# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

# For	the	fiscal	year	ended	December	29,	2018,	or

☐ 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	80th	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		☒		No		☐

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

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		☒				No		☐

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	every	Interactive	Data	File	required	to	be	submitted	pursuant	to	Rule	405	of	Regulation	S-T (§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	such	files).				Yes		☒				No		☐

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

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

Large	accelerated	filer		☒				Accelerated	filer		☐				Non-accelerated	filer		☐

Smaller	reporting	company		☐					Emerging	growth	company		☐

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

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

The	aggregate	market	value	of	voting	and	non-voting	common	equity	held	by	non-affiliates	(excludes	626,160	shares	held	by	directors	and	executive	officers)	computed by	reference	to	the	price	($160.72)	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,	2018)	was	$9.0	billion.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Part	III	of	this	Annual	Report	on	Form	10-K	incorporates	by	reference	certain	information	that	will	be	set	forth	in	Snap-on's	Proxy	Statement,	which	is	expected	to	first be	mailed	to	shareholders	on	or	about	March	11,	2019,	prepared	for	the	Annual	Meeting	of	Shareholders	scheduled	for	April	25,	2019.

# TABLE	OF	CONTENTS

# PART		I

| PART		I |  |  |
| :--- | :--- | :--- |
| Item\t\t1 | Business | 4 |
| Item\t\t1A | Risk\tFactors | 11 |
| Item\t\t1B | Unresolved\tStaff\tComments | 19 |
| Item\t\t2 | Properties | 19 |
| Item\t\t3 | Legal\tProceedings | 21 |
| Item\t\t4 | Mine\tSafety\tDisclosures | 21 |
| PART\t\tII |  |  |
| Item\t\t5 | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 21 |
| Item\t\t6 | Selected\tFinancial\tData | 24 |
| Item\t\t7 | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 26 |
| Item\t\t7A | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 55 |
| Item\t\t8 | Financial\tStatements\tand\tSupplementary\tData | 56 |
| Item\t\t9 | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 56 |
| Item\t\t9A | Controls\tand\tProcedures | 56 |
| Item\t\t9B | Other\tInformation | 59 |
| PART\t\tIII |  |  |
| Item\t\t10 | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 59 |
| Item\t\t11 | Executive\tCompensation | 60 |
| Item\t\t12 | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 60 |
| Item\t\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 60 |
| Item\t\t14 | Principal\tAccounting\tFees\tand\tServices | 60 |
| PART\t\tIV |  |  |
| Item\t\t15 | Exhibits,\tFinancial\tStatement\tSchedules | 61 |
| Item\t\t16 | Form\t10-K\tSummary | 64 |
| Signatures |  | 118 |
| Consent\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | Consent\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 123 |
| Certifications |  | 124 |

# 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	value	through	its	Snap-on	Value	Creation	Processes,	including	its	ability	to	realize	efficiencies	and	savings	from	its	rapid continuous	improvement	and	other	cost	reduction	initiatives,	improve	workforce	productivity,	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/or	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	help	improve	their	sales	and	profitability,	introduce	successful	new	products,	successfully	pursue,	complete	and	integrate	acquisitions, as	well	as	its	ability	to	withstand	disruption	arising	from	natural	disasters,	planned	facility	closures	or	other	labor	interruptions,	the	effects	of	external	negative	factors, including	adverse	developments	in	world	financial	markets,	weakness	in	certain	areas	of	the	global	economy	(including	as	a	result	of	the	United	Kingdom's	pending	exit from	the	European	Union),	and	significant	changes	in	the	current	competitive	environment,	inflation,	interest	rates	and	other	monetary	and	market	fluctuations,	changes in	tax	rates,	laws	and	regulations	as	well	as	uncertainty	surrounding	potential	changes,	and	the	impact	of	energy	and	raw	material	supply	and	pricing,	including	steel	and gasoline,	as	well	as	tariffs	and	other	trade	protection	measures	put	in	place	by	the	U.S.	or	other	countries,	the	amount,	rate	and	growth	of	Snap-on's	general	and administrative	expenses,	including	health	care	and	postretirement	costs,	continuing	and	potentially	increasing	required	contributions	to	pension	and	postretirement	plans, the	impacts	of	non-strategic	business	and/or	product	line	rationalizations,	and	the	effects	on	business	as	a	result	of	new	legislation,	regulations	or	government-related developments	or	issues,	risks	associated	with	data	security	and	technological	systems	and	protections,	potential	reputational	damages	and	costs	related	to	litigation	as well	as	an	inability	to	assure	that	costs	will	be	reduced	or	eliminated	on	appeal,	and	other	world	or	local	events	outside	Snap-on's	control,	including	terrorist	disruptions. 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	("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.

# Fiscal	Year

2018	ANNUAL	REPORT

# 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,	equipment,	diagnostics,	repair	information	and	systems	solutions	for	professional	users	performing	critical	tasks. Products	and	services	include	hand	and	power	tools,	tool	storage,	diagnostics	software,	handheld	and	PC-based	diagnostic	products,	information	and	management systems,	shop	equipment	and	other	solutions	for	vehicle	dealerships	and	repair	centers,	as	well	as	for	customers	in	industries,	such	as	aviation	and	aerospace,	agriculture, construction,	government	and	military,	mining,	natural	resources,	power	generation	and	technical	education.	Snap-on	also	derives	income	from	various	financing programs	designed	to	facilitate	the	sales	of	its	products	and	support	its	franchise	business.

Snap-on	markets	its	products	and	brands	worldwide	through	multiple	sales	distribution	channels	in	more	than	130	countries.	Snap-on's	largest	geographic	markets include	the	United	States,	Europe,	Canada	and	Asia	Pacific.	Snap-on	reaches	its	customers	through	the	company's	franchised,	company-direct,	distributor	and	internet channels.

The	company	began	with	the	development	of	the	original	Snap-on	interchangeable	socket	set	in	1920	and	subsequently	pioneered	mobile	tool	distribution	in	the automotive	repair	market,	where	well	stocked	vans	sell	to	professional	vehicle	technicians	at	their	place	of	business.	Today,	Snap-on	defines	its	value	proposition	more broadly,	extending	its	reach	"beyond	the	garage"	to	deliver	a	broad	array	of	unique	solutions	that	make	work	easier	for	serious	professionals	performing	critical	tasks. The	company's	"coherent	growth"	strategy	focuses	on	developing	and	expanding	its	professional	customer	base	in	its	legacy	automotive	market,	as	well	as	in	adjacent markets,	additional	geographies	and	other	areas,	including	in	critical	industries,	where	the	cost	and	penalties	for	failure	can	be	high.	In	addition	to	its	coherent	growth strategy,	Snap-on	is	committed	to	its	"Value	Creation	Processes"	–	a	set	of	strategic	principles	and	processes	designed	to	create	value	and	employed	in	the	areas	of (i)	safety;	(ii)	quality;	(iii)	customer	connection;	(iv)	innovation;	and	(v)	rapid	continuous	improvement	("RCI").	Snap-on's	RCI	initiatives	employ	a	structured	set	of tools	and	processes	across	multiple	businesses	and	geographies	intended	to	eliminate	waste	and	improve	operations.	Savings	from	Snap-on's	RCI	initiatives	reflect benefits	from	a	wide	variety	of	ongoing	efficiency,	productivity	and	process	improvements,	including	savings	generated	from	product	design	cost	reductions,	improved manufacturing	line	set-up	and	change-over	practices,	lower-cost	sourcing	initiatives	and	facility	consolidations.

Snap-on's	 primary	 customer	 segments	 include:	 (i)	 commercial	 and	 industrial	 customers,	 including	 professionals	 in	 critical	 industries	 and	 emerging	 markets; (ii)	professional	vehicle	repair	technicians	who	purchase	products	through	the	company's	mobile	tool	distribution	network;	and	(iii)	other	professional	customers	related to	 vehicle	 repair,	 including	 owners	 and	 managers	 of	 independent	 and	 original	 equipment	 manufacturer	 ("OEM")	 dealership	 service	 and	 repair	 shops	 ("OEM dealerships").	 Snap-on's	 Financial	 Services	 customer	 segment	 includes:	 (i)	 franchisees'	 customers,	 principally	 serving	 vehicle	 repair	 technicians,	 and	 Snap-on customers	who	require	financing	for	the	purchase	or	lease	of	tools	and	diagnostics	and	equipment	products	on	an	extended-term	payment	plan;	and	(ii)	franchisees	who require	financing	for	vehicle	leases	and	business	loans.

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	are:	(i)	the	Commercial	&	Industrial	Group;	(ii)	the	Snap-on	Tools	Group;	(iii)	the	Repair	Systems	&	Information	Group;	and (iv)	Financial	Services.	The	Commercial	&	Industrial	Group	consists	of	business	operations	serving	a	broad	range	of	industrial	and	commercial	customers	worldwide, including	customers	in	the	aerospace,	natural	resources,	government,	power	generation,	transportation	and	technical	education	market	segments	(collectively,	"critical industries"),	primarily	through	direct	and	distributor	channels.	The	Snap-on	Tools	Group	consists	of	business	operations	primarily	serving	vehicle	service	and	repair technicians	through	the	company's	worldwide	mobile	tool	distribution	channel.	The	Repair	Systems	&	Information	Group	consists	of	business	operations	serving	other professional	vehicle	repair	customers	worldwide,	primarily	owners	and	managers	of	independent	repair	shops	and	OEM	dealerships,	through	direct	and	distributor channels.	Financial	Services	consists	of	the	business	operations	of	Snap-on	Credit	LLC	("SOC"),	the	company's	financial	services	business	in	the	United	States,	and Snap-on's	other	financial	services	subsidiaries	in	those	international	markets	where	Snap-on	has	franchise	operations.	See	Note	19	to	the	Consolidated	Financial Statements	for	information	on	business	segments	and	foreign	operations.

# SNAP-ON	INCORPORATED

Snap-on	evaluates	the	performance	of	its	operating	segments	based	on	segment	revenues,	including	both	external	and	intersegment	net	sales,	and	segment	operating earnings.	 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.	Corporate	assets	consist	of	cash	and	cash	equivalents	(excluding cash	held	at	Financial	Services),	deferred	income	taxes	and	certain	other	assets.	Intersegment	amounts	are	eliminated	to	arrive	at	Snap-on's	consolidated	financial results.

# Recent	Acquisitions

On	January	31,	2018,	Snap-on	acquired	substantially	all	of	the	assets	of	George	A.	Sturdevant,	Inc.	(d/b/a	Fastorq)	for	a	cash	purchase	price	of	$3.0	million.	Fastorq, based	in	New	Caney,	Texas,	designs,	assembles	and	distributes	hydraulic	torque	and	hydraulic	tensioning	products	for	use	in	critical	industries.	The	acquisition	of	the Fastorq	product	line	complemented	and	increased	Snap-on's	existing	torque	product	offering	and	broadened	its	established	capabilities	in	serving	in	critical	industries. For	segment	reporting	purposes,	the	results	of	operations	and	assets	of	Fastorq	have	been	included	in	the	Commercial	&	Industrial	Group	since	the	acquisition	date.

On	July	28,	2017,	Snap-on	acquired	Torque	Control	Specialists	Pty	Ltd	("TCS")	for	a	cash	purchase	price	of	$3.6	million	(or	$3.5	million,	net	of	cash	acquired).	TCS, based	in	Adelaide,	Australia,	distributes	a	full	range	of	torque	products,	including	wrenches,	multipliers	and	calibrators,	for	use	in	critical	industries.	The	acquisition	of TCS	enhanced	and	expanded	Snap-on's	capabilities	in	providing	solutions	that	address	torque	requirements,	which	are	increasingly	essential	to	critical	mechanical performance.	For	segment	reporting	purposes,	the	results	of	operations	and	assets	of	TCS	have	been	included	in	the	Commercial	&	Industrial	Group	since	the	acquisition date.

On	May	4,	2017,	Snap-on	acquired	Norbar	Torque	Tools	Holdings	Limited,	along	with	its	U.S.	and	Chinese	joint	ventures	("Norbar"),	for	a	cash	purchase	price	of $71.6	million	(or	$69.9	million,	net	of	cash	acquired).	Norbar,	based	in	Banbury,	U.K.,	designs	and	manufactures	a	full	range	of	torque	products,	including	wrenches, multipliers	and	calibrators,	for	use	in	critical	industries.	The	acquisition	of	Norbar	enhanced	and	expanded	Snap-on's	capabilities	in	providing	solutions	that	address torque	requirements.	For	segment	reporting	purposes,	the	results	of	operations	and	assets	of	Norbar	have	been	included	in	the	Commercial	&	Industrial	Group	since	the acquisition	date.

On	January	30,	2017,	Snap-on	acquired	BTC	Global	Limited	("BTC")	for	a	cash	purchase	price	of	$9.2	million.	BTC,	based	in	Crewe,	U.K.,	designs	and	implements automotive	vehicle	inspection	and	management	software	for	OEM	franchise	repair	shops.	The	acquisition	of	BTC	enhanced	Snap-on's	capabilities	to	grow	enterprise revenues	and	add	increased	productivity	for	repair	workshops.	For	segment	reporting	purposes,	the	results	of	operations	and	assets	of	BTC	have	been	included	in	the Repair	Systems	&	Information	Group	since	the	acquisition	date.

On	November	16,	2016,	Snap-on	acquired	Ryeson	Corporation	(d/b/a	Sturtevant	Richmont)	for	a	cash	purchase	price	of	$13.0	million	(or	$12.6	million,	net	of	cash acquired).	Sturtevant	Richmont,	based	in	Carol	Stream,	Illinois,	designs,	manufactures	and	distributes	mechanical	and	electronic	torque	wrenches	as	well	as	wireless torque	error	proofing	systems	for	a	variety	of	industrial	applications.	The	acquisition	of	Sturtevant	Richmont	enhanced	and	expanded	Snap-on's	capabilities	in	providing solutions	that	address	torque	requirements.	For	segment	reporting	purposes,	the	results	of	operations	and	assets	of	Sturtevant	Richmont	have	been	included	in	the Commercial	&	Industrial	Group	since	the	acquisition	date.

On	October	31,	2016,	Snap-on	acquired	Car-O-Liner	Holding	AB	("Car-O-Liner")	for	a	cash	purchase	price	of	$152.0	million	(or	$148.1	million,	net	of	cash	acquired). Car-O-Liner,	based	in	Gothenburg,	Sweden,	designs	and	manufactures	collision	repair	equipment,	and	information	and	truck	alignment	systems.	The	acquisition	of	Car- O-Liner	complemented	and	increased	Snap-on's	existing	equipment	and	repair	and	service	information	product	offerings,	broadened	its	established	capabilities	in serving	vehicle	repair	facilities	and	further	expanded	the	company's	presence	with	repair	shop	owners	and	managers.	For	segment	reporting	purposes,	substantially	all of	Car-O-Liner's	results	of	operations	and	assets	have	been	included	in	the	Repair	Systems	&	Information	Group	since	the	acquisition	date,	with	the	remaining	portions included	in	the	Commercial	&	Industrial	Group.

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

# Information	Available	on	the	Company's	Website

Additional	 information	 regarding	 Snap-on	 and	 its	 products	 is	 available	 on	 the	 company's	 website	 at	www.snapon.com.	Snap-on	 is	not	 including	 the	 information contained	on	its	website	as	a	part	of,	or	incorporating	it	by	reference	into,	this	Annual	Report	on	Form	10-K.	Snap-on's	Annual	Reports	on	Form	10-K,	Quarterly Reports	on	Form	10-Q,	Proxy	Statements	on	Schedule	14A	and	Current	Reports	on	Form	8-K,	as	well	as	any	amendments	to	those	reports,	are	made	available	to	the public	at	no	charge	through	the	Investors	section	of	the	company's	website	at	www.snapon.com.	Snap-on	makes	such	material	available	on	its	website	as	soon	as reasonably	practicable	after	it	electronically	files	such	material	with,	or	furnishes	it	to,	the	Securities	and	Exchange	Commission	("SEC").	Copies	of	any	materials	the company	files	with	the	SEC	can	also	be	obtained	free	of	charge	through	the	SEC's	website	at	www.sec.gov.	In	addition,	Snap-on'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	the	company's	website.	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	website	at	www.snapon.com.

# Products	and	Services

# Tools;	Diagnostics,	Information	and	Management	Systems;	and	Equipment

Snap-on	 offers	 a	 broad	 line	 of	 products	 and	 complementary	 services	 that	 are	 grouped	 into	 three	 product	 categories:	 (i)	 tools;	 (ii)	 diagnostics,	 information	 and management	systems;	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:

|  |  | Net	Sales |  |
| :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | 2018 | 2017 | 2016 |
| Product\tCategory: |  |  |  |
| Tools | $2,021.2 | $1,946.7 | $1,899.2 |
| Diagnostics,\tinformation\tand\tmanagement\tsystems | 797.9 | 800.4 | 748.2 |
| Equipment | 921.6 | 939.8 | 783.0 |
|  | $3,740.7 | $3,686.9 | $3,430.4 |

The	tools	product	category	includes	hand	tools,	power	tools,	tool	storage	products	and	other	similar	products.	Hand	tools	include	wrenches,	sockets,	ratchet	wrenches, pliers,	screwdrivers,	punches	and	chisels,	saws	and	cutting	tools,	pruning	tools,	torque	measuring	instruments	and	other	similar	products.	Power	tools	include	cordless (battery),	pneumatic	(air),	hydraulic	and	corded	(electric)	tools,	such	as	impact	wrenches,	ratchets,	screwdrivers,	drills,	sanders,	grinders	and	similar	products.	Tool storage	includes	tool	chests,	roll	cabinets	and	other	similar	products.	For	many	industrial	customers,	Snap-on	creates	specific,	engineered	solutions,	including	facility- level	tool	control	and	asset	management	hardware	and	software,	custom	kits	in	a	wide	range	of	configurations,	and	custom-built	tools	designed	to	meet	customer requirements.	The	majority	of	products	are	manufactured	by	Snap-on	and,	in	completing	the	product	offering,	other	items	are	purchased	from	external	manufacturers.

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

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

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.

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:

# Financial	Services

Snap-on	also	generates	revenue	from	various	financing	programs	that	include:	(i)	installment	sales	and	lease	contracts	arising	from	franchisees'	customers	and	Snap-on customers	who	require	financing	for	the	purchase	or	lease	of	tools	and	diagnostic	and	equipment	products	on	an	extended-term	payment	plan;	and	(ii)	business	loans	and vehicle	leases	to	franchisees.	The	decision	to	finance	through	Snap-on	or	another	financing	source	is	solely	by	election	of	the	customer.	When	assessing	customers	for potential	financing,	Snap-on	considers	various	factors	regarding	ability	 to	pay,	 including	 the	customers'	financial	condition,	debt-servicing	ability,	past	payment experience,	and	credit	bureau	and	proprietary	Snap-on	credit	model	information,	as	well	as	the	value	of	the	underlying	collateral.

Snap-on	offers	financing	through	SOC	and	the	company's	international	finance	subsidiaries	in	those	markets	where	Snap-on	has	franchise	operations.	Financing	revenue from	contract	originations	is	recognized	over	the	life	of	the	underlying	contracts,	with	interest	computed	primarily	on	the	average	daily	balances	of	the	underlying contracts.

# 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	diagnostic	and	equipment	products	for	use	in their	work;	(ii)	other	professional	customers	related	to	vehicle	repair,	including	owners	and	managers	of	independent	repair	shops	and	OEM	dealerships	who	purchase tools	and	diagnostic	and	equipment	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,	designed	to	meet	technicians'	evolving	needs.	Snap- on's	mobile	tool	distribution	system	offers	technicians	the	convenience	of	purchasing	quality	tools	at	their	place	of	business	with	minimal	disruption	of	their	work routine.	Snap-on	also	provides	owners	and	managers	of	repair	shops,	where	technicians	work,	with	tools,	diagnostic	equipment,	and	repair	and	service	information, including	electronic	parts	catalogs	and	shop	management	products.	Snap-on's	OEM	facilitation	business	provides	OEMs	with	products	and	services	including	special and	essential	tools	as	well	as	consulting	and	facilitation	services,	which	include	product	procurement,	distribution	and	administrative	support	to	customers	for	their dealership	equipment	programs.

The	vehicle	service	and	repair	sector	is	characterized	by	an	increasing	rate	of	technological	change	within	motor	vehicles,	vehicle	population	growth	and	increasing vehicle	life,	and	the	resulting	effects	of	these	changes	on	the	businesses	of	both	our	suppliers	and	customers.	Snap-on	believes	it	is	a	meaningful	participant	in	the vehicle	service	and	repair	market	sector.

# Industrial	Sector

Snap-on	markets	its	products	and	services	globally	to	a	broad	cross-section	of	commercial	and	industrial	customers,	including	maintenance	and	repair	operations; manufacturing	and	assembly	facilities;	various	government	agencies,	facilities	and	operations,	including	military	operations;	schools	with	vocational	and	technical programs;	aviation	and	aerospace	operations;	oil	and	gas	developers;	mining	operations;	energy	and	power	generation;	equipment	fabricators	and	operators;	railroad manufacturing	and	maintenance;	customers	in	agriculture;	infrastructure	construction	companies;	and	other	customers	that	require	instrumentation,	service	tools	and/or equipment	for	their	products	and	business	needs.	The	industrial	sector	for	Snap-on	focuses	on	providing	value-added	products	and	services	to	an	increasingly	expanding global	base	of	customers	in	critical	industries.

The	industrial	sector	is	characterized	by	a	highly	competitive	environment	with	multiple	suppliers	offering	either	a	full	line	or	industry	specific	portfolios	for	tools	and equipment.	Industrial	customers	increasingly	require	specialized	solutions	that	provide	repeatability	and	reliability	in	performing	tasks	of	consequence	that	are	specific to	the	particular	end	market	in	which	they	operate.	Snap-on	believes	it	is	a	meaningful	participant	in	the	industrial	tools	and	equipment	market	sector.

# Distribution	Channels

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

# Mobile	Van	Channel

In	the	United	States,	a	significant	portion	of	sales	to	the	vehicle	service	and	repair	sector	is	conducted	through	Snap-on's	mobile	franchise	van	channel.	Snap-on's franchisees	 primarily	 serve	 vehicle	 repair	 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	products,	shop	equipment,	and	diagnostic	and	repair	information	products,	which	can	easily	be transported	in	a	van	or	trailer	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.	U.S.	franchisees	are	provided	a	list	of	calls	that	serves	as	the	basis	of	the	franchisee's	sales	route.	Snap-on's	franchisees	also	have the	opportunity	to	add	a	limited	number	of	additional	franchises.

Snap-on	charges	nominal	 initial	and	ongoing	monthly	franchise	fees.	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.	Franchise	fee	revenue	totaled	$16.2 million,	$15.2	million	and	$13.9	million	in	fiscal	2018,	2017	and	2016,	respectively.

Snap-on	also	has	a	company-owned	route	program	that	is	designed	to:	(i)	provide	another	pool	of	potential	field	organization	personnel;	(ii)	service	customers	in	select new	and/or	open	routes	not	currently	serviced	by	franchisees;	and	(iii)	allow	Snap-on	to	pilot	new	sales	and	promotional	ideas	prior	to	introducing	them	to	franchisees. As	of	2018	year	end,	company-owned	routes	comprised	less	than	3%	of	the	total	route	population;	Snap-on	may	elect	to	increase	or	reduce	the	number	of	company- owned	routes	in	the	future.

In	addition	to	its	mobile	van	channel	in	the	United	States,	Snap-on	has	replicated	its	U.S.	franchise	distribution	model	in	certain	other	countries,	including	the	United Kingdom,	Canada,	Japan,	Australia,	Germany,	Netherlands,	South	Africa,	New	Zealand,	Belgium	and	Ireland.	In	many	of	these	markets,	as	in	the	United	States, purchase	decisions	are	generally	made	or	influenced	by	professional	vehicle	service	technicians	as	well	as	repair	shop	owners	and	managers.	As	of	2018	year	end,	Snap- on's	worldwide	route	count	was	approximately	4,800,	including	approximately	3,450	routes	in	the	United	States.

Through	SOC,	financing	is	available	to	U.S.	franchisees,	including	financing	for	van	leases,	working	capital	loans	and	loans	to	help	enable	new	franchisees	to	fund	the purchase	of	the	franchise	or	the	expansion	of	an	existing	franchise.	In	many	international	markets,	Snap-on	offers	a	variety	of	financing	options	to	its	franchisees	and/or customer	networks	through	its	international	finance	subsidiaries.	The	decision	to	finance	through	Snap-on	or	another	financing	source	is	solely	at	the	customer's election.

Snap-on	supports	its	franchisees	with	a	field	organization	of	regional	offices,	franchise	performance	teams,	customer	care	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	the company's	international	finance	subsidiaries,	all	of	which	are	designed	to	strengthen	franchisee	sales.	National	Franchise	Advisory	Councils	in	the	United	States,	the United	 Kingdom,	 Canada	 and	 Australia,	 composed	 primarily	 of	 franchisees	 that	 are	 elected	 by	 franchisees,	 assist	 Snap-on	 in	 identifying	 and	 implementing enhancements	to	the	franchise	program.

# Company	Direct	Sales

A	significant	proportion	of	shop	equipment	sales	in	North	America	under	the	John	Bean,	Hofmann,	Blackhawk,	Car-O-Liner,	Challenger	and	Pro-Cut	brands,	diagnostic products	under	the	Snap-on	brand	and	information	products	under	the	Mitchell1	brand	are	made	by	direct	and	independent	sales	forces	that	have	responsibility	for national	and	other	accounts.	As	the	vehicle	service	and	repair	sector	consolidates	(with	more	business	conducted	by	national	chains	and	franchised	service	centers), Snap-on	believes	these	larger	organizations	can	be	serviced	most	effectively	by	sales	people	who	can	demonstrate	and	sell	the	full	line	of	diagnostic	and	equipment products	and	services.	Snap-on	also	sells	these	products	and	services	directly	to	OEMs	and	their	franchised	dealers.

Snap-on	 brand	 tools	 and	 equipment	 are	 marketed	 to	 industrial	 and	 governmental	 customers	 worldwide	 through	 both	 industrial	 sales	 associates	 and	 independent distributors.	Selling	activities	focus	on	industrial	customers	whose	main	purchase	criteria	are	quality	and	integrated	solutions.	As	of	2018	year	end,	Snap-on	had industrial	sales	associates	and	independent	distributors	primarily	in	the	United	States,	Canada	and	in	various	European,	Latin	American,	Middle	Eastern,	Asian	and African	countries,	with	the	United	States	representing	the	majority	of	Snap-on's	total	industrial	sales.

Snap-on	also	sells	software,	services	and	solutions	to	the	automotive,	commercial,	heavy	duty,	agriculture,	power	equipment	and	power	sports	segments.	Products	and services	are	marketed	to	targeted	groups,	including	OEMs	and	their	dealerships,	fleets	and	individual	repair	shops.	To	effectively	reach	OEMs,	which	frequently	have	a multi-national	presence,	Snap-on	has	deployed	focused	business	teams	globally.

# Distributors

Sales	of	certain	tools	and	equipment	are	made	through	independent	distributors	who	purchase	the	items	from	Snap-on	and	resell	them	to	end	users.	Hand	tools	sold under	the	BAHCO,	Fish	and	Hook,	Irimo,	Lindström,	CDI,	ATI,	Fastorq,	Norbar,	Sioux,	Sturtevant	Richmont	and	Williams	brands	and	trade	names,	for	example,	are sold	through	distributors	worldwide.	Wheel	service	and	other	vehicle	service	equipment	are	sold	through	distributors	primarily	under	brands	including	Hofmann,	John Bean,	Car-O-Liner,	Challenger,	Pro-Cut,	Cartec,	Blackhawk	and	Ecotechnics.	Diagnostic	and	equipment	products	are	marketed	through	distributors	in	South	America and	Asia,	and	through	both	a	direct	sales	force	and	distributors	in	Europe	under	the	Snap-on,	Sun	and	Blue-Point	brands.

# E-commerce

Snap-on	offers	current	and	prospective	customers	online	access	to	research	and	purchase	products	through	its	public	website	at	www.snapon.com.	The	site	features	an online	catalog	of	Snap-on	hand	tools,	power	tools,	tool	storage	units	and	diagnostic	equipment	available	to	customers	in	the	United	States,	the	United	Kingdom,	Canada and	Australia.	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.	Sales	through	the	company's	e-commerce	distribution	channel	were	not	significant	in	any	of	the	last three	years.

# Competition

Snap-on	competes	on	the	basis	of	its	product	quality	and	performance,	product	line	breadth	and	depth,	service,	brand	awareness	and	imagery,	technological	innovation and	availability	of	financing	(through	SOC	or	its	international	finance	subsidiaries).	While	Snap-on	does	not	believe	that	any	single	company	competes	with	it	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,	tool	storage,	diagnostic	and	equipment	products,	and	repair	software	and	solutions, offering	a	broad	line	of	these	products	to	both	vehicle	service	and	industrial	marketplaces.	Various	competitors	target	and	sell	to	professional	technicians	in	the	vehicle service	and	repair	sector	through	the	mobile	tool	distribution	channel.	Snap-on	also	competes	with	companies	that	sell	tools	and	equipment	to	vehicle	service	and	repair technicians	online	and	through	retail	stores,	vehicle	parts	supply	outlets	and	tool	supply	warehouses/distributorships.	Within	the	power	tools	category	and	the	industrial sector,	Snap-on	has	various	other	competitors,	including	companies	with	offerings	that	overlap	with	other	areas	discussed	herein.	Major	competitors	selling	diagnostics, shop	equipment	and	information	to	vehicle	dealerships	and	independent	repair	shops	include	OEMs	and	their	proprietary	electronic	parts	catalogs	and	diagnostics	and information	systems,	and	other	companies	that	offer	products	serving	this	sector.

# Raw	Materials	and	Purchased	Product

Snap-on's	supply	of	raw	materials	and	purchased	components	are	generally	and	readily	available	from	numerous	suppliers.	Snap-on	believes	it	has	secured	an	ample supply	of	both	bar	and	coil	steel	for	the	near	future	to	ensure	stable	supply	to	meet	material	demands.	The	company	does	not	currently	anticipate	experiencing	any significant	impact	in	2019	from	steel	pricing	or	availability	issues,	though	it	is	continuing	to	monitor	the	impact	of	tariffs	and	other	trade	protection	measures	put	in place	by	the	U.S.	and	other	countries.

# Patents,	Trademarks	and	Other	Intellectual	Property

Snap-on	 vigorously	 pursues	 and	 relies	 on	 patent	 protection	 to	 protect	 its	 intellectual	 property	 and	 position	 in	 its	 markets.	As	 of	2018	 year	 end,	 Snap-on	 and	 its subsidiaries	held	approximately	750	active	and	pending	patents	in	the	United	States	and	approximately	2,000	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	any	of	the	last	three	years.

Examples	of	products	that	have	features	or	designs	that	benefit	from	patent	protection	include	hand	tools	(including	sealed	ratchets	and	ratcheting	screwdrivers),	power tools,	wheel	alignment	systems,	wheel	balancers,	tire	changers,	vehicle	lifts,	tool	storage,	tool	control,	collision	measurement,	test	lanes,	brake	lathes,	electronic	torque instruments,	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	many	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	strategically	licenses	the	Snap-on	brand	to	carefully	selected	manufacturing	and	distribution	companies	for	items	such	as	apparel	and	a	variety	of	other	goods,	in order	to	further	build	brand	awareness	and	market	presence	for	the	company's	strongest	brand.

# Environmental

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,	Health	and	Safety	Management	System	("EH	&	SMS"),	which	is	applied worldwide.	The	system	is	based	upon	continual	improvement	and	is	certified	to	ISO	14001:2015	and	OHSAS	18001:2007,	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

Snap-on	employed	approximately	12,600	people	at	the	end	of	both	January	2019	and	January	2018.

Approximately	2,650	employees,	or	21%	of	Snap-on's	worldwide	workforce,	are	represented	by	unions	and/or	covered	under	collective	bargaining	agreements.	The number	of	covered	union	employees	whose	contracts	expire	over	the	next	five	years	approximates	875	employees	in	2019,	975	employees	in	2020,	575	employees	in 2021,	175	employees	 in	2022,	 and	50	employees	 in	2023.	In	recent	years,	Snap-on	has	not	experienced	any	significant	work	slowdowns,	stoppages	or	other	labor disruptions.

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

# Working	Capital

Most	of	Snap-on's	businesses	are	not	seasonal	and	their	inventory	needs	are	relatively	constant.	Snap-on	did	not	have	a	significant	backlog	of	orders	at	2018	year	end.	In recent	years,	Snap-on	has	been	using	its	working	capital	to	fund,	in	part,	the	continued	growth	of	the	company's	financial	services	portfolio	and	the	acquisitions discussed	above.

Snap-on's	liquidity	and	capital	resources	and	use	of	working	capital	are	discussed	herein	in	"Part	II,	Item	7,	Management's	Discussion	and	Analysis	of	Financial Condition	and	Results	of	Operations."

As	of	2018	year	end,	neither	Snap-on	nor	any	of	its	segments	depend	on	any	single	customer,	small	group	of	customers	or	government	for	any	material	part	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.

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

We,	our	franchisees	and	our	customers,	may	be	adversely	affected	by	changing	economic	conditions,	including	conditions	that	may	particularly	impact	specific	regions. These	conditions	may	result	in	reduced	consumer	and	investor	confidence,	instability	in	the	credit	and	financial	markets,	volatile	corporate	profits,	and	reduced	business and	consumer	spending.	We,	our	franchisees	and	our	customers,	and	the	economy	as	a	whole,	also	may	be	affected	by	future	world	or	local	events	outside	our	control, such	as	tariffs	and	other	trade	protection	measures	put	in	place	by	the	United	States	or	other	countries,	acts	of	terrorism,	developments	in	the	war	on	terrorism,	conflicts in	international	situations,	weather	events	and	natural	disasters,	as	well	as	government-related	developments	or	issues.	These	factors	may	affect	our	results	of	operations by	reducing	our	sales,	margins	and/or	net	earnings	as	a	result	of	a	slowdown	in	customer	orders	or	order	cancellations,	impact	the	availability	and/or	pricing	of	raw materials	and/or	the	supply	chain,	and	could	potentially	lead	to	future	impairment	of	our	intangible	assets.	In	addition,	political	and	social	turmoil	related	to	international conflicts	and	terrorist	acts	may	put	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	flows	could	be	negatively	affected.

In	2016,	the	United	Kingdom	voted	in	a	referendum	to	exit	the	European	Union	("Brexit"),	which	resulted	in	significant	currency	exchange	rate	fluctuations	and volatility.	Negotiations	continue	to	determine	the	terms	of	Brexit.	Given	the	lack	of	comparable	precedent	and	the	status	of	the	negotiations,	the	implications	of	Brexit, or	how	such	implications	might	affect	Snap-on,	continue	to	remain	unclear	at	this	time.	Brexit	could,	among	other	impacts,	disrupt	trade	and	the	movement	of	goods, services	and	people	between	the	United	Kingdom	and	the	European	Union	or	other	countries	as	well	as	create	legal	and	global	economic	uncertainty.	These	and	other potential	implications	could	adversely	affect	our	business	and	results	of	operations.

In	2018,	Canada,	Mexico	and	the	United	States	negotiated	the	United	States-Mexico-Canada	Agreement	(the	"USMCA"),	which	is	intended	to	update	and	replace	the North	American	Free	Trade	Agreement	("NAFTA").	THE	USMCA	must	be	ratified	by	all	three	countries	before	it	becomes	fully	effective	and	many	of	its	provisions will	not	take	effect	until	2020.	While	the	USMCA	is	somewhat	similar	to	NAFTA,	it	contains	several	new	compliance	obligations	addressing	such	issues	as	rules	of origin,	labor	standard,	certificate	of	origin	documentation	and	de	minimis	thresholds,	as	well	as	new	policies	on	labor	and	environmental	standards,	intellectual	property protections	and	some	digital	trade	provisions.	The	Company	is	currently	analyzing	the	expected	impact	of	the	USMCA.	While	certain	aspects	of	the	USMCA	are expected	to	be	positive,	others,	including	potentially	higher	regulatory	compliance	costs,	may	have	an	adverse	impact	on	our	business.

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

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	our	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	common	alloys,	which	are	available from	multiple	suppliers.	Some	of	these	materials	have	been,	and	in	the	future	may	be,	in	short	supply,	particularly	in	the	event	of	mill	shutdowns	or	production	cut	backs. As	some	steel	alloys	require	specialized	manufacturing	procedures,	we	could	experience	inventory	shortages	if	we	were	required	to	use	an	alternative	manufacturer	on short	notice.	These	raw	materials	exhibit	price	and	demand	cyclicality,	including	tariffs	and	other	trade	protection	measures	enacted	in	fiscal	2018	and	which	could continue	to	in	fiscal	2019.	Unexpected	price	increases	for	raw	materials	could	result	in	an	erosion	of	the	margins	on	our	products	or	higher	prices	to	our	customers.

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	technicians	and,	consequently,	the	demand	technicians	have	for	our	tools,	other	products	and	services,	and	the	value	technicians	place	on	those	products and	services.	The	use	of	other	methods	of	transportation,	including	more	frequent	use	of	public	transportation,	could	result	in	a	decrease	in	the	use	of	privately	operated vehicles.	A	decrease	in	the	use	of	privately	operated	vehicles	may	lead	to	fewer	repairs	and	less	demand	for	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	periodically	increased	significantly	over	short	periods	of	time;	future	volatility	and	changes	may	be	caused	by	market	fluctuations,	supply	and	demand, currency	fluctuations,	production	and	transportation	disruptions,	world	events	and	changes	in	governmental	programs.	Energy	price	increases	raise	both	our	operating costs	and	the	costs	of	our	materials,	and	we	may	not	be	able	to	increase	our	prices	enough	to	offset	these	costs.	Higher	prices	also	may	reduce	the	level	of	future customer	orders	and	our	profitability.

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

Approximately	40%	of	our	consolidated	net	revenues	in	2018	were	generated	by	the	Snap-on	Tools	Group,	which	consists	of	Snap-on's	business	operations	primarily serving	vehicle	service	and	repair	technicians	through	the	company's	worldwide	mobile	tool	distribution	channel.	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 business,	financial	condition,	results	of	operations	and	cash	flows.

In	addition,	if	we	are	unable	to	maintain	effective	relationships	with	franchisees,	Snap-on	or	the	franchisees	may	choose	to	terminate	the	relationship,	which	may	result in	(i)	open	routes,	in	which	end-user	customers	are	not	provided	reliable	service;	(ii)	litigation	resulting	from	termination;	(iii)	reduced	collections	or	increased	charge- offs	of	franchisee	receivables	owed	to	Snap-on;	and/or	(iv)	reduced	collections	or	increased	charge-offs	of	finance	and	contract	receivables.

Exposure	 to	credit	risks	of	customers	and	resellers	may	make	 it	difficult to	collect	receivables,	and	our	allowances for	credit losses for	receivables	may	prove inadequate,	which	could	adversely	affect	operating	results	and	financial	condition.

Our	financial	services	portfolio	represents	a	significant	portion	of	the	company's	assets.	A	decline	in	industry	and/or	economic	conditions	could	have	the	potential	to weaken	the	financial	position	of	some	of	our	customers,	including	financial	services	customers.	If	circumstances	surrounding	our	customers'	ability	to	repay	their	credit obligations	were	to	deteriorate	and	result	in	the	write-down	or	charge-off	of	such	receivables,	it	would	negatively	affect	our	operating	results	for	the	period	in	which	they occur	and,	if	large,	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.

We	maintain	allowances	for	credit	losses	for	receivables	to	provide	for	defaults	and	nonperformance,	which	represent	an	estimate	of	losses	of	our	receivables	portfolios. The	determination	of	the	appropriate	levels	of	the	allowances	for	credit	losses	inherently	involves	a	high	degree	of	subjectivity	and	judgment,	and	requires	us	to	make estimates	of	current	credit	risks,	which	may	undergo	material	changes.	The	allowances	may	not	be	adequate	to	cover	actual	losses,	and	future	allowances	for	credit losses	could	materially	and	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

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

An	integral	component	of	our	business	and	profitability	is	our	ability	to	offer	competitive	financing	alternatives	to	franchisees	and	other	end-user	customers.	The	lack	of our	ability	to	offer	such	alternatives	or	obtain	capital	resources	or	other	financing	to	support	our	receivables	on	terms	that	we	believe	are	attractive,	whether	resulting from	the	state	of	the	financial	markets,	our	own	operating	performance,	or	other	factors,	would	negatively	affect	our	operating	results	and	financial	condition.	Adverse fluctuations	in	interest	rates	and/or	our	ability	to	provide	competitive	financing	programs	could	also	have	an	adverse	impact	on	our	revenue	and	profitability.

Adverse	developments	in	the	credit	and	financial	markets	could	negatively	impact	the	availability	of	credit	that	we	and	our	customers	need	to	operate	our	businesses.

We	depend	upon	the	availability	of	credit	to	operate	our	business,	including	the	financing	of	receivables	from	end-user	customers	that	are	originated	by	our	financial services	businesses.	Our	end-user	customers,	franchisees	and	suppliers	also	require	access	to	credit	for	their	businesses.	At	times,	world	financial	markets	have	been unstable	and	subject	to	uncertainty.	Adverse	developments	in	the	credit	and	financial	markets,	or	unfavorable	changes	in	Snap-on's	credit	rating,	could	negatively	impact the	availability	of	future	financing	and	the	terms	on	which	it	might	be	available	to	Snap-on,	its	end-user	customers,	franchisees	and	suppliers.	Inability	to	access	credit	or capital	markets,	or	a	deterioration	in	the	terms	on	which	financing	might	be	available,	could	have	an	adverse	impact	on	our	business,	financial	condition,	results	of operations	and	cash	flows.

# Increasing	our	financial	leverage	could	affect	our	operations	and	profitability.

The	maximum	available	credit	under	our	multi-currency	revolving	credit	facility	is	$700	million.	The	company's	leverage	ratio	may	affect	both	our	availability	of additional	capital	resources	as	well	as	our	operations	in	several	ways,	including:

•The	terms	on	which	credit	may	be	available	to	us	could	be	less	attractive,	both	in	the	economic	terms	of	the	credit	and	the	covenants	stipulated	by	the	credit terms;

•The	 possible lack	 of	 availability	 of	 additional	 credit	 or	 access to the	 commercial	 paper market;

•The	potential	for	higher	levels	of	interest	expense	to	service	or	maintain	our	outstanding

debt;

•The	possibility	of	additional	borrowings	in	the	future	to	repay	our	indebtedness	when	it	comes	due;

•The	 possible	 diversion	 of capital resources from	 other uses.

While	we	believe	we	will	have	the	ability	to	service	our	debt	and	obtain	additional	resources	in	the	future	if	and	when	needed,	that	will	depend	upon	our	results	of operations	and	financial	position	at	the	time,	the	then-current	state	of	the	credit	and	financial	markets,	and	other	factors	that	may	be	beyond	our	control.	Therefore,	we cannot	give	assurances	that	credit	will	be	available	on	terms	that	we	consider	attractive,	or	at	all,	if	and	when	necessary	or	beneficial	to	us.

Data	security	and	information	technology	infrastructure	and	security	are	critical	to	supporting	business	objectives;	failure	of	our	systems	to	operate	effectively	could adversely	affect	our	business	and	reputation.

