | $40.13 | $37.39 |
| Second | 56.20 | 47.54 | 41.99 | 37.43 |
| Third | 55.61 | 46.09 | 44.63 | 36.39 |
| Fourth | 50.68 | 44.59 | 48.31 | 44.80 |

Snap-on	has	paid	consecutive	quarterly	cash	dividends,	without	interruption	or	reduction,	since	1939.		On	November	1,	2007,	Snap-on	announced	that	its	Board	of Directors	("Board")	approved	a	$0.03	per	share,	or	11.1%,	increase	in	the	quarterly	dividend	to	$0.30	per	share.		Quarterly	dividends	declared	in	2007	were	$0.30	in	the fourth	quarter	and	$0.27	in	the	first	three	quarters	($1.11	per	share	for	the	year).		Quarterly	dividends	declared	were	$0.27	($1.08	per	share	for	the	year)	in	2006	and $0.25	per	share	($1.00	per	share	for	the	year)	in	2005.		Cash	dividends	paid	in	2007,	2006	and	2005	totaled	$64.8	million,	$63.6	million	and	$57.8	million, respectively.		Snap-on's	Board	monitors	and	evaluates	the	company's	dividend	practice	quarterly	and	the	Board	may	elect	to	increase,	decrease	or	not	pay	a	dividend	on Snap-on	common	stock	based	upon	the	company's	financial	condition,	results	of	operations,	cash	requirements	and	future	prospects	of	Snap-on	and	other	factors deemed	relevant	by	the	Board.

See	Note	13	to	the	Consolidated	Financial	Statements	for	information	on	securities	authorized	for	issuance	under	equity	compensation	plans.

The	following	chart	discloses	information	regarding	the	shares	of	Snap-on's	common	stock	repurchased	by	the	company	during	the	fourth	quarter	of	fiscal	2007,	all	of which	were	purchased	pursuant	to	the	Board's	authorizations	that	the	company	has	publicly	announced.		Snap-on	has	undertaken	stock	repurchases	from	time	to	time	to offset	dilution	created	by	shares	issued	for	employee	and	dealer	stock	purchase	plans,	stock	options,	and	other	corporate	purposes,	as	well	as	to	repurchase	shares	when the	company	believes	market	conditions	are	favorable.		The	repurchase	of	Snap-on	common	stock	is	at	the	company's	discretion,	subject	to	prevailing	financial	and market	conditions.

# Issuer	Purchases	of	Equity	Securities

|  |  |  | Number	of	Shares | Approximate |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Average | Purchased\tas\tPart\tof | Value\tof\tShares |
|  | Number\tof | Price | Publicly\tAnnounced | that\tMay\tbe |
|  | Shares | Paid\tper | Plans | Purchased |
| Period | Purchased | Share | or\tPrograms | Under\tthe\tPlans* |
| 9/30/07\tto\t10/27/07 | — | N/A | — | $124.1\tmillion |
| 10/28/07\tto\t11/24/07 | 180,000 | $48.18 | 180,000 | $116.3\tmillion |
| 11/25/07\tto\t12/29/07 | — | N/A | — | $116.8\tmillion |
| Total/Average | 180,000 | $48.18 | 180,000 | N/A |

*Subject	to	further	adjustment	pursuant	to	the	1996	Authorization	described	below,	as	of	December	29,	2007,	the	approximate	value	of	shares	that	may	yet	be	purchased	pursuant	to	the	three outstanding	Board	authorizations	discussed	below	is	$116.8	million.

·						In	its	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	28,	1996,	Snap-on	disclosed	that	the	company's	Board	authorized	the	company	to	repurchase	shares	of	its common	stock	from	time	to	time	in	the	open	market	or	in	privately	negotiated	transactions	("the	1996	Authorization").		The	1996	Authorization	allows	the	repurchase	of	up	to	the number	of	shares	issued	or	delivered	from	treasury	from	time	to	time	under	the	various	plans	the	company	has	in	place	that	call	for	the	issuance	of	the	company's	common	stock. Because	the	number	of	shares	that	are	purchased	pursuant	to	the	1996	Authorization	will	change	from	time	to	time	as	(i)	the	company	issues	shares	under	its	various	plans;	and (ii)	shares	are	repurchased	pursuant	to	this	authorization,	the	number	of	shares	authorized	to	be	repurchased	will	vary	from	time	to	time.		The	1996	Authorization	will	expire	when terminated	by	the	company's	Board.		When	calculating	the	approximate	value	of	shares	that	the	company	may	yet	purchase	under	the	1996	Authorization,	the	company	assumed	a price	of	$49.97,	$47.07	and	$48.13	per	share	of	common	stock	as	of	the	end	of	the	fiscal	2007	months	ended	October	27,	November	24	and	December	29,	respectively.

·						On	June	29,	1998,	the	company	announced	that	its	Board	authorized	the	repurchase	of	an	aggregate	of	$100	million	of	the	company's	common	stock	("the	1998	Authorization").		The 1998	Authorization	will	expire	when	the	aggregate	repurchase	price	limit	is	met,	unless	terminated	earlier	by	the	company's	Board.

·						On	February	3,	1999,	the	company	announced	that	its	Board	authorized	the	repurchase	of	an	aggregate	of	$50	million	of	the	company's	common	stock	("the	1999	Authorization").		The 1999	Authorization	will	expire	when	the	aggregate	repurchase	price	limit	is	met,	unless	terminated	earlier	by	the	company's	Board.

During	2007,	the	company	repurchased	1,860,000	shares	of	common	stock	at	an	average	purchase	price	of	$50.77	per	share.

# Five-year	Stock	Performance	Graph

The	graph	below	illustrates	the	cumulative	total	shareholder	return	on	Snap-on	Common	Stock	since	2002,	assuming	that	dividends	were	reinvested.		The	graph compares	Snap-on's	performance	to	that	of	the	Standard	&	Poor's	500	Stock	Index	("S&P	500")	and	a	Peer	Group.

# Snap-on	Incorporated	Total	Shareholder	Return	(1)

| Fiscal	Year	Ended	(2) | Incorporated | Peer	Group	(3) | S&P	500 |
| :--- | :--- | :--- | :--- |
| December\t31,\t2002 | $100.00 | $100.00 | $100.00 |
| December\t31,\t2003 | 118.80 | 126.16 | 128.68 |
| December\t31,\t2004 | 130.66 | 152.42 | 142.69 |

| December	31,	2005 | 146.97 | 157.97 | 149.70 |
| :--- | :--- | :--- | :--- |
| December\t31,\t2006 | 191.27 | 185.10 | 173.34 |
| December\t31,\t2007 | 198.05 | 216.19 | 182.87 |

(1)	Assumes	$100	was	invested	on	December	31,	2002,	and	that	dividends	were	reinvested	quarterly.

(2)	The	company's	fiscal	year	ends	on	the	Saturday	closest	to	December	31	of	each	year;	the	fiscal	year	end	is	assumed	to	be	December	31	for	ease	of	calculation.

(3)	The	Peer	Group	includes:	The	Black	&	Decker	Corporation,	Cooper	Industries,	Ltd.,	Danaher	Corporation,	Emerson	Electric	Co.,	Fortune	Brands,		Inc.,	Genuine Parts	Company,	Newell	Rubbermaid	Inc.,	Pentair,	Inc.,	SPX	Corporation,	The	Stanley	Works	and	W.W.	Grainger,	Inc.

# Item	6:	Selected	Financial	Data

The	selected	financial	data	presented	below	has	been	derived	from,	and	should	be	read	in	conjunction	with,	the	respective	historical	consolidated	financial	statements	of the	company,	including	the	notes	thereto,	and	Item	7,	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

| (Amounts	in	millions,	except	per	share	data) | 2007 | 2006 | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Results\tof\tOperations |  |  |  |  |  |
| Net\tsales | $2,841.2 | $2,455.1 | $2,281.0 | $2,311.6 | $2,218.9 |
| Gross\tprofit | 1,266.6 | 1,079.8 | 1,011.2 | 1,003.2 | 960.5 |
| Financial\tservices\trevenue | 63.0 | 49.0 | 53.6 | 78.1 | — |
| Financial\tservices\texpenses | 40.6 | 36.0 | 37.9 | 44.0 | — |
| Operating\texpenses | 964.2 | 930.0 | 863.5 | 897.1 | 854.6 |
| Operating\tearnings | 324.8 | 162.8 | 163.4 | 140.2 | 149.7 |
| Interest\texpense | 46.1 | 20.6 | 21.7 | 23.0 | 24.4 |
| Earnings\tbefore\tincome\ttaxes,\tminority\tinterests\tand\tequity |  |  |  |  |  |
| earnings\t(loss) | 284.2 | 147.5 | 144.8 | 120.9 | 119.3 |
| Income\ttax\texpense | 92.5 | 45.9 | 55.2 | 38.7 | 38.0 |
| Earnings\tbefore\tminority\tinterests\tand\tequity\tearnings |  |  |  |  |  |
| (loss) | 191.7 | 101.6 | 89.6 | 82.2 | 81.3 |
| Minority\tinterests\tand\tequity\tearnings\t(loss),\tnet\tof\ttax | (2.5) | (3.7) | (1.4) | (2.7) | (3.1) |
| Net\tearnings\tfrom\tcontinuing\toperations | 189.2 | 97.9 | 88.2 | 79.5 | 78.2 |
| Income\t(loss)\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | (8.0) | 2.2 | 4.7 | 2.2 | 0.5 |
| Net\tearnings | 181.2 | 100.1 | 92.9 | 81.7 | 78.7 |
| Financial\tPosition |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $93.0 | $63.4 | $170.4 | $150.0 | $96.1 |
| Accounts\treceivable\tcurrent\t-\tnet | 586.9 | 559.2 | 485.9 | 542.0 | 546.8 |
| Inventories | 322.4 | 323.0 | 283.2 | 341.9 | 351.1 |
| Current\tassets | 1,187.4 | 1,113.2 | 1,072.9 | 1,192.6 | 1,131.7 |
| Property\tand\tequipment\t-\tnet | 304.8 | 297.1 | 295.5 | 313.6 | 328.6 |
| Total\tassets | 2,765.1 | 2,654.5 | 2,008.4 | 2,290.1 | 2,138.5 |
| Accounts\tpayable | 171.6 | 178.8 | 135.4 | 194.9 | 189.7 |
| Current\tliabilities | 639.2 | 682.0 | 506.1 | 674.2 | 567.2 |
| Long-term\tdebt | 502.0 | 505.6 | 201.7 | 203.2 | 303.0 |
| Total\tdebt | 517.9 | 549.2 | 226.5 | 331.0 | 333.2 |
| Total\tshareholders'\tequity | 1,280.1 | 1,076.3 | 962.2 | 1,110.7 | 1,010.9 |
| Working\tcapital | 548.2 | 431.2 | 566.8 | 518.4 | 564.5 |
| Common\tShare\tSummary |  |  |  |  |  |
| Average\tshares\toutstanding\t-\tdiluted | 58.6 | 59.2 | 58.4 | 58.3 | 58.4 |
| Earnings\tper\tshare,\tcontinuing\toperations: |  |  |  |  |  |
| Basic | $3.27 | $1.68 | $1.53 | $1.37 | $1.34 |
| Diluted | 3.23 | 1.65 | 1.51 | 1.36 | 1.34 |
| Net\tearnings\tper\tshare: |  |  |  |  |  |
| Basic | 3.13 | 1.72 | 1.61 | 1.41 | 1.35 |
| Diluted | 3.09 | 1.69 | 1.59 | 1.40 | 1.35 |
| Cash\tdividends\tpaid\tper\tshare | 1.11 | 1.08 | 1.00 | 1.00 | 1.00 |
| Shareholders'\tequity\tper\tbasic\tshare | 22.11 | 18.46 | 16.65 | 19.20 | 17.37 |
| Fiscal\tyear-end\tper\tshare\tprice | 48.13 | 47.64 | 37.56 | 34.36 | 31.80 |

·						Certain	prior-year	amounts	have	been	reclassified	to	conform	to	the	2007	income	statement	presentation.		See	Note	1	to	the	Consolidated	Financial	Statements	for	information	regarding	the 2007	income	statement	presentation.

·						Results	of	operations	for	all	years	presented	have	been	restated	to	reflect	the	June	29,	2007,	sale	of	the	Sun	Electric	Systems	("SES")	business	based	in	the	Netherlands	as	discontinued operations.		Snap-on	recorded	an	$8.0	million	net	loss	from	the	sale	of	SES	in	2007.		See	Note	16	to	the	Consolidated	Financial	Statements	for	information	on	the	sale	of	SES.

·						Operating	expenses	and	operating	earnings	in	2006	include	a	$38.0	million	pretax	charge	($23.4	million	after	tax	or	$0.40	per	diluted	share)	to	settle	certain	legal	matters	related	to	certain	then current	and	former	franchisees.		Results	in	2006	also	include	the	impact	of	the	company's	acquisition	of	Snap-on	Business	Solutions	for	the	approximate	five-week	period	from	November	28, 2006,	to	year	end.

·						Total	shareholders'	equity	of	$1,076.3	million	at	year-end	2006	includes	an	$89.0	million	reduction	from	the	adoption	of Statement	of	Financial	Accounting	Standards	("SFAS")	No.	158, "Employers'	Accounting	for	Defined	Benefit	Pension	and	Postretirement	Plans:	an	amendment	of	FASB	Statements	No.	87,	88,	106,	and	132(R) ."		See	Note	1	to	the	Consolidated	Financial Statements	for	information	on	the	adoption	of	SFAS	No.	158.

·						In	conjunction	with	the	consolidation	of	Snap-on	Credit	LLC	("SOC")	at	the	beginning	of	2004,	Financial	services	revenue	consists	of	SOC's	sales	of	originated	contracts	and	service	fee

income,	as	well	as	installment	contract	revenue	and	franchisee	loan	receivable	revenue	derived	from	SOC	and	Snap-on's	wholly	owned	international	finance	operations.		Snap-on	began consolidating	SOC	in	fiscal	2004	as	a	result	of	the	adoption	of	Financial	Interpretation	No.	46R,	"Consolidation	of	Variable	Interest	Entities	(an	interpretation	of	ARB	No.	51) ."		As	Snap-on consolidated	SOC	on	a	prospective	basis,	previously	issued	financial	statements	were	not	restated.		Prior	to	fiscal	2004,	Snap-on	accounted	for	SOC	using	the	equity	method.		See	Note	1	to	the Consolidated	Financial	Statements	for	further	information	on	SOC.

# Item	7:		Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

# Management	Overview

In	2007	Snap-on	continued	to	implement	strategic	initiatives	intended	to	create	long-term	value	for	company	shareholders,	associates,	franchisees	and	other	distributor partners	across	all	of	its	business	segments	and	channels.			During	the	year,	Snap-on	believes	it	made	measurable	progress	on	many	fronts.

Net	sales	grew	15.7%	year	over	year,	with	sales	increases	in	each	segment.		Operating	earnings	of	$324.8	million	in	2007	nearly	doubled	from	$162.8	million	in	2006. Higher	sales,	increased	income	from	financial	services,	and	improved	operating	expense	margins	from	ongoing	efficiency,	productivity	and	cost	reduction	(collectively "Rapid	Continuous	Improvement"	or	"RCI")	initiatives,	along	with	the	absence	of	the	2006	franchisee	litigation	settlement	cost,	all	contributed	to	the	significant	year- over-year	earnings	improvement.

Our	strategic	priorities	and	plans	for	2008	will	continue	to	build	on	the	improvement	initiatives	underway	to	achieve	sustainable,	profitable	growth	through	increased sales	and	lower	costs.

In	the	Commercial	&	Industrial	Group,	higher	sales,	including	growth	in	emerging	markets,	combined	with	expense	control	and	savings	from	restructuring	initiatives to	deliver	continued	improvements	in	operating	performance.		Segment	net	sales	in	2007	were	up	13.3%	and	operating	earnings	were	up	23.8%.

Benefits	from	ongoing	cost	reduction	and	RCI	initiatives,	including	increased	production	and	sourcing	of	materials	from	lower-cost	regions	and	facilities,	were	major contributors	to	the	year-over-year	earnings	improvement.		As	a	result	of	continued	sales	growth,	improved	levels	of	customer	service,	and	savings	from	RCI	and restructuring	activities,	operating	earnings	increased	to	$131.5	million	in	2007.

The	Commercial	&	Industrial	Group	expects	to	continue	to	build	on	the	following	strategic	priorities	in	2008:

·																		Continue	to	invest	in	emerging	market	growth	initiatives,	such	as	China,	India	and	Eastern	Europe;

·																		Increase	market	share	in	key	industrial	market	segments	by	reaching	new	customers,	building	business	with	existing	customers	and	continually	improving	order fill	rates;

·																		Continued	innovation	in	productivity-enhancing	products	that	utilize	increasingly	advanced	technology;

·																		Continue	to	pursue	key,	large	customers	that	offer	long-term	growth	potential;	and

·																		Continue	to	rationalize	the	operating	footprint	and	shift	manufacturing	activities	to	lower-cost	regions.

In	the	Snap-on	Tools	Group,	considerable	progress	on	fundamental,	strategic	initiatives	strengthened	company	operating	and	financial	performance,	as	well	as franchisee	performance	and	satisfaction.

Higher	sales	of	a	mid-tier	brand	of	tools	and	equipment	(Blue	Point),	a	re-launch	of	the	company's	warehouse	distribution	program,	and	a	more	focused	promotional program	all	contributed	to	the	8.1%	sales	growth	in	2007.		Supply	chain	improvements	and	an	ongoing	transition	to	a	market-demand-based	replenishment	system continued	to	improve	complete	and	on-time	delivery	of	a	broad	assortment	of	products.		Operating	earnings	of	$125.1	million	in	2007	improved	significantly	from	prior- year	levels,	primarily	due	to	contributions	from	the	higher	sales	and	benefits	from	ongoing	cost	reduction	and	RCI	initiatives,	as	well	as	the	absence	of	the	$38.0	million franchisee	litigation	settlement	charge	in	2006.

The	Snap-on	Tools	Group	expects	to	continue	to	build	on	the	progress	made	in	enhancing	the	franchise	proposition	and	delivering	customer	productivity	solutions,	with specific	initiatives	in	2008	focused	on	the	following:

·																		Continue	to	improve	franchisee	profitability	and	satisfaction;

·																		Continually	improve	the	supply	chain	through	investments	in	manufacturing	and	use	of	RCI;	and

By	executing	in	these	areas,	Snap-on	believes	the	company	and	its	franchisees	will	continue	to	serve	more	customers	better	and	more	profitably.

In	the	Diagnostics	&	Information	Group,	significant	progress	was	realized	across	many	facets	of	the	business	in	2007.		Segment	sales	increased	28.5%	to	over	$650 million,	despite	lower	original	equipment	manufacturers	("OEM")	facilitation	sales,	due	primarily	to	the	wind	down	of	a	major	facilitation	program	in	Europe,	and	the outsourcing	of	certain	non-strategic,	low-margin	products	previously	manufactured	for	the	Snap-on	Tools	Group.

The	integration	of	the	Snap-on	Business	Solutions	("Business	Solutions")	acquisition,	which	was	acquired	November	28,	2006,	provided	an	opportunity	to	successfully build	closer	relationships	with	key	OEM	customers	and	strengthen	Snap-on's	position	as	a	provider	of	productivity	solutions.			New	product	and	program	offerings, coupled	with	a	renewed	focus	and	dedication	to	customer	delivery,	were	rewarded	with	solid	sales	growth.			Integrating	Snap-on's	RCI	initiatives	also	drove	improved operating	cost	leverage.

The	diagnostics	equipment	and	software	business,	as	well	as	the	shop	management	business,	grew	through	the	development	and	launch	of	new	hardware	and	software products	targeted	at	a	broader	and	growing	customer	base.		Focus	on	RCI	initiatives	also	achieved	strong	cost	reduction	and	improved	inventory	turns.

The	Diagnostics	&	Information	Group	expects	to	build	on	the	following	strategic	priorities	in	2008:

·																		Further	leveraging	of	customer	relationships	and	product	and	service	offerings;	and

Financial	Services	revenue	increased	28.6%	to	$63.0	million,	and	operating	income	of	$22.4	million	increased	72.3%	from	the	prior	year.		Originations	in	2007	were flat	with	prior-year	levels.

# Cash	Flows

Snap-on	delivered	continued	increased	cash	flow	from	operations	of	$231.1	million	in	2007,	up	from	$203.4	million	in	the	prior	year.		Snap-on	used	available	cash	in 2007	to	repurchase	over	1.8	million	shares	of	Snap-on	common	stock	for	$94.4	million,	pay	dividends	totaling	$64.8	million,	and	pay	down	debt	of	$36.6	million. Capital	expenditures	in	2007	of	$61.9	million	reflect	higher	levels	of	efficiency	and	cost-reduction	capital	investments	and	higher	levels	of	spending	to	support	strategic supply	chain	and	other	growth	initiatives,	including	the	expansion	of	the	company's	manufacturing	capabilities	in	lower-cost	regions	and	emerging	markets.		Cash	at year-end	2007	of	$93.0	million	was	up	from	$63.4	million	at	year-end	2006.		In	2006,	the	company	used	available	cash	to	fund,	in	part,	the	purchase	of	the	Business Solutions	acquisition,	pay	dividends	totaling	$63.6	million,	repurchase	over	2.6	million	shares	of	Snap-on	common	stock	for	$109.8	million,	and	invest	$50.5	million	in capital	expenditures.

# Results	of	Operations

Highlights	of	Snap-on's	results	of	operations	for	the	fiscal	years	ended	December	29,	2007,	and	December	30,	2006,	are	as	follows:

| Net	sales | $2,841.2 | 100.0% | $2,455.1 | 100.0% | $386.1 | 15.7% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (1,574.6) | -55.4% | (1,375.3) | -56.0% | (199.3) | -14.5% |
| Gross\tprofit | 1,266.6 | 44.6% | 1,079.8 | 44.0% | 186.8 | 17.3% |
| Financial\tservices\trevenue | 63.0 | 100.0% | 49.0 | 100.0% | 14.0 | 28.6% |
| Financial\tservices\texpenses | (40.6) | -64.4% | (36.0) | -73.5% | (4.6) | -12.8% |
| Operating\tincome\tfrom\tfinancial\tservices | 22.4 | 35.6% | 13.0 | 26.5% | 9.4 | 72.3% |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | (964.2) | -33.9% | (892.0) | -36.3% | (72.2) | -8.1% |
| Litigation\tsettlement | — | — | (38.0) | -1.6% | 38.0 | NM |
| Total\toperating\texpenses | (964.2) | -33.9% | (930.0) | -37.9% | (34.2) | -3.7% |
| Operating\tearnings | 324.8 | 11.2% | 162.8 | 6.5% | 162.0 | 99.5% |
| Interest\texpense | (46.1) | -1.6% | (20.6) | -0.8% | (25.5) | -123.8% |
| Other\tincome\t(expense)\t-\tnet | 5.5 | 0.2% | 5.3 | 0.2% | 0.2 | 3.8% |
| Earnings\tbefore\tincome\ttaxes,\tminority\tinterests |  |  |  |  |  |  |
| and\tequity\tearnings\t(loss) | 284.2 | 9.8% | 147.5 | 5.9% | 136.7 | 92.7% |
| Income\ttax\texpense | (92.5) | -3.2% | (45.9) | -1.8% | (46.6) | -101.5% |
| Earnings\tbefore\tminority\tinterests\tand\tequity |  |  |  |  |  |  |
| earnings\t(loss) | 191.7 | 6.6% | 101.6 | 4.1% | 90.1 | 88.7% |
| Minority\tinterests\tand\tequity\tearnings\t(loss),\tnet\tof |  |  |  |  |  |  |
| tax | (2.5) | -0.1% | (3.7) | -0.2% | 1.2 | 32.4% |
| Net\tearnings\tfrom\tcontinuing\toperations | 189.2 | 6.5% | 97.9 | 3.9% | 91.3 | 93.3% |
| Income\t(loss)\tfrom\tdiscontinued\toperations,\tnet\tof |  |  |  |  |  |  |
| tax | (8.0) | -0.3% | 2.2 | 0.1% | (10.2) | NM |
| Net\tearnings | $181.2 | 6.2% | $100.1 | 4.0% | $81.1 | 81.0% |

# NM:		Not	meaningful

Note:		Certain	2006	amounts	have	been	reclassified	to	conform	to	the	2007	income	statement	presentation.		See	Note	1	to	the	Consolidated	Financial	Statements	for	information	on	the	2007	income statement	presentation.

Percentage	Disclosure:		Cost	of	goods	sold,	Gross	profit	and	Operating	expense	percentages	are	calculated	as	a	percentage	of	Net	sales.		Financial	services	expenses	and	Operating	income	from financial	services	percentages	are	calculated	as	a	percentage	of	Financial	services	revenue.		All	other	income	statement	line	item	percentages	are	calculated	as	a	percentage	of	the	sum	of	Net	sales	and Financial	services	revenue.

Net	sales	in	2007	increased	$386.1	million,	or	15.7%,	from	2006	levels,	including	$84.0	million	from	currency	translation.		Sales	in	the	Commercial	&	Industrial	Group increased	$158.6	million,	or	13.3%,	year	over	year,	primarily	due	to	higher	sales	of	professional	tools	and	equipment	in	Europe,	increased	industrial	sales,	and	continued strong	sales	growth	in	emerging	markets.		Sales	in	the	Snap-on	Tools	Group	increased	$82.7	million,	or	8.1%,	from	prior-year	levels,	primarily	driven	by	a	6.3% increase	in	North	American	sales	and	continued	strong	growth	in	international	sales.		In	the	Diagnostics	&	Information	Group,	sales	were	up	$144.4	million,	or	28.5%, from	2006	levels,	primarily	due	to	sales	from	the	November	28,	2006,	acquisition	of	Business	Solutions,	partially	offset	by	lower	sales	due	to	the	wind	down	of	an	OEM facilitation	program	in	Europe,	and	by	lower	sales	as	a	result	of	outsourcing	certain	products	previously	manufactured	and	sold	to	the	Snap-on	Tools	Group.

Gross	profit	in	2007	was	$1,266.6	million,	as	compared	to	$1,079.8	million	in	2006.		The	$186.8	million	improvement	in	2007	gross	profit	primarily	reflects	benefits from	the	higher	sales,	$40.6	million	of	savings	from	ongoing	RCI	initiatives,	and	$30.9

million	of	currency	translation.	These	increases	were	partially	offset	by	$22.5	million	of	increased	production	and	material	costs,	and	$6.6	million	of	higher	year-over- year	restructuring	costs.	As	a	percentage	of	net	sales,	gross	profit	improved	from	44.0%	in	2006	to	44.6%	in	2007.

Operating	expenses	in	2007	were	$964.2	million,	as	compared	to	$930.0	million	in	2006.	The	$34.2	million	increase	in	operating	expenses	includes	$62.1	million	of higher	year-over-year	operating	expenses	for	Business	Solutions	(twelve	months	of	operating	expense	in	2007	versus	approximately	five	weeks	of	post-acquisition operating	expense	in	2006),	$22.2	million	of	unfavorable	currency	translation,	higher	volume-related	expenses,	and	increased	spending	for	expansion	in	emerging markets.	These	increases	in	year-over-year	operating	expenses	were	largely	offset	by	the	absence,	in	2007,	of	a	$38.0	million	franchisee	litigation	settlement	charge recorded	in	2006,	higher	benefits	of	$11.5	million	from	ongoing	RCI	initiatives,	$6.4	million	of	gains	on	the	sale	of	facilities	and	$2.0	million	of	lower	restructuring costs.	As	a	percentage	of	net	sales,	operating	expenses	of	33.9%	were	significantly	improved	from	2006	levels.	See	Note	15	to	the	Consolidated	Financial	Statements	for further	information	on	the	franchisee	litigation	settlement.

Interest	expense	of	$46.1	million	in	2007	was	up	from	$20.6	million	in	2006	primarily	due	to	higher	debt	levels	to	finance	the	Business	Solutions	acquisition.

Other	income	(expense)	–	net	was	income	of	$5.5	million	in	2007	as	compared	to	income	of	$5.3	million	in	2006.	This	line	item	includes	the	impact	of	all	non-operating items	such	as	interest	income	and	hedging	and	currency	exchange	rate	transaction	gains	and	losses.	See	Note	17	to	the	Consolidated	Financial	Statements	for	further information	on	other	income	(expense)	–	net.

Snap-on's	effective	income	tax	rate	on	earnings	before	minority	interests	and	equity	earnings	(loss)	was	32.5%	in	2007,	as	compared	with	31.1%	in	the	prior	year.	See Note	8	to	the	Consolidated	Financial	Statements	for	further	information	on	income	taxes.

On	June	29,	2007,	Snap-on	sold	its	Sun	Electric	Systems	("SES")	business	based	in	the	Netherlands	for	a	nominal	cash	purchase	price.	SES's	primary	business	was	the research,	development	and	manufacture	of	test	equipment	in	Europe	for	aircraft	hydraulics.	SES	reported	full-year	sales	of	$18.3	million	in	2006	and	was	not	a significant	subsidiary	of	Snap-on.	Snap-on	divested	of	SES	as	it	deemed	SES	to	be	non-core	to	the	company's	ongoing	strategies.	The	anticipated	future	capital	and other	resources	necessary	to	be	expended	in	connection	with	the	SES	business	were	not	consistent	with	Snap-on's	growth	plans.	Snap-on	recorded	an	$8.0	million	net loss	($9.2	million	net	loss	on	sale	partially	offset	by	$1.2	million	of	net	earnings	from	operations)	from	the	sale	of	SES	in	2007.	Certain	prior	year	amounts	were reclassified	on	the	accompanying	Consolidated	Statements	of	Earnings	to	reflect	the	sale	of	SES	as	"Discontinued	operations,	net	of	tax."	For	segment	reporting purposes,	the	results	of	operations	of	SES	were	previously	included	in	the	Diagnostics	&	Information	Group.	See	Note	16	to	the	Consolidated	Financial	Statements	for information	on	SES.

Net	earnings	from	continuing	operations	in	2007	were	$189.2	million,	or	$3.23	per	diluted	share.	Net	earnings	from	continuing	operations	in	2006	were	$97.9	million,	or $1.65	per	diluted	share,	including	a	$23.4	million	after-tax	charge	($0.40	per	diluted	share)	related	to	the	resolution	of	the	franchisee	litigation	settlement.	Net	earnings in	2007	were	$181.2	million,	or	$3.09	per	diluted	share,	as	compared	to	net	earnings	of	$100.1	million,	or	$1.69	per	diluted	share,	in	2006.	Results	of	operations	for	2007 include	a	full	year	of	operating	results	for	Business	Solutions;	results	of	operations	for	2006	include	approximately	five	weeks	of	post-acquisition	operating	results	for Business	Solutions.	See	Note	2	to	the	Consolidated	Financial	Statements	for	information	on	the	Business	Solutions	acquisition.

# Exit	and	Disposal	Activities

See	Note	7	to	the	Consolidated	Financial	Statements	for	information	on	Snap-on's	exit	and	disposal	activities.

# Segment	Results

Snap-on's	business	segments	are	based	on	the	organization	structure	used	by	management	for	making	operating	and	investment	decisions	and	for	assessing	performance. Snap-on's	reportable	business	segments	include:	(i)	the	Commercial	&	Industrial	Group;	(ii)	the	Snap-on	Tools	Group;	(iii)	the	Diagnostics	&	Information	Group;	and (iv)	Financial	Services.	The	Commercial	&	Industrial	Group	consists	of	the	business	operations	providing	tools	and	equipment	products	and	equipment	repair	services	to a	broad	range	of	industrial	and	commercial	customers	worldwide	through	direct,	distributor	and	other	non-franchise	distribution	channels.	The	Snap-on	Tools	Group consists	of	the	business	operations	serving	the	worldwide	franchise	van	channel.	The	Diagnostics	&	Information	Group	consists	of	the	business	operations	providing diagnostics	equipment,	vehicle	service	information,	business	management	systems,	electronic	parts	catalogs,	and	other	solutions	for	vehicle	service	to	customers	in	the worldwide	vehicle	service	and	repair	marketplace.	Financial	Services	consists	of	the	business	operations	of	Snap-on	Credit	LLC	("SOC"),	a	consolidated,	50%-owned joint	venture	between	Snap-on	and	The	CIT	Group,	Inc.	("CIT"),	and	Snap-on's	wholly	owned	finance	subsidiaries	in	those	international	markets	where	Snap-on	has franchise	operations.

Snap-on	evaluates	the	performance	of	its	operating	segments	based	on	segment	revenues	and	operating	earnings.	For	the	Commercial	&	Industrial,	Snap-on	Tools,	and Diagnostics	&	Information	Groups,	segment	net	sales	include	both	external	and	intersegment	net	sales.	Snap-on	accounts	for	intersegment	sales	and	transfers	based primarily	on	standard	costs	with	reasonable	mark-ups	established	between	the	segments.	Identifiable	assets	by	segment	are	those	assets	used	in	the	respective	reportable segment's	operations.	Intersegment	amounts	are	eliminated	to	arrive	at	consolidated	financial	results.

# Commercial	&	Industrial	Group

| (Amounts	in	millions) |  | 2007 |  | 2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| External\tnet\tsales | $1,208.6 |  | 89.5% | $1,048.6 | 88.0% | $160.0 | 15.3% |
| Intersegment\tnet\tsales | 142.0 |  | 10.5% | 143.4 | 12.0% | (1.4) | -1.0% |
| Segment\tnet\tsales | 1,350.6 |  | 100.0% | 1,192.0 | 100.0% | 158.6 | 13.3% |
| Cost\tof\tgoods\tsold | (867.1) |  | -64.2% | (756.3) | -63.4% | (110.8) | -14.7% |
| Gross\tprofit | 483.5 |  | 35.8% | 435.7 | 36.6% | 47.8 | 11.0% |
| Operating\texpenses | (352.0) |  | -26.1% | (329.5) | -27.7% | (22.5) | -6.8% |
| Segment\toperating\tearnings | $131.5 |  | 9.7% | $106.2 | 8.9% | $25.3 | 23.8% |

Segment	net	sales	in	2007	increased	$158.6	million,	or	13.3%,	from	2006	levels	due	to	$101.4	million	of	higher	sales	and	$57.2	million	of	currency	translation.	The $101.4	million	sales	increase	primarily	reflects	higher	sales	of	professional	tools	and	equipment	in	Europe,	increased	industrial	sales,	and	continued	strong	sales	growth in	emerging	markets.

Segment	gross	profit	of	$483.5	million	in	2007	was	up	$47.8	million	over	2006	levels	primarily	due	to	higher	sales,	$24.6	million	of	savings	from	ongoing	RCI initiatives,	and	$20.7	million	of	currency	translation.	These	increases	were	partially	offset	by	$14.4	million	of	increased	production	and	material	costs	and	$8.4	million of	higher	restructuring	costs.	Operating	expenses	of	$352.0	million	in	2007	were	up	$22.5	million	from	2006	levels,	but	improved	160	basis	points	(100	basis	points equals	1.0	percent)	as	a	percentage	of	segment	sales.	The	increase	in	year-over-year	operating	expenses	primarily	includes	$15.2	million	of	currency	translation,	higher volume-related	expenses,	increased	investment	spending	to	further	expand	the	company's	sales	and	manufacturing	presence	in	emerging	growth	markets	and	lower-cost regions,	and	$3.1	million	of	higher	restructuring	costs.	These	increases	in	operating	expenses	were	partially	offset	by	$5.4	million	of	gains	on	the	sale	of	facilities	in Europe	and	$3.1	million	of	savings	from	ongoing	RCI	initiatives.	As	a	result	of	these	factors,	segment	operating	earnings	in	2007	increased	$25.3	million	from	2006 levels.	As	a	percentage	of	segment	net	sales,	including	the	impact	of	$11.5	million	of	higher	restructuring	costs	in	2007,	operating	earnings	for	the	Commercial	& Industrial	Group	improved	from	8.9%	in	2006	to	9.7%	in	2007.