We	depend	heavily	on	information	technology	infrastructure	to	achieve	our	business	objectives	and	to	protect	sensitive	information,	and	continually	invest	in	improving such	systems.	Problems	that	impair	or	compromise	this	infrastructure,	including	natural	disasters,	power	outages,	major	network	failures,	security	breaches	or	malicious attacks,	or	during	system	upgrades	and/or	new	system	implementations,	could	impede	our	ability	to	record	or	process	orders,	manufacture	and	ship	in	a	timely	manner, manage	 our	 financial	 services	 operations	 including	 originating,	 processing,	 accounting	 for	 and	 collecting	 receivables,	 protect	 sensitive	 data	 of	 the	 company,	 our customers,	our	suppliers	and	business	partners,	or	otherwise	carry	on	business	in	the	normal	course.	Any	such	events,	if	significant,	could	cause	us	to	lose	customers and/or	revenue	and	could	require	us	to	incur	significant	expense	to	remediate,	including	as	a	result	of	legal	or	regulatory	claims,	proceedings,	fines	or	penalties,	and could	also	damage	our	reputation.	While	we	have	taken	steps	to	maintain	adequate	data	security	and	address	these	risks	and	uncertainties	by	implementing	security technologies,	internal	controls,	network	and	data	center	resiliency,	and	redundancy	and	recovery	processes,	as	well	as	by	securing	insurance,	these	measures	may	be inadequate.

In	association	with	initiatives	to	better	integrate	business	units,	rationalize	operating	footprint	and	improve	responsiveness	to	franchisees	and	customers,	Snap-on	is continually	replacing	and	enhancing	its	global	Enterprise	Resource	Planning	(ERP)	management	information	systems.	As	we	integrate,	implement	and	deploy	new information	technology	processes	and	enhance	our	common	information	infrastructure	across	our	global	operations,	we	could	experience	disruptions	in	our	business	that could	have	an	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.

Changes	to	legislation	and	regulations	may	affect	our	business,	reputation,	results	of	operations	and	financial	condition.

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

Financial	services	businesses	of	all	kinds	are	subject	to	significant	and	complex	regulations	and	enforcement.	In	addition	to	potentially	increasing	the	costs	of	doing business	due	to	compliance	obligations,	new	laws	and	regulations,	or	changes	to	existing	laws	and	regulations,	as	well	as	the	enforcement	thereof,	may	affect	the relationships	between	creditors	and	debtors,	inhibit	the	rights	of	creditors	to	collect	amounts	owed	to	them,	expand	liability	for	certain	actions	or	inactions,	or	limit	the types	of	financial	products	or	services	offered,	any	or	all	of	which	could	have	a	material	adverse	effect	on	our	financial	condition,	results	of	operations	and	cash	flows. Failure	to	comply	with	any	of	these	laws	or	regulations	could	also	result	in	civil,	criminal,	monetary	and/or	non-monetary	penalties,	damage	to	our	reputation,	and/or	the incurrence	of	remediation	costs.

In	fiscal	2018,	Snap-on's	results	of	operations	were	impacted,	and	in	the	future	could	be	further	affected,	by	changes	in	the	company's	effective	tax	rate	as	a	result	of changes	in	statutory	tax	rates,	laws	and	regulations,	as	well	as	related	guidance.	The	Tax	Cuts	and	Jobs	Act	in	the	United	States	(the	"Tax	Act"),	which	made	significant changes	to	the	U.S.	Tax	Code	and	affects,	among	other	items,	the	company's	tax	rate,	previously	unremitted	foreign	earnings	and	valuations	of	deferred	tax	assets	and liabilities.	If	new	guidance	is	issued	on	the	recently	enacted	tax	revisions,	depending	on	the	circumstances,	this	(and	other)	tax	legislation	could	adversely	affect	our results	of	operations.

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

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

Snap-on	sponsors	various	defined	benefit	pension	plans	(the	"pension	plans").	The	assets	of	the	pension	plans	are	diversified	in	an	attempt	to	mitigate	the	risk	of	a	large loss.	Required	funding	for	 the	company's	domestic	defined	benefit	pension	plans	 is	determined	 in	accordance	with	guidelines	set	forth	 in	 the	federal	Employee Retirement	Income	Security	Act	("ERISA");	foreign	defined	benefit	pension	plans	are	funded	in	accordance	with	local	statutes	or	practice.	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	pension	plans	that	could	reduce	our	financial flexibility.	Changes	in	plan	demographics,	including	an	increase	in	the	number	of	retirements	or	changes	in	life	expectancy	assumptions,	may	also	increase	the	costs	and funding	requirements	of	the	obligations	related	to	the	company's	pension	plans.

Our	pension	plan	obligations	are	affected	by	changes	in	market	interest	rates.	Significant	fluctuations	in	market	interest	rates	have	added,	and	may	further	add,	volatility to	our	pension	plan	obligations.	In	periods	of	declining	market	interest	rates,	our	pension	plan	obligations	generally	increase;	in	periods	of	increasing	market	interest rates,	our	pension	plan	obligations	generally	decrease.	While	our	plan	assets	are	broadly	diversified,	there	are	inherent	market	risks	associated	with	investments;	if adverse	market	conditions	occur,	our	plan	assets	could	incur	significant	or	material	losses.	Since	we	may	need	to	make	additional	contributions	to	address	changes	in obligations	 and/or	 a	 loss	 in	 plan	 assets,	 the	 combination	 of	 declining	 market	 interest	 rates,	 past	 or	 future	 plan	 asset	 investment	 losses,	 and/or	 changes	 in	 plan demographics	could	adversely	impact	our	results	of	operations,	financial	condition	and	cash	flows.

The	company's	pension	plan	expense	is	comprised	of	the	following	factors:	(i)	service	cost;	(ii)	interest	on	projected	benefit	obligations;	(iii)	expected	return	on	plan assets;	(iv)	the	amortization	of	prior	service	costs	and	credits;	(v)	effects	of	actuarial	gains	and	losses;	and	(vi)	settlement/curtailment	costs,	when	applicable.	The accounting	for	pensions	involves	the	estimation	of	a	number	of	factors	that	are	highly	uncertain.	Certain	factors,	such	as	the	interest	on	projected	benefit	obligations	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	12	to	the Consolidated	Financial	Statements	for	further	information	on	the	company's	pension	plans.

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,	costs	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,	facility	consolidation	or	closure	actions,	lack	of	raw	material	or	component	availability,	destruction	of	or	damage	to	any	facility	(as	a	result of	natural	disasters,	weather	events,	use	and	storage	of	hazardous	materials,	acts	of	war,	sabotage	or	terrorism,	or	other	events),	or	other	reasons,	could	have	a	material adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.

# 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.

# The	global	tool,	equipment,	and	diagnostics	and	repair	information	industries	are	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 continue	to	increase.	Any	inability	to	maintain	customer	satisfaction	could	diminish	Snap-on's	premium	image	and	reputation	and	could	result	in	a	lessening	of	our 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.

Product	liability	claims	and	litigation	could	affect	our	business,	reputation,	financial	condition,	results	of	operations	and	cash	flows.

The	products	that	we	design	and/or	manufacture,	and/or	the	services	we	provide,	can	lead	to	product	liability	claims	or	other	legal	claims	being	filed	against	us.	To	the extent	that	plaintiffs	are	successful	in	showing	that	a	defect	in	a	product's	design,	manufacture	or	warnings	led	to	personal	injury	or	property	damage,	or	that	our provision	of	services	resulted	in	similar	injury	or	damage,	we	may	be	subject	to	claims	for	damages.	Although	we	are	insured	for	damages	above	a	certain	amount,	we bear	the	costs	and	expenses	associated	with	defending	claims,	including	frivolous	lawsuits,	and	are	responsible	for	damages	up	to	the	insurance	retention	amount.	In addition	to	claims	concerning	individual	products,	as	a	manufacturer,	we	can	be	subject	to	costs,	potential	negative	publicity	and	lawsuits	related	to	product	recalls, which	could	adversely	impact	our	results	of	operations	and	damage	our	reputation.

Legal	disputes	could	adversely	affect	our	business,	reputation,	financial	condition,	results	of	operations	and	cash	flows.

From	time	to	time	we	are	subject	to	legal	disputes	that	are	being	litigated	and/or	settled	in	the	ordinary	course	of	business.	Disputes	or	future	lawsuits	could	result	in	the diversion	of	management's	time	and	attention	away	from	business	operations.	Additionally,	negative	developments	with	respect	to	legal	disputes	and	the	costs	incurred in	defending	ourselves,	even	if	successful,	could	have	an	adverse	impact	on	the	company	and	its	reputation.	Successful	outcomes,	at	trial	or	on	appeal,	can	never	be assured.	Adverse	outcomes	or	settlements	could	also	require	us	to	pay	damages,	potentially	in	excess	of	amounts	reserved,	or	incur	liability	for	other	remedies	that	could have	a	material	adverse	effect	on	our	business,	reputation,	financial	condition,	results	of	operations	and	cash	flows.

Failure	to	adequately	protect	intellectual	property,	or	claims	of	infringement,	could	adversely	affect	our	business,	reputation,	financial	condition,	results	of	operations and	cash	flows.

Intellectual	property	rights	are	an	important	and	integral	component	of	our	business	and	failure	to	obtain	or	maintain	adequate	protection	of	our	intellectual	property rights	for	any	reason	could	have	a	material	adverse	effect	on	our	business.	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.	In	addition,	we	have	been,	and	in the	future	may	be,	subject	to	claims	of	intellectual	property	infringement	against	us	by	third	parties;	whether	or	not	these	claims	have	merit,	we	could	be	required	to expend	significant	resources	in	defense	of	those	claims.	Adverse	determinations	in	a	judicial	or	administrative	proceeding	could	prevent	us	from	manufacturing	and selling	our	products,	prevent	us	from	stopping	others	from	manufacturing	and	selling	competing	products,	and/or	result	in	payments	for	damages.	In	the	event	of	an infringement	claim,	we	may	also	be	required	to	spend	significant	resources	to	develop	alternatives	or	obtain	licenses	which	may	not	be	available	on	reasonable	terms	or at	all,	and	may	reduce	our	sales	and	disrupt	our	production.	Failure	to	obtain	or	maintain	adequate	protection	of	our	intellectual	property	rights	for	any	reason	could	have a	material	adverse	effect	on	our	business.

Foreign	operations	are	subject	to	political,	economic,	currency	exchange	and	other	risks	that	could	adversely	affect	our	business,	financial	condition,	results	of operations	and	cash	flows.

Approximately	33%	of	our	revenues	in	2018	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	 and	 critical	 industries.	 Numerous	 risks	 and	 uncertainties	 affect	 our	 non- U.S.	operations.	These	risks	and	uncertainties	include	political,	economic	and	social	instability,	such	as	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,	as	well	as	the	exposure	to	liabilities	under	anti-corruption	laws	in	various	countries,	such	as	the	U.S.	Foreign	Corrupt	Practices	Act,	currency volatility,	transportation	delays	or	interruptions,	sovereign	debt	uncertainties	and	difficulties	in	enforcement	of	contract	and	intellectual	property	rights,	as	well	as	natural disasters.	Should	the	economic	environment	in	our	non-U.S.	markets	deteriorate	from	current	levels,	our	results	of	operations	and	financial	position	could	be	materially impacted,	including	as	a	result	of	the	effects	of	potential	impairment	write-downs	of	goodwill	and/or	other	intangible	assets	related	to	these	businesses.

The	reporting	currency	for	Snap-on's	consolidated	financial	statements	 is	 the	U.S.	dollar.	Certain	of	 the	company's	assets,	 liabilities,	expenses	and	revenues	are denominated	in	currencies	other	than	the	U.S.	dollar.	In	preparing	Snap-on's	Consolidated	Financial	Statements,	those	assets,	liabilities,	expenses	and	revenues	are translated	into	U.S.	dollars	at	applicable	exchange	rates.	Increases	or	decreases	in	exchange	rates	between	the	U.S.	dollar	and	other	currencies	affect	the	U.S.	dollar value	of	those	items,	as	reflected	in	the	Consolidated	Financial	Statements.	Substantial	fluctuations	in	the	value	of	the	U.S.	dollar	could	have	a	significant	impact	on	the company's	financial	condition	and	results	of	operations.

We	are	also	affected	by	changes	in	inflation	rates	and	interest	rates.	Additionally,	cash	generated	in	certain	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.

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

The	pursuit	of	growth	through	acquisitions,	including	participation	in	joint	ventures,	involves	significant	risks	that	could	have	a	material	adverse	effect	on	our	business, financial	condition,	results	of	operations	and	cash	flows.	These	risks	include:

•Loss of the acquired businesses' customers;

•Inability to integrate successfully the acquired businesses' operations;

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

•Unforeseen or contingent liabilities of the acquired businesses;

•Large	write-offs	or	write-downs,	or	the	impairment	of	goodwill	or	other	intangible	assets;

•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; and

•The	 dilutive effect in the event of the issuance of additional equity securities.

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

We	have	a	substantial	amount	of	goodwill	and	purchased	intangible	assets,	almost	all	of	which	are	booked	in	the	Commercial	&	Industrial	Group	and	in	the	Repair Systems	&	Information	Group.	We	are	required	to	perform	impairment	tests	on	our	goodwill	and	other	intangibles	annually	or	at	any	time	when	events	occur	that	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	 in	 circumstances,	 such	 as	 significant	 and	 long-term	 adverse	 changes	 in	 business	 climate,	 adverse	 actions	 by	 regulators, unanticipated	competition,	the	loss	of	key	customers,	and/or	changes	in	technology	or	markets,	could	require	a	provision	for	impairment	in	a	future	period	that	could substantially	 impact	 our	 reported	 earnings	 and	 reduce	 our	 consolidated	 net	 worth	 and	 shareholders'	 equity.	 Should	 the	 economic	 environment	 in	 these	 markets deteriorate,	our	results	of	operations	and	financial	position	could	be	materially	impacted,	including	as	a	result	of	the	effects	of	potential	impairment	write-downs	of goodwill	and/or	other	intangible	assets	related	to	these	businesses.

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.

The	inability	to	successfully	defend	claims	from	taxing	authorities	could	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

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	financial	condition,	results	of	operations	and	cash	flows.

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	business,	financial	condition,	results	of	operations	and	cash	flows.

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	the	future,	intended	to	improve	customer	service	and	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:

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

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

•Continuing	to	implement	efficiency	and	productivity	initiatives	throughout	the	company	to	drive	further	efficiencies	and	reduce costs;

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

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

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

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

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

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

# Item	1B:	Unresolved	Staff	Comments

# None.

# Item	2:	Properties

Snap-on	maintains	leased	and	owned	manufacturing,	software	development,	warehouse,	distribution,	research	and	development	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	3.5	million	square	feet,	of	which	71%	is	owned,	including	its	corporate	and	general	office	facility	located	in	Kenosha, Wisconsin.	Snap-on's	facilities	outside	the	United	States	occupy	approximately	4.6	million	square	feet,	of	which	approximately	72%	is	owned.	Certain	Snap-on	facilities are	leased	through	operating	and	capital	lease	agreements.	See	Note	16	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	our	corporate	headquarters	and	financial	services	operations,	and	each	of	Snap-on's	principal	active	manufacturing locations,	distribution	centers	and	software	development	locations	(exceeding	50,000	square	feet)	as	of	2018	year	end:

*	Segment	abbreviations:

C&I	–	Commercial	&	Industrial	Group

SOT	–	Snap-on	Tools	Group

RS&I	–	Repair	Systems	&	Information	Group

FS	–	Financial	Services

# Item	3:	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	of	these	legal	matters	will	not	have	a	material	impact	on	Snap-on's	consolidated	financial	position,	results	of operations	or	cash	flows.

# Item	4:	Mine	Safety	Disclosures

Not	applicable.

# PART	II

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

Snap-on	had	55,610,781	shares	of	common	stock	outstanding	as	of	2018	year	end.	Snap-on's	stock	is	listed	on	the	New	York	Stock	Exchange	under	the	ticker	symbol "SNA."	At	February	8,	2019,	there	were	4,704	registered	holders	of	Snap-on	common	stock.

# Issuer	Purchases	of	Equity	Securities

The	following	chart	discloses	information	regarding	the	shares	of	Snap-on's	common	stock	repurchased	by	the	company	during	the	fourth	quarter	of	fiscal	2018,	all	of which	were	purchased	pursuant	to	the	Board's	authorizations	that	the	company	has	publicly	announced.	Snap-on	has	undertaken	stock	repurchases	from	time	to	time	to offset	dilution	created	by	shares	issued	for	employee	and	franchisee	stock	purchase	plans,	and	equity	plans,	and	for	other	corporate	purposes,	as	well	as	when	the company	believes	market	conditions	are	favorable.	The	repurchase	of	Snap-on	common	stock	is	at	the	company's	discretion,	subject	to	prevailing	financial	and	market conditions.

| Period | Shares<br>		purchased | Average	price<br>per	share | Shares	purchased	as<br>part	of	publicly<br>announced	plans	or<br>programs | that	may	yet	be<br>purchased		under<br>publicly<br>announced	plans<br>or	programs* |
| :--- | :--- | :--- | :--- | :--- |
| 09/30/18\tto\t10/27/18 | 90,000 | $149.28 | 90,000 | $292.4\tmillion |
| 10/28/18\tto\t11/24/18 | 335,000 | $159.35 | 335,000 | $239.1\tmillion |
| 11/25/18\tto\t12/29/18 | 205,000 | $160.20 | 205,000 | $215.7\tmillion |
| Total/Average | 630,000 | $158.19 | 630,000 | N/A |

N/A:	Not	applicable

*	Subject	to	further	adjustment	pursuant	to	the	1996	Authorization	described	below,	as	of	 December	29,	2018,	the	approximate	value	of	shares	that	may	yet	be	purchased	pursuant	to	the	outstanding Board	authorizations	discussed	below	is	$215.7	million.

•In	1996,	the	Board	authorized	the	company	to	repurchase	shares	of	the	company's	common	stock	from	time	to	time	in	the	open	market	or	in	privately	negotiated	transactions	("the	1996 Authorization").	The	1996	Authorization	allows	the	repurchase	of	up	to	the	number	of	shares	issued	or	delivered	from	treasury	from	time	to	time	under	the	various	plans	the	company	has	in place	that	call	for	the	issuance	of	the	company's	common	stock.	Because	the	number	of	shares	that	are	purchased	pursuant	to	the	1996	Authorization	will	change	from	time	to	time	as	(i)	the company	issues	shares	under	its	various	plans;	and	(ii)	shares	are	repurchased	pursuant	to	this	authorization,	the	number	of	shares	authorized	to	be	repurchased	will	vary	from	time	to	time. The	1996	Authorization	will	expire	when	terminated	by	the	Board.	When	calculating	the	approximate	value	of	shares	that	the	company	may	yet	purchase	under	the	1996	Authorization,	the company	 assumed	 a	 price	 of	$148.71,	$161.00	 and	$144.25	per	share	of	common	stock	as	of	 the	end	of	 the	fiscal	2018	 months	 ended	October	27,	2018,	 November	24,	2018,	and December	29,	2018,	respectively.

•In	2017,	the	Board	authorized	the	repurchase	of	an	aggregate	of	up	to	$500	million	of	the	company's	common	stock	("the	2017	Authorization").	The	2017	Authorization	will	expire	when	the aggregate	repurchase	price	limit	is	met,	unless	terminated	earlier	by	the	Board.

# Other	Purchases	or	Sales	of	Equity	Securities

The	following	chart	discloses	information	regarding	transactions	in	shares	of	Snap-on's	common	stock	by	Citibank,	N.A.	("Citibank")	during	the	fourth	quarter	of	2018 pursuant	to	a	prepaid	equity	forward	agreement	(the	"Agreement")	with	Citibank	that	is	intended	to	reduce	the	impact	of	market	risk	associated	with	the	stock-based portion	of	the	company's	deferred	compensation	plans.	The	company's	stock-based	deferred	compensation	liabilities,	which	are	impacted	by	changes	in	the	company's stock	price,	increase	as	the	company's	stock	price	rises	and	decrease	as	the	company's	stock	price	declines.	Pursuant	to	the	Agreement,	Citibank	may	purchase	or	sell shares	of	the	company's	common	stock	(for	Citibank's	account)	in	the	market	or	in	privately	negotiated	transactions.	The	Agreement	has	no	stated	expiration	date	and does	not	provide	for	Snap-on	to	purchase	or	repurchase	its	shares.

# Citibank	Purchases	of	Snap-on	Stock

| Period | Shares	purchased | Average	price<br>per	share |
| :--- | :--- | :--- |
| 09/30/18\tto\t10/27/18 | 2,800 | $149.19 |
| 10/28/18\tto\t11/24/18 | — | — |
| 11/25/18\tto\t12/29/18 | 1,000 | $152.45 |
| Total/Average | 3,800 | $150.05 |

# 	Five-year	Stock	Performance	Graph

The	graph	below	illustrates	the	cumulative	total	shareholder	return	on	Snap-on	common	stock	since	December	31,	2013,	of	a	$100	investment,	assuming	that	dividends were	reinvested	quarterly.	The	graph	compares	Snap-on's	performance	to	that	of	the	Standard	&	Poor's	500	Industrials	Index	("S&P	500	Industrials")	and	Standard	& Poor's	500	Stock	Index	("S&P	500").

| Fiscal	Year	Ended	(1) | Snap-on<br>Incorporated | S&amp;P	500<br>Industrials | S&amp;P	500 |
| :--- | :--- | :--- | :--- |
| December\t31,\t2013 | $100.00 | $100.00 | $100.00 |
| December\t31,\t2014 | 126.77 | 109.83 | 113.69 |
| December\t31,\t2015 | 161.15 | 107.04 | 115.26 |
| December\t31,\t2016 | 163.63 | 127.23 | 129.05 |
| December\t31,\t2017 | 169.61 | 153.99 | 157.22 |
| December\t31,\t2018 | 144.41 | 133.53 | 150.33 |

(1)	The	company's	fiscal	year	ends	on	the	Saturday	that	is	on	or	nearest	to	December	31	of	each	year;	for	ease	of	calculation,	the	fiscal	year	end	is	assumed	to	be	December	31.

# 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	"Part	II,	Item	7,	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations."

# Impact	of	Accounting	Standards	Update	("ASU")	No.	2017-07

At	the	beginning	of	fiscal	2018,	Snap-on	adopted	ASU	No.	2017-07,	Compensation	-	Retirement	Benefits	(Topic	715)	-	Improving	the	Presentation	of	Net	Periodic Pension	Cost	and	Net	Periodic	Postretirement	Benefit	Cost.	The	ASU	requires	changes	to	be	applied	retrospectively;	as	such,	prior	periods	have	been	adjusted	to	reflect this	adoption	and	conform	to	the	2018	presentation.	See	Note	1	to	the	Consolidated	Financial	Statements	for	further	information	on	the	effect	of	adoption	of	this	ASU.

# Five-year	Data

| (Amounts	in	millions,	except	per	share	data) | 2018 | 2017 | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Results\tof\tOperations |  |  |  |  |  |
| Net\tsales | $3,740.7 | $3,686.9 | $3,430.4 | $3,352.8 | $3,277.7 |
| Gross\tprofit | 1,870.0 | 1,825.9 | 1,710.4 | 1,649.3 | 1,585.3 |
| Operating\texpenses | 1,144.0 | 1,161.3 | 1,048.0 | 1,041.3 | 1,042.3 |
| Operating\tearnings\tbefore\tfinancial\tservices | 726.0 | 664.6 | 662.4 | 608.0 | 543.0 |
| Financial\tservices\trevenue | 329.7 | 313.4 | 281.4 | 240.3 | 214.9 |
| Financial\tservices\texpenses | 99.6 | 95.9 | 82.7 | 70.1 | 65.8 |
| Operating\tearnings\tfrom\tfinancial\tservices | 230.1 | 217.5 | 198.7 | 170.2 | 149.1 |
| Operating\tearnings | 956.1 | 882.1 | 861.1 | 778.2 | 692.1 |
| Interest\texpense | 50.4 | 52.4 | 52.2 | 51.9 | 52.9 |
| Earnings\tbefore\tincome\ttaxes\tand\tequity\tearnings | 909.9 | 821.9 | 801.4 | 710.5 | 630.9 |
| Income\ttax\texpense | 214.4 | 250.9 | 244.3 | 221.2 | 199.5 |
| Earnings\tbefore\tequity\tearnings | 695.5 | 571.0 | 557.1 | 489.3 | 431.4 |
| Equity\tearnings,\tnet\tof\ttax | 0.7 | 1.2 | 2.5 | 1.3 | 0.7 |
| Net\tearnings | 696.2 | 572.2 | 559.6 | 490.6 | 432.1 |
| Net\tearnings\tattributable\tto\tnoncontrolling\tinterests | (16.3) | (14.5) | (13.2) | (11.9) | (10.2) |
| Net\tearnings\tattributable\tto\tSnap-on | 679.9 | 557.7 | 546.4 | 478.7 | 421.9 |
| Financial\tPosition |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $140.9 | $92.0 | $77.6 | $92.8 | $132.9 |
| Trade\tand\tother\taccounts\treceivable\t–\tnet | 692.6 | 675.6 | 598.8 | 562.5 | 550.8 |
| Finance\treceivables\t–\tnet\t(current) | 518.5 | 505.4 | 472.5 | 447.3 | 402.4 |
| Contract\treceivables\t–\tnet\t(current) | 98.3 | 96.8 | 88.1 | 82.1 | 74.5 |
| Inventories\t–\tnet | 673.8 | 638.8 | 530.5 | 497.8 | 475.5 |
| Property\tand\tequipment\t–\tnet | 495.1 | 484.4 | 425.2 | 413.5 | 404.5 |
| Long-term\tfinance\treceivables\t–\tnet | 1,074.4 | 1,039.2 | 934.5 | 772.7 | 650.5 |
| Long-term\tcontract\treceivables\t–\tnet | 344.9 | 322.6 | 286.7 | 266.6 | 242.0 |
| Total\tassets | 5,373.1 | 5,249.1 | 4,723.2 | 4,331.1 | 4,162.0 |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | 186.3 | 433.2 | 301.4 | 18.4 | 56.6 |
| Accounts\tpayable | 201.1 | 178.2 | 170.9 | 148.3 | 145.0 |
| Long-term\tdebt | 946.0 | 753.6 | 708.8 | 861.7 | 862.7 |
| Total\tdebt | 1,132.3 | 1,186.8 | 1,010.2 | 880.1 | 919.3 |
| Total\tshareholders'\tequity\tattributable\tto\tSnap-on | 3,098.8 | 2,953.9 | 2,617.2 | 2,412.7 | 2,207.8 |
| Common\tShare\tSummary |  |  |  |  |  |
| Weighted-average\tshares\toutstanding\t–\tdiluted | 57.3 | 58.6 | 59.4 | 59.1 | 59.1 |
| Net\tearnings\tper\tshare\tattributable\tto\tSnap-on: |  |  |  |  |  |
| Basic | $12.08 | $9.72 | $9.40 | $8.24 | $7.26 |
| Diluted | 11.87 | 9.52 | 9.20 | 8.10 | 7.14 |
| Cash\tdividends\tpaid\tper\tshare | 3.41 | 2.95 | 2.54 | 2.20 | 1.85 |
| Shareholders'\tequity\tper\tbasic\tshare | 55.04 | 51.46 | 45.05 | 41.53 | 38.00 |
|  | 2018\tANNUAL\tREPORT |  |  |  | 25 |

Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

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

# Management	Overview

References	in	this	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	to	"organic	sales"	refer	to	sales	from	continuing	operations calculated	in	accordance	with	generally	accepted	accounting	principles	in	the	United	States	of	America	("GAAP"),	excluding	acquisition-related	sales	and	the	impact	of foreign	 currency	 translation.	 Management	 evaluates	 the	 company's	 sales	 performance	 based	 on	 organic	 sales	 growth,	 which	 primarily	 reflects	 growth	 from	 the company's	existing	businesses	as	a	result	of	increased	output,	customer	base	and	geographic	expansion,	new	product	development	and/or	pricing,	and	excludes	sales contributions	from	acquired	operations	the	company	did	not	own	as	of	the	comparable	prior-year	reporting	period.	The	company's	organic	sales	disclosures	also	exclude the	effects	of	foreign	currency	translation	as	foreign	currency	translation	is	subject	to	volatility	that	can	obscure	underlying	business	trends.	Management	believes	that the	non-GAAP	financial	measure	of	organic	sales	is	meaningful	to	investors	as	it	provides	them	with	useful	information	to	aid	in	identifying	underlying	growth	trends	in our	businesses	and	facilitating	comparisons	of	our	sales	performance	with	prior	periods.

We	believe	our	2018	operating	results	demonstrate	our	commitment	in	providing	repeatability	and	reliability	to	a	wide	range	of	professional	customers	performing critical	tasks	in	workplaces	of	consequence.	Leveraging	capabilities	already	demonstrated	in	the	automotive	repair	arena,	our	"coherent	growth"	strategy	focuses	on developing	and	expanding	our	professional	customer	base,	not	only	in	automotive	repair,	but	in	adjacent	markets,	additional	geographies	and	other	areas,	including	in critical	industries,	where	the	cost	and	penalties	for	failure	can	be	high.	Snap-on's	value	proposition	of	making	work	easier	for	serious	professionals	in	workplaces	of consequence	is	an	ongoing	strength	as	we	move	forward	along	our	runways	for	coherent	growth:

•Enhancing	 the	 franchise	 network,	 where	 we	 continued	 to	 focus	 on	 helping	 our	 franchisees	 extend their	 reach through innovative	 selling	 processes	 and productivity	initiatives	that	break	the	traditional	time	and	space	barriers	inherent	in	a	mobile	van;

•Expanding	in	the	vehicle	repair	garage,	where	we	continued	to	make	progress	in	connecting	with	customers	and	translating	the	resulting	insights	into	innovation that	solves	specific	challenges	in	the	repair	facility;

•Further	extending	in	critical	industries,	where	we	continued	to	grow	our	lines	of	products	customized	for	specific	industries,	including	through	acquisitions; and

•Building in	 emerging	 markets,	 where	 we	 continued to	 build	 manufacturing	 capacity, focused	 product lines	 and	 distribution capability.

Our	strategic	priorities	and	plans	for	2019	will	continue	to	build	on	our	Snap-on	Value	Creation	Processes	–	our	suite	of	strategic	principles	and	processes	we	employ every	 day	 designed	 to	 create	 value,	 and	 employed	 in	 the	 areas	 of	 safety,	 quality,	 customer	 connection,	 innovation	 and	 rapid	 continuous	 improvement	 ("Rapid Continuous	Improvement"	or	"RCI").	We	expect	to	continue	to	deploy	these	processes	in	our	existing	operations	as	well	as	into	our	recently	acquired	businesses.

Snap-on's	RCI	initiatives	employ	a	structured	set	of	tools	and	processes	across	multiple	businesses	and	geographies	intended	to	eliminate	waste	and	improve	operations. Savings	from	Snap-on's	RCI	initiatives	reflect	benefits	from	a	wide	variety	of	ongoing	efficiency,	productivity	and	process	improvements,	including	savings	generated from	product	design	cost	reductions,	improved	manufacturing	line	set-up	and	change-over	practices,	lower-cost	sourcing	initiatives	and	facility	consolidations.	Unless individually	significant,	it	is	not	practicable	to	disclose	each	RCI	activity	that	generated	savings	and/or	segregate	RCI	savings	embedded	in	sales	volume	increases.

Our	global	financial	services	operations	continue	to	serve	a	significant	strategic	role	in	offering	financing	options	to	our	franchisees,	to	their	customers,	and	to	customers in	other	parts	of	our	business.	We	expect	that	our	global	financial	services	business,	which	includes	both	Snap-on	Credit	LLC	("SOC")	in	the	United	States	and	our other	international	finance	subsidiaries,	will	continue	to	be	a	meaningful	contributor	to	our	operating	earnings	going	forward.

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

On	January	30,	2017,	Snap-on	acquired	BTC	Global	Limited	("BTC")	for	a	cash	purchase	price	of	$9.2	million.	BTC,	based	in	Crewe,	U.K.,	designs	and	implements automotive	vehicle	inspection	and	management	software	for	original	equipment	manufacturer	("OEM")	franchise	repair	shops.	The	acquisition	of	BTC	enhanced	Snap- on's	capabilities	to	grow	enterprise	revenues	and	add	increased	productivity	for	repair	workshops.	For	segment	reporting	purposes,	the	results	of	operations	and	assets	of BTC	have	been	included	in	the	Repair	Systems	&	Information	Group	since	the	acquisition	date.

# Impact	of	Accounting	Standards	Update	No.	2017-07

# Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	(continued)

# Summary	of	Consolidated	Performance

Consolidated	net	sales	of	$3,740.7	million	in	2018	increased	$53.8	million,	or	1.5%,	from	2017	levels,	reflecting	a	$19.3	million,	or	0.5%,	increase	in	organic	sales	(a non-GAAP	financial	measure	that	excludes	acquisition-related	sales	and	the	impact	of	foreign	currency	translation),	$24.2	million	of	acquisition-related	sales	and	$10.3 million	of	favorable	foreign	currency	translation.

Operating	earnings	before	financial	services	of	$726.0	million	in	2018,	including	$4.4	million	of	favorable	foreign	currency	effects,	increased	$61.4	million,	or	9.2%,	as compared	to	$664.6	million	last	year.	Fiscal	2018	results	included	a	$4.3	million	benefit	related	to	a	settlement	in	an	employment-related	litigation	matter	that	was	being appealed	(the	"legal	settlement").	Fiscal	2017	results	included	$45.9	million	of	charges	related	to	the	judgment	that	was	the	subject	of	the	legal	settlement	and	a judgment	in	a	patent-related	litigation	matter	that	is	being	appealed	(collectively	the	"legal	charges").	The	company	can	provide	no	assurance	as	to	the	result	of	the appeal.	As	a	percentage	of	net	sales,	operating	earnings	before	financial	services	of	19.4%	in	2018	compared	to	18.0%	last	year.

Operating	earnings	of	$956.1	million	in	2018,	including	the	$4.3	million	benefit	for	the	legal	settlement	and	$4.7	million	of	favorable	foreign	currency	effects,	increased $74.0	million,	or	8.4%	from	$882.1	million	last	year.	In	2017,	operating	earnings	included	$45.9	million	of	expense	for	the	legal	charges.	As	a	percentage	of	revenues, operating	earnings	of	23.5%	compared	to	22.1%	last	year.

In	2018,	net	earnings	attributable	to	Snap-on	were	$679.9	million,	or	$11.87	per	diluted	share,	increased	$122.2	million,	or	$2.35	per	diluted	share,	from	$557.7	million, or	$9.52	per	diluted	share,	in	2017.	In	2018,	net	earnings	attributable	to	Snap-on	included	a	$4.1	million,	or	$0.07	per	diluted	share,	benefit	from	an	after-tax	net	gain	of $4.1	million	associated	with	a	treasury	lock	settlement	of	$10.0	million	related	to	the	issuance	of	debt,	partially	offset	by	$5.9	million	of	expense	related	to	the	early extinguishment	of	debt	(collectively,	the	"net	debt	items"),	as	well	as	$3.2	million,	or	$0.06	per	diluted	share,	for	the	after-tax	benefit	related	to	the	legal	settlement, partially	offset	by	$3.9	million,	or	$0.07	per	diluted	share,	of	tax	expense	for	newly	issued	guidance	associated	with	the	U.S.	Tax	Cuts	and	Jobs	Act	(the	"Tax	Act")	or ("tax	charge").	Net	earnings	attributable	to	Snap-on	in	2017	included	$28.4	million,	or	$0.48	per	diluted	share,	for	the	after-tax	expense	related	to	the	legal	charges,	and $7.0	million,	or	$0.12	per	diluted	share,	of	tax	expense	as	a	result	of	the	implementation	of	the	Tax	Act.

# Impact	of	the	Tax	Act

On	December	22,	2017,	the	U.S.	government	passed	the	Tax	Act.	The	Tax	Act	makes	broad	and	complex	changes	to	the	U.S.	tax	code,	including,	but	not	limited	to: (i)	reducing	the	future	U.S.	federal	corporate	tax	rate	from	35	percent	to	21	percent;	(ii)	requiring	companies	to	pay	a	one-time	transition	tax	on	certain	unremitted earnings	of	foreign	subsidiaries;	and	(iii)	bonus	depreciation	that	will	allow	for	full	expensing	of	qualified	property.

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

The	Securities	and	Exchange	Commission	staff	issued	Staff	Accounting	Bulletin	("SAB")	118,	which	provides	guidance	on	accounting	for	the	tax	effects	of	the	Tax	Act, for	the	company's	year	ended	December	30,	2017.	SAB	118	provides	a	measurement	period	that	should	not	extend	beyond	one	year	from	the	Tax	Act	enactment	date for	companies	to	complete	the	related	accounting	under	Accounting	Standards	Codification	("ASC")	740,	Accounting	for	Income	Taxes.	In	accordance	with	SAB	118,	a company	must	reflect	the	income	tax	effects	of	those	aspects	of	the	Tax	Act	for	which	the	accounting	under	ASC	740	is	complete.	To	the	extent	that	a	company's accounting	for	a	certain	income	tax	effect	of	the	Tax	Act	is	incomplete,	but	it	is	able	to	determine	a	reasonable	estimate,	it	must	record	a	provisional	estimate	in	the financial	statements.	If	a	company	cannot	determine	a	provisional	estimate	to	be	included	in	the	financial	statements,	it	should	continue	to	apply	ASC	740	on	the	basis	of the	provisions	of	the	tax	laws	that	were	in	effect	immediately	before	the	enactment	of	the	Tax	Act.

The	company's	accounting	for	certain	elements	of	the	Tax	Act	was	incomplete	as	of	December	30,	2017.	However,	the	company	was	able	to	make	reasonable	estimates of	the	effects	and,	therefore,	recorded	provisional	estimates	for	these	items.	In	connection	with	its	initial	analysis	of	the	impact	of	the	Tax	Act,	the	company	recorded	a provisional	discrete	net	tax	expense	of	$7.0	million	in	the	fiscal	year	ended	December	29,	2017.	This	provisional	estimate	consists	of	a	net	expense	of	$13.7	million	for the	one-time	transition	tax	and	a	net	benefit	of	$6.7	million	related	to	revaluation	of	deferred	tax	assets	and	liabilities,	caused	by	the	new	lower	corporate	tax	rate.	To determine	the	transition	tax,	the	company	must	determine	the	amount	of	post-1986	accumulated	earnings	and	profits	of	the	relevant	subsidiaries,	as	well	as	the	amount	of non-U.S.	income	taxes	paid	on	such	earnings.	While	the	company	was	able	to	make	a	reasonable	estimate	of	the	transition	tax	for	2017,	it	continued	to	gather	additional information	to	more	precisely	compute	the	final	amount	reported	on	its	2017	U.S.	federal	tax	return	which	was	filed	in	October	2018.	The	actual	transition	tax	reported was	$8.3	million	greater	than	the	company's	initial	estimate	and	was	included	in	income	tax	expense	for	2018.	Likewise,	while	the	company	was	able	to	make	a reasonable	estimate	of	the	impact	of	the	reduction	to	the	corporate	tax	rate,	it	was	affected	by	other	analyses	related	to	the	Tax	Act,	including,	but	not	limited	to,	the	state tax	effect	of	adjustments	made	to	federal	temporary	differences.	During	2018,	the	company	recorded	additional	net	tax	benefits	of	$4.4	million	attributable	to	pension contributions	made	in	2018	that	were	deductible	for	2017	at	the	higher	35%	federal	tax	rate	and	other	changes	to	the	2017	tax	provision	related	to	the	Tax	Act	and subsequently	issued	tax	guidance.	Due	to	the	complexity	of	the	new	GILTI	tax	rules,	the	company	continued	to	evaluate	this	provision	of	the	Tax	Act	and	the	application of	ASC	740	throughout	2018.	Under	GAAP,	the	company	is	allowed	to	make	an	accounting	policy	choice	to	either:	(i)	treat	taxes	due	on	future	U.S.	inclusions	in taxable	income	related	to	GILTI	as	a	current-period	expense	when	incurred	(the	"period	cost	method");	or	(ii)	factor	in	such	amounts	into	a	company's	measurement	of its	deferred	taxes	(the	"deferred	method").	The	company	selected	to	apply	the	"period	cost	method"	to	account	for	the	new	GILTI	tax,	and	treated	it	as	a	current-period expense	 for	2018.	The	company	will	continue	to	analyze	the	full	effects	of	the	Tax	Act	on	its	financial	statements	in	2019	as	additional	guidance	is	issued	and interpretations	evolve.

# Summary	of	Segment	Performance

The	Commercial	&	Industrial	Group	consists	of	business	operations	serving	a	broad	range	of	industrial	and	commercial	customers	worldwide,	including	customers	in the	aerospace,	natural	resources,	government,	power	generation,	transportation	and	technical	education	market	segments	(collectively,	"critical	industries"),	primarily through	direct	and	distributor	channels.	Segment	net	sales	of	$1,343.3	million	in	2018	increased	$78.3	million,	or	6.2%,	from	2017	levels,	reflecting	a	$52.1	million,	or 4.1%,	organic	sales	gain,	$23.5	million	of	acquisition-related	sales	and	$2.7	million	of	favorable	foreign	currency	translation.	The	organic	sales	increase	includes	higher sales	to	customers	in	critical	industries,	in	the	Asia	Pacific	operations,	in	power	tools	operations	and	in	the	European-based	hand	tools	business.	Operating	earnings	of $199.3	million	in	2018,	increased	$12.8	million,	or	6.9%,	from	2017	levels,	primarily	due	to	increased	organic	sales	volume	and	acquisitions,	partially	offset	by	$2.5 million	of	unfavorable	foreign	currency	effects.

The	Commercial	&	Industrial	Group	intends	to	continue	building	on	the	following	strategic	priorities	in	2019:

•Continuing	to	invest	in	emerging	market	growth	initiatives;

•Expanding	 our	 business	 with	 existing	 customers	 and reaching	 new	 customers in	 critical industries	 and	 other	 market segments;

•Broadening our product offering designed particularly for critical industry segments;

•Increasing our customer-connection-driven understanding of work across multiple industries;

•Investing	in	innovation	that,	guided	by	that	understanding	of	work,	delivers	an	ongoing	stream	of	productivity-enhancing	custom	engineered	solutions; and

•Continuing to reduce structural and	 operating costs, as	 well as improve efficiencies, through	 RCI initiatives.

The	Snap-on	Tools	Group	consists	of	business	operations	primarily	serving	vehicle	service	and	repair	technicians	through	the	company's	worldwide	mobile	tool distribution	channel.	Segment	net	sales	of	$1,613.8	million	in	2018	decreased	$11.3	million,	or	0.7%,	from	2017	levels,	reflecting	a	$15.6	million,	or	1.0%,	organic	sales decrease,	partially	offset	by	$4.3	million	of	favorable	foreign	currency	translation.	The	organic	sales	decrease	includes	a	decline	in	the	company's	international	franchise operations	while	sales	in	the	U.S.	franchise	operations	were	essentially	flat.	Operating	earnings	of	$264.2	million	in	2018	decreased	$10.5	million,	or	3.8%,	from	2017 levels	primarily	due	to	the	impact	of	lower	sales	volumes	and	higher	costs,	partially	offset	by	$7.7	million	of	favorable	foreign	currency	effects	and	benefits	from	the company's	RCI	initiatives.