# Snap-on	Tools	Group

| Gross	profit | 489.5 | 44.2% | 447.7 | 43.7% | 41.8 | 9.3% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | (364.4) | -32.9% | (372.1) | -36.3% | 7.7 | 2.1% |
| Litigation\tsettlement | — | — | (38.0) | -3.7% | 38.0 | NM |
| Total\toperating\texpenses | (364.4) | -32.9% | (410.1) | -40.0% | 45.7 | 11.1% |
| Segment\toperating\tearnings | $125.1 | 11.3% $ | 37.6 | 3.7% $ | 87.5 | 232.7% |

Segment	net	sales	in	2007	increased	$82.7	million,	or	8.1%,	from	2006	levels	primarily	driven	by	a	6.3%	increase	in	North	American	franchise	sales,	including	higher sales	from	a	new	mid-tier	product	offering	and	the	re-launch	of	the	company's	in-house	warehouse	distribution	program,	as	well	as	the	impacts	of	lower	levels	of franchisee	turnover	and	product	returns.	Sales	in	the	company's	international	franchise	operations	increased	15.3%	year	over	year	primarily	due	to	continued	strong growth	in	the	United	Kingdom	and	Australia.	Currency	translation	contributed	$18.0	million	of	the	segment's	year-over-year	sales	increase.

Segment	gross	profit	of	$489.5	million	in	2007	was	up	$41.8	million	from	2006	levels	primarily	due	to	the	higher	sales	and	lower	costs,	including	$15.9	million	of benefits	from	ongoing	RCI	initiatives	and	$7.1	million	of	currency	translation.	These	improvements	to	gross	profit	were	partially	offset	by	$7.0	million	of	higher production	and	material	costs.	Operating	expenses	of	$364.4	million	in	2007	were	down	$45.7	million	from	prior-year	levels	primarily	due	to	the	absence	of	the	$38.0 million	franchisee	litigation	settlement	charge	recorded	in	2006,	lower	spending	of	$4.4	million	in	2007	related	to	the	company's	strategic	supply	chain	and	franchise system	initiatives,	$3.3	million	of	lower	bad	debt	expense,	and	$3.2	million	of	lower	restructuring	costs.	These	decreases	in	operating	expenses	were	partially	offset	by $4.2	million	of	currency	translation	and	higher	volume-related	expenses.	As	a	result	of	these	factors,	operating	earnings	in	2007	for	the	Snap-on	Tools	Group	increased $87.5	million	from	2006	levels	and,	as	a	percentage	of	segment	net	sales,	improved	from	3.7%	in	2006	to	11.3%	in	2007.

# Diagnostics	&	Information	Group

| (Amounts	in	millions) |  | 2007 |  | 2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| External\tnet\tsales | $524.9 |  | 80.7% $ | 381.5 | 75.4% $ | 143.4 | 37.6% |
| Intersegment\tnet\tsales | 125.7 |  | 19.3% | 124.7 | 24.6% | 1.0 | 0.8% |
| Segment\tnet\tsales | 650.6 |  | 100.0% | 506.2 | 100.0% | 144.4 | 28.5% |
| Cost\tof\tgoods\tsold | (357.0) |  | -54.9% | (309.8) | -61.2% | (47.2) | -15.2% |
| Gross\tprofit | 293.6 |  | 45.1% | 196.4 | 38.8% | 97.2 | 49.5% |
| Operating\texpenses | (194.1) |  | -29.8% | (136.6) | -27.0% | (57.5) | -42.1% |
| Segment\toperating\tearnings | $99.5 |  | 15.3% $ | 59.8 | 11.8% $ | 39.7 | 66.4% |

Segment	net	sales	in	2007	of	$650.6	million	increased	$144.4	million,	or	28.5%,	from	2006	levels	primarily	due	to	$179.0	million	of	higher	sales	in	2007	(twelve	months of	sales	in	2007	versus	approximately	five	weeks	of	post-acquisition	sales	in	2006)	from	Business	Solutions	and	higher	sales	of	diagnostics	and	information	products. Currency	translation	contributed	$11.8	million	of	the	year-over-year	sales	increase.	These	increases	were	partially	offset	by	approximately	$35	million	of	lower	sales	due to	the	wind	down	of	an	OEM	facilitation	program	in	Europe,	and	by	lower	sales	from	the	outsourcing	of	certain	non-strategic,	low-margin	diagnostics	equipment products	previously	manufactured	and	sold	to	the	Snap-on	Tools	Group.

Segment	gross	profit	of	$293.6	million	in	2007	was	up	$97.2	million	from	2006	levels	primarily	due	to	the	higher	sales	and	a	more	favorable	product	mix.	As	a percentage	of	segment	net	sales,	gross	profit	margin	of	45.1%	in	2007	improved	significantly	from	38.8%	in	2006.	Operating	expenses	of	$194.1	million	were	up	$57.5 million	from	2006	levels	primarily	due	to	$62.1	million	of	higher	operating	expenses	for	Business	Solutions	(twelve	months	of	operating	expense	in	2007	versus approximately	five	weeks	of	post-acquisition	operating	expense	in	2006),	partially	offset	by	$7.3	million	of	savings	from	ongoing	RCI	initiatives.	As	a	result	of	these factors,	operating	earnings	for	the	Diagnostics	&	Information	Group	in	2007	increased	$39.7	million	from	2006	levels	and,	as	a	percentage	of	segment	net	sales, improved	from	11.8%	in	2006	to	15.3%	in	2007.

# Financial	Services

| (Amounts	in	millions) |  | 2007 |  |  | 2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Financial\tservices\trevenue | $63.0 |  | 100.0% $ | 49.0 |  | 100.0% $ | 14.0 | 28.6% |
| Financial\tservices\texpenses | (40.6) |  | -64.4% | (36.0) |  | -73.5% | (4.6) | -12.8% |
| Segment\toperating\tincome | $22.4 |  | 35.6% $ | 13.0 |  | 26.5% $ | 9.4 | 72.3% |

Financial	services	operating	income	in	2007	was	$22.4	million	on	$63.0	million	of	revenue,	as	compared	with	$13.0	million	of	operating	income	on	$49.0	million	of revenue	in	2006.	The	increase	in	operating	income	primarily	reflects	the	impact	of	higher	net	yields	and	lower	borrowing	costs.	Originations	of	$539.6	million	in	2007 were	essentially	flat	with	prior-year	levels.

# Corporate

Snap-on's	general	corporate	expenses	of	$53.7	million	in	2007	were	essentially	flat	with	the	$53.8	million	incurred	in	2006.

# Fourth	Quarter

Highlights	of	Snap-on's	results	of	operations	for	the	fiscal	fourth	quarters	ended	December	29,	2007,	and	December	30,	2006,	are	as	follows:

| (Amounts	in	millions) | December	29,	2007 |  | December	30,	2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $742.9 | 100.0% $ | 651.4 | 100.0% $ | 91.5 | 14.0% |
| Cost\tof\tgoods\tsold | (409.5) | -55.1% | (368.7) | -56.6% | (40.8) | -11.1% |
| Gross\tprofit | 333.4 | 44.9% | 282.7 | 43.4% | 50.7 | 17.9% |
| Financial\tservices\trevenue | 19.0 | 100.0% | 14.8 | 100.0% | 4.2 | 28.4% |
| Financial\tservices\texpenses |  |  |  |  | -12.2 | -12.2 |
|  | (11.0) | -57.9% | (9.8) | -66.2% | (1.2) | % |
| Operating\tincome\tfrom\tfinancial\tservices | 8.0 | 42.1% | 5.0 | 33.8% | 3.0 | 60.0% |
| Operating\texpenses | (245.1) | -33.0% | (229.1) | -35.2% | (16.0) | -7.0% |
| Operating\tearnings | 96.3 | 12.6% | 58.6 | 8.8% | 37.7 | 64.3% |

| Interest	expense | (11.5) | -1.5% | -1.5% | (7.0) | -1.1% | -1.1% | (4.5) | -64.3% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Other\tincome\t(expense)\t-\tnet | (0.4) | -0.1% | -0.1% | 2.0 | 0.3% | 0.3% | (2.4) | NM |
| Earnings\tbefore\tincome\ttaxes,\tminority\tinterests\tand |  |  |  |  |  |  |  |  |
| equity\tearnings\t(loss) | 84.4 | 11.0% | 11.0% | 53.6 | 8.0% | 8.0% | 30.8 | 57.5% |
| Income\ttax\texpense | (26.3) | -3.4% | -3.4% | (15.3) | -2.3% | -2.3% | (11.0) | -71.9% |
| Earnings\tbefore\tminority\tinterests\tand\tequity\tearnings |  |  |  |  |  |  |  |  |
| (loss) | 58.1 | 7.6% | 7.6% | 38.3 | 5.7% | 5.7% | 19.8 | 51.7% |
| Minority\tinterests\tand\tequity\tearnings\t(loss),\tnet\tof\ttax |  |  | % |  |  | % |  |  |
|  | (0.8\t) | -0.1 | % | (1.0\t) | -0.1 | % | 0.2 | 20.0\t% |
| Net\tearnings\tfrom\tcontinuing\toperations | 57.3 | 7.5 |  | 37.3 | 5.6 | 5.6 | 20.0 | 53.6% |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | — | — |  | 0.7 | 0.1% | 0.1% | (0.7) | NM |
| Net\tearnings | $57.3 | 7.5% $ | 7.5% $ | 38.0 | 5.7% $ | 5.7% $ | 19.3 | 50.8% |

Net	sales	in	the	fourth	quarter	of	2007	increased	$91.5	million,	or	14.0%,	from	2006	levels,	including	$59.9	million	of	higher	sales	and	$31.6	million	of	currency translation.	Sales	in	the	Commercial	&	Industrial	Group	increased	$51.5	million,	or	16.2%,	year	over	year,	primarily	due	to	higher	industrial	sales,	increased	sales	of professional	tools	and	equipment	in	Europe,	and	continued	strong	sales	growth	in	emerging	markets.	Sales	in	the	Snap-on	Tools	Group	increased	$11.6	million,	or	4.4%, from	2006	levels	primarily	driven	by	continued	strong	sales	in	the	company's	international	franchise	operations	and	higher	sales	in	North	America.	Sales	in	the Diagnostics	&	Information	Group	increased	$29.4	million,	or	21.0%,	from	2006	levels	primarily	due	to	incremental	fourth-quarter	sales	in	2007	from	the	November	28, 2006,	acquisition	of	Business	Solutions	(13	weeks	of	sales	in	2007	versus	approximately	five	weeks	of	post-acquisition	sales	in	2006)	and	higher	sales	of	diagnostics	and information	products,	partially	offset	by	lower	sales	due	to	the	wind	down	of	an	OEM	facilitation	program	in	Europe.

Gross	profit	in	the	fourth	quarter	of	2007	was	$333.4	million,	or	44.9%	of	net	sales,	as	compared	to	$282.7	million,	or	43.4%	of	net	sales,	in	2006.	The	$50.7	million improvement	in	2007	gross	profit	primarily	reflects	benefits	from	the	higher	sales,	savings	from	ongoing	RCI	initiatives	of	$12.6	million,	and	currency	translation	of $11.4	million,	partially	offset	by	$7.4	million	of	increased	production	and	material	costs.	Fourth-quarter	2007	gross	profit	also	benefited	from	$6.0	million	of	"last-in, first-out"	("LIFO")	related	inventory	benefits;	gross	profit	in	the	fourth	quarter	of	2006	included	LIFO-related	charges	of	$4.1	million.

Operating	expenses	in	the	fourth	quarter	of	2007	were	$245.1	million,	as	compared	to	$229.1	million	in	2006.	The	$16.0	million	increase	includes	$9.6	million	of	higher year-over-year	operating	expenses	for	Business	Solutions,	$8.0	million	of	currency	translation,	higher	volume-related	expenses,	and	$3.8	million	of	increased restructuring	costs.	These	increases	were	partially	offset	by	a	$4.0	million	gain	on	the	sale	of	a	facility	in	Europe,	$2.6	million	of	lower	bad	debt	expense,	$1.9	million	of benefits	from	ongoing	RCI	initiatives,	and	$1.7	million	of	lower	spending	in	2007	related	to	the	company's	strategic	supply	chain	and	franchise	system	initiatives.	As	a percentage	of	net	sales,	operating	expenses	improved	220	basis	points	to	33.0%	in	the	fourth	quarter	of	2007,	as	compared	to	35.2%	in	2006.

Interest	expense	of	$11.5	million	in	the	fourth	quarter	of	2007	was	up	$4.5	million	from	2006	levels	primarily	due	to	higher	debt	levels	to	finance	the	Business	Solutions acquisition.

Other	income	(expense)	–	net	was	expense	of	$0.4	million	in	the	fourth	quarter	of	2007	as	compared	to	income	of	$2.0	million	in	2006.	This	line	item	includes	the impact	of	all	non-operating	items	such	as	interest	income	and	hedging	and	currency	exchange	rate	transaction	gains	and	losses.

Snap-on's	effective	income	tax	rate	on	earnings	before	minority	interests	and	equity	earnings	(loss)	in	the	fourth	quarter	of	2007	was	31.2%,	as	compared	with	28.5%	in the	prior	year.	The	lower	effective	tax	rate	in	2006	primarily	reflects	the	reversal	of	certain	foreign	income	tax	valuation	allowances.	See	Note	8	to	the	Consolidated Financial	Statements	for	further	information	on	income	taxes.

Net	earnings	in	the	fourth	quarter	of	2007	were	$57.3	million,	or	$0.98	per	diluted	share,	as	compared	with	net	earnings	of	$38.0	million,	or	$0.64	per	diluted	share,	in 2006.	Results	of	operations	for	the	fourth	quarter	of	2007	include	a	full	quarter	(13	weeks)	of	operating	results	for	Business	Solutions;	results	of	operations	for	the	fourth quarter	of	2006	included	approximately	five	weeks	of	post-acquisition	operating	results	for	Business	Solutions.

| (Amounts	in	millions) | December	29,	2007 |  | December	30,	2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| External\tnet\tsales | $333.3 | 90.3% $ | 278.4 | 87.6% $ | 54.9 | 19.7% |
| Intersegment\tnet\tsales | 36.0 | 9.7% | 39.4 | 12.4% | (3.4) | -8.6% |
| Segment\tnet\tsales | 369.3 | 100.0% | 317.8 | 100.0% | 51.5 | 16.2% |
| Cost\tof\tgoods\tsold | (236.8) | -64.1% | (201.2) | -63.3% | (35.6) | -17.7% |
| Gross\tprofit | 132.5 | 35.9% | 116.6 | 36.7% | 15.9 | 13.6% |
| Operating\texpenses | (94.3) | -25.6% | (84.4) | -26.6% | (9.9) | -11.7% |
| Segment\toperating\tearnings | $38.2 | 10.3% $ | 32.2 | 10.1% $ | 6.0 | 18.6% |

Segment	net	sales	in	the	fourth	quarter	of	2007	increased	$51.5	million,	or	16.2%,	from	2006	levels,	including	$30.1	million	of	higher	sales	and	$21.4	million	of currency	translation.	The	$30.1	million	sales	increase	primarily	reflects	higher	industrial	sales,	increased	sales	of	professional	tools	and	equipment	in	Europe,	and continued	strong	sales	growth	in	emerging	markets.

Segment	gross	profit	of	$132.5	million	in	the	fourth	quarter	of	2007	was	up	$15.9	million	over	2006	levels.	The	improvement	in	gross	profit	primarily	reflects	benefits from	the	higher	sales,	$8.5	million	of	savings	from	ongoing	RCI	initiatives,	and	$7.3	million	of	currency	translation.	These	improvements	in	gross	profit	were	partially offset	by	$6.2	million	of	higher	production	and	material	costs	and	$1.1	million	of	higher	year-over-year	restructuring	costs.	Operating	expenses	of	$94.3	million	in	the fourth	quarter	of	2007	were	up	$9.9	million	from	2006	levels,	but	improved	100	basis	points	as	a	percentage	of	segment	sales.	The	increase	in	operating	expenses primarily	includes	$5.1	million	of	currency	translation,	$3.6	million	of	higher	restructuring	costs,	higher	volume-related	expenses,	and	increased	investment	spending	to further	expand	Snap-on's	presence	in	emerging	growth	markets	and	lower-cost	regions.	These	increases	in	operating	expenses	were	partially	offset	by	a	$4.0	million

gain	on	the	sale	of	a	facility	in	Europe	and	$1.1	million	of	savings	from	ongoing	RCI	initiatives.	As	a	result	of	these	factors,	fourth-quarter	operating	earnings	for	the Commercial	&	Industrial	Group	increased	$6.0	million	from	2006	levels.	As	a	percentage	of	segment	net	sales,	including	the	impact	of	$4.7	million	of	higher restructuring	costs	in	the	fourth	quarter	of	2007,	operating	earnings	for	the	Commercial	&	Industrial	Group	improved	from	10.1%	in	2006	to	10.3%	in	2007.

| (Amounts	in	millions) | December	29,	2007 |  | December	30,	2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Segment\tnet\tsales | $273.2 | 100.0% $ | 261.6 | 100.0% $ | 11.6 | 4.4% |
| Cost\tof\tgoods\tsold | (148.1) | -54.2% | (154.5) | -59.1% | 6.4 | 4.1% |
| Gross\tprofit | 125.1 | 45.8% | 107.1 | 40.9% | 18.0 | 16.8% |
| Operating\texpenses | (88.6) | -32.4% | (91.9) | -35.1% | 3.3 | 3.6% |
| Segment\toperating\tearnings | $36.5 | 13.4% $ | 15.2 | 5.8% $ | 21.3 | 140.1% |

Segment	net	sales	in	the	fourth	quarter	of	2007	increased	$11.6	million,	or	4.4%,	from	2006	levels.	Sales	in	the	company's	international	franchise	operations	increased $9.6	million,	or	19.3%,	over	2006	levels,	primarily	due	to	continued	strong	sales	growth	in	the	United	Kingdom	and	higher	sales	in	Japan.	Sales	in	the	company's	North American	franchise	operations	increased	1.0%	from	2006	levels.	Currency	translation	contributed	$7.5	million	of	the	segment's	year-over-year	sales	increase.

Segment	gross	profit	of	$125.1	million	in	the	fourth	quarter	of	2007	was	up	$18.0	million	over	2006	levels	primarily	due	to	the	higher	sales	and	lower	costs,	including benefits	of	$4.1	million	from	ongoing	RCI	initiatives	and	$3.0	million	of	currency	translation.	Segment	gross	profit	in	2007	also	includes	$6.0	million	of	LIFO-related inventory	benefits;	segment	gross	profit	in	2006	included	$4.1	million	of	LIFO-related	charges.	Operating	expenses	in	the	fourth	quarter	of	2007	declined	$3.3	million from	prior-year	levels	primarily	due	to	$2.3	million	of	lower	bad	debt	expense	and	$1.7	million	of	lower	costs	in	2007	related	to	the	company's	strategic	supply	chain and	franchise	system	initiatives.	As	a	result	of	these	factors,	fourth-quarter	operating	earnings	for	the	Snap-on	Tools	Group	increased	$21.3	million	from	2006	levels and,	as	a	percentage	of	segment	net	sales,	improved	from	5.8%	in	2006	to	13.4%	in	2007.

| (Amounts	in	millions) | December	29,	2007 |  | December	30,	2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| External\tnet\tsales | $136.4 | 80.5% $ | 111.4 | 79.5% $ | 25.0 | 22.4% |
| Intersegment\tnet\tsales | 33.1 | 19.5% | 28.7 | 20.5% | 4.4 | 15.3% |
| Segment\tnet\tsales | 169.5 | 100.0% | 140.1 | 100.0% | 29.4 | 21.0% |
| Cost\tof\tgoods\tsold | (93.7) | -55.3% | (81.1) | -57.9% | (12.6) | -15.5% |
| Gross\tprofit | 75.8 | 44.7% | 59.0 | 42.1% | 16.8 | 28.5% |
| Operating\texpenses | (48.4) | -28.5% | (38.3) | -27.3% | (10.1) | -26.4% |
| Segment\toperating\tearnings | $27.4 | 16.2% $ | 20.7 | 14.8% $ | 6.7 | 32.4% |

Segment	net	sales	of	$169.5	million	in	the	fourth	quarter	of	2007	increased	$29.4	million,	or	21.0%,	from	2006	levels.	Incremental	year-over-year	sales	of	$31.4	million from	the	acquisition	of	Business	Solutions	(13	weeks	of	sales	in	2007	versus	approximately	five	weeks	of	post-acquisition	sales	in	2006)	and	higher	sales	of	diagnostics and	information	products	were	partially	offset	by	lower	sales	due	to	the	wind	down	of	an	OEM	facilitation	program	in	Europe.	Currency	translation	contributed	$3.8 million	of	the	year-over-year	sales	increase.

Segment	gross	profit	of	$75.8	million	in	the	fourth	quarter	of	2007	increased	$16.8	million	from	2006	levels	primarily	due	to	the	higher	sales	and	a	more	favorable product	mix.	As	a	percentage	of	segment	net	sales,	gross	profit	margin	of	44.7%	was	up	260	basis	points	from	2006	levels.	Operating	expenses	of	$48.4	million	in	the fourth	quarter	of	2007	were	up	$10.1	million	from	2006	levels	primarily	due	to	$9.6	million	of	higher	year-over-year	operating	expenses	for	Business	Solutions,	partially offset	by	$2.6	million	of	savings	from	ongoing	RCI	initiatives.	As	a	result	of	these	factors,	fourth-quarter	operating	earnings	for	the	Diagnostics	&	Information	Group increased	$6.7	million	from	2006	levels	and,	as	a	percentage	of	segment	net	sales,	improved	from	14.8%	in	2006	to	16.2%	in	2007.

| (Amounts	in	millions) | December	29,	2007 |  | December	30,	2006 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Financial\tservices\trevenue | $19.0 | 100.0% | $14.8 | 100.0% | $4.2 | 28.4% |
| Financial\tservices\texpenses | (11.0) | -57.9% | (9.8) | -66.2% | (1.2) | -12.2% |
| Segment\toperating\tincome | $8.0 | 42.1% | $5.0 | 33.8% | $3.0 | 60.0% |

Financial	services	operating	income	in	the	fourth	quarter	of	2007	was	$8.0	million	on	$19.0	million	of	revenue,	as	compared	with	$5.0	million	of	operating	income	on $14.8	million	of	revenue	in	2006.	The	increase	in	operating	income	primarily	reflects	the	impact	of	higher	net	yields.	Originations	of	$139.4	million	in	the	fourth	quarter of	2007	were	up	3.0%	from	prior-year	levels.

Snap-on's	general	corporate	expenses	of	$13.8	million	in	the	fourth	quarter	of	2007	were	down	slightly	from	the	$14.5	million	incurred	in	the	fourth	quarter	of	2006.

Highlights	of	Snap-on's	results	of	operations	for	the	fiscal	years	ended	December	30,	2006,	and	December	31,	2005,	are	as	follows:

| (Amounts	in	millions) | 2006 |  | 2005 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $2,455.1 | 100.0% | $2,281.0 | 100.0% | $174.1 | 7.6% |
| Cost\tof\tgoods\tsold | (1,375.3) | -56.0% | (1,269.8) | -55.7% | (105.5) | -8.3% |
| Gross\tprofit | 1,079.8 | 44.0% | 1,011.2 | 44.3% | 68.6 | 6.8% |
| Financial\tservices\trevenue | 49.0 | 100.0% | 53.6 | 100.0% | (4.6) | -8.6% |
| Financial\tservices\texpenses | (36.0) | -73.5% | (37.9) | -70.7% | 1.9 | 5.0% |
| Operating\tincome\tfrom\tfinancial\tservices |  |  |  |  |  | -17.2 |
|  | 13.0 | 26.5% | 15.7 | 29.3% | (2.7) | % |
| Operating\texpenses:\nSelling,\tgeneral\tand\tadministrative | (892.0) | -36.3% | (863.5) | -37.9% | (28.5) | -3.3% |

| Litigation	settlement | (38.0) | -1.6% | — | NM | (38.0) | NM |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\toperating\texpenses | (930.0) | -37.9% | (863.5) | -37.9% | (66.5) | -7.7% |
| Operating\tearnings | 162.8 | 6.5% | 163.4 | 7.0% | (0.6) | -0.4% |
| Interest\texpense | (20.6) | -0.8% | (21.7) | -0.9% | 1.1 | 5.1% |
| Other\tincome\t(expense)\t-\tnet | 5.3 | 0.2% | 3.1 | 0.1% | 2.2 | 70.9% |
| Earnings\tbefore\tincome\ttaxes,\tminority\tinterests |  |  |  |  |  |  |
| and\tequity\tearnings\t(loss) | 147.5 | 5.9% | 144.8 | 6.2% | 2.7 | 1.9% |
| Income\ttax\texpense | (45.9) | -1.8% | (55.2) | -2.4% | 9.3 | 16.8% |
| Earnings\tbefore\tminority\tinterests\tand\tequity |  |  |  |  |  |  |
| earnings\t(loss) | 101.6 | 4.1% | 89.6 | 3.8% | 12.0 | 13.4% |
| Minority\tinterests\tand\tequity\tearnings\t(loss),\tnet\tof |  |  |  |  |  |  |
| tax | (3.7) | -0.2% | (1.4) | -0.1% | (2.3) | NM |
| Net\tearnings\tfrom\tcontinuing\toperations | 97.9 | 3.9% | 88.2 | 3.7% | 9.7 | 11.0% |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 2.2 | 0.1% | 4.7 | 0.2% | (2.5) | -53.2% |
| Net\tearnings | $100.1 | 4.0% | $92.9 | 3.9% | $7.2 | 7.8% |

Note:		Certain	amounts	have	been	reclassified	to	conform	to	the	2007	income	statement	presentation.	See	Note	1	to	the	Consolidated	Financial	Statements	for	information	on	the	2007	income statement	presentation.

Net	sales	in	2006	increased	$174.1	million,	or	7.6%,	from	2005	levels,	including	$11.0	million	from	currency	translation.	The	increase	in	net	sales	includes	higher	sales in	the	Diagnostics	&	Information	Group's	OEM	facilitation	business	and	$20.4	million	of	sales	for	the	approximate	five-week	period	following	the	company's November	28,	2006,	acquisition	of	Business	Solutions.	Sales	in	the	Commercial	&	Industrial	Group	also	increased	year	over	year	primarily	due	to	higher	sales	of	tools for	U.S.	commercial	and	industrial	applications,	improved	worldwide	sales	of	equipment	products,	along	with	continued	growth	in	emerging	markets.	Sales	in	the	Snap- on	Tools	Group	increased	$30.5	million,	or	3.1%,	over	2005	levels,	reflecting	sales	increases	in	both	the	North	American	and	international	franchise	operations.	See Note	2	to	the	Consolidated	Financial	Statements	for	information	on	the	Business	Solutions	acquisition.

Gross	profit	was	$1,079.8	million,	or	44.0%	of	net	sales,	in	2006,	as	compared	to	$1,011.2	million,	or	44.3%	of	net	sales,	in	2005.	The	$68.6	million	increase	in	2006 gross	profit	primarily	reflects	benefits	from	higher	sales	and	pricing,	as	well	as	benefits	from	lower	costs,	including	benefits	from	ongoing	RCI	initiatives	of	$34.9 million.	The	year-over-year	increase	in	gross	profit	also	includes	$11.5	million	from	the	fourth-quarter	2006	acquisition	of	Business	Solutions	and	$4.2	million	of currency	translation.	These	increases	in	gross	profit	were	partially	offset	by	higher	year-over-year	production	costs	of	$22.6	million,	and	LIFO	and	other	inventory expenses	of	$11.2	million,	including	a	$1.0	million	charge	related	to	LIFO	inventories	in	2006	versus	a	comparable	$8.8	million	benefit	in	2005.	Restructuring	costs included	in	"Cost	of	goods	sold"	totaled	$12.1	million	in	2006,	as	compared	to	$3.0	million	in	2005.	The	30	basis	point	decline	in	year-over-year	gross	profit	as	a percentage	of	net	sales	also	reflects	the	impact	of	a	shift	in	product	mix	that	included	higher	2006	sales	(and	lower	relative	gross	margin)	in	the	OEM	facilitation business.

Financial	services	operating	income	was	$13.0	million	on	$49.0	million	of	revenue	in	2006,	as	compared	with	$15.7	million	of	operating	income	on	$53.6	million	of revenue	in	2005.	The	decrease	in	operating	income	primarily	reflects	the	impact	of	lower	net	interest	spreads,	partially	offset	by	higher	levels	of	originations.

Operating	expenses	in	2006	were	$930.0	million,	as	compared	to	$863.5	million	in	2005.	The	$66.5	million	increase	in	2006	operating	expenses	is	primarily	due	to	the recording	of	a	$38.0	million	pretax	charge	in	the	second	quarter	of	2006	related	to	the	settlement	of	franchisee	litigation	matters.	Operating	expenses	in	2006	also included	$22.8	million	in	higher	spending	for	strategic	growth	initiatives	and	$22.0	million	of	higher	stock-based	and	performance-based	incentive	compensation, including	$6.3	million	in	costs	associated	with	the	January	1,	2006,	adoption	of	Statement	of	Financial	Accounting	Standards	("SFAS")	No.	123(R),	"Share-Based Payment,"	on	a	prospective	basis.	The	year-over-year	increase	in	2006	operating	expenses	also	includes	$6.7	million	of	operating	expenses	from	the	acquisition	of Business	Solutions	and	$2.7	million	of	currency	translation.	These	increases	in	operating	expenses	were	partially	offset	by	benefits	from	ongoing	RCI	initiatives	of	$15.3 million,	as	well	as	the	absence	of	$3.0	million	of	costs	incurred	in	2005	to	terminate	a	supplier	relationship.	Restructuring	costs	included	in	"Operating	expenses"	totaled $9.6	million	in	2006,	as	compared	to	$15.4	million	in	2005.	See	Note	15	to	the	Consolidated	Financial	Statements	for	information	on	the	franchisee	litigation	settlement.

Interest	expense	of	$20.6	million	in	2006	was	slightly	lower	than	the	$21.7	million	incurred	in	2005	primarily	due	to	lower	average	debt	levels,	including	the	October	3, 2005,	repayment	of	$100	million	of	unsecured	6.625%	notes.	The	year-over-year	decrease	in	interest	expense	was	partially	offset	by	the	impacts	of	higher	interest	rates and	$1.8	million	of	interest	expense	in	2006	related	to	the	issuance	of	approximately	$305	million	of	commercial	paper	obligations	to	finance,	in	part,	the	November	28, 2006,	acquisition	of	Business	Solutions.	See	Note	9	to	the	Consolidated	Financial	Statements	for	information	on	commercial	paper	borrowings.

Snap-on's	effective	income	tax	rate	on	earnings	before	minority	interests	and	equity	earnings	(loss)	was	31.1%	in	2006,	as	compared	with	38.1%	in	the	prior	year.	The lower	effective	tax	rate	in	2006	primarily	reflects	the	mix	of	U.S.	and	non-U.S.	earnings,	including	the	impacts	of	the	$38.0	million	pretax	franchisee	litigation settlement	charge	that	was	tax	effected	at	a	higher	U.S.	tax	rate,	and	the	reversal	of	foreign	income	tax	valuation	allowances	as	a	result	of	foreign	restructuring	and	other activities.	Snap-on's	effective	income	tax	rate	of	38.1%	in	2005	included	$3.3	million	of	additional	U.S.	income	tax	expense	related	to	the	repatriation	of	accumulated foreign	earnings	under	the	American	Jobs	Creation	Act	of	2004	("the	AJCA").	Under	the	provisions	of	the	AJCA,	Snap-on	repatriated	approximately	$93	million	of qualifying	dividends	in	2005.	See	Note	8	to	the	Consolidated	Financial	Statements	for	further	information	on	income	taxes.

Net	earnings	in	2006	were	$100.1	million,	or	$1.69	per	diluted	share,	including	a	$23.4	million	after-tax	charge	($0.40	per	diluted	share)	related	to	the	resolution	of	the franchisee	litigation	settlement,	as	compared	with	net	earnings	of	$92.9	million,	or	$1.59	per	diluted	share,	in	2005.	Results	of	operations	for	fiscal	2006	included approximately	five	weeks	of	operating	results	for	the	November	28,	2006,	acquisition	of	Business	Solutions.

| (Amounts	in	millions) |  | 2006 |  | 2005 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| External\tnet\tsales | $1,048.6 |  | 88.0% | $1,009.0 | 89.4% | $39.6 | 3.9% |
| Intersegment\tnet\tsales | 143.4 |  | 12.0% | 120.2 | 10.6% | 23.2 | 19.3% |
| Segment\tnet\tsales | 1,192.0 |  | 100.0% | 1,129.2 | 100.0% | 62.8 | 5.6% |
| Cost\tof\tgoods\tsold | (756.3) |  | -63.4% | (734.7) | -65.1% | (21.6) | -2.9% |
| Gross\tprofit | 435.7 |  | 36.6% | 394.5 | 34.9% | 41.2 | 10.4% |
| Operating\texpenses | (329.5) |  | -27.7% | (324.9) | -28.7% | (4.6) | -1.4% |
| Segment\toperating\tearnings | $106.2 |  | 8.9% | $69.6 | 6.2% | $36.6 | 52.6% |

Segment	net	sales	in	2006	increased	$62.8	million,	or	5.6%,	from	2005	levels	due	to	$54.9	million	of	higher	sales	and	$7.9	million	of	currency	translation.	The	$54.9 million	sales	increase	primarily	reflects	growth	in	emerging	markets,	higher	worldwide	equipment	and	power	tool	sales,	and	increased	sales	of	tools	for	U.S.	commercial and	industrial	applications.

Segment	gross	profit	of	$435.7	million	in	2006	was	up	$41.2	million,	or	170	basis	points	as	a	percentage	of	segment	sales,	over	2005	levels.	The	improvement	in	2006 gross	profit	primarily	reflects	benefits	from	increased	sales	of	higher-margin	products	and	improved	pricing,	savings	of	$16.7	million	from	ongoing	RCI	initiatives, including	increased	production	and	sourcing	of	materials	from	lower-cost	regions	and	facilities,	and	$2.4	million	of	currency	translation.	These	improvements	were partially	offset	by	$5.7	million	of	higher	restructuring	costs	primarily	related	to	manufacturing	footprint	initiatives	in	Europe,	and	$3.7	million	of	higher	material	and production	costs.	Operating	expenses	increased	$4.6	million,	but	decreased	100	basis	points	as	a	percentage	of	segment	sales,	from	2005	levels.	The	operating	expense increase	includes	higher	volume-related	expenses,	$6.7	million	of	increased	spending	to	support	the	expansion	of	Snap-on's	sales	and	manufacturing	presence	in emerging	growth	markets	and	lower-cost	regions,	higher	performance-based	incentive	compensation	of	$2.1	million,	and	$1.6	million	of	currency	translation.	These increases	were	partially	offset	by	$6.5	million	of	benefits	from	ongoing	RCI	initiatives	and	$3.6	million	of	lower	restructuring	costs.	As	a	result	of	these	factors, operating	earnings	in	2006	for	the	Commercial	&	Industrial	Group	increased	$36.6	million	over	2005	levels.

| (Amounts	in	millions) | 2006 |  | 2005 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Segment\tnet\tsales | $1,025.0 | 100.0% | $994.5 | 100.0% | $30.5 | 3.1% |
| Cost\tof\tgoods\tsold | (577.3) | -56.3% | (548.9) | -55.2% | (28.4) | -5.2% |
| Gross\tprofit | 447.7 | 43.7% | 445.6 | 44.8% | 2.1 | 0.5% |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | (372.1) | -36.3% | (363.4) | -36.5% | (8.7) | -2.4% |
| Litigation\tsettlement | (38.0) | -3.7% | — | — | (38.0) | NM |
| Total\toperating\texpenses | (410.1) | -40.0% | (363.4) | -36.5% | (46.7) | -12.9% |
| Segment\toperating\tearnings | $37.6 | 3.7% | $82.2 | 8.3% | $(44.6) | -54.3% |

Segment	net	sales	in	2006	increased	$30.5	million	from	2005	levels	due	to	$28.4	million	of	higher	sales	and	$2.1	million	of	currency	translation.	Sales	in	the	company's North	American	franchise	operations	were	up	3.1%	over	2005	levels,	primarily	driven	by	a	significant	year-over-year	increase	in	fourth-quarter	U.S.	sales,	partially offset	by	a	lower	average	number	of	U.S.	franchisees	in	2006.	The	average	number	of	U.S.	franchisees	in	2006	was	down	3.0%	from	2005	levels.	As	the	company continues	implementing	its	strategic	initiatives	to	improve	the	franchise	system,	it	anticipates	that	the	decline	in	the	number	of	U.S.	franchisees	will	moderate.	In	2006, sales	in	the	company's	international	franchise	operations	were	up	3.1%	from	2005	levels,	largely	due	to	strong	sales	growth	in	the	United	Kingdom	and	Australia.