Despite	the	sales	challenges	in	2018,	the	Snap-on	Tools	Group	remained	focused	on	its	fundamental,	strategic	initiatives	to	strengthen	the	franchise	network	and	enhance franchisee	profitability.	In	2019,	the	Snap-on	Tools	Group	intends	to	continue	these	initiatives,	with	specific	focus	on	the	following:

•Continuing to improve franchisee satisfaction, productivity, profitability and commercial health;

•Developing	 new	 programs	 and	 products to	 expand	 market	 coverage, reaching	 new technician	 customers	 and increasing	 penetration	 with	 existing customers;

•Increasing	investment	in	new	product	innovation	and	development;	and

•Increasing	 customer	 service	 levels	 and	 productivity	 in	 back	 office	 support functions,	 manufacturing	 and the	 supply	 chain through	 RCI initiatives	 and investment.

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

The	Repair	Systems	&	Information	Group	consists	of	business	operations	serving	other	professional	vehicle	repair	customers	worldwide,	primarily	owners	and managers	 of	 independent	 repair	 shops	 and	 OEM	 dealerships	 through	 direct	 and	 distributor	 channels.	 Segment	 net	 sales	 of	 $1,334.4	 million	 in	2018	 decreased $12.8	million,	or	1.0%,	from	2017	levels,	reflecting	a	$19.6	million,	or	1.4%,	organic	sales	decline,	partially	offset	by	$0.7	million	of	acquisition-related	sales	and $6.1	million	of	favorable	foreign	currency	translation.	The	organic	sales	decrease	primarily	reflects	lower	sales	to	OEM	dealerships	and	in	sales	of	undercar	equipment, partially	offset	by	increased	sales	of	diagnostic	and	repair	information	products	to	independent	repair	shop	owners	and	managers.	Operating	earnings	of	$342.6	million in	2018	increased	$7.3	million,	or	2.2%,	from	2017	levels,	primarily	due	to	benefits	from	the	company's	RCI	initiatives,	partially	offset	by	$0.8	million	of	unfavorable foreign	currency	effects.

The	Repair	Systems	&	Information	Group	intends	to	focus	on	the	following	strategic	priorities	in	2019:

•Expanding the	 product	 offering	 with	 new	 products	 and	 services, thereby	 providing	 more to	 sell to repair	 shop	 owners	 and managers;

•Continuing software and hardware upgrades to further improve functionality, performance and efficiency;

•Leveraging integration of software solutions;

•Continuing	productivity	advancements through	RCI initiatives	and leveraging	of	resources; and

•Increasing penetration in geographic markets, including emerging markets.

Financial	Services	revenue	was	$329.7	million	in	2018	and	$313.4	million	in	2017;	originations	of	$1,057.5	million	in	2018	decreased	$14.5	million,	or	1.4%,	from 2017	levels.	In	2018,	operating	earnings	from	financial	services	of	$230.1	million,	including	$0.3	million	of	favorable	foreign	currency	effects,	increased	$12.6	million, or	5.8%,	from	$217.5	million	last	year.	In	recent	years,	Snap-on	has	steadily	grown	its	financial	services	portfolio	by	providing	financing	for	new	finance	and	contract receivables	originated	by	our	global	financial	services	operations.

Financial	Services	intends	to	focus	on	the	following	strategic	priorities	in	2019:

•Delivering	financial	products	and	services	that	attract	and	sustain	profitable	franchisees	and	support	Snap-on's	strategies	for	expanding	market	coverage	and penetration;

•Improving	productivity	levels	and	ensuring	high	quality	in	all	financial	products	and	processes	through	the	use	of	RCI	initiatives;

•Maintaining	healthy	portfolio	performance

levels.

# Cash	Flows

Net	cash	provided	by	operating	activities	of	$764.5	million	in	2018	increased	$156.0	million	from	$608.5	million	in	2017.	The	$156.0	million	increase	is	primarily	due to	$124.0	million	of	higher	net	earnings	and	$34.0	million	from	net	changes	in	operating	assets	and	liabilities.	Net	cash	provided	by	operating	activities	was	$576.1 million	in	2016.

Net	cash	used	by	investing	activities	of	$210.2	million	 in	2018	included	additions	to	finance	receivables	of	$865.6	million,	partially	offset	by	collections	of	$747.7 million,	as	well	as	$3.0	million	for	the	acquisition	of	Fastorq.	Net	cash	used	by	investing	activities	of	$341.4	million	in	2017	included	additions	to	finance	receivables	of $892.0	million,	partially	offset	by	collections	of	$712.7	million,	as	well	as	a	total	of	$82.9	million	(net	of	$1.8	million	of	cash	acquired)	for	the	acquisitions	of	BTC, Norbar,	and	TCS,	and	working	capital	adjustments	for	the	Car-O-Liner	and	Sturtevant	Richmont	acquisitions.	Net	cash	used	by	investing	activities	of	$473.4	million	in 2016	included	additions	to	finance	receivables	of	$915.0	million,	partially	offset	by	collections	of	$671.7	million,	as	well	as,	on	a	preliminary	basis,	$160.4	million	(net of	$4.3	million	of	cash	acquired)	for	the	acquisitions	of	Car-O-Liner	and	Sturtevant	Richmont.	Capital	expenditures	in	2018,	2017	and	2016	totaled	$90.9	million,	$82.0 million	and	$74.3	million,	respectively.	Capital	expenditures	in	all	three	years	included	investments	to	support	the	company's	execution	of	its	strategic	growth	initiatives and	Value	Creation	Processes	around	safety,	quality,	customer	connection,	innovation	and	RCI.

Net	cash	used	by	financing	activities	of	$502.2	million	in	2018	included	repayments	of	$250	million	of	the	unsecured	4.25%	notes,	due	January	16,	2018	(the	"2018 Notes"),	at	maturity,	and	$200	million	of	the	unsecured	6.70%	notes	that	were	scheduled	to	mature	on	March	1,	2019	(the	"2019	Notes"),	and	a	$7.8	million	loss	on early	extinguishment	of	debt.	These	amounts	were	partially	offset	by	Snap-on's	sale,	on	February	20,	2018,	of	$400	million	of	unsecured	4.10%	notes	that	mature	on March	1,	2048	(the	"2048	Notes")	at	a	discount,	from	which	Snap-on	received	$395.4	million	of	net	proceeds,	reflecting	$3.5	million	of	transaction	costs.	Net	cash	used by	 financing	 activities	 in	2018	 also	 included	$284.1	million	 for	 the	 repurchase	 of	1,769,000	 shares	 of	 Snap-on's	 common	 stock	 and	$192.0	million	 for	 dividend payments	to	shareholders,	partially	offset	by	$55.5	million	of	proceeds	from	stock	purchase	and	option	plan	exercises	and	$4.9	million	of	proceeds	from	a	net	increase	in notes	payable	and	other	short-term	borrowings.	Net	cash	used	by	financing	activities	of	$256.1	million	in	2017	included	the	January	2017	repayment	of	$150	million	of 5.5%	unsecured	notes	upon	maturity	(the	"2017	Notes").	These	amounts	were	partially	offset	by	Snap-on's	sale,	on	February	15,	2017,	of	$300	million	of	unsecured 3.25%	notes	that	mature	on	March	1,	2027	(the	"2027	Notes")	at	a	discount,	from	which	Snap-on	received	$297.8	million	of	net	proceeds,	reflecting	$1.9	million	of transaction	costs.	Net	cash	used	by	financing	activities	in	2017	also	included	$287.9	million	for	the	repurchase	of	1,820,000	shares	of	Snap-on's	common	stock,	and $169.4	million	for	dividend	payments	to	shareholders,	partially	offset	by	$46.2	million	of	proceeds	from	stock	purchase	and	option	plan	exercises	and	$30.6	million	of proceeds	from	a	net	increase	in	notes	payable	and	other	short-term	borrowings.	Net	cash	used	by	financing	activities	of	$116.0	million	in	2016	included	$147.5	million for	dividend	payments	 to	shareholders	and	$120.4	million	for	 the	repurchase	of	758,000	shares	of	Snap-on's	common	stock,	partially	offset	by	$134.2	million	 of proceeds	from	a	net	increase	in	notes	payable	and	other	short-term	borrowings	and	$41.8	million	of	proceeds	from	stock	purchase	and	option	plan	exercises.

Snap-on's	fiscal	year	ends	on	the	Saturday	that	is	on	or	nearest	to	December	31.	Unless	otherwise	indicated,	references	in	this	Management's	Discussion	and	Analysis	of Financial	Condition	and	Results	of	Operations	to	"fiscal	2018"	or	"2018"	refer	to	the	fiscal	year	ended	December	29,	2018;	references	to	"fiscal	2017"	or	"2017"	refer	to the	fiscal	year	ended	December	30,	2017;	and	references	to	"fiscal	2016"	or	"2016"	refer	to	the	fiscal	year	ended	December	31,	2016.	References	in	this	document	to 2018,	2017	and	2016	year	end	refer	to	December	29,	2018,	December	30,	2017,	and	December	31,	2016,	respectively.

# Results	of	Operations

Results	of	operations	for	2018	and	2017	are	as	follows:

| Net	sales | $3,740.7 | 100.0	% | $3,686.9 | 100.0	% | $53.8 | 1.5	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (1,870.7) | (50.0)% | (1,861.0) | (50.5)% | (9.7) | (0.5)% |
| Gross\tprofit | 1,870.0 | 50.0\t% | 1,825.9 | 49.5\t% | 44.1 | 2.4\t% |
| Operating\texpenses | (1,144.0) | (30.6)% | (1,161.3) | (31.5)% | 17.3 | 1.5\t% |
| Operating\tearnings\tbefore\tfinancial\tservices | 726.0 | 19.4\t% | 664.6 | 18.0\t% | 61.4 | 9.2\t% |
| Financial\tservices\trevenue | 329.7 | 100.0\t% | 313.4 | 100.0\t% | 16.3 | 5.2\t% |
| Financial\tservices\texpenses | (99.6) | (30.2)% | (95.9) | (30.6)% | (3.7) | (3.9)% |
| Operating\tearnings\tfrom\tfinancial\tservices | 230.1 | 69.8\t% | 217.5 | 69.4\t% | 12.6 | 5.8\t% |
| Operating\tearnings | 956.1 | 23.5\t% | 882.1 | 22.1\t% | 74.0 | 8.4\t% |
| Interest\texpense | (50.4) | (1.2)% | (52.4) | (1.3)% | 2.0 | 3.8\t% |
| Other\tincome\t(expense)\t–\tnet | 4.2 | 0.1\t% | (7.8) | (0.3)% | 12.0 | \t\t\tNM |
| Earnings\tbefore\tincome\ttaxes\tand\tequity\tearnings | 909.9 | 22.4\t% | 821.9 | 20.5\t% | 88.0 | 10.7\t% |
| Income\ttax\texpense | (214.4) | (5.3)% | (250.9) | (6.2)% | 36.5 | 14.5\t% |
| Earnings\tbefore\tequity\tearnings | 695.5 | 17.1\t% | 571.0 | 14.3\t% | 124.5 | 21.8\t% |
| Equity\tearnings,\tnet\tof\ttax | 0.7 | — | 1.2 | — | (0.5) | (41.7)% |
| Net\tearnings | 696.2 | 17.1\t% | 572.2 | 14.3\t% | 124.0 | 21.7\t% |
| Net\tearnings\tattributable\tto\tnoncontrolling\tinterests | (16.3) | (0.4)% | (14.5) | (0.4)% | (1.8) | (12.4)% |
| Net\tearnings\tattributable\tto\tSnap-on\tInc. | $679.9 | 16.7\t% | $557.7 | 13.9\t% | $122.2 | 21.9\t% |

# NM:	Not	meaningful

Percentage	Disclosure:	All	income	statement	line	item	percentages	below	"Operating	earnings	from	financial	services"	are	calculated	as	a	percentage	of	the	sum	of	Net	sales	and	Financial	services revenue.

Gross	profit	of	$1,870.0	million	in	2018	compared	to	$1,825.9	million	last	year.	Gross	margin	(gross	profit	as	a	percentage	of	net	sales)	of	50.0%	in	2018	improved	50 basis	points	(100	basis	points	("bps")	equals	1.0	percent)	from	49.5%	last	year	primarily	due	to	a	shift	in	sales	that	included	increased	volumes	of	higher	gross	margin products	and	savings	from	the	company's	RCI	initiatives,	partially	offset	by	higher	material	and	other	costs.

Operating	expenses	of	$1,144.0	million	in	2018,	including	a	$4.3	million	benefit	for	the	legal	settlement,	compared	to	$1,161.3	million,	including	$45.9	million	for	the legal	charges,	 in	2017.	The	operating	expense	margin	(operating	expenses	as	a	percentage	of	net	sales)	of	30.6%	in	2018	improved	90	bps	from	31.5%	last	year primarily	due	to	130	bps	for	the	legal	charges	that	occurred	in	2017	and	10	bps	for	the	legal	settlement,	partially	offset	by	10	bps	of	operating	expenses	from	acquisitions and	higher	costs.

Operating	earnings	before	financial	services	of	$726.0	million	in	2018,	including	$4.4	million	of	favorable	foreign	currency	effects,	increased	$61.4	million,	or	9.2%,	as compared	to	$664.6	million	last	year.	Fiscal	2018	results	included	a	$4.3	million	benefit	for	the	legal	settlement.	Fiscal	2017	results	included	$45.9	million	for	the	legal charges.	As	a	percentage	of	net	sales,	operating	earnings	before	financial	services,	including	the	legal	settlement,	of	19.4%	compared	to	18.0%	last	year,	which	included the	legal	charges.

Financial	services	revenue	of	$329.7	million	in	2018	compared	to	revenue	of	$313.4	million	last	year.	Financial	services	operating	earnings	of	$230.1	million,	including $0.3	million	of	favorable	foreign	currency	effects	in	2018,	increased	$12.6	million,	or	5.8%,	as	compared	to	$217.5	million	last	year.	The	year-over-year	increases	in both	revenue	and	operating	earnings	primarily	reflect	continued	growth	of	the	company's	financial	services	portfolio.

Operating	earnings	of	$956.1	million	in	2018,	including	$4.7	million	of	favorable	foreign	currency	effects,	increased	$74.0	million,	or	8.4%,	from	$882.1	million	last year.	Fiscal	2018	results	included	a	$4.3	million	benefit	for	the	legal	settlement.	Fiscal	2017	included	$45.9	million	of	expense	for	the	legal	charges.	As	a	percentage	of revenues,	operating	earnings	of	23.5%	compared	to	22.1%	last	year.

Interest	expense	of	$50.4	million	in	2018	decreased	$2.0	million	from	$52.4	million	last	year.	See	Note	10	to	the	Consolidated	Financial	Statements	for	information	on Snap-on's	debt	and	credit	facilities.

Other	income	(expense)	–	net	was	income	of	$4.2	million	in	2018	and	expense	of	$7.8	million	in	2017.	Other	income	(expense)	–	net	in	fiscal	2018	includes	a	net	gain of	$5.5	million	for	the	net	debt	items.	Other	income	(expense)	-	net	also	includes	net	gains	and	losses	associated	with	hedging	and	currency	exchange	rate	transactions, non-service	components	of	net	periodic	benefit	costs,	and	interest	income.	See	Note	17	to	the	Consolidated	Financial	Statements	for	information	on	other	income (expense)	–	net.

Snap-on's	effective	income	tax	rate	on	earnings	attributable	to	Snap-on	was	24.0%	in	2018,	including	a	50	bps	charge	related	to	the	newly	issued	guidance	associated with	the	Tax	Act,	as	compared	to	31.1%	in	2017,	which	included	a	40	bps	benefit	from	the	legal	charges,	and	a	net	$7.0	million	charge,	or	90	bps	impact,	from	the implementation	of	the	Tax	Act.	See	Note	9	to	the	Consolidated	Financial	Statements	for	information	on	income	taxes.

Net	earnings	attributable	to	Snap-on	in	2018	of	$679.9	million,	or	$11.87	per	diluted	share,	increased	$122.2	million,	or	$2.35	per	diluted	share,	from	$557.7	million,	or $9.52	per	diluted	share,	in	2017.	In	2018,	net	earnings	attributable	to	Snap-on	included	a	$4.1	million,	or	$0.07	per	diluted	share,	benefit	from	the	after-tax	net	debt items,	as	well	as	a	$3.2	million,	or	$0.06	per	diluted	share,	after-tax	benefit	related	to	the	legal	settlement,	and	$3.9	million,	or	$0.07	per	diluted	share,	for	the	tax	charge. Net	earnings	attributable	to	Snap-on	in	2017	included	$28.4	million,	or	$0.48	per	diluted	share,	of	after-tax	legal	charges,	and	$7.0	million,	or	$0.12	per	diluted	share,	of tax	expense	as	a	result	of	the	implementation	of	the	Tax	Act.

# 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	are:	(i)	the	Commercial	&	Industrial	Group;	(ii)	the	Snap-on	Tools	Group;	(iii)	the	Repair	Systems	&	Information	Group;	and (iv)	Financial	Services.	The	Commercial	&	Industrial	Group	consists	of	business	operations	serving	a	broad	range	of	industrial	and	commercial	customers	worldwide, including	customers	in	the	aerospace,	natural	resources,	government,	power	generation,	transportation	and	technical	education	market	segments,	primarily	through	direct and	distributor	channels.	The	Snap-on	Tools	Group	consists	of	business	operations	primarily	serving	vehicle	service	and	repair	technicians	through	the	company's worldwide	 mobile	 tool	 distribution	 channel.	The	 Repair	 Systems	 &	 Information	 Group	 consists	 of	 business	 operations	 serving	 other	 professional	 vehicle	 repair customers	worldwide,	primarily	owners	and	managers	of	independent	repair	shops	and	OEM	dealerships	through	direct	and	distributor	channels.	Financial	Services consists	of	the	business	operations	of	Snap-on's	finance	subsidiaries.

Snap-on	evaluates	the	performance	of	its	operating	segments	based	on	segment	revenues,	including	both	external	and	intersegment	net	sales,	and	segment	operating earnings.	 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.	Corporate	assets	consist	of	cash	and	cash	equivalents	(excluding cash	held	at	Financial	Services),	deferred	income	taxes	and	certain	other	assets.	All	significant	intersegment	amounts	are	eliminated	to	arrive	at	Snap-on's	consolidated financial	results.

# Commercial	&	Industrial	Group

| External	net	sales | $1,051.6 | 78.3	% | $986.1 | 78.0	% | $65.5 | 6.6	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Intersegment\tnet\tsales | 291.7 | 21.7\t% | 278.9 | 22.0\t% | 12.8 | 4.6\t% |
| Segment\tnet\tsales | 1,343.3 | 100.0\t% | 1,265.0 | 100.0\t% | 78.3 | 6.2\t% |
| Cost\tof\tgoods\tsold | (817.7) | (60.9)% | (766.4) | (60.6)% | (51.3) | (6.7)% |
| Gross\tprofit | 525.6 | 39.1\t% | 498.6 | 39.4\t% | 27.0 | 5.4\t% |
| Operating\texpenses | (326.3) | (24.3)% | (312.1) | (24.7)% | (14.2) | (4.5)% |
| Segment\toperating\tearnings | $199.3 | 14.8\t% | $186.5 | 14.7\t% | $12.8 | 6.9\t% |

Segment	net	sales	of	$1,343.3	million	in	2018	increased	$78.3	million,	or	6.2%,	from	2017	levels,	reflecting	a	$52.1	million	or	4.1%,	organic	sales	gain,	$23.5	million	of acquisition-related	sales	and	$2.7	million	of	favorable	foreign	currency	translation.	The	organic	sales	increase	primarily	includes	mid	single-digit	gains	in	sales	to customers	in	both	critical	industries	and	in	the	segment's	Asia	Pacific	operations,	as	well	as	low	single-digit	gains	in	sales	in	the	power	tools	operations	and	in	the European-based	hand	tools	business.

Segment	gross	profit	of	$525.6	million	in	2018	compared	to	$498.6	million	last	year.	Gross	margin	of	39.1%	in	2018	declined	30	bps	from	39.4%	last	year	primarily	due to	10	bps	of	unfavorable	foreign	currency	effects	and	higher	material	and	other	costs,	partially	offset	by	benefits	from	the	company's	RCI	initiatives.

Segment	operating	expenses	of	$326.3	million	in	2018	compared	to	$312.1	million	last	year.	The	operating	expense	margin	of	24.3%	in	2018	improved	40	bps	from 24.7%	last	year	as	benefits	from	higher	sales	volumes	were	partially	offset	by	10	bps	of	unfavorable	foreign	currency	effects.

As	a	result	of	these	factors,	segment	operating	earnings	of	$199.3	million	in	2018,	including	$2.5	million	of	unfavorable	foreign	currency	effects,	increased	$12.8	million from	2017	levels.	Operating	margin	(segment	operating	earnings	as	a	percentage	of	segment	net	sales)	for	the	Commercial	&	Industrial	Group	was	14.8%	and	14.7%,	in 2018	and	2017,	respectively.

# Snap-on	Tools	Group

| Segment	net	sales | $1,613.8 | 100.0	% | $1,625.1 | 100.0	% | $(11.3) | (0.7)% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (910.8) | (56.4)% | (930.9) | (57.3)% | 20.1 | 2.2\t% |
| Gross\tprofit | 703.0 | 43.6\t% | 694.2 | 42.7\t% | 8.8 | 1.3\t% |
| Operating\texpenses | (438.8) | (27.2)% | (419.5) | (25.8)% | (19.3) | (4.6)% |
| Segment\toperating\tearnings | $264.2 | 16.4\t% | $274.7 | 16.9\t% | $(10.5) | (3.8)% |

Segment	net	sales	of	$1,613.8	million	in	2018	decreased	$11.3	million,	or	0.7%,	from	2017	levels,	reflecting	a	$15.6	million,	or	1.0%	organic	sales	decrease,	partially offset	by	$4.3	million	of	favorable	foreign	currency	translation.	The	organic	sales	decline	reflects	a	low	single-digit	decline	in	the	company's	international	franchise operations	while	sales	in	the	U.S.	operations	were	essentially	flat.

Segment	gross	profit	of	$703.0	million	in	2018	compared	to	$694.2	million	last	year.	Gross	margin	of	43.6%	in	2018	improved	from	42.7%	last	year	primarily	due	to increased	sales	of	higher	gross	margin	products,	benefits	from	the	company's	RCI	initiatives	and	40	bps	of	favorable	foreign	currency	effects.

Segment	operating	expenses	of	$438.8	million	in	2018	compared	to	$419.5	million	last	year.	The	operating	expense	margin	of	27.2%	in	2018	increased	140	bps	from 25.8%	last	year	primarily	due	to	higher	costs.

As	a	result	of	these	factors,	segment	operating	earnings	of	$264.2	million	in	2018,	including	$7.7	million	of	favorable	foreign	currency	effects,	decreased	$10.5	million from	2017	levels.	Operating	margin	for	the	Snap-on	Tools	Group	of	16.4%	in	2018	compared	to	16.9%	last	year.

# Repair	Systems	&	Information	Group

Segment	net	sales	of	$1,334.4	million	in	2018	decreased	$12.8	million,	or	1.0%,	from	2017	levels,	reflecting	a	$19.6	million,	or	1.4%,	organic	sales	decline,	partially offset	by	$0.7	million	of	acquisition-related	sales	and	$6.1	million	of	favorable	foreign	currency	translation.	The	organic	sales	decrease	includes	low	single-digit decreases	in	sales	to	OEM	dealerships	and	in	sales	of	undercar	equipment,	partially	offset	by	a	low	single-digit	increase	in	sales	of	diagnostic	and	repair	information products	to	independent	repair	shop	owners	and	managers.

Segment	gross	profit	of	$641.4	million	in	2018	compared	to	$633.1	million	last	year.	Gross	margin	of	48.1%	in	2018	improved	110	bps	from	47.0%	last	year,	primarily as	a	result	of	a	shift	in	sales	that	included	lower	volumes	of	lower	gross	margin	products	and	savings	from	the	company's	RCI	initiatives,	partially	offset	by	20	bps	of unfavorable	foreign	currency	effects.

Segment	operating	expenses	of	$298.8	million	in	2018	compared	to	$297.8	million	last	year.	The	operating	expense	margin	of	22.4%	in	2018	increased	30	bps	from 22.1%	last	year	primarily	due	to	the	effect	of	lower	sales	volumes,	partially	offset	by	benefits	from	the	company's	RCI	initiatives.

As	a	result	of	these	factors,	segment	operating	earnings	of	$342.6	million	in	2018,	including	$0.8	million	of	unfavorable	foreign	currency	effects,	increased	$7.3	million from	2017	levels.	Operating	margin	for	the	Repair	Systems	&	Information	Group	of	25.7%	in	2018	compared	to	24.9%	last	year.

Financial	services	revenue	of	$329.7	million	in	2018	increased	$16.3	million,	or	5.2%,	from	$313.4	million	last	year	primarily	reflecting	$18.9	million	of	higher	revenue as	a	result	of	continued	growth	of	the	company's	financial	services	portfolio,	partially	offset	by	$2.6	million	of	decreased	revenue	from	lower	average	yields	on	finance receivables.	In	2018	and	2017,	the	respective	average	yields	on	finance	receivables	were	17.7%	and	17.9%,	and	the	average	yield	on	contract	receivables	was	9.2%	in both	years.	Originations	of	$1,057.5	million	in	2018	decreased	$14.5	million,	or	1.4%,	from	2017	levels.

Financial	services	expenses	primarily	include	personnel-related	and	other	general	and	administrative	costs,	as	well	as	provisions	for	credit	losses.	These	expenses	are generally	more	dependent	on	changes	in	the	financial	services	portfolio	than	they	are	on	the	revenue	of	the	segment.	Financial	services	expenses	of	$99.6	million	in	2018 increased	from	$95.9	million	last	year	primarily	due	to	increases	in	both	the	provisions	for	credit	losses	and	in	the	size	of	the	portfolio.	As	a	percentage	of	the	average financial	services	portfolio,	financial	services	expenses	were	4.9%	and	5.0%	in	2018	and	2017,	respectively.

Financial	services	operating	earnings	of	$230.1	million	in	2018,	including	$0.3	million	of	favorable	foreign	currency	effects,	increased	$12.6	million,	or	5.8%,	from 2017	levels.

See	Note	1	and	Note	4	to	the	Consolidated	Financial	Statements	for	further	information	on	financial	services.

# Corporate

Snap-on's	general	corporate	expenses	in	2018	of	$80.1	million	decreased	$51.8	million	from	$131.9	million	last	year.	The	year-over-year	decrease	in	general	corporate expenses	primarily	reflects	a	$4.3	million	benefit	in	2018	from	the	legal	settlement	and	$45.9	million	in	2017	for	the	legal	charges.

# Fourth	Quarter

Results	of	operations	for	the	fourth	quarters	of	2018	and	2017	are	as	follows:

| Net	sales | $952.5 | 100.0	% | $974.6 | 100.0	% | $(22.1) | (2.3)% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (495.1) | (52.0)% | (509.0) | (52.2)% | 13.9 | 2.7\t% |
| Gross\tprofit | 457.4 | 48.0\t% | 465.6 | 47.8\t% | (8.2) | (1.8)% |
| Operating\texpenses | (275.3) | (28.9)% | (307.6) | (31.6)% | 32.3 | 10.5\t% |
| Operating\tearnings\tbefore\tfinancial\tservices | 182.1 | 19.1\t% | 158.0 | 16.2\t% | 24.1 | 15.3\t% |
| Financial\tservices\trevenue | 82.7 | 100.0\t% | 79.9 | 100.0\t% | 2.8 | 3.5\t% |
| Financial\tservices\texpenses | (26.6) | (32.2)% | (25.5) | (31.9)% | (1.1) | (4.3)% |
| Operating\tearnings\tfrom\tfinancial\tservices | 56.1 | 67.8\t% | 54.4 | 68.1\t% | 1.7 | 3.1\t% |
| Operating\tearnings | 238.2 | 23.0\t% | 212.4 | 20.1\t% | 25.8 | 12.1\t% |
| Interest\texpense | (12.4) | (1.2)% | (13.6) | (1.3)% | 1.2 | 8.8\t% |
| Other\tincome\t(expense)\t–\tnet | 3.0 | 0.3\t% | (1.8) | (0.1)% | 4.8 | \t\t\t\t\t\tNM |
| Earnings\tbefore\tincome\ttaxes\tand\tequity\tearnings | 228.8 | 22.1\t% | 197.0 | 18.7\t% | 31.8 | 16.1\t% |
| Income\ttax\texpense | (49.5) | (4.8)% | (63.8) | (6.1)% | 14.3 | 22.4\t% |
| Earnings\tbefore\tequity\tearnings | 179.3 | 17.3\t% | 133.2 | 12.6\t% | 46.1 | 34.6\t% |
| Equity\tearnings,\tnet\tof\ttax | — | — | — | — | — | — |
| Net\tearnings | 179.3 | 17.3\t% | 133.2 | 12.6\t% | 46.1 | 34.6\t% |
| Net\tearnings\tattributable\tto\tnoncontrolling\tinterests | (4.3) | (0.4)% | (3.7) | (0.3)% | (0.6) | (16.2)% |
| Net\tearnings\tattributable\tto\tSnap-on\tInc. | $175.0 | 16.9\t% | $129.5 | 12.3\t% | $45.5 | 35.1\t% |

Net	sales	of	$952.5	million	in	the	fourth	quarter	of	2018	decreased	$22.1	million,	or	2.3%,	from	2017	levels,	reflecting	a	$5.4	million,	or	0.6%,	organic	sales	decrease and	$17.1	million	of	unfavorable	foreign	currency	translation,	partially	offset	by	$0.4	million	of	acquisition-related	sales.

Gross	profit	of	$457.4	million	in	the	fourth	quarter	of	2018	compared	to	$465.6	million	last	year.	Gross	margin	of	48.0%	in	the	quarter	improved	20	bps	from	47.8%	last year	primarily	due	to	savings	from	the	company's	RCI	initiatives,	partially	offset	by	higher	material	and	other	costs.

Operating	expenses	of	$275.3	million	in	the	fourth	quarter	of	2018	compared	to	$307.6	million	last	year,	as	2018	included	a	$4.3	million	benefit	for	the	legal	settlement, while	2017	included	a	$30.9	million	legal	charge.	The	operating	expense	margin	of	28.9%	in	the	quarter	improved	270	bps	from	31.6%	last	year	primarily	due	to	320 bps	related	to	the	legal	charge	occurring	in	fiscal	2017	and	40	bps	for	the	2018	legal	settlement,	partially	offset	by	10	bps	of	unfavorable	foreign	currency	effects	and higher	costs.

Operating	earnings	before	financial	services	of	$182.1	million	in	the	fourth	quarter	of	2018,	including	a	$4.3	million	benefit	for	the	legal	settlement	and	$4.2	million	of unfavorable	foreign	currency	effects,	increased	$24.1	million,	or	15.3%,	as	compared	to	$158.0	million	last	year,	which	included	$30.9	million	for	the	legal	charge.	As	a percentage	of	net	sales,	operating	earnings	before	financial	services	of	19.1%	in	the	quarter,	including	the	legal	settlement,	compared	to	16.2%	last	year,	including	the legal	charge.

Financial	services	revenue	of	$82.7	million	in	the	fourth	quarter	of	2018	compared	to	revenue	of	$79.9	million	last	year.	Financial	services	operating	earnings	of $56.1	million	in	the	fourth	quarter	of	2018,	including	$0.3	million	of	unfavorable	foreign	currency	effects,	increased	$1.7	million,	or	3.1%,	as	compared	to	$54.4	million last	year.	The	year-over-year	increases	in	both	revenue	and	operating	earnings	primarily	reflect	continued	growth	of	the	company's	financial	services	portfolio.

Operating	earnings	of	$238.2	million	in	the	fourth	quarter	of	2018,	including	a	$4.3	million	benefit	for	the	legal	settlement	and	$4.5	million	of	unfavorable	foreign currency	effects,	increased	$25.8	million,	or	12.1%,	from	$212.4	million	last	year,	which	included	$30.9	million	of	expense	for	the	legal	charge.	As	a	percentage	of revenues,	operating	earnings	of	23.0%	in	the	quarter	compared	to	20.1%	last	year.

Interest	expense	of	$12.4	million	in	the	fourth	quarter	of	2018	decreased	$1.2	million	from	$13.6	million	last	year.	See	Note	10	to	the	Consolidated	Financial	Statements for	information	on	Snap-on's	debt	and	credit	facilities.

Other	 income	(expense)	–	net	was	 income	of	$3.0	million	and	expense	of	$1.8	million in the	respective	fourth	quarters	of	2018 and	2017.	See	 Note	 17 to the Consolidated	Financial	Statements	for	information	on	other	income	(expense)	–	net.

Snap-on's	fourth	quarter	effective	income	tax	rate	on	earnings	attributable	to	Snap-on	was	22.0%	in	2018	compared	to	33.0%	in	2017,	which	included	a	120	bps	benefit from	the	legal	charge,	and	$7.0	million,	or	360	bps	impact,	related	to	the	implementation	of	the	Tax	Act.	See	Note	9	to	the	Consolidated	Financial	Statements	for information	on	income	taxes.

Net	earnings	attributable	to	Snap-on	in	the	fourth	quarter	of	2018	of	$175.0	million,	or	$3.09	per	diluted	share,	increased	$45.5	million,	or	$0.85	per	diluted	share,	from $129.5	million	or	$2.24	per	diluted	share	in	2017.	The	fourth	quarter	of	2018,	included	$3.2	million,	or	$0.06	per	diluted	share,	for	the	after-tax	benefit	from	the	legal settlement,	while	 the	 fourth	 quarter	 of	2017	 included	$19.1	million,	or	$0.33	per	diluted	share,	for	 the	after-tax	expense	associated	with	 the	 legal	charge,	and	a $7.0	million,	or	$0.12	per	diluted	share,	charge	related	to	the	Tax	Act.

| External	net	sales | $270.0 | 78.6	% | $273.2 | 80.0	% | $(3.2) | (1.2)% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Intersegment\tnet\tsales | 73.7 | 21.4\t% | 68.5 | 20.0\t% | 5.2 | 7.6\t% |
| Segment\tnet\tsales | 343.7 | 100.0\t% | 341.7 | 100.0\t% | 2.0 | 0.6\t% |
| Cost\tof\tgoods\tsold | (211.3) | (61.5)% | (207.5) | (60.7)% | (3.8) | (1.8)% |
| Gross\tprofit | 132.4 | 38.5\t% | 134.2 | 39.3\t% | (1.8) | (1.3)% |
| Operating\texpenses | (81.6) | (23.7)% | (82.9) | (24.3)% | 1.3 | 1.6\t% |
| Segment\toperating\tearnings | $50.8 | 14.8\t% | $51.3 | 15.0\t% | $(0.5) | (1.0)% |

Segment	net	sales	of	$343.7	million	in	the	fourth	quarter	of	2018	increased	$2.0	million,	or	0.6%,	from	2017	levels,	reflecting	an	$11.5	million,	or	3.5%,	organic	sales gain	and	$0.4	million	of	acquisition-related	sales,	partially	offset	by	$9.9	million	of	unfavorable	foreign	currency	translation.	The	organic	sales	increase	primarily includes	double-digit	gains	in	both	the	segment's	Asia	Pacific	operations	and	specialty	tools	business,	as	well	as	low	single-digit	gains	in	sales	in	the	European-based hand	tools	business	and	in	sales	to	customers	in	critical	industries.

Segment	gross	profit	of	$132.4	million	in	the	fourth	quarter	of	2018	compared	to	$134.2	million	last	year.	Gross	margin	of	38.5%	in	the	quarter	declined	80	bps	from 39.3% last	year	primarily	due	 to	higher	sales	volumes	of	 lower	gross	margin	products	and	higher	material	and	other	costs,	partially	offset	by	benefits	from	 the company's	RCI	initiatives.

Segment	operating	expenses	of	$81.6	million	in	the	fourth	quarter	of	2018	compared	to	$82.9	million	last	year.	The	operating	expense	margin	of	23.7%	in	the	quarter, improved	60	bps	from	24.3%	last	year	primarily	due	to	the	benefits	of	sales	volume	leverage.

As	a	result	of	these	factors,	segment	operating	earnings	of	$50.8	million	in	the	fourth	quarter	of	2018,	including	$1.5	million	of	unfavorable	foreign	currency	effects, decreased	$0.5	million	from	2017	levels.	Operating	margin	for	the	Commercial	&	Industrial	Group	of	14.8%	in	the	fourth	quarter	of	2018	compared	to	15.0%	last	year.

| Segment	net	sales | $407.4 | 100.0	% | $409.2 | 100.0	% | $(1.8) | (0.4)% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (243.7) | (59.8)% | (239.9) | (58.6)% | (3.8) | (1.6)% |
| Gross\tprofit | 163.7 | 40.2\t% | 169.3 | 41.4\t% | (5.6) | (3.3)% |
| Operating\texpenses | (106.7) | (26.2)% | (102.0) | (25.0)% | (4.7) | (4.6)% |
| Segment\toperating\tearnings | $57.0 | 14.0\t% | $67.3 | 16.4\t% | $(10.3) | (15.3)% |

Segment	net	sales	of	$407.4	million	in	the	fourth	quarter	of	2018	decreased	$1.8	million,	or	0.4%,	from	2017	levels,	reflecting	a	$1.6	million,	or	0.4%,	organic	sales increase,	which	was	more	than	offset	by	$3.4	million	of	unfavorable	foreign	currency	translation.	The	organic	sales	increase	reflects	a	low	single-digit	increase	in	the company's	U.S.	franchise	operations,	partially	offset	by	a	low	single-digit	decline	in	the	segments	international	operations.

Segment	gross	profit	of	$163.7	million	in	the	fourth	quarter	of	2018	compared	to	$169.3	million	last	year.	Gross	margin	of	40.2%,	in	the	quarter	declined	120	bps	from 41.4%	primarily	due	to	20	bps	of	unfavorable	foreign	currency	effects,	increased	sales	of	lower	gross	margin	products,	and	higher	material	and	other	costs.

Segment	operating	expenses	of	$106.7	million	in	the	fourth	quarter	of	2018	increased	from	$102.0	million	last	year.	The	operating	expense	margin	of	26.2%	in	the quarter	increased	120	bps	from	25.0%	last	year	primarily	due	to	efforts	to	provide	increased	levels	of	field	and	technical	support	to	franchisees.

As	a	result	of	these	factors,	segment	operating	earnings	of	$57.0	million	in	the	fourth	quarter	of	2018,	including	$1.4	million	of	unfavorable	foreign	currency	effects, decreased	$10.3	million	from	2017	levels.	Operating	margin	for	the	Snap-on	Tools	Group	of	14.0%	in	the	fourth	quarter	of	2018	compared	to	16.4%	last	year.

| External	net	sales | $275.1 | 80.9	% | $292.2 | 81.9	% | $(17.1) | (5.9)% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Intersegment\tnet\tsales | 64.8 | 19.1\t% | 64.6 | 18.1\t% | 0.2 | 0.3\t% |
| Segment\tnet\tsales | 339.9 | 100.0\t% | 356.8 | 100.0\t% | (16.9) | (4.7)% |
| Cost\tof\tgoods\tsold | (178.6) | (52.5)% | (194.7) | (54.6)% | 16.1 | 8.3\t% |
| Gross\tprofit | 161.3 | 47.5\t% | 162.1 | 45.4\t% | (0.8) | (0.5)% |
| Operating\texpenses | (73.9) | (21.8)% | (71.9) | (20.1)% | (2.0) | (2.8)% |
| Segment\toperating\tearnings | $87.4 | 25.7\t% | $90.2 | 25.3\t% | $(2.8) | (3.1)% |

Segment	net	sales	of	$339.9	million	in	the	fourth	quarter	of	2018	decreased	$16.9	million,	or	4.7%,	from	2017	levels,	reflecting	a	$12.2	million,	or	3.5%,	organic	sales decline	and	$4.7	million	of	unfavorable	foreign	currency	translation.	The	organic	sales	decrease	includes	a	high	single-digit	decline	in	sales	to	OEM	dealerships	and	a low	single-digit	decline	in	sales	of	undercar	equipment.

Segment	gross	profit	of	$161.3	million	in	the	fourth	quarter	of	2018	compared	to	$162.1	million	last	year.	Gross	margin	of	47.5%	in	the	quarter	improved	210	bps	from 45.4%	last	year	as	a	result	of	a	shift	in	sales	that	included	decreased	volumes	of	lower	gross	margin	products	and	savings	from	the	company's	RCI	initiatives.

Segment	operating	expenses	of	$73.9	million	in	the	fourth	quarter	of	2018	compared	to	$71.9	million	last	year.	The	operating	expense	margin	of	21.8%	increased	170 bps	from	20.1%	last	year	primarily	due	to	the	effect	of	lower	sales	volume	and	higher	costs.

As	a	result	of	these	factors,	segment	operating	earnings	of	$87.4	million	in	the	fourth	quarter	of	2018,	including	$1.3	million	of	unfavorable	foreign	currency	effects, decreased	$2.8	million	from	2017	levels.	Operating	margin	for	the	Repair	Systems	&	Information	Group	of	25.7%	in	the	fourth	quarter	of	2018	compared	to	25.3%	last year.

| Financial	services	revenue | $82.7 | 100.0	% | $79.9 | 100.0	% | $2.8 | 3.5	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Financial\tservices\texpenses | (26.6) | (32.2)% | (25.5) | (31.9)% | (1.1) | (4.3)% |
| Segment\toperating\tearnings | $56.1 | 67.8\t% | $54.4 | 68.1\t% | $1.7 | 3.1\t% |

Financial	services	revenue	of	$82.7	million	in	the	fourth	quarter	of	2018	increased	$2.8	million,	or	3.5%,	from	$79.9	million	last	year	primarily	reflecting	$3.1	million	of higher	revenue	as	a	result	of	continued	growth	of	the	company's	financial	services	portfolio,	partially	offset	by	$0.3	million	of	decreased	revenue	from	lower	average yields	on	finance	receivables.	In	the	fourth	quarters	of	2018	and	2017,	the	respective	average	yields	on	finance	receivables	were	17.7%	and	17.8%,	and	the	average yields	on	contract	receivables	were	9.2%	in	both	periods.	Originations	of	$267.1	million	in	the	fourth	quarter	of	2018	increased	$2.1	million,	or	0.8%,	from	2017	levels.

Financial	services	expenses	primarily	include	personnel-related	and	other	general	and	administrative	costs,	as	well	as	provisions	for	credit	losses.	These	expenses	are generally	more	dependent	on	changes	in	the	financial	services	portfolio	than	they	are	on	the	revenue	of	the	segment.	Financial	services	expenses	of	$26.6	million	in	the fourth	quarter	of	2018	increased	from	$25.5	million	last	year	primarily	due	to	increases	in	both	the	provisions	for	credit	losses	and	in	the	size	of	the	portfolio.	As	a percentage	of	the	average	financial	services	portfolio,	financial	services	expenses	were	1.3%	for	both	the	fourth	quarters	of	2018	and	2017.

Financial	 services	 operating	 earnings	 of	 $56.1	 million in the fourth	 quarter	 of	2018, including	 $0.3	 million	 of	 unfavorable foreign	 currency	 effects, increased $1.7	million,	or	3.1%,	from	2017	levels.