Segment	gross	profit	of	$447.7	million	in	2006	was	up	slightly	from	$445.6	million	in	2005.	The	$2.1	million	increase	in	2006	gross	profit	primarily	reflects	the	higher sales	and	selling	prices,	as	well	as	lower	costs	of	$17.3	million	from	ongoing	RCI	initiatives.	These	increases	were	partially	offset	by	higher	production	costs	and	$10.5 million	of	increased	year-over-year	LIFO	and	other	inventory	expenses,	including	a	$1.0	million	charge	related	to	LIFO	inventories	in	2006,	versus	a	comparable	$8.8 million	benefit	in	2005.	Snap-on	also	incurred	$2.0	million	of	higher	restructuring	costs	in	2006	primarily	related	to	the	expected	mid-2007	closure	of	its	Johnson	City, Tennessee,	hand	tool	facility.	Snap-on	expects	to	phase	out	production	at	the	Johnson	City	facility	and	transfer	production	to	other	Snap-on	hand	tool	facilities	and suppliers.	Gross	profit	as	a	percentage	of	segment	sales	was	43.7%,	down	110	basis	points	from	44.8%	in	the	prior	year.	Operating	expenses	in	2006	were	up	$46.7 million	from	prior-year	levels,	primarily	due	to	the	$38.0	million	pretax	franchisee	litigation	settlement	charge,	$13.3	million	of	higher	costs,	including	$1.7	million	of restructuring-related	costs,	to	support	strategic	supply	chain	and	franchise	system	initiatives,	and	$5.5	million	of	higher	performance-based	incentive	compensation. These	increases	were	partially	offset	by	$4.6	million	of	benefits	from	ongoing	RCI	initiatives	and	the	absence	of	$3.0	million	of	costs	incurred	in	2005	to	terminate	a supplier	relationship.	As	a	result	of	these	factors,	operating	earnings	in	2006	for	the	Snap-on	Tools	Group	declined	$44.6	million	from	2005	levels.

| (Amounts	in	millions) |  | 2006 |  | 2005 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| External\tnet\tsales | $381.5 |  | 75.4% | $277.5 | 68.5% | $104.0 | 37.5% |
| Intersegment\tnet\tsales | 124.7 |  | 24.6% | 127.6 | 31.5% | (2.9) | -2.3% |
| Segment\tnet\tsales | 506.2 |  | 100.0% | 405.1 | 100.0% | 101.1 | 25.0% |
| Cost\tof\tgoods\tsold | (309.8) |  | -61.2% | (234.0) | -57.8% | (75.8) | -32.4% |
| Gross\tprofit | 196.4 |  | 38.8% | 171.1 | 42.2% | 25.3 | 14.8% |
| Operating\texpenses | (136.6) |  | -27.0% | (128.8) | -31.8% | (7.8) | -6.1% |
| Segment\toperating\tearnings | $59.8 |  | 11.8% | $42.3 | 10.4% | $17.5 | 41.4% |

Segment	net	sales	of	$506.2	million	in	2006	increased	$101.1	million,	or	25.0%,	from	2005	levels,	largely	due	to	higher	OEM	facilitation	sales,	$20.4	million	of incremental	sales	for	the	approximate	five-week	period	following	the	company's	November	28,	2006,	acquisition	of	Business	Solutions,	and	increased	sales	of information	products.	Currency	translation	contributed	$1.5	million	to	the	year-over-year	sales	increase.

Segment	gross	profit	of	$196.4	million	in	2006	was	up	$25.3	million	from	2005	levels	primarily	due	to	the	higher	sales,	including	$11.5	million	from	the	Business Solutions	acquisition,	and	$2.2	million	of	benefits	from	efficiency	and	productivity	initiatives,	partially	offset	by	$1.4	million	of	higher	restructuring	costs.	As	a percentage	of	segment	net	sales,	gross	profit	margin	of	38.8%	was	down	340	basis	points	from	2005	levels,	reflecting	a	shift	in	product	mix	that	included	higher	2006 OEM	(and	lower	relative	gross	margin)	facilitation	sales.	Operating	expenses	in	2006	of	$136.6	million	were	up	$7.8	million	from	2005	levels.	The	increase	in	year- over-year	operating	expenses	primarily	includes	$6.7	million	of	operating	expenses	from	the	Business	Solutions	acquisition	and	$4.5	million	of	higher	spending	to support	strategic	growth	initiatives,	partially	offset	by	$3.3	million	of	benefits	from	efficiency	and	productivity	initiatives.	As	a	result	of	these	factors,	operating	earnings

in	2006	for	the	Diagnostics	&	Information	Group	increased	$17.5	million	over	2005	levels.

| (Amounts	in	millions) |  | 2006 |  | 2005 |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Financial\tservices\trevenue | $49.0 |  | 100.0% | $53.6 | 100.0% | $(4.6) | -8.6% |
| Financial\tservices\texpenses | (36.0) |  | -73.5% | (37.9) | -70.7% | 1.9 | 5.0% |
| Segment\toperating\tincome | $13.0 |  | 26.5% | $15.7 | 29.3% | $(2.7) | -17.2% |

Financial	services	operating	income	in	2006	was	$13.0	million	on	$49.0	million	of	revenue,	as	compared	with	$15.7	million	of	operating	income	on	$53.6	million	of revenue	in	2005.	The	decrease	in	operating	income	primarily	reflects	the	impact	of	lower	net	interest	spreads,	partially	offset	by	a	2.9%	increase	in	year-over-year originations.

Snap-on's	general	corporate	expenses	totaled	$53.8	million	in	2006,	up	from	$46.4	million	in	2005,	primarily	due	to	$15.2	million	of	increased	stock-based	and performance-based	incentive	compensation,	including	$6.3	million	from	the	January	1,	2006,	adoption	of	SFAS	No.	123(R).	Increased	expenses	in	2006	also	included $4.2	million	of	higher	insurance	and	other	costs.	These	expense	increases	were	partially	offset	by	$9.5	million	of	benefits	from	RCI	initiatives.	See	Note	13	to	the Consolidated	Financial	Statements	for	information	on	the	company's	adoption	of	SFAS	No.	123(R).

# Financial	Condition

Snap-on's	growth	has	historically	been	funded	by	a	combination	of	cash	provided	by	operating	activities	and	debt	financing.	Snap-on	believes	that	its	cash	from operations,	coupled	with	its	sources	of	borrowings,	are	sufficient	to	fund	its	anticipated	requirements	for	working	capital,	capital	expenditures,	restructuring	activities, acquisitions,	common	stock	repurchases	and	dividend	payments.	Due	to	Snap-on's	credit	rating	over	the	years,	external	funds	have	been	available	at	a	reasonable	cost. As	of	the	close	of	business	on	February	15,	2008,	Snap-on's	long-term	debt	and	commercial	paper	was	rated	A3	and	P-2	by	Moody's	Investors	Service	and	A-	and	A-2 by	Standard	&	Poor's.	Snap-on	believes	that	the	strength	of	its	balance	sheet,	combined	with	its	cash	flows	from	operating	activities,	affords	the	company	the	financial flexibility	to	respond	to	both	internal	growth	opportunities	and	those	available	through	acquisitions.

The	following	discussion	focuses	on	information	included	in	the	accompanying	Consolidated	Balance	Sheets.

Snap-on	has	been	focused	on	improving	asset	utilization	by	making	more	effective	use	of	its	investment	in	certain	working	capital	items.	The	company	assesses management's	operating	performance	and	effectiveness	relative	to	those	components	of	working	capital,	particularly	accounts	receivable	and	inventories,	that	are	more directly	impacted	by	operational	decisions.

As	of	December	29,	2007,	working	capital	(current	assets	less	current	liabilities)	of	$548.2	million	was	up	$117.0	million	from	$431.2	million	as	of	December	30,	2006. The	increase	in	year-over-year	working	capital	primarily	reflects	higher	levels	of	"Cash	and	cash	equivalents"	of	$29.6	million,	lower	"Notes	payable	and	current maturities	of	long-term	debt"	of	$27.7	million,	and	$27.7	million	of	increased	"Accounts	receivable	–	net	of	allowances."

The	following	represents	the	company's	working	capital	position	as	of	December	29,	2007,	and	December	30,	2006.

| (Amounts	in	millions)​ | 2007 | 2006 |
| :--- | :--- | :--- |
| Cash\tand\tcash\tequivalents | $93.0 | $63.4 |
| Accounts\treceivable\t–\tnet\tof\tallowances | 586.9 | 559.2 |
| Inventories | 322.4 | 323.0 |
| Other\tcurrent\tassets | 185.1 | 167.6 |
| Total\tcurrent\tassets | 1,187.4 | 1,113.2 |
| Accounts\tpayable | (171.6) | (178.8) |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | (15.9) | (43.6) |
| Other\tcurrent\tliabilities | (451.7) | (459.6) |
| Total\tcurrent\tliabilities | (639.2) | (682.0) |
| Total\tworking\tcapital | $548.2 | $431.2 |

Accounts	receivable	at	the	end	of	2007	was	$586.9	million,	up	$27.7	million	from	year-end	2006	levels.	The	year-over-year	increase	in	accounts	receivable	primarily reflects	the	impact	of	higher	sales	in	the	fourth	quarter	of	2007	and	$25.1	million	of	currency	translation.	This	increase	in	accounts	receivable	was	partially	offset	by lower	levels	of	receivables	as	a	result	of	an	improvement	in	days	sales	outstanding	from	76	days	at	year-end	2006	to	73	days	at	year-end	2007.

Inventories	of	$322.4	million	at	year-end	2007	were	essentially	flat	with	year-end	2006	levels,	as	a	$15.3	million	net	decrease	in	inventories	was	largely	offset	by	$14.7 million	of	currency	translation.	Lower	year-over-year	inventory	levels	from	the	wind	down	of	a	2006	OEM	facilitation	program	in	Europe	(essential	equipment	and diagnostics	deployments	for	major	OEMs)	and	reduced	U.S.	supply	chain	inventory,	were	partially	offset	by	higher	inventory	levels	to	better	meet	increased	demand	for industrial	products,	and	professional	tools	and	equipment	in	Europe.	Inventories	accounted	for	using	the	first-in,	first-out	("FIFO")	method	as	of	December	29,	2007, and	December	30,	2006,	approximated	65%	and	62%,	respectively,	of	total	inventories.	All	other	inventories	are	accounted	for	using	the	LIFO	cost	method.	The company's	LIFO	reserve	decreased	from	$86.7	million	at	December	30,	2006,	to	$75.0	million	at	December	29,	2007.	Inventory	turns	(full	year	cost	of	goods	sold divided	by	the	average	of	the	beginning	and	ending	inventory	balances	for	the	year)	were	4.9	turns	at	year-end	2007,	as	compared	to	4.6	turns	at	year-end	2006.

Accounts	payable	at	December	29,	2007,	was	$171.6	million,	down	$7.2	million	from	year-end	2006	levels	primarily	due	to	the	timing	of	payments	and	the	impact	of lower	inventory	levels,	partially	offset	by	$6.8	million	of	currency	translation.

Notes	payable	and	long-term	debt	as	of	December	29,	2007,	was	$517.9	million;	no	commercial	paper	was	outstanding	at	December	29,	2007.	As	of	December	30, 2006,	notes	payable	and	long-term	debt	was	$549.2	million,	including	$314.9	million	of	commercial	paper.	On	January	12,	2007,	Snap-on	sold	$300	million	in	floating and	fixed	rate	notes	consisting	of	$150	million	of	floating	rate	notes	that	mature	on	January	12,	2010,	and	$150	million	of	fixed	rate	notes	that	mature	on	January	15, 2017.	Interest	on	the	floating	rate	notes	accrues	at	a	rate	equal	to	the	three-month	London	Interbank	offer	rate	plus	0.13%	per	year	and	is	payable	quarterly.	Interest	on the	fixed	rate	notes	accrues	at	a	rate	of	5.50%	per	year	and	is	payable	semi-annually.	Snap-on	used	the	proceeds	from	the	sale	of	the	notes,	net	of	$1.5	million	of transaction	costs,	to	repay	commercial	paper	obligations	issued	to	finance	the	acquisition	of	Business	Solutions.	On	January	12,	2007,	the	company	also	terminated	a $250	million	bridge	credit	agreement	that	Snap-on	established	prior	to	its	acquisition	of	Business	Solutions.

Average	commercial	paper	and	bank	notes	outstanding	were	$124.9	million	in	2007	and	$55.1	million	in	2006.	The	weighted-average	interest	rate	on	these	instruments was	5.59%	in	2007	and	5.63%	in	2006.	As	of	December	29,	2007,	the	weighted-average	interest	rate	on	outstanding	bank	notes	was	8.78%.	At	December	30,	2006,	the weighted-average	interest	rate	on	outstanding	commercial	paper	and	bank	notes	was	5.42%.

Long-term	debt	of	$502.0	million	as	of	December	29,	2007,	includes	$200	million	of	unsecured	6.25%	notes,	$150	million	of	unsecured	floating	rate	notes,	$150 million	of	unsecured	5.50%	notes,	and	$2.0	million	of	other	long-term	debt.	Current	maturities	of	long-term	debt	and	notes	payable	to	banks	under	uncommitted	lines	of credit	of	$15.9	million	at	December	29,	2007,	included	$10.1	million	of	notes	payable	and	$5.8	million	of	current	maturities	of	long-term	debt.

On	August	10,	2007,	Snap-on	entered	into	a	five-year,	$500	million	multi-currency	revolving	credit	facility	that	terminates	on	August	10,	2012.	This	$500	million facility	replaces	Snap-on's	previous	$400	million	multi-currency	revolving	credit	facility	that	was	set	to	terminate	on	July	27,	2009.	The	$500	million	revolving	credit facility's	financial	covenant	requires	that	Snap-on	maintain,	as	of	each	fiscal	quarter	end,	(i)	a	ratio	of	total	debt	to	the	sum	of	total	debt	plus	shareholders'	equity	of	not greater	than	0.60	to	1.00;	or	(ii)	a	ratio	of	total	debt	to	earnings	before	interest,	taxes,	depreciation	and	amortization	(EBITDA)	for	the	preceding	four	fiscal	quarters	then ended	of	not	greater	than	3.50	to	1.00.	As	of	December	29,	2007,	Snap-on	was	in	compliance	with	all	covenants	of	this	revolving	credit	facility.

As	of	December	29,	2007,	Snap-on	also	had	$20	million	of	unused	available	debt	capacity	under	its	committed	bank	lines	of	credit,	including	a	$10	million	line	of credit	that	expires	on	July	29,	2008,	and	a	$10	million	line	of	credit	that	expires	on			August	31,	2008.	As	of	December	29,	2007,	Snap-on	had	$520	million	of	unused available	debt	capacity	under	the	terms	of	its	revolving	credit	facility	and	its	committed	bank	lines	of	credit.

Snap-on	maintains	sufficient	committed	and	uncommitted	lines	of	credit	and	liquidity	facilities	to	cover	its	expected	funding	needs	on	both	a	short-term	and	long-term basis.	Snap-on	manages	its	aggregate	short-term	borrowings	so	as	not	to	exceed	its	availability	under	its	revolving	credit	facilities	and	committed	lines	of	credit.	The company	accesses	short-term	debt	markets	predominantly	through	commercial	paper	issuances	and	lines	of	credit	to	fund	its	short-term	requirements	and	to	ensure	near- term	liquidity.	Near-term	liquidity	requirements	for	Snap-on	in	2008	include	the	funding	of	its	investments	in	capital	expenditures	and	restructuring	activities,	payments of	dividends,	interest	and	share	repurchases.	Snap-on	expects	to	make	contributions	of	$10.0	million	to	its	foreign	pension	plans	and	$1.2	million	to	its	domestic	pension plans	in	2008.	Depending	on	market	and	other	conditions,	Snap-on	may	elect	to	make	discretionary	cash	contributions	to	its	domestic	pension	plans	in	2008.

Snap-on's	long-term	financing	strategy	is	to	maintain	continuous	access	to	the	debt	markets	to	accommodate	its	liquidity	needs.	See	Note	9	to	the	Consolidated	Financial Statements	for	further	information	on	Snap-on's	debt	and	credit	facilities.The	following	discussion	focuses	on	information	included	in	the	accompanying	Consolidated Statements	of	Cash	Flow.

Capital	expenditures	were	$61.9	million	in	2007,	$50.5	million	in	2006	and	$40.1	million	in	2005.	Capital	expenditures	in	all	three	years	mainly	reflect	efficiency	and cost-reduction	capital	investments,	including	the	installation	of	new	production	equipment	and	machine	tooling	to	enhance	manufacturing	and	distribution	operations,	as well	as	ongoing	replacements	of	manufacturing	and	distribution	equipment.	Capital	spending	in	2006	and	2007	also	included	higher	levels	of	spending	to	support	the company's	strategic	supply	chain	and	other	growth	initiatives,	including	the	expansion	of	the	company's	manufacturing	capabilities	in	lower-cost	regions	and	emerging markets,	and	for	the	replacement	and	enhancement	of	its	existing	global	enterprise	resource	planning	(ERP)	management	information	system,	which	will	continue	over	a period	of	several	years.	Snap-on	believes	that	its	cash	generated	from	operations,	as	well	as	the	funds	available	from	its	credit	facilities,	will	be	sufficient	to	fund	the company's	capital	expenditure	requirements	in	2008.

Amortization	expense	was	$22.2	million	in	2007,	$3.4	million	in	2006	and	$2.7	million	in	2005.	The	increase	in	2007	amortization	expense	is	primarily	due	to	the amortization	of	intangibles	from	the	November	2006	acquisition	of	Business	Solutions.	See	Note	6	to	the	Consolidated	Financial	Statements	for	information	on	acquired intangible	assets.

Snap-on	has	undertaken	stock	repurchases	from	time	to	time	to	offset	dilution	created	by	shares	issued	for	employee	and	dealer	stock	purchase	plans,	stock	options,	and other	corporate	purposes,	as	well	as	to	repurchase	shares	when	the	company	believes	market	conditions	are	favorable.	In	2007,	Snap-on	repurchased	1,860,000	shares	of common	stock	for	$94.4	million	under	its	previously	announced	share	repurchase	programs.	The	cash	used	to	repurchase	shares	of	common	stock	was	partially	offset	by $39.2	million	of	proceeds	from	stock	purchase	and	option	plan	exercises	and	$6.0	million	of	related	excess	tax	benefits.	As	of	December	29,	2007,	Snap-on	had remaining	availability	to	repurchase	up	to	an	additional	$116.8	million	in	common	stock	pursuant	to	the	Board	of	Directors'	("Board")	authorizations.	The	purchase	of Snap-on	common	stock	is	at	the	company's	discretion,	subject	to	prevailing	financial	and	market	conditions.	Snap-on	repurchased	2,616,618	shares	of	common	stock for	$109.8	million	in	2006	and	912,100	shares	of	common	stock	for	$32.1	million	in	2005.	Snap-on	believes	that	its	cash	generated	from	operations,	as	well	as	the	funds available	from	its	credit	facilities,	will	be	sufficient	to	fund	the	company's	share	repurchases	in	2008.

On	October	3,	2005,	Snap-on	repaid	its	$100	million,	10-year,	6.625%	unsecured	notes	upon	their	maturity.	The	$100	million	debt	repayment	was	made	with	available cash	on	hand.

Snap-on	has	paid	consecutive	quarterly	cash	dividends,	without	interruption	or	reduction,	since	1939.	Cash	dividends	paid	in	2007,	2006	and	2005	totaled	$64.8	million, $63.6	million	and	$57.8	million,	respectively.	On	November	1,	2007,	the	company	announced	that	its	Board	increased	the	quarterly	cash	dividend	by	11.1%	to	$0.30	per share	($1.20	per	share	per	year).	At	the	beginning	of	fiscal	2006,	the	company's	Board	increased	the	quarterly	cash	dividend	by	8%	to	$0.27	per	share	($1.08	per	share per	year).

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Cash\tdividends\tpaid\tper\tcommon\tshare | $1.11 | $1.08 | $1.00 |
| Cash\tdividends\tpaid\tas\ta\tpercent\tof\tprior-year\tretained\tearnings | 5.5% | 5.6% | 5.2% |

Snap-on	believes	that	its	cash	generated	from	operations,	as	well	as	the	funds	available	from	its	credit	facilities,	will	be	sufficient	to	pay	dividends	in	2008.

# Off-Balance	Sheet	Arrangements

Except	as	set	forth	below	in	the	section	labeled	"Contractual	Obligations	and	Commitments,"	the	company	had	no	off-balance	sheet	arrangements	as	of	December	29, 2007.

Contractual	Obligations	and	Commitments

A	summary	of	Snap-on's	future	contractual	obligations	and	commitments	as	of	December	29,	2007,	are	as	follows:

|  |  |  |  |  | 2013	and |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Total | 2008 | 2009\t-\t2010 | 2011\t-\t2012 | thereafter |
| Contractual\tobligations: |  |  |  |  |  |
| Long-term\tdebt | $507.8 | $5.8 | $151.6 | $200.1 | $150.3 |
| Interest\ton\tfixed\trate\tdebt | 140.3 | 20.8 | 41.5 | 36.8 | 41.2 |
| Operating\tleases | 93.7 | 28.9 | 30.5 | 12.7 | 21.6 |
| Capital\tleases | 30.7 | 1.4 | 3.0 | 3.2 | 23.1 |
| Purchase\tobligations | 5.6 | 2.3 | 3.3 | — | — |
| Other | 0.7 | — | 0.7 | — | — |
| Total | $778.8 | $59.2 | $230.6 | $252.8 | $236.2 |

The	company	has	excluded	payments	related	to	its	pension	and	postretirement	benefit	plans	from	the	contractual	obligation	table	above;	see	Notes	11	and	12	to	the Consolidated	Financial	Statements	for	information	on	the	company's	benefit	plans	and	payments.		The	contractual	obligation	table	above	does	not	include	income	tax liabilities	recorded	in	accordance	with	Financial	Accounting	Standards	Board	("FASB")	Interpretation	No.	48	"Accounting	for	Uncertainty	in	Income	Taxes:	an Interpretation	of	FASB	Statement	No.	109;"	see	Note	8	for	information	on	income	taxes.

# Environmental	Matters

Snap-on	is	subject	to	various	federal,	state	and	local	government	requirements	regulating	the	discharge	of	materials	into	the	environment	or	otherwise	relating	to	the protection	of	the	environment.	Snap-on's	policy	is	to	comply	with	these	requirements	and	the	company	believes	that,	as	a	general	matter,	its	policies,	practices	and procedures	are	properly	designed	to	prevent	unreasonable	risk	of	environmental	damage,	and	of	resulting	financial	liability,	in	connection	with	its	business.	Some	risk	of environmental	damage	is,	however,	inherent	in	some	of	Snap-on's	operations	and	products,	as	it	is	with	other	companies	engaged	in	similar	businesses.

Snap-on	is	and	has	been	engaged	in	the	handling,	manufacture,	use	and	disposal	of	many	substances	classified	as	hazardous	or	toxic	by	one	or	more	regulatory	agencies. The	company	believes	that,	as	a	general	matter,	its	handling,	manufacture,	use	and	disposal	of	these	substances	are	in	accordance	with	environmental	laws	and regulations.	It	is	possible,	however,	that	future	knowledge	or	other	developments,	such	as	improved	capability	to	detect	substances	in	the	environment	or	increasingly strict	environmental	laws	and	standards	and	enforcement	policies,	could	bring	into	question	the	company's	handling,	manufacture,	use	or	disposal	of	these	substances.

# Consolidated	Joint	Venture

SOC,	a	consolidated,	50%-owned	joint	venture	between	Snap-on	and	CIT,	provides	a	broad	range	of	financial	services	to	Snap-on's	U.S.	franchisee	and	customer network	and	to	Snap-on's	industrial	and	other	customers.	Snap-on	and	CIT	have	identical	voting	and	participation	rights	and	responsibilities	in	SOC.		See	Note	1	to	the Consolidated	Financial	Statements	for	further	information	on	SOC.

Snap-on	receives	royalty	and	management	fee	income	from	SOC	based	on	the	volume	of	financings	originated	by	SOC.		Snap-on	also	shares	ratably	with	CIT	in	any residual	net	profit	or	loss	of	the	joint	venture	after	operating	expenses,	including	royalty	and	management	fees,	interest	costs	and	credit	loss	provisions.		Snap-on provides	extended-term	financing	internationally	through	its	wholly	owned	finance	subsidiaries.

SOC	sells	substantially	all	of	its	originated	contracts	on	a	limited	recourse	basis	to	CIT,	net	of	certain	fees,	and	SOC	continues	to	service	these	contracts	for	an	estimated market-rate	servicing	fee.		SOC	originated	contracts	totaling	$422.7	million	in	2007,	$426.8	million	in	2006	and	$413.8	million	in	2005.

CIT	and	Snap-on	have	agreed	to	lend	funds	to	support	SOC's	working	capital	requirements	on	a	50/50	basis.		As	of	December	29,	2007,	and	December	30,	2006,	SOC owed	each	of	Snap-on	and	CIT	$0.3	million	and	$0.1	million,	respectively,	pursuant	to	this	agreement.

Financial	information	regarding	SOC	loan	originations	is	as	follows:

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Originations\t(in\tmillions): |  |  |  |
| Extended-credit\treceivables | $348.1 | $356.2 | $327.0 |
| Equipment\tleases | 24.6 | 28.8 | 41.1 |
| Franchisee\tfinancing | 50.0 | 41.8 | 45.7 |
| Total | $422.7 | $426.8 | $413.8 |
| Number\tof\taccounts\toutstanding: |  |  |  |
| Extended-credit\treceivables | 176,126 | 172,703 | 172,147 |
| Equipment\tleases | 9,019 | 10,710 | 12,045 |
| Franchisee\tfinancing | 3,238 | 3,306 | 3,477 |
| Total | 188,383 | 186,719 | 187,669 |

# New	Accounting	Standards

See	Note	1	to	the	Consolidated	Financial	Statements	for	information	on	new	accounting	standards.

# Critical	Accounting	Policies

The	consolidated	financial	statements	and	related	notes	contain	information	that	is	pertinent	to	management's	discussion	and	analysis.		The	preparation	of	financial statements	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	of	America	requires	management	to	make	estimates	and	assumptions	that affect	the	reported	amounts	of	assets	and	liabilities,	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements,	and	the	reported	amounts	of revenues	and	expenses	during	the	reporting	period.		These	estimates	are	generally	based	on	historical	experience,	current	conditions	and	on	various	other	assumptions that	are	believed	to	be	reasonable	under	the	circumstances,	the	results	of	which	form	the	basis	for	making	judgments	about	the	carrying	values	of	assets	and	liabilities that	are	not	readily	available	from	other	sources,	as	well	as	identifying	and	assessing	our	accounting	treatment	with	respect	to	commitments	and	contingencies.		Actual results	could	differ	from	those	estimates.		Snap-on	considers	the	following	policies	to	be	the	most	critical	in	understanding	the	judgments	that	are	involved	in	the preparation	of	the	company's	consolidated	financial	statements	and	the	uncertainties	that	could	impact	the	company's	financial	position,	results	of	operations	and	cash flow.

Revenue	Recognition:	Snap-on	derives	revenue	primarily	from	the	sale	of	tools,	diagnostics	and	equipment	solutions	for	professional	tool	and	equipment	users.		Snap-on markets	its	products	and	services	through	the	worldwide	franchise	mobile	van	channel,	company	direct	sales,	and	independent	distributor	and	other	non-franchise channels,	including	its	public	Internet	Web	site.		Snap-on	also	derives	revenue	from	various	financing	programs	to	facilitate	the	sales	of	its	products.

Snap-on	recognizes	revenue	from	the	sale	of	tools,	diagnostics	and	equipment	solutions	when	all	of	the	following	conditions	are	satisfied:	(i)	persuasive	evidence	of	an arrangement	exists;	(ii)	the	price	is	fixed	or	determinable;	(iii)	collectibility	is	reasonably	assured;	and	(iv)	delivery	has	occurred	or	services	have	been	rendered. Delivery	generally	occurs	when	the	title	and	the	risks	and	rewards	of	ownership	have	substantially	transferred	to	the	customer.		For	sales	contingent	upon	customer

acceptance	or	product	installation,	revenue	recognition	is	deferred	until	such	obligations	are	fulfilled.		As	required	by	SFAS	No.	48,	"Revenue	Recognition	When	Right of	Return	Exists,"	estimated	product	returns	are	recorded	as	a	reduction	in	reported	revenues	at	the	time	of	sale	based	upon	historical	product	return	experience	and assumptions	for	the	gross	profit	margin	and	volume	of	future	sales	returns.		Provisions	for	customer	volume	rebates,	discounts	and	allowances	are	also	recorded	as	a reduction	of	reported	revenues	at	the	time	of	sale	based	on	historical	experience	and	known	trends.		Revenue	related	to	maintenance	and	subscription	agreements	is recognized	over	the	term	of	the	agreement.

Snap-on	also	recognizes	revenue	related	to	multiple	element	arrangements,	including	sales	of	software	and	software-related	services.		Snap-on	follows	the	guidance under	Statement	of	Position	("SOP")	97-2,	"Software	Revenue	Recognition,"	as	amended	and	Emerging	Issues	Task	Force	("EITF")	Issue	No.	03-5,	"Applicability	of SOP	97-2	to	Non-software	Deliverables	Containing	More	than	Incidental	Software"	for	software	and	software-related	elements,	and	EITF	Issue	No.	00-21,	"Revenue Arrangements	with	Multiple	Deliverables,"	in	conjunction	with	Securities	and	Exchange	Commission	Staff	Accounting	Bulletin	No.	104,	"Revenue	Recognition,"	for hardware	and	hardware-related	elements.		When	a	sales	arrangement	contains	multiple	elements,	such	as	hardware	and	software	products	and/or	services,	Snap-on	uses vendor	specific	objective	evidence	("VSOE")	of	fair	value	to	allocate	revenue	to	each	element	based	on	its	relative	fair	value	and,	when	necessary,	uses	the	residual method	to	assign	value	to	the	delivered	elements	when	VSOE	only	exists	for	the	undelivered	elements.		Snap-on	limits	the	amount	of	revenue	recognition	for	delivered elements	to	the	amount	that	is	not	contingent	on	the	future	delivery	of	products	or	services.		The	amount	assigned	to	future	delivery	of	products	or	services	is	recognized when	the	product	is	delivered	and/or	when	the	services	are	performed.		In	instances	where	the	product	and/or	services	are	performed	over	an	extended	period,	as	is	the case	with	subscription	agreements	or	the	providing	of	ongoing	support,	revenue	is	recognized	on	a	straight-line	basis	over	the	term	of	the	agreement,	which	generally ranges	from	12	to	60	months.

Purchased	software	and	costs	incurred	in	the	development	of	software	that	will	ultimately	be	sold	are	capitalized	at	the	time	technological	feasibility	has	been	attained and	the	related	product	is	ready	for	general	release.	During	2007,	2006	and	2005,	the	company	capitalized	$10.6	million,	$5.0	million	and	$4.2	million,	respectively,	of such	costs.	Amortization	of	capitalized	software	development	costs	was	$4.9	million	in	2007,	$2.5	million	in	2006,	and	$1.7	million	in	2005.	Unamortized	capitalized software	development	costs	were	$24.0	million	at	December	29,	2007,	and	$18.3	million	at	December	30,	2006.

Financial	Services	Revenue:		In	addition	to	its	sales	of	tools,	diagnostics	and	equipment	solutions,	Snap-on	also	generates	revenue	from	various	financing	programs	that include	(i)	loans	to	franchisees;	(ii)	loans	to	the	franchisees'	customers;	and	(iii)	loans	to	Snap-on's	industrial	and	other	customers	for	the	purchase	of	tools	and equipment	on	an	extended-term	payment	plan.		These	financing	programs	are	offered	through	SOC,	a	consolidated	50%-owned	joint	venture	with	CIT,	and	Snap-on's wholly	owned	international	finance	subsidiaries.		Financial	services	revenue	consists	of	SOC's	sales	of	originated	contracts	to	CIT	and	service	fee	income,	as	well	as installment	contract	revenue	and	franchisee	loan	receivable	revenue	derived	from	SOC	and	Snap-on's	wholly	owned	international	finance	operations.		The	decision	to finance	through	Snap-on	or	another	financing	entity	is	solely	at	the	election	of	the	customer.		When	assessing	customers	for	potential	financing,	Snap-on	considers various	factors	regarding	ability	to	pay	including	financial	condition,	collateral,	debt-servicing	ability,	past	payment	experience	and	credit	bureau	information. Contracts	originated	by	SOC	and	subsequently	sold	to	CIT	are	also	subject	to	the	underwriting	approval	of	CIT.

Financing	revenue	from	SOC	is	recognized	primarily	from	the	sale	of	originated	contracts	to	CIT	net	of	various	fees,	including	securitization,	warehousing,	bad	debt	and prepayment	fees.		SOC	continues	to	service	these	contracts	for	an	estimated	market-rate	servicing	fee.		Servicing	fees	are	paid	to	SOC	by	CIT	and	such	revenue	is recognized	over	the	contractual	term	of	the	loan,	with	a	portion	of	the	servicing	fee	recognized	at	the	time	of	origination.		Financing	revenue	from	originated	loans	that are	retained	is	recognized	over	the	life	of	the	contract,	with	interest	computed	on	a	daily	basis.

Snap-on's	wholly	owned	international	finance	subsidiaries	own	all	of	the	loans	originated	through	their	financing	programs.	Revenue	from	interest	income	is	recognized over	the	life	of	the	contract,	with	interest	computed	on	a	daily	basis.

Goodwill	and	Other	Indefinite-lived	Intangible	Assets:	Goodwill	represents	the	excess	of	the	purchase	price	paid	over	the	value	of	net	tangible	and	identifiable	intangible assets	of	businesses	acquired.	Goodwill	and	other	indefinite-lived	intangible	assets	are	not	amortized,	but	instead	are	tested	for	impairment	annually	or	more	frequently	if events	or	changes	in	circumstances	indicate	that	these	assets	might	be	impaired.	Impairment	tests	involve	the	use	of	judgmental	estimates

related	to	the	fair	market	value	of	the	business	operations	with	which	goodwill	and	other	indefinite-lived	intangible	assets	are	associated,	taking	into	consideration	both historical	operating	performance	and	anticipated	financial	position	and	future	earnings,	discounted	by	the	company's	weighted	average	cost	of	capital.	Annual impairment	tests	are	performed	by	the	company	in	the	second	quarter	of	each	year;	the	2007	evaluation	indicated	that	no	goodwill	or	intangible	asset	impairment adjustments	were	required.

Should	the	operations	of	the	businesses	with	which	goodwill	or	indefinite-lived	intangible	assets	are	associated	incur	significant	declines	in	profitability	and	cash	flow	in future	years	due	to	significant	adverse	changes	in	business	climate,	adverse	actions	by	regulators,	unanticipated	competition,	loss	of	key	personnel,	and/or	changes	in technology	or	markets,	some	or	all	of	the	recorded	goodwill	or	intangibles	could	be	subject	to	impairment.	See	Note	6	to	the	Consolidated	Financial	Statements	for further	information	on	goodwill	and	other	intangible	assets.

Allowances	for	Doubtful	Accounts:	Snap-on's	accounts	receivable	are	reported	net	of	estimated	bad	debt	allowances,	which	are	regularly	evaluated	by	management	for adequacy.	The	evaluations	take	into	consideration	various	financial	and	qualitative	factors	that	may	affect	customers'	ability	to	pay.		These	factors	may	include customers'	financial	condition,	collateral,	debt-servicing	ability,	past	payment	experience	and	credit	bureau	information.		Snap-on	regularly	reviews	the	allowance estimation	process	and	adjusts	the	allowances	as	appropriate.		It	is	possible,	however,	that	the	accuracy	of	Snap-on's	estimation	process	could	be	adversely	impacted	if the	financial	condition	of	its	customers	were	to	deteriorate.		The	company	does	not	believe	that	accounts	receivable	represent	significant	concentrations	of	credit	risk because	of	the	diversified	portfolio	of	individual	customers	and	geographical	areas.

Inventory	Valuation:	Snap-on	values	its	inventory	at	the	lower	of	cost	or	market	and	adjusts	for	the	value	of	inventory	that	is	estimated	to	be	excess,	obsolete	or otherwise	unmarketable.		Inventory	adjustments	for	raw	materials	are	largely	based	on	analysis	of	raw	material	age	and	actual	physical	inspection	of	raw	material	for fitness	for	use.		As	part	of	evaluating	work-in-progress	and	finished	goods,	management	reviews	individual	product	stock-keeping	units	(SKUs)	by	product	category	and product	life	cycle.		Cost	adjustments	for	each	product	category/product	life-cycle	state	are	generally	established	and	maintained	based	on	a	combination	of	historical experience,	forecasted	sales	and	promotions,	technological	obsolescence,	inventory	age	and	other	actual	known	conditions	and	circumstances.		Should	actual	product marketability	and	raw	material	fitness	for	use	be	affected	by	conditions	that	are	different	from	management	estimates,	further	adjustments	to	inventory	allowances	may be	required.

Internal-use	Software:		In	accordance	with	SOP	98-1,	"Accounting	for	the	Costs	of	Computer	Software	Developed	or	Obtained	for	Internal	Use,"	costs	that	are	incurred internally	in	creating	software	solutions	and	enhancements	to	those	solutions	are	expensed	until	technological	feasibility	has	been	established.

Warranty	Accruals:	Snap-on	provides	product	warranties	for	specific	product	lines	and	accrues	for	estimated	future	warranty	costs	in	the	period	in	which	the	sale	is recorded.		Snap-on	calculates	its	accrual	requirements	based	on	historic	warranty	loss	experience	that	is	periodically	adjusted	for	recent	actual	experience,	including	the timing	of	claims	during	the	warranty	period	and	actual	costs	incurred.	If	actual	return	rates	and/or	repair	and	replacement	costs	differ	significantly	from	our	estimates,

adjustments	to	cost	of	sales	may	be	required	in	future	periods.	See	Note	15	to	the	Consolidated	Financial	Statements	for	further	information	on	Snap-on's	warranty accrual.

Pension	Benefits:	The	calculation	of	Snap-on's	pension	expense	and	projected	benefit	obligation	requires	the	use	of	a	number	of	assumptions.		Changes	in	these assumptions	are	primarily	influenced	by	factors	outside	of	Snap-on's	control	and	can	have	a	significant	effect	on	the	amounts	reported	in	the	financial	statements.		Snap- on	believes	that	the	two	most	critical	assumptions	are	(i)	the	expected	return	on	plan	assets;	and	(ii)	the	assumed	discount	rate.

Pension	expense	increases	as	the	expected	rate	of	return	on	plan	assets	decreases.		Lowering	the	expected	rate	of	return	assumption	for	Snap-on's	domestic	pension	plan assets	by	0.5%	would	have	increased	Snap-on's	2007	domestic	pension	expense	by	approximately	$3.4	million.		At	year-end	2007,	Snap-on's	domestic	plan	assets comprised	approximately	87%	of	Snap-on's	worldwide	pension	plan	assets.		See	Note	11	to	the	Consolidated	Financial	Statements	for	further	information	on	Snap-on's pension	plans.

The	objective	of	Snap-on's	discount	rate	assumption	is	to	reflect	the	rate	at	which	the	pension	benefits	could	be	effectively	settled.		In	making	this	determination,	the company	takes	into	account	the	timing	and	amount	of	benefits	that	would	be	available	under	the	plans.		The	methodology	for	selecting	the	discount	rate	as	of	year-end 2007	was	to	match	the	plan's	cash	flows	to	that	of	a	yield	curve	that	provides	the	equivalent	yields	on	long-term	bonds	with	an	Aa	rating	or	better	for	each	maturity.		The selection	of	the	6.5%	weighted-average	discount	rate	for	Snap-on's	domestic	pension	plans	represents	the	single	rate	that	produces	the	same	present	value	of	cash	flows as	the	estimated	benefit	plan	payments.	Lowering	Snap-on's	domestic	discount	rate	assumption	by	0.5%	would	have	increased	Snap-on's	2007	domestic	pension expense	and	projected	benefit	obligation	by	approximately	$2.5	million	and	$35.1	million,	respectively.		At	year-end	2007,	Snap-on's	domestic	projected	benefit obligation	comprised	approximately	81%	of	Snap-on's	worldwide	projected	benefit	obligation.

Income	Taxes:	The	company	records	a	valuation	allowance	to	reduce	its	deferred	tax	assets	if	it	is	more	likely	than	not	that	some	portion	or	all	of	the	deferred	tax	assets will	not	be	realized.		While	the	company	has	considered	future	taxable	income	and	ongoing	prudent	and	feasible	tax	strategies	in	assessing	the	need	for	the	valuation allowance,	if	these	estimates	and	assumptions	change	in	the	future,	the	company	may	be	required	to	adjust	its	valuation	allowance.		This	could	result	in	a	charge	to,	or an	increase	in,	income	in	the	period	such	determination	is	made.

In	addition,	the	company	operates	within	multiple	taxing	jurisdictions	and	is	subject	to	audit	in	these	jurisdictions.		The	company	records	accruals	for	the	estimated outcomes	of	these	audits	and	the	accruals	may	change	in	the	future	due	to	new	developments	in	each	matter.

Stock-based	Compensation:	Effective	January	1,	2006,	the	company	adopted	SFAS	No.	123(R),	"Share-Based	Payment,"	using	the	modified	prospective	method. SFAS	No.	123(R)	requires	entities	to	recognize	the	cost	of	employee	services	in	exchange	for	awards	of	equity	instruments	based	on	the	grant-date	fair	value	of	those awards	(with	limited	exceptions).		That	cost,	based	on	the	estimated	number	of	awards	that	are	expected	to	vest,	will	be	recognized	over	the	period	during	which	the employee	is	required	to	provide	the	service	in	exchange	for	the	award.		No	compensation	cost	is	recognized	for	awards	for	which	employees	do	not	render	the	requisite service.		Upon	adoption,	the	grant-date	fair	value	of	employee	share	options	and	similar	instruments	was	estimated	using	the	Black-Scholes	valuation	model.

The	Black-Scholes	valuation	model	requires	the	input	of	subjective	assumptions,	including	the	expected	life	of	the	stock-based	award	and	stock	price	volatility.	The assumptions	used	are	management's	best	estimates,	but	the	estimates	involve	inherent	uncertainties	and	the	application	of	management	judgment.	As	a	result,	if	other assumptions	had	been	used,	the	recorded	and	pro	forma	stock-based	compensation	expense	could	have	been	materially	different	from	that	depicted	in	the	financial statements.

# Outlook

Snap-on	expects	to	continue	investing	in	its	growth	initiatives	aimed	at	expanding	value	provided	to	its	traditional	customers,	penetrating	new	and	adjacent	segments, and	extending	its	presence	in	the	emerging	markets	of	Asia/Pacific	and	Eastern	Europe.		In	addition,	Snap-on	also	expects	to	continue	implementing	its	strategic	growth, RCI	and	low-cost	sourcing	initiatives	intended	to	provide	higher	levels	of	growth	and	profitability.		Snap-on	anticipates	2008	restructuring	costs	to	be	in	a	range	of	$15 million	to	$20	million,	down	from	the	$26	million	incurred	in	2007.		Capital	expenditures	in	2008	are	expected	to	be	in	a	range	of	$55	million	to	$60	million.		Snap-on also	expects	that	its	2008	effective	income	tax	rate	on	earnings	before	minority	interests	and	equity	earnings	(loss)	will	approximate	33%.		As	a	result,	Snap-on	expects full-year	2008	sales	and	operating	earnings	to	improve	over	2007	levels.

# Item	7A:	Quantitative	and	Qualitative	Disclosures	About	Market	Risk

# Market,	Credit	and	Economic	Risks

Market	risk	is	the	potential	economic	loss	that	may	result	from	adverse	changes	in	the	fair	value	of	financial	instruments.		Snap-on	is	exposed	to	market	risk	from changes	in	both	foreign	currency	exchange	rates	and	interest	rates.		Snap-on	monitors	its	exposure	to	these	risks	and	attempts	to	manage	the	underlying	economic exposures	through	the	use	of	financial	instruments	such	as	forward	exchange	contracts	and	interest	rate	swap	agreements.		Snap-on	does	not	use	derivative	instruments for	speculative	or	trading	purposes.		Snap-on's	broad-based	business	activities	help	to	reduce	the	impact	that	volatility	in	any	particular	area	or	related	areas	may	have on	its	operating	earnings	as	a	whole.		Snap-on's	management	takes	an	active	role	in	the	risk	management	process	and	has	developed	policies	and	procedures	that	require specific	administrative	and	business	functions	to	assist	in	the	identification,	assessment	and	control	of	various	risks.

# Foreign	Currency	Risk	Management

Snap-on	has	significant	international	operations	and	is	subject	to	certain	risks	inherent	with	foreign	operations	that	include	currency	fluctuations	and	restrictions	on movement	of	funds.	Foreign	exchange	risk	exists	to	the	extent	that	Snap-on	has	payment	obligations	or	receipts	denominated	in	currencies	other	than	the	functional currency.		To	manage	these	exposures,	Snap-on	identifies	naturally	offsetting	positions	and	then	generally	purchases	hedging	instruments	to	protect	the	residual	net anticipated	exposures.		Snap-on's	financial	position	and	results	of	operations	have	not	been	materially	affected	by	such	events	to	date.		See	Note	10	to	the	Consolidated Financial	Statements	for	further	information	on	foreign	currency	risk	management.

# Interest	Rate	Risk	Management

Snap-on's	interest	rate	risk	management	policies	are	designed	to	reduce	the	potential	earnings	volatility	that	could	arise	from	changes	in	interest	rates.	Through	the	use of	interest	rate	swaps,	Snap-on	aims	to	stabilize	funding	costs	by	managing	the	exposure	created	by	the	differing	maturities	and	interest	rate	structures	of	Snap-on's assets	and	liabilities.		See	Note	10	to	the	Consolidated	Financial	Statements	for	further	information	on	interest	rate	risk	management.

Snap-on	utilizes	a	Value-at-Risk	("VAR")	model	to	determine	the	potential	one-day	loss	in	the	fair	value	of	its	interest	rate	and	foreign	exchange-sensitive	financial instruments	from	adverse	changes	in	market	factors.	The	VAR	model	estimates	were	made	assuming	normal	market	conditions	and	a	95%	confidence	level.	Snap-on's computations	are	based	on	the	inter-relationships	among	movements	in	various	currencies	and	interest	rates	(variance/co-variance	technique).	These	inter-relationships were	determined	by	observing	interest	rate	and	foreign	currency	market	changes	over	the	preceding	quarter.

The	estimated	maximum	potential	one-day	loss	in	fair	value,	calculated	using	the	VAR	model,	at	December	29,	2007,	was	$0.5	million	on	interest	rate-sensitive financial	instruments	and	$0.3	million	on	foreign	currency-sensitive	financial	instruments.	The	VAR	model	is	a	risk	management	tool	and	does	not	purport	to	represent actual	losses	in	fair	value	that	will	be	incurred	by	Snap-on,	nor	does	it	consider	the	potential	effect	of	favorable	changes	in	market	factors.

# Credit	Risk

Credit	risk	is	the	possibility	of	loss	from	a	customer's	failure	to	make	payments	according	to	contract	terms.		Prior	to	granting	credit,	each	customer	is	evaluated,	taking into	consideration	the	borrower's	financial	condition,	collateral,	debt-servicing	ability,	past	payment	experience,	credit	bureau	information	and	other	financial	and qualitative	factors	that	may	affect	the	borrower's	ability	to	repay.		Specific	credit	reviews	and	standard	industry	credit	scoring	models	are	used	in	performing	this evaluation.	Loans	that	have	been	granted	are	typically	monitored	through	an	asset-quality-review	process	that	closely	monitors	past	due	accounts	and	initiates	collection actions	when	appropriate.		In	addition	to	its	direct	credit	risk	exposure,	Snap-on	also	has	credit	risk	exposure	for	certain	SOC	loan	originations	with	recourse	provisions against	Snap-on	(primarily	for	franchisee	van	loans).		At	December	29,	2007,	$16.1	million	of	loans	originated	by	SOC	have	a	recourse	provision	to	Snap-on	if	the loans	become	more	than	90	days	past	due.		For	additional	information	on	SOC,	refer	to	the	section	entitled	"Consolidated	Joint	Venture"	in	this	Management's Discussion	and	Analysis	and	Note	1	to	the	Consolidated	Financial	Statements.

# Commodity	Risk

The	company	is	a	purchaser	of	certain	commodities	such	as	steel,	natural	gas	and	electricity.		The	company	is	also	a	purchaser	of	components	and	parts	that	are integrated	into	the	company's	end	products,	as	well	as	the	purchaser	of	certain	finished	goods,	all	of	which	may	contain	various	commodities	including	steel,	aluminum and	others.		Snap-on's	supply	of	raw	materials	and	purchased	components	are	generally	and	readily	available	from	numerous	suppliers.

We	believe	our	ability	to	sell	our	products	is	also	dependent	on	the	number	of	vehicles	on	the	road,	the	number	of	miles	driven	and	the	general	aging	of	vehicles.	These factors	affect	the	frequency,	type	and	amount	of	service	and	repair	performed	on	vehicles	by	technicians,	and	therefore	affect	the	demand	for	the	number	of	technicians, the	prosperity	of	the	technicians	and,	subsequently,	the	demand	the	technicians	have	for	our	tools,	other	products	and	services,	and	the	value	they	place	on	those products	and	services.	To	the	extent	that	gasoline	prices	increase,	consumers	may	turn	to	other,	non-gasoline	based,	methods	of	transportation,	including	more	frequent use	of	public	transportation.		A	decrease	in	the	use	of	gasoline	consuming	vehicles	may	lead	to	fewer	repairs	and	less	demand	for	our	products.

To	the	extent	that	commodity	prices	increase	and	the	company	does	not	have	firm	pricing	agreements	with	its	suppliers,	the	company	may	experience	margin	declines	to the	extent	that	it	is	not	able	to	increase	the	selling	prices	of	its	products.

# Item	8:	Financial	Statements	and	Supplementary	Data

The	financial	statements	and	schedules	are	listed	on	page	52	and	are	incorporated	by	reference	in	this	Item	8.

# Item	9:	Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure

# Item	9A:	Controls	and	Procedures

# Evaluation	of	Disclosure	Controls	and	Procedures

Snap-on	maintains	a	system	of	disclosure	controls	and	procedures	that	is	designed	to	provide	reasonable	assurance	that	material	information	relating	to	the	company	and its	consolidated	subsidiaries	is	timely	communicated	to	the	officers	who	certify	Snap-on's	financial	reports	and	to	other	members	of	senior	management	and	the	Board, as	appropriate.

In	accordance	with	Rule	13a-15(b)	of	the	Securities	Exchange	Act	of	1934	(the	"Exchange	Act"),	the	company's	management	evaluated,	with	the	participation	of	the Chief	Executive	Officer	and	Chief	Financial	Officer,	the	effectiveness	of	the	design	and	operation	of	the	company's	disclosure	controls	and	procedures	(as	defined	in Rule	13a-15(e)	under	the	Exchange	Act)	as	of	December	29,	2007.		Based	upon	their	evaluation	of	these	disclosure	controls	and	procedures,	the	Chief	Executive	Officer and	Chief	Financial	Officer	concluded	that	the	disclosure	controls	and	procedures	were	effective	as	of	December	29,	2007	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,	as	appropriate,	to allow	timely	decisions	regarding	required	disclosure.

# Changes	in	Internal	Control

Snap-on	is	in	the	process	of	developing	and	implementing	an	improved	enterprise	resource	planning	(ERP)	management	information	system	to	further	enhance	the operational	capabilities	of	its	businesses.		In	2007,	the	company	has	been	implementing	this	system	at	certain	of	its	North	American	and	European	locations.		As	a	result of,	and	in	connection	with,	the	implementation	of	the	new	system	and	processes,	the	company	modified	its	internal	control	over	financial	reporting	(as	such	term	is defined	in	Exchange	Act	Rule	13a-15(f)).	Additional	implementations	will	occur	at	other	worldwide	locations	over	a	multi-year	period.

# Management's	Report	on	Internal	Control	over	Financial	Reporting

Our	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	(as	defined	in	Exchange	Act	Rules	13a-15(f)	under	the Securities	Exchange	Act	of	1934,	as	amended).		Under	the	supervision	and	with	the	participation	of	our	management,	including	our	Chief	Executive	Officer	and	Chief Financial	Officer,	we	evaluated	the	effectiveness	of	our	internal	control	over	financial	reporting	based	on	the	criteria	set	forth	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	in	Internal	Control	—	Integrated	Framework.	Based	on	this	assessment,	the	company's	management	believes	that,	as	of December	29,	2007,	our	internal	control	over	financial	reporting	was	effective.		The	effectiveness	of	our	internal	control	over	financial	reporting	as	of	December	29, 2007,	has	been	audited	by	Deloitte	&	Touche	LLP,	an	independent	registered	public	accounting	firm,	as	stated	in	their	report,	which	is	included	herein.

Our	management,	including	the	Chief	Executive	Officer	and	Chief	Financial	Officer,	does	not	expect	that	our	internal	control	over	financial	reporting	will	prevent	all

error	or	fraud.		Because	of	inherent	limitations,	a	system	of	internal	control	over	financial	reporting	can	provide	only	reasonable	assurance	and	may	not	prevent	or	detect misstatements.		Further,	because	of	changes	in	conditions,	effectiveness	of	internal	control	over	financial	reporting	may	vary	over	time.

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# To	the	Board	of	Directors	and	Shareholders	of

# Snap-on	Incorporated:

We	have	audited	the	internal	control	over	financial	reporting	of	Snap-on	Incorporated	and	subsidiaries	(the	"Company")	as	of	December	29,	2007,	based	on	criteria established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	The	Company's management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on	the Company's	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe that	our	audit	provides	a	reasonable	basis	for	our	opinions.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	by,	or	under	the	supervision	of,	the	company's	principal	executive	and	principal	financial officers,	or	persons	performing	similar	functions,	and	effected	by	the	company's	board	of	directors,	management,	and	other	personnel	to	provide	reasonable	assurance regarding	the	reliability	of	financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting principles.	A	company's	internal	control	over	financial	reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	the	inherent	limitations	of	internal	control	over	financial	reporting,	including	the	possibility	of	collusion	or	improper	management	override	of	controls, material	misstatements	due	to	error	or	fraud	may	not	be	prevented	or	detected	on	a	timely	basis.	Also,	projections	of	any	evaluation	of	the	effectiveness	of	the	internal control	over	financial	reporting	to	future	periods	are	subject	to	the	risk	that	the	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	29,	2007,	based	on	the	criteria established	in	Internal	Control	—		Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	financial	statements	as	of and	for	the	year	ended	December	29,	2007,	of	the	Company	and	our	report	dated	February	18,	2008,	expressed	an	unqualified	opinion	on	those	financial	statements	and included	an	explanatory	paragraph	relating	to	the	adoption	of	Financial	Accounting	Standards	Board	(FASB)	Statement	No.	123(R),	Share-Based	Payment	and	FASB Statement	No.	158,	Employers'	Accounting	for	Defined	Benefit	Pension	and	Other	Postretirement	Plans	—	an	amendment	of	FASB	Statements	No.	87,	88,	106,	and 132(R).

/s/	Deloitte	&	Touche	LLP

DELOITTE	&	TOUCHE	LLP Milwaukee,	WI

# Item	9B:	Other	Information

# PART	III

# Item	10:	Directors,	Executive	Officers	of	the	Registrant	and	Corporate	Governance

Incorporated	by	reference	to	sections	entitled	"Item	1:	Election	of	Directors,"	"Corporate	Governance	Practices	and	Board	Information"	and	"Other	Information"	in Snap-on's	2008	Annual	Meeting	Proxy	Statement,	which	is	expected	to	be	mailed	to	shareholders	on	or	around	March	19,	2008	(the	"2008	Proxy	Statement").

The	Section	16(a)	filing	compliance	disclosure	pursuant	to	Item	405	of	Regulation	S-K	is	contained	in	Snap-on's	Proxy	Statement,	which	is	expected	to	be	mailed	to shareholders	on	or	around	March	19,	2008,	in	the	section	entitled	"Other	Information	–	Section	16(a)	Beneficial	Ownership	Reporting	Compliance,"	and	is	incorporated herein	by	reference.

The	executive	officers	of	Snap-on,	their	ages,	and	their	titles	as	of	December	29,	2007,	and	positions	held	during	the	last	five	years	are	listed	below.

Nicholas	T.	Pinchuk	(61)	–	President	and	Chief	Executive	Officer	since	December	2007	and	President	and	Chief	Operating	Officer	from	April	to	December	2007. Senior	Vice	President	and	President	–	Worldwide	Commercial	&	Industrial	Group	from	June	2002	to	April	2007.		Prior	to	joining	Snap-on,	Mr.	Pinchuk	was	President of	Global	Refrigeration	Operations	for	Carrier	Corporation,	a	producer	of	air	conditioning,	heating	and	refrigeration	systems,	and	a	subsidiary	of	United	Technologies Corporation.

Martin	M.	Ellen	(54)	–	Senior	Vice	President	–	Finance	and	Chief	Financial	Officer	since	November	2002.

Iain	Boyd	(45)	–	Vice	President	–	Human	Resources	since	February	2007.		Vice	President,	Human	Resources	–	Snap-on	Tools	Group	from	February	2004	to February	2007,	and	Director,	Human	Resources	–	Diagnostics	&	Information	Group	from	February	2002	to	February	2004.

Constance	R.	Johnsen	(50)	–	Vice	President	and	Controller	since	October	2003,	and	Director,	Corporate	Financial	Reporting	from	July	2000	to	October	2003.

Thomas	L.	Kassouf	(55)	–	Senior	Vice	President	and	President	–	Commercial	Group	since	December	2007.		President	–	Commercial	Group	from	April	2007	to

# December	2007,	and	President	–	Equipment	Worldwide	from	January	2003	to	April	2007.

Jeanne	M.	Moreno	(53)	–	Vice	President	and	Chief	Information	Officer	since	March	2005.		Prior	to	joining	Snap-on,	Ms.	Moreno	was	Senior	Vice	President	of

Corporate	Services	and	Chief	Information	Officer	for	Citrix	Systems,	a	leader	in	access	infrastructure	software.

Thomas	J.	Ward	(55)	–	Senior	Vice	President	and	President	–	Snap-on	Tools	Company	LLC	since	April	2007.		Senior	Vice	President	and	President	–	Diagnostics	& Information	Group	from	March	2005	to	April	2007,	and	President	–	Worldwide	Diagnostics	from	July	2001	to	February	2005.

There	is	no	family	relationship	among	the	executive	officers	and	there	has	been	no	involvement	in	legal	proceedings	during	the	past	five	years	that	would	be	material	to the	evaluation	of	the	ability	or	integrity	of	any	of	the	executive	officers.		Executive	officers	may	be	elected	by	the	Board	or	appointed	by	the	Chief	Executive	Officer	at the	regular	meeting	of	the	Board	that	follows	the	Annual	Shareholders'	Meeting,	which	is	ordinarily	held	in	April	each	year,	and	at	such	other	times	as	new	positions	are created	or	vacancies	must	be	filled.

# Code	of	Ethics	and	Web	Site	Disclosure

Snap-on	has	adopted	a	written	code	of	ethics	that	applies	to	its	Chief	Executive	Officer,	Chief	Financial	Officer,	Vice	President	and	Controller,	and	all	other	financial officers	and	executives	performing	similar	functions.		Snap-on	has	posted	a	copy	of	the	code	of	ethics	in	the	Investors/Corporate	Governance	section	on	the	company's Web	site	at	www.snapon.com.		Shareholders	may	request	a	copy	of	the	code	of	ethics	in	print,	free	of	charge,	by	written	request	directed	to	the	Corporate	Secretary, 2801	80 th 	Street,	Kenosha,	Wisconsin	53143.		Snap-on	will	also	post	any	amendments	to	these	documents,	or	information	about	any	waivers	granted	to	directors	or executive	officers	with	respect	to	the	Code	of	Business	Conduct	and	Ethics,	on	the	company's	Web	site	at	www.snapon.com.

Snap-on	intends	to	satisfy	the	disclosure	requirements	under	Item	10	of	Form	10-K	regarding	amendments	to,	or	waivers	from,	the	code	of	ethics	by	posting	such information	in	the	Investors	section	of	its	corporate	Web	site	at	www.snapon.com.

# Item	11:	Executive	Compensation

The	information	required	by	Item	11	is	contained	in	Snap-on's	2008	Proxy	Statement	in	the	sections	entitled	"Executive	Compensation,"	"Board	Compensation," "Compensation	Committee	Report,"	and	"Other	Information"	and	is	incorporated	herein	by	reference.

# Item	12:	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters

The	following	table	sets	forth	information	about	Snap-on's	equity	compensation	plans	as	of	December	29,	2007:

|  | Number	of	securities	to |  | Number	of		securities	remaining |
| :--- | :--- | :--- | :--- |
|  | \tbe\tissued\tupon | Weighted-average | available\tfor\tfuture\tissuance |
|  | exercise\tof\toutstanding | exercise\tprice\tof | \tunder\tequity\tcompensation |
|  | options,\twarrants\tand | \toutstanding\toptions, | plans\t(excluding\tsecurities |
|  | rights | \twarrants\tand\trights | reflected\tin\tcolumn\t(a)) |
| Plan\tcategory | (a) | \t(b) | (c) |
| Equity\tcompensationplans\tapproved\tby |  |  |  |
| security\tholders | 2,417,749(1) | $37.98(2) | 3,899,058(3) |
| Equity\tcompensation\tplans\tnot\tapproved |  |  |  |
| by\tsecurity\tholders | 53,567(4) | Not\tApplicable | —(5) |
| Total | 2,471,316 | $37.98 | 3,899,058(5) |

(1) Includes	(i)	options	to	acquire	280,119	shares	granted	under	the	1986	Incentive	Stock	Program;	(ii)	options	to	acquire	2,070,539	shares	granted	under	the	2001	Incentive	Stock	and	Awards Plan;	and	(iii)	67,091	shares	represented	by	deferred	share	units	under	the	Directors'	Fee	Plan.	Excludes	483,376	shares	issuable	in	connection	with	the	vesting	of	performance	based	restricted share	units	and	restricted	stock	under	the	2001	Incentive	Stock	and	Awards	Plan.	Also	excludes	shares	of	common	stock	that	may	be	issuable	under	the	employee	stock	purchase	plan	and	the dealer	stock	purchase	plan.

(2) Reflects	only	the	weighted-average	exercise	price	of	outstanding	stock	options	granted	under	the	2001	Incentive	Stock	and	Awards	Plan	and	the	1986	Incentive	Stock	Program	and	does	not include	shares	represented	by	deferred	share	units	under	the	Directors'	Fee	Plan	and	shares	issuable	in	connection	with	the	vesting	of	restricted	share	units	under	the	2001	Incentive	Stock	and Awards	Plan	for	which	there	is	no	exercise	prices.	Also	excludes	shares	of	common	stock	that	may	be	issuable	under	the	employee	stock	purchase	plan	and	the	dealer	stock	purchase	plan.

(3) Includes	(i)	3,427,179	shares	reserved	for	issuance	under	the	2001	Incentive	Stock	and	Awards	Plan	(which	may	be	issued	upon	the	exercise	of	stock	options	or	granted	as	restricted	stock	or restricted	share	units);	(ii)	169,535	shares	reserved	for	issuance	under	the	Directors'	Fee	Plan;	and	(iii)	302,344	shares	reserved	for	issuance	under	the	employee	stock	purchase	plan.

(4) Consists	of	deferred	share	units	under	Snap-on's	Deferred	Compensation	Plan,	which	allows	elected	and	appointed	officers	of	Snap-on	to	defer	all	or	a	percentage	of	their	respective	annual salary	and/or	incentive	compensation.	The	deferred	share	units	are	payable	in	shares	of	Snap-on	Common	Stock	on	a	one-for-one	basis	and	are	calculated	at	fair	market	value.	Shares	of Common	Stock	delivered	under	the	Deferred	Compensation	Plan	are	previously	issued	shares	reacquired	and	held	by	Snap-on.

(5) The	Deferred	Compensation	Plan	provides	that	Snap-on	will	make	available,	as	and	when	required,	a	sufficient	number	of	shares	of	Common	Stock	to	meet	the	needs	of	the	plan.	It	further provides	that	such	shares	shall	be	previously	issued	shares	reacquired	and	held	by	Snap-on.

The	additional	information	required	by	Item	12	is	contained	in	Snap-on's	2008	Proxy	Statement	in	the	sections	entitled	"Executive	Compensation,"	"Security	Ownership of	Management	and	Certain	Beneficial	Owners"	and	"Other	Information"	and	is	incorporated	herein	by	reference.

# Item	13:	Certain	Relationships,	Related	Transactions	and	Director	Independence

Incorporated	by	reference	to	the	sections	entitled	"Corporate	Governance	Practices	and	Board	Information	–	Board	Information"	and	"Other	Information	–	Transactions with	the	Company"	in	Snap-on's	2008	Proxy	Statement.

# Item	14:	Principal	Accountant	Fees	and	Services

Incorporated	by	reference	to	the	section	entitled	"Deloitte	&	Touche	LLP	Fee	Disclosure"	in	Snap-on's	2008	Proxy	Statement.

# PART	IV

Item	15:	Exhibits	and	Financial	Statement	Schedules

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

# 1.		List	of	Financial	Statements

The	following	consolidated	financial	statements	of	Snap-on	and	the	Report	of	Independent	Registered	Public	Accounting	Firm	thereon,	are	filed	as	part	of	this	report:

# 2.		Financial	Statement	Schedules

All	schedules	are	omitted	because	they	are	not	applicable,	or	the	required	information	is	included	in	the	consolidated	financial	statements	or	notes	thereto.

# 3.		List	of	Exhibits

The	exhibits	filed	with	or	incorporated	by	reference	in	this	report	are	as	specified	in	the	exhibit	index	on	pages	93	through	95	herein.

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Snap-on	Incorporated	and	subsidiaries	(the	"Company")	as	of	December	29,	2007,	and	December	30, 2006,	and	the	related	consolidated	statements	of	earnings,	shareholders'	equity	and	comprehensive	income,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended December	29,	2007.	These	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial statements	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test	basis, evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant	estimates made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	such	consolidated	financial	statements	present	fairly,	in	all	material	respects,	the	financial	position	of	Snap-on	Incorporated	and	subsidiaries	as	of December	29,	2007,	and	December	30,	2006,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	29,	2007, in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	of	America.

As	described	in	Notes	1	and	13	to	the	consolidated	financial	statements,	effective	January	1,	2006,	the	Company	changed	its	method	of	accounting	for	share-based compensation	to	adopt	Financial	Accounting	Standards	Board	(FASB)	Statement	No.	123(R),	Share-Based	Payment.	As	described	in	Notes	1,	11	and	12	to	the consolidated	financial	statements,	the	Company	recognized	the	funded	status	of	its	benefit	plans	in	accordance	with	the	provisions	of	FASB	Statement	No.	158, Employers'	Accounting	for	Defined	Benefit	Pension	and	Other	Postretirement	Plans—	an	amendment	of	FASB	Statements	No.	87,	88,	106,	and	132(R),	as	of December	30,	2006.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	Company's	internal	control	over financial	reporting	as	of	December	29,	2007,	based	on	the	criteria	established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	February	18,	2008,	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial reporting.