Snap-on's	fourth	quarter	2018	general	corporate	expenses	of	$13.1	million	decreased	$37.7	million	from	$50.8	million	last	year.	The	year-over-year	decrease	in	general corporate	expenses	primarily	reflects	a	$4.3	million	benefit	in	2018	from	the	legal	settlement	and	a	$30.9	million	legal	charge	in	2017.

| Net	sales | $3,686.9 | 100.0	% | $3,430.4 | 100.0	% | $256.5 | 7.5	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (1,861.0) | (50.5)% | (1,720.0) | (50.1)% | (141.0) | (8.2)% |
| Gross\tprofit | 1,825.9 | 49.5\t% | 1,710.4 | 49.9\t% | 115.5 | 6.8\t% |
| Operating\texpenses | (1,161.3) | (31.5)% | (1,048.0) | (30.6)% | (113.3) | (10.8)% |
| Operating\tearnings\tbefore\tfinancial\tservices | 664.6 | 18.0\t% | 662.4 | 19.3\t% | 2.2 | 0.3\t% |
| Financial\tservices\trevenue | 313.4 | 100.0\t% | 281.4 | 100.0\t% | 32.0 | 11.4\t% |
| Financial\tservices\texpenses | (95.9) | (30.6)% | (82.7) | (29.4)% | (13.2) | (16.0)% |
| Operating\tearnings\tfrom\tfinancial\tservices | 217.5 | 69.4\t% | 198.7 | 70.6\t% | 18.8 | 9.5\t% |
| Operating\tearnings | 882.1 | 22.1\t% | 861.1 | 23.2\t% | 21.0 | 2.4\t% |
| Interest\texpense | (52.4) | (1.3)% | (52.2) | (1.4)% | (0.2) | (0.4)% |
| Other\tincome\t(expense)\t–\tnet | (7.8) | (0.3)% | (7.5) | (0.2)% | (0.3) | (4.0)% |
| Earnings\tbefore\tincome\ttaxes\tand\tequity\tearnings | 821.9 | 20.5\t% | 801.4 | 21.6\t% | 20.5 | 2.6\t% |
| Income\ttax\texpense | (250.9) | (6.2)% | (244.3) | (6.6)% | (6.6) | (2.7)% |
| Earnings\tbefore\tequity\tearnings | 571.0 | 14.3\t% | 557.1 | 15.0\t% | 13.9 | 2.5\t% |
| Equity\tearnings,\tnet\tof\ttax | 1.2 | — | 2.5 | 0.1\t% | (1.3) | NM |
| Net\tearnings | 572.2 | 14.3\t% | 559.6 | 15.1\t% | 12.6 | 2.3\t% |
| Net\tearnings\tattributable\tto\tnoncontrolling\tinterests | (14.5) | (0.4)% | (13.2) | (0.4)% | (1.3) | (9.8)% |
| Net\tearnings\tattributable\tto\tSnap-on\tInc. | $557.7 | 13.9\t% | $546.4 | 14.7\t% | $11.3 | 2.1\t% |

Operating	expenses	of	$1,161.3	million	in	2017	compared	to	$1,048.0	million	in	2016,	 as	2017	included	$45.9	million	for	the	legal	charges.	The	operating	expense margin	(operating	expenses	as	a	percentage	of	net	sales)	of	31.5%	in	2017	increased	90	bps	from	30.6%	in	2016	as	130	bps	for	the	legal	charges	and	30	bps	of	operating expenses	from	acquisitions	were	partially	offset	by	benefits	from	sales	volume	leverage.	Restructuring	costs	included	in	operating	expenses	were	$0.1	million	in	2016.

Operating	earnings	before	financial	services	of	$664.6	million	in	2017,	including	$45.9	million	of	expense	for	the	legal	charges	and	$8.6	million	of	unfavorable	foreign currency	effects,	increased	$2.2	million,	or	0.3%,	as	compared	to	$662.4	million	in	2016.	As	a	percentage	of	net	sales,	operating	earnings	before	financial	services	of 18.0%,	including	130	bps	impact	from	the	legal	charges,	compared	to	19.3%	in	2016.

Financial	services	revenue	of	$313.4	million	in	2017	compared	to	revenue	of	$281.4	million	in	2016.	Financial	services	operating	earnings	of	$217.5	million	in	2017 increased	$18.8	million,	or	9.5%,	as	compared	to	$198.7	million	in	2016,	including	$0.4	million	of	unfavorable	foreign	currency	effects.	The	year-over-year	increases	in both	revenue	and	operating	earnings	primarily	reflect	continued	growth	of	the	company's	financial	services	portfolio.

Operating	earnings	of	$882.1	million	in	2017,	including	$45.9	million	of	expense	related	to	the	legal	charges	and	$9.0	million	of	unfavorable	foreign	currency	effects, increased	$21.0	million,	or	2.4%,	from	$861.1	million	in	2016.	As	a	percentage	of	revenues,	operating	earnings	of	22.1%	compared	to	23.2%	in	2016.

Interest	expense	of	$52.4	million	in	2017	increased	$0.2	million	from	$52.2	million	in	2016.	See	Note	10	to	the	Consolidated	Financial	Statements	for	information	on Snap-on's	debt	and	credit	facilities.

Other	income	(expense)	-	net	was	expense	of	$7.8	million	and	$7.5	million	in	2017	and	2016,	respectively.	Other	income	(expense)	-	net	reflects	net	losses	and	gains associated	with	hedging	and	currency	exchange	rate	transactions,	non-service	cost	components	of	net	periodic	pension	and	postretirement	costs,	and	interest	income.	See Note	17	to	the	Consolidated	Financial	Statements	for	information	on	other	income	(expense)	-	net.

Snap-on's	effective	income	tax	rate	on	earnings	attributable	to	Snap-on	was	31.1%	in	2017,	including	a	0.4%	benefit	from	the	legal	charges,	compared	to	31.0%	in	2016. The	2017	tax	rate	includes	a	net	$7.0	million	charge,	or	90	bps	impact,	from	the	implementation	of	the	Tax	Act,	including	the	estimated	transition	tax	of	$13.7	million	on previously	unremitted	foreign	earnings,	partially	offset	by	a	$6.7	million	estimated	tax	benefit	related	to	revaluation	of	deferred	tax	assets	and	liabilities.	See	Note	9	to the	Consolidated	Financial	Statements	for	information	on	income	taxes.

Net	earnings	attributable	to	Snap-on	of	$557.7	million,	or	$9.52	per	diluted	share,	in	2017,	including	$28.4	million,	or	$0.48	per	diluted	share,	for	the	after-tax	expense related	to	the	legal	charges,	and	$7.0	million,	or	$0.12	per	diluted	share	related	to	the	Tax	Act,	increased	$11.3	million,	or	$0.32	per	diluted	share,	from	2016	levels.	Net earnings	attributable	to	Snap-on	in	2016	were	$546.4	million	or	$9.20	per	diluted	share.

| External	net	sales | $986.1 | 78.0	% | $863.0 | 75.2	% | $123.1 | 14.3	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Intersegment\tnet\tsales | 278.9 | 22.0\t% | 285.3 | 24.8\t% | (6.4) | (2.2)% |
| Segment\tnet\tsales | 1,265.0 | 100.0\t% | 1,148.3 | 100.0\t% | 116.7 | 10.2\t% |
| Cost\tof\tgoods\tsold | (766.4) | (60.6)% | (697.8) | (60.8)% | (68.6) | (9.8)% |
| Gross\tprofit | 498.6 | 39.4\t% | 450.5 | 39.2\t% | 48.1 | 10.7\t% |
| Operating\texpenses | (312.1) | (24.7)% | (281.7) | (24.5)% | (30.4) | (10.8)% |
| Segment\toperating\tearnings | $186.5 | 14.7\t% | $168.8 | 14.7\t% | $17.7 | 10.5\t% |

Segment	net	sales	of	$1,265.0	million	in	2017	increased	$116.7	million,	or	10.2%,	from	2016	levels,	reflecting	a	$52.0	million	or	4.5%,	organic	sales	gain	and	$65.5 million	of	acquisition-related	sales,	partially	offset	by	$0.8	million	of	unfavorable	foreign	currency	translation.	The	organic	sales	increase	primarily	includes	a	high single-digit	gain	in	sales	to	customers	in	critical	industries,	and	a	mid	single-digit	gain	in	the	segment's	European-based	hand	tools	business.	These	organic	sales	gains were	partially	offset	by	a	low	single-digit	decline	in	sales	in	the	segment's	power	tools	operations.

Segment	operating	expenses	of	$312.1	million	in	2017	compared	to	$281.7	million	in	2016.	The	operating	expense	margin	of	24.7%	in	2017	increased	20	bps	from 24.5%	in	2016	as	40	bps	of	operating	expenses	from	acquisitions	and	increased	costs	for	research	and	engineering	activities	were	partially	offset	by	benefits	from	sales volume	leverage.

As	a	result	of	these	factors,	segment	operating	earnings	of	$186.5	million	in	2017,	including	$0.4	million	of	favorable	foreign	currency	effects,	increased	$17.7	million from	2016	levels.	Operating	margin	(segment	operating	earnings	as	a	percentage	of	segment	net	sales)	for	the	Commercial	&	Industrial	Group	was	14.7%	in	both	years.

| Segment	net	sales | $1,625.1 | 100.0	% | $1,633.9 | 100.0	% | $(8.8) | (0.5)% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tgoods\tsold | (930.9) | (57.3)% | (929.9) | (56.9)% | (1.0) | (0.1)% |
| Gross\tprofit | 694.2 | 42.7\t% | 704.0 | 43.1\t% | (9.8) | (1.4)% |
| Operating\texpenses | (419.5) | (25.8)% | (423.6) | (25.9)% | 4.1 | 1.0\t% |
| Segment\toperating\tearnings | $274.7 | 16.9\t% | $280.4 | 17.2\t% | $(5.7) | (2.0)% |

Segment	net	sales	of	$1,625.1	million	in	2017	decreased	$8.8	million,	or	0.5%,	from	2016	levels,	reflecting	a	$6.9	million,	or	0.4%,	organic	sales	decrease	and	$1.9 million	of	unfavorable	foreign	currency	translation.	The	organic	sales	decrease	reflects	a	low	single-digit	decline	in	the	company's	U.S.	franchise	operations	partially offset	by	a	high	single-digit	gain	in	the	international	franchise	operations.

As	a	result	of	these	factors,	segment	operating	earnings	of	$274.7	million	in	2017,	including	$7.9	million	of	unfavorable	foreign	currency	effects,	decreased	$5.7	million from	2016	levels.	Operating	margin	for	the	Snap-on	Tools	Group	of	16.9%	in	2017	compared	to	17.2%	in	2016.

| External	net	sales | $1,075.7 | 79.8	% | $933.5 | 79.1	% | $142.2 | 15.2	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Intersegment\tnet\tsales | 271.5 | 20.2\t% | 246.4 | 20.9\t% | 25.1 | 10.2\t% |
| Segment\tnet\tsales | 1,347.2 | 100.0\t% | 1,179.9 | 100.0\t% | 167.3 | 14.2\t% |
| Cost\tof\tgoods\tsold | (714.1) | (53.0)% | (624.0) | (52.9)% | (90.1) | (14.4)% |
| Gross\tprofit | 633.1 | 47.0\t% | 555.9 | 47.1\t% | 77.2 | 13.9\t% |
| Operating\texpenses | (297.8) | (22.1)% | (257.3) | (21.8)% | (40.5) | (15.7)% |
| Segment\toperating\tearnings | $335.3 | 24.9\t% | $298.6 | 25.3\t% | $36.7 | 12.3\t% |

Segment	net	sales	of	$1,347.2	million	in	2017	increased	$167.3	million,	or	14.2%,	from	2016	levels,	reflecting	an	$89.6	million,	or	7.6%,	organic	sales	gain,	$76.0 million	of	acquisition-related	sales	and	$1.7	million	of	favorable	foreign	currency	translation.	The	organic	sales	increase	includes	a	double-digit	gain	in	sales	to	OEM dealerships,	a	high	single-digit	gain	in	sales	of	diagnostic	and	repair	information	products	to	independent	repair	shop	owners	and	managers,	and	mid	single-digit increases	in	sales	of	undercar	equipment.

Segment	gross	profit	of	$633.1	million	in	2017	compared	to	$555.9	million	in	2016.	Gross	margin	of	47.0%	in	2017	decreased	10	bps	from	47.1%	in	2016,	as	the	impact from	higher	sales	of	lower	gross	margin	products	were	partially	offset	by	savings	from	RCI	initiatives	and	20	bps	of	benefits	from	acquisitions.	Restructuring	costs included	in	gross	profit	were	$0.8	million	in	2016.

Segment	operating	expenses	of	$297.8	million	in	2017	compared	to	$257.3	million	in	2016.	The	operating	expense	margin	of	22.1%	in	2017	increased	30	bps	from 21.8%	in	2016	primarily	due	to	a	120	bps	impact	from	acquisitions,	partially	offset	by	benefits	from	sales	volume	leverage.	Restructuring	costs	included	in	operating expenses	were	$0.1	million	in	2016.

As	a	result	of	these	factors,	segment	operating	earnings	of	$335.3	million	in	2017,	including	$1.1	million	of	unfavorable	foreign	currency	effects,	increased	$36.7 million	from	2016	levels.	Operating	margin	for	the	Repair	Systems	&	Information	Group	of	24.9%	in	2017	compared	to	25.3%	in	2016.

| Financial	services	revenue | $313.4 | 100.0	% | $281.4 | 100.0	% | $32.0 | 11.4	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Financial\tservices\texpenses | (95.9) | (30.6)% | (82.7) | (29.4)% | (13.2) | (16.0)% |
| Segment\toperating\tearnings | $217.5 | 69.4\t% | $198.7 | 70.6\t% | $18.8 | 9.5\t% |

Financial	services	revenue	of	$313.4	million	in	2017	increased	$32.0	million,	or	11.4%,	from	$281.4	million	in	2016	primarily	reflecting	$34.9	million	of	higher	revenue as	a	result	of	continued	growth	of	the	company's	financial	services	portfolio,	partially	offset	by	$2.9	million	of	decreased	revenue	from	lower	average	yields	on	finance and	contract	receivables.	In	2017	and	2016,	the	respective	average	yields	on	finance	receivables	were	17.9%	and	18.0%,	and	the	respective	average	yield	on	contract receivables	were	9.2%	and	9.4%.	Originations	of	$1,072.0	million	in	2017	decreased	$3.7	million,	or	0.3%,	from	2016	levels.

Financial	services	expenses	primarily	include	personnel-related	and	other	general	and	administrative	costs,	as	well	as	provisions	for	credit	losses.	These	expenses	are generally	more	dependent	on	changes	in	the	financial	services	portfolio	than	they	are	on	the	revenue	of	the	segment.	Financial	services	expenses	of	$95.9	million	in	2017 increased	from	$82.7	million	in	2016	primarily	due	to	changes	in	both	the	provisions	for	credit	losses	and	in	the	size	of	the	portfolio.	As	a	percentage	of	the	average financial	services	portfolio,	financial	services	expenses	were	5.0%	and	4.9%	in	2017	and	2016,	respectively.

Financial	services	operating	earnings	of	$217.5	million	in	2017,	including	$0.4	million	of	unfavorable	foreign	currency	effects,	increased	$18.8	million,	or	9.5%,	from 2016	levels.

Snap-on's	general	corporate	expenses	in	2017	of	$131.9	million	increased	$46.5	million	from	$85.4	million	in	2016.	The	year-over-year	increase	in	general	corporate expenses	primarily	reflects	$45.9	million	of	expense	for	the	legal	charges.

# Non-GAAP	Supplemental	Data

The	following	non-GAAP	supplemental	data	is	presented	for	informational	purposes	to	provide	readers	with	insight	into	the	information	used	by	management	for assessing	the	operating	performance	of	Snap-on	Incorporated's	("Snap-on")	non-financial	services	("Operations")	and	"Financial	Services"	businesses.

The	supplemental	Operations	data	reflects	the	results	of	operations	and	financial	position	of	Snap-on's	tools,	diagnostic	and	equipment	products,	software	and	other	non- financial	services	operations	with	Financial	Services	on	the	equity	method.	The	supplemental	Financial	Services	data	reflects	the	results	of	operations	and	financial position	of	Snap-on's	U.S.	and	international	financial	services	operations.	The	financing	needs	of	Financial	Services	are	met	through	intersegment	borrowings	and	cash generated	from	Operations;	Financial	Services	is	charged	interest	expense	on	intersegment	borrowings	at	market	rates.	Income	taxes	are	charged	to	Financial	Services	on the	basis	of	the	specific	tax	attributes	generated	by	the	U.S.	and	international	financial	services	businesses.	Transactions	between	the	Operations	and	Financial	Services businesses	were	eliminated	to	arrive	at	the	Consolidated	Financial	Statements.

Non-GAAP	Supplemental	Consolidating	Data	–	Supplemental	Statements	of	Earnings	information	for	2018,	2017	and	2016	is	as	follows:

|  |  | Operations* |  |  | Financial	Services |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Net\tsales | $3,740.7 | $3,686.9 | $3,430.4 | $— | $— | $— |
| Cost\tof\tgoods\tsold | (1,870.7) | (1,861.0) | (1,720.0) | — | — | — |
| Gross\tprofit | 1,870.0 | 1,825.9 | 1,710.4 | — | — | — |
| Operating\texpenses | (1,144.0) | (1,161.3) | (1,048.0) | — | — | — |
| Operating\tearnings\tbefore\tfinancial\tservices | 726.0 | 664.6 | 662.4 | — | — | — |
| Financial\tservices\trevenue | — | — | — | 329.7 | 313.4 | 281.4 |
| Financial\tservices\texpenses | — | — | — | (99.6) | (95.9) | (82.7) |
| Operating\tearnings\tfrom\tfinancial\tservices | — | — | — | 230.1 | 217.5 | 198.7 |
| Operating\tearnings | 726.0 | 664.6 | 662.4 | 230.1 | 217.5 | 198.7 |
| Interest\texpense | (50.1) | (52.1) | (51.9) | (0.3) | (0.3) | (0.3) |
| Intersegment\tinterest\tincome\t(expense)\t–\tnet | 69.7 | 70.8 | 72.2 | (69.7) | (70.8) | (72.2) |
| Other\tincome\t(expense)\t–\tnet | 4.1 | (7.8) | (7.6) | 0.1 | — | 0.1 |
| Earnings\tbefore\tincome\ttaxes\tand\tequity\tearnings | 749.7 | 675.5 | 675.1 | 160.2 | 146.4 | 126.3 |
| Income\ttax\texpense | (173.1) | (196.8) | (197.7) | (41.3) | (54.1) | (46.6) |
| Earnings\tbefore\tequity\tearnings | 576.6 | 478.7 | 477.4 | 118.9 | 92.3 | 79.7 |
| Financial\tservices\t–\tnet\tearnings\tattributable\tto\tSnap-on | 118.9 | 92.3 | 79.7 | — | — | — |
| Equity\tearnings,\tnet\tof\ttax | 0.7 | 1.2 | 2.5 | — | — | — |
| Net\tearnings | 696.2 | 572.2 | 559.6 | 118.9 | 92.3 | 79.7 |
| Net\tearnings\tattributable\tto\tnoncontrolling\tinterests | (16.3) | (14.5) | (13.2) | — | — | — |
| Net\tearnings\tattributable\tto\tSnap-on | $679.9 | $557.7 | $546.4 | $118.9 | $92.3 | $79.7 |

*	Snap-on	with	Financial	Services	on	the	equity	method.

Non-GAAP	Supplemental	Consolidating	Data	–	Supplemental	Balance	Sheet	Information	as	of	2018	and	2017	year	end	is	as	follows:

|  | Operations* | Operations* | Financial	Services |  |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | 2018 | 2017 | 2018 | 2017 |
| ASSETS |  |  |  |  |
| Current\tassets: |  |  |  |  |
| Cash\tand\tcash\tequivalents | $140.5 | $91.8 | $0.4 | $0.2 |
| Intersegment\treceivables | 15.1 | 17.1 | — | — |
| Trade\tand\tother\taccounts\treceivable\t–\tnet | 692.1 | 674.9 | 0.5 | 0.7 |
| Finance\treceivables\t–\tnet | — | — | 518.5 | 505.4 |
| Contract\treceivables\t–\tnet | 6.6 | 9.4 | 91.7 | 87.4 |
| Inventories\t–\tnet | 673.8 | 638.8 | — | — |
| Prepaid\texpenses\tand\tother\tassets | 100.2 | 117.6 | 0.5 | 0.7 |
| Total\tcurrent\tassets | 1,628.3 | 1,549.6 | 611.6 | 594.4 |
| Property\tand\tequipment\t–\tnet | 493.5 | 482.4 | 1.6 | 2.0 |
| Investment\tin\tFinancial\tServices | 329.5 | 317.4 | — | — |
| Deferred\tincome\ttax\tassets | 45.8 | 25.2 | 18.9 | 26.8 |
| Intersegment\tlong-term\tnotes\treceivable | 701.3 | 583.7 | — | — |
| Long-term\tfinance\treceivables\t–\tnet | — | — | 1,074.4 | 1,039.2 |
| Long-term\tcontract\treceivables\t–\tnet | 11.9 | 13.2 | 333.0 | 309.4 |
| Goodwill | 902.2 | 924.1 | — | — |
| Other\tintangibles\t–\tnet | 232.9 | 253.7 | — | — |
| Other\tassets | 51.9 | 63.1 | 0.1 | — |
| Total\tassets | $4,397.3 | $4,212.4 | $2,039.6 | $1,971.8 |
| *\tSnap-on\twith\tFinancial\tServices\ton\tthe\tequity\tmethod. |  |  |  |  |
|  | 2018\tANNUAL\tREPORT |  |  | 45 |

Non-GAAP	Supplemental	Consolidating	Data	–	Supplemental	Balance	Sheet	Information	(continued):

|  | Operations* | Operations* | Financial	Services |  |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | 2018 | 2017 | 2018 | 2017 |
| LIABILITIES\tAND\tEQUITY |  |  |  |  |
| Current\tliabilities: |  |  |  |  |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | $186.3 | $183.2 | $— | $250.0 |
| Accounts\tpayable | 199.6 | 177.1 | 1.5 | 1.1 |
| Intersegment\tpayables | — | — | 15.1 | 17.1 |
| Accrued\tbenefits | 52.0 | 55.8 | — | — |
| Accrued\tcompensation | 66.8 | 67.8 | 4.7 | 3.7 |
| Franchisee\tdeposits | 67.5 | 66.5 | — | — |
| Other\taccrued\tliabilities | 355.4 | 366.0 | 26.1 | 29.7 |
| Total\tcurrent\tliabilities | 927.6 | 916.4 | 47.4 | 301.6 |
| Long-term\tdebt\tand\tintersegment\tlong-term\tdebt | — | — | 1,647.3 | 1,337.3 |
| Deferred\tincome\ttax\tliabilities | 41.4 | 28.4 | — | — |
| Retiree\thealth\tcare\tbenefits | 31.8 | 36.0 | — | — |
| Pension\tliabilities | 171.3 | 158.9 | — | — |
| Other\tlong-term\tliabilities | 106.6 | 100.4 | 15.4 | 15.5 |
| Total\tliabilities | 1,278.7 | 1,240.1 | 1,710.1 | 1,654.4 |
| Total\tshareholders'\tequity\tattributable\tto\tSnap-on | 3,098.8 | 2,953.9 | 329.5 | 317.4 |
| Noncontrolling\tinterests | 19.8 | 18.4 | — | — |
| Total\tequity | 3,118.6 | 2,972.3 | 329.5 | 317.4 |
| Total\tliabilities\tand\tequity | $4,397.3 | $4,212.4 | $2,039.6 | $1,971.8 |

# Liquidity	and	Capital	Resources

Snap-on's	growth	has	historically	been	funded	by	a	combination	of	cash	provided	by	operating	activities	and	debt	financing.	On	February	20,	2018,	the	company	issued $400	million	(with	net	proceeds	of	$395.4	million)	of	the	2048	Notes;	the	company	used	the	proceeds	from	the	offering	to	repay,	prior	to	maturity,	$200	million	of	the 2019	Notes,	as	well	as	to	reduce	outstanding	commercial	paper	borrowings.	In	addition,	on	January	16,	2018,	Snap-on	repaid	$250	million	of	the	2018	Notes	upon maturity	with	available	cash	and	cash	generated	from	 issuances	of	commercial	paper.	Snap-on	believes	 that	 its	cash	from	operations	and	collections	of	finance receivables,	 coupled	 with	 its	 sources	 of	 borrowings	 and	 available	 cash	 on	 hand,	 are	 sufficient	 to	 fund	 its	 currently	 anticipated	 requirements	 for	 scheduled	 debt repayments,	payments	of	interest	and	dividends,	new	receivables	originated	by	our	financial	services	businesses,	capital	expenditures,	working	capital,	the	funding	of pension	plans,	and	funding	for	share	repurchases	and	acquisitions,	if	and	as	they	arise.

Due	to	Snap-on's	credit	rating	over	the	years,	external	funds	have	been	available	at	an	acceptable	cost.	As	of	the	close	of	business	on	February	8,	2019,	Snap-on's	long- term	debt	and	commercial	paper	were	rated,	respectively,	A2	and	P-1	by	Moody's	Investors	Service;	A-	and	A-2	by	Standard	&	Poor's;	and	A	and	F1	by	Fitch	Ratings. Snap-on	believes	that	its	current	credit	arrangements	are	sound	and	that	the	strength	of	its	balance	sheet	affords	the	company	the	financial	flexibility,	including	through access	to	financial	markets	for	potential	new	financing,	to	respond	to	both	internal	growth	opportunities	and	those	available	through	acquisitions.	However,	Snap-on cannot	provide	any	assurances	of	the	availability	of	future	financing	or	the	terms	on	which	it	might	be	available,	or	that	its	debt	ratings	may	not	decrease.

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

As	 of	2018	year	end,	working	capital	(current	assets	less	current	liabilities)	of	$1,264.9	million increased	$338.9	million from	$926.0	million	 as	 of	2017	year	end primarily	as	a	result	of	other	net	changes	in	working	capital	discussed	below.

The	following	represents	the	company's	working	capital	position	as	of	2018	and	2017	year	end:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Cash\tand\tcash\tequivalents | $140.9 | $92.0 |
| Trade\tand\tother\taccounts\treceivable\t–\tnet | 692.6 | 675.6 |
| Finance\treceivables\t–\tnet | 518.5 | 505.4 |
| Contract\treceivables\t–\tnet | 98.3 | 96.8 |
| Inventories\t–\tnet | 673.8 | 638.8 |
| Prepaid\texpenses\tand\tother\tassets | 92.8 | 110.7 |
| Total\tcurrent\tassets | 2,216.9 | 2,119.3 |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | (186.3) | (433.2) |
| Accounts\tpayable | (201.1) | (178.2) |
| Other\tcurrent\tliabilities | (564.6) | (581.9) |
| Total\tcurrent\tliabilities | (952.0) | (1,193.3) |
| Working\tcapital | $1,264.9 | $926.0 |

Cash	and	cash	equivalents	of	$140.9	million	 as	 of	2018	 year	 end	 increased	$48.9	million	 from	2017	year-end	levels	primarily	due	to:	(i)	$764.5	million	of	cash generated	from	operations,	net	of	$50.0	million	of	discretionary	cash	contributions	to	the	company's	domestic	pension	plans;	(ii)	$747.7	million	of	cash	from	collections of	finance	receivables;	(iii)	$395.4	million	of	net	proceeds	from	the	2048	Notes;	(iv)	$55.5	million	of	cash	proceeds	from	stock	purchase	and	option	plan	exercises;	and (v)	$4.9	million	of	net	proceeds	from	notes	payable	and	other	short-term	borrowings.	These	increases	in	cash	and	cash	equivalents	were	partially	offset	by:	(i)	the funding	of	$865.6	million	of	new	finance	receivables;	(ii)	the	repurchase	of	1,769,000	shares	of	the	company's	common	stock	for	$284.1	million;	(iii)	the	repayment	of $250	million	of	the	2018	Notes;	(iv)	the	repayment	of	$200	million	of	the	2019	Notes;	(v)	dividend	payments	to	shareholders	of	$192.0	million;	(vi)	the	funding	of $90.9	million	of	capital	expenditures;	and	(vii)	the	funding	of	$3.0	million	for	acquisitions.

Of	the	$140.9	million	of	cash	and	cash	equivalents	as	of	2018	year	end,	$121.4	million	was	held	outside	of	the	United	States.	Snap-on	maintains	non-U.S.	funds	in	its foreign	operations	to:	(i)	provide	adequate	working	capital;	(ii)	satisfy	various	regulatory	requirements;	and/or	(iii)	take	advantage	of	business	expansion	opportunities	as they	arise.	Although	the	Tax	Act	generally	eliminates	U.S.	federal	taxation	on	dividends	from	foreign	subsidiaries,	such	dividends	may	still	be	subject	to	state	income taxation	and	foreign	withholding	taxes.	Snap-on	periodically	evaluates	its	cash	held	outside	the	United	States	and	may	pursue	opportunities	to	repatriate	certain	foreign cash	amounts	to	the	extent	that	it	can	be	accomplished	in	a	tax	efficient	manner.

Trade	and	other	accounts	receivable	–	net	of	$692.6	million	as	of	2018	year	end	increased	$17.0	million	from	2017	year-end	levels	primarily	due	to	an	increase	in	days sales	outstanding	and	$0.2	million	of	receivables	related	to	the	Fastorq	acquisition,	partially	offset	by	$20.8	million	of	unfavorable	foreign	currency	translation.	Days sales	outstanding	(trade	and	other	accounts	receivable	–	net	as	of	the	respective	period	end,	divided	by	the	respective	trailing	12	months	sales,	times	360	days)	was	67 days	at	2018	year	end	and	66	days	at	2017	year	end.

The	current	portions	of	net	finance	and	contract	receivables	of	$616.8	million	as	of	2018	year	end	compared	to	$602.2	million	at	2017	year	end.	The	long-term	portions of	net	finance	and	contract	receivables	of	$1,419.3	million	as	of	2018	year	end	compared	to	$1,361.8	million	at	2017	year	end.	The	combined	$72.1	million	increase	in net	current	and	long-term	finance	and	contract	receivables	over	2017	year-end	levels	is	primarily	due	to	continued	growth	of	the	company's	financial	services	portfolio, partially	offset	by	$16.8	million	of	unfavorable	foreign	currency	translation.

Inventories	–	net	of	$673.8	million	as	of	2018	year	end	increased	$35.0	million	from	2017	year-end	levels	primarily	due	to	$20.9	million	related	to	the	adoption	of	ASU No.	2014-09,	Revenue	from	Contracts	with	Customers	(Topic	606),	continued	support	for	new	product	introductions,	as	well	as	$0.7	million	of	inventories	related	to	the Fastorq	acquisition,	partially	offset	by	$23.2	million	of	foreign	currency	translation.	As	of	2018	and	2017	year	end,	inventory	turns	(trailing	12	months	of	cost	of	goods sold,	divided	by	the	average	of	the	beginning	and	ending	inventory	balance	for	the	trailing	12	months)	were	2.9	turns	and	3.2	turns,	respectively.	Inventories	accounted for	using	the	first-in,	first-out	("FIFO")	method	as	of	both	2018	and	2017	year	end	approximated	61%	of	total	inventories.	All	other	inventories	are	accounted	for	using the	last-in,	first-out	("LIFO")	method.	The	company's	LIFO	reserve	was	$78.4	million	and	$75.1	million	at	2018	and	2017	year	end,	respectively.

Notes	payable	and	current	maturities	of	long-term	debt	of	$186.3	million	as	of	2018	year	end	included	$177.1	million	of	commercial	paper	borrowings	and	$9.2	million of	other	notes.	Notes	payable	and	current	maturities	of	long-term	debt	of	$433.2	million	as	of	2017	year	end	consisted	of	$250	million	of	the	2018	Notes	(which	were subsequently	repaid),	$151	million	of	commercial	paper	borrowings	and	$32.2	million	of	other	notes.

Average	notes	payable	outstanding,	including	commercial	paper	borrowings,	were	$167.7	million	 and	$126.8	million	 in	2018	 and	2017,	respectively.	The	weighted- average	interest	rate	of	2.84%	in	2018	increased	from	2.45%	last	year	primarily	due	to	the	impact	of	higher	rates	on	commercial	paper	borrowings.	Average	commercial paper	borrowings	were	$154.9	million	and	$103.3	million	in	2018	and	2017,	respectively,	and	the	weighted-average	interest	rate	of	2.03%	in	2018	increased	from	1.14% last	year.	At	2018	year	end,	the	weighted-average	interest	rate	on	outstanding	notes	payable	of	3.21%	compared	with	2.34%	at	2017	year	end.	The	2018	year-end	rate increased	primarily	due	to	higher	rates	on	commercial	borrowings.

Accounts	payable	of	$201.1	million	as	of	2018	year	end	increased	$22.9	million	from	2017	year-end	levels	primarily	due	to	the	timing	of	payments,	partially	offset	by $5.0	million	of	foreign	currency	translation.

Other	accrued	liabilities	of	$373.6	million	as	of	2018	year	end	decreased	$14.5	million from	2017	year-end	levels	primarily	due	to	lower	income	tax	accruals,	the settlement	of	an	employment-related	litigation	matter	and	$8.7	million	of	foreign	currency	translation.

Snap-on	has	a	five-year,	$700	million	multi-currency	revolving	credit	facility	that	terminates	on	December	15,	2020	(the	"Credit	Facility");	no	amounts	were	outstanding under	the	Credit	Facility	as	of	December	29,	2018.	Borrowings	under	the	Credit	Facility	bear	interest	at	varying	rates	based	on	Snap-on's	then-current,	long-term	debt ratings.	The	Credit	Facility's	financial	covenant	requires	 that	Snap-on	maintain,	as	of	each	fiscal	quarter	end,	either	(i)	a	ratio	not	greater	 than	0.60	 to	1.00	of consolidated	net	debt	(consolidated	debt	net	of	certain	cash	adjustments)	 to	 the	sum	of	such	consolidated	net	debt	plus	 total	equity	and	 less	accumulated	other comprehensive	income	or	loss	(the	"Debt	Ratio");	or	(ii)	a	ratio	not	greater	than	3.50	to	1.00	of	such	consolidated	net	debt	to	earnings	before	interest,	taxes,	depreciation, amortization	and	certain	other	adjustments	for	the	preceding	four	fiscal	quarters	then	ended	(the	"Debt	to	EBITDA	Ratio").	Snap-on	may,	up	to	two	times	during	any five-year	period	during	the	term	of	the	Credit	Facility	(including	any	extensions	thereof),	increase	the	maximum	Debt	Ratio	to	0.65	to	1.00	and/or	increase	the	maximum Debt	to	EBITDA	Ratio	to	3.75	to	1.00	for	four	consecutive	fiscal	quarters	in	connection	with	certain	material	acquisitions	(as	defined	in	the	related	credit	agreement).	As of	2018	year	end,	the	company's	actual	ratios	of	0.23	and	0.99,	respectively,	were	both	within	the	permitted	ranges	set	forth	in	this	financial	covenant.	Snap-on	generally issues	commercial	paper	to	fund	its	financing	needs	on	a	short-term	basis	and	uses	the	Credit	Facility	as	back-up	liquidity	to	support	such	commercial	paper	issuances.

Snap-on's	Credit	Facility	and	other	debt	agreements	also	contain	certain	usual	and	customary	borrowing,	affirmative,	negative	and	maintenance	covenants.	As	of	2018 year	end,	Snap-on	was	in	compliance	with	all	covenants	of	its	Credit	Facility	and	other	debt	agreements.

Snap-on	believes	it	has	sufficient	available	cash	and	access	to	both	committed	and	uncommitted	credit	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	the	revolving	Credit	Facility.	Snap-on	believes	that it	can	access	short-term	debt	markets,	predominantly	through	commercial	paper	issuances	and	existing	lines	of	credit,	to	fund	its	short-term	requirements	and	to	ensure near-term	liquidity.	Snap-on	regularly	monitors	the	credit	and	financial	markets	and	may	take	advantage	of	what	it	believes	are	favorable	market	conditions	to	issue long-term	debt	to	further	improve	its	liquidity	and	capital	resources.	Near-term	liquidity	requirements	for	Snap-on	include	scheduled	debt	payments,	payments	of interest	and	dividends,	funding	to	support	new	receivables	originated	by	our	financial	services	businesses,	capital	expenditures,	working	capital,	the	funding	of	pension plans,	and	funding	for	share	repurchases	and	acquisitions,	if	and	as	they	arise.	Snap-on	intends	to	make	contributions	of	$9.4	million	to	its	foreign	pension	plans	and $1.9	million	to	its	domestic	pension	plans	in	2019,	as	required	by	law.	Depending	on	market	and	other	conditions,	Snap-on	may	make	additional	discretionary	cash contributions	to	its	pension	plans	in	2019.

Snap-on's	long-term	financing	strategy	is	to	maintain	continuous	access	to	the	debt	markets	to	accommodate	its	liquidity	needs,	including	the	use	of	commercial	paper, additional	fixed-term	debt	and/or	securitizations.

The	following	discussion	focuses	on	information	included	in	the	accompanying	Consolidated	Statements	of	Cash	Flows.

# Operating	Activities

# Investing	Activities

Net	cash	used	by	investing	activities	of	$210.2	million	 in	2018	included	additions	to	finance	receivables	of	$865.6	million,	partially	offset	by	collections	of	$747.7 million.	Net	cash	used	by	investing	activities	of	$341.4	million	in	2017	included	additions	to	finance	receivables	of	$892.0	million,	partially	offset	by	collections	of $712.7	million.	Net	cash	used	by	investing	activities	of	$473.4	million	in	2016	included	additions	to	finance	receivables	of	$915.0	million,	partially	offset	by	collections of	$671.7	million.	Finance	receivables	are	comprised	of	extended-term	installment	payment	contracts	to	both	technicians	and	independent	shop	owners	(i.e.,	franchisees' customers)	to	enable	them	to	purchase	tools	and	diagnostic	and	equipment	products	on	an	extended-term	payment	plan,	generally	with	average	payment	terms	of approximately	four	years.

Net	cash	used	by	investing	activities	in	2018	also	included	a	total	of	$3.0	million	for	the	acquisition	of	Fastorq.	Net	cash	used	by	investing	activities	in	2017	included,	a total	of	$82.9	million	(net	of	$1.8	million	of	cash	acquired)	for	the	acquisitions	of	BTC,	Norbar	and	TCS,	as	well	as	working	capital	adjustments	for	the	Car-O-Liner	and Sturtevant	Richmont	acquisitions.	Net	cash	used	by	investing	activities	in	2016	included,	on	a	preliminary	basis,	$160.4	million	(net	of	$4.3	million	of	cash	acquired)	for the	acquisitions	of	Car-O-Liner	and	Sturtevant	Richmont.	See	Note	3	to	the	Consolidated	Financial	Statements	for	information	on	acquisitions.

Capital	 expenditures	 in	2018,	2017	 and	2016	 totaled	$90.9	million,	$82.0	million	 and	$74.3	million,	respectively.	Capital	expenditures	in	all	three	years	included continued	investments	related	to	the	company's	execution	of	its	strategic	Value	Creation	Processes	and	strategic	growth	initiatives.	The	company	also	invested	in: (i)	new	product,	efficiency,	safety	and	cost	reduction	initiatives	that	are	intended	to	expand	and	improve	its	manufacturing	and	distribution	capabilities	worldwide; (ii)	 new	 production	 and	 machine	 tooling	 to	 enhance	 manufacturing	 operations,	 as	 well	 as	 ongoing	 replacements	 of	 manufacturing	 and	 distribution	 equipment, particularly	in	the	United	States;	(iii)	the	ongoing	replacement	and	enhancement	of	the	company's	global	enterprise	resource	planning	(ERP)	management	information systems;	and	(iv)	improvements	to	the	company's	research	and	development	facilities	and	corporate	headquarters	in	Kenosha,	Wisconsin.	Snap-on	believes	that	its	cash generated	from	operations,	as	well	as	its	available	cash	on	hand	and	funds	available	from	its	credit	facilities	will	be	sufficient	to	fund	the	company's	capital	expenditure requirements	in	2019.

# Financing	Activities

Net	cash	used	by	financing	activities	of	$502.2	million	in	2018	included	repayments	of	$250	million	of	the	2018	Notes	at	maturity	and	$200	million	of	the	2019	Notes prior	to	maturity,	as	well	as	a	$7.8	million	loss	on	early	extinguishment	of	debt.	These	amounts	were	partially	offset	by	Snap-on's	sale,	on	February	20,	2018,	of	$400 million	of	the	2048	Notes	at	a	discount,	from	which	Snap-on	received	$395.4	million	of	net	proceeds,	reflecting	$3.5	million	of	transaction	costs,	and	$4.9	million	of proceeds	from	the	net	increase	in	notes	payable	and	other	short-term	borrowings.	Net	cash	used	by	financing	activities	of	$256.1	million	in	2017	included	the	January 2017	repayment	of	$150	million	of	the	2017	Notes.	These	amounts	were	partially	offset	by	Snap-on's	sale,	on	February	15,	2017,	of	$300	million	of	the	2027	Notes	sold at	a	discount,	from	which	Snap-on	received	$297.8	million	of	net	proceeds,	reflecting	$1.9	million	of	transaction	costs,	and	$30.6	million	of	proceeds	from	a	net	increase in	notes	payable	and	other	short-term	borrowings.	Net	cash	used	by	financing	activities	of	$116.0	million	 in	2016	 included	$134.2	million	of	proceeds	from	a	net increase	in	notes	payable	and	other	short-term	borrowings.

Proceeds	from	stock	purchase	and	option	plan	exercises	totaled	$55.5	million	in	2018,	$46.2	million	in	2017	and	$41.8	million	in	2016.	Snap-on	has	undertaken	stock repurchases	from	time	to	time	to	offset	dilution	created	by	shares	issued	for	employee	and	franchisee	stock	purchase	plans,	stock	options	and	other	corporate	purposes. In	2018,	Snap-on	repurchased	1,769,000	shares	of	its	common	stock	for	$284.1	million	under	its	previously	announced	share	repurchase	programs.	As	of	2018	year end,	 Snap-on	 had	 remaining	 availability	 to	 repurchase	 up	 to	 an	 additional	$215.7	 million	 in	 common	 stock	 pursuant	 to	 its	 Board	 of	 Directors'	 (the	 "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 1,820,000	shares	of	its	common	stock	for	$287.9	million	in	2017	and	Snap-on	repurchased	758,000	shares	of	its	common	stock	for	$120.4	million	 in	2016.	Snap-on believes	that	its	cash	generated	from	operations,	available	cash	on	hand,	and	funds	available	from	its	credit	facilities,	will	be	sufficient	to	fund	the	company's	share repurchases,	if	any,	in	2019.

Snap-on	has	paid	consecutive	quarterly	cash	dividends,	without	interruption	or	reduction,	since	1939.	Cash	dividends	paid	in	2018,	2017	 and	2016	 totaled	$192.0 million,	$169.4	million	and	$147.5	million,	respectively.	On	November	8,	2018,	the	company	announced	that	its	Board	increased	the	quarterly	cash	dividend	by	15.9% to	$0.95	per	share	($3.80	per	share	annualized).	Quarterly	dividends	in	2018	were	$0.95	per	share	in	the	fourth	quarter	and	$0.82	per	share	in	the	first	three	quarters ($3.41	per	share	for	the	year).	Quarterly	dividends	in	2017	were	$0.82	per	share	in	the	fourth	quarter	and	$0.71	per	share	in	the	first	three	quarters	($2.95	per	share	for the	year).	Quarterly	dividends	in	2016	were	$0.71	per	share	in	the	fourth	quarter	and	$0.61	per	share	in	the	first	three	quarters	($2.54	per	share	for	the	year).

Snap-on	believes	that	its	cash	generated	from	operations,	available	cash	on	hand	and	funds	available	from	its	credit	facilities	will	be	sufficient	to	pay	dividends	in	2019.

# Off-Balance-Sheet	Arrangements

Except	as	included	below	in	the	section	labeled	"Contractual	Obligations	and	Commitments"	and	Note	16	to	the	Consolidated	Financial	Statements,	the	company	had	no off-balance-sheet	arrangements	as	of	2018	year	end.

# Contractual	Obligations	and	Commitments

A	summary	of	Snap-on's	future	contractual	obligations	and	commitments	as	of	2018	year	end	are	as	follows:

|  |  |  |  |  | 2024	and |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Total | 2019 | 2020-2021 | 2022-2023 | thereafter |
| Contractual\tobligations: |  |  |  |  |  |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-\nterm\tdebt | $186.3 | $186.3 | $— | $— | $— |
| Long-term\tdebt | 946.0 | — | 254.0 | — | 692.0 |
| Interest\ton\tfixed\trate\tdebt | 598.7 | 41.5 | 77.8 | 52.3 | 427.1 |
| Operating\tleases | 77.0 | 25.6 | 32.3 | 14.7 | 4.4 |
| Capital\tleases | 16.0 | 3.3 | 6.1 | 4.7 | 1.9 |
| Purchase\tobligations | 72.5 | 65.2 | 7.1 | — | 0.2 |
| Total | $1,896.5 | $321.9 | $377.3 | $71.7 | $1,125.6 |

Snap-on	intends	to	make	contributions	of	$9.4	million	to	its	foreign	pension	plans	and	$1.9	million	to	its	domestic	pension	plans	in	2019,	as	required	by	law.	Depending on	market	and	other	conditions,	Snap-on	may	make	additional	discretionary	cash	contributions	to	its	pension	plans	in	2019.	Snap-on	has	not	presented	estimated	pension and	postretirement	funding	contributions	in	the	table	above	as	the	funding	can	vary	from	year	to	year	based	on	changes	in	the	fair	value	of	the	plan	assets	and	actuarial assumptions;	see	Note	12	and	Note	13	to	the	Consolidated	Financial	Statements	for	information	on	the	company's	benefit	plans	and	payments.

Due	to	the	uncertainty	of	the	timing	of	settlements	with	taxing	authorities,	Snap-on	is	unable	to	make	reasonably	reliable	estimates	of	the	period	of	cash	settlement	of unrecognized	tax	benefits	for	its	remaining	uncertain	tax	liabilities.	As	a	result,	$11.1	million	of	unrecognized	tax	benefits	have	been	excluded	from	the	table	above;	see Note	9	to	the	Consolidated	Financial	Statements	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. Snap-on	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.

# New	Accounting	Standards

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

# Critical	Accounting	Policies	and	Estimates

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	("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.	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.

In	addition	to	the	company's	significant	accounting	policies	described	in	Note	1	to	the	Consolidated	Financial	Statements,	Snap-on	considers	the	following	policies	and estimates	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	flows.

Impairment	of	Goodwill	and	Other	Indefinite-lived	Intangible	Assets:	Goodwill	and	other	indefinite-lived	intangible	assets	are	tested	for	impairment	annually	or	more frequently	if	events	or	changes	in	circumstances	indicate	that	the	assets	might	be	impaired.	Annual	impairment	tests	are	performed	by	the	company	in	the	second	quarter of	each	year	using	information	available	as	of	fiscal	April	month	end.

Snap-on	evaluates	the	recoverability	of	goodwill	by	estimating	the	future	discounted	cash	flows	of	the	businesses	to	which	the	goodwill	relates.	Estimated	cash	flows	and related	goodwill	are	grouped	at	the	reporting	unit	level.	The	company	has	determined	that	its	reporting	units	for	testing	goodwill	impairment	are	its	operating	segments or	components	of	an	operating	segment	that	constitute	a	business	for	which	discrete	financial	information	is	available	and	for	which	segment	management	regularly reviews	the	operating	results.	Within	its	four	reportable	operating	segments,	the	company	has	identified	11	reporting	units.

Snap-on	evaluates	the	recoverability	of	goodwill	by	utilizing	an	income	approach	that	estimates	the	fair	value	of	the	future	discounted	cash	flows	of	the	reporting	units to	which	the	goodwill	relates.	The	future	projections,	which	are	based	on	both	past	performance	and	the	projections	and	assumptions	used	in	the	company's	operating plans,	are	subject	to	change	as	a	result	of	changing	economic	and	competitive	conditions.	This	approach	reflects	management's	internal	outlook	at	the	reporting	units, which	management	believes	provides	the	best	determination	of	value	due	to	management's	insight	and	experience	with	the	reporting	units.	Significant	estimates	used	by management	in	the	discounted	cash	flows	methodology	include	estimates	of	future	cash	flows	based	on	expected	growth	rates,	price	increases,	working	capital	levels, expected	benefits	from	RCI	initiatives,	and	a	weighted-average	cost	of	capital	that	reflects	the	specific	risk	profile	of	the	reporting	unit	being	tested.	The	company's methodologies	 for	 valuing	 goodwill	 are	 applied	 consistently	 on	 a	 year-over-year	 basis;	 the	 assumptions	 used	 in	 performing	 the	 second	 quarter	2018	 impairment calculations	were	evaluated	in	light	of	then-current	market	and	business	conditions.	Snap-on	continues	to	believe	that	the	future	discounted	cash	flow	valuation	model provides	the	most	reasonable	and	meaningful	fair	value	estimate	based	upon	the	reporting	units'	projections	of	future	operating	results	and	cash	flows	and	replicates	how market	participants	would	value	the	company's	reporting	units	in	an	orderly	transaction.

In	the	event	the	fair	value	of	a	reporting	unit	is	less	than	the	carrying	value,	including	goodwill,	the	company	would	then	record	an	impairment	charge	based	on	the excess	of	a	reporting	units	carrying	amount	over	its	fair	value.

Snap-on	also	evaluates	the	recoverability	of	its	indefinite-lived	trademarks	by	utilizing	an	income	approach	that	estimates	the	fair	value	of	the	future	discounted	cash flows	of	each	of	its	trademarks.	The	future	projections,	which	are	based	on	both	past	performance	and	the	projections	and	assumptions	used	in	the	company's	operating plans,	are	subject	to	change	as	a	result	of	changing	economic	and	competitive	conditions.	Significant	estimates	used	by	management	in	the	discounted	cash	flows methodology	include	estimates	of	future	cash	flows	based	on	expected	growth	and	royalty	rates,	expected	synergies,	and	a	weighted-average	cost	of	capital	that	reflects the	specific	risk	profile	of	the	trademark	being	tested.	The	company's	methodologies	for	valuing	trademarks	are	applied	consistently	on	a	year-over-year	basis;	the assumptions	used	in	performing	the	second	quarter	2018	impairment	calculations	were	evaluated	in	light	of	then-current	market	and	business	conditions.	Snap-on continues	to	believe	that	the	future	discounted	cash	flow	valuation	model	provides	the	most	reasonable	and	meaningful	fair	value	estimate	based	upon	the	trademarks' projected	future	cash	flows	and	replicates	how	market	participants	would	value	the	company's	trademarks	in	an	orderly	transaction.

Inherent	in	fair	value	determinations	are	significant	judgments	and	estimates,	including	material	assumptions	about	future	revenue,	profitability	and	cash	flows,	the company's	operational	plans	and	its	interpretation	of	current	economic	indicators.	Should	the	operations	of	the	businesses	with	which	goodwill	or	other	indefinite-lived intangible	assets	are	associated	incur	significant	declines	in	profitability	and	cash	flow	due	to	significant	and	long-term	deterioration	in	macroeconomic,	industry	and market	conditions,	the	loss	of	key	customers,	changes	in	technology	or	markets,	significant	changes	in	key	personnel	or	litigation,	a	significant	and	sustained	decrease	in share	price	and/or	other	events,	including	effects	from	the	sale	or	disposal	of	a	reporting	unit,	some	or	all	of	the	recorded	goodwill	or	other	indefinite-lived	intangible assets	could	be	subject	to	impairment	and	could	result	in	a	material	adverse	effect	on	Snap-on's	financial	position	or	results	of	operations.

Snap-on	completed	its	annual	impairment	testing	of	goodwill	and	other	indefinite-lived	intangible	assets	in	the	second	quarter	of	2018,	which	did	not	result	in	any impairment.	As	of	2018	year	end,	the	company	has	no	accumulated	impairment	losses.	Although	the	company	consistently	uses	the	same	methods	in	developing	the assumptions	and	estimates	underlying	the	fair	value	calculations,	such	estimates	are	uncertain	by	nature	and	can	vary	from	actual	results.	In	performing	its	annual impairment	testing	the	company	performed	a	sensitivity	analysis	on	the	material	assumptions	used	in	the	discounted	cash	flow	valuation	models	for	each	of	its	11 reporting	units.	Based	on	the	company's	second	quarter	2018	impairment	testing	and	assuming	a	hypothetical	10%	decrease	in	the	estimated	fair	values	of	each	of	its	11 reporting	units,	the	hypothetical	fair	value	of	each	of	the	company's	11	reporting	units	would	have	been	greater	than	its	carrying	value.	See	Note	7	to	the	Consolidated Financial	Statements	for	further	information	about	goodwill	and	other	intangible	assets.

Pension	 Benefits:	 The	 pension	 benefit	 obligation	 and	 related	 pension	 expense	 are	 calculated	 in	 accordance	 with	 GAAP	 and	 are	 impacted	 by	 certain	 actuarial assumptions.	Changes	in	these	assumptions	are	primarily	influenced	by	factors	outside	of	Snap-on's	control,	such	as	changes	in	economic	conditions,	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.

Snap-on's	domestic	pension	plans	have	a	long-term	investment	horizon	and	a	total	return	strategy	that	emphasizes	a	capital	growth	objective.	In	2018,	the	long-term investment	performance	objective	for	Snap-on's	domestic	plans'	assets	was	to	achieve	net	of	expense	returns	that	met	or	exceeded	the	7.45%	domestic	expected	return on	plan	assets	assumption.	Snap-on	uses	a	three-year,	market-related	value	asset	method	of	amortizing	the	difference	between	actual	and	expected	returns	on	its domestic	plans'	assets.	As	of	2018	year	end,	Snap-on's	domestic	pension	plans'	assets	comprised	approximately	86%	of	the	company's	worldwide	pension	plan	assets.

Based	on	forward-looking	capital	market	expectations,	Snap-on	selected	an	expected	return	on	plan	assets	assumption	for	its	U.S.	pension	plans	of	7.45%,	the	same	as 2018,	to	be	used	in	determining	pension	expense	for	2019.	In	estimating	the	domestic	expected	return	on	plan	assets,	Snap-on	utilizes	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,	calculated using	the	geometric	mean,	are	then	adjusted	based	on	current	relative	valuation	levels,	macro-economic	conditions,	and	the	expected	alpha	related	to	active	investment management.	The	asset	return	assumption	 is	also	adjusted	by	an	 implicit	expense	 load	for	estimated	administrative	and	 investment-related	expenses.	Since	asset allocation	is	a	key	determinant	of	expected	investment	returns,	the	current	and	expected	mix	of	plan	assets	are	also	considered	when	setting	the	assumption.

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	plans' assets	by	50	bps	would	have	increased	Snap-on's	2018	domestic	pension	expense	by	approximately	$5.3	million.

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	domestic	discount	rate	as	of	2018	and	2017	year	end	was selected	based	on	a	cash	flow	matching	methodology	developed	by	the	company's	outside	actuaries	and	which	incorporates	a	review	of	current	economic	conditions. This	methodology	matches	the	plans'	yearly	projected	cash	flows	for	benefits	and	service	costs	to	those	of	hypothetical	bond	portfolios	using	high-quality,	AA	rated	or better,	corporate	bonds	from	either	Moody's	Investors	Service	or	Standard	&	Poor's	credit	rating	agencies	available	at	the	measurement	date.	This	technique	calculates bond	portfolios	that	produce	adequate	cash	flows	to	pay	the	plans'	projected	yearly	benefits	and	then	selects	the	portfolio	with	the	highest	yield	and	uses	that	yield	as	the recommended	discount	rate.

The	selection	of	the	4.4%	weighted-average	discount	rate	for	Snap-on's	domestic	pension	plans	as	of	2018	year	end	(compared	to	3.9%	as	of	2017	year	end)	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	50 bps	would	have	increased	Snap-on's	2018	domestic	pension	expense	and	projected	benefit	obligation	by	approximately	$3.7	million	and	$62.9	million,	respectively.	As of	2018	year	end,	Snap-on's	domestic	projected	benefit	obligation	comprised	approximately	83%	of	Snap-on's	worldwide	projected	benefit	obligation.	The	weighted- average	discount	rate	for	Snap-on's	foreign	pension	plans	of	3.0%	(compared	to	2.7%	as	of	2017	year	end)	represents	the	single	rate	that	produces	the	same	present value	of	cash	flows	as	the	estimated	benefit	plan	payments.	Lowering	Snap-on's	foreign	discount	rate	assumption	by	50	bps	would	have	increased	Snap-on's	2018 foreign	pension	expense	and	projected	benefit	obligation	by	approximately	$1.9	million	and	$21.0	million,	respectively.

Actuarial	gains	and	losses	in	excess	of	10	percent	of	the	greater	of	the	projected	benefit	obligation	or	market-related	value	of	assets	are	amortized	on	a	straight-line	basis over	the	average	remaining	service	period	of	active	participants	or	over	the	average	remaining	life	expectancy	for	plans	with	primarily	inactive	participants.	Prior	service costs	and	credits	resulting	from	plan	amendments	are	amortized	in	equal	annual	amounts	over	the	average	remaining	service	period	of	active	participants	or	over	the average	remaining	life	expectancy	for	plans	with	primarily	inactive	participants.

To	determine	 the	2019	net	periodic	benefit	cost,	Snap-on	 is	using	weighted-average	discount	rates	for	 its	domestic	and	foreign	pension	plans	of	4.4%	 and	3.0%, respectively,	and	an	expected	return	on	plan	assets	for	its	domestic	pension	plans	of	7.45%.	The	expected	returns	on	plan	assets	for	foreign	pension	plans	ranged	from 2.0%	and	6.1%	as	of	2018	year	end.	The	net	change	in	these	two	key	assumptions	from	those	used	in	2018	is	expected	to	decrease	pension	expense	in	2019.	Other factors,	 such	 as	 changes	 in	 plan	 demographics	 and	 discretionary	 contributions,	 may	 further	 increase	 or	 decrease	 pension	 expense	 in	 2019.	 See	 Note	 12	 to	 the Consolidated	Financial	Statements	for	further	information	on	pension	plans.

Allowance	for	Doubtful	Accounts	on	Finance	Receivables:	The	allowance	for	doubtful	accounts	on	finance	receivables	is	maintained	at	a	level	management	believes	is adequate	to	cover	probable	losses	inherent	in	Snap-on's	finance	receivables	portfolio	as	of	the	measurement	date.	The	allowance	represents	management's	estimate	of the	losses	inherent	in	the	company's	receivables	portfolio	based	on	ongoing	assessments	and	evaluations	of	collectability	and	historical	loss	experience.	Determination of	the	proper	level	of	the	allowance	requires	management	to	exercise	judgment	about	the	timing,	frequency	and	severity	of	credit	losses	that	could	materially	affect	the provision	for	credit	losses	and,	as	a	result,	net	earnings.	The	allowance	takes	into	consideration	numerous	quantitative	and	qualitative	factors	that	include	receivable type,	historical	loss	experience,	loss	migration,	delinquency	trends,	collection	experience,	current	economic	conditions	and	credit	risk	characteristics.	Some	of	these factors	are	influenced	by	items	such	as	the	customers'	financial	condition,	debt-servicing	ability,	past	payment	experience,	and	credit	bureau	and	proprietary	Snap-on credit	model	information,	as	well	as	the	value	of	the	underlying	collateral.	Changes	in	economic	conditions	and	assumptions,	including	the	resulting	credit	quality metrics	relative	to	the	performance	of	the	finance	receivable	portfolio	create	uncertainty	and	could	result	in	a	change	to	both	the	allowance	for	doubtful	accounts	and provision	for	credit	losses.

Management	utilizes	established	policies	and	procedures	in	an	effort	to	ensure	the	estimates	and	assumptions	are	well	controlled,	reviewed	and	consistently	applied.	As of	December	29,	2018,	the	ratio	of	the	allowance	for	doubtful	accounts	for	finance	receivables	was	3.71%.	As	of	December	30,	2017,	the	allowance	ratio	was	3.53%. While	management	believes	it	exercises	prudent	judgment	and	applies	reasonable	assumptions	in	establishing	its	estimate	for	the	allowance	for	finance	receivables,	there can	be	no	assurance	that	changes	in	economic	conditions	or	other	factors	would	not	adversely	impact	the	financial	health	of	our	customers	and	result	in	changes	to	the estimates	used	in	the	allowance	calculation.	For	reference,	a	100	bps	increase	in	the	allowance	ratio	for	finance	receivables	as	of	December	29,	2018,	would	have increased	Snap-on's	2018	provision	expense	and	related	allowance	for	doubtful	accounts	by	approximately	$16.5	million.

For	additional	information	on	Snap-on's	allowances	for	doubtful	accounts,	see	Note	1	and	Note	4	to	the	Consolidated	Financial	Statements.

# Outlook

Snap-on	expects	to	make	continued	progress	in	2019	along	its	defined	runways	for	coherent	growth,	leveraging	capabilities	already	demonstrated	in	the	automotive repair	arena	and	developing	and	expanding	its	professional	customer	base,	not	only	in	automotive	repair,	but	in	adjacent	markets,	additional	geographies	and	other	areas, including	extending	in	critical	industries,	where	the	cost	and	penalties	for	failure	can	be	high.	In	pursuit	of	these	initiatives,	Snap-on	expects	that	capital	expenditures	in 2019	will	be	in	a	range	of	$90	million	to	$100	million.

Snap-on	currently	anticipates	that	its	full	year	2019	effective	income	tax	rate	will	be	comparable	to	its	full	year	2018	effective	tax	rate	of	24.0%.

# 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	 interest	 rates	 and	 foreign	 currency	 exchange	 rates.	 Snap-on	 is	 also	 exposed	 to	 market	 risk	 associated	 with	 the	 stock-based	 portion	 of	 its	 deferred compensation	plans.	Snap-on	monitors	its	exposure	to	these	risks	and	attempts	to	manage	the	underlying	economic	exposures	through	the	use	of	financial	instruments such	as	foreign	currency	forward	contracts,	interest	rate	swap	agreements,	treasury	lock	agreements	and	prepaid	equity	forward	agreements	("equity	forwards").	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.	Foreign	currency exchange	risk	exists	to	the	extent	that	Snap-on	has	payment	obligations	or	receipts	denominated	in	currencies	other	than	the	functional	currency,	including	intercompany loans	denominated	in	foreign	currencies.	To	manage	these	exposures,	Snap-on	identifies	naturally	offsetting	positions	and	then	purchases	hedging	instruments	to	protect the	residual	net	exposures.	See	Note	11	to	the	Consolidated	Financial	Statements	for	information	on	foreign	currency	risk	management.

# Interest	Rate	Risk	Management

Snap-on	aims	to	control	funding	costs	by	managing	the	exposure	created	by	the	differing	maturities	and	interest	rate	structures	of	Snap-on's	borrowings	through	the	use of	interest	rate	swap	agreements.	Treasury	lock	agreements	are	used	from	time	to	time	to	manage	the	potential	change	in	interest	rates	in	anticipation	of	the	possible issuance	of	fixed	rate	debt.	See	Note	11	to	the	Consolidated	Financial	Statements	for	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,	as	of	2018	 and	2017	year	end	was	$7.7	million	and	$1.5	million, respectively,	on	interest	rate-sensitive	financial	instruments,	and	zero	and	$0.1	million,	respectively,	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.

# Stock-based	Deferred	Compensation	Risk	Management

Snap-on	aims	to	manage	market	risk	associated	with	the	stock-based	portion	of	its	deferred	compensation	plans	through	the	use	of	equity	forwards.	Equity	forwards	are used	to	aid	in	offsetting	the	potential	mark-to-market	effect	on	stock-based	deferred	compensation	from	changes	in	Snap-on's	stock	price.	Since	stock-based	deferred compensation	liabilities	increase	as	the	company's	stock	price	rises	and	decrease	as	the	company's	stock	price	declines,	the	equity	forwards	are	intended	to	mitigate	the potential	impact	on	compensation	expense	that	may	result	from	such	mark-to-market	changes.	See	Note	11	to	the	Consolidated	Financial	Statements	for	additional information	on	stock-based	deferred	compensation	risk	management.

# Credit	Risk

Credit	risk	is	the	possibility	of	loss	from	a	customer's	failure	to	make	payments	according	to	contract	terms.	Prior	to	extending	credit,	each	customer	is	evaluated,	taking into	consideration	various	factors,	including	the	customer's	financial	condition,	debt-servicing	ability,	past	payment	experience,	credit	bureau	information,	and	other financial	and	qualitative	factors	that	may	affect	the	customer's	ability	to	repay,	as	well	as	the	value	of	the	underlying	collateral.	Financial	receivable	credit	risk	is	also monitored	regularly	through	the	use	of	internal	proprietary	custom	scoring	models	to	evaluate	each	transaction	at	the	time	of	the	application	for	credit.	Snap-on evaluates	credit	quality	through	the	use	of	an	internal	proprietary	measuring	system	that	provides	a	framework	to	analyze	finance	receivables	on	the	basis	of	risk	factors of	the	individual	obligor	as	well	as	transaction	specific	risk.	The	finance	receivables	are	typically	monitored	through	an	asset	quality	review	process	that	closely monitors	past	due	accounts	and	initiates	a	progressive	collection	action	process	when	appropriate.

# Counterparty	Risk

Snap-on	is	exposed	to	credit	losses	in	the	event	of	non-performance	by	the	counterparties	to	its	various	financial	agreements,	including	its	foreign	currency	forward contracts,	interest	rate	swap	agreements,	treasury	lock	agreements	and	prepaid	equity	forward	agreements.	Snap-on	does	not	obtain	collateral	or	other	security	to	support financial	 instruments	 subject	 to	 credit	 risk,	 but	 monitors	 the	 credit	 standing	 of	 the	 counterparties	 and	 generally	 enters	 into	 agreements	 with	 financial	 institution counterparties	with	a	credit	rating	of	A-	or	better.	Snap-on	does	not	anticipate	non-performance	by	its	counterparties,	but	cannot	provide	assurances.

# Economic	Risk

Economic	risk	is	the	possibility	of	loss	resulting	from	economic	instability	in	certain	areas	of	the	world.	Snap-on	continually	monitors	its	exposure	in	these	markets;	for example,	the	company	is	monitoring	the	potential	effects	of	the	United	Kingdom's	pending	exit	from	the	European	Union,	although	it	is	too	soon	to	know	what	effects this	might	have	on	the	world	economy	or	the	company.	Inflation	has	not	had	a	significant	impact	on	the	company.

As	a	result	of	the	above	market,	credit	and	economic	risks,	net	earnings	and	revenues	in	any	particular	period	may	not	be	representative	of	full-year	results	and	may	vary significantly	from	year	to	year.

# Commodity	Risk

Snap-on	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,	nickel,	copper and	others.	Snap-on's	supply	of	raw	materials	and	purchased	components	are	generally	and	readily	available	from	numerous	suppliers.

The	principal	raw	material	used	in	the	manufacture	of	the	company's	products	is	steel,	which	the	company	purchases	in	competitive,	price-sensitive	markets.	To	meet Snap-on's	high	quality	standards,	the	company's	steel	needs	range	from	specialized	alloys,	which	are	available	only	from	a	limited	group	of	approved	suppliers,	to common	alloys,	which	are	available	from	multiple	suppliers.	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,	 particularly	 in	 the	 event	 of	 mill	 shutdowns	 or	 production	 cut	 backs.	As	 some	 steel	 alloys	 require	 specialized manufacturing	procedures,	Snap-on	could	experience	inventory	shortages	if	it	were	required	to	use	an	alternative	manufacturer	on	short	notice.	Additionally,	price increases	for	raw	materials,	including	as	a	result	of	tariffs	and	other	trade	protection	measures	put	in	place	by	the	United	States	or	other	countries,	such	as	those	the company	experienced	in	fiscal	2018	and	expects	to	continue	to	experience	in	fiscal	2019,	could	result	in	higher	prices	to	Snap-on's	customers	or	an	erosion	of	the margins	on	its	products.

Snap-on	believes	its	ability	to	sell	product	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,	consequently,	the	demand	technicians	have	for	the	company's	tools,	other	products	and	services,	and	the	value	technicians	place	on those	products	and	services.	The	use	of	other	methods	of	transportation,	including	more	frequent	use	of	public	transportation,	could	result	in	a	decrease	in	the	use	of privately	operated	vehicles.	A	decrease	in	the	use	of	privately	operated	vehicles	may	lead	to	fewer	repairs	and	less	demand	for	the	company's	products.

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	in	Part	IV,	Item	15(a)	and	are	incorporated	by	reference	into	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 Rules	13a-15(e)	and	15d-15(e)	under	the	Exchange	Act)	as	of	December	29,	2018.	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,	2018,	to	ensure	that	information required	to	be	disclosed	by	the	company	in	the	reports	it	files	or	submits	under	the	Exchange	Act	is	recorded,	processed,	summarized	and	reported,	within	the	time period	specified	in	the	Securities	and	Exchange	Commission	rules	and	forms,	and	to	ensure	that	information	required	to	be	disclosed	by	the	company	in	the	reports	it files	or	submits	under	the	Exchange	Act	is	accumulated	and	communicated	to	the	company's	management,	including	its	principal	executive	and	principal	financial officers,	or	persons	performing	similar	functions,	as	appropriate,	to	allow	timely	decisions	regarding	required	disclosure.

# Changes	in	Internal	Control

During	the	quarter	ended	December	29,	2018,	the	company	implemented	a	plan	that	calls	for	modifications	and	additions	to	internal	control	over	financial	reporting related	to	the	accounting	for	leases	as	a	result	of	the	new	lease	standard,	ASC	842.	The	modified	and	new	controls	have	been	designed	to	address	risks	associated	with gathering	the	lease	information	for	recognizing	a	"right-of-	use"	asset	and	the	related	liability	required	by	the	new	standard.	The	company	has	added	additional	controls over	financial	reporting	by	implementing	a	company-wide	lease	system	to	gather	lessee	information	required	for	financial	statement	presentation,	as	well	as	to	provide for	the	additional	disclosure	information	required	by	the	new	standard.	There	were	no	other	changes	in	internal	controls	during	the	quarter	ended	December	29,	2018, that	have	materially	affected,	or	are	reasonably	likely	to	materially	affect,	the	company's	internal	control	over	financial	reporting	(as	such	term	is	defined	in	Exchange Act	Rules	13a-15(f)	and	15d-15(f)).

# 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)	and	15d- 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	(2013).	Based	on	this	assessment,	the	company's	management believes	that,	as	of	December	29,	2018,	our	internal	control	over	financial	reporting	was	effective	at	a	reasonable	assurance	level.	The	company's	internal	control	over financial	reporting	as	of	December	29,	2018,	has	been	audited	by	Deloitte	&	Touche	LLP,	an	independent	registered	public	accounting	firm,	as	stated	in	its	attestation 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,	the	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:

# Opinion	on	Internal	Control	over	Financial	Reporting

We	have	audited	the	internal	control	over	financial	reporting	of	Snap-on	Incorporated	and	subsidiaries	(the	"Company")	as	of	December	29,	2018,	based	on	criteria established	in	Internal	Control	—	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	("COSO").	In	our opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	29,	2018,	based	on	criteria	established	in Internal	Control	—	Integrated	Framework	(2013)	issued	by	COSO.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States)	("PCAOB"),	the	consolidated	financial statements	as	of	and	for	the	year	ended	December	29,	2018,	of	the	Company	and	our	report	dated	February	14,	2019,	expressed	an	unqualified	opinion	on	those	financial statements.

# Basis	for	Opinion

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

We	conducted	our	audit	in	accordance	with	the	standards	of	the	PCAOB.	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	opinion.

# Definition	and	Limitations	of	Internal	Control	over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	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	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

# /s/	DELOITTE	&	TOUCHE	LLP

# Milwaukee,	Wisconsin

# Item	9B:	Other	Information

# PART	III

# Item	10:	Directors,	Executive	Officers	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	2019	Annual	Meeting	Proxy	Statement,	which	is	expected	to	be	mailed	to	shareholders	on	or	about	March	11,	2019	(the	"2019	Proxy	Statement").

The	Section	16(a)	filing	compliance	disclosure	pursuant	to	Item	405	of	Regulation	S-K	is	contained	in	Snap-on's	2019	Proxy	Statement	in	the	section	entitled	"Other Information	–	Section	16(a)	Beneficial	Ownership	Reporting	Compliance,"	and	is	incorporated	herein	by	reference.

Information	regarding	Snap-on's	executive	officers,	including	their	ages,	business	experience	(for	at	least	the	last	five	years)	and	titles	as	of	December	29,	2018,	is presented	below:

Nicholas	T.	Pinchuk	(72)	–	Chairman	of	the	Board	of	Directors	since	2009,	President	and	Chief	Executive	Officer	since	December	2007,	and	President	and	Chief Operating	Officer	during	2007.	Senior	Vice	President	and	President	–	Worldwide	Commercial	&	Industrial	Group	from	2002	to	2007.	Prior	to	joining	Snap-on, Mr.	Pinchuk	held	various	positions,	including	President	of	Global	Refrigeration	Operations	and	President	of	Asia	Pacific	Operations,	at	Carrier	Corporation,	a	producer of	air	conditioning,	heating	and	refrigeration	systems,	and	a	subsidiary	of	United	Technologies	Corporation.	Mr.	Pinchuk	serves	on	the	board	of	directors	of	Columbus McKinnon	Corporation.

Aldo	J.	Pagliari	(64)	–	Senior	Vice	President	–	Finance	and	Chief	Financial	Officer	since	2010.

Anup	R.	Banerjee	(68)	–	Senior	Vice	President,	Human	Resources	and	Chief	Development	Officer	since	2015,	and	President,	Commercial	Group	from	2011	to	2015.

Iain	Boyd	(56)	–	Vice	President,	Operations	Development	since	2015.	Vice	President	–	Human	Resources	from	2007	to	2015.

Thomas	L.	Kassouf	(66)	–	Senior	Vice	President	and	President	–	Snap-on	Tools	Group	since	2010.

June	C.	Lemerand	(56)	–	Vice	President	and	Chief	Information	Officer	since	2017.	Vice	President	of	Information	Technology	Services	from	2015	to	2017,	and	Senior Director,	Information	Technology	Sales	and	Marketing	Applications	from	2005	to	2015.

Richard	T.	Miller	(48)	–	Vice	President,	General	Counsel	and	Secretary	since	July	2018.	Associate	General	Counsel	from	2012	to	2018.

Richard	K.	Strege	(61)	–	Vice	President	and	Controller	since	2017.	Vice	President,	Internal	Audit,	Controls	and	Compliance	from	2007	to	2017.

Thomas	J.	Ward	(66)	–	Senior	Vice	President	and	President	–	Repair	Systems	&	Information	Group	since	2010.

There	is	no	family	relationship	among	the	executive	officers	and	there	has	been	no	involvement	in	legal	proceedings	during	the	past	ten	years	that	would	be	material	to the	evaluation	of	the	ability	or	integrity	of	any	of	the	executive	officers.	Executive	officers	may	either	be	elected	by	the	Board	or	may	be	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,	or	at	such	other	times as	new	positions	are	created	or	vacancies	must	be	filled.

# Code	of	Ethics	and	Website	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 website	at	www.snapon.com.	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	website	at	www.snapon.com.

Snap-on	intends	to	satisfy	the	disclosure	requirements	under	Item	10	of	Form	8-K	regarding	amendments	to,	or	waivers	from,	the	code	of	ethics	by	posting	such information	in	the	"Investors"	section	of	its	corporate	website	at	www.snapon.com.

# Item	11:	Executive	Compensation

The	 information	required	by	Item	11	 is	contained	 in	Snap-on's	2019	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	at	2018	year	end:

| Plan	category | Number	of	securities<br>to	be	issued	upon<br>exercise	of<br>outstanding	options,<br>warrants	and	rights<br>(a) | Weighted-average<br>exercise	price	of<br>outstanding	options,<br>warrants	and	rights<br>(b) | remaining	available	for<br>future	issuance	under<br>equity	compensation<br>plans	(excluding	securities<br>reflected	in	column	(a))<br>(c) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders | \t\t\t\t\t\t3,539,442\t(1) | \t\t\t\t$\t\t\t\t\t\t\t\t\t\t\t\t\t129.68\t(2) | 3,561,642\t\t(3) |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\nholders | \t\t\t\t\t\t\t\t\t\t70,657\t(4) | Not\tApplicable | –\t\t\t\t\t\t\t\t(5) |
| Total | 3,610,099 | \t\t\t\t$\t\t\t\t\t\t\t\t\t\t\t\t129.68\t(2) | 3,561,642\t\t(5) |

(1) Includes	(i)	options	to	acquire	306,839	shares	granted	under	the	2001	Incentive	Stock	and	Awards	Plan	(the	"2001	Plan");	(ii)	options	and	stock	appreciation	rights	to	acquire	3,195,879	shares granted	under	the	2011	Incentive	Stock	and	Awards	Plan	(the	"2011	Plan,"	and	collectively	with	the	2001	Plan,	the	"Incentive	Plans");	and	(iii)	36,724	shares	represented	by	deferred	share units	under	the	Directors'	Fee	Plan.	Excludes	50,528	shares	issuable	in	connection	with	the	vesting	of	restricted	stock	units	and	restricted	stock	under	the	2001	Plan,	and	170,673	shares issuable	in	connection	with	the	vesting	of	performance	share	awards,	restricted	stock	units	and	restricted	stock	under	the	2011	Plan.	Also	excludes	shares	of	common	stock	that	may	be	issuable under	the	employee	and	franchisee	stock	purchase	plans.

(2) Reflects	only	the	weighted-average	exercise	price	of	outstanding	stock	options	and	stock	appreciation	rights	granted	under	the	Incentive	Plans	and	does	not	include	shares	represented	by deferred	share	units	under	the	Directors'	Fee	Plan	and	shares	issuable	in	connection	with	the	vesting	of	restricted	stock	units	or	performance	units	under	the	Incentive	Plans	for	which	there	are no	exercise	prices.	Also	excludes	shares	of	common	stock	that	may	be	issuable	under	the	employee	and	franchisee	stock	purchase	plans.

(3) Includes	(i)	2,654,112	shares	reserved	for	issuance	under	the	2011	Plan;	(ii)	176,724	shares	reserved	for	issuance	under	the	Directors'	Fee	Plan;	and	(iii)	730,806	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	2019	Proxy	Statement	in	the	sections	entitled	"Executive	Compensation,"	"Security	Ownership of	Certain	Beneficial	Owners	and	Management,"	and	"Other	Information,"	and	is	incorporated	herein	by	reference.

# Item	13:	Certain	Relationships	and	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	2019	Proxy	Statement.

# Item	14:	Principal	Accounting	Fees	and	Services

Incorporated	by	reference	to	the	section	entitled	"Deloitte	&	Touche	LLP	Fee	Disclosure"	in	Snap-on's	2019	Proxy	Statement.

# PART	IV

# Item	15:	Exhibits,	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:

•Consolidated	Statements	of	Earnings	for	the	2018,	2017	and	2016	fiscal	years.

•Consolidated	Statements	of	Comprehensive	Income	for	the	2018,	2017	and	2016	fiscal	years.

•Consolidated	Statements	of	Equity	for	the	2018,	2017	and	2016	fiscal	years.

•Consolidated	Statements	of	Cash	Flows	for	the	2018,	2017	and	2016	fiscal	years.

•Notes to Consolidated Financial Statements.

# 2.	Financial	Statement	Schedules

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

(3) (a) Restated	Certificate	of	Incorporation	of	Snap-on	Incorporated,	as	amended	through	April	25,	2013	(incorporated	by	reference	to	Exhibit 3.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	September	28,	2013	(Commission	File	No.	1-7724))

(b) Bylaws	of	Snap-on	Incorporated,	as	amended	and	restated	as	of	April	26,	2018	(incorporated	by	reference	to	Exhibit	3.1	to	Snap-on's Current	Report	on	Form	8-K	dated	April	26,	2018	(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,	2018.	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	2001	Incentive	Stock	and	Awards	Plan	(Amended	and	Restated	as	of	April	27,	2006,	as further	amended	on	August	6,	2009)	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the quarterly	period	ended	October	3,	2009	(Commission	File	No.	1-7724))**	(superseded	except	as	to	outstanding	awards)

(b) Snap-on	Incorporated	2011	Incentive	Stock	and	Awards	Plan	(As	Amended	and	Restated)	(incorporated	by	reference	to	Exhibit	10(b)	to Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	30,	2017	(Commission	File	No.	1-7724))**

(c) Form	of	Restated	Executive	Agreement	between	Snap-on	Incorporated	and	each	of	its	executive	officers**	(incorporated	by	reference	to Exhibit	10(c)	to	Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	30,	2017	(Commission	File	No.	1-7724))**

(d)(1) Form	of	Indemnification	Agreement	between	Snap-on	Incorporated	and	certain	executive	officers	(incorporated	by	reference	to	Exhibit 10.1	to	Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	January	1,	2011	(Commission	File	No.	1-7724))**

(d)(2) Form	of	Indemnification	Agreement	between	Snap-on	Incorporated	and	directors	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	January	1,	2011	(Commission	File	No.	1-7724))**

(e)(1) Amended	and	Restated	Snap-on	Incorporated	Directors'	1993	Fee	Plan	(as	amended	through	August	5,	2010)	(incorporated	by	reference	to Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	October	2,	2010	(Commission	File	No.	1- 7724))**

(e)(2) 		 Amendment	to	Amended	and	Restated	Snap-on	Incorporated	Directors'	1993	Fee	Plan	(incorporated	by	reference	to	Exhibit	10(e)(2)	to Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	28,	2013	(Commission	File	No.	1-7724))**

(f)(1) 		 Snap-on	Incorporated	Deferred	Compensation	Plan	(as	amended	and	restated	as	of	September	1,	2011)	(incorporated	by	reference	to Exhibit	10(g)	to	Snap-on's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2011	(Commission	File	No.	1-7724))**

(f)(2) 		 Amendment	to	Snap-on	Incorporated	Deferred	Compensation	Plan	(incorporated	by	reference	to	Exhibit	10(f)(2)	to	Snap-on's	Annual Report	on	Form	10-K	for	the	fiscal	year	ended	December	28,	2013	(Commission	File	No.	1-7724))**

(g) 		 Snap-on	Incorporated	Supplemental	Retirement	Plan	for	Officers	(as	amended	 through	June	11,	2010)	(incorporated	by	reference to Exhibit	10.2	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	July	3,	2010	(Commission	File	No.	1-7724))**

(h) 		 Form	of	Non-Qualified	Stock	Option	Agreement	under	the	2001	Incentive	Stock	and	Awards	Plan	(and	accompanying	Non-Qualified Stock	Option	Grant	Offer	Letter)	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly period	ended	March	31,	2007	(Commission	File	No.	1-7724))**	(superseded	except	as	to	outstanding	awards)

(i) 		 Form	of	Restricted	Stock	Unit	Agreement	for	Directors	under	the	2001	Incentive	Stock	and	Awards	Plan	(and	accompanying	Restricted Stock	Unit	Offer	Letter)	(incorporated	by	reference	to	Exhibit	10.2	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period ended	October	3,	2009	(Commission	File	No.	1-7724))**	(superseded	except	as	to	outstanding	awards)

(j) 		 Form	of	Non-Qualified	Stock	Option	Agreement	under	the	2011	Incentive	Stock	and	Awards	Plan	(and	accompanying	Non-Qualified Stock	Option	Grant	Offer	Letter)	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly period	ended	October	1,	2011	(Commission	File	No.	1-7724))**

(k) 		 Form	of	Performance	Share	Unit	Award	Agreement	under	the	2011	Incentive	Stock	and	Awards	Plan	(incorporated	by	reference	to	Exhibit 10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	March	31,	2012	(Commission	File	No.	1-7724))**

(l) 		 Form	of	Restricted	Unit	Award	Agreement	for	Executive	Officers	under	the	2011	Incentive	Stock	and	Awards	Plan	(incorporated	by reference	to	Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	March	31,	2012	(Commission	File No.	1-7724))**

(m) 		 Form	of	Restricted	Unit	Award	Agreement	for	Directors	under	the	2011	Incentive	Stock	and	Awards	Plan	(incorporated	by	reference	to Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	March	31,	2012	(Commission	File	No.	1-7724))**

(n) 		 Form	of	Restricted	Stock	Award	Agreement	for	Directors	under	the	2011	Incentive	Stock	and	Awards	Plan	(incorporated	by	reference	to Exhibit	10.1	to	Snap-on's	Quarterly	Report	on	Form	10-Q	for	the	quarterly	period	ended	March	30,	2013	(Commission	File	No.	1-7724))**

(o) 		 Second	Amended	and	Restated	Five	Year	Credit	Agreement,	dated	as	of	December	15,	2015,	among	Snap-on	Incorporated	and	the	lenders and	agents	listed	on	the	signature	pages	thereof,	and	J.P.	Morgan	Securities	LLC,	Citigroup	Global	Markets	Inc.	and	U.S.	Bank	National Association	as	joint	lead	arrangers	and	joint	bookrunners	(incorporated	by	reference	to	Exhibit	10.1	to	Snap-on's	Current	Report	on	Form 8-K	dated	December	15,	2015	(Commission	File	No.	1-7724))

(p) 		 Underwriting	Agreement,	dated	as	of	February	15,	2017,	among	Snap-on	Incorporated,	Citigroup	Global	Markets	Inc.	and	J.P.	Morgan Securities	LLC,	as	representatives	of	 the	several	underwriters	named	 therein.	(incorporated	by	reference	 to	Exhibit	1.1	 to	Snap-on's Current	Report	on	Form	8-K	dated	February	15,	2017	(Commission	File	No.	1-7724))

(q) Underwriting	Agreement,	dated	as	of	February	20,	2018,	among	Snap-on	Incorporated,	Citigroup	Global	Markets	Inc.,	J.P.	Morgan Securities	 LLC	 and	 U.S.	 Bancorp	 Investments,	 Inc.,	 as	 representatives	 of	 the	 several	 underwriters	 named	 therein.	 (incorporated	 by reference	to	Exhibit	1.1	to	Snap-on's	Current	Report	on	Form	8-K	dated	February	20,	2018	(Commission	File	No.	1-7724)

(14) 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))

# (21) 		 Subsidiaries	of	the	Corporation

# (23) 		 Consent	of	Independent	Registered	Public	Accounting	Firm

(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

# (101.SCH) 	 XBRL	Taxonomy	Extension	Schema	Document***

(101.CAL) 	 XBRL	Taxonomy	Extension	Calculation	Linkbase	Document***

(101.DEF) 	 XBRL	Taxonomy	Extension	Definition	Linkbase	Document***

(101.LAB) 	 XBRL	Taxonomy	Extension	Label	Linkbase	Document***

(101.PRE) 	 XBRL	Taxonomy	Extension	Presentation	Linkbase	Document***

* 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	website	at	www.sec.gov.