DELOITTE	&	TOUCHE	LLP

Milwaukee,	WI

# Consolidated	Statements	of	Earnings

|  |  | For	the	Fiscal	Years	Ended |  |
| :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions,\texcept\tper\tshare\tdata) | 2007 | 2006 | 2005 |
| Net\tsales | $2,841.2 | $2,455.1 | $2,281.0 |
| Cost\tof\tgoods\tsold | (1,574.6) | (1,375.3) | (1,269.8) |
| Gross\tprofit | 1,266.6 | 1,079.8 | 1,011.2 |
| Financial\tservices\trevenue | 63.0 | 49.0 | 53.6 |
| Financial\tservices\texpenses | (40.6) | (36.0) | (37.9) |
| Operating\tincome\tfrom\tfinancial\tservices | 22.4 | 13.0 | 15.7 |
| Operating\texpenses | (964.2) | (930.0) | (863.5) |
| Operating\tearnings | 324.8 | 162.8 | 163.4 |

| Interest	expense | (46.1) | (20.6) | (21.7) |
| :--- | :--- | :--- | :--- |
| Other\tincome\t(expense)\t-\tnet | 5.5 | 5.3 | 3.1 |
| Earnings\tbefore\tincome\ttaxes,\tminority\tinterests\tand\tequity\tearnings\t(loss) | 284.2 | 147.5 | 144.8 |
| Income\ttax\texpense | (92.5) | (45.9) | (55.2) |
| Earnings\tbefore\tminority\tinterests\tand\tequity\tearnings\t(loss) | 191.7 | 101.6 | 89.6 |
| Minority\tinterests\tand\tequity\tearnings\t(loss),\tnet\tof\ttax | (2.5) | (3.7) | (1.4) |
| Net\tearnings\tfrom\tcontinuing\toperations | 189.2 | 97.9 | 88.2 |
| Discontinued\toperations,\tnet\tof\ttax | (8.0) | 2.2 | 4.7 |
| Net\tearnings | $181.2 | $100.1 | $92.9 |
| Basic\tearnings\tper\tshare: |  |  |  |
| Earnings\tper\tshare,\tcontinuing\toperations | $3.27 | $1.68 | $1.53 |
| Earnings\t(loss)\tper\tshare,\tdiscontinued\toperations | (0.14) | 0.04 | 0.08 |
| Net\tearnings\tper\tshare | $3.13 | $1.72 | $1.61 |
| Diluted\tearnings\tper\tshare: |  |  |  |
| Earnings\tper\tshare,\tcontinuing\toperations | $3.23 | $1.65 | $1.51 |
| Earnings\t(loss)\tper\tshare,\tdiscontinued\toperations | (0.14) | 0.04 | 0.08 |
| Net\tearnings\tper\tshare | $3.09 | $1.69 | $1.59 |
| Weighted-average\tshares\toutstanding: |  |  |  |
| Basic | 57.9 | 58.3 | 57.8 |
| Effect\tof\tdilutive\toptions | 0.7 | 0.9 | 0.6 |
| Diluted | 58.6 | 59.2 | 58.4 |
| Dividends\tpaid\tper\tcommon\tshare | $1.11 | $1.08 | $1.00 |

# See	Notes	to	Consolidated	Financial	Statements

# Consolidated	Balance	Sheets

|  | December	29, | December	30, |
| :--- | :--- | :--- |
| (Amounts\tin\tmillions,\texcept\tshare\tdata) | \t2007 | 2006 |
| ASSETS |  |  |
| Current\tassets |  |  |
| Cash\tand\tcash\tequivalents | $93.0 | $63.4 |
| Accounts\treceivable\t-\tnet\tof\tallowances | 586.9 | 559.2 |
| Inventories | 322.4 | 323.0 |
| Deferred\tincome\ttax\tassets | 87.0 | 76.0 |
| Prepaid\texpenses\tand\tother\tassets | 98.1 | 91.6 |
| Total\tcurrent\tassets | 1,187.4 | 1,113.2 |
| Property\tand\tequipment\t-\tnet | 304.8 | 297.1 |
| Deferred\tincome\ttax\tassets | 22.0 | 55.3 |
| Goodwill | 818.8 | 776.1 |
| Other\tintangibles\t-\tnet | 234.8 | 257.8 |
| Pension\tassets | 57.0 | 14.0 |
| Other\tassets | 140.3 | 141.0 |
| Total\tassets | $2,765.1 | $2,654.5 |
| LIABILITIES\tAND\tSHAREHOLDERS'\tEQUITY |  |  |
| Current\tliabilities |  |  |
| Accounts\tpayable | $171.6 | $178.8 |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | 15.9 | 43.6 |
| Accrued\tbenefits | 41.3 | 41.4 |
| Accrued\tcompensation | 95.6 | 90.4 |
| Franchisee\tdeposits | 51.0 | 48.5 |
| Deferred\tsubscription\trevenue | 25.9 | 25.3 |
| Income\ttaxes | 25.5 | 37.8 |
| Other\taccrued\tliabilities | 212.4 | 216.2 |
| Total\tcurrent\tliabilities | 639.2 | 682.0 |
| Long-term\tdebt | 502.0 | 505.6 |
| Deferred\tincome\ttax\tliabilities | 91.2 | 88.9 |
| Retiree\thealth\tcare\tbenefits | 53.8 | 69.6 |
| Pension\tliabilities | 85.3 | 113.9 |
| Other\tlong-term\tliabilities | 113.5 | 118.2 |
| Total\tliabilities | 1,485.0 | 1,578.2 |
| Commitments\tand\tcontingencies\t(Note\t15) |  |  |
| Shareholders'\tequity |  |  |
| Preferred\tstock\t(authorized\t15,000,000\tshares\tof\t$1\tpar\tvalue;\tnone\toutstanding) | — | — |
| Common\tstock\t(authorized\t250,000,000\tshares\tof\t$1\tpar\tvalue;\tissued\t67,110,281\tand\t67,081,801\tshares) | 67.1 | 67.1 |
| Additional\tpaid-in\tcapital | 137.9 | 121.9 |
| Retained\tearnings | 1,296.7 | 1,180.3 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | 142.8 | 21.2 |
| Grantor\tStock\tTrust\tat\tfair\tmarket\tvalue\t(zero\tand\t407,485\tshares) | — | (19.4) |
| Treasury\tstock\tat\tcost\t(9,681,142\tand\t8,503,482\tshares) | (364.4) | (294.8) |
| Total\tshareholders'\tequity | 1,280.1 | 1,076.3 |
| Total\tliabilities\tand\tshareholders'\tequity | $2,765.1 | $2,654.5 |

# Consolidated	Statements	of	Shareholders'	Equity	and	Comprehensive	Income

| (Amounts	in	millions,	except	share	data) | Common<br>Stock | Additional<br>Paid-in<br>Capital | Retained<br>Earnings | Other<br>Comprehensive<br>Income	(Loss) | Grantor	Stock<br>Trust | Treasury<br>Stock | Total<br>Shareholders'<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1,\t2005 | $67.0 | $105.8 | $1,108.7 | $129.1 | $(147.0) | $(152.9) | $1,110.7 |
| Comprehensive\tincome\t(loss): |  |  |  |  |  |  |  |
| Net\tearnings\tfor\t2005 | — | — | 92.9 | — | — | — | 92.9 |
| Foreign\tcurrency\ttranslation | — | — | — | (92.5) | — | — | (92.5) |
| Mark\tto\tmarket\tfor\tcash\tflow\thedges,\tnet\tof |  |  |  |  |  |  |  |
| tax\tof\t$0.3\tmillion\t(net\tunrealized\tholding |  |  |  |  |  |  |  |
| losses\tof\t$0.5\tmillion\tand\tnet\tlosses |  |  |  |  |  |  |  |
| reclassified\tto\tnet\tincome\tof\t$0.2\tmillion) | — | — | — | (0.3) | — | — | (0.3) |
| Minimum\tpension\tliability,\tnet\tof\ttax\tof\t$58.8 |  |  |  |  |  |  |  |
| million | — | — | — | (92.9) | — | — | (92.9) |
| Total\tcomprehensive\tincome\t(loss) |  |  |  |  |  |  | (92.8) |
| Cash\tdividends\t-\t$1.00\tper\tshare | — | — | (57.8) | — | — | — | (57.8) |
| Dividend\treinvestment\tplan | — | 1.2 | — | — | — | — | 1.2 |
| Stock\tcompensation\tplans | — | 0.2 | — | — | — | — | 0.2 |
| Grantor\tStock\tTrust\t—\t1,074,253\tshares | — | — | — | — | 29.6 | — | 29.6 |
| Share\trepurchases\t—\t912,100\tshares | — | — | — | — | — | (32.1) | (32.1) |
| Tax\tbenefit\tfrom\tcertain\tstock\toptions | — | 3.2 | — | — | — | — | 3.2 |
| Adjustment\tof\tGrantor\tStock\tTrust\tto\tfair\tmarket |  |  |  |  |  |  |  |
| value | — | 2.9 | — | — | (2.9) | — | — |
| Balance\tat\tDecember\t31,\t2005 | 67.0 | 113.3 | 1,143.8 | (56.6) | (120.3) | (185.0) | 962.2 |
| Comprehensive\tincome\t(loss): |  |  |  |  |  |  |  |
| Net\tearnings\tfor\t2006 | — | — | 100.1 | — | — | — | 100.1 |
| Foreign\tcurrency\ttranslation | — | — | — | 73.8 | — | — | 73.8 |
| Mark\tto\tmarket\tfor\tcash\tflow\thedges,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| $0.1\tmillion\t(net\tunrealized\tholding\tlosses\tof |  |  |  |  |  |  |  |
| $0.5\tmillion\tand\tnet\tlosses\treclassified\tto\tnet |  |  |  |  |  |  |  |
| income\tof\t$0.4\tmillion) | — | — | — | (0.1) | — | — | (0.1) |
| Minimum\tpension\tliability,\tnet\tof\ttax\tof\t$58.8 |  |  |  |  |  |  |  |
| million | — | — | — | 93.1 | — | — | 93.1 |
| Total\tcomprehensive\tincome\t(loss) |  |  |  |  |  |  | 266.9 |
| Cash\tdividends\t-\t$1.08\tper\tshare | — | — | (63.6) | — | — | — | (63.6) |
| Dividend\treinvestment\tplan\tand\tother | 0.1 | 1.2 | — | — | — | — | 1.3 |
| Stock\tcompensation\tplans | — | 10.6 | — | — | — | — | 10.6 |
| Grantor\tStock\tTrust\t—\t2,796,823\tshares | — | — | — | — | 87.1 | — | 87.1 |
| Share\trepurchases\t—\t2,616,618\tshares | — | — | — | — | — | (109.8) | (109.8) |
| Tax\tbenefit\tfrom\tcertain\tstock\toptions | — | 10.6 | — | — | — | — | 10.6 |
| Adjustment\tof\tGrantor\tStock\tTrust\tto\tfair\tmarket |  |  |  |  |  |  |  |
| value | — | (13.8) | — | — | 13.8 | — | — |
| Adjustment\tto\tadopt\tSFAS\tNo.\t158,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| $55.9\tmillion | — | — | — | (89.0) | — | — | (89.0) |
| Balance\tat\tDecember\t30,\t2006 | 67.1 | 121.9 | 1,180.3 | 21.2 | (19.4) | (294.8) | 1,076.3 |
| Comprehensive\tincome\t(loss): |  |  |  |  |  |  |  |
| Net\tearnings\tfor\t2007 | — | — | 181.2 | — | — | — | 181.2 |
| Foreign\tcurrency\ttranslation | — | — | — | 74.4 | — | — | 74.4 |
| Change\tin\tpension\tand\tpostretirement\tplans,\tnet |  |  |  |  |  |  |  |
| of\ttax\tof\t$31.4\tmillion | — | — | — | 47.2 | — | — | 47.2 |
| Total\tcomprehensive\tincome\t(loss) |  |  |  |  |  |  | 302.8 |
| Cash\tdividends\t-\t$1.11\tper\tshare | — | — | (64.8) | — | — | — | (64.8) |
| Dividend\treinvestment\tplan\tand\tother | — | 1.3 | — | — | — | — | 1.3 |
| Stock\tcompensation\tplans | — | 14.0 | — | — | — | 24.8 | 38.8 |
| Grantor\tStock\tTrust\t—\t407,485\tshares | — | — | — | — | 13.8 | — | 13.8 |
| Share\trepurchases\t—\t1,860,000\tshares | — | — | — | — | — | (94.4) | (94.4) |
| Tax\tbenefit\tfrom\tcertain\tstock\toptions | — | 6.3 | — | — | — | — | 6.3 |
| Adjustment\tof\tGrantor\tStock\tTrust\tto\tfair\tmarket |  |  |  |  |  |  |  |
| value | — | (5.6) | — | — | 5.6 | — | — |
| Balance\tat\tDecember\t29,\t2007 | $67.1 | $137.9 | $1,296.7 | $142.8 | $— | $(364.4) | $1,280.1 |

# Consolidated	Statements	of	Cash	Flow

|  |  | For	the	Fiscal	Years	Ended |  |
| :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | 2007 | 2006 | 2005 |
| Operating\tactivities: |  |  |  |
| Net\tearnings | $181.2 | $100.1 | $92.9 |
| Adjustments\tto\treconcile\tnet\tearnings\tto\tnet\tcash\tprovided\t(used)\tby\toperating\tactivities: |  |  |  |
| Depreciation | 53.5 | 48.5 | 49.5 |
| Amortization\tof\tother\tintangibles | 22.2 | 3.4 | 2.7 |
| Stock-based\tcompensation\texpense | 19.0 | 16.6 | — |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | (6.0) | (10.9) | — |
| Deferred\tincome\ttax\tprovision\t(benefit) | 12.3 | (7.3) | 14.6 |
| Loss\t(gain)\ton\tsale\tof\tassets | (7.0) | 0.1 | (1.1) |
| Gain\ton\tmark\tto\tmarket\tfor\tcash\tflow\thedges | — | — | (0.1) |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\teffects\tof\tacquisitions: |  |  |  |
| (Increase)\tdecrease\tin\treceivables | (2.6) | (19.3) | 31.5 |
| (Increase)\tdecrease\tin\tinventories | 15.2 | (22.2) | 39.5 |
| (Increase)\tdecrease\tin\tprepaid\tand\tother\tassets | (11.9) | (16.3) | 20.2 |
| Increase\t(decrease)\tin\taccounts\tpayable | (15.3) | 31.8 | (51.3) |
| Increase\t(decrease)\tin\taccruals\tand\tother\tliabilities | (29.5) | 78.9 | 22.7 |
| Net\tcash\tprovided\tby\toperating\tactivities | 231.1 | 203.4 | 221.1 |
| Investing\tactivities: |  |  |  |
| Capital\texpenditures | (61.9) | (50.5) | (40.1) |
| Acquisitions\tof\tbusinesses\t–\tnet\tof\tcash\tacquired | (5.7) | (507.4) | — |

| Proceeds	from	disposal	of	property	and	equipment | 16.1 | 11.7 | 8.9 |
| :--- | :--- | :--- | :--- |
| Other | (1.4) | — | 0.3 |
| Net\tcash\tused\tin\tinvesting\tactivities | (52.9) | (546.2) | (30.9) |
| Financing\tactivities: |  |  |  |
| Net\tproceeds\tfrom\tissuance\tof\tlong-term\tdebt | 298.5 | — | — |
| Net\tproceeds\tfrom\tcommercial\tpaper | — | 314.9 | — |
| Payment\tof\tlong-term\tdebt | — | — | (100.3) |
| Net\tdecrease\tin\tshort-term\tborrowings | (335.1) | (8.9) | (2.5) |
| Purchase\tof\ttreasury\tstock | (94.4) | (109.8) | (32.1) |
| Proceeds\tfrom\tstock\tpurchase\tand\toption\tplans | 39.2 | 89.5 | 31.1 |
| Cash\tdividends\tpaid | (64.8) | (63.6) | (57.8) |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | 6.0 | 10.9 | — |
| Other | (0.8) | — | — |
| Net\tcash\tprovided\t(used)\tby\tfinancing\tactivities | (151.4) | 233.0 | (161.6) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | 2.8 | 2.8 | (8.2) |
| Increase\t(decrease)\tin\tcash\tand\tcash\tequivalents | 29.6 | (107.0) | 20.4 |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 63.4 | 170.4 | 150.0 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tyear | $93.0 | $63.4 | $170.4 |
| Supplemental\tcash\tflow\tdisclosures: |  |  |  |
| Cash\tpaid\tfor\tinterest | $(31.9) | $(17.9) | $(21.4) |
| Net\tcash\tpaid\tfor\tincome\ttaxes | (69.3) | (49.8) | (30.5) |

# Note	1:	Summary	of	Accounting	Policies

Principles	of	consolidation	and	presentation:	The	consolidated	financial	statements	include	the	accounts	of	Snap-on	Incorporated	("Snap-on"	or	"the	company"),	its majority-owned	subsidiaries,	and	Snap-on	Credit	LLC	("SOC"),	a	50%-owned	joint	venture	with	The	CIT	Group,	Inc.	("CIT").		The	consolidated	financial	statements do	not	include	the	accounts	of	the	company's	independent	franchisees.		Snap-on's	consolidated	financial	statements	are	prepared	in	conformity	with	generally	accepted accounting	principles	in	the	United	States	of	America	("U.S.	GAAP").		All	significant	intercompany	accounts	and	transactions	have	been	eliminated.

Certain	prior	year	amounts	have	been	reclassified	on	the	Consolidated	Statements	of	Earnings	to	conform	to	the	2007	presentation.		Minority	interests	of	$3.7	million	in 2006	and	$3.5	million	in	2005,	and	pretax	earnings	of	unconsolidated	affiliates	of	$2.1	million	in	2005,	all	previously	included	in	"Other	income	(expense)	—	net,"	are being	presented	after	"Earnings	before	minority	interests	and	equity	earnings	(loss)."		Previously	reported	"Other	income	(expense)	—	net"	of	$1.6	million	in	2006	and $1.7	million	in	2005	is	now	$5.3	million	in	2006	and	$3.1	million	in	2005.		The	Consolidated	Statements	of	Earnings	have	also	been	restated	to	reflect	the	company's June	29,	2007,	sale	of	a	non-strategic	business	as	"Discontinued	operations,	net	of	tax."		As	a	result	of	the	above,	"Income	tax	expense"	of	$45.8	million	in	2006	and $55.1	million	in	2005	is	now	$45.9	million	in	2006	and	$55.2	million	in	2005.		See	Note	16	for	information	on	discontinued	operations.

Fiscal	year	accounting	period:	Snap-on's	fiscal	year	ends	on	the	Saturday	nearest	December	31.	The	2007,	2006	and	2005	fiscal	years	each	contained	52	weeks	and ended	on	December	29,	2007,	December	30,	2006,	and	December	31,	2005,	respectively.		Snap-on's	2008	fiscal	year	will	contain	53	weeks	of	operating	results,	with	the additional	week	occurring	in	the	fourth	quarter.	The	company	does	not	expect	the	impact	of	the	additional	week	of	operations	on	full-year	2008	operating	earnings	to	be material.

Use	of	estimates:	The	preparation	of	financial	statements	in	conformity	with	U.S.	GAAP	requires	management	to	make	estimates	and	assumptions	that	affect	the reported	amounts	of	assets	and	liabilities,	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements,	and	the	reported	amounts	of	revenues and	expenses	during	the	reporting	period.	Actual	results	could	differ	from	those	estimates.

Revenue	recognition:	Snap-on	derives	revenue	primarily	from	the	sale	of	tools,	diagnostics	and	equipment	solutions	for	professional	users.		Snap-on	markets	its products	and	services	through	the	worldwide	franchise	mobile	van,	company-direct,	distributor	and	Internet	sales	channels.		Snap-on	also	derives	revenue	from	various financing	programs	to	facilitate	the	sales	of	its	products	and	services.

Snap-on	recognizes	revenue	from	the	sale	of	tools,	diagnostics	and	equipment	solutions	when	all	of	the	following	conditions	are	satisfied:	(i)	persuasive	evidence	of	an arrangement	exists;	(ii)	the	price	is	fixed	or	determinable;	(iii)	collectibility	is	reasonably	assured;	and	(iv)	delivery	has	occurred	or	services	have	been	rendered. Delivery	generally	occurs	when	the	title	and	the	risks	and	rewards	of	ownership	have	substantially	transferred	to	the	customer.		For	sales	contingent	upon	customer acceptance	or	product	installation,	revenue	recognition	is	deferred	until	such	obligations	are	fulfilled.		As	required	by	Statement	of	Financial	Accounting	Standards ("SFAS")	No.	48,	"Revenue	Recognition	When	Right	of	Return	Exists,"	estimated	product	returns	are	recorded	as	a	reduction	in	reported	revenues	at	the	time	of	sale based	upon	historical	product	return	experience	and	assumptions	for	the	gross	profit	margin	and	volume	of	future	sales	returns.		Provisions	for	customer	volume	rebates, discounts	and	allowances	are	also	recorded	as	a	reduction	of	reported	revenues	at	the	time	of	sale	based	on	historical	experience	and	known	trends.		Revenue	related	to maintenance	and	subscription	agreements	is	recognized	over	the	term	of	the	agreement.

Snap-on	also	recognizes	revenue	related	to	multiple	element	arrangements,	including	sales	of	software	and	software-related	services.		Snap-on	follows	the	guidance under	Statement	of	Position	("SOP")	97-2,	"Software	Revenue	Recognition,"	as	amended	and	Emerging	Issues	Task	Force	("EITF")	Issue	No.	03-5,	"Applicability	of SOP	97-2	to	Non-software	Deliverables	Containing	More	than	Incidental	Software"	for	software	and	software-related	elements,	and	EITF	Issue	No.	00-21,	"Revenue Arrangements	with	Multiple	Deliverables,"	in	conjunction	with	Securities	and	Exchange	Commission	Staff	Accounting	Bulletin	No.	104,	"Revenue	Recognition,"	for hardware	and	hardware-related	elements.		When	a	sales	arrangement	contains	multiple	elements,	such	as	hardware	and	software	products	and/or	services,	Snap-on	uses vendor	specific	objective	evidence	("VSOE")	of	fair	value	to	allocate	revenue	to	each	element	based	on	its	relative	fair	value	and,	when	necessary,	uses	the	residual method	to	assign	value	to	the	delivered	elements	when	VSOE	only	exists	for	the	undelivered	elements.		Snap-on	limits	the	amount	of	revenue	recognition	for	delivered elements	to	the	amount	that	is	not	contingent	on	the	future	delivery	of	products	or	services.		The	amount	assigned	to	future	delivery	of

products	or	services	is	recognized	when	the	product	is	delivered	and/or	when	the	services	are	performed.		In	instances	where	the	product	and/or	services	are	performed over	an	extended	period,	as	is	the	case	with	subscription	agreements	or	the	providing	of	ongoing	support,	revenue	is	recognized	on	a	straight-line	basis	over	the	term	of the	agreement,	which	generally	ranges	from	12	to	60	months.

Financial	services	revenue:		In	addition	to	its	sales	of	tools,	diagnostics	and	equipment	solutions,	Snap-on	also	generates	revenue	from	various	financing	programs	that include	(i)	loans	to	franchisees;	(ii)	loans	to	the	franchisees'	customers;	and	(iii)	loans	to	Snap-on's	industrial	and	other	customers	for	the	purchase	of	tools	and equipment	on	an	extended-term	payment	plan.		These	financing	programs	are	offered	through	SOC	and	the	company's	wholly	owned	international	finance	subsidiaries. Financial	services	revenue	consists	of	SOC's	sales	of	originated	contracts	to	CIT	and	service	fee	income,	as	well	as	installment	contract	revenue	and	franchisee	loan receivable	revenue	derived	from	SOC	and	Snap-on's	wholly	owned	international	finance	operations.		The	decision	to	finance	through	Snap-on	or	another	financing entity	is	solely	at	the	customers'	election.		When	assessing	customers	for	potential	financing,	Snap-on	considers	various	factors	regarding	ability	to	pay	including financial	condition,	collateral,	debt-servicing	ability,	past	payment	experience	and	credit	bureau	information.		Contracts	originated	by	SOC	and	subsequently	sold	to	CIT are	also	subject	to	the	underwriting	approval	of	CIT.

Financing	revenue	from	SOC	is	recognized	primarily	from	the	sale	of	originated	contracts	to	CIT	net	of	various	fees,	including	securitization,	warehousing,	bad	debt	and prepayment	fees.		SOC	continues	to	service	these	contracts	for	an	estimated	market-rate	servicing	fee.		Servicing	fees	are	paid	to	SOC	by	CIT	and	such	revenue	is recognized	over	the	contractual	term	of	the	loan,	with	a	portion	of	the	servicing	fee	recognized	at	the	time	of	origination.

Financing	revenue	from	originated	loans	that	are	retained	is	recognized	over	the	life	of	the	contract,	with	interest	computed	on	a	daily	basis.	Snap-on's	wholly	owned international	finance	subsidiaries	own	all	of	the	loans	originated	through	their	financing	programs.	Revenue	from	interest	income,	at	both	SOC	and	Snap-on's	wholly owned	finance	subsidiaries,	is	recognized	over	the	life	of	the	contract,	with	interest	computed	on	a	daily	basis.

Research	and	engineering:	Research	and	engineering	costs	are	charged	to	expense	in	the	year	incurred.	For	2007,	2006	and	2005,	research	and	engineering	costs totaled	$47.6	million,	$44.0	million	and	$48.0	million,	respectively.

Shipping	and	handling:	Amounts	billed	to	customers	for	shipping	and	handling	are	included	as	a	component	of	sales.		Costs	incurred	by	Snap-on	for	shipping	and handling	are	included	as	a	component	of	cost	of	goods	sold	when	the	costs	relate	to	manufacturing	activities.		In	2007,	2006	and	2005,	Snap-on	incurred	shipping	and handling	charges	of	$26.7	million,	$21.5	million	and	$17.9	million,	respectively,	that	were	recorded	in	"Cost	of	goods	sold"	on	the	accompanying	Consolidated Statements	of	Earnings.		Shipping	and	handling	costs	incurred	in	conjunction	with	selling	or	distribution	activities	are	included	as	a	component	of	operating	expenses. In	2007,	2006	and	2005,	Snap-on	incurred	shipping	and	handling	charges	of	$67.6	million,	$66.3	million	and	$62.6	million,	respectively,	that	were	recorded	in "Operating	expenses"	on	the	accompanying	Consolidated	Statements	of	Earnings.

Advertising	and	promotion:	Production	costs	of	future	media	advertising	are	deferred	until	the	advertising	occurs.		All	other	advertising	and	promotion	costs	are generally	expensed	when	incurred.	For	2007,	2006	and	2005,	advertising	and	promotion	expense	totaled	$58.9	million,	$56.3	million	and	$47.1	million,	respectively.

Warranties:	Snap-on	provides	product	warranties	for	specific	product	lines	and	accrues	for	estimated	future	warranty	costs	in	the	period	in	which	the	sale	is	recorded. See	Note	15	for	further	information	on	warranties.

Minority	interests	and	equity	earnings	(loss)	of	unconsolidated	affiliates:	"Minority	interests	and	equity	earnings	(loss),	net	of	tax"	on	the	accompanying Consolidated	Statements	of	Earnings	is	comprised	of	the	following:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Minority\tinterests | $(4.9) | $(3.7) | $(3.5) |
| Equity\tearnings\t(loss),\tnet\tof\ttax | 2.4 | — | 2.1 |
| Total | $(2.5) | $(3.7) | $(1.4) |

Minority	interests	in	consolidated	subsidiaries	of	$17.3	million	as	of	December	29,	2007,	and	$16.8	million	as	of	December	30,	2006,	are	included	in	"Other	long-term liabilities"	on	the	accompanying	Consolidated	Balance	Sheets.		Investments	in	unconsolidated	affiliates	of	$30.7	million	as	of	December	29,	2007,	and	$30.6	million	as of	December	30,	2006,	are	included	in	"Other	assets"	on	the	accompanying	Consolidated	Balance	Sheets.

Foreign	currency	translation:	The	financial	statements	of	Snap-on's	foreign	subsidiaries	are	translated	into	U.S.	dollars	in	accordance	with	SFAS	No.	52,	"Foreign Currency	Translation."		Assets	and	liabilities	of	foreign	subsidiaries	are	translated	at	current	rates	of	exchange,	and	income	and	expense	items	are	translated	at	the average	exchange	rate	for	the	period.	The	resulting	translation	adjustments	are	recorded	directly	into	"Accumulated	other	comprehensive	income	(loss)"	on	the accompanying	Consolidated	Balance	Sheets.	Foreign	exchange	transactions	resulted	in	pretax	losses	of	$1.7	million	in	2007	and	$1.2	million	in	2006,	and	a	pretax	gain of	$0.7	million	in	2005.		Foreign	exchange	transaction	gains	and	losses	are	reported	in	"Other	income	(expense)	-	net"	on	the	accompanying	Consolidated	Statements	of Earnings.

Income	taxes:	In	the	ordinary	course	of	business	there	is	inherent	uncertainty	in	quantifying	income	tax	positions.	We	assess	income	tax	positions	and	record	tax benefits	for	all	years	subject	to	examination	based	upon	management's	evaluation	of	the	facts,	circumstances	and	information	available	at	the	reporting	dates.	For	those tax	positions	where	it	is	more-likely-than-not	that	a	tax	benefit	will	be	sustained,	we	record	the	largest	amount	of	tax	benefit	with	a	greater	than	50%	likelihood	of	being realized	upon	ultimate	settlement	with	a	taxing	authority	that	has	full	knowledge	of	all	relevant	information.	For	those	income	tax	positions	where	it	is	not	more-likely- than-not	that	a	tax	benefit	will	be	sustained,	no	tax	benefit	is	recognized	in	the	financial	statements.	When	applicable,	associated	interest	and	penalties	are	recognized	as a	component	of	income	tax	expense.		Accrued	interest	and	penalties	are	included	within	the	related	tax	liability	in	the	accompanying	Consolidated	Balance	Sheets.

Deferred	income	taxes	are	provided	for	temporary	differences	arising	from	differences	in	bases	of	assets	and	liabilities	for	tax	and	financial	reporting	purposes. Deferred	income	taxes	are	recorded	on	temporary	differences	using	enacted	tax	rates	in	effect	for	the	year	in	which	the	temporary	differences	are	expected	to	reverse. The	effect	of	a	change	in	tax	rates	on	deferred	tax	assets	and	liabilities	is	recognized	in	income	in	the	period	that	includes	the	enactment	date.		See	Note	8	for	further information	on	income	taxes.

Per	share	data:	Basic	earnings	per	share	calculations	were	computed	by	dividing	net	earnings	by	the	corresponding	weighted-average	number	of	common	shares outstanding	for	the	period.	The	dilutive	effect	of	the	potential	exercise	of	outstanding	options	to	purchase	common	shares	is	calculated	using	the	treasury	stock	method. Snap-on	had	dilutive	shares	as	of	year-end	2007,	2006	and	2005,	of	731,442	shares,	911,697	shares	and	584,222	shares,	respectively.		Options	to	purchase	493,544 shares,	23,000	shares	and	612,892	shares	of	Snap-on	common	stock	for	the	fiscal	years	ended	2007,	2006	and	2005,	respectively,	were	not	included	in	the	computation of	diluted	earnings	per	share	as	the	exercise	prices	of	the	options	were	greater	than	the	average	market	price	of	the	common	stock	for	the	respective	year	and,	as	a	result,

# the	effect	on	earnings	per	share	would	be	anti-dilutive.

Stock-based	compensation:	Effective	January	1,	2006,	the	company	adopted	SFAS	No.	123(R),	"Share-Based	Payment,"	using	the	modified	prospective	method. SFAS	No.	123(R)	requires	entities	to	recognize	the	cost	of	employee	services	in	exchange	for	awards	of	equity	instruments	based	on	the	grant-date	fair	value	of	those awards	(with	limited	exceptions).		That	cost,	based	on	the	estimated	number	of	awards	that	are	expected	to	vest,	is	recognized	over	the	period	during	which	the	employee is	required	to	provide	the	service	in	exchange	for	the	award.		No	compensation	cost	is	recognized	for	awards	for	which	employees	do	not	render	the	requisite	service. Upon	adoption,	the	grant-date	fair	value	of	employee	share	options	and

similar	instruments	was	estimated	using	the	Black-Scholes	valuation	model.		Due	to	the	prospective	adoption	of	SFAS	No.	123(R),	results	for	prior	periods	have	not been	restated.

Derivatives:	Snap-on	utilizes	derivative	financial	instruments,	including	interest	rate	swaps	and	foreign	exchange	contracts,	to	manage	its	exposure	to	interest	rate	and foreign	currency	exchange	rate	risks.		Snap-on	accounts	for	its	derivatives	in	accordance	with	SFAS	No.	133,	"Accounting	for	Derivative	Instruments	and	Hedging Activities,"	as	amended	by	SFAS	No.	138,	"Accounting	for	Certain	Derivative	Instruments	and	Certain	Hedging	Activities,"	and	SFAS	No.	149,	"Amendment	of Statement	133	on	Derivative	Instruments	and	Hedging	Activities."		Snap-on	does	not	hold	or	issue	financial	instruments	for	speculative	or	trading	purposes.	See	Note	10 for	further	information	on	derivatives.

Concentrations:	Snap-on	is	exposed	to	credit	losses	in	the	event	of	non-performance	by	the	counterparties	to	its	interest	rate	swap	and	foreign	exchange	contracts. Snap-on	does	not	obtain	collateral	or	other	security	to	support	its	financial	instruments	subject	to	credit	risk,	but	monitors	the	credit	standing	of	the	counterparties	and enters	into	agreements	only	with	financial	institution	counterparties	with	a	credit	rating	of	A-	or	better.		Snap-on	does	not	anticipate	non-performance	by	its counterparties.

Snap-on's	accounts	receivable	do	not	represent	significant	concentrations	of	credit	risk	because	of	the	diversified	portfolio	of	individual	customers	and	geographic	areas.

Cash	equivalents:	Snap-on	considers	all	highly	liquid	investments	with	an	original	maturity	of	three	months	or	less	to	be	cash	equivalents.	Cash	equivalents	are	stated at	cost,	which	approximates	market	value.

Accounts	receivable	and	allowance	for	doubtful	accounts:	Snap-on's	accounts	receivable	are	reported	net	of	estimated	bad	debt	allowances,	which	are	regularly evaluated	by	management	for	adequacy.	The	evaluations	take	into	consideration	various	financial	and	qualitative	factors	that	may	affect	customers'	ability	to	pay.		These factors	may	include	customers'	financial	condition,	collateral,	debt-servicing	ability,	past	payment	experience	and	credit	bureau	information.		Snap-on	regularly	reviews the	allowance	estimation	process	and	adjusts	the	allowances	as	appropriate.		It	is	possible,	however,	that	the	accuracy	of	Snap-on's	estimation	process	could	be	adversely impacted	if	the	financial	condition	of	its	customers	were	to	deteriorate.		The	company	does	not	believe	that	accounts	receivable	represent	significant	concentrations	of credit	risk	because	of	the	diversified	portfolio	of	individual	customers	and	geographical	areas.

Inventories:	Snap-on	values	its	inventory	at	the	lower	of	cost	or	market	and	adjusts	for	the	value	of	inventory	that	is	estimated	to	be	excess,	obsolete	or	otherwise unmarketable.		Inventory	adjustments	for	raw	materials	are	largely	based	on	analysis	of	raw	material	age	and	actual	physical	inspection	of	raw	material	for	fitness	for use.		As	part	of	evaluating	work-in-progress	and	finished	goods,	management	reviews	individual	product	stock-keeping	units	(SKUs)	by	product	category	and	product life	cycle.		Cost	adjustments	for	each	product	category/product	life-cycle	state	are	generally	established	and	maintained	based	on	a	combination	of	historical	experience, forecasted	sales	and	promotions,	technological	obsolescence,	inventory	age	and	other	actual	known	conditions	and	circumstances.		Should	actual	product	marketability and	raw	material	fitness	for	use	be	affected	by	conditions	that	are	different	from	management	estimates,	further	adjustments	to	inventory	allowances	may	be	required.

Snap-on	adopted	the	"last-in,	first-out"	("LIFO")	inventory	valuation	method	in	1973	for	its	U.S.	locations.		Snap-on's	U.S.	inventories	accounted	for	on	LIFO	consist	of purchased	product	and	inventory	manufactured	at	the	company's	heritage	U.S.	manufacturing	facilities	(primarily	hand	tools	and	tool	storage).		As	Snap-on	began acquiring	businesses	in	the	1990's,	the	company	retained	the	"first-in,	first-out"	("FIFO")	inventory	valuation	methodology	used	by	the	predecessor	businesses	prior	to their	acquisition	by	Snap-on;	the	company	does	not	adopt	the	LIFO	inventory	valuation	methodology	for	new	acquisitions.		See	Note	4	for	further	information	on inventories.

Property	and	equipment:	Property	and	equipment	is	stated	at	cost	less	accumulated	depreciation	and	amortization.	Depreciation	and	amortization	are	provided	on	a straight-line	basis	over	estimated	useful	lives.	Major	repairs	that	extend	the	useful	life	of	an	asset	are	capitalized,	while	routine	maintenance	and	repairs	are	expensed	as incurred.		Capitalized	software	included	in	property	and	equipment	reflects	costs	related	to	internally	developed	or	purchased	software	for	internal	use	and	is	amortized on	a	straight-line	basis	over	their	estimated	useful	lives.	Long-lived	assets	are	evaluated	for	impairment	in	accordance	with	the	provisions	of	SFAS	No.	144,	"Accounting for	the	Impairment	or	Disposal	of	Long-Lived	Assets."		See	Note	5	for	further	information	on	property	and	equipment.

Goodwill	and	other	intangible	assets:	SFAS	No.	142,	"Goodwill	and	Other	Intangible	Assets,"	requires	the	testing	of	goodwill	and	indefinite-lived	intangible	assets for	impairment,	at	least	annually.	Snap-on	evaluates	annually,	and	when	significant	changes	in	expected	long-term	performance	or	other	events	arise,	the	existence	of goodwill	and	indefinite-lived	intangible	asset	impairment	on	the	basis	of	whether	the	assets	are	fully	recoverable	from	projected,	discounted	cash	flows	of	the	related business	unit.		See	Note	6	for	further	information	on	goodwill	and	other	intangible	assets.

Accumulated	other	comprehensive	income	(loss):		The	components	of	"Accumulated	other	comprehensive	income	(loss)"	("AOCI")	on	the	accompanying Consolidated	Balance	Sheets	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Foreign\tcurrency\ttranslation\tadjustment | $193.3 | $118.9 |
| $60.8\tmillion,\trespectively | (49.8) | (97.0) |
| Other | (0.7) | (0.7) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | $142.8 | $21.2 |

New	accounting	standards:		The	Financial	Accounting	Standards	Board	("FASB")	released	SFAS	No.	141(R),	"Business	Combinations,"	to	establish	accounting	and reporting	standards	to	improve	the	relevance,	comparability	and	transparency	of	financial	information	that	an	acquirer	would	provide	in	its	consolidated	financial statements	from	a	business	combination.		SFAS	No.	141(R)	is	effective	for	fiscal	years	beginning	after	December	15,	2008.		The	company	is	currently	assessing	the impact	the	adoption	of	SFAS	No.	141(R)	will	have	on	the	company's	consolidated	financial	position	and	results	of	operations.