** Represents	a	management	compensatory	plan	or	agreement.

*** Attached	as	Exhibit	101	to	this	report	are	the	following	documents	formatted	in	XBRL	(Extensible	Business	Reporting	Language):	(i)	Consolidated	Statements	of	Earnings	for	the	twelve months	ended	December	29,	2018,	December	30,	2017,	and	December	31,	2016;	(ii)	Consolidated	Statements	of	Comprehensive	Income	for	the	twelve	months	ended	December	29,	2018, December	30,	2017,	and	December	31,	2016;	(iii)	Consolidated	Balance	Sheets	as	of	December	29,	2018,	and	December	30,	2017;	(iv)	Consolidated	Statements	of	Equity	for	the	twelve months	 ended	 December	 29,	 2018,	 December	 30,	 2017,	 and	 December	 31,	 2016;	 (v)	 Consolidated	 Statements	 of	 Cash	 Flows	 for	 the	 twelve	 months	 ended	 December	 29,	 2018, December	30,	2017,	and	December	31,	2016;	and	(vi)	Notes	to	Consolidated	Financial	Statements.

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

# Opinion	on	the	Financial	Statements

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Snap-on	Incorporated	and	subsidiaries	(the	"Company")	as	of	December	29,	2018,	and	December	30, 2017,	and	the	related	consolidated	statements	of	earnings,	comprehensive	income,	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	29, 2018,	and	the	related	notes	(collectively	referred	to	as	the	"financial	statements").		In	our	opinion,	the	financial	statements	present	fairly,	in	all	material	respects,	the financial	position	of	the	Company	as	of	December	29,	2018,	and	December	30,	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the period	ended	December	29,	2018,	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	of	America.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States)	("PCAOB"),	the	Company's	internal	control over	financial	reporting	as	of	December	29,	2018,	 based	 on	 criteria	 established in	Internal	Control	—	Integrated	Framework	(2013) issued	by	 the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	and	our	report	dated	February	14,	2019,	expressed	an	unqualified	opinion	on	the	Company's	internal	control over	financial	reporting.

These	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	financial	statements	based on	our	audits.	We	are	a	public	accounting	firm	registered	with	the	PCAOB	and	are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S. federal	securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange	Commission	and	the	PCAOB.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance about	whether	the	financial	statements	are	free	of	material	misstatement,	whether	due	to	error	or	fraud.	Our	audits	included	performing	procedures	to	assess	the	risks	of material	misstatement	of	the	financial	statements,	whether	due	to	error	or	fraud,	and	performing	procedures	that	respond	to	those	risks.	Such	procedures	included examining,	on	a	test	basis,	evidence	regarding	the	amounts	and	disclosures	in	the	financial	statements.	Our	audits	also	included	evaluating	the	accounting	principles	used and	significant	estimates	made	by	management,	as	well	as	evaluating	the	overall	presentation	of	the	financial	statements.	We	believe	that	our	audits	provide	a	reasonable basis	for	our	opinion.

Milwaukee,	Wisconsin February	14,	2019

We	have	served	as	the	Company's	auditor	since	2002.

# Snap-on	Incorporated	–	Consolidated	Statements	of	Earnings

| (Amounts	in	millions,	except	per	share	data) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $3,740.7 | $3,686.9 | $3,430.4 |
| Cost\tof\tgoods\tsold | (1,870.7) | (1,861.0) | (1,720.0) |
| Gross\tprofit | 1,870.0 | 1,825.9 | 1,710.4 |
| Operating\texpenses | (1,144.0) | (1,161.3) | (1,048.0) |
| Operating\tearnings\tbefore\tfinancial\tservices | 726.0 | 664.6 | 662.4 |
| Financial\tservices\trevenue | 329.7 | 313.4 | 281.4 |
| Financial\tservices\texpenses | (99.6) | (95.9) | (82.7) |
| Operating\tearnings\tfrom\tfinancial\tservices | 230.1 | 217.5 | 198.7 |
| Operating\tearnings | 956.1 | 882.1 | 861.1 |
| Interest\texpense | (50.4) | (52.4) | (52.2) |
| Other\tincome\t(expense)\t–\tnet | 4.2 | (7.8) | (7.5) |
| Earnings\tbefore\tincome\ttaxes\tand\tequity\tearnings | 909.9 | 821.9 | 801.4 |
| Income\ttax\texpense | (214.4) | (250.9) | (244.3) |
| Earnings\tbefore\tequity\tearnings | 695.5 | 571.0 | 557.1 |
| Equity\tearnings,\tnet\tof\ttax | 0.7 | 1.2 | 2.5 |
| Net\tearnings | 696.2 | 572.2 | 559.6 |
| Net\tearnings\tattributable\tto\tnoncontrolling\tinterests | (16.3) | (14.5) | (13.2) |
| Net\tearnings\tattributable\tto\tSnap-on\tIncorporated | $679.9 | $557.7 | $546.4 |
| Net\tearnings\tper\tshare\tattributable\tto\tSnap-on\tIncorporated: |  |  |  |
| Basic | $12.08 | $9.72 | $9.40 |
| Diluted | 11.87 | 9.52 | 9.20 |
| Weighted-average\tshares\toutstanding: |  |  |  |
| Basic | 56.3 | 57.4 | 58.1 |
| Effect\tof\tdilutive\tsecurities | 1.0 | 1.2 | 1.3 |
| Diluted | 57.3 | 58.6 | 59.4 |

See	Notes	to	Consolidated	Financial	Statements.

# Snap-on	Incorporated	–	Consolidated	Statements	of	Comprehensive	Income

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Comprehensive\tincome\t(loss): |  |  |  |
| Net\tearnings | $696.2 | $572.2 | $559.6 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |
| Foreign\tcurrency\ttranslation* | (95.4) | 135.2 | (99.2) |
| Unrealized\tcash\tflow\thedges,\tnet\tof\ttax: |  |  |  |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | (0.8) | 6.9 | 8.8 |
| Reclassification\tof\tcash\tflow\thedges\tto\tnet\tearnings | (1.5) | (1.6) | (0.3) |
| Defined\tbenefit\tpension\tand\tpostretirement\tplans: |  |  |  |
| Net\tprior\tservice\tcosts\tand\tcredits\tand\tunrecognized\t(loss)\tgain | (79.0) | 15.9 | (93.3) |
| Income\ttax\t(expense)\tbenefit | 20.0 | (4.1) | 30.7 |
| Net\tof\ttax | (59.0) | 11.8 | (62.6) |
| Amortization\tof\tnet\tprior\tservice\tcosts\tand\tcredits\tand\tunrecognized\tloss\nincluded\tin\tnet\tperiodic\tbenefit\tcost | 31.1 | 26.6 | 30.1 |
| Income\ttax\tbenefit | (7.6) | (9.4) | (11.1) |
| Net\tof\ttax | 23.5 | 17.2 | 19.0 |
| Total\tcomprehensive\tincome | 563.0 | 741.7 | 425.3 |
| Comprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests | (16.3) | (14.5) | (13.2) |
| Comprehensive\tincome\tattributable\tto\tSnap-on\tIncorporated | $546.7 | $727.2 | $412.1 |
| See\tNotes\tto\tConsolidated\tFinancial\tStatements. |  |  |  |
| 2018\tANNUAL\tREPORT |  |  | 67 |

*	There	is	no	reclassification	adjustment	as	there	was	no	sale	or	liquidation	of	any	foreign	entity	during	any	period	presented.

# Snap-on	Incorporated	–	Consolidated	Balance	Sheets

|  | Fiscal	Year	End |  |
| :--- | :--- | :--- |
| (Amounts\tin\tmillions,\texcept\tshare\tdata) | 2018 | 2017 |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $140.9 | $92.0 |
| Trade\tand\tother\taccounts\treceivable\t–\tnet | 692.6 | 675.6 |
| Finance\treceivables\t–\tnet | 518.5 | 505.4 |
| Contract\treceivables\t–\tnet | 98.3 | 96.8 |
| Inventories\t–\tnet | 673.8 | 638.8 |
| Prepaid\texpenses\tand\tother\tassets | 92.8 | 110.7 |
| Total\tcurrent\tassets | 2,216.9 | 2,119.3 |
| Property\tand\tequipment\t–\tnet | 495.1 | 484.4 |
| Deferred\tincome\ttax\tassets | 64.7 | 52.0 |
| Long-term\tfinance\treceivables\t–\tnet | 1,074.4 | 1,039.2 |
| Long-term\tcontract\treceivables\t–\tnet | 344.9 | 322.6 |
| Goodwill | 902.2 | 924.1 |
| Other\tintangibles\t–\tnet | 232.9 | 253.7 |
| Other\tassets | 42.0 | 53.8 |
| Total\tassets | $5,373.1 | $5,249.1 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Notes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | $186.3 | $433.2 |
| Accounts\tpayable | 201.1 | 178.2 |
| Accrued\tbenefits | 52.0 | 55.8 |
| Accrued\tcompensation | 71.5 | 71.5 |
| Franchisee\tdeposits | 67.5 | 66.5 |
| Other\taccrued\tliabilities | 373.6 | 388.1 |
| Total\tcurrent\tliabilities | 952.0 | 1,193.3 |
| Long-term\tdebt | 946.0 | 753.6 |
| Deferred\tincome\ttax\tliabilities | 41.4 | 28.4 |
| Retiree\thealth\tcare\tbenefits | 31.8 | 36.0 |
| Pension\tliabilities | 171.3 | 158.9 |
| Other\tlong-term\tliabilities | 112.0 | 106.6 |
| Total\tliabilities | 2,254.5 | 2,276.8 |
| Commitments\tand\tcontingencies\t(Note\t16) |  |  |
| Equity |  |  |
| Shareholders'\tequity\tattributable\tto\tSnap-on\tIncorporated: |  |  |
| 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\t67,415,091\tand\t67,407,704\tshares,\nrespectively) | 67.4 | 67.4 |
| Additional\tpaid-in\tcapital | 359.4 | 343.2 |
| Retained\tearnings | 4,257.6 | 3,772.3 |
| Accumulated\tother\tcomprehensive\tloss | (462.2) | (329.0) |
| Treasury\tstock\tat\tcost\t(11,804,310\tand\t10,717,455\tshares,\trespectively) | (1,123.4) | (900.0) |
| Total\tshareholders'\tequity\tattributable\tto\tSnap-on\tIncorporated | 3,098.8 | 2,953.9 |
| Noncontrolling\tinterests | 19.8 | 18.4 |
| Total\tequity | 3,118.6 | 2,972.3 |
| Total\tliabilities\tand\tequity | $5,373.1 | $5,249.1 |

# Snap-on	Incorporated	–	Consolidated	Statements	of	Equity

# Shareholders'	Equity	Attributable	to	Snap-on	Incorporated

| (Amounts	in	millions,	except	share	data) | Common<br>Stock | Additional<br>Paid-in<br>Capital | Retained<br>Earnings | Accumulated<br>Other<br>Comprehensive<br>Income	(Loss) | Treasury<br>Stock | Noncontrolling<br>Interests | Total<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t2,\t2016 | $67.4 | $296.3 | $2,986.9 | $(364.2) | $(573.7) | $18.0 | $2,430.7 |
| Net\tearnings\tfor\t2016 | — | — | 546.4 | — | — | 13.2 | 559.6 |
| Other\tcomprehensive\tloss | — | — | — | (134.3) | — | — | (134.3) |
| Cash\tdividends\t–\t$2.54\tper\tshare | — | — | (147.5) | — | — | — | (147.5) |
| Stock\tcompensation\tplans | — | 21.0 | — | — | 40.2 | — | 61.2 |
| Share\trepurchases\t–\t758,000\tshares | — | — | — | — | (120.4) | — | (120.4) |
| Other | — | — | (0.9) | — | — | (13.2) | (14.1) |
| Balance\tat\tDecember\t31,\t2016 | 67.4 | 317.3 | 3,384.9 | (498.5) | (653.9) | 18.0 | 2,635.2 |
| Net\tearnings\tfor\t2017 | — | — | 557.7 | — | — | 14.5 | 572.2 |
| Other\tcomprehensive\tincome | — | — | — | 169.5 | — | — | 169.5 |
| Cash\tdividends\t–\t$2.95\tper\tshare | — | — | (169.4) | — | — | — | (169.4) |
| Stock\tcompensation\tplans | — | 25.9 | — | — | 41.8 | — | 67.7 |
| Share\trepurchases\t–\t1,820,000\tshares | — | — | — | — | (287.9) | — | (287.9) |
| Other | — | — | (0.9) | — | — | (14.1) | (15.0) |
| Balance\tat\tDecember\t30,\t2017 | 67.4 | 343.2 | 3,772.3 | (329.0) | (900.0) | 18.4 | 2,972.3 |
| Net\tearnings\tfor\t2018 | — | — | 679.9 | — | — | 16.3 | 696.2 |
| Other\tcomprehensive\tloss | — | — | — | (133.2) | — | — | (133.2) |
| Cash\tdividends\t–\t$3.41\tper\tshare | — | — | (192.0) | — | — | — | (192.0) |
| Stock\tcompensation\tplans | — | 16.2 | — | — | 60.7 | — | 76.9 |
| Share\trepurchases\t–\t1,769,000\tshares | — | — | — | — | (284.1) | — | (284.1) |
| Other | — | — | (2.6) | — | — | (14.9) | (17.5) |
| Balance\tat\tDecember\t29,\t2018 | $67.4 | $359.4 | $4,257.6 | $(462.2) | $(1,123.4) | $19.8 | $3,118.6 |

# Snap-on	Incorporated	–	Consolidated	Statements	of	Cash	Flows

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities: |  |  |  |
| Net\tearnings | $696.2 | $572.2 | $559.6 |
| Adjustments\tto\treconcile\tnet\tearnings\tto\tnet\tcash\tprovided\t(used)\tby\toperating\tactivities: |  |  |  |
| Depreciation | 68.8 | 65.6 | 61.4 |
| Amortization\tof\tother\tintangibles | 25.3 | 27.6 | 24.2 |
| Provision\tfor\tlosses\ton\tfinance\treceivables | 57.5 | 54.6 | 44.0 |
| Provision\tfor\tlosses\ton\tnon-finance\treceivables | 12.8 | 10.5 | 7.5 |
| Stock-based\tcompensation\texpense | 27.2 | 30.3 | 31.0 |
| Deferred\tincome\ttax\tprovision | 13.7 | 12.3 | 1.3 |
| Loss\t(gain)\ton\tsales\tof\tassets | 0.5 | (0.2) | 0.2 |
| Settlement\tof\ttreasury\tlock | — | 14.9 | — |
| \t\t\t\t\tLoss\ton\tearly\textinguishment\tof\tdebt | 7.8 | — | — |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\teffects\tof\tacquisitions: |  |  |  |
| Increase\tin\ttrade\tand\tother\taccounts\treceivable | (47.7) | (55.5) | (41.0) |
| Increase\tin\tcontract\treceivables | (30.9) | (41.8) | (31.9) |
| Increase\tin\tinventories | (38.6) | (76.0) | (32.7) |
| (Increase)\tdecrease\tin\tprepaid\tand\tother\tassets | 10.4 | (10.0) | (11.9) |
| Increase\t(decrease)\tin\taccounts\tpayable | 27.5 | (2.2) | 16.3 |
| Increase\t(decrease)\tin\taccruals\tand\tother\tliabilities | (66.0) | 6.2 | (51.9) |
| Net\tcash\tprovided\tby\toperating\tactivities | 764.5 | 608.5 | 576.1 |
| Investing\tactivities: |  |  |  |
| Additions\tto\tfinance\treceivables | (865.6) | (892.0) | (915.0) |
| Collections\tof\tfinance\treceivables |  |  |  |
|  | 747.7 | 712.7 | 671.7 |
| Capital\texpenditures | (90.9) | (82.0) | (74.3) |
| Acquisitions\tof\tbusinesses,\tnet\tof\tcash\tacquired | (3.0) | (82.9) | (160.4) |
| Disposals\tof\tproperty\tand\tequipment | 0.7 | 1.5 | 2.2 |
| Other | 0.9 | 1.3 | 2.4 |
| Net\tcash\tused\tby\tinvesting\tactivities | (210.2) | (341.4) | (473.4) |
| Financing\tactivities: |  |  |  |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 395.4 | 297.8 | — |
| Repayments\tof\tlong-term\tdebt | (457.8) | (150.0) | — |
| Proceeds\tfrom\tnotes\tpayable | — | 16.8 | 4.5 |
| Repayments\tof\tnotes\tpayable | (16.8) | (4.5) | (5.3) |
| Net\tincrease\tin\tother\tshort-term\tborrowings | 21.7 | 18.3 | 135.0 |
| Cash\tdividends\tpaid | (192.0) | (169.4) | (147.5) |
| Purchases\tof\ttreasury\tstock | (284.1) | (287.9) | (120.4) |
| Proceeds\tfrom\tstock\tpurchase\tand\toption\tplans | 55.5 | 46.2 | 41.8 |
| Other | (24.1) | (23.4) | (24.1) |
| Net\tcash\tused\tby\tfinancing\tactivities | (502.2) | (256.1) | (116.0) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (3.2) | 3.4 | (1.9) |
| Increase\t(decrease)\tin\tcash\tand\tcash\tequivalents | 48.9 | 14.4 | (15.2) |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 92.0 | 77.6 | 92.8 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tyear | $140.9 | $92.0 | $77.6 |
| Supplemental\tcash\tflow\tdisclosures: |  |  |  |
| Cash\tpaid\tfor\tinterest | $(51.5) | $(51.2) | $(51.0) |
| Net\tcash\tpaid\tfor\tincome\ttaxes | (188.0) | (228.1) | (247.3) |

# Note	1:	Summary	of	Accounting	Policies

Principles	of	consolidation	and	presentation:	The	 Consolidated	 Financial	 Statements include the	 accounts	 of	 Snap-on	 Incorporated	 and its	 wholly-owned	 and majority-owned	subsidiaries	(collectively,	"Snap-on"	or	"the	company").

Certain	prior	year	amounts	have	been	reclassified	on	the	Consolidated	Statements	of	Earnings	to	conform	to	the	2018	presentation	following	the	retrospective	adoption of	Accounting	Standards	Update	("ASU")	No.	2017-07,	Compensation	-	Retirement	Benefits	(Topic	715)	-	Improving	the	Presentation	of	Net	Periodic	Pension	Cost	and Net	Periodic	Postretirement	Benefit	Cost.	The	following	items	were	reclassified	to	"Other	income	(expense)	-	net"	in	the	indicated	fiscal	year:	income	of	$1.0	million and	$0.8	million	for	2017	and	2016,	respectively,	that	was	previously	included	in	"Cost	of	goods	sold"	and	expense	of	$0.4	million	for	2017	and	income	of	$6.1	million for	2016,	that	were	previously	included	in	"Operating	expenses."	As	a	result,	previously	reported	"Cost	of	goods	sold"	of	$1,862.0	million	and	$1,720.8	million	are	now $1,861.0	million	and	$1,720.0	million	for	2017	and	2016,	respectively,	"Operating	expenses"	of	$1,160.9	million	and	$1,054.1	million	are	now	$1,161.3	million	and $1,048.0	million	for	2017	and	2016,	respectively,	and	"Other	income	(expense)	-	net"	of	$7.2	million	and	$0.6	million	of	expense	are	now	$7.8	million	and	$7.5	million of	expense	for	2017	and	2016,	respectively.	Additionally,	prior	year	"Operating	earnings"	for	certain	reportable	business	segments	have	been	restated	to	reflect	these reclassifications.	See	Note	19	for	information	on	Snap-on's	reportable	business	segments.

Snap-on	 accounts	 for	 investments	 in	 unconsolidated	 affiliates	 where	 Snap-on	 has	 a	 non-significant	 ownership	 interest	 under	 the	 equity	 method	 of	 accounting. Investments	in	unconsolidated	affiliates	of	$18.5	million	as	of	December	29,	2018,	and	$18.6	million	as	of	December	30,	2017,	are	included	in	"Other	assets"	on	the accompanying	Consolidated	Balance	Sheets;	no	equity	investment	dividends	were	received	in	any	period	presented.	In	the	normal	course	of	business,	the	company	may purchase	products	or	services	from,	or	sell	products	or	services	to,	unconsolidated	affiliates.	Purchases	from	unconsolidated	affiliates	were	$11.2	million,	$11.6	million and	$12.9	million	in	2018,	2017	and	2016,	respectively,	and	sales	to	unconsolidated	affiliates	were	$0.8	million	in	2018,	$0.5	million	in	2017	and	$0.2	million	in	2016. 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	("GAAP").	Intercompany	accounts	and	transactions	have	been eliminated.

Use	of	estimates:	The	preparation	of	financial	statements	in	conformity	with	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.

Financial	instruments:	The	fair	value	of	the	company's	derivative	financial	instruments	is	generally	determined	using	quoted	prices	in	active	markets	for	similar	assets and	liabilities.	The	carrying	value	of	the	company's	non-derivative	financial	instruments	either	approximates	fair	value,	due	to	their	short-term	nature,	or	the	amount disclosed	for	fair	value	is	based	upon	a	discounted	cash	flow	analysis	or	quoted	market	values.	See	Note	11	for	further	information	on	financial	instruments.

Revenue	recognition:	Snap-on	recognizes	revenue	from	the	sale	of	tools,	diagnostic	and	equipment	products	and	related	services	based	on	when	control	of	the	product passes	to	the	customer	or	the	service	is	provided	and	is	recognized	at	an	amount	that	reflects	the	consideration	expected	to	be	received	in	exchange	for	such	goods	or services.	See	Note	2	for	information	on	revenue	recognition.

Financial	services	revenue:	Snap-on	also	generates	revenue	from	various	financing	programs	 that	 include:	(i)	 installment	sales	and	 lease	contracts	arising	from franchisees'	customers	and	Snap-on	customers	who	require	financing	for	the	purchase	or	lease	of	tools	and	diagnostic	and	equipment	products	on	an	extended-term payment	plan;	and	(ii)	business	loans	and	vehicle	leases	to	franchisees.	These	financing	programs	are	offered	through	Snap-on's	wholly	owned	finance	subsidiaries. Financial	services	revenue	consists	primarily	of	interest	income	on	finance	and	contract	receivables	and	is	recognized	over	the	life	of	the	underlying	contracts,	with interest	computed	primarily	on	the	average	daily	balances	of	the	underlying	contracts.

Notes	to	Consolidated	Financial	Statements	(continued)

The	decision	to	finance	through	Snap-on	or	another	financing	source	is	solely	at	the	election	of	the	customer.	When	assessing	customers	for	potential	financing,	Snap-on considers	various	factors	regarding	ability	to	pay,	including	the	customers'	financial	condition,	debt-servicing	ability,	past	payment	experience,	and	credit	bureau	and proprietary	Snap-on	credit	model	information,	as	well	as	the	value	of	the	underlying	collateral.	For	finance	receivables,	Snap-on	assesses	these	factors	through	the	use of	credit	quality	indicators	consisting	primarily	of	customer	credit	risk	scores	combined	with	internal	credit	risk	grades,	collection	experience,	franchise	input	and	other internal	metrics.	For	contract	receivables,	Snap-on	assesses	these	factors	through	the	use	of	credit	quality	indicators	consisting	primarily	of	customer	credit	risk	scores combined	with	internal	credit	risk	grades,	collection	experience	and	other	internal	metrics.

Financial	services	lease	arrangements:	Snap-on	accounts	for	its	financial	services	leases	as	direct	financing	or	sales-type	leases.	The	company	determines	the	gross investment	in	the	lease	as	the	present	value	of	the	minimum	lease	payments	using	the	interest	rate	implicit	in	the	lease,	net	of	amounts,	if	any,	included	therein	for executor	costs	to	be	paid	by	Snap-on,	together	with	any	profit	thereon.	The	difference	between	the	gross	investment	in	the	lease	and	the	related	undiscounted	minimum lease	payments	for	the	leased	property	is	reported	as	unearned	finance	charges.	Unearned	finance	charges	are	amortized	to	income	over	the	life	of	the	contract.	The default	covenants	included	in	the	lease	arrangements	are	usual	and	customary,	consistent	with	industry	practice,	and	do	not	impact	the	lease	classification.	Except	in circumstances	where	the	company	has	concluded	that	a	lessee's	financial	condition	has	deteriorated,	the	other	default	covenants	under	Snap-on's	lease	arrangements	are objectively	determinable.

Research	and	engineering:	Snap-on	incurred	research	and	engineering	costs	of	$61.2	million,	$60.9	million	and	$53.4	million	in	2018,	2017	 and	2016,	respectively. Research	and	engineering	costs	are	included	in	"Operating	expenses"	on	the	accompanying	Consolidated	Statements	of	Earnings.

Internally	developed	software:	Costs	incurred	in	the	development	of	software	that	will	ultimately	be	sold	are	capitalized	from	the	time	technological	feasibility	has been	attained	and	capitalization	ceases	when	the	related	product	is	ready	for	general	release.	During	2018,	2017	 and	2016,	 Snap-on	 capitalized	$9.7	million,	$11.3 million	 and	$10.8	million,	respectively,	of	such	costs.	Amortization	of	capitalized	software	development	costs,	which	is	included	in	"Cost	of	goods	sold"	on	the accompanying	Consolidated	Statements	of	Earnings,	was	$13.4	million	 in	2018,	$14.7	million	 in	2017	 and	$13.8	million	 in	2016.	Unamortized	capitalized	software development	 costs	 of	$40.2	million	 as	 of	2018	 year	 end	 and	$43.6	million	 as	 of	2017	year	end	are	 included	 in	"Other	 intangibles	–	net"	on	 the	accompanying Consolidated	Balance	Sheets.

Internal-use	software:	Costs	that	are	incurred	in	creating	software	solutions	and	enhancements	to	those	solutions	are	capitalized	only	for	the	application	development stage	of	the	project.

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	2018,	2017	and	2016,	Snap-on	incurred	shipping	and handling	 charges	 of	$53.7	million,	$49.7	million	 and	$43.1	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. Shipping	and	handling	charges	were	$84.3	million	in	2018,	$82.3	million	in	2017	and	$81.2	million	in	2016;	these	charges	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 expensed	when	incurred.	For	2018,	2017	and	2016,	advertising	and	promotion	expenses	totaled	$55.6	million,	$55.7	million	and	$52.6	million,	respectively.	Advertising and	promotion	costs	are	included	in	"Operating	expenses"	on	the	accompanying	Consolidated	Statements	of	Earnings.

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	Notes	2	and	16	for	information	on	warranties.

Foreign	currency:	The	financial	statements	of	Snap-on's	foreign	subsidiaries	are	translated	into	U.S.	dollars.	Assets	and	liabilities	of	foreign	subsidiaries	are	translated at	current	rates	of	exchange,	and	income	and	expense	items	are	translated	at	the	average	exchange	rates	for	the	period.	The	resulting	translation	adjustments	are	recorded directly	into	"Accumulated	other	comprehensive	loss"	on	the	accompanying	Consolidated	Balance	Sheets.	Foreign	exchange	transactions,	net	of	foreign	currency hedges,	resulted	in	pretax	losses	of	$3.9	million,	$7.0	million	and	$1.3	million	in	2018,	2017	and	2016,	respectively.	Foreign	exchange	transaction	gains	and	losses	are reported	in	"Other	income	(expense)	–	net"	on	the	accompanying	Consolidated	Statements	of	Earnings.

Change	in	Functional	Currency:	Argentina's	economy	has	been	determined	to	be	highly	inflationary	effective	July	1,	2018.	As	a	result	the	functional	currency	for	the company's	subsidiary	in	Argentina	changed	from	the	Argentinian	Peso	to	the	U.S.	Dollar.	 The	impact	of	the	change	in	functional	currency	did	not	have	a	material impact	on	the	company's	consolidated	financial	statements.

Income	taxes:	Current	tax	assets	and	liabilities	are	based	upon	an	estimate	of	taxes	refundable	or	payable	for	each	of	the	jurisdictions	in	which	the	company	is	subject	to tax.	In	the	ordinary	course	of	business,	there	is	inherent	uncertainty	in	quantifying	income	tax	positions.	Snap-on	assesses	income	tax	positions	and	records	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,	Snap-on	records	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	asset	or	liability	on	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.	Deferred	tax	assets	are	reduced	by	a valuation	allowance	when,	in	the	opinion	of	management,	it	is	more-likely-than-not	that	some	portion	or	all	of	the	deferred	tax	assets	will	not	be	realized.	See	Note	9	for further	information	on	income	taxes.

Per	share	data:	Basic	earnings	per	share	calculations	were	computed	by	dividing	net	earnings	attributable	to	Snap-on	Incorporated	by	the	corresponding	weighted- average	number	of	common	shares	outstanding	for	the	period.	The	dilutive	effect	of	the	potential	exercise	of	outstanding	options	and	stock-settled	stock	appreciation rights	("SARs")	to	purchase	common	shares	is	calculated	using	the	treasury	stock	method.	As	of	December	29,	2018,	there	were	685,533	awards	outstanding	that	were anti-dilutive;	as	of	December	30,	2017,	there	were	722,715	awards	outstanding	that	were	anti-dilutive;	and	as	of	December	31,	2016	there	were	1,600	awards	outstanding that	were	anti-dilutive.	Performance-based	equity	awards	are	included	in	the	diluted	earnings	per	share	calculation	based	on	the	attainment	of	the	applicable	performance metrics	to	date.	Snap-on	had	dilutive	securities	totaling	986,984	shares,	1,207,285	shares	and	1,307,914	shares,	as	of	the	end	of	2018,	2017	and	2016,	respectively.	See Note	14	for	further	information	on	equity	awards.

Stock-based	compensation:	Snap-on	recognizes	the	cost	of	employee	services	in	exchange	for	awards	of	equity	instruments	based	on	the	grant	date	fair	value	of	those awards.	That	cost,	based	on	the	estimated	number	of	awards	that	are	expected	to	vest,	is	recognized	on	a	straight-line	basis	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.	The grant	date	fair	value	of	employee	stock	options	and	similar	instruments	is	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	stock-based	compensation	expense	could	have	been	materially	different	from	that	depicted	in	the	financial	statements.	See Note	14	for	further	information	on	stock-based	compensation.

Derivatives:	Snap-on	utilizes	derivative	financial	instruments,	including	foreign	currency	forward	contracts,	interest	rate	swap	agreements,	treasury	lock	agreements	and prepaid	equity	forward	agreements	to	manage	its	exposures	to	foreign	currency	exchange	rate	risks,	interest	rate	risks,	and	market	risk	associated	with	the	stock-based portion	of	its	deferred	compensation	plans.	Snap-on	accounts	for	its	derivative	instruments	at	fair	value.	Snap-on	does	not	hold	or	issue	financial	instruments	for speculative	or	trading	purposes.	See	Note	11	for	further	information	on	derivatives.

Cash	equivalents:	 Snap-on	 considers	 all	 highly liquid investments	 with	 an	 original	 maturity	 of three	 months	 or less to	 be	 cash	 equivalents.	There	 were	no	 cash equivalents	as	of	2018	and	2017	year	ends.

Receivables	and	allowances	for	doubtful	accounts:	All	trade,	finance	and	contract	receivables	are	reported	on	the	Consolidated	Balance	Sheets	at	their	outstanding principal	balance	adjusted	for	any	charge-offs	and	net	of	allowances	for	doubtful	accounts.	Finance	and	contract	receivables	also	include	accrued	interest	and	contract acquisition	costs,	net	of	contract	acquisition	fees.

Snap-on	maintains	allowances	for	doubtful	accounts	to	absorb	probable	losses	inherent	in	its	portfolio	of	receivables.	The	allowances	for	doubtful	accounts	represent management's	estimate	of	the	losses	inherent	in	the	company's	receivables	portfolio	based	on	ongoing	assessments	and	evaluations	of	collectability	and	historical	loss experience.	In	estimating	losses	inherent	in	each	of	its	receivable	portfolios	(trade,	finance	and	contract	receivables),	Snap-on	uses	historical	loss	experience	rates	by portfolio	and	applies	them	to	a	related	aging	analysis.	Determination	of	the	proper	level	of	allowances	by	portfolio	requires	management	to	exercise	judgment	about	the timing,	frequency	and	severity	of	credit	losses	that	could	materially	affect	the	provision	for	credit	losses	and,	as	a	result,	net	earnings.	The	allowances	take	into consideration	 numerous	 quantitative	 and	 qualitative	 factors	 that	 include	 receivable	 type,	 historical	 loss	 experience,	 loss	 migration,	 delinquency	 trends,	 collection experience,	current	economic	conditions	and	credit	risk	characteristics	as	follows:

•Snap-on	evaluates	the	collectability	of	receivables	based	on	a	combination	of	various	financial	and	qualitative	factors	that	may	affect	its	customers'	ability	to pay.	These	factors	may	include	customers'	financial	condition,	debt-servicing	ability,	past	payment	experience,	and	credit	bureau	and	proprietary	Snap-on credit	model	information,	as	well	as	the	value	of	the	underlying	collateral.

•For	finance	and	contract	receivables,	Snap-on	assesses	quantitative	and	qualitative	factors	through	the	use	of	credit	quality	indicators	consisting	primarily	of collection	experience	and	other	internal	metrics	as	follows:

◦Collection	experience	–	Snap-on	conducts	monthly	reviews	of	credit	and	collection	performance	for	each	of	its	finance	and	contract	receivable portfolios	focusing	on	data	such	as	delinquency	trends,	non-performing	assets,	and	charge-off	and	recovery	activity.	These	reviews	allow	for	the formulation	of	collection	strategies	and	potential	collection	policy	modifications	in	response	to	changing	risk	profiles	in	the	finance	and	contract receivable	portfolios.

◦Other	internal	metrics	–	Snap-on	maintains	a	system	that	aggregates	credit	exposure	by	customer,	risk	classification	and	geographical	area,	among other	factors,	to	further	monitor	changing	risk	profiles.

Management	performs	detailed	reviews	of	its	receivables	on	a	monthly	and/or	quarterly	basis	to	assess	the	adequacy	of	the	allowances	based	on	historical	and	current trends	and	other	factors	affecting	credit	losses	and	to	determine	if	any	impairment	has	occurred.	A	receivable	is	impaired	when	it	is	probable	that	all	amounts	related	to the	receivable	will	not	be	collected	according	to	the	contractual	terms	of	the	agreement.	Additions	to	the	allowances	for	doubtful	accounts	are	maintained	through adjustments	to	the	provision	for	credit	losses,	which	are	charged	to	current	period	earnings;	amounts	determined	to	be	uncollectable	are	charged	directly	against	the allowances,	while	amounts	recovered	on	previously	charged-off	accounts	increase	the	allowances.	Net	charge-offs	include	the	principal	amount	of	losses	charged-off	as well	as	charged-off	interest	and	fees.	Recovered	interest	and	fees	previously	charged-off	are	recorded	through	the	allowances	for	doubtful	accounts	and	increase	the allowances.	 Finance	 receivables	 are	 assessed	 for	 charge-off	 when	 an	 account	 becomes	120	 days	 past	 due	 and	 are	 charged-off	 typically	 within	60	 days	 of	 asset repossession.	Contract	receivables	related	to	equipment	leases	are	generally	charged-off	when	an	account	becomes	150	days	past	due,	while	contract	receivables	related to	franchise	finance	and	van	leases	are	generally	charged-off	up	to	180	days	past	the	asset	return	date.	For	finance	and	contract	receivables,	customer	bankruptcies	are generally	charged-off	upon	notification	that	the	associated	debt	is	not	being	reaffirmed	or,	in	any	event,	no	later	than	180	days	past	due.

Snap-on	does	not	believe	that	its	trade	accounts,	finance	or	contract	receivables	represent	significant	concentrations	of	credit	risk	because	of	the	diversified	portfolio	of individual	customers	and	geographical	areas.	See	Note	4	for	further	information	on	receivables	and	allowances	for	doubtful	accounts.

Other	accrued	liabilities:	Supplemental	balance	sheet	information	for	"Other	accrued	liabilities"	as	of	2018	and	2017	year	end	is	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Income\ttaxes | $34.4 | $41.6 |
| Accrued\twarranty | 17.1 | 17.2 |
| Deferred\tsubscription\trevenue | 47.3 | 38.9 |
| Accrued\tnew\ttool\treturn | 43.7 | 23.9 |
| Accrued\tproperty,\tpayroll\tand\tother\ttaxes | 40.1 | 45.4 |
| Accrued\tselling\tand\tpromotion\texpense | 28.7 | 28.6 |
| Accrued\tlegal\tcharges | 30.9 | 45.9 |
| Other | 131.4 | 146.6 |
| Total\tother\taccrued\tliabilities | $373.6 | $388.1 |

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.	Snap-on	records	allowances	for	excess	and	obsolete	inventory	based	on	historical	and	estimated	future	demand	and	market	conditions.	Allowances	for raw	materials	are	largely	based	on	an	analysis	of	raw	material	age	and	actual	physical	inspection	of	raw	material	for	fitness	for	use.	As	part	of	evaluating	the	adequacy	of allowances	for	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	a	LIFO	basis consist	of	purchased	product	and	inventory	manufactured	at	the	company's	heritage	U.S.	manufacturing	facilities	(primarily	hand	tools	and	tool	storage).	Since	Snap-on began	acquiring	businesses	in	the	1990's,	the	company	has	used	the	"first-in,	first-out"	("FIFO")	inventory	valuation	methodology	for	acquisitions;	the	company	does not	adopt	the	LIFO	inventory	valuation	methodology	for	new	acquisitions.	See	Note	5	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	when	events	or	circumstances	indicate	that	the	carrying	amount of	the	long-lived	asset	may	not	be	recoverable.	See	Note	6	for	further	information	on	property	and	equipment.

Goodwill	and	other	intangible	assets:	Goodwill	and	other	indefinite-lived	assets	are	tested	for	impairment	annually	or	more	frequently	if	events	or	changes	in circumstances	indicate	that	the	assets	might	be	impaired.	Annual	impairment	tests	are	performed	by	the	company	in	the	second	quarter	of	each	year	using	information available	as	of	fiscal	April	month	end.	Snap-on	evaluates	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	reportable	unit	or	asset.	Intangible	assets	with	finite	lives	are	amortized	over	their	estimated	useful lives	using	straight-line	and	accelerated	methods	depending	on	the	nature	of	the	particular	asset.	See	Note	7	for	further	information	on	goodwill	and	other	intangible assets.

The	following	new	accounting	pronouncements	were	adopted	in	fiscal	year	2018:

In	March	2017,	the	Financial	Accounting	Standards	Board	(the	"FASB")	issued	ASU	No.	2017-07,	Compensation	-	Retirement	Benefits	(Topic	715)	-	Improving	the Presentation	of	Net	Periodic	Pension	Cost	and	Net	Periodic	Retirement	Benefit	Cost,	which	provides	additional	guidance	on	the	presentation	of	net	periodic	pension	and postretirement	benefit	costs	in	the	income	statement	and	on	the	components	eligible	for	capitalization.	The	amendments	in	this	ASU	require	that	an	employer	report	the service	cost	component	of	the	net	periodic	benefit	costs	in	the	same	income	statement	line	item	as	other	compensation	costs	arising	from	services	rendered	by	employees during	the	period.	The	non-service-cost	components	of	net	periodic	benefit	costs	are	to	be	presented	in	the	income	statement	separately	from	the	service	cost	components and	outside	a	subtotal	of	income	from	operations.	The	ASU	also	allows	for	the	capitalization	of	the	service	cost	components,	when	applicable	(i.e.,	as	a	cost	of	internally manufactured	inventory	or	a	self-constructed	asset).

Snap-on	adopted	this	ASU	at	the	beginning	of	its	2018	fiscal	year,	with	the	changes	related	to	the	presentation	in	the	statements	of	earnings	of	the	service	cost	and	non- service-cost	components	of	net	periodic	benefit	costs	applied	retrospectively,	using	the	practical	expedient	permitting	the	use	of	the	amounts	disclosed	in	pension	and other	postretirement	benefit	plan	notes	as	the	estimation	basis	for	the	presentation	of	the	prior	comparative	periods.	For	fiscal	2018	and	all	comparative	periods,	the	non- service	cost	components	of	net	periodic	benefit	costs	are	included	in	"Other	income	(expense)	-	net"	on	the	accompanying	Consolidated	Statements	of	Earnings. Beginning	in	fiscal	2018,	changes	related	to	the	capitalization	in	assets	of	the	service	cost	component	of	net	periodic	benefit	costs	were	applied	prospectively.	The adoption	of	this	ASU	did	not	have	a	significant	impact	on	the	company's	Consolidated	Statements	of	Earnings.

In	October	2016,	the	FASB	issued	ASU	No.	2016-16,	Income	Taxes	(Topic	740)	-	Intra-Entity	Transfers	of	Assets	Other	Than	Inventory.	The	ASU	eliminates	the requirement	to	defer	the	recognition	of	current	and	deferred	income	taxes	for	an	intra-entity	asset	transfer	until	the	asset	has	been	sold	to	an	outside	party.	Under	the	new guidance,	an	entity	should	recognize	the	income	tax	consequences	of	an	intra-entity	transfer	of	an	asset	other	than	inventory	when	the	transfer	occurs.	The	ASU	is effective	for	fiscal	years	beginning	after	December	15,	2017,	including	interim	periods	within	those	fiscal	years.	The	amendments	in	this	ASU	were	to	be	applied	on	a modified	retrospective	basis	through	a	cumulative-effect	adjustment	directly	to	retained	earnings	at	the	time	of	adoption.	The	adoption	of	this	ASU	did	not	have	an impact	on	the	company's	consolidated	financial	statements.

In	August	2016,	the	FASB	issued	ASU	No.	2016-15,	Statement	of	Cash	Flows	(Topic	230),	which	adds	and/or	clarifies	guidance	on	the	classification	of	certain	cash receipts	and	payments	in	the	statement	of	cash	flows.	The	new	guidance	is	intended	to	reduce	diversity	in	practice	in	how	certain	transactions	are	classified	in	the statement	of	cash	flows.	This	ASU	is	effective	for	fiscal	years	beginning	after	December	15,	2017,	including	interim	periods	within	those	fiscal	years.	The	adoption	of this	ASU	did	not	have	a	significant	impact	to	the	designations	of	operating,	investing	and	financing	activities	on	the	company's	Consolidated	Statements	of	Cash	Flows.