The	FASB	released	SFAS	No.	160,	"Noncontrolling	Interests	in	Consolidated	Financial	Statements	-	an	amendment	of	Accounting	Research	Bulletin	No.	51,"	to improve	the	relevance,	comparability	and	transparency	of	the	financial	information	that	a	reporting	entity	provides	in	its	consolidated	financial	statements	by establishing	accounting	and	reporting	standards	for	the	noncontrolling	interest	in	a	subsidiary	and	for	the	deconsolidation	of	a	subsidiary.		SFAS	No.	160	is	effective	for fiscal	years	beginning	after	December	15,	2008.		The	company	is	currently	assessing	the	impact	the	adoption	of	SFAS	No.	160	will	have	on	the	company's	consolidated financial	position	and	results	of	operations.

Effective	December	30,	2007,	the	beginning	of	the	company's	2008	fiscal	year,	Snap-on	adopted	SFAS	No.	157,	"Fair	Value	Measurements,"	to	define	fair	value, establish	a	framework	for	measuring	fair	value	in	accordance	with	generally	accepted	accounting	principles,	and	expand	disclosures	about	fair	value	measurements.		The company	does	not	believe	the	adoption	of	SFAS	No.	157	will	have	a	material	impact	on	the	company's	consolidated	financial	statements.

Effective	December	30,	2007,	Snap-on	adopted	SFAS	No.	159,	"The	Fair	Value	Option	for	Financial	Assets	and	Financial	Liabilities,	Including	an	amendment	of	SFAS No.	115,"	to	allow	companies	to	choose	to	elect,	at	specified	dates,	to	measure	eligible	financial	instruments	at	fair	value.		At	the	date	of	adoption	of	SFAS	No.	159,	the company	did	not	elect	the	fair	value	option	for	any	of	its	financial	assets	or	financial	liabilities.

In	June	2007	the	FASB	ratified	EITF	Issue	No.	06-11,	"Accounting	for	Income	Tax	Benefits	of	Dividends	on	Share-Based	Payment	Awards."		EITF	Issue	No.	06-11 specifies	how	companies	should	recognize	the	income	tax	benefit	received	on	dividends	that	are	(i)	paid	to	employees	holding	equity-classified	nonvested	shares,	equity- classified	nonvested	share	units,	or	equity-classified	outstanding	share	options;	and	(ii)	charged	to	retained	earnings	under	SFAS	No.	123(R).	The	company	does	not believe	the	adoption	of	EITF	Issue	No.	06-11,	which	is	effective	for	Snap-on	beginning	in	fiscal	2008,	will	have	a	material	impact	on	the	company's	consolidated financial	statements.

Effective	December	31,	2006,	the	beginning	of	the	company's	2007	fiscal	year,	Snap-on	adopted	SFAS	No.	156,	"Accounting	for	Servicing	of	Financial	Assets,"	to simplify	accounting	for	separately	recognized	servicing	assets	and	servicing	liabilities.		The	adoption	of	SFAS	No.	156	did	not	have	a	material	impact	on	the	company's consolidated	financial	position	and	results	of	operations.

Snap-on	adopted	FASB	Interpretation	No.	48	("FIN	48"),	"Accounting	for	Uncertainty	in	Income	Taxes:	an	Interpretation	of	FASB	Statement	No.	109,"	at	the	beginning of	its	2007	fiscal	year.		FIN	48	clarifies	the	accounting	for	uncertainty	in	income	taxes	recognized	under	SFAS	No.	109,	"Accounting	for	Income	Taxes."		FIN	48 prescribes	a	recognition	threshold	and	measurement	attribute	for	financial	statement	recognition	and	measurement	of	tax	positions	taken	or	expected	to	be	taken	in	a	tax return.		FIN	48	also	provides	guidance	on	the	accounting	for	and	disclosure	of	unrecognized	tax	benefits,	including	any	related	interest	and	penalties.		The	adoption	and application	of	FIN	48	did	not	have	a	significant	impact	on	Snap-on's	consolidated	financial	statements.		See	Note	8	for	further	information	on	income	taxes.

Effective	December	30,	2006,	the	last	day	of	its	2006	fiscal	year,	Snap-on	adopted	the	recognition	provisions	of	SFAS	No.	158,	"Employers'	Accounting	for	Defined Benefit	Pension	and	Postretirement	Plans:	an	amendment	of	FASB	Statements	No.	87,	88,	106,	and	132(R)."		SFAS	No.	158	requires	an	employer	to	measure	the	funded status	of	a	plan	as	of	the	date	of	its	year-end	statement	of	financial	position,	and	also	requires	an	employer	to	initially	apply	the	requirement	to	measure	plan	assets	and benefit	obligations	as	of	the	date	of	the	employer's	fiscal	year-end	statement	of	financial	position	for	fiscal	years	ending	after	December	15,	2008.		As	the	company	uses the	last	day	of	its	fiscal	year	end	as	the	measurement	date	for	its	plans,	the	adoption	of	the	measurement	provisions	of	SFAS	No.	158	will	have	no	impact	on	the company's	consolidated	financial	position	and	results	of	operations.		Retrospective	application	of	the	recognition	and	fiscal	year-end	measurement	date	provisions	of SFAS	No.	158	is	not	permitted.		The	impact	of	adopting	SFAS	No.	158	resulted	in	a	decrease	of	$89.0	million	to	"Accumulated	Other	Comprehensive	Income	(Loss)," as	shown	on	the	accompanying	Consolidated	Statements	of	Shareholders'	Equity	and	Comprehensive	Income.		See	Notes	11	and	12	for	information	on	the	company's pension	and	postretirement	plans.

# Note	2:	Acquisitions

On	November	28,	2006,	Snap-on	acquired	the	ProQuest	Business	Solutions	business	and	certain	net	assets	(collectively,	"Snap-on	Business	Solutions"	or	"Business Solutions")	from	ProQuest	Company	for	an	initial	purchase	price	of	$516.0	million	of	cash	and	the	assumption	of	approximately	$19	million	of	debt.	Subsequent	to	the November	28,	2006,	closing	date,	the	cash	purchase	price	for	Business	Solutions	increased	by	$5.7	million	to	$521.7	million,	primarily	reflecting	a	higher	level	of working	capital	received	by	Snap-on	at	closing.

# Pro	forma	Information

The	following	unaudited	pro	forma	information	presents	the	results	of	operations	of	Snap-on	as	if	the	Snap-on	Business	Solutions	acquisition	had	taken	place	at	the beginning	of	fiscal	2005.	The	unaudited	pro	forma	financial	information	is	not	intended	to	represent	or	be	indicative	of	the	consolidated	results	of	operations	of	Snap-on that	would	have	been	reported	had	the	acquisition	been	completed	as	of	the	dates	presented,	and	should	not	be	taken	as	representative	of	the	future	consolidated	results of	operations	of	Snap-on.

|  | For	the	Fiscal	Years	Ended<br>2006 | 2005 |
| :--- | :--- | :--- |
| (Amounts\tin\tmillions,\texcept\tper\tshare\tdata) |  |  |
| Net\tsales: |  |  |
| As\treported | $2,455.1 | $2,281.0 |
| Pro\tforma | 2,644.8 | 2,463.9 |
| Operating\tearnings: |  |  |
| As\treported | $162.8 | $163.4 |
| Pro\tforma | 202.3 | 196.1 |
| Net\tearnings: |  |  |
| As\treported | $100.1 | $92.9 |
| Pro\tforma | 110.8 | 100.2 |
| Basic\tearnings\tper\tshare: |  |  |
| As\treported | $1.72 | $1.61 |
| Pro\tforma | 1.90 | 1.73 |

| As	reported | $1.69 | $1.59 |
| :--- | :--- | :--- |
| Pro\tforma | 1.87 | 1.72 |

# Note	3:	Accounts	Receivable

Accounts	receivable	include	trade	accounts,	installment	and	other	receivables,	including	the	current	portion	of	franchisee	financing	receivables.	The	components	of Snap-on's	current	accounts	receivable	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Trade\taccounts\treceivable | $493.7 | $477.6 |
|  | 73.4 | 62.4 |
| Other\taccounts\treceivable | 51.5 | 52.1 |
| Total | 618.6 | 592.1 |
| Allowances\tfor\tdoubtful\taccounts | (31.7) | (32.9) |
| Total\taccounts\treceivable\t-\tnet | $586.9 | $559.2 |

The	long-term	portion	of	accounts	receivable	is	classified	in	"Other	assets"	on	the	accompanying	Consolidated	Balance	Sheets	and	is	comprised	of	installment	and	other receivables,	including	franchisee	financing	receivables,	with	payment	terms	that	are	due	beyond	one	year.		The	components	of	Snap-on's	long-term	accounts	receivable as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
|  | $49.2 | $42.6 |
| Other\tlong-term\taccounts\treceivable | 30.7 | 28.3 |
| Total | $79.9 | $70.9 |

The	following	is	a	rollforward	of	the	allowance	for	doubtful	accounts	for	fiscal	2007,	2006	and	2005:

|  | Balance	at |  |  | Balance	at |
| :--- | :--- | :--- | :--- | :--- |
|  | Beginning |  |  | End\tof |
| (Amounts\tin\tmillions) | of\tYear | Expenses | Deductions\t(1) | Year |
| Allowance\tfor\tdoubtful\taccounts: |  |  |  |  |
| Year\tended\tDecember\t29,\t2007 | $32.9 | $20.7 | $(21.9) | $31.7 |
| Year\tended\tDecember\t30,\t2006 | 34.9 | 25.8 | (27.8) | 32.9 |
| Year\tended\tDecember\t31,\t2005 | 46.5 | 21.8 | (33.4) | 34.9 |

(1)		Represents	write-offs	of	bad	debts	and	the	net	impact	of	currency	translation.

# Note	4:	Inventories

Inventories	by	major	classification	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Finished\tgoods | $299.8 | $310.4 |
| Work\tin\tprogress | 33.6 | 35.2 |
| Raw\tmaterials | 64.0 | 64.1 |
| Total\tFIFO\tvalue | 397.4 | 409.7 |
| Excess\tof\tcurrent\tcost\tover\tLIFO\tcost | (75.0) | (86.7) |
| Total\tinventories | $322.4 | $323.0 |

Inventories	accounted	for	using	the	FIFO	method	as	of	December	29,	2007,	and	December	30,	2006,	approximated	65%	and	62%,	respectively,	of	total	inventories.		The company	accounts	for	its	non-U.S.	inventory	on	the	FIFO	basis.		As	of	December	29,	2007,	31%	of	the	company's	U.S.	inventory	was	accounted	for	using	the	FIFO basis	and	69%	was	accounted	for	using	the	LIFO	basis.		LIFO	inventory	liquidations	resulted	in	a	reduction	of	"Cost	of	goods	sold"	on	the	accompanying	Consolidated Statements	of	Earnings	of	$4.6	million	for	the	year	ended	December	29,	2007,	and	$8.3	million	for	the	year	ended	December	31,	2005.	There	were	no	LIFO	inventory liquidations	for	the	year	ended	December	30,	2006.

# Note	5:	Property	and	Equipment

Snap-on's	property	and	equipment	values,	which	are	carried	at	cost,	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Land | $22.9 | $24.3 |
| Buildings\tand\timprovements | 224.2 | 236.7 |
| Machinery,\tequipment\tand\tcomputer\tsoftware | 544.8 | 540.9 |
|  | 791.9 | 801.9 |
| Accumulated\tdepreciation\tand\tamortization | (487.1) | (504.8) |
| Property\tand\tequipment\t-\tnet | $304.8 | $297.1 |

Snap-on	entered	into	a	20-year	capital	lease	for	office	and	distribution	facilities	in	Japan	for	the	Snap-on	Tools	Group	in	2005.		The	current	portion	of	the	capital	lease obligation	is	included	in	"Other	accrued	liabilities"	and	the	long-term	portion	is	included	in	"Other	long-term	liabilities"	on	the	accompanying	Consolidated	Balance

Sheets.		The	cost	and	accumulated	depreciation	as	of	December	29,	2007,	and	December	30,	2006,	for	this	facility	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Buildings\tand\timprovements\t-\tcost | $20.8 | $20.8 |
| Accumulated\tdepreciation | (3.0) | (2.0) |
| Net\tbook\tvalue | $17.8 | $18.8 |

Depreciation	expense	of	$53.5	million,	$48.5	million	and	$49.5	million	in	fiscal	2007,	2006	and	2005,	respectively,	includes	$1.0	million	of	depreciation	expense	in each	year	for	the	Japan	capital	lease.

# Note	6:	Acquired	Intangible	Assets

The	changes	in	the	carrying	amount	of	segment	goodwill	for	fiscal	2007	and	2006	are	as	follows:

|  | Commercial	&amp; | Snap-on | Information |  |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Industrial\tGroup | Tools\tGroup | Group | Total |
| Balance\tas\tof\tDecember\t31,\t2005 | $316.9 | $12.3 | $69.1 | $398.3 |
| Currency\ttranslation | 32.3 | 0.2 | (0.2) | 32.3 |
| Acquisitions | 0.9 | — | 344.6 | 345.5 |
| Balance\tas\tof\tDecember\t30,\t2006 | 350.1 | 12.5 | 413.5 | 776.1 |
| Currency\ttranslation | 23.4 | — | 1.4 | 24.8 |
| Acquisitions | — | — | 17.9 | 17.9 |
| Balance\tas\tof\tDecember\t29,\t2007 | $373.5 | $12.5 | $432.8 | $818.8 |

Additional	disclosures	related	to	other	intangible	assets	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

|  | Gross | Accumulated | Gross | Accumulated |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Carrying\tValue | Amortization | Carrying\tValue | Amortization |
| Amortized\tother\tintangible\tassets: |  |  |  |  |
| Customer\trelationships | $140.3 | $(10.8) | $164.6 | $(0.9) |
| Developed\ttechnology | 21.0 | (5.3) | 28.3 | (0.4) |
| Internally\tdeveloped\tsoftware | 37.0 | (13.0) | — | — |
| Patents | 33.8 | (18.0) | 32.5 | (15.8) |
| Trademarks | 2.0 | (0.5) | 2.8 | (0.9) |
| Other | 0.7 | (0.6) | 0.7 | (0.3) |
| Total | 234.8 | (48.2) | 228.9 | (18.3) |
| Non-amortized\ttrademarks | 48.2 | — | 47.2 | — |
| Total | $283.0 | $(48.2) | $276.1 | $(18.3) |

As	of	December	30,	2006,	the	$192.9	million	preliminary	purchase	price	allocation	for	the	intangible	assets	acquired	as	part	of	the	Business	Solutions	acquisition consisted	of	$164.6	million	in	customer-relationship	intangible	assets	with	a	16	year	weighted-average	life	and	$28.3	million	of	developed	technology	with	a	five	year weighted-average	life.		As	a	result	of	the	resolution	of	certain	post	closing	adjustments	in	the	third	quarter	of	2007,	Snap-on	reduced	the	initial	preliminary	purchase price	allocation	for	the	intangible	assets	acquired	by	$32.8	million	to	$160.1	million.	Based	on	exchange	rates	in	effect	at	the	date	of	the	acquisition,	the	$160.1	million of	intangible	assets	acquired	consist	of	$139.4	million	of	customer-relationship	intangible	assets	($140.3	million	at	December	29,	2007	exchange	rates)	and	$20.7 million	of	developed	technology	($21.0	million	at	December	29,	2007	exchange	rates).		Snap-on	is	amortizing	the	$139.4	million	of	customer-relationship	intangible assets	on	an	accelerated	basis	over	a	16	year	weighted-average	life	and	is	amortizing	the	$20.7	million	of	developed	technology	on	a	straight-line	basis	over	a	five	year weighted-average	life.

As	of	December	30,	2006,	internally	developed	software	with	a	gross	carrying	value	of	$34.4	million	($18.3	million	net	of	accumulated	amortization)	was	included	in "Other	assets"	on	the	accompanying	Consolidated	Balance	Sheets.

The	weighted-average	amortization	periods	related	to	other	intangible	assets	are	as	follows:

|  | Weighted- |
| :--- | :--- |
|  | average |
| (In\tyears) | Amortization |
| Customer\trelationships | 16 |
| Developed\ttechnology | 5 |
| Internally\tdeveloped\tsoftware | 3 |
| Patents | 16 |
| Trademarks | 38 |
| Other | 2 |

The	weighted-average	amortization	period	for	all	amortizable	intangibles	on	a	combined	basis	is	16	years.

# Note	7:	Exit	and	Disposal	Activities

Snap-on	recorded	costs	associated	with	exit	and	disposal	activities	of	$26.3	million	and	$21.8	million	during	2007	and	2006,	respectively.

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Exit\tand\tdisposal\tcosts: |  |  |
| Cost\tof\tgoods\tsold | $18.7 | $12.1 |

| Operating	expenses | 7.6 | 9.6 |
| :--- | :--- | :--- |
| Financial\tservices\texpenses | — | 0.1 |
| Total\texpense | $26.3 | $21.8 |

Of	the	$26.3	million	of	costs	incurred	in	2007,	$17.3	million	qualified	for	accrual	treatment.		Of	the	$21.8	million	of	costs	incurred	in	2006,	$17.0	million	qualified	for accrual	treatment.		Costs	associated	with	exit	and	disposal	activities	in	2007	primarily	related	to	headcount	reductions	for	(i)	the	transfer	of	certain	production	activities from	Sweden	to	lower-cost	regions	and	emerging	markets;	(ii)	the	third	quarter	2007	closure	of	the	Johnson	City,	Tennessee,	hand	tool	facility;	(iii)	the	consolidation	of multiple	customer	call	centers	in	the	United	States;	and	(iv)	various	other	management,	distribution	and	production	realignment	actions	at	other	Snap-on	facilities.

Snap-on's	exit	and	disposal	accrual	activity	related	to	2007	and	2006	actions	were	as	follows:

| (Amounts	in	millions) | Balance	at<br>December	31,<br>2005 | Provision	in<br>2006 | Usage	in<br>2006 | Balance	at<br>December	30,<br>2006 | Provision	in<br>2007 | Usage	in<br>2007 | Balance	at<br>December	29,<br>2007 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Severance\tcosts: |  |  |  |  |  |  |  |
| Commercial\t&amp;\tIndustrial | $0.8 | $5.9 | $(4.3) | $2.4 | $10.4 | $(5.1) | $7.7 |
| Snap-on\tTools | 0.6 | 5.8 | (4.1) | 2.3 | 1.3 | (2.8) | 0.8 |
| Diagnostics\t&amp;\tInformation | — | 2.6 | (2.3) | 0.3 | 5.1 | (2.2) | 3.2 |
| Financial\tServices | 0.4 | — | (0.4) | — | — | — | — |
| Corporate | 0.7 | 0.7 | (1.1) | 0.3 | 0.4 | (0.7) | — |
| Facility-related\tcosts: |  |  |  |  |  |  |  |
| Commercial\t&amp;\tIndustrial | 0.6 | 0.2 | (0.8) | — | — | — | — |
| Snap-on\tTools | 0.5 | 0.7 | (1.0) | 0.2 | — | (0.1) | 0.1 |
| Diagnostics\t&amp;\tInformation | — | 0.4 | (0.1) | 0.3 | 0.1 | (0.1) | 0.3 |
| Corporate | — | 0.7 | (0.5) | 0.2 | — | (0.1) | 0.1 |
| Total | $3.6 | $17.0 | $(14.6) | $6.0 | $17.3 | $(11.1) | $12.2 |

Exit	and	disposal	accrual	usage	of	$11.1	million	in	2007	consisted	of	$10.8	million	for	severance	payments	and	$0.3	million	for	facility	consolidation	or	closure	costs. Since	year-end	2006,	Snap-on	has	reduced	headcount	by	approximately	300	employees	as	part	of	its	restructuring	actions.		While	the	majority	of	the	exit	and	disposal accrual	will	be	utilized	in	2008,	certain	facility-related	costs	will	extend	beyond	2008	primarily	due	to	longer-term	lease	obligations.

Snap-on	expects	to	fund	the	remaining	cash	requirements	of	its	exit	and	disposal	activities	with	cash	flows	from	operations	and	borrowings	under	the	company's	existing credit	facilities.		The	estimated	costs	for	the	exit	and	disposal	activities	were	based	on	management's	best	business	judgment	under	prevailing	circumstances.

# Note	8:	Income	Taxes

The	source	of	earnings	before	income	taxes,	minority	interests	and	equity	earnings	(loss)	consisted	of	the	following:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| United\tStates | $165.9 | $40.5 | $52.3 |
| Foreign | 118.3 | 107.0 | 92.5 |
| Total | $284.2 | $147.5 | $144.8 |

The	provision	(benefit)	for	income	taxes	consisted	of	the	following:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal | $39.3 | $20.9 | $9.2 |
| Foreign | 40.5 | 30.1 | 27.2 |
| State | 5.0 | 2.2 | 4.2 |
| Total\tcurrent | 84.8 | 53.2 | 40.6 |
| Deferred: |  |  |  |
| Federal | 12.0 | (8.8) | 13.4 |
| Foreign | (7.4) | (0.7) | 1.3 |
| State | 3.1 | 2.2 | (0.1) |
| Total\tdeferred | 7.7 | (7.3) | 14.6 |
| Total\tincome\ttax\tprovision | $92.5 | $45.9 | $55.2 |

A	reconciliation	of	the	statutory	federal	income	tax	rate	to	Snap-on's	effective	tax	rate	is	as	follows:

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Statutory\tfederal\tincome\ttax\trate | 35.0% | 35.0% | 35.0% |
| Increase\t(decrease)\tin\ttax\trate\tresulting\tfrom: |  |  |  |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 1.7 | 0.7 | 1.9 |
| Extraterritorial\tincome\texclusion | — | (1.4) | (1.6) |
| Change\tin\tvaluation\tallowance\tfor\tforeign\tlosses | (0.1) | (3.2) | 2.1 |
| Adjustments\tto\ttax\taccruals\tand\treserves | (0.9) | 1.8 | (1.1) |
| Foreign\trate\tdifferences | (1.9) | (2.6) | (2.0) |
| Repatriation\tof\tqualifying\tforeign\tdividends\tunder\tthe\tAmerican |  |  |  |
| Jobs\tCreation\tAct\tof\t2004 | — | — | 2.2 |
| Other | (1.3) | 0.8 | 1.6 |
| Effective\ttax\trate | 32.5% | 31.1% | 38.1% |

Temporary	differences	that	give	rise	to	the	net	deferred	tax	asset	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Current\tdeferred\tincome\ttax\tassets: |  |  |  |
| Inventories | $21.1 | $23.2 | $23.4 |
| Accruals\tnot\tcurrently\tdeductible | 61.3 | 49.2 | 48.6 |
| Other | 2.9 | 1.5 | 1.8 |
| Total\tcurrent\t(included\tin\tdeferred\tincome\ttax\tassets\tand\tother\taccrued |  |  |  |
| liabilities) | 85.3 | 73.9 | 73.8 |
| Long-term\tdeferred\tincome\ttax\tassets\t(liabilities): |  |  |  |
| Employee\tbenefits | 27.0 | 56.4 | 58.0 |
| Net\toperating\tlosses | 39.3 | 56.4 | 53.8 |
| Depreciation\tand\tamortization | (77.4) | (71.2) | (55.0) |
| SOC\tsecuritization | (33.0) | (32.9) | (35.5) |
| Valuation\tallowance | (35.5) | (43.7) | (42.2) |
| Equity-based\tcompensation | 10.7 | 5.1 | — |
| Other | (0.3) | (3.7) | 3.4 |
| Total\tlong\tterm | (69.2) | (33.6) | (17.5) |
| Net\tdeferred\tincome\ttax\tasset | $16.1 | $40.3 | $56.3 |

At	December	29,	2007,	Snap-on	had	tax	net	operating	loss	carryforwards	totaling	$221.0	million	as	follows:

| (Amounts	in	millions) | State | States | Foreign | Total |
| :--- | :--- | :--- | :--- | :--- |
| Year\tof\texpiration: |  |  |  |  |
| 2008-2012 | $5.7 | $— | $5.4 | $11.1 |
| 2013-2017 | 24.1 | — | 0.3 | 24.4 |
| 2018-2022 | 36.1 | — | — | 36.1 |
| 2023-2027 | 21.7 | — | — | 21.7 |
| Indefinite | — | — | 127.7 | 127.7 |
| Total\tnet\toperating\tloss\tcarryforwards | $87.6 | $— | $133.4 | $221.0 |

A	valuation	allowance	totaling	$35.5	million,	$43.7	million	and	$42.2	million	in	2007,	2006	and	2005,	respectively,	has	been	established	for	deferred	income	tax	assets related	to	certain	subsidiary	loss	carryforwards	that	may	not	be	realized.	Realization	of	the	net	deferred	tax	assets	is	dependent	on	generating	sufficient	taxable	income prior	to	their	expiration.	Although	realization	is	not	assured,	management	believes	it	is	more	likely	than	not	that	the	net	deferred	tax	assets	will	be	realized.	The	amount of	the	net	deferred	tax	assets	considered	realizable,	however,	could	be	reduced	in	the	near	term	if	estimates	of	future	taxable	income	during	the	carryforward	period	are reduced.

The	company	adopted	FIN	48	on	December	31,	2006,	the	beginning	of	the	company's	2007	fiscal	year;	the	company	had	unrecognized	tax	benefits	of	$21.3	million	as	of the	date	of	adoption.		Snap-on	did	not	record	any	cumulative	effect	adjustment	to	retained	earnings	as	a	result	of	adopting	FIN	48.	As	of	December	29,	2007,	the company	had	unrecognized	tax	benefits	of	$18.7	million.

Following	is	a	reconciliation	of	the	beginning	and	ending	amount	of	unrecognized	tax	benefits:

Of	the	$18.7	million	of	unrecognized	tax	benefits	at	the	end	of	2007,	approximately	$16.2	million	would	impact	the	effective	income	tax	rate	if	recognized.

Interest	and	penalties	related	to	unrecognized	tax	benefits	are	recorded	in	income	tax	expense.		During	the	years	ended	December	29,	2007,	December	30,	2006,	and December	31,	2005,	the	company	recognized	approximately	$1.2	million,	$0.5	million	and	$(0.5)	million	in	net	interest	expense	(benefit),	respectively.		The	company has	provided	for	approximately	$3.4	million,	$2.2	million,	and	$1.7	million	of	accrued	interest	related	to	unrecognized	tax	benefits	at	the	end	of	fiscal	year	2007,	2006 and	2005,	respectively.

During	the	next	12	months,	the	company	does	not	anticipate	any	significant	changes	to	the	total	amount	of	unrecognized	tax	benefits,	other	than	the	accrual	of	additional interest	expense	in	an	amount	similar	to	the	prior	year's	expense.

With	few	exceptions,	Snap-on	is	no	longer	subject	to	U.S.	federal	and	state/local	income	tax	examinations	by	tax	authorities	for	years	prior	to	2003,	and	Snap-on	is	no longer	subject	to	non-U.S.	income	tax	examinations	by	tax	authorities	for	years	prior	to	2001.

The	undistributed	earnings	of	all	non-U.S.	subsidiaries	totaled	$338.5	million,	$247.4	million	and	$173.6	million	at	the	end	of	fiscal	2007,	2006	and	2005,	respectively. Snap-on	has	not	provided	any	deferred	taxes	on	these	undistributed	earnings	as	it	considers	the	undistributed	earnings	to	be	permanently	invested.		Determination	of	the amount	of	unrecognized	deferred	income	tax	liability	related	to	these	earnings	is	not	practicable.

The	American	Jobs	Creation	Act	of	2004	(the	"AJCA")	created	a	one-time	tax	incentive	for	U.S.	corporations	to	repatriate	accumulated	foreign	earnings	by	providing	a tax	deduction	of	85%	of	qualifying	dividends	received	from	foreign	affiliates.		Under	the	provisions	of	the	AJCA,	Snap-on	repatriated	approximately	$93	million	of qualifying	dividends	in	2005	that	resulted	in	additional	income	tax	expense	of	$3.3	million	for	the	year.

# Note	9:	Short-term	and	Long-term	Debt

Notes	payable	and	long-term	debt	as	of	December	29,	2007,	was	$517.9	million;	no	commercial	paper	was	outstanding	at	December	29,	2007.		As	of	December	30, 2006,	notes	payable	and	long-term	debt	was	$549.2	million,	including	$314.9	million	of	commercial	paper.	Snap-on	presented	$300	million	of	the	December	30,	2006, outstanding	commercial	paper	as	"Long-term	debt"	on	the	accompanying	December	30,	2006,	Consolidated	Balance	Sheet.

On	January	12,	2007,	Snap-on	sold	$300	million	of	unsecured	notes	consisting	of	$150	million	of	floating	rate	notes	that	mature	on	January	12,	2010,	and	$150	million of	fixed	rate	notes	that	mature	on	January	15,	2017.		Interest	on	the	floating	rate	notes	accrues	at	a	rate	equal	to	the	three-month	London	Interbank	offer	rate	plus	0.13%

per	year	and	is	payable	quarterly.		Interest	on	the	fixed	rate	notes	accrues	at	a	rate	of	5.50%	per	year	and	is	payable	semi-annually.		Snap-on	used	the	proceeds	from	the sale	of	the	notes,	net	of	$1.5	million	of	transaction	costs,	to	repay	commercial	paper	obligations	issued	to	finance	the	acquisition	of	Business	Solutions.	On	January	12, 2007,	the	company	also	terminated	a	$250	million	bridge	credit	agreement	that	Snap-on	established	prior	to	its	acquisition	of	Business	Solutions.

Long-term	debt	of	$502.0	million	as	of	December	29,	2007,	includes	$200	million	of	unsecured	6.25%	notes,	$150	million	of	unsecured	floating	rate	notes,	$150 million	of	unsecured	5.50%	notes,	and	$2.0	million	of	other	long-term	debt.		Notes	payable	and	current	maturities	of	long-term	debt	at	December	29,	2007,	of	$15.9 million	included	$10.1	million	of	notes	payable	and	$5.8	million	of	current	maturities	of	long-term	debt.

On	August	10,	2007,	Snap-on	entered	into	a	five-year,	$500	million	multi-currency	revolving	credit	facility	that	terminates	on	August	10,	2012.	This	$500	million facility	replaces	Snap-on's	previous	$400	million	multi-currency	revolving	credit	facility	that	was	to	terminate	on	July	27,	2009.		The	$500	million	revolving	credit facility's	financial	covenant	requires	that	Snap-on	maintain,	as	of	each	fiscal	quarter	end,	(i)	a	ratio	of	total	debt	to	the	sum	of	total	debt	plus	shareholders'	equity	of	not greater	than	0.60	to	1.00;	or	(ii)	a	ratio	of	total	debt	to	earnings	before	interest,	taxes,	depreciation	and	amortization	(EBITDA)	for	the	preceding	four	fiscal	quarters	then ended	of	not	greater	than	3.50	to	1.00.	As	of	December	29,	2007,	Snap-on	was	in	compliance	with	all	covenants	of	this	revolving	credit	facility.

Snap-on's	long-term	debt	as	of	fiscal	year-end	2007	and	2006	consisted	of	the	following:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Senior\tunsecured\tindebtedness | $500.0 | $200.0 |
| Other\tdebt* | 7.8 | 316.2 |
|  | 507.8 | 516.2 |
| Less:\tcurrent\tmaturities | (5.8) | (10.6) |
| Total\tlong-term\tdebt | $502.0 | $505.6 |

*	Includes	$300	million	of	commercial	paper	at	year-end	2006.

# Note	10:	Financial	Instruments

Snap-on	accounts	for	its	hedging	activities	under	SFAS	No.	133,	"Accounting	for	Derivative	Instruments	and	Hedging	Activities,"	as	amended	by	SFAS	No.	138	and SFAS	No.	149.		These	standards	require	that	all	derivative	instruments	be	reported	in	the	consolidated	financial	statements	at	fair	value.		Changes	in	the	fair	value	of derivatives	are	to	be	recorded	each	period	in	earnings	or	on	the	accompanying	Consolidated	Balance	Sheets	in	"Accumulated	other	comprehensive	income	(loss)," depending	on	the	type	of	hedged	transaction	and	whether	the	derivative	is	designated	and	effective	as	part	of	a	hedged	transaction.	Gains	or	losses	on	derivative instruments	reported	in	"Accumulated	other	comprehensive	income	(loss)"	must	be	reclassified	as	earnings	in	the	period	in	which	earnings	are	affected	by	the underlying	hedged	item	and	the	ineffective	portion	of	all	hedges	must	be	recognized	in	earnings	in	the	current	period.

Snap-on	uses	derivative	instruments	to	manage	well-defined	interest	rate	and	foreign	currency	exposures.	Snap-on	does	not	use	derivative	instruments	for	speculative	or trading	purposes.		The	criteria	used	to	determine	if	hedge	accounting	treatment	is	appropriate	are	(i)	the	designation	of	the	hedge	to	an	underlying	exposure;	(ii)	whether or	not	overall	risk	is	being	reduced;	and	(iii)	if	there	is	a	correlation	between	the	value	of	the	derivative	instrument	and	the	underlying	obligation.	On	the	date	a derivative	contract	is	entered	into,	Snap-on	designates	the	derivative	as	a	fair	value	hedge,	a	cash	flow	hedge,	a	hedge	of	a	net	investment	in	a	foreign	operation,	or	a natural	hedging	instrument	whose	change	in	fair	value	is	recognized	as	an	economic	hedge	against	changes	in	the	values	of	the	hedged	item.

Foreign	currency	derivative	instruments:	Snap-on	has	operations	in	a	number	of	countries	that	have	transactions	outside	their	functional	currencies	and,	as	a	result,	is exposed	to	changes	in	foreign	currency	exchange	rates.		Snap-on	also	has	intercompany	loans	to	foreign	subsidiaries	denominated	in	foreign	currencies.		Snap-on manages	these	exposures	on	a	consolidated	basis,	which	allows	for	netting	of	certain	exposures	to	take	advantage	of	natural	offsets.		Forward	exchange	contracts	are generally	used	to	hedge	the	net	exposures.		Gains	or	losses	on	net	foreign	currency	hedges	are	intended	to	offset	losses	or	gains	on	the	underlying	net	exposures	in	an effort	to	reduce	the	earnings	volatility	resulting	from	fluctuating	foreign	currency	exchange	rates.

At	December	29,	2007,	Snap-on	had	$156.1	million	of	net	foreign	exchange	forward	buy	contracts	outstanding	comprised	of	buy	contracts	of	$65.1	million	in	Swedish kronor,	$44.4	million	in	euros,	$21.8	million	in	Australian	dollars,	$16.4	million	in	British	pounds,	$3.5	million	in	Canadian	dollars,	$2.7	million	in	Singapore	dollars and	$5.7	million	in	other	currencies,	and	sell	contracts	of	$1.6	million	in	Hungarian	forint	and	$1.9	million	in	other	currencies.		At	December	30,	2006,	Snap-on	had $80.1	million	of	net	foreign	exchange	forward	buy	contracts	outstanding	comprised	of	buy	contracts	of	$31.4	million	in	Swedish	kronor,	$23.1	million	in	euros,	$17.8 million	in	British	pounds,	$10.9	million	in	Australian	dollars,	$2.3	million	in	Japanese	yen,	$2.1	million	in	Norwegian	kroner,	and	$3.4	million	in	other	currencies,	and sell	contracts	of	$7.0	million	in	Canadian	dollars	and	$3.9	million	in	other	currencies.		The	majority	of	Snap-on's	forward	exchange	contracts	are	not	designated	as hedges	under	SFAS	No.	133.		The	fair	value	changes	of	these	contracts	are	reported	in	earnings	as	foreign	exchange	gain	or	loss,	which	is	included	in	"Other	income (expense)	—	net"	on	the	accompanying	Consolidated	Statements	of	Earnings.