On	December	31,	2017,	the	beginning	of	Snap-on's	2018	fiscal	year,	Snap-on	adopted	ASU	No.	2014-09,	Revenue	from	Contracts	with	Customers	(Topic	606),	which outlines	a	single	comprehensive	model	for	entities	 to	use	 in	accounting	for	revenue	arising	from	contracts	with	customers	and	supersedes	most	current	revenue recognition	guidance,	including	industry-specific	guidance.	Topic	606	is	based	on	the	principle	that	an	entity	should	recognize	revenue	to	depict	the	transfer	of	goods	or services	to	customers	in	an	amount	that	reflects	the	consideration	to	which	the	entity	expects	to	be	entitled	in	exchange	for	those	goods	or	services.	Topic	606	also requires	additional	disclosure	about	 the	nature,	amount,	 timing	and	uncertainty	of	revenue	and	cash	flows	arising	from	customer	contracts,	 including	significant judgments	and	changes	in	judgments	and	assets	recognized	from	costs	incurred	to	fulfill	a	contract.	Snap-on	adopted	Topic	606	using	the	modified	retrospective approach	applied	to	those	contracts	that	were	not	completed	as	of	December	31,	2017,	which	means	Topic	606	has	been	applied	to	the	fiscal	2018	financial	statements and	disclosures	going	forward,	but	that	prior	period	financial	statements	and	disclosures	reflect	the	prior	revenue	recognition	standard.	See	Note	2	for	additional information	on	revenue	recognition.

Snap-on's	revenues	are	primarily	from	the	selling	of	products	that	are	shipped	and	billed,	services	provided	to	customers	and	from	subscriptions,	including	software subscriptions.	Approximately	90%	of	net	sales	are	earned	at	a	point	in	time	through	ship-and	bill	performance	obligations.	The	remaining	performance	obligations	that are	recorded	over	time	relate	primarily	to	software	subscriptions	and	to	a	lesser	extent	extended	warranty	and	other	subscription	agreements.	Revenues	are	recognized when	control	is	transferred	to	customers,	in	an	amount	that	reflects	the	consideration	Snap-on	expects	to	be	entitled	to	in	exchange	for	those	goods	and	services.	Revenue recognition	is	evaluated	through	the	following	five	steps:	(i)	identification	of	the	contract,	or	contracts,	with	a	customer;	(ii)	identification	of	the	performance	obligations in	the	contract;	(iii)	determination	of	the	transaction	price;	(iv)	allocation	of	the	transaction	price	to	the	performance	obligations	in	the	contract;	and	(v)	recognition	of revenue	when	or	as	a	performance	obligation	is	satisfied.

Revenue	related	to	software	subscriptions,	as	well	as	extended	warranty	and	other	subscription	agreements,	is	generally	recognized	over	time	on	a	ratable	basis	over	the contract	term	beginning	on	the	date	that	our	service	is	made	available	to	the	customer.	Contracts	with	customers	may	include	multiple	performance	obligations	related	to sales	of	hardware,	software	and	software-related	services.	For	these	contracts,	individual	performance	obligations	are	recorded	separately	if	they	are	distinct.	The transaction	price,	including	any	discounts,	is	allocated	to	each	separate	performance	obligation	based	on	its	relative	standalone	selling	price.	The	standalone	selling prices	are	determined	based	on	the	prices	charged	to	customers	or	by	using	an	expected	cost	plus	margin	approach.	The	amount	assigned	to	the	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,	revenue	is	generally	recognized	over	time	on	a	ratable	basis	using	a	time-based	output	method	applied	over	the	contract	term beginning	on	the	date	that	the	service	is	made	available	to	the	customer.	These	contracts	are	generally	for	12	months	but	can	be	for	a	term	up	to	60	months.

The	following	new	accounting	pronouncements,	and	related	impacts	on	adoption,	are	being	evaluated	by	the	company:

In	August	2018,	the	FASB	issued	ASU	No.	2018-13,	Fair	Value	Measurement	(Topic	820)	-	Disclosure	Framework	-	Changes	to	the	Disclosure	Requirements	for	Fair Value	Measurement,	which	is	designed	to	improve	the	effectiveness	of	disclosures	by	removing,	modifying	and	adding	disclosures	related	to	fair	value	measurements. ASU	No.	2018-13	is	effective	for	fiscal	years	beginning	after	December	15,	2019,	including	interim	periods	within	those	fiscal	years;	the	ASU	allows	for	early	adoption in	any	interim	period	after	issuance	of	the	update.	The	adoption	of	this	ASU	is	not	expected	to	have	a	significant	impact	on	the	company's	consolidated	financial statements.

In	August	2018,	the	FASB	issued	ASU	No.	2018-14,	Compensation	-	Retirement	Benefits	-	Defined	Benefit	Plans	-	General	Subtopic	715-20	-	Disclosure	Framework	- Changes	to	the	Disclosure	Requirements	for	Defined	Benefit	Plans,	which	is	designed	to	improve	the	effectiveness	of	disclosures	by	removing	and	adding	disclosures related	to	defined	benefit	plans.	ASU	No.	2018-14	is	effective	for	fiscal	years	ending	after	December	15,	2020;	the	ASU	allows	for	early	adoption	in	any	year	end	after issuance	of	the	update.	The	adoption	of	this	ASU	is	not	expected	to	have	a	significant	impact	on	the	company's	consolidated	financial	statements.

In	February	2018,	the	FASB	issued	ASU	No.	2018-02,	Income	Statement	-	Reporting	Comprehensive	Income	-	Reclassification

of	Certain	Tax	Effects	from	Accumulated	Other	Comprehensive	Income	(Topic	220),	which	allows	for	a	reclassification	from	accumulated	other	comprehensive	income to	retained	earnings	for	stranded	tax	effects	resulting	from	the	Tax	Cuts	and	Jobs	Act	(the	"Tax	Act").	ASU	No.	2018-02	is	effective	for	fiscal	years	beginning	after December	15,	2018,	including	interim	periods	within	those	fiscal	years.	The	adoption	of	this	ASU	will	reclassify	approximately	$46	million	from	accumulated	other comprehensive	income	to	retained	earnings	on	the	company's	consolidated	financial	statements.

In	August	2017,	the	FASB	issued	ASU	No.	2017-12,	Derivatives	and	Hedging	(Topic	815)	–	Targeted	Improvements	to	Accounting	for	Hedging	Activities,	which improves	the	financial	reporting	of	hedging	relationships	to	better	portray	the	economic	results	of	an	entity's	risk	management	activities	in	its	financial	statements.	The amendments	in	this	update	also	make	certain	targeted	improvements	to	simplify	the	application	of	the	hedge	accounting	guidance	in	current	GAAP.	ASU	No.	2017-12	is effective	for	fiscal	years	beginning	after	December	15,	2018,	including	interim	periods	within	those	fiscal	years.	The	adoption	of	this	ASU	is	not	expected	to	have	a significant	impact	on	the	company's	consolidated	financial	statements.

In	June	2016,	the	FASB	issued	ASU	No.	2016-13,	Financial	Instruments	–	Credit	Losses	(Topic	326),	to	require	the	measurement	of	expected	credit	losses	for	financial instruments	held	at	the	reporting	date	based	on	historical	experience,	current	conditions	and	reasonable	forecasts.	The	main	objective	of	this	ASU	is	to	provide	financial statement	users	with	more	decision-useful	information	about	the	expected	credit	losses	on	financial	instruments	and	other	commitments	to	extend	credit	held	by	a reporting	entity	at	each	reporting	date.	ASU	No.	2016-13	is	effective	for	fiscal	years	beginning	after	December	15,	2019,	including	interim	periods	within	those	fiscal years;	the	ASU	allows	for	early	adoption	as	of	the	beginning	of	an	interim	or	annual	reporting	period	beginning	after	December	15,	2018.	The	company	is	currently assessing	the	impact	this	ASU	will	have	on	its	consolidated	financial	statements.

In	February	2016,	the	FASB	issued	ASU	No.	2016-02,	Leases	(Topic	842),	to	increase	transparency	and	comparability	among	organizations	by	recognizing	lease	assets and	lease	liabilities	on	the	balance	sheet	and	disclosing	key	information	about	leasing	arrangements.	The	ASU	is	intended	to	represent	an	improvement	over	previous GAAP,	which	did	not	require	lease	assets	and	lease	liabilities	to	be	recognized	for	most	leases.	This	ASU,	which	supersedes	most	current	lease	guidance,	affects	any entity	that	enters	into	a	lease	(as	that	term	is	defined	in	the	ASU),	with	some	specified	scope	exemptions.	ASU	No.	2016-02	is	effective	for	fiscal	years	beginning	after December	15,	2018.

Snap-on	commenced	its	assessment	of	Topic	842	during	the	second	half	of	2017	and	developed	a	comprehensive	project	plan	that	included	representatives	from	across the	company's	business	segments.	The	project	plan	included	evaluating	Snap-on's	lease	information,	analyzing	the	standard's	impact	on	the	company's	various	types	of lease	contracts	and	identifying	the	reporting	requirements	of	the	new	standard.	The	company	identified	and	implemented	appropriate	changes	to	its	business	processes, systems	and	controls	to	support	lease	accounting	and	disclosures	under	Topic	842.

As	of	December	29,	2018,	and	subject	to	the	company's	ongoing	evaluation	of	new	lease	contracts,	the	company	has	substantially	completed	its	evaluation	of	the expected	impact	of	adopting	Topic	842	and	anticipates	that	the	adoption	of	this	standard	will	not	have	a	significant	impact	on	the	company's	consolidated	financial statements.	As	a	result	of	the	adoption	of	this	standard,	a	right-of-use	asset	and	a	related	lease	liability	of	approximately	$61	million	will	be	established	to	reflect	the present	value	of	the	future	lease	payments.

The	company	will	adopt	Topic	842	at	the	beginning	of	2019	using	the	modified	retrospective	approach	with	prior	periods	following	existing	guidance.

# Note	2:	Revenue	Recognition

Snap-on	recognizes	revenue	from	the	sale	of	tools,	diagnostic	and	equipment	products	and	related	services	based	on	when	control	of	the	product	passes	to	the	customer or	the	service	is	provided	and	is	recognized	at	an	amount	that	reflects	the	consideration	expected	to	be	received	in	exchange	for	such	goods	or	services.

The	effects	of	adjustments	to	the	December	30,	2017	Consolidated	Balance	Sheet	for	the	adoption	of	Topic	606	were	as	follows:

| (Amounts	in	millions) | Balance	at<br>December	30,	2017 | Topic	606<br>Adjustments | Opening	Balance	at<br>December	31,	2017 |
| :--- | :--- | :--- | :--- |
| Assets |  |  |  |
| Inventories\t-\tnet | \t $638.8 | \t $20.9 | \t $659.7 |
| Deferred\tincome\ttax\tassets | 52.0 | 0.6 | 52.6 |
| Liabilities\tand\tEquity |  |  |  |
| Other\taccrued\tliabilities | \t $388.1 | \t $23.3 | \t $411.4 |
| Retained\tearnings | 3,772.3 | (1.8) | 3,770.5 |

The	adoption	of	Topic	606	did	not	have	a	significant	impact	on	the	company's	consolidated	financial	statements.	The	adoption	resulted	in	the	recognition	of	an inventory	asset	related	to	certain	product	returns	by	increasing	the	returns	liability	and	recognizing	an	inventory	asset	for	the	anticipated	value	of	the	returns	to	recognize Snap-on's	contractual	obligation	to	recover	products	from	customers;	this	gross	up	had	no	corresponding	impact	on	the	Consolidated	Statement	of	Earnings.	For	the anticipated	value	of	the	returns,	the	adoption	resulted	in	the	recognition	of	an	increase	in	the	inventory	obsolescence	reserve	of	$2.4	million	with	a	corresponding adjustment	to	fiscal	2018	beginning	retained	earnings.	Other	than	the	amounts	recorded	for	the	adoption	of	Topic	606	on	the	Consolidated	Balance	Sheets,	there	were	no other	changes	since	the	adoption	that	would	be	materially	different	from	previous	accounting	standards	that	would	affect	the	Consolidated	Statements	of	Earnings, Balance	Sheets,	or	Cash	Flows.

# Revenue	Disaggregation

The	following	table	shows	the	consolidated	revenues	by	revenue	source:

| (Amounts	in	millions) | 2018 |
| :--- | :--- |
| Revenue\tfrom\tcontracts\twith\tcustomers | $3,719.6 |
| Other\trevenues | 21.1 |
| Total\tnet\tsales | 3,740.7 |
| Financial\tservices\trevenue | 329.7 |
| Total\trevenues | $4,070.4 |

Snap-on	evaluates	the	performance	of	its	operating	segments	based	on	segment	revenues,	including	both	external	and	intersegment	net	sales,	and	segment	operating earnings.	Snap-on	accounts	for	both	intersegment	sales	and	transfers	based	primarily	on	standard	costs	with	reasonable	mark-ups	established	between	the	segments. Intersegment	amounts	are	eliminated	to	arrive	at	Snap-on's	consolidated	financial	results.

The	following	table	represents	external	net	sales	disaggregated	by	geography,	based	on	the	customers'	billing	addresses:

|  | Commercial	&amp; | Snap-on | Repair	Systems |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Industrial | Tools | &amp;\tInformation | Financial |  | Snap-on |
| (Amounts\tin\tmillions) | Group | Group | Group | Services | Eliminations | Incorporated |
| Net\tsales: |  |  |  |  |  |  |
| \t\tNorth\tAmerica* | $466.5 | $1,378.7 | $747.1 | $— | $— | $2,592.3 |
| \t\tEurope | 311.9 | 151.3 | 255.2 | — | — | 718.4 |
| \t\tAll\tother | 273.2 | 83.8 | 73.0 | — | — | 430.0 |
| External\tnet\tsales | 1,051.6 | 1,613.8 | 1,075.3 | — | — | 3,740.7 |
| Intersegment\tnet\tsales | 291.7 | — | 259.1 | — | (550.8) | — |
| Total\tnet\tsales | 1,343.3 | 1,613.8 | 1,334.4 | — | (550.8) | 3,740.7 |
| Financial\tservices\trevenue | — | — | — | 329.7 | — | 329.7 |
| Total\trevenue | $1,343.3 | $1,613.8 | $1,334.4 | $329.7 | $(550.8) | $4,070.4 |
|  |  | 2018\tANNUAL\tREPORT | 2018\tANNUAL\tREPORT |  |  | 79 |

*	North	America	is	comprised	of	the	United	States,	Canada	and	Mexico.

The	following	table	represents	external	net	sales	disaggregated	by	customer	type:

|  | Commercial	&amp; | Snap-on | Repair	Systems |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Industrial | Tools | &amp;\tInformation | Financial |  | Snap-on |
| (Amounts\tin\tmillions) | Group | Group | Group | Services | Eliminations | Incorporated |
| Net\tsales: |  |  |  |  |  |  |
| \t\tVehicle\tservice\tprofessionals | $91.1 | $1,613.8 | $1,075.3 | $— | $— | $2,780.2 |
| \t\tAll\tother\tprofessionals | 960.5 | — | — | — | — | 960.5 |
| External\tnet\tsales | 1,051.6 | 1,613.8 | 1,075.3 | — | — | 3,740.7 |
| Intersegment\tnet\tsales | 291.7 | — | 259.1 | — | (550.8) | — |
| Total\tnet\tsales | 1,343.3 | 1,613.8 | 1,334.4 | — | (550.8) | 3,740.7 |
| Financial\tservices\trevenue | — | — | — | 329.7 | — | 329.7 |
| Total\trevenue | $1,343.3 | $1,613.8 | $1,334.4 | $329.7 | $(550.8) | $4,070.4 |

# Nature	of	Goods	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,	information	and management	 systems;	 and	 (iii)	 equipment.	 The	 tools	 product	 category	 includes	 hand	 tools,	 power	 tools,	 tool	 storage	 products	 and	 other	 similar	 products.	The diagnostics,	information	and	management	systems	product	category	includes	handheld	and	PC-based	diagnostic	products,	service	and	repair	information	products, diagnostic	software	solutions,	electronic	parts	catalogs,	business	management	systems	and	services,	point-of-sale	systems,	integrated	systems	for	vehicle	service	shops, original	equipment	manufacturer	("OEM")	purchasing	facilitation	services,	and	warranty	management	systems	and	analytics	to	help	OEM	dealership	service	and	repair shops	("OEM	dealerships")	manage	and	track	performance.	The	equipment	product	category	includes	solutions	for	the	service	of	vehicles	and	industrial	equipment. Snap-on	supports	the	sale	of	its	diagnostics	and	vehicle	service	shop	equipment	by	offering	training	programs	as	well	as	after-sales	support	to	its	customers.	Through	its financial	services	businesses,	Snap-on	also	derives	revenue	from	various	financing	programs	designed	to	facilitate	the	sales	of	its	products	and	support	its	franchise business.

Approximately	90%	of	Snap-on's	net	sales	are	products	sold	at	a	point	in	time	through	ship-and-bill	performance	obligations	that	also	includes	service	repair	services. The	remaining	sales	revenue	is	earned	over	time	primarily	on	a	subscription	basis	including	software,	extended	warranty	and	other	subscription	service	agreements.

Snap-on	enters	into	contracts	related	to	the	selling	of	tools,	diagnostic	and	repair	information	and	equipment	products	and	related	services.	At	contract	inception,	an assessment	of	the	goods	and	services	promised	in	the	contracts	with	customers	is	performed	and	a	performance	obligation	is	identified	for	each	distinct	promise	to transfer	to	the	customer	a	good	or	service	(or	bundle	of	goods	or	services).	To	identify	the	performance	obligations,	Snap-on	considers	all	of	the	goods	or	services promised	in	the	contract	regardless	of	whether	they	are	explicitly	stated	or	are	implied	by	customary	business	practices.	Contracts	with	customers	are	comprised	of customer	purchase	orders,	invoices	and	written	contracts.

# When	Performance	Obligations	Are	Satisfied

For	performance	obligations	related	to	the	majority	of	ship-and-bill	products,	including	repair	services	contracts,	control	transfers	at	a	point	in	time	when	title	transfers upon	shipment	of	the	product	to	the	customer,	and	for	some	sales,	control	transfers	when	title	is	transferred	at	time	of	receipt	by	customer.	Once	a	product	or	repaired product	has	shipped	or	has	been	delivered,	the	customer	is	able	to	direct	the	use	of,	and	obtain	substantially	all	of	the	remaining	benefits	from	the	asset,	revenue	is recognized.	Snap-on	considers	control	to	have	transferred	upon	shipment	or	delivery	when	Snap-on	has	a	present	right	to	payment,	the	customer	has	legal	title	to	the asset,	Snap-on	has	transferred	physical	possession	of	the	asset,	and	the	customer	has	significant	risk	and	rewards	of	ownership	of	the	asset.

For	performance	obligations	related	to	software	subscriptions,	extended	warranties	and	other	subscription	agreements,	Snap-on	transfers	control	and	recognizes	revenue over	time	on	a	ratable	basis	using	a	time-based	output	method.	The	performance	obligations	are	typically	satisfied	as	services	are	rendered	on	a	straight-line	basis	over the	contract	term,	which	is	generally	for	12	months	but	can	be	for	a	term	up	to	60	months.

# Significant	Payment	Terms

For	ship-and-bill	type	contracts	with	customers,	the	contract	states	the	final	terms	of	the	sale,	including	the	description,	quantity,	and	price	of	each	product	or	service purchased.	Payment	terms	are	typically	due	upon	delivery	or	up	to	30	days	after	delivery	but	can	range	up	to	120	days	after	delivery.

For	subscription	contracts,	payment	terms	are	in	advance	or	in	arrears	of	services	on	a	monthly,	quarterly	or	annual	basis	over	the	contract	term,	which	is	generally	for	12 months	but	can	be	for	a	term	up	to	60	months	depending	on	the	product	or	service.	The	customer	typically	agrees	to	a	stated	rate	and	price	in	the	contract	that	does	not vary	over	the	contract	term.	In	some	cases,	customers	prepay	for	their	licenses,	or	in	other	cases,	pay	on	a	monthly	or	quarterly	basis.	When	the	timing	of	the	payment made	by	the	customer	precedes	the	delivery	of	the	performance	obligation,	a	contract	liability	is	recognized.

# Variable	Consideration

In	some	cases,	the	nature	of	Snap-on's	contracts	give	rise	to	variable	consideration,	including	rebates,	credits,	allowances	for	returns	or	other	similar	items	that	generally decrease	the	transaction	price.	These	variable	amounts	generally	are	credited	to	the	customer,	based	on	achieving	certain	levels	of	sales	activity,	product	returns	and making	payments	within	specific	terms.

In	the	normal	course	of	business,	Snap-on	allows	franchisees	to	return	product	per	the	provisions	in	the	franchise	agreement	that	allow	for	the	return	of	product	in	a saleable	condition.	For	other	customers,	product	returns	are	generally	not	accepted	unless	the	item	is	defective	as	manufactured.	Where	applicable,	Snap-on	establishes provisions	for	estimated	sales	returns.	Estimated	product	returns	are	recorded	as	a	reduction	in	reported	revenues	at	the	time	of	sale	based	upon	historical	product	return experience	and	is	adjusted	for	known	trends	to	arrive	at	the	amount	of	consideration	to	which	Snap-on	expects	to	receive.

Variable	consideration	is	estimated	at	the	most	likely	amount	that	is	expected	to	be	earned.	Estimated	amounts	are	included	in	the	transaction	price	to	the	extent	it	is probable	 that	a	significant	reversal	of	cumulative	revenue	recognized	will	not	occur	when	 the	uncertainty	associated	with	 the	variable	consideration	 is	resolved. Estimates	of	variable	consideration	and	determination	of	whether	to	include	estimated	amounts	in	the	transaction	price	are	based	largely	on	an	assessment	of	the anticipated	performance	and	all	information	(historical,	current	and	forecasted)	that	is	reasonably	available.

# Warranties

Snap-on	allows	customers	to	return	product	when	the	product	is	defective	as	manufactured.	Where	applicable,	Snap-on	establishes	provisions	for	estimated	warranties. Estimated	product	warranties	are	provided	for	specific	product	lines	and	Snap-on	accrues	for	estimated	future	warranty	cost	in	the	period	in	which	the	sale	is	recorded. The	costs	are	included	in	"Cost	of	goods	sold"	on	the	accompanying	Consolidated	Statements	of	Earnings.	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. Snap-on	does	not	typically	provide	customers	with	the	right	to	a	refund.

# Practical	Expedients	and	Exemptions

Snap-on	typically	expenses	incremental	direct	costs	of	obtaining	a	contract	(sales	commissions)	when	incurred	because	the	amortization	period	is	generally	12	months	or less.	Capitalized	long-term	contract	costs	are	not	significant.	Contract	costs	are	expensed	or	amortized	in	"Operating	expenses"	on	the	accompanying	Consolidated Statements	of	Earnings.

Snap-on	elected	to	account	for	shipping	and	handling	activities	that	occur	after	control	of	the	related	good	transfers	to	the	customer	as	fulfillment	activities	and	are therefore	recognized	upon	shipment	of	the	goods.

Snap-on	has	applied	the	portfolio	approach	to	its	ship-and-bill	contracts	that	have	similar	characteristics	as	it	reasonably	expects	that	the	effects	on	the	financial statements	of	applying	this	guidance	to	the	portfolio	of	contracts	would	not	differ	materially	from	applying	this	guidance	to	the	individual	contracts	within	the	portfolio.

Snap-on	typically	excludes	from	its	sales	transaction	price	any	amounts	collected	from	customers	for	sales	(and	similar)	taxes.

For	certain	performance	obligations	related	to	software	subscriptions,	extended	warranty	and	other	subscription	agreements	that	are	settled	over	time,	Snap-on	has elected	not	to	disclose	the	value	of	unsatisfied	performance	obligations	for:	(i)	contracts	that	have	an	original	expected	length	of	one	year	or	less;	(ii)	contracts	where revenue	is	recognized	as	invoiced;	and	(iii)	contracts	with	variable	consideration	related	to	unsatisfied	performance	obligations.	 	The	remaining	duration	of	these unsatisfied	performance	obligations	generally	range	from	one	month	up	to	60	months.		Snap-on	had	approximately	$221.0	million	of	long-term	contracts	that	have	fixed consideration	that	extends	beyond	one	year	as	of	December	29,	2018.		Snap-on	expects	to	recognize	approximately	50%	of	these	contracts	as	revenue	by	the	end	of fiscal	2020,	an	additional	40%	by	the	end	of	fiscal	2022	and	the	balance	thereafter.

# Contract	Liabilities	(Deferred	Revenues)

Contract	liabilities	are	recorded	when	cash	payments	are	received	in	advance	of	Snap-on's	performance.		The	timing	of	payment	is	typically	on	a	monthly,	quarterly	or annual	basis.	The	balance	of	total	contract	liabilities	at	December	29,	2018,	was	$63.8	million	and	was	$49.4	million	at	the	beginning	of	fiscal	2018.			The	current	portion of	contract	 liabilities	and	 the	non-current	portion	are	 included	 in	"Other	accrued	 liabilities"	and	"Other	 long-term	 liabilities",	respectively,	on	 the	accompanying Consolidated	Balance	Sheets.		In	2018,	Snap-on	recognized	revenue	of	$37.4	million	that	was	included	in	the	contract	liability	balance	as	of	December	30,	2017,	which was	primarily	from	the	amortization	of	software	subscriptions,	extended	warranties	and	other	subscription	agreements.		The	increase	in	the	total	contract	liabilities balance	is	primarily	driven	by	the	timing	of	cash	payments	received	or	due	in	advance	of	satisfying	Snap-on's	performance	obligations	and	growth	in	certain	software subscriptions,	partially	offset	by	revenues	recognized	that	were	included	in	the	contract	liability	balance	at	the	beginning	of	the	year.

Franchise	fee	revenue,	including	nominal,	non-refundable	initial	fees,	was	recognized	upon	the	granting	of	a	franchise,	which	was	when	the	company	performed substantially	all	initial	services	required	by	the	franchise	agreement.	Franchise	fee	revenue	also	included	ongoing	monthly	fees	(primarily	for	sales	and	business	training as	well	as	marketing	and	product	promotion	programs)	that	were	recognized	as	the	fees	were	earned.	Franchise	fee	revenue	in	2018,	2017	and	2016	totaled	$16.2	million, $15.2	million	and	$13.9	million,	respectively.

# Revenue	Recognition	Prior	to	2018

Revenue	recognition	prior	to	2018,	as	presented,	is	based	on	Revenue	Recognition	(Topic	605).	Snap-on	recognized	revenue	from	the	sale	of	tools	and	diagnostic	and equipment	products	when	contract	terms	were	met,	the	price	was	fixed	or	determinable,	collectability	was	reasonably	assured	and	a	product	was	shipped	or	risk	of ownership	had	been	transferred	to	and	accepted	by	the	customer.	For	sales	contingent	upon	customer	acceptance,	revenue	recognition	was	deferred	until	such	obligations were	fulfilled.	Estimated	product	returns	were	recorded	as	a	reduction	in	reported	revenues	at	the	time	of	sale	based	upon	historical	product	return	experience	and	gross profit	margin	was	adjusted	for	known	trends.	Provisions	for	customer	volume	rebates,	discounts	and	allowances	were	also	recorded	as	a	reduction	in	reported	revenues	at the	time	of	sale	based	on	historical	experience	and	known	trends.	Revenue	related	to	extended	warranty	and	subscription	agreements	was	recognized	over	the	terms	of the	respective	agreements.

Snap-on	 also	 recognized	 revenue	 related	 to	 multiple	 element	 arrangements,	 including	 sales	 of	 hardware,	 software	 and	 software-related	 services.	 When	 a	 sales arrangement	contained	multiple	elements,	such	as	hardware	and	software	products	and/or	services,	Snap-on	used	the	relative	selling	price	method	to	allocate	revenues between	hardware	and	software	elements.	For	software	elements	that	were	not	essential	to	the	hardware's	functionality	and	related	software	post-contract	customer support,	vendor	specific	objective	evidence	("VSOE")	of	fair	value	was	used	to	further	allocate	revenue	to	each	element	based	on	its	relative	fair	value	and,	when necessary,	the	residual	method	was	used	to	assign	value	to	the	delivered	elements	when	VSOE	only	existed	for	the	undelivered	elements.	The	amount	assigned	to	the products	or	services	was	recognized	when	the	product	was	delivered	and/or	when	the	services	were	performed.	In	instances	where	the	product	and/or	services	were performed	over	an	extended	period,	as	is	the	case	with	subscription	agreements	or	the	providing	of	ongoing	support,	revenue	was	generally	recognized	on	a	straight-line basis	over	the	term	of	the	agreement,	which	generally	ranged	from	12	months	to	60	months.

# Note	3:	Acquisitions

On	January	31,	2018,	Snap-on	acquired	substantially	all	of	the	assets	of	George	A.	Sturdevant,	Inc.	(d/b/a	Fastorq)	for	a	cash	purchase	price	of	$3.0	million.	Fastorq, based	in	New	Caney,	Texas,	designs,	assembles	and	distributes	hydraulic	torque	and	hydraulic	tensioning	products	for	use	in	critical	industries.

In	fiscal	2018,	the	company	completed	the	purchase	accounting	valuations	for	the	acquired	net	assets	of	Fastorq.	The	$2.6	million	excess	of	the	purchase	price	over	the fair	value	of	the	net	assets	acquired	was	recorded	in	"Goodwill"	on	the	accompanying	Consolidated	Balance	Sheets.	For	segment	reporting	purposes,	the	results	of operations	and	assets	of	Fastorq	have	been	included	in	the	Commercial	&	Industrial	Group	since	the	acquisition	date.

On	July	28,	2017,	Snap-on	acquired	Torque	Control	Specialists	Pty	Ltd	("TCS")	for	a	cash	purchase	price	of	$3.6	million	(or	$3.5	million,	net	of	cash	acquired).	TCS, based	in	Adelaide,	Australia,	distributes	a	full	range	of	torque	products,	including	wrenches,	multipliers	and	calibrators,	for	use	in	critical	industries.

In	fiscal	2018,	the	company	completed	the	purchase	accounting	valuations	for	the	acquired	net	assets	of	TCS.	The	$2.0	million	excess	of	purchase	price	over	the	fair value	of	 the	net	assets	acquired	was	recorded	 in	"Goodwill"	on	 the	accompanying	Consolidated	Balance	Sheets.	For	segment	reporting	purposes,	 the	results	of operations	and	assets	of	TCS	have	been	included	in	the	Commercial	&	Industrial	Group	since	the	acquisition	date.

On	May	4,	2017,	Snap-on	acquired	Norbar	Torque	Tools	Holdings	Limited,	along	with	its	U.S.	and	Chinese	joint	ventures	("Norbar"),	for	a	cash	purchase	price	of	$71.6 million	 (or	$69.9	million,	net	of	cash	acquired).	Norbar,	based	in	Banbury,	U.K.,	designs	and	manufactures	a	full	range	of	torque	products,	including	wrenches, multipliers	and	calibrators	for	use	in	critical	industries.

In	fiscal	2018,	the	company	completed	the	purchase	accounting	valuations	for	the	acquired	net	assets	of	Norbar,	including	intangible	assets.	The	$25.1	million	excess	of purchase	price	over	the	fair	value	of	the	net	assets	acquired	was	recorded	in	"Goodwill"	on	the	accompanying	Consolidated	Balance	Sheets.	For	segment	reporting purposes,	the	results	of	operations	and	assets	of	Norbar	have	been	included	in	the	Commercial	&	Industrial	Group	since	the	acquisition	date.

On	January	30,	2017,	Snap-on	acquired	BTC	Global	Limited	("BTC")	for	a	cash	purchase	price	of	$9.2	million.	BTC,	based	in	Crewe,	U.K.,	designs	and	implements automotive	vehicle	inspection	and	management	software	for	original	equipment	manufacturer	("OEM")	franchise	repair	shops.

In	fiscal	2017,	the	company	completed	the	purchase	accounting	valuations	for	the	acquired	net	assets	of	BTC,	including	intangible	assets.	The	$5.9	million	excess	of purchase	price	over	the	fair	value	of	the	net	assets	acquired	was	recorded	in	"Goodwill"	on	the	accompanying	Consolidated	Balance	Sheets.	For	segment	reporting purposes,	the	results	of	operations	and	assets	of	BTC	have	been	included	in	the	Repair	Systems	and	Information	Group	since	the	acquisition	date.

On	November	16,	2016,	Snap-on	acquired	Ryeson	Corporation	(d/b/a	Sturtevant	Richmont)	for	a	cash	purchase	price	of	$13.0	million	 (or	$12.6	million,	net	of	cash acquired).	Sturtevant	Richmont,	based	in	Carol	Stream,	Illinois,	designs,	manufactures	and	distributes	mechanical	and	electronic	torque	wrenches	as	well	as	wireless torque	error	proofing	systems	for	a	variety	of	industrial	applications.

In	 fiscal	2017,	the	company	completed	the	purchase	accounting	valuations	for	the	acquired	net	assets	of	Sturtevant	Richmont,	including	intangible	assets.	The	$5.0 million	excess	of	purchase	price	over	the	fair	value	of	the	net	assets	acquired	was	recorded	in	"Goodwill"	on	the	accompanying	Consolidated	Balance	Sheets.	For segment	reporting	purposes,	the	results	of	operations	and	assets	of	Sturtevant	Richmont	have	been	included	in	the	Commercial	&	Industrial	Group	since	the	acquisition date.

On	October	31,	2016,	Snap-on	acquired	Car-O-Liner	Holding	AB	("Car-O-Liner")	for	a	cash	purchase	price	of	$152.0	million	(or	$148.1	million,	net	of	cash	acquired). Car-O-Liner,	based	in	Gothenburg,	Sweden,	designs	and	manufactures	collision	repair	equipment,	and	information	and	truck	alignment	systems.

In	 fiscal	2017,	the	company	completed	the	purchase	accounting	valuations	for	the	acquired	net	assets	of	Car-O-Liner,	including	intangible	assets.	The	$77.3	million excess	of	purchase	price	over	the	fair	value	of	the	net	assets	acquired	was	recorded	in	"Goodwill"	on	the	accompanying	Consolidated	Balance	Sheets.	For	segment reporting	purposes,	substantially	all	of	Car-O-Liner's	results	of	operations	and	assets	have	been	 included	 in	 the	Repair	Systems	&	Information	Group	since	 the acquisition	date,	with	the	remaining	portions	included	in	the	Commercial	&	Industrial	Group.

Pro	forma	financial	information	has	not	been	presented	for	any	of	these	acquisitions	as	the	net	effects,	individually	and	collectively,	were	neither	significant	nor	material to	Snap-on's	results	of	operations	or	financial	position.	See	Note	7	for	further	information	on	goodwill	and	other	intangible	assets.

# Note	4:	Receivables

# Trade	and	Other	Accounts	Receivable

Snap-on's	trade	and	other	accounts	receivable	primarily	arise	from	the	sale	of	tools	and	diagnostic	and	equipment	products	to	a	broad	range	of	industrial	and	commercial customers	and	to	Snap-on's	independent	franchise	van	channel	on	a	non-extended-term	basis	with	payment	terms	generally	ranging	from	30	to	120	days.

The	components	of	Snap-on's	trade	and	other	accounts	receivable	as	of	2018	and	2017	year	end	are	as	follows:

# Finance	and	Contract	Receivables

Snap-on	Credit	LLC	("SOC"),	the	company's	financial	services	operation	in	the	United	States,	originates	extended-term	finance	and	contract	receivables	on	sales	of Snap-on's	products	sold	through	the	U.S.	franchisee	and	customer	network	and	to	certain	other	customers	of	Snap-on;	Snap-on's	foreign	finance	subsidiaries	provide similar	financing	internationally.	Interest	income	on	finance	and	contract	receivables	is	included	in	"Financial	services	revenue"	on	the	accompanying	Consolidated Statements	of	Earnings.

Snap-on's	finance	receivables	are	comprised	of	extended-term	 installment	payment	contracts	 to	both	 technicians	and	 independent	shop	owners	(i.e.,	franchisees' customers)	to	enable	them	to	purchase	tools	and	diagnostic	and	equipment	products	on	an	extended-term	payment	plan,	generally	with	average	payment	terms	of approximately	four	years.	Finance	receivables	are	generally	secured	by	the	underlying	tools	and/or	diagnostic	or	equipment	products	financed.

Snap-on's	contract	receivables,	with	payment	terms	of	up	to	10	years,	are	comprised	of	extended-term	installment	payment	contracts	to	a	broad	base	of	customers worldwide,	including	shop	owners,	both	independents	and	national	chains,	for	their	purchase	of	tools	and	diagnostic	and	equipment	products.	Contract	receivables	also include	extended-term	installment	loans	to	franchisees	to	meet	a	number	of	financing	needs,	including	working	capital	loans,	loans	to	enable	new	franchisees	to	fund	the purchase	of	the	franchise	and	van	leases,	or	the	expansion	of	an	existing	franchise.	Contract	receivables	are	generally	secured	by	the	underlying	tools	and/or	diagnostic or	equipment	products	financed	and,	for	installment	loans	to	franchisees,	other	franchisee	assets.

The	components	of	Snap-on's	current	finance	and	contract	receivables	as	of	2018	and	2017	year	end	are	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Finance\treceivables | $538.1 | $523.1 |
| Contract\treceivables | 99.5 | 98.1 |
| Total | 637.6 | 621.2 |
| Allowances\tfor\tdoubtful\taccounts: |  |  |
| Finance\treceivables | (19.6) | (17.7) |
| Contract\treceivables | (1.2) | (1.3) |
| Total | (20.8) | (19.0) |
| Total\tcurrent\tfinance\tand\tcontract\treceivables\t–\tnet | $616.8 | $602.2 |
| Finance\treceivables\t–\tnet | $518.5 | $505.4 |
| Contract\treceivables\t–\tnet | 98.3 | 96.8 |
| Total\tcurrent\tfinance\tand\tcontract\treceivables\t–\tnet | $616.8 | $602.2 |

The	components	of	Snap-on's	finance	and	contract	receivables	with	payment	terms	beyond	one	year	as	of	2018	and	2017	year	end	are	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Finance\treceivables | $1,116.2 | $1,078.0 |
| Contract\treceivables | 348.0 | 325.9 |
| Total | 1,464.2 | 1,403.9 |
| Allowances\tfor\tdoubtful\taccounts: |  |  |
| Finance\treceivables | (41.8) | (38.8) |
| Contract\treceivables | (3.1) | (3.3) |
| Total | (44.9) | (42.1) |
| Total\tlong-term\tfinance\tand\tcontract\treceivables\t–\tnet | $1,419.3 | $1,361.8 |
| Finance\treceivables\t–\tnet | $1,074.4 | $1,039.2 |
| Contract\treceivables\t–\tnet | 344.9 | 322.6 |
| Total\tlong-term\tfinance\tand\tcontract\treceivables\t–\tnet | $1,419.3 | $1,361.8 |

Long-term	finance	and	contract	receivables	installments,	net	of	unearned	finance	charges,	as	of	2018	and	2017	year	end	are	scheduled	as	follows:

|  | Finance | Contract | Finance | Contract |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Receivables | Receivables | Receivables | Receivables |
| Due\tin\tMonths: |  |  |  |  |
| 13\t–\t24 | $428.7 | $82.2 | $415.1 | $77.6 |
| 25\t–\t36 | 345.0 | 72.5 | 333.3 | 67.6 |
| 37\t–\t48 | 232.8 | 60.5 | 225.5 | 56.5 |
| 49\t–\t60 | 109.7 | 48.8 | 104.1 | 42.8 |
| Thereafter | — | 84.0 | — | 81.4 |
| Total | $1,116.2 | $348.0 | $1,078.0 | $325.9 |

Delinquency	is	the	primary	indicator	of	credit	quality	for	finance	and	contract	receivables.	The	entire	receivable	balance	of	a	contract	is	considered	delinquent	when contractual	payments	become	30	days	past	due.	Depending	on	the	contract,	payments	for	finance	and	contract	receivables	are	due	on	a	monthly	or	weekly	basis.	Weekly payments	are	converted	into	a	monthly	equivalent	for	purposes	of	calculating	delinquency.	Delinquencies	are	assessed	at	the	end	of	each	month	following	the	monthly equivalent	due	date.	Removal	from	delinquent	status	occurs	when	the	cumulative	number	of	monthly	equivalent	payments	due	has	been	received	by	the	company.

Finance	receivables	are	generally	placed	on	nonaccrual	status	(nonaccrual	of	interest	and	other	fees):	(i)	when	a	customer	is	placed	on	repossession	status;	(ii)	upon receipt	of	notification	of	bankruptcy;	(iii)	upon	notification	of	the	death	of	a	customer;	or	(iv)	in	other	instances	in	which	management	concludes	collectability	is	not reasonably	assured.	Finance	receivables	that	are	considered	nonperforming	include	receivables	that	are	on	nonaccrual	status	and	receivables	that	are	generally	more	than 90	days	past	due.

Contract	receivables	are	generally	placed	on	nonaccrual	status:	(i)	when	a	receivable	is	more	than	90	days	past	due	or	at	the	point	a	customer's	account	is	placed	on terminated	status	regardless	of	its	delinquency	status;	(ii)	upon	notification	of	the	death	of	a	customer;	or	(iii)	in	other	instances	in	which	management	concludes collectability	is	not	reasonably	assured.	Contract	receivables	that	are	considered	nonperforming	include	receivables	that	are	on	nonaccrual	status	and	receivables	that	are generally	more	than	90	days	past	due.

The	accrual	of	interest	and	other	fees	is	resumed	when	the	finance	or	contract	receivable	becomes	contractually	current	and	collection	of	all	remaining	contractual amounts	due	is	reasonably	assured.	Finance	and	contract	receivables	are	evaluated	for	impairment	on	a	collective	basis.	A	receivable	is	impaired	when	it	is	probable	that all	amounts	related	to	the	receivable	will	not	be	collected	according	to	the	contractual	terms	of	the	applicable	agreement.	Impaired	finance	and	contract	receivables	are covered	by	the	company's	respective	allowances	for	doubtful	accounts	and	are	charged-off	against	the	allowances	when	appropriate.	As	of	2018	and	2017	year	end, there	were	$27.9	million	and	$28.0	million,	respectively,	of	impaired	finance	receivables,	and	there	were	$6.0	million	and	$2.3	million,	respectively,	of	impaired	contract receivables.

It	is	the	general	practice	of	Snap-on's	financial	services	business	to	not	engage	in	contract	or	loan	modifications.	In	limited	instances,	Snap-on's	financial	services business	may	modify	certain	impaired	receivables	in	troubled	debt	restructurings.	The	amount	and	number	of	restructured	finance	and	contract	receivables	as	of	2018 and	2017	year	end	were	immaterial	to	both	the	financial	services	portfolio	and	the	company's	results	of	operations	and	financial	position.