Interest	rate	swap	agreements:	Snap-on	enters	into	interest	rate	swap	agreements	to	manage	interest	costs	and	risks	associated	with	changing	interest	rates.	Interest	rate swap	agreements	are	accounted	for	as	either	cash	flow	hedges	or	fair	value	hedges.	The	differentials	paid	or	received	on	interest	rate	swap	agreements	are	recognized	as adjustments	to	interest	expense.		For	fair	value	hedges,	the	effective	portion	of	the	change	in	fair	value	of	the	derivative	is	recorded	in	"Long-term	debt"	on	the accompanying	Consolidated	Balance	Sheets,	while	any	ineffective	portion	is	recorded	as	an	adjustment	to	interest	expense.		For	cash	flow	hedges,	the	effective	portion of	the	change	in	fair	value	of	the	derivative	is	recorded	in	"Accumulated	other	comprehensive	income	(loss),"	while	any	ineffective	portion	is	recorded	as	an	adjustment to	interest	expense.		The	notional	amount	of	interest	rate	swaps	outstanding	and	designated	as	fair	value	hedges	was	$50	million	at	both	December	29,	2007,	and December	30,	2006.

Changes	in	the	fair	value	of	derivative	financial	instruments	qualifying	for	hedge	accounting	are	included	in	derivative	assets	or	liabilities,	with	the	corresponding	gains or	losses	reflected	in	earnings	in	the	period	of	change.		An	offsetting	gain	or	loss	is	also	reflected	in	earnings	based	upon	the	changes	of	the	fair	value	of	the	debt instrument	being	hedged.		For	all	fair	value	hedges	qualifying	for	hedge	accounting,	the	net	accumulated	derivative	asset	at	December	29,	2007,	was	$0.1	million.		At

December	29,	2007,	the	maximum	maturity	date	of	any	fair	value	hedge	was	four	years.		During	the	years	ended	December	29,	2007,	and	December	30,	2006,	cash	flow hedge	and	fair	value	hedge	ineffectiveness	was	not	material.

Fair	value	of	financial	instruments:	SFAS	No.	107,	"Disclosures	about	Fair	Value	of	Financial	Instruments,"	requires	Snap-on	to	disclose	the	fair	value	of	financial instruments	for	both	on-	and	off-balance-sheet	assets	and	liabilities	for	which	it	is	practicable	to	estimate	that	value.	The	following	methods	and	assumptions	were	used in	estimating	the	fair	value	of	financial	instruments:

Installment	contracts:	A	discounted	cash	flow	analysis	was	performed	over	the	average	life	of	a	contract	using	a	discount	rate	currently	available	to	Snap-on	adjusted	for credit	quality,	cost	and	profit	factors.	As	of	December	29,	2007,	and	December	30,	2006,	the	fair	value	was	approximately	$126	million	and	$109	million,	respectively, versus	a	book	value	of	$122.6	million	and	$105.0	million,	respectively.

Long-term	debt:	The	fair	value	of	long-term	debt	was	estimated	using	a	discounted	cash	flow	analysis	based	on	quoted	market	rates	for	similar	instruments.		As	of December	29,	2007,	and	December	30,	2006,	the	fair	value	was	approximately	$497	million	and	$504	million,	respectively,	versus	a	book	value	of	$500.0	million	for both	periods.

All	other	financial	instruments:	The	carrying	amounts	of	all	cash	equivalents,	interest	rate	swaps	and	forward	exchange	contracts	approximate	fair	value	based	upon quoted	market	prices	or	discounted	cash	flows.		The	fair	value	of	trade	accounts	receivable,	accounts	payable	and	other	financial	instruments	approximates	carrying value	due	to	their	short-term	nature.

# Note	11:	Pension	Plans

Snap-on	adopted	the	reporting	and	disclosure	requirements	of	SFAS	No.	158	as	of	December	30,	2006	(fiscal	2006	year	end).		See	Note	1	for	further	discussion	of	SFAS No.	158.

Snap-on	has	several	non-contributory	defined	benefit	pension	plans	covering	most	U.S.	employees	and	certain	employees	in	foreign	countries.	Snap-on	also	has	foreign contributory	defined	benefit	pension	plans	covering	certain	foreign	employees.	Retirement	benefits	are	generally	provided	based	on	employees'	years	of	service	and average	earnings	or	stated	amounts	for	years	of	service.	Normal	retirement	age	is	65,	with	provisions	for	earlier	retirement.	Snap-on	recognizes	retirement	plan	expenses in	accordance	with	SFAS	No.	87,	"Employers'	Accounting	for	Pensions."

The	status	of	Snap-on's	pension	plans	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Change\tin\tprojected\tbenefit\tobligation: |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $911.7 | $901.4 |
| Service\tcost | 21.6 | 23.3 |
| Interest\tcost | 49.6 | 47.7 |
| Plan\tparticipants'\tcontributions | 1.4 | 1.2 |
| Plan\tcurtailments | (0.5) | — |
| Benefits\tpaid | (42.5) | (53.9) |
| Plan\tamendments | — | 2.3 |
| Actuarial\tgain | (63.1) | (24.1) |
| Net\ttransfer\tin\t(out) | (0.8) | 0.8 |
| Foreign\tcurrency\timpact | 11.4 | 13.0 |
| Benefit\tobligation\tat\tend\tof\tyear | $888.8 | $911.7 |
| Change\tin\tplan\tassets: |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $809.1 | $741.6 |
| Actual\treturn\ton\tplan\tassets | 72.0 | 105.0 |
| Plan\tparticipants'\tcontributions | 1.4 | 1.2 |
| Employer\tcontributions | 13.4 | 9.6 |
| Benefits\tpaid | (42.5) | (53.9) |
| Divestitures | (0.8) | — |
| Foreign\tcurrency\timpact | 8.0 | 5.6 |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | $860.6 | $809.1 |
| Unfunded\tstatus\tat\tend\tof\tyear | $(28.2) | $(102.6) |

Amounts	recognized	in	the	Consolidated	Balance	Sheets	consist	of:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Deferred\tincome\ttax\tassets | $36.6 | $66.9 |
| Pension\tassets | 51.8 | 8.1 |
| Accrued\tbenefits | 4.0 | 3.6 |
| Pension\tliabilities | 76.0 | 107.1 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (58.4) | (106.8) |

The	amounts	included	AOCI	on	the	accompanying	Consolidated	Balance	Sheets	are	as	follows:

The	accumulated	benefit	obligation	for	Snap-on's	pension	plans	was	$805.8	million	and	$831.3	million	at	December	29,	2007,	and	December	30,	2006,	respectively.

The	projected	benefit	obligation,	accumulated	benefit	obligation	and	fair	value	of	plan	assets	for	Snap-on's	pension	plans	in	which	the	accumulated	benefit	obligation exceeds	the	fair	value	of	plan	assets	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Projected\tbenefit\tobligation | $82.4 | $151.0 |
| Accumulated\tbenefit\tobligation | 71.3 | 128.4 |
| Fair\tvalue\tof\tplan\tassets | 9.2 | 59.1 |

The	components	of	net	periodic	benefit	cost	and	other	amounts	recognized	in	"Other	comprehensive	income	(loss)"	("OCI")	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Net\tperiodic\tbenefit\tcost: |  |  |  |
| Service\tcost | $21.6 | $23.3 | $21.3 |
| Interest\tcost | 49.6 | 47.7 | 44.7 |
| Expected\treturn\ton\tplan\tassets | (64.5) | (61.3) | (56.7) |
| Amortization\tof\tprior\tservice\tcost | 1.2 | 1.3 | 1.5 |
| Amortization\tof\tunrecognized\tloss | 7.2 | 11.8 | 10.3 |
| Amortization\tof\tnet\ttransition\tasset | (0.2) | (0.2) | (0.3) |
| Settlement\tloss\trecognized | 0.6 | 0.9 | — |
| Net\tperiodic\tbenefit\tcost | 15.5 | 23.5 | $20.8 |
| Other\tchanges\tin\tbenefit\tobligations\trecognized\tin\tOCI: |  |  |  |
| Prior\tservice\tcost | (1.0) | 5.4 |  |
| Net\tloss\t(gain) | (47.5) | 101.6 |  |
| Transition\tasset | 0.1 | (0.2) |  |
| Total\trecognized\tin\tOCI | (48.4) | 106.8 |  |
| Total\trecognized\tin\tnet\tperiodic\tbenefit\tcost\tand\tOCI | $(32.9) | $130.3 |  |

Snap-on	expects	to	recognize	as	components	of	net	periodic	benefit	cost	in	2008	the	following	amounts	included	in	AOCI	as	of	December	29,	2007:

| (Amounts	in	millions) | Amount |
| :--- | :--- |
| Amortization\tof\tprior\tservice\tcost | $(1.0) |
| Amortization\tof\tunrecognized\tloss | (1.4) |
| Amortization\tof\tnet\ttransition\tasset | 0.1 |
| Total\tto\tbe\trecognized\tin\tnet\tperiodic\tbenefit\tcost | $(2.3) |

The	worldwide	weighted-average	assumptions	used	to	determine	Snap-on's	full-year	pension	costs	are	as	follows:

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Discount\trate | 5.6% | 5.3% | 5.7% |
| Expected\tlong-term\trate\tof\treturn\ton\tplan\tassets | 8.2% | 8.2% | 8.3% |
| Rate\tof\tcompensation\tincrease | 3.1% | 3.1% | 3.1% |

The	worldwide	weighted-average	assumptions	used	to	determine	Snap-on's	projected	benefit	obligation	as	of	fiscal	year-end	2007	and	2006	are	as	follows:

|  | 2007 | 2006 |
| :--- | :--- | :--- |
| Discount\trate | 6.3% | 5.6% |
| Rate\tof\tcompensation\tincrease | 3.1% | 3.1% |

Snap-on	uses	the	last	day	of	its	fiscal	year	end	as	the	measurement	date	for	the	majority	of	its	plans.	Snap-on	expects	to	make	contributions	of	$10.0	million	to	its foreign	pension	plans	and	$1.2	million	to	its	domestic	pension	plans	in	2008.	Depending	on	market	and	other	conditions,	Snap-on	may	elect	to	make	discretionary	cash contributions	to	its	domestic	pension	plans	in	2008.

The	following	benefit	payments,	which	reflect	expected	future	service,	are	expected	to	be	paid	as	follows:

| (Amounts	in	millions) | Amount |
| :--- | :--- |
| 2008 | $44.5 |
| 2009 | 45.8 |
| 2010 | 48.7 |
| 2011 | 52.1 |
| 2012 | 53.1 |
| 2013-2017 | 314.9 |

Snap-on's	domestic	pension	plans'	weighted-average	asset	allocation	at	December	29,	2007,	and	December	30,	2006,	by	asset	category	and	fair	value	of	plan	assets	are as	follows:

| Asset	category: | Target | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Equity\tsecurities | 46% | 47% | 51% |
| Debt\tsecurities\tand\tcash | 33% | 36% | 33% |
| Real\testate\tand\tother\treal\tassets | 11% | 11% | 11% |
| Other | 10% | 6% | 5% |
| Total | 100% | 100% | 100% |
| Fair\tvalue\tof\tplan\tassets\t(Amounts\tin\tmillions) |  | $744.6 | $713.5 |

Snap-on's	domestic	pension	plans	have	a	long-term	investment	horizon	and	a	total	return	strategy	that	emphasizes	a	capital	growth	objective.	The	long-term	investment performance	objective	for	Snap-on's	domestic	plan	assets	is	to	achieve	net	of	expense	returns	that	meet	or	exceed	the	8.5%	domestic	long-term,	rate-of-return-on-assets assumption	used	for	reporting	purposes.

The	basis	for	determining	the	overall	expected	long-term,	rate-of-return-on-assets	assumption	applies	a	nominal	returns	forecasting	method.	For	each	asset	class,	future returns	are	estimated	by	identifying	the	premium	of	riskier	asset	classes	over	lower	risk	alternatives.	The	methodology	constructs	expected	returns	using	a	"building block"	approach	to	the	individual	components	of	total	return.	These	forecasts	are	stated	in	both	nominal	and	real	(after	inflation)	terms.	This	process	first	considers	the long-term	historical	return	premium	based	on	the	longest	set	of	data	available	for	each	asset	class.	These	premiums	are	then	adjusted	based	on	current	relative	valuation levels	and	macro-economic	conditions.

For	risk	and	correlation	assumptions,	the	actual	experience	for	each	asset	class	is	reviewed	for	the	longest	time	period	available.	Expected	relationships	for	a	10	to	20 year	time	horizon	are	determined	based	upon	historical	results,	with	adjustments	made	for	material	changes.	For	example,	expected	correlations	for	international	equities relative	to	U.S.	equities	are	higher	than	historical	averages	due	to	the	integration	of	the	global	economy.

Investments	are	broadly	diversified	to	attempt	to	minimize	the	risk	of	large	losses.	Since	asset	allocation	is	a	key	determinant	of	expected	investment	returns,	assets	are periodically	rebalanced	to	the	targeted	allocation	to	correct	significant	deviations	from	the	asset	allocation	policy	that	are	caused	by	market	fluctuations	and	cash	flow.

Snap-on	has	adopted	a	strategic	asset	allocation	policy	that	is	intended	to	offer	the	highest	probability	of	achieving	the	long-term	investment	return	goal	with	the	lowest level	of	risk.	Asset/liability	studies	are	conducted	periodically	to	determine	if	any	revisions	to	the	strategic	asset	allocation	policy	are	necessary.

Snap-on's	foreign	pension	plans'	weighted-average	asset	allocation	by	asset	category	and	fair	value	of	plan	assets	at	December	29,	2007,	and	December	30,	2006,	are	as follows:

| Asset	category: | Target | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Equity\tsecurities | 53% | 54% | 60% |
| Debt\tsecurities\tand\tcash | 42% | 42% | 38% |
| Real\testate\tand\tother\treal\tassets | — | — | — |
| Other | 5% | 4% | 2% |
| Total | 100% | 100% | 100% |
| Fair\tvalue\tof\tplan\tassets\t(Amounts\tin\tmillions) |  | $116.0 | $95.6 |

Snap-on's	primary	investment	objective	for	its	foreign	pension	plan	assets	is	to	meet	the	projected	obligations	to	the	beneficiaries	over	a	long	period	of	time,	and	to	do so	in	a	manner	that	is	consistent	with	the	company's	risk	tolerance.	The	foreign	asset	allocation	policies	consider	the	company's	financial	strength	and	long-term	asset class	risk/return	expectations,	since	the	obligations	are	long	term	in	nature.	The	assets	are	well	diversified	and	are	managed	locally	by	professional	investment	firms.

The	expected	long-term	rate	of	return	on	foreign	plan	assets	reflects	management's	expectations	of	long-term	average	rates	of	return	on	funds	invested	to	provide benefits	included	in	the	projected	benefit	obligations.	The	expected	return	is	based	on	the	outlook	for	inflation,	fixed	income	returns	and	equity	returns,	while	also considering	historical	returns,	asset	allocation	and	investment	strategy.

Snap-on	has	several	401(k)	plans	covering	certain	U.S.	employees.	Snap-on's	employer	match	to	the	401(k)	plans	is	made	with	cash	contributions.	For	2007,	2006	and 2005,	Snap-on	recognized	$4.2	million,	$2.7	million	and	$2.4	million,	respectively,	of	expense	related	to	its	401(k)	plans.

# Note	12:	Retiree	Health	Care

Snap-on	provides	certain	health	care	benefits	for	certain	retired	U.S.	employees.	The	majority	of	Snap-on's	U.S.	employees	become	eligible	for	those	benefits	if	they reach	early	retirement	age	while	working	for	Snap-on;	however,	the	age	and	service	requirements	for	eligibility	under	the	plans	have	been	increased	for	certain employees	hired	on	and	after	specified	dates	since	1992.	Generally,	most	plans	pay	stated	percentages	of	covered	expenses	after	a	deductible	is	met.	There	are	several plan	designs,	with	more	recent	retirees	being	covered	under	a	comprehensive	major	medical	plan.	In	determining	benefits,	the	plans	take	into	consideration	payments	by Medicare	and	other	insurance	coverage.

For	employees	retiring	under	the	comprehensive	major	medical	plans,	retiree	contributions	are	required,	and	these	plans	contain	provisions	allowing	for	benefit	and coverage	changes.	The	plans	require	retirees	to	contribute	either	the	full	cost	of	the	coverage	or	amounts	estimated	to	exceed	a	capped	per-retiree	annual	cost commitment	by	Snap-on.	Most	employees	hired	since	1994	are	required	to	pay	the	full	cost.

Snap-on	contributed	$14.5	million	to	a	Voluntary	Employees	Beneficiary	Association	("VEBA")	trust	in	2007	for	the	funding	of	existing	postretirement	health	care benefits	for	certain	non-salaried	retirees	in	the	United	States;	all	other	retiree	health	care	plans	are	unfunded.

Effective	January	1,	2006,	Snap-on	established	individual,	unfunded	bookkeeping	accounts	equal	to	the	actuarial	present	value	of	the	capped	per-retiree	annual	cost	for certain	U.S.	individuals	retiring	after	1988.	Retirees	are	able	to	self-direct	the	spending	of	their	account	and	may	consume,	for	qualifying	medical	expenses,	the	account balance	at	their	discretion.	With	the	expected	reduction	in	these	individual	accounts,	liabilities	and	expense	in	future	years	are	expected	to	decline.	This	plan	change	was recognized	as	a	negative	plan	amendment	that	reduced	the	December	30,	2005,	benefit	obligation	by	approximately	$2.0	million.	The	$2.0	million	benefit	obligation reduction	is	being	amortized	to	income	over	five	years.

Snap-on	recognizes	postretirement	health	care	expense	in	accordance	with	SFAS	No.	106,	"Employers'	Accounting	for	Postretirement	Benefits	Other	than	Pensions."

The	status	of	Snap-on's	U.S.	postretirement	health	care	plans	is	as	follows:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Change\tin\tbenefit\tobligation: |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $76.0 | $86.2 |
| Service\tcost | 0.4 | 0.5 |
| Interest\tcost | 4.3 | 4.2 |
| Plan\tparticipants'\tcontributions | 4.7 | 3.6 |
| Plan\tcurtailment | 0.6 | — |
| Benefits\tpaid | (10.3) | (10.1) |
| Actuarial\t(gain)\tloss | 0.1 | (8.4) |
| Benefit\tobligation\tat\tend\tof\tyear | $75.8 | $76.0 |

| Change	in	plan	assets: |  |  |
| :--- | :--- | :--- |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $— $— | $— $— |
| Plan\tparticipants'\tcontributions | 4.7 | 3.6 |
| Employer\tcontributions | 20.1 | 6.5 |
| Actual\treturn\ton\tVEBA\tplan\tassets | 0.2 | — |
| Benefits\tpaid | (10.3) | (10.1) |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | $14.7 | $— |
| Unfunded\tstatus\tat\tend\tof\tyear | $(61.1) | $(76.0) |

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Deferred\tincome\ttax\tassets | $(5.4) | $(6.1) |
| Accrued\tbenefits | 7.3 | 6.4 |
| Retiree\thealth\tcare\tbenefits | 53.8 | 69.6 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | 8.6 | 9.8 |

The	amounts	included	in	AOCI	on	the	accompanying	Consolidated	Balance	Sheets	are	as	follows:

The	components	of	net	periodic	benefit	cost	and	other	amounts	recognized	in	OCI	are	as	follows:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Net\tperiodic\tbenefit\tcost: |  |  |  |
| Service\tcost | $0.4 | $0.5 | $0.7 |
| Interest\tcost | 4.3 | 4.2 | 4.8 |
| Amortization\tof\tprior\tservice\tcredit | (0.4) | (0.4) | — |
| Amortization\tof\tunrecognized\tgain | (1.1) | (1.1) | — |
| Net\tperiodic\tbenefit\tcost | 3.2 | 3.2 | $5.5 |
| Other\tchanges\tin\tbenefit\tobligations\trecognized\tin\tOCI: |  |  |  |
| Prior\tservice\tcost | 0.3 | (1.0) |  |
| Net\tloss\t(gain) | 0.9 | (8.8) |  |
| Total\trecognized\tin\tOCI | 1.2 | (9.8) |  |
| Total\trecognized\tin\tnet\tperiodic\tbenefit\tcost\tand\tOCI | $4.4 | $(6.6) |  |

Snap-on	expects	to	recognize	$1.0	million	of	unrecognized	gain	included	in	AOCI	as	of	December	29,	2007,	in	net	periodic	benefit	cost	in	2008.

The	weighted-average	discount	rates	used	to	determine	Snap-on's	postretirement	health	care	expense	are	as	follows:

The	actuarial	calculation	assumes	a	health	care	cost	trend	rate	of	9.0%	in	2008,	decreasing	gradually	to	6.0%	in	2011	and	thereafter.	As	of	December	29,	2007,	a	one- percentage-point	increase	in	the	health	care	cost	trend	rate	for	future	years	would	increase	the	accumulated	postretirement	benefit	obligation	by	$1.9	million	and	the aggregate	of	the	service	cost	and	interest	cost	components	by	$0.1	million.	Conversely,	a	one-percentage-point	decrease	in	the	health	care	cost	trend	rate	for	future	years would	decrease	the	accumulated	postretirement	benefit	obligation	by	$0.9	million	and	the	aggregate	of	the	service	cost	and	interest	cost	components	by	$0.1	million.

| (Amounts	in	millions) | Amount |
| :--- | :--- |
| 2008 | $7.3 |
| 2009 | 7.9 |
| 2010 | 8.3 |
| 2011 | 8.2 |
| 2012 | 8.1 |
| 2013-2017 | 30.9 |

# Note	13:	Stock-based	Compensation	and	Other	Stock	Plans

The	2001	Incentive	Stock	and	Awards	Plan,	as	Amended	("2001	Plan"),	which	was	approved	by	shareholders	in	2001	and	amended	and	approved	by	shareholders	in 2006,	provides	for	the	grant	of	stock	options,	performance	share	awards	and	restricted	stock	awards.	As	of	December	29,	2007,	the	2001	Plan	had	3,427,179	shares available	for	future	grants;	the	company	uses	treasury	stock	to	deliver	shares	under	these	plans.

Effective	January	1,	2006,	the	company	adopted	SFAS	No.	123(R)	using	the	modified	prospective	method.	SFAS	No.	123(R)	requires	entities	to	recognize	the	cost	of employee	services	in	exchange	for	awards	of	equity	instruments	based	on	the	grant-date	fair	value	of	those	awards	(with	limited	exceptions).	That	cost,	based	on	the estimated	number	of	awards	that	are	expected	to	vest,	is	recognized	over	the	period	during	which	the	employee	is	required	to	provide	the	service	in	exchange	for	the award.	No	compensation	cost	is	recognized	for	awards	for	which	the	employees	do	not	render	the	requisite	service.	Upon	adoption,	the	grant-date	fair	value	of	employee

share	options	and	similar	instruments	was	estimated	using	the	Black-Scholes	valuation	model.	Due	to	the	prospective	adoption	of	SFAS	No.	123(R),	results	for	prior periods	have	not	been	restated.

The	compensation	cost	charged	against	income	for	the	2001	Plan	was	$19.0	million	in	2007	and	$16.6	million	in	2006.	The	company	recorded	$5.5	million	of	expense related	to	stock	appreciation	rights,	performance	share	awards	and	restricted	stock	awards	that	were	valued	using	the	intrinsic	method	under	Accounting	Principles Board	("APB")	Opinion	No.	25,	"Accounting	for	Stock	Issued	to	Employees,"	and	related	interpretations	for	the	fiscal	year	ended	December	31,	2005.	Cash	received from	option	exercises	under	all	share-based	payment	arrangements	was	$39.2	million	in	2007,	$89.5	million	in	2006	and	$31.1	million	in	2005.	The	tax	benefit	realized from	the	exercise	of	the	share-based	payment	arrangements	was	$7.1	million	in	2007,	$11.4	million	in	2006	and	$3.1	million	in	2005.

# Stock	Options

Stock	options	are	granted	with	an	exercise	price	equal	to	the	market	value	of	a	share	of	common	stock	on	the	date	of	grant	and	have	a	contractual	term	of	ten	years. Grants	made	prior	to	2007	vest	in	two	annual	increments	beginning	on	the	first	anniversary	following	the	grant	date	of	the	award.	Beginning	in	2007,	all	stock	option grants	vest	over	a	three-year	period,	beginning	on	the	first	anniversary	following	the	grant	date	of	the	award,	with	the	exception	of	the	2007	grant	to	the	company's former	Chief	Executive	Officer,	which	vested	upon	his	retirement	on	December	18,	2007.

The	fair	value	of	each	stock	option	award	is	estimated	on	the	date	of	grant	using	the	Black-Scholes	valuation	model.	The	company	uses	historical	data	regarding	stock option	exercise	behaviors	for	different	participating	groups	to	estimate	the	expected	term	of	options	granted	(based	on	the	period	of	time	that	options	granted	are expected	to	be	outstanding).	Expected	volatility	is	based	on	the	historical	volatility	of	the	company's	stock	for	the	length	of	time	corresponding	to	the	expected	term	of the	option.	The	expected	dividend	yield	is	based	on	the	company's	historical	dividend	payments.	The	risk-free	interest	rate	is	based	on	the	U.S.	treasury	yield	curve	on the	grant	date	for	the	expected	term	of	the	option.	The	following	weighted-average	assumptions	were	used	in	calculating	the	fair	value	of	stock	options	granted	during 2007,	2006	and	2005,	using	the	Black-Scholes	valuation	model:

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Expected\tterm\tof\toption\t(in\tyears) | 6.31 | 6.50 | 7.12 |
| Expected\tvolatility\tfactor | 25.75% | 28.73% | 30.15% |
| Expected\tdividend\tyield | 3.05% | 3.23% | 3.40% |
| Risk-free\tinterest\trate | 4.68% | 4.59% | 4.09% |

A	summary	of	stock	option	activity	as	of	December	29,	2007,	is	presented	below:

|  |  |  | Remaining | Aggregate |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Exercise | Contractual | Intrinsic |
|  | Shares | Price\tper | Term* | Value |
|  | (in\tmillions) | Share* | (in\tyears) | (in\tmillions) |
| Outstanding\tat\tDecember\t30,\t2006 | 2.8 | $33.39 |  |  |
| Granted | 0.7 | 50.40 |  |  |
| Exercised | (1.0) | 33.23 |  |  |
| Forfeited\tor\texpired | (0.1) | 44.98 |  |  |
| Outstanding\tat\tDecember\t29,\t2007 | 2.4 | 37.98 | 6.71 | $25.3 |
| Exercisable\tat\tDecember\t29,\t2007 | 1.5 | 32.40 | 5.44 | 23.3 |

# *	Weighted-average

As	of	December	29,	2007,	there	was	approximately	$4.4	million	of	unrecognized	compensation	cost	related	to	non-vested	stock	option	compensation	arrangements granted	under	the	2001	Plan	that	is	expected	to	be	recognized	as	a	charge	to	earnings	over	a	weighted-average	period	of	1.7	years.

# Performance	Awards

Performance	awards	granted	in	2007	under	the	2001	Plan	are	earned	over	a	contractual	term	of	three	years.	Vesting	of	the	performance	awards	will	be	dependent	upon performance	relative	to	pre-defined	goals	for	revenue	growth	and	return	on	assets	for	the	years	2007	through	2009.	Based	on	Snap-on's	performance	relative	to	these goals,	the	recipient	can	earn	up	to	100%	of	the	performance	awards.	For	performance	achieved	above	a	certain	level,	the	recipient	may	earn	additional	cash	awards	not to	exceed	50%	of	the	number	of	performance	awards	initially	granted.	Cash	awards	related	to	the	2007	performance	shares	represent	the	right	to	receive	cash	of	$50.22 per	unit,	which	was	the	fair	market	value	of	the	performance	awards	at	the	date	of	grant.

Performance	awards	granted	in	2006	under	the	2001	Plan	are	earned	over	a	contractual	term	of	three	years.	Vesting	of	the	performance	awards	will	be	dependent	upon performance	relative	to	pre-defined	goals	for	revenue	growth	and	return	on	assets	for	the	years	2006	through	2008.	Based	on	Snap-on's	performance	relative	to	these goals,	the	recipient	can	earn	up	to	100%	of	the	performance	awards.	For	performance	achieved	above	a	certain	level,	the	recipient	may	earn	additional	cash	awards	not to	exceed	50%	of	the	number	of	performance	awards	initially	granted.	Cash	awards	related	to	the	2006	performance	shares	represent	the	right	to	receive	cash	of	$39.35 per	unit,	which	was	the	fair	market	value	of	the	performance	awards	at	the	date	of	grant.

Performance	awards	granted	in	2005	under	the	2001	Plan	vested	as	of	December	29,	2007.	Vesting	of	the	awards	was	dependent	upon	performance	relative	to	pre- defined	goals	for	revenue	growth	and	return	on	assets	for	the	years	2005	through	2007.	Based	on	Snap-on's	performance	relative	to	these	goals,	the	recipient	earned 100%	of	the	performance	awards	with	an	equal	number	of	cash	units	that	represented	the	right	to	receive	cash	of	$31.73	per	unit,	which	was	the	stock	price	on	the	date of	grant.	In	addition,	as	performance	was	achieved	above	targeted	levels,	the	recipients	earned	additional	cash	units	equal	to	approximately	68%	of	the	cash	match.

The	fair	value	of	each	performance	award	is	estimated	on	the	date	of	grant	using	the	Black-Scholes	valuation	model.	The	company	uses	the	vesting	period	of	the performance	awards	as	the	expected	term	of	performance	awards	granted.	Expected	volatility	is	based	on	the	historical	volatility	of	the	company's	stock	for	the	length	of time	corresponding	to	the	expected	term	of	the	performance	award.	The	risk-free	interest	rate	is	based	on	the	U.S.	treasury	yield	curve	on	the	grant	date	for	the	length	of time	corresponding	to	the	expected	term	of	the	performance	award.	The	following	weighted-average	assumptions	were	used	in	calculating	the	fair	value	of	performance awards	granted	during	the	last	three	years	using	the	Black-Scholes	valuation	model.

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Expected\tterm\tof\tperformance\taward\t(in\tyears) | 3.0 | 3.0 | 3.0 |
| Expected\tvolatility\tfactor | 20.52% | 20.54% | 25.37% |
| Risk-free\tinterest\trate | 4.73% | 4.67% | 3.91% |

The	weighted-average	grant	date	fair	value	of	performance	awards	granted	during	2007,	2006	and	2005	was	$50.22,	$35.74	and	$28.69,	respectively.	Performance	share awards	vest	only	at	the	end	of	the	performance-award	period.	Vested	performance	share	awards	totaled	0.1	million	shares	as	of	both	December	29,	2007,	and December	31,	2005;	no	performance	share	awards	vested	during	2006.	A	summary	of	the	status	of	the	company's	non-vested	performance	share	awards	as	of December	29,	2007,	and	changes	during	2007,	are	as	follows:

| December	29,	2007,	and	changes	during	2007,	are	as	follows: |  |  |
| :--- | :--- | :--- |
|  | Shares |  |
|  | (in\tmillions) | Fair\tValue* |
| Non-vested\tperformance\tawards\tat\tDecember\t30,\t2006 | 0.4 | $33.52 |
| Granted | 0.1 | 50.22 |
| Vested | (0.1) | 31.73 |
| Forfeited\tor\texpired | (0.1) | — |
| Non-vested\tperformance\tawards\tat\tDecember\t29,\t2007 | 0.3 | $42.20 |

# *	Weighted-average	fair	value	at	date	of	grant

As	of	December	29,	2007,	there	was	approximately	$11.1	million	of	unrecognized	compensation	cost	related	to	non-vested	performance	share	awards	granted	under	the 2001	Plan	that	is	expected	to	be	recognized	as	a	charge	to	earnings	over	a	weighted-average	period	of	1.7	years.

# Stock	Appreciation	Rights	("SARs")

The	company	also	issues	SARs	to	certain	key	non-U.S.	employees.	SARs	are	granted	with	an	exercise	price	equal	to	the	market	value	of	a	share	of	Snap-on's	common stock	on	the	date	of	grant	and	have	a	contractual	term	of	ten	years	and,	for	SARs	granted	prior	to	2007,	vest	in	two	annual	increments	beginning	on	the	first	anniversary following	the	grant	date	of	the	award.	SARs	granted	in	2007	vest	over	a	three-year	period	beginning	on	the	first	anniversary	following	the	grant	date	of	the	award.	SARs provide	for	the	cash	payment	of	the	excess	of	the	fair	market	value	of	Snap-on's	common	stock	price	on	the	date	of	exercise	over	the	grant	price.	SARs	have	no	effect	on dilutive	shares	or	shares	outstanding	as	any	appreciation	of	Snap-on's	common	stock	value	over	the	grant	price	is	paid	in	cash	and	not	in	common	stock.

The	fair	value	of	each	SAR	is	remeasured	each	reporting	period	using	the	Black-Scholes	valuation	model.	The	company	uses	historical	data	regarding	SARs	exercise behaviors	for	different	participating	groups	to	estimate	the	expected	term	of	the	SARs	granted	based	on	the	period	of	time	that	similar	instruments	granted	are	expected to	be	outstanding.	Expected	volatility	is	based	on	the	historical	volatility	of	the	company's	stock	for	the	length	of	time	corresponding	to	the	expected	term	of	the	SARs. The	expected	dividend	yield	is	based	on	the	company's	historical	dividend	payments.	The	risk-free	interest	rate	is	based	on	the	U.S.	treasury	yield	curve	in	effect	on	the reporting	date	for	the	length	of	time	corresponding	to	the	expected	term	of	the	SARs.	The	following	weighted-average	assumptions	were	used	in	calculating	the	fair	value of	SARs	granted	during	2007	and	2006,	using	the	Black-Scholes	valuation	model.

|  | 2007 | 2006 |
| :--- | :--- | :--- |
| Expected\tterm\tof\tSARs\t(in\tyears) | 5.17 | 5.44 |
| Expected\tvolatility\tfactor | 23.73% | 24.32% |
| Expected\tdividend\tyield | 2.88% | 3.08% |
| Risk-free\tinterest\trate | 3.45% | 4.70% |

The	total	intrinsic	value	of	SARs	exercised	during	both	2007	and	2006	was	$1.8	million.	The	total	fair	value	of	SARs	vested	during	2007	and	2006	was	$1.5	million	and $1.4	million,	respectively.	A	summary	of	the	status	of	the	company's	non-vested	SARs	as	of	December	29,	2007,	and	changes	during	2007,	are	as	follows:

|  | (in	millions) | Fair	Value* |
| :--- | :--- | :--- |
| Non-vested\tSARs\tat\tDecember\t30,\t2006 | 0.1 | $13.85 |
| Granted | 0.1 | 8.61 |
| Vested | — | — |
| Forfeited\tor\texpired | — | — |
| Non-vested\tSARs\tat\tDecember\t29,\t2007 | 0.2 | $9.24 |

As	of	December	29,	2007,	there	is	approximately	$0.8	million	of	unrecognized	compensation	cost	related	to	non-vested	SARs	granted	under	the	2001	Plan	that	is expected	to	be	recognized	as	a	charge	to	earnings	over	a	weighted-average	period	of	1.8	years.

# Restricted	Stock	Awards

The	company	granted	awards	of	17,868	shares	of	restricted	stock	to	the	members	of	the	Board	of	Directors	("Board")	during	the	fiscal	year	ended	December	29,	2007. All	restrictions	will	lapse	upon	the	recipient's	retirement	from	the	Board,	death	or	a	change	in	control.

Directors'	Fee	Plan:	Under	the	Directors'	Fee	Plan,	non-employee	directors	may	elect	up	to	100%	of	their	fees	and	retainer	in	shares	of	Snap-on's	common	stock. Directors	may	elect	to	defer	receipt	of	all	or	part	of	these	shares.	Issuances	under	the	Directors'	Fee	Plan	totaled	2,968	shares	in	2007,	2,999	shares	in	2006	and	7,289 shares	in	2005.	Additionally,	receipt	of	5,147	shares,	4,101	shares	and	3,923	shares	was	deferred	in	2007,	2006	and	2005,	respectively.	At	December	29,	2007,	shares reserved	for	issuance	to	directors	under	this	plan	totaled	169,535	shares.

Employee	Stock	Purchase	Plan:	Employees	of	Snap-on	are	eligible	to	participate	in	an	employee	stock	purchase	plan.	The	employee	purchase	price	of	the	common stock	is	the	lesser	of	the	mean	of	the	high	and	low	price	of	the	stock	on	the	beginning	date	(May	15)	or	ending	date	(the	following	May	14)	of	each	plan	year.	For	2007, 2006	and	2005,	issuances	under	the	employee	stock	ownership	plan	totaled	49,327	shares,	35,227	shares	and	30,876	shares,	respectively.	At	December	29,	2007,	shares reserved	for	issuance	to	employees	under	this	plan	totaled	302,344	shares	and	Snap-on	held	contributions	of	approximately	$0.7	million	for	the	purchase	of	common stock	by	employees.	Employees	are	able	to	withdraw	from	the	plan	and	receive	all	contributions	made	during	the	plan	year.	Compensation	expense	for	plan	participants in	2007,	2006	and	2005	was	not	material.

Dealer	Stock	Purchase	Plan:	Franchisees	are	eligible	to	participate	in	a	dealer	stock	purchase	plan.	The	franchisee	purchase	price	of	the	common	stock	is	the	lesser	of the	mean	of	the	high	and	low	price	of	the	stock	on	the	beginning	date	(May	15)	or	ending	date	(the	following	May	14)	of	each	plan	year.	For	2007,	2006	and	2005, issuances	under	the	dealer	stock	purchase	plan	totaled	43,009	shares,	48,444	shares	and	43,911	shares,	respectively.	At	December	29,	2007,	shares	reserved	for	issuance

to	franchisees	under	this	plan	totaled	229,966	shares	and	Snap-on	held	franchisee	contributions	of	approximately	$1.0	million	for	the	purchase	of	common	stock	by franchisees.	Franchisees	are	able	to	withdraw	from	the	plan	and	receive	all	contributions	made	during	the	plan	year.	Expense	for	plan	participants	in	2007,	2006	and 2005	was	not	material.

Dividend	Reinvestment	and	Stock	Purchase	Plan:	Under	this	plan,	participating	shareholders	may	invest	the	cash	dividends	from	all	or	a	portion	of	their	common stock	to	buy	additional	shares.	The	program	also	permits	new	investors	and	current	shareholders	to	make	additional	contributions.	For	2007,	2006	and	2005,	issuances under	the	dividend	reinvestment	and	stock	purchase	plan	totaled	21,730	shares,	25,279	shares	and	30,941	shares,	respectively.	At	December	29,	2007,	shares	available for	purchase	under	this	plan	totaled	1,586,852	shares.

# Fair	Value	Disclosures	–	Prior	to	Adoption	of	SFAS	No.	123(R)

Prior	to	January	1,	2006,	the	company	accounted	for	its	share-based	instruments	under	the	recognition	and	measurement	provisions	of	APB	No.	25	and	related interpretations.	No	stock-based	employee	compensation	costs	related	to	stock	options	were	recognized	prior	to	2006.	The	following	table	illustrates	the	effect	on	net earnings	and	earnings	per	share	for	the	fiscal	year	ended	December	31,	2005,	as	if	Snap-on	had	applied	the	fair	value	recognition	provisions	of	SFAS	No.	123	to	stock- based	employee	compensation	using	the	Black-Scholes	valuation	model:

# Note	14:	Capital	Stock

Snap-on	has	undertaken	repurchases	of	Snap-on	common	stock	from	time	to	time	to	offset	dilution	created	by	shares	issued	for	employee	and	dealer	stock	purchase plans,	stock	options,	and	other	corporate	purposes,	as	well	as	to	repurchase	shares	when	market	conditions	are	favorable.	Snap-on	repurchased	1,860,000	shares	in	2007, following	the	repurchase	of	2,616,618	shares	in	2006	and	912,100	shares	in	2005.	As	of	the	end	of	2007,	Snap-on	has	remaining	availability	to	repurchase	up	to	an additional	$116.8	million	in	common	stock	pursuant	to	the	Board's	authorizations.	The	purchase	of	Snap-on	common	stock	is	at	the	company's	discretion,	subject	to prevailing	financial	and	market	conditions.	In	2007,	Snap-on's	average	common	stock	repurchase	price	was	approximately	$50.77	per	share.

In	August	1997,	the	Board	issued	a	dividend	of	one	preferred	stock	purchase	right	for	each	share	of	Snap-on's	outstanding	common	stock.	The	rights	were	exercisable only	if	a	person	or	group	acquired	15%	or	more	of	Snap-on's	common	stock	("Acquiring	Person")	or	publicly	announced	a	tender	offer	to	become	an	Acquiring	Person. Each	right	could	then	be	exercised	by	a	shareholder,	other	than	an	acquiring	person,	to	purchase	shares	of	Snap-on	common	stock,	or	a	surviving	corporation,	on advantageous	terms.	The	rights	expired	on	November	3,	2007.

Snap-on	created	a	Grantor	Stock	Trust	("GST")	in	1998	and	sold	7.1	million	shares	of	treasury	stock	to	the	GST.	The	sale	of	these	shares	had	no	impact	on	shareholders' equity	or	on	Snap-on's	Consolidated	Statements	of	Earnings.	As	of	fiscal	2006	year	end,	the	GST	held	407,485	shares	of	common	stock.	In	fiscal	2007,	the	GST distributed	all	remaining	shares	of	common	stock;	no	shares	remained	in	the	GST	as	of	December	29,	2007.

The	GST	served	as	a	funding	mechanism	for	certain	benefit	programs	and	compensation	arrangements,	including	the	2001	Plan	and	employee	and	dealer	stock	purchase plans.	The	GST	is	disclosed	as	"Grantor	Stock	Trust	at	fair	market	value"	on	the	accompanying	Consolidated	Balance	Sheets.	Shares	owned	by	the	GST	were	accounted for	as	a	reduction	to	shareholders'	equity	until	used	in	connection	with	employee	benefits.	Each	period,	the	shares	owned	by	the	GST	were	valued	at	the	closing	market price,	with	corresponding	changes	in	the	GST	balance	reflected	in	additional	paid-in	capital.

# Note	15:	Commitments	and	Contingencies

Snap-on	leases	facilities	and	office	equipment	under	non-cancelable	operating	and	capital	leases	that	extend	for	varying	amounts	of	time.	Snap-on's	future	minimum lease	commitments	under	these	leases,	net	of	sub-lease	rental	income,	are	as	follows:

| (Amounts	in	millions) | Amount |
| :--- | :--- |
| 2008 | $30.3 |
| 2009 | 21.1 |
| 2010 | 12.4 |
| 2011 | 8.8 |
| 2012 | 7.1 |
| 2013\tand\tthereafter | 44.7 |

Rent	expense,	net	of	sub-lease	rental	income,	for	worldwide	facilities	and	office	equipment	was	$32.1	million,	$26.8	million	and	$29.7	million	in	2007,	2006	and	2005, respectively.

Snap-on	has	a	multi-year,	$4.5	million	purchase	commitment	with	one	of	its	suppliers.

Snap-on	has	credit	risk	exposure	for	certain	SOC-originated	contracts	with	recourse	provisions	against	Snap-on	(primarily	for	franchisee	van	loans).	At	December	29, 2007,	and	December	30,	2006,	$16.1	million	and	$16.2	million	of	loans,	with	terms	ranging	from	six	months	to	ten	years,	have	a	primary	recourse	provision	to	Snap-on if	the	loans	become	more	than	90	days	past	due.	The	asset	value	of	the	collateral	underlying	these	recourse	loans	would	serve	to	mitigate	Snap-on's	loss	in	the	event	of default.	The	estimated	fair	value	of	the	guarantees	for	all	loan	originations	with	recourse	as	of	December	29,	2007,	was	not	material.

Snap-on	provides	product	warranties	for	specific	product	lines	and	accrues	for	estimated	future	warranty	cost	in	the	period	in	which	the	sale	is	recorded.	Snap-on calculates	its	accrual	requirements	based	on	historic	warranty	loss	experience	that	is	periodically	adjusted	for	recent	actual	experience,	including	the	timing	of	claims

during	the	warranty	period	and	actual	costs	incurred.	The	following	summarizes	Snap-on's	product	warranty	accrual	activity	for	2007	and	2006:

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Warranty\taccrual: |  |  |
| Beginning\tof\tyear | $17.3 | $16.8 |
| Additions | 14.0 | 15.5 |
| Usage | (14.2) | (15.0) |
| End\tof\tyear | $17.1 | $17.3 |

On	May	16,	2006,	Snap-on	reached	an	agreement	to	settle	certain	legal	matters	related	to	certain	then	current	and	former	franchisees	on	a	class	basis.	The	court	gave	its final	approval	to	the	class	settlement	on	October	27,	2006.	Under	the	terms	of	the	settlement,	Snap-on	agreed	to	make	payments	to	claimants	and	class	counsel,	plus incur	certain	other	costs	and	expenses.	Snap-on	recorded	a	$38.0	million	pretax	charge	in	2006	representing	its	best	estimate	to	settle	these	legal	matters.	The	majority of	the	settlement	funds,	including	payments	to	the	class	participants	made	in	the	first	quarter	of	2007,	have	been	disbursed.	Snap-on	has	not	admitted	any	wrongdoing	by way	of	this	settlement.

Snap-on	is	involved	in	various	other	legal	matters	that	are	being	litigated	and/or	settled	in	the	ordinary	course	of	business.	Although	it	is	not	possible	to	predict	the outcome	of	these	legal	matters,	management	believes	that	the	results	will	not	have	a	material	impact	on	Snap-on's	consolidated	financial	position	or	results	of operations.

# Note	16:	Discontinued	Operations

On	June	29,	2007,	Snap-on	sold	its	Sun	Electric	Systems	("SES")	business	based	in	the	Netherlands	to	Duinmaaijer	B.V.,	a	limited	liability	company	represented	by	an employee	of	SES,	for	a	nominal	cash	purchase	price.			SES's	primary	business	is	the	research,	development	and	manufacture	of	test	equipment	in	Europe	for	aircraft hydraulics.		Snap-on	divested	of	SES	as	it	deemed	SES	to	be	non-core	to	Snap-on's	ongoing	business	strategies.		The	anticipated	future	capital	and	other	resources necessary	to	be	expended	in	connection	with	the	SES	business	were	not	consistent	with	Snap-on's	growth	plans.	Certain	prior	year	amounts	were	reclassified	on	the accompanying	Consolidated	Statements	of	Earnings	to	reflect	the	sale	of	SES	as	"Discontinued	operations,	net	of	tax."

The	company	recorded	an	after-tax	loss	of	$8.0	million,	or	$0.14	per	diluted	share,	in	2007	related	to	the	sale	and	results	of	operations	of	SES.		For	segment	reporting purposes,	the	results	of	operations	of	SES	were	previously	included	in	the	Diagnostics	&	Information	Group.

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Net\tsales\tof\tSES | $9.9 | $18.3 | $27.6 |
| Loss\ton\tsale\tof\tSES | $(9.4) | $— $— | $— $— |
| Income\tfrom\toperations | 1.1 | 2.2 | 4.7 |
| Income\t(loss)\ton\tdiscontinued\toperations | $(8.3) | $2.2 | $4.7 |
| Income\ttax\tbenefit | 0.3 | — | — |
| Discontinued\toperations,\tnet\tof\ttax | $(8.0) | $2.2 | $4.7 |

# Note	17:	Other	Income	(Expense)

"Other	income	(expense)	–	net"	on	the	accompanying	Consolidated	Statements	of	Earnings	consists	of	the	following:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $9.1 | $6.7 | $3.0 |
| Foreign\texchange\tgain\t(loss) | (1.7) | (1.2) | 0.7 |
| Other | (1.9) | (0.2) | (0.6) |
| Total\tother\tincome\t(expense)\t–\tnet | $5.5 | $5.3 | $3.1 |

# Note	18:	Segments

Snap-on's	business	segments	are	based	on	the	organization	structure	used	by	management	for	making	operating	and	investment	decisions	and	for	assessing	performance. Snap-on's	reportable	business	segments	include:	(i)	the	Commercial	&	Industrial	Group;	(ii)	the	Snap-on	Tools	Group;	(iii)	the	Diagnostics	&	Information	Group;	and (iv)	Financial	Services.	The	Commercial	&	Industrial	Group	consists	of	the	business	operations	providing	tools	and	equipment	products	and	equipment	repair	services	to a	broad	range	of	industrial	and	commercial	customers	worldwide	through	direct,	distributor	and	other	non-franchise	distribution	channels.	The	Snap-on	Tools	Group consists	of	the	business	operations	serving	the	worldwide	franchise	van	channel.	The	Diagnostics	&	Information	Group	consists	of	the	business	operations	providing diagnostics	equipment,	vehicle	service	information,	business	management	systems,	electronic	parts	catalogs,	and	other	solutions	for	vehicle	service	to	customers	in	the worldwide	vehicle	service	and	repair	marketplace.	Financial	Services	consists	of	the	business	operations	of	SOC	and	Snap-on's	wholly	owned	finance	subsidiaries	in those	international	markets	where	Snap-on	has	franchise	operations.

Snap-on	evaluates	the	performance	of	its	reportable	segments	based	on	segment	revenues	and	operating	earnings.	For	the	Commercial	&	Industrial,	Snap-on	Tools,	and Diagnostics	&	Information	Groups,	segment	net	sales	include	both	external	and	intersegment	net	sales.	Snap-on	accounts	for	intersegment	sales	and	transfers	based primarily	on	standard	costs	with	reasonable	mark-ups	established	between	the	segments.	Identifiable	assets	by	segment	are	those	assets	used	in	the	respective	reportable segment's	operations.	Intersegment	amounts	are	eliminated	to	arrive	at	consolidated	financial	results.

Neither	Snap-on	nor	any	of	its	segments,	except	Financial	Services,	depend	on	any	single	customer,	small	group	of	customers	or	government	for	more	than	10%	of	its revenues.	As	a	result	of	SOC's	relationship	with	CIT,	Snap-on's	Financial	Services	business	segment	depends	on	CIT	for	more	than	10%	of	its	revenues.

# Financial	data	by	segment:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Net\tsales: |  |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $1,350.6 | $1,192.0 | $1,129.2 |
| Snap-on\tTools\tGroup | 1,107.7 | 1,025.0 | 994.5 |
| Diagnostics\t&amp;\tInformation\tGroup |  |  |  |
|  | 650.6 | 506.2 | 405.1 |
| Segment\tnet\tsales | 3,108.9 | 2,723.2 | 2,528.8 |

| Intersegment	eliminations | (267.7) | (268.1) | (247.8) |
| :--- | :--- | :--- | :--- |
| Total\tnet\tsales | $2,841.2 | $2,455.1 | $2,281.0 |
| Financial\tservices\trevenue | 63.0 | 49.0 | 53.6 |
| Total\trevenues | $2,904.2 | $2,504.1 | $2,334.6 |
| Operating\tearnings: |  |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $131.5 | $106.2 | $69.6 |
| Snap-on\tTools\tGroup | 125.1 | 37.6* | 82.2 |
| Diagnostics\t&amp;\tInformation\tGroup | 99.5 | 59.8 | 42.3 |
| Financial\tServices | 22.4 | 13.0 | 15.7 |
| Segment\toperating\tearnings | 378.5 | 216.6* | 209.8 |
| Corporate | (53.7) | (53.8) | (46.4) |
| Operating\tearnings | 324.8 | 162.8* | 163.4 |
| Interest\texpense | (46.1) | (20.6) | (21.7) |
| Other\tincome\t(expense)\t-\tnet | 5.5 | 5.3 | 3.1 |
| Earnings\tbefore\tincome\ttaxes,\tminority\tinterests |  |  |  |
| and\tequity\tearnings\t(loss) | $284.2 | $147.5* | $144.8 |

*	Includes	$38.0	million	pretax	litigation	settlement	charge.

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Assets: |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $1,113.9 | $1,020.9 |
| Snap-on\tTools\tGroup | 429.9 | 413.4 |
| Diagnostics\t&amp;\tInformation\tGroup | 808.2 | 863.5 |
| Financial\tServices | 171.5 | 156.5 |
| Total\tassets\tfrom\treportable\tsegments | 2,523.5 | 2,454.3 |
| Corporate | 284.5 | 233.5 |
| Elimination\tof\tintersegment\treceivables | (42.9) | (33.3) |
| Total\tassets | $2,765.1 | $2,654.5 |

# Financial	data	by	segment	(continued):

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Capital\texpenditures: |  |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $22.5 | $17.5 | $11.9 |
| Snap-on\tTools\tGroup | 31.8 | 24.7 | 19.9 |
| Diagnostics\t&amp;\tInformation\tGroup | 7.2 | 6.6 | 6.9 |
| Financial\tServices | 0.4 | 1.6 | 1.1 |
| Total\tfrom\treportable\tsegments | 61.9 | 50.4 | 39.8 |
| Corporate | — | 0.1 | 0.3 |
| Total\tcapital\texpenditures | $61.9 | $50.5 | $40.1 |
| Depreciation\tand\tamortization: |  |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $24.8 | $25.7 | $25.5 |
| Snap-on\tTools\tGroup | 17.1 | 15.8 | 15.6 |
| Diagnostics\t&amp;\tInformation\tGroup | 32.0 | 7.9 | 7.6 |
| Financial\tServices | 1.4 | 1.7 | 1.6 |
| Total\tfrom\treportable\tsegments | 75.3 | 51.1 | 50.3 |
| Corporate | 0.4 | 0.8 | 1.9 |
| Total\tdepreciation\tand\tamortization | $75.7 | $51.9 | $52.2 |

# Geographic	regions:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Total\trevenue:* |  |  |  |
| United\tStates | $1,655.0 | $1,410.1 | $1,343.2 |
| Europe | 847.7 | 746.5 | 671.3 |
| All\tother | 401.5 | 347.5 | 320.1 |
| Total\trevenue | $2,904.2 | $2,504.1 | $2,334.6 |

| (Amounts	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Long-lived\tassets:** |  |  |
| United\tStates | $936.5 | $971.5 |
| Sweden | 153.5 | 159.1 |
| All\tother | 268.4 | 200.4 |
| Total\tlong-lived\tassets | $1,358.4 | $1,331.0 |

* Revenue	is	attributed	to	countries	based	on	the	origin	of	the	sale.

** Long-lived	assets	consist	of	Property	and	equipment-net,	Goodwill	and	Other	intangibles-net.

Products	and	services:	Snap-on	derives	net	sales	from	a	broad	line	of	products	and	complementary	services	that	are	grouped	into	three	categories:	(i)	tools; (ii)	diagnostics	and	repair	information;	and	(iii)	equipment.	The	tools	category	includes	Snap-on's	hand	tools,	power	tools,	tool	storage	units,	saws,	and	cutting	and pruning	tools	product	offerings.	The	diagnostics	and	repair	information	category	includes	handheld	and	PC-based	diagnostics	products,	service	and	repair	information products,	diagnostic	software	solutions,	including	electronic	parts	catalogs,	business	management	and	other

solutions	to	help	dealerships	manage	and	track	performance.	The	equipment	category	includes	solutions	for	the	diagnosis	and	service	of	automotive	and	industrial equipment.	Snap-on	also	derives	revenue	from	financing	its	products	through	SOC	and	through	its	wholly	owned	finance	subsidiaries.	Snap-on	utilizes	various financing	programs	to	facilitate	the	sales	of	its	products.	Further	product	line	information	is	not	presented	as	it	is	not	practicable	to	do	so.	The	following	table	shows	the consolidated	net	sales	and	revenues	of	these	product	groups	in	the	last	three	years:

| (Amounts	in	millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Net\tsales: |  |  |  |
| Tools | $1,632.2 | $1,453.1 | $1,387.3 |
| Diagnostics\tand\trepair\tinformation | 647.6 | 499.5 | 405.8 |
| Equipment | 561.4 | 502.5 | 487.9 |
| Total\tnet\tsales | $2,841.2 | $2,455.1 | $2,281.0 |
| Financial\tservices\trevenue | 63.0 | 49.0 | 53.6 |
| Total\trevenue | $2,904.2 | $2,504.1 | $2,334.6 |

# Note	19:	Quarterly	Data	(Unaudited)

|  | First | Second | Third | Fourth |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions,\texcept\tper\tshare\tdata) | Quarter | Quarter | Quarter | Quarter | Total |
| 2007 |  |  |  |  |  |
| Net\tsales | $705.7 | $711.9 | $680.7 | $742.9 | $2,841.2 |
| Gross\tprofit | 309.9 | 322.4 | 300.9 | 333.4 | 1,266.6 |
| Financial\tservices\trevenue | 13.4 | 14.8 | 15.8 | 19.0 | 63.0 |
| Financial\tservices\texpenses | (9.7) | (9.7) | (10.2) | (11.0) | (40.6) |
| Total\trevenue | 719.1 | 726.7 | 696.5 | 761.9 | 2,904.2 |
| Net\tearnings\tfrom\tcontinuing\toperations | 38.0 | 52.8 | 41.1 | 57.3 | 189.2 |
| Net\tearnings | 39.0 | 43.8 | 41.1 | 57.3 | 181.2 |
| Earnings\tper\tshare\t–\tbasic | 0.67 | 0.75 | 0.71 | 1.00 | 3.13 |
| Earnings\tper\tshare\t–\tdiluted | 0.66 | 0.74 | 0.70 | 0.98 | 3.09 |
| Cash\tdividends\tpaid\tper\tshare | 0.27 | 0.27 | 0.27 | 0.30 | 1.11 |
| 2006 |  |  |  |  |  |
| Net\tsales | $587.3 | $621.7 | $594.7 | $651.4 | $2,455.1 |
| Gross\tprofit | 258.6 | 279.9 | 258.6 | 282.7 | 1,079.8 |
| Financial\tservices\trevenue | 11.2 | 11.7 | 11.3 | 14.8 | 49.0 |
| Financial\tservices\texpenses | (9.2) | (8.7) | (8.3) | (9.8) | (36.0) |
| Total\trevenue | 598.5 | 633.4 | 606.0 | 666.2 | 2,504.1 |
| Net\tearnings\tfrom\tcontinuing\toperations | 21.3 | 11.7 | 27.6 | 37.3 | 97.9 |
| Net\tearnings | 22.1 | 11.8 | 28.2 | 38.0 | 100.1 |
| Earnings\tper\tshare\t—\tbasic | 0.38 | 0.20 | 0.48 | 0.65 | 1.72 |
| Earnings\tper\tshare\t—\tdiluted | 0.37 | 0.20 | 0.48 | 0.64 | 1.69 |
| Cash\tdividends\tpaid\tper\tshare | 0.27 | 0.27 | 0.27 | 0.27 | 1.08 |

Note	–	Net	earnings	in	the	2006	second	quarter	and	full	year	included	a	$23.4	million	after-tax	charge	($0.40	per	diluted	share)	related	to	the	resolution	of	the	franchisee	litigation	settlement.

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	Snap-on	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the undersigned,	thereunto	duly	authorized.

Nicholas	T.	Pinchuk,	President	and	Chief	Executive	Officer

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	Snap-on	and	in	the capacities	and	on	the	date	indicated.

Vice	President	and	Controller

# By: /s/	Bruce	S.	Chelberg

# Bruce	S.	Chelberg,	Director

| By: | /s/	Bruce	S.	Chelberg | Date: | February	19,	2008 |
| :--- | :--- | :--- | :--- |
|  | Bruce\tS.\tChelberg,\tDirector |  |  |
| By: | /s/\tKaren\tL.\tDaniel | Date: | February\t19,\t2008 |
|  | Karen\tL.\tDaniel,\tDirector |  |  |
| By: | /s/\tRoxanne\tJ.\tDecyk | Date: | February\t19,\t2008 |
|  | Roxanne\tJ.\tDecyk,\tDirector |  |  |
| By: | /s/\tJohn\tF.\tFiedler | Date: | February\t19,\t2008 |
|  | John\tF.\tFiedler,\tDirector |  |  |
| By: | /s/\tJames\tP.\tHolden | Date: | February\t19,\t2008 |
|  | James\tP.\tHolden,\tDirector |  |  |
| By: | /s/\tArthur\tL.\tKelly | Date: | February\t19,\t2008 |
|  | Arthur\tL.\tKelly,\tDirector |  |  |
| By: | /s/\tW.\tDudley\tLehman | Date: | February\t19,\t2008 |
|  | W.\tDudley\tLehman,\tDirector |  |  |
| By: | /s/\tJack\tD.\tMichaels | Date: | February\t19,\t2008 |
|  | Jack\tD.\tMichaels,\tDirector |  |  |
| By: | /s/\tNicholas\tT.\tPinchuk | Date: | February\t19,\t2008 |
|  | Nicholas\tT.\tPinchuk,\tDirector |  |  |
| By: | /s/\tEdward\tH.\tRensi | Date: | February\t19,\t2008 |
|  | Edward\tH.\tRensi,\tDirector |  |  |
| By: | /s/\tRichard\tF.\tTeerlink | Date: | February\t19,\t2008 |

(3) (a) Restated	Certificate	of	Incorporation	of	the	Corporation	as	amended	through	April	25,	1997	(incorporated	by	reference	to	Exhibit	3(a)	to	Snap-on's Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	January	3,	1998	(Commission	File	No.	1-7724))

(b) Amended	and	Restated	Bylaws	of	the	Corporation	adopted	on	November	1,	2007	(incorporated	by	reference	to	Exhibit	3.1	to	Snap-on's	Current	Report on	Form	8-K	dated	November	1,	2007	(Commission	File	No.	1-7724))

	(4) (a) Indenture,	dated	as	of	January	8,	2007,	between	Snap-on	Incorporated	and	U.S.	Bank	National	Association	as	trustee	(incorporated	by	reference	to Exhibit	(4)(b)	to	Form	S-3	Registration	Statement	(Registration	No.	333-139863))

Except	for	the	foregoing,	Snap-on	and	its	subsidiaries	have	no	unregistered	long-term	debt	agreement	for	which	the	related	outstanding	debt	exceeds	10%	of consolidated	total	assets	as	of	December	29,	2007.	Copies	of	debt	instruments	for	which	the	related	debt	is	less	than	10%	of	consolidated	total	assets	will	be	furnished	to the	Commission	upon	request.

# (10) Material	Contracts

(a) Amended	and	Restated	Snap-on	Incorporated	1986	Incentive	Stock	Program	(incorporated	by	reference	to	Exhibit	(10)(a)	to	Snap-on's	Annual	Report on	Form	10-K	for	the	fiscal	year	ended	December	31,	2005	(Commission File	No.	1-7724))**

(b) Amended	and	Restated	Snap-on	Incorporated	2001	Incentive	Stock	and	Awards	Plan	(Amended	and	Restated	as	of	April	27,	2006)	(incorporated	by reference	to	Appendix	A	to	Snap-on's	Proxy	Statement	on	Schedule	14A	filed	on	March	13,	2006	(Commission	File	No.	1-7724))**

(c)(i) Form	of	Restated	Senior	Officer	Agreement	between	the	Corporation	and	each	of	Alan	T.	Biland,	Martin	M.	Ellen,	Susan	F.	Marrinan,	Jeanne	M. Moreno	and	Nicholas	T.	Pinchuk	(incorporated	by	reference	to	Exhibit	10(c)	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period ended	March	30,	2002	(Commission	File	No.	1-7724))**	[expired	and	superseded	on	January	31,	2008]

(ii) Form	of	Restated	Executive	Agreement	dated	February	1,	2008,	between	the	Corporation	and	each	of	Nicholas	T.	Pinchuk,	Martin	M.	Ellen,	Thomas	J. Ward,	Iain	Boyd,	Constance	R.	Johnsen,	Thomas	L.	Kassouf,	and	Jeanne	M.	Moreno	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Current Report	on	Form	8-K	dated	January	31,	2008	(Commission	File	No.	1-7724))**

(d)(i) Form	of	Restated	Executive	Agreement	between	the	Corporation	and	each	of	Richard	V.	Caskey,	Gary	S.	Henning,	Blaine	A.	Metzger,	and	Thomas	J. Ward	(incorporated	by	reference	to	Exhibit	10(d)	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	March	30,	2002 (Commission	File	No.	1-7724))**	[expired	and	superseded	on	January	31,	2008]

(e) Form	of	Indemnification	Agreement	between	the	Corporation	and	each	of	Nicholas	T.	Pinchuk	and	Martin	M.	Ellen	effective	October	24,	1997 (incorporated	by	reference	to	Exhibit	10(d)	to	Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	January	3,	1998	(Commission	File No.	1-7724))	**

(f) Amended	and	Restated	Snap-on	Incorporated	Directors'	1993	Fee	Plan	(as	amended	on	August	3,	2006)	(incorporated	by	reference	to	Exhibit	10.1	to Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	September	30,	2006	(Commission	File	No.	1-7724))**

(g) Snap-on	Incorporated	Deferred	Compensation	Plan	(as	amended	through	August	21,	2003)	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	September	27,	2003	(Commission	File	No.	1-7724))**

(h) Snap-on	Incorporated	Supplemental	Retirement	Plan	for	Officers	(as	amended	and	effective	October	23,	2003)	(incorporated	by	reference	to Exhibit	10(h)	to	Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	January	3,	2004	(Commission	File	No.	1-7724))**

(i) Form	of	Share	and	Performance	Award	Agreement	(incorporated	by	reference	to	Exhibit	10.2	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the quarterly	period	ended	March	31,	2007	(Commission	File	No.	1-7724))**

(j) Form	of	Deferred	Share	and	Performance	Award	Agreement	(incorporated	by	reference	to	Exhibit	10(d)	to	Snap-on's	Quarterly	Report	on	Form	10-Q for	the	quarterly	period	ended	March	29,	2003	(Commission	File	No.	1-7724))**

(k) Agreement	between	the	Company	and	Jack	D.	Michaels	effective	as	of	December	3,	2004	(incorporated	by	reference	to	Exhibit	10.2	of	Snap-on's Current	Report	on	Form	8-K	dated	December	3,	2004	(Commission	File	No.	1-7724))**	[expired	by	its	terms	in	December	2007]

(m)(i) Letter	agreement	between	the	Corporation	and	Mr.	Pinchuk	dated	June	4,	2002	(incorporated	by	reference	to	Exhibit	10(b)	to	Snap-on's	Quarterly Report	on	Form	10-Q	for	the	quarterly	period	ended	June	29,	2002	(Commission File	No.	1-7724))**	[terminated	in	December	2007]

(ii) Letter	agreement	between	the	Corporation	and	Mr.	Pinchuk	dated	December	18,	2007	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Current Report	on	Form	8-K	dated	December	18,	2007	(Commission	File	No.	1-7724))**

(n)(i) Excerpts	from	the	offer	letter	agreement	dated	September	18,	1990,	between	Snap-on	Tools	Company	and	Susan	F.	Marrinan	(incorporated	by reference	to	Exhibit	10(o)	to	Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	30,	2006	(Commission	File	No.	1-7724))** [terminated	on	August	31,	2007]

(ii) Letter	agreement	between	the	Company	and	Susan	F.	Marrinan	dated	August	2,	2007	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Current Report	on	Form	8-K	dated	August	31,	2007	(Commission	File	No.	1-7724))**

(o) Termination	Agreement	and	General	Release,	dated	April	29,	2007,	by	and	between	Snap-on	Incorporated	and	Alan	T.	Biland	(incorporated	by reference	to	Exhibit	10.3	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2007	(Commission	File	No.	1-7724))**

(p) Amended	and	Restated	Benefit	Trust	Agreement	between	the	Corporation	and	The	Northern	Trust	Company,	dated	as	of	July	2,	1998,	and	amended	and restated	as	of	March	17,	2000	(incorporated	by	reference	to	Snap-on's	Current	Report	on	Form	8-K	dated	March	17,	2000	(Commission	File	No.	1- 7724))**

(q)(i) Five	Year	Credit	Agreement	between	Snap-on	Incorporated,	Citigroup	Global	Markets	Inc.	and	Citibank,	N.A.	(incorporated	by	reference	to Exhibit	10.2	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	October	2,	2004	(Commission	File	No.	1-7724))	[superseded on	August	10,	2007]

(ii) Amended	and	Restated	Five	Year	Credit	Agreement,	dated	as	of	August	10,	2007,	among	Snap-on	Incorporated	and	the	banks,	financial	institutions	and other	institutional	lenders	listed	on	the	signature	pages	thereof,	J.P.	Morgan	Securities,	Inc.	and	Citigroup	Global	Markets	Inc.,	as	joint	lead	arrangers and	joint	book	runners,	and	JPMorgan	Chase	Bank,	N.A.,	as	administrative	agent	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Current Report	on

(r) Snap-on	Incorporated	Section	406	of	the	Sarbanes-Oxley	Act	Code	of	Ethics	(incorporated	by	reference	to	Exhibit	10(aa)	to	Snap-on's	Annual	Report on	Form	10-K	for	the	fiscal	year	ended	January	3,	2004	(Commission	File	No.	1-7724))

(s) Stock	and	Asset	Purchase	Agreement,	dated	as	of	October	20,	2006,	by	and	between	Snap-on	Incorporated	and	ProQuest	Company	(incorporated	by reference	to	Exhibit	(10.1)	of	Snap-on's	Current	Report	on	Form	8-K	dated	October	20,	2006	(Commission	File	No.	1-7724))

(t) Amendment	No.	1	to	Stock	and	Asset	Purchase	Agreement,	dated	as	of	November	1,	2006,	by	and	between	ProQuest	Company	and	Snap-on Incorporated	(incorporated	by	reference	to	Exhibit	(10.1)	of	Snap-on's	Current	Report	on	Form	8-K	dated	November	1,	2006	(Commission	File	No.	1- 7724))

(u)(i) Sale	and	Purchase	Agreement,	dated	as	of	May	18,	2007,	between	Snap-on	Europe	Holding	B.V.,	Snap-on	UK	Holdings,	Ltd.	and	Duinmaaijer	B.V. (incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2007	(Commission	File No.	1-7724))

(ii) Letter	Agreement,	dated	as	of	June	28,	2007,	between	Duinmaaijer	B.V.	and	Snap-on	Europe	Holding	B.V.	(incorporated	by	reference	to	Exhibit	10.2 to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2007	(Commission	File	No.	1-7724))

(v) Underwriting	Agreement,	dated	January	9,	2007,	among	Snap-on	Incorporated,	CitiGroup	Global	Markets	Inc.,	Credit	Suisse	Securities	(USA),	LLC and	J.P.	Morgan	Securities	Inc.,	as	representatives	of	the	several	underwriters	named	therein	(incorporated	by	reference	to	Exhibit	1.1	to	Snap-on's Current	Report	on	Form

(w) DeSantis	Class	Settlement	Agreement	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period ended	July	1,	2006	(Commission	File	No.	1-7724))

(12)									Computation	of	Ratio	of	Earnings	to	Fixed	Charges

(23)									Consent	of	Independent	Registered	Public	Accounting	Firm

(31.1)						Certification	of	the	Chief	Executive	Officer	pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002 (31.2)						Certification	of	the	Principal	Financial	Officer	pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002

(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	2002 (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	2002

*						Filed	electronically	or	incorporated	by	reference	as	an	exhibit	to	this	Annual	Report	on	Form	10-K.	Copies	of	any	materials	the	company	files	with	the	SEC	can	also	be	obtained	free	of	charge through	the	SEC's	Web	site	at	www.sec.gov.	The	SEC's	Public	Reference	Room	can	be	contacted	at	100	F	Street,	N.E.,	Washington,	D.C.	20549,	or	by	calling	the	SEC's	Public	Reference Room	at	1-800-732-0330.

**				Represents	a	management	compensatory	plan	or	agreement.



Question: what is the roi in s&p500 if the investment was made at the end of 2005 and sold at the end of 2007?
Calculation: a = 182.87 - 149.70
b = a / 149.70 
answer = b * 100
Answer: 22.2%