The	aging	of	finance	and	contract	receivables	as	of	2018	and	2017	year	end	is	as	follows:

|  |  |  |  |  |  |  | Greater |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Greater |  |  |  | Than\t90 |
|  | 30-59 | 60-90 | Than\t90 |  |  |  | Days\tPast |
|  | Days\tPast | Days\tPast | Days\tPast | Total\tPast | Total\tNot\tPast |  | Due\tand |
| (Amounts\tin\tmillions) | Due | Due | Due | Due | Due | Total | Accruing |
| 2018\tyear\tend: |  |  |  |  |  |  |  |
| Finance\treceivables | $19.4 | $12.1 | $20.3 | $51.8 | $1,602.5 | $1,654.3 | $15.9 |
| Contract\treceivables | 1.7 | 1.2 | 5.2 | 8.1 | 439.4 | 447.5 | 0.2 |
| 2017\tyear\tend: |  |  |  |  |  |  |  |
| Finance\treceivables | $19.3 | $13.9 | $20.1 | $53.3 | $1,547.8 | $1,601.1 | $15.4 |
| Contract\treceivables | 1.2 | 0.6 | 1.9 | 3.7 | 420.3 | 424.0 | 0.6 |

The	amount	of	performing	and	nonperforming	finance	and	contract	receivables	based	on	payment	activity	as	of	2018	and	2017	year	end	is	as	follows:

|  | Finance | Contract | Finance | Contract |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Receivables | Receivables | Receivables | Receivables |
| Performing | $1,626.4 | $441.5 | $1,573.1 | $421.7 |
| Nonperforming | 27.9 | 6.0 | 28.0 | 2.3 |
| Total | $1,654.3 | $447.5 | $1,601.1 | $424.0 |

The	amount	of	finance	and	contract	receivables	on	nonaccrual	status	as	of	2018	and	2017	year	end	is	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Finance\treceivables | $12.0 | $12.6 |
| Contract\treceivables | 5.8 | 1.7 |

The	following	is	a	rollforward	of	the	allowances	for	doubtful	accounts	for	finance	and	contract	receivables	for	2018	and	2017:

|  | 2018 | 2018 | 2017 | 2017 |
| :--- | :--- | :--- | :--- | :--- |
|  | Finance | Contract | Finance | Contract |
| (Amounts\tin\tmillions) | Receivables | Receivables | Receivables | Receivables |
| Allowances\tfor\tdoubtful\taccounts: |  |  |  |  |
| Beginning\tof\tyear | $56.5 | $4.6 | $48.6 | $3.9 |
| Provision | 57.5 | 2.0 | 54.6 | 2.7 |
| Charge-offs | (59.4) | (2.5) | (53.3) | (2.5) |
| Recoveries | 7.1 | 0.4 | 6.6 | 0.4 |
| Currency\ttranslation | (0.3) | (0.2) | — | 0.1 |
| End\tof\tyear | $61.4 | $4.3 | $56.5 | $4.6 |

The	following is	a	rollforward	of the	combined	allowances	for	doubtful	accounts	related to trade	and	other	accounts	receivable,	as	well	as	finance	and	contract receivables,	for	2018,	2017	and	2016:

|  | Balance	at |  |  | Balance	at |
| :--- | :--- | :--- | :--- | :--- |
|  | Beginning |  |  | End\tof |
| (Amounts\tin\tmillions) | of\tYear | Expenses | Deductions\t(1) | Year |
| Allowances\tfor\tdoubtful\taccounts: |  |  |  |  |
| 2018 | $75.7 | $70.3 | $(62.8) | $83.2 |
| 2017 | 66.5 | 65.1 | (55.9) | 75.7 |
| 2016 | 59.3 | 51.5 | (44.3) | 66.5 |

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

# Note	5:	Inventories

Inventories	by	major	classification	as	of	2018	and	2017	year	end	are	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Finished\tgoods | $577.0 | $541.9 |
| Work\tin\tprogress | 51.7 | 49.3 |
| Raw\tmaterials | 123.5 | 122.7 |
| Total\tFIFO\tvalue | 752.2 | 713.9 |
| Excess\tof\tcurrent\tcost\tover\tLIFO\tcost | (78.4) | (75.1) |
| Total\tinventories\t–\tnet | $673.8 | $638.8 |

Inventories	accounted	for	using	the	FIFO	method	approximated	61%	of	total	inventories	as	of	both	2018	and	2017	year	end.	The	company	accounts	for	its	non-U.S. inventory	on	the	FIFO	method.	As	of	2018	year	end,	approximately	35%	of	the	company's	U.S.	inventory	was	accounted	for	using	the	FIFO	method	and	65%	was accounted	for	using	the	LIFO	method.	There	were	no	LIFO	inventory	liquidations	in	2018,	2017	or	2016.

# Note	6:	Property	and	Equipment

Property	and	equipment	(which	are	carried	at	cost)	as	of	2018	and	2017	year	end	are	as	follows:

# Note	7:	Goodwill	and	Other	Intangible	Assets

The	changes	in	the	carrying	amount	of	goodwill	by	segment	for	2018	and	2017	are	as	follows:

|  | Commercial |  | Repair	Systems	&amp; |  |
| :--- | :--- | :--- | :--- | :--- |
|  | &amp;\tIndustrial | Snap-on | Information |  |
| (Amounts\tin\tmillions) | Group | Tools\tGroup | Group | Total |
| Balance\tas\tof\t2016\tyear\tend | $242.4 | $12.5 | $640.6 | $895.5 |
| Currency\ttranslation | 30.3 | — | 15.8 | 46.1 |
| Acquisitions | 25.7 | — | (43.2) | (17.5) |
| Balance\tas\tof\t2017\tyear\tend | $298.4 | $12.5 | $613.2 | $924.1 |
| Currency\ttranslation | (16.3) | — | (9.7) | (26.0) |
| Acquisitions | 4.1 | — | — | 4.1 |
| Balance\tas\tof\t2018\tyear\tend | $286.2 | $12.5 | $603.5 | $902.2 |
|  | 2018\tANNUAL\tREPORT |  |  | 87 |

Goodwill	of	$902.2	million	as	of	2018	year	end	includes:	(i)	$25.1	million	from	the	acquisition	of	Norbar,	(ii)	$2.6	million	from	the	acquisition	of	Fastorq,	and	(iii)	$2.0 million	from	the	acquisition	of	TCS.	The	goodwill	from	the	Norbar,	Fastorq	and	TCS	acquisitions	is	included	in	the	Commercial	&	Industrial	Group.

Goodwill	of	$924.1	million	as	of	2017	year	end	includes	the	following	from	2017	acquisitions:	(i)	$23.7	million,	on	a	preliminary	basis,	from	the	acquisition	of	Norbar, (ii)	$5.9	million	from	the	acquisition	of	BTC,	and	(iii)	$1.9	million,	on	a	preliminary	basis,	from	the	acquisition	of	TCS.		As	of	2017	year	end	goodwill	also	includes, from	2016	acquisitions:	(i)	$77.3	million	from	the	acquisition	of	Car-O-Liner;	and	(ii)	$5.0	million	from	the	acquisition	of	Sturtevant	Richmont.

During	2018,	the	purchase	accounting	valuation	for	the	acquired	net	assets,	including	intangible	assets,	of	Norbar	and	TCS	were	completed	resulting	in	an	increase	in goodwill	of	$1.4	million	for	Norbar	and	$0.1	million	for	TCS	from	2017	year	end.	During	2017,	the	purchase	accounting	valuations	for	the	acquired	net	assets,	including intangible	assets,	of	Car-O-Liner	were	completed,	resulting	in	a	reduction	of	goodwill	of	$50.8	million	from	2016	year	end,	with	a	$49.1	million	reduction	in	the	Repair Systems	&	Information	Group	and	$1.7	million	in	the	Commercial	&	Industrial	Group.		Additionally,	purchase	accounting	for	Sturtevant	Richmont	was	also	completed in	2017,	resulting	in	a	$1.8	million	increase	in	goodwill	from	2016	year	end.

The	goodwill	from	the	Car-O-Liner	acquisition	is	distributed	as	follows:		$76.5	million	in	the	Repair	Systems	&	Information	Group	and	$0.8	million	in	the	Commercial &	Industrial	Group.		The	goodwill	from	Sturtevant	Richmont	is	included	in	the	Commercial	&	Industrial	Group	and	the	goodwill	from	the	BTC	acquisition	is	included	in the	Repair	Systems	&	Information	Group.		See	Note	3	for	additional	information	on	acquisitions.

Additional	disclosures	related	to	other	intangible	assets	as	of	2018	and	2017	year	end	are	as	follows:

|  | Gross | Accumulated | Gross | Accumulated |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Carrying\tValue | Amortization | Carrying\tValue | Amortization |
| Amortized\tother\tintangible\tassets: |  |  |  |  |
| Customer\trelationships | $172.2 | $(107.6) | $175.2 | $(98.2) |
| Developed\ttechnology | 18.5 | (18.3) | 18.9 | (18.4) |
| Internally\tdeveloped\tsoftware | 156.6 | (116.6) | 177.0 | (133.4) |
| Patents | 35.7 | (22.9) | 34.1 | (22.7) |
| Trademarks | 3.2 | (2.0) | 3.0 | (2.0) |
| Other | 7.3 | (2.9) | 7.7 | (2.7) |
| Total | 393.5 | (270.3) | 415.9 | (277.4) |
| Non-amortized\ttrademarks | 109.7 | — | 115.2 | — |
| Total\tother\tintangible\tassets | $503.2 | $(270.3) | $531.1 | $(277.4) |

There	were	no	acquisitions	during	2018	that	resulted	in	the	recognition	of	other	intangible	assets	as	of	year-end	2018.	As	of	year-	end	2017,	the	gross	carrying	value	of the	customer	relationships	includes	$28.8	million	related	to	the	Car-O-Liner	acquisition,	$1.2	million	related	to	the	BTC	acquisition	and	$1.1	million	related	to	the Norbar	acquisition.	The	gross	carrying	value	of	non-amortized	trademarks	as	of	2018	year	end	includes	$29.8	million	related	 to	 the	Car-O-Liner	acquisition,	$16.9 million	related	to	the	Norbar	acquisition	and	$2.1	million	related	to	the	BTC	acquisition.

Significant	and	unanticipated	changes	in	circumstances,	such	as	declines	in	profitability	and	cash	flow	due	to	significant	and	long-term	deterioration	in	macroeconomic, industry	and	market	conditions,	the	loss	of	key	customers,	changes	in	technology	or	markets,	significant	changes	in	key	personnel	or	litigation,	a	significant	and sustained	decrease	in	share	price	and/or	other	events,	including	effects	from	the	sale	or	disposal	of	a	reporting	unit,	could	require	a	provision	for	impairment	of	goodwill and/or	other	intangible	assets	in	a	future	period.	As	of	2018	year	end,	the	company	had	no	accumulated	impairment	losses.

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

| The	weighted-average	amortization	periods	related	to	other	intangible	assets	are	as	follows: |  |
| :--- | :--- |
|  | In\tYears |
| Customer\trelationships | 15 |
| Developed\ttechnology | 3 |
| Internally\tdeveloped\tsoftware | 5 |
| Patents | 8 |
| Trademarks | 6 |
| Other | 39 |

Snap-on	is	amortizing	its	customer	relationships	on	both	an	accelerated	and	straight-line	basis	over	a	15	year	weighted-average	life;	the	remaining	intangibles	are amortized	on	a	straight-line	basis.	The	weighted-average	amortization	period	for	all	amortizable	intangibles	on	a	combined	basis	is	11	years.

The	company's	customer	relationships	generally	have	contractual	terms	of	three	to	five	years	and	are	typically	renewed	without	significant	cost	to	the	company.	The weighted-average	15	year	life	for	customer	relationships	is	based	on	the	company's	historical	renewal	experience.	Intangible	asset	renewal	costs	are	expensed	as incurred.

# Note	8:	Exit	and	Disposal	Activities

In	2018	and	2017,	Snap-on	did	not	record	any	costs	for	exit	and	disposal	activities.	In	2016,	the	company's	Repair	Systems	&	Information	Group	recorded	$0.9	million of	severance	costs	for	exit	and	disposal	activities,	all	of	which	qualified	for	accrual	treatment.	The	exit	and	disposal	accrual	of	$0.6	million	as	of	2017	year	end	was	fully utilized	in	2018.

# Note	9:	Income	Taxes

The	source	of	earnings	before	income	taxes	and	equity	earnings	consisted	of	the	following:

The	following	is	a	reconciliation	of	the	statutory	federal	income	tax	rate	to	Snap-on's	effective	tax	rate:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Statutory\tfederal\tincome\ttax\trate | 21.0% | 35.0% | 35.0% |
| Increase\t(decrease)\tin\ttax\trate\tresulting\tfrom: |  |  |  |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 2.9 | 2.4 | 2.4 |
| Noncontrolling\tinterests | (0.4) | (0.6) | (0.6) |
| Repatriation\tof\tforeign\tearnings | (0.1) | (1.2) | (0.1) |
| Change\tin\tvaluation\tallowance\tfor\tdeferred\ttax\tassets | 0.3 | 0.1 | (1.0) |
| Adjustments\tto\ttax\taccruals\tand\treserves | (0.2) | (0.3) | 0.3 |
| Foreign\trate\tdifferences | 0.4 | (2.4) | (2.1) |
| Domestic\tproduction\tactivities\tdeduction | — | (2.1) | (1.9) |
| Excess\ttax\tbenefits\trelated\tto\tequity\tcompensation | (0.8) | (1.4) | (1.8) |
| U.S.\ttax\treform,\tnet\timpact | 0.4 | 0.9 | — |
| Other | 0.1 | 0.1 | 0.3 |
| Effective\ttax\trate | 23.6% | 30.5% | 30.5% |

Snap-on's	effective	income	tax	rate	on	earnings	attributable	to	Snap-on	Incorporated	was	24.0%	in	2018,	31.1%	in	2017,	and	31.0%	in	2016.	The	effective	tax	rate	for 2018	reflects	the	reduction	of	the	U.S.	federal	corporate	income	tax	rate	from	35%	to	21%.	It	also	includes	an	additional	non-recurring	net	tax	cost	attributable	to	the prior	year's	U.S.	tax	reform	changes.	The	effective	tax	rate	for	2017	included	the	one-time	net	tax	costs	associated	with	the	Tax	Cuts	and	Jobs	Act	(the	"Tax	Act"),	which was	signed	into	law	in	the	fourth	quarter	of	2017,	as	well	as	tax	benefits	associated	with	certain	legal	charges.	The	effective	tax	rate	for	2016	included	tax	benefits	from the	reversal	of	deferred	tax	asset	valuation	allowances	that	are	now	expected	to	be	realized	in	future	years,	as	well	as	tax	benefits	associated	with	the	January	3,	2016 adoption	of	ASU	No.	2016-09,	Compensation	–	Stock	Compensation	(Topic	718)	–	Improvements	to	Employee	Share-Based	Payment	Accounting;	these	tax	benefits were	partially	offset	by	tax	contingency	reserves	established	for	certain	non-U.S.	tax	audits.

The	Securities	and	Exchange	Commission	staff	issued	Staff	Accounting	Bulletin	("SAB")	118,	which	provides	guidance	on	accounting	for	the	tax	effects	of	the	Tax	Act, for	the	company's	year	ended	December	30,	2017.	SAB	118	provides	a	measurement	period	that	should	not	extend	beyond	one	year	from	the	Tax	Act	enactment	date for	companies	to	complete	the	related	accounting	under	ASC	740,	Accounting	for	Income	Taxes.	In	accordance	with	SAB	118,	a	company	must	reflect	the	income	tax effects	of	those	aspects	of	the	Tax	Act	for	which	the	accounting	under	Accounting	Standards	Codification	("ASC")	740	is	complete.	To	the	extent	that	a	company's accounting	for	a	certain	income	tax	effect	of	the	Tax	Act	is	incomplete,	but	it	is	able	to	determine	a	reasonable	estimate,	it	must	record	a	provisional	estimate	in	the financial	statements.	If	a	company	cannot	determine	a	provisional	estimate	to	be	included	in	the	financial	statements,	it	should	continue	to	apply	ASC	740	on	the	basis	of the	provisions	of	the	tax	laws	that	were	in	effect	immediately	before	the	enactment	of	the	Tax	Act.

The	company's	accounting	for	certain	elements	of	the	Tax	Act	was	incomplete	as	of	December	30,	2017.	However,	the	company	was	able	to	make	reasonable	estimates of	the	effects	and,	therefore,	recorded	provisional	estimates	for	these	items.	In	connection	with	its	initial	analysis	of	the	impact	of	the	Tax	Act,	the	company	recorded	a provisional	discrete	net	tax	expense	of	$7.0	million	in	the	fiscal	year	ended	December	30,	2017.	This	provisional	estimate	consists	of	a	net	expense	of	$13.7	million	for the	one-time	transition	tax	and	a	net	benefit	of	$6.7	million	related	to	revaluation	of	deferred	tax	assets	and	liabilities,	caused	by	the	new	lower	corporate	tax	rate.	To determine	the	transition	tax,	the	company	must	determine	the	amount	of	post-1986	accumulated	earnings	and	profits	of	the	relevant	subsidiaries,	as	well	as	the	amount	of non-U.S.	income	taxes	paid	on	such	earnings.	While	the	company	was	able	to	make	a	reasonable	estimate	of	the	transition	tax	for	2017,	it	continued	to	gather	additional information	to	more	precisely	compute	the	final	amount	reported	on	its	2017	U.S.	federal	tax	return	which	was	filed	in	October	2018.	The	actual	transition	tax	was	$8.3 million	greater	than	the	company's	initial	estimate	and	was	included	in	income	tax	expense	for	2018.	Likewise,	while	the	company	was	able	to	make	a	reasonable estimate	of	the	impact	of	the	reduction	to	the	corporate	tax	rate,	it	was	affected	by	other	analyses	related	to	the	Tax	Act,	including,	but	not	limited	to,	the	state	tax	effect of	adjustments	made	to	federal	temporary	differences.	During	2018,	the	company	recorded	additional	net	tax	benefits	of	$4.4	million	attributable	to	pension	contributions made	in	2018	that	were	deductible	for	2017	at	the	higher	35%	federal	tax	rate	and	other	changes	to	the	2017	tax	provision	related	to	the	Tax	Act	and	subsequently-issued tax	guidance.	Due	to	the	complexity	of	the	new	GILTI	tax	rules,	the	company	continued	to	evaluate	this	provision	of	the	Tax	Act	and	the	application	of	ASC	740 throughout	2018.	Under	GAAP,	the	company	is	allowed	to	make	an	accounting	policy	choice	to	either:	(i)	treat	taxes	due	on	future	U.S.	inclusions	in	taxable	income related	to	GILTI	as	a	current-period	expense	when	incurred	(the	"period	cost	method");	or	(ii)	factor	in	such	amounts	into	a	company's	measurement	of	its	deferred	taxes (the	"deferred	method").	The	company	selected	to	apply	the	"period	cost	method"	to	account	for	the	new	GILTI	tax,	and	treated	it	as	a	current-period	expense	for	2018. The	company	will	continue	to	analyze	the	full	effects	of	the	Tax	Act	on	its	financial	statements	in	2019	as	additional	guidance	is	issued	and	interpretations	evolve.

Temporary	differences	that	give	rise	to	the	net	deferred	income	tax	asset	as	of	2018,	2017	and	2016	year	end	are	as	follows:

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Long-term\tdeferred\tincome\ttax\tassets\t(liabilities): |  |  |  |
| Inventories | $33.6 | $28.8 | $33.3 |
| Accruals\tnot\tcurrently\tdeductible | 72.9 | 61.7 | 77.7 |
| Tax\tcredit\tcarryforward | 1.8 | 2.1 | 15.1 |
| Employee\tbenefits | 56.5 | 56.8 | 108.1 |
| Net\toperating\tlosses | 40.9 | 44.0 | 42.8 |
| Depreciation\tand\tamortization | (167.5) | (161.3) | (209.8) |
| Valuation\tallowance | (25.1) | (25.2) | (21.7) |
| Equity-based\tcompensation | 16.6 | 17.1 | 24.3 |
| Undistributed\tnon-U.S.\tearnings | (6.0) | — | — |
| Cash\tflow\thedge | — | (0.3) | (5.5) |
| Other | (0.4) | (0.1) | (4.6) |
| Net\tdeferred\tincome\ttax\tasset | $23.3 | $23.6 | $59.7 |

As	of	2018	year	end,	Snap-on	had	tax	net	operating	loss	carryforwards	totaling	$224.8	million	as	follows:

| (Amounts	in	millions) | State | Federal | Foreign | Total |
| :--- | :--- | :--- | :--- | :--- |
| Year\tof\texpiration: |  |  |  |  |
| 2019-2023 | $0.2 | $— | $52.5 | $52.7 |
| 2024-2028 | 0.1 | — | 38.9 | 39.0 |
| 2029-2033 | 90.6 | — | 6.8 | 97.4 |
| 2034-2038 | — | — | — | — |
| Indefinite | — | — | 35.7 | 35.7 |
| Total\tnet\toperating\tloss\tcarryforwards | $90.9 | $— | $133.9 | $224.8 |
|  | 2018\tANNUAL\tREPORT |  |  | 91 |

A	valuation	allowance	 totaling	$25.1	million,	$25.2	million	 and	$21.7	million	 as	 of	2018,	2017	 and	2016	year	end,	respectively,	has	been	established	for	deferred income	tax	assets	primarily	related	to	certain	subsidiary	loss	carryforwards	that	may	not	be	realized.	Realization	of	the	net	deferred	income	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 income	tax	assets	will	be	realized.	The	amount	of	the	net	deferred	income	tax	assets	considered	realizable,	however,	could	change	in	the	near	term	if	estimates	of	future taxable	income	during	the	carryforward	period	fluctuate.

The	following	is	a	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	tax	benefits	for	2018,	2017	and	2016:

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Unrecognized\ttax\tbenefits\tat\tbeginning\tof\tyear | $7.7 | $9.4 | $7.2 |
| Gross\tincreases\t–\ttax\tpositions\tin\tprior\tperiods | 1.3 | 1.4 | 2.5 |
| Gross\tdecreases\t–\ttax\tpositions\tin\tprior\tperiods | (0.1) | — | (0.3) |
| Gross\tincreases\t–\ttax\tpositions\tin\tthe\tcurrent\tperiod | 2.8 | 1.0 | 0.5 |
| Settlements\twith\ttaxing\tauthorities | — | (3.6) | — |
| Lapsing\tof\tstatutes\tof\tlimitations | (0.6) | (0.5) | (0.5) |
| Unrecognized\ttax\tbenefits\tat\tend\tof\tyear | $11.1 | $7.7 | $9.4 |

The	unrecognized	tax	benefits	of	$11.1	million,	$7.7	million	and	$9.4	million	as	of	2018,	2017	and	2016	year	end,	respectively,	would	impact	the	effective	income	tax rate	if	recognized.	As	of	December	29,	2018,	unrecognized	tax	benefits	of	$1.7	million	and	$9.4	million	were	included	in	"Deferred	income	tax	assets"	and	"Other	long- term	liabilities,"	respectively,	on	the	accompanying	Consolidated	Balance	Sheets.	Interest	and	penalties	related	to	unrecognized	tax	benefits	are	recorded	in	income	tax expense.	As	of	2018,	2017	and	2016	year	end,	the	company	had	provided	for	$0.8	million,	$0.6	million	and	$0.9	million,	respectively,	of	accrued	interest	and	penalties related	to	unrecognized	tax	benefits.	During	2018,	the	company	increased	the	reserve	attributable	to	interest	and	penalties	associated	with	unrecognized	tax	benefits	by	a net	$0.2	million.	 As	 of	December	29,	2018,	$0.8	million	 of	 accrued	 interest	 and	 penalties	 were	 included	 in	 "Other	 long-term	 liabilities"	 on	 the	 accompanying Consolidated	Balance	Sheets.

Snap-on	and	its	subsidiaries	file	income	tax	returns	in	the	United	States	and	in	various	state,	local	and	foreign	jurisdictions.	It	is	reasonably	possible	that	certain unrecognized	tax	benefits	may	either	be	settled	with	taxing	authorities	or	the	statutes	of	limitations	for	such	items	may	lapse	within	the	next	12	months,	causing	Snap- on's	gross	unrecognized	tax	benefits	to	decrease	by	a	range	of	zero	to	$2.4	million.	Over	the	next	12	months,	Snap-on	anticipates	taking	certain	tax	positions	on	various tax	returns	for	which	the	related	tax	benefit	does	not	meet	the	recognition	threshold.	Accordingly,	Snap-on's	gross	unrecognized	tax	benefits	may	increase	by	a	range	of zero	to	$1.0	million	over	the	next	12	months	for	uncertain	tax	positions	expected	to	be	taken	in	future	tax	filings.

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	2013,	and	Snap-on	is	no longer	subject	to	non-U.S.	income	tax	examinations	by	tax	authorities	for	years	prior	to	2012.

In	general,	it	is	Snap-on's	practice	and	intention	to	reinvest	certain	earnings	of	its	non-U.S.	subsidiaries	in	those	operations.	As	of	2018	year	end,	the	company	has	not made	a	provision	for	incremental	U.S.	income	taxes	or	additional	foreign	withholding	taxes	on	approximately	$205.6	million	of	such	undistributed	earnings	that	is deemed	indefinitely	reinvested.	Determination	of	the	amount	of	unrecognized	deferred	tax	liability	related	to	these	earnings	is	not	practicable.	As	a	result	of	the	Tax	Act, which	subjected	the	majority	of	the	company's	undistributed	foreign	earnings	to	taxation	for	the	2017	tax	year,	the	company	can	now	repatriate	non-U.S.	cash	in	a	tax efficient	manner.	Accordingly,	the	company	has	reversed	its	prior	assertion	concerning	the	indefinite	reinvestment	of	the	majority	of	its	undistributed	foreign	earnings and	has	recorded	a	deferred	tax	liability	for	the	incremental	tax	costs	associated	with	the	future	repatriation	of	such	earnings.

# Note	10:	Short-term	and	Long-term	Debt

Short-term	and	long-term	debt	as	of	2018	and	2017	year	end	consisted	of	the	following:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| 4.25%\tunsecured\tnotes\tdue\t2018 | $$250.0 | $$250.0 |
| 6.70%\tunsecured\tnotes\tdue\t2019,\tpaid\tin\tFebruary\t2018 | — | 200.0 |
| 6.125%\tunsecured\tnotes\tdue\t2021 | 250.0 | 250.0 |
| 3.25%\tunsecured\tnotes\tdue\t2027 | 300.0 | 300.0 |
| 4.10%\tunsecured\tnotes\tdue\t2048 | 400.0 | — |
| Other\tdebt* | 182.3 | 186.8 |
|  | 1,132.3 | 1,186.8 |
| Less:\tnotes\tpayable\tand\tcurrent\tmaturities\tof\tlong-term\tdebt: |  |  |
| Current\tmaturities\tof\tlong-term\tdebt | $— | $(250.0) |
| Commercial\tpaper\tborrowings | (177.1) | (151.0) |
| Other\tnotes | (9.2) | (32.2) |
|  | (186.3) | (433.2) |
| Total\tlong-term\tdebt | $946.0 | $753.6 |

*	Includes	fair	value	adjustments	related	to	interest	rate	swaps.

The	annual	maturities	of	Snap-on's	long-term	debt	and	notes	payable	over	the	next	five	years	are	$186.3	million	in	2019,	no	maturities	in	2020,	$250	million	in	2021, and	no	maturities	in	both	2022	and	2023.

Average	notes	payable	outstanding,	including	commercial	paper	borrowings,	were	$167.7	million	 and	$126.8	million	 in	2018	 and	2017,	respectively.	The	weighted- average	interest	rate	of	2.84%	in	2018	increased	from	2.45%	last	year	primarily	due	to	the	impact	of	higher	rates	on	commercial	paper	borrowings.	Average	commercial paper	borrowings	were	$154.9	million	and	$103.3	million	in	2018	and	2017,	respectively,	and	the	weighted-average	interest	rate	of	2.03%	in	2018	increased	from	1.14% last	year.	At	2018	year	end,	the	weighted-average	interest	rate	on	outstanding	notes	payable	of	3.21%	compared	with	2.34%	at	2017	year	end.	The	2018	year-end	rate increased	primarily	due	to	higher	rates	on	commercial	paper	borrowings.

On	February	20,	2018,	Snap-on	commenced	a	tender	offer	to	repurchase	$200	million	in	principal	amount	of	its	unsecured	6.70%	notes	that	were	scheduled	to	mature on	March	1,	2019	(the	"2019	Notes"),	with	$26.1	million	of	the	2019	Notes	tendered	and	repaid	on	February	27,	2018.	On	February	20,	2018,	Snap-on	also	issued	a notice	of	redemption	for	remaining	outstanding	2019	Notes	not	tendered,	with	the	redemption	completed	on	March	22,	2018.	The	total	cash	cost	for	this	tender	and redemption	was	$209.1	million,	including	accrued	interest	of	$1.5	million.	Snap-on	recorded	$7.8	million	for	the	loss	on	the	early	extinguishment	of	debt	related	to	the 2019	Notes,	which	included	the	redemption	premium	and	other	issuance	costs	associated	with	this	debt	in	"Other	income	(expense)	-	net"	on	the	accompanying Consolidated	Statement	of	Earnings.	See	Note	17	for	additional	information	on	Other	income	(expense)	-	net.

On	February	20,	2018,	Snap-on	sold,	at	a	discount,	$400	million	of	unsecured	4.10%	long-term	notes	that	mature	on	March	1,	2048	(the"2048	Notes").	Interest	on	the 2048	Notes	accrues	at	a	rate	of	4.10%	per	year	and	is	payable	semi-annually	beginning	September	1,	2018.	Snap-on	used	a	portion	of	the	$395.4	million	of	net	proceeds from	the	sale	of	the	2048	Notes,	reflecting	$3.5	million	of	transaction	costs,	to	repay	the	2019	Notes.	The	remaining	net	proceeds	were	used	to	repay	a	portion	of	its	then- outstanding	commercial	paper	borrowings	and	for	general	corporate	purposes.

# Note	11:	Financial	Instruments

Derivatives:	All	derivative	instruments	are	reported	in	the	Consolidated	Financial	Statements	at	fair	value.	Changes	in	the	fair	value	of	derivatives	are	recorded	each period	 in	 earnings	 or	 on	 the	 accompanying	 Consolidated	 Balance	 Sheets,	 depending	 on	 whether	 the	 derivative	 is	 designated	 and	 effective	 as	 part	 of	 a	 hedged transaction.	Gains	or	 losses	on	derivative	 instruments	recorded	 in	Accumulated	other	comprehensive	 income	(loss)	("Accumulated	OCI")	must	be	reclassified	 to 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	period that	such	portion	is	determined	to	be	ineffective.

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	hedged	item.	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	value	of	the	hedged	item.	Snap-on	does	not	use	derivative	instruments for	speculative	or	trading	purposes.

The	company	is	exposed	to	global	market	risks,	including	the	effects	of	changes	in	foreign	currency	exchange	rates,	interest	rates,	and	the	company's	stock	price,	and therefore	uses	derivatives	to	manage	financial	exposures	that	occur	in	the	normal	course	of	business.	The	primary	risks	managed	by	using	derivative	instruments	are foreign	currency	risk,	interest	rate	risk	and	stock-based	deferred	compensation	risk.

Foreign	currency	risk	management:	Snap-on	has	significant	international	operations	and	is	subject	to	certain	risks	inherent	with	foreign	operations	that	include currency	fluctuations.	Foreign	currency	exchange	risk	exists	to	the	extent	that	Snap-on	has	payment	obligations	or	receipts	denominated	in	currencies	other	than	the functional	currency,	including	intercompany	loans	denominated	in	foreign	currencies.	To	manage	these	exposures,	Snap-on	identifies	naturally	offsetting	positions	and then	purchases	hedging	instruments	to	protect	the	residual	net	exposures.	Snap-on	manages	most	of	these	exposures	on	a	consolidated	basis,	which	allows	for	netting	of certain	exposures	to	take	advantage	of	natural	offsets.	Foreign	currency	forward	contracts	("foreign	currency	forwards")	are	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.	Snap-on's	foreign	currency	forwards	are	typically	not	designated	as	hedges.	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.

As	of	2018	year	end,	Snap-on	had	$26.3	million	of	net	foreign	currency	forward	buy	contracts	outstanding	comprised	of	buy	contracts	including	$26.7	million	in	euros, $23.6	million	in	Swedish	kronor,	$21.0	million	in	Hong	Kong	dollars,	$10.2	million	in	Chinese	renminbi,	$8.6	million	in	Singapore	dollars,	$7.0	million	in	South	Korean won,	$6.3	million	in	Norwegian	kroner,	and	$5.1	million	in	other	currencies,	and	sell	contracts	comprised	of	$37.4	million	in	British	pounds,	$14.6	million	in	Canadian dollars,	$11.0	million	in	Japanese	yen,	$8.2	million	in	Indian	rupees,	$4.1	million	in	Australian	dollars,	$3.1	million	in	Thai	baht,	and	$3.8	million	in	other	currencies.	As of	2017	year	end,	Snap-on	had	$53.8	million	of	net	foreign	currency	forward	buy	contracts	outstanding	comprised	of	buy	contracts	including	$64.9	million	in	euros, $15.4	million	in	Swedish	kronor,	$13.1	million	in	Hong	Kong	dollars,	$11.3	million	in	Singapore	dollars,	$6.8	million	in	South	Korean	won,	$5.7	million	in	Norwegian kroner,	 and	$8.0	million	 in	other	currencies,	and	sell	contracts	comprised	of	$29.7	million	 in	 British	 pounds,	$13.8	million	 in	 Canadian	 dollars,	$11.8	million	 in Australian	dollars,	$6.0	million	in	Indian	rupees,	$3.4	million	in	Thai	baht,	and	$6.7	million	in	other	currencies.

Interest	rate	risk	management:	Snap-on	aims	to	control	funding	costs	by	managing	the	exposure	created	by	the	differing	maturities	and	interest	rate	structures	of Snap-on's	borrowings	through	the	use	of	interest	rate	swap	agreements	("interest	rate	swaps")	and	treasury	lock	agreements	("treasury	locks").

Interest	rate	swaps:	Snap-on	enters	into	interest	rate	swaps	to	manage	risks	associated	with	changing	interest	rates	related	to	the	company's	fixed	rate	borrowings. Interest	rate	swaps	are	accounted	for	as	fair	value	hedges.	The	differentials	paid	or	received	on	interest	rate	swaps	are	recognized	as	adjustments	to	"Interest	expense"	on the	accompanying	Consolidated	Statements	of	Earnings.	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"	on	 the	accompanying	Consolidated Statements	of	Earnings.	The	notional	amount	of	interest	rate	swaps	outstanding	and	designated	as	fair	value	hedges	was	$100	million	as	of	both	2018	and	2017	year	end.

Treasury	locks:	Snap-on	uses	treasury	locks	to	manage	the	potential	change	in	interest	rates	in	anticipation	of	the	issuance	of	fixed	rate	debt.	Treasury	locks	are accounted	for	as	cash	flow	hedges.	The	effective	differentials	to	be	paid	or	received	on	treasury	locks	related	to	the	anticipated	issuance	of	fixed	rate	debt	are	initially recorded	in	Accumulated	OCI,	net	of	tax	effect.	Upon	the	issuance	of	debt,	the	related	amount	in	Accumulated	OCI	is	released	over	the	term	of	the	debt	and	recognized as	an	adjustment	to	interest	expense	on	the	Consolidated	Statements	of	Earnings.

Snap-on	entered	into	a	$300	million	treasury	lock	in	the	fourth	quarter	of	2017	to	manage	the	potential	change	in	interest	rates	in	anticipation	of	the	issuance	of	fixed	rate debt	in	the	first	quarter	of	2018.	As	of	2017	year	end,	an	unrecognized	gain	of	$0.8	million	had	been	recorded	in	Accumulated	OCI	on	the	accompanying	Consolidated Balance	Sheets.

In	the	first	quarter	of	2018,	Snap-on	settled	the	outstanding	$300	million	treasury	lock	after	it	was	deemed	to	be	an	ineffective	hedge	for	the	2048	Notes	which	were issued	 in	 February	 2018.	The	$13.3	million	 gain	 on	 the	 settlement	 of	 the	 treasury	 lock	 was	 recorded	 in	 "Other	 income	 (expense)	 -	 net"	 on	 the	 accompanying Consolidated	Statements	of	Earnings.	The	notional	amount	of	treasury	locks	outstanding	and	designated	as	cash	flow	hedges	was	zero	as	of	December	29,	2018,	and $300	million	as	of	December	30,	2017.	See	Note	17	for	additional	information	on	Other	income	(expense)	-	net.

In	fiscal	2017,	Snap-on	settled	a	$250	million	treasury	lock	in	conjunction	with	the	February	2017	issuance	of	$300	million	of	unsecured	3.25%	notes	that	mature	on March	1,	2027	(the	"2027	Notes").	The	$14.9	million	gain	on	the	settlement	of	the	treasury	lock	was	recorded	in	Accumulated	OCI	and	is	being	amortized	over	the	term of	the	2027	Notes	and	recognized	as	an	adjustment	to	interest	expense	on	the	Consolidated	Statements	of	Earnings.	There	were	no	treasury	locks	settled	in	2016.

Stock-based	deferred	compensation	risk	management:	Snap-on	aims	to	manage	market	risk	associated	with	the	stock-based	portion	of	its	deferred	compensation plans	through	the	use	of	prepaid	equity	forward	agreements	("equity	forwards").	Equity	forwards	are	used	to	aid	in	offsetting	the	potential	mark-to-market	effect	on stock-based	deferred	compensation	from	changes	in	Snap-on's	stock	price.	Since	stock-based	deferred	compensation	liabilities	increase	as	the	company's	stock	price rises	and	decrease	as	the	company's	stock	price	declines,	the	equity	forwards	are	intended	to	mitigate	the	potential	impact	on	deferred	compensation	expense	that	may result	from	such	mark-to-market	changes.	As	of	2018	and	2017	year	end,	Snap-on	had	equity	forwards	in	place	intended	to	manage	market	risk	with	respect	to	99,100 shares	and	102,300	shares,	respectively,	of	Snap-on	common	stock	associated	with	its	deferred	compensation	plans.

Fair	value	measurements:	Snap-on	has	derivative	assets	and	liabilities	related	to	interest	rate	swaps,	treasury	locks,	foreign	currency	forwards	and	equity	forwards	that are	measured	at	Level	2	fair	value	on	a	recurring	basis.	The	fair	values	of	derivative	instruments	included	within	the	accompanying	Consolidated	Balance	Sheets	as	of 2018	and	2017	year	end	are	as	follows:

|  |  | 2018 | 2018 | 2017 | 2017 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Asset | Liability | Asset | Liability |
|  | Balance\tSheet | Derivatives | Derivatives | Derivatives | Derivatives |
| (Amounts\tin\tmillions) | Presentation | Fair\tValue | Fair\tValue | Fair\tValue | Fair\tValue |
| Derivatives\tdesignated\tas\nhedging\tinstruments: |  |  |  |  |  |
| Interest\trate\tswaps | Other\tassets | $4.6 | $— | $7.3 | $— |
| Treasury\tlocks | Other\tassets | — | — | 1.4 | — |
|  |  | 4.6 | — | 8.7 | — |
| Derivatives\tnot\tdesignated\tas\thedging\ninstruments: |  |  |  |  |  |
|  | Prepaid\texpenses\tand\tother |  |  |  |  |
| Foreign\tcurrency\tforwards | assets | $2.8 | $— | $4.1 | $— |
| Foreign\tcurrency\tforwards | Other\taccrued\tliabilities | — | 3.2 | — | 6.5 |
|  | Prepaid\texpenses\tand\tother |  |  |  |  |
| Equity\tforwards | assets | 14.3 | — | 17.8 | — |
|  |  | 17.1 | 3.2 | 21.9 | 6.5 |
| Total\tderivative\tinstruments |  | $21.7 | $3.2 | $30.6 | $6.5 |

As	of	2018	and	2017	year	end,	the	fair	value	adjustment	to	long-term	debt	related	to	the	interest	rate	swaps	was	$4.6	million	and	$7.3	million,	respectively.

Fair	value	is	defined	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between	participants	at	the	measurement date.	Level	2	fair	value	measurements	for	derivative	assets	and	liabilities	are	measured	using	quoted	prices	in	active	markets	for	similar	assets	and	liabilities.	Interest	rate swaps	are	valued	based	on	the	six-month	LIBOR	swap	rate	for	similar	instruments.	Treasury	locks	are	valued	based	on	the	10-year	U.S.	treasury	interest	rate.	Foreign currency	forwards	are	valued	based	on	exchange	rates	quoted	by	domestic	and	foreign	banks	for	similar	instruments.	Equity	forwards	are	valued	using	a	market	approach based	primarily	on	the	company's	stock	price	at	the	reporting	date.	The	company	did	not	have	any	derivative	assets	or	liabilities	measured	at	Level	1	or	Level	3,	nor	did it	implement	any	changes	in	its	valuation	techniques	as	of	and	for	its	2018	and	2017	years	ended.

The	effect	of	derivative	instruments	designated	as	fair	value	hedges	as	included	in	the	Consolidated	Statements	of	Earnings	is	as	follows:

The	effects	of	derivative	instruments	not	designated	as	hedging	instruments	as	included	in	the	Consolidated	Statements	of	Earnings	are	as	follows:

|  | Statement	of |  | Gain	(Loss)	Recognized	in |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Earnings |  | Income |  |
| (Amounts\tin\tmillions) | Presentation | 2018 | 2017 | 2016 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |  |  |
|  | Other\tincome |  |  |  |
| Foreign\tcurrency\tforwards | \t\t(expense)\t–\t\tnet | $(40.4) | (25.8) | (7.4) |
| Equity\tforwards | Operating\texpenses | (2.1) | 0.9 | 0.8 |

Snap-on's	foreign	currency	forwards	are	typically	not	designated	as	hedges	for	financial	reporting	purposes.	The	fair	value	changes	of	foreign	currency	forwards	not designated	as	hedging	instruments	are	reported	in	earnings	as	foreign	exchange	gain	or	loss	in	"Other	income	(expense)	–	net"	on	the	accompanying	Consolidated Statements	of	Earnings.	In	2018,	 the	$40.4	million	derivative	loss	was	substantially	offset	by	transaction	gains	on	net	exposures	of	$36.5	million,	resulting	in	a	net foreign	exchange	loss	of	$3.9	million.	In	2017,	the	$25.8	million	derivative	loss	was	partially	offset	by	transaction	gains	on	net	exposures	of	$18.8	million,	resulting	in	a net	foreign	exchange	loss	of	$7.0	million.	In	2016,	the	$7.4	million	derivative	loss	was	partially	offset	by	transaction	gains	on	net	exposures	of	$6.1	million,	resulting	in a	net	foreign	exchange	loss	of	$1.3	million.	The	resulting	net	foreign	exchange	losses	are	included	in	"Other	income	(expense)	–	net"	on	the	accompanying	Consolidated Statements	of	Earnings.	See	Note	17	for	additional	information	on	"Other	income	(expense)	–	net."

Snap-on's	equity	forwards	are	not	designated	as	hedges	for	financial	reporting	purposes.	Fair	value	changes	of	both	the	equity	forwards	and	related	stock-based	(mark- to-market)	 deferred	 compensation	 liabilities	 are	 reported	 in	 "Operating	 expenses"	 on	 the	 accompanying	 Consolidated	 Statements	 of	 Earnings.	 The	$2.1	 million derivative	loss	recognized	in	2018	was	primarily	offset	by	$2.0	million	of	mark-to-market	deferred	compensation	gain.	The	$0.9	million	derivative	gain	recognized	in 2017	was	primarily	offset	by	$0.8	million	of	mark-to-market	deferred	compensation	expense.	The	$0.8	million	derivative	gain	recognized	in	2016	was	largely	offset	by $0.3	million	of	mark-to-market	deferred	compensation	expense.

As	of	2018	year	end,	the	maximum	maturity	date	of	any	fair	value	hedge	was	three	years.	During	the	next	12	months,	Snap-on	expects	to	reclassify	into	earnings	net gains	from	Accumulated	OCI	of	approximately	$1.1	million	after	tax	at	the	time	the	underlying	hedge	transactions	are	realized.

Counterparty	risk:	Snap-on	is	exposed	to	credit	losses	in	the	event	of	non-performance	by	the	counterparties	to	its	various	financial	agreements,	including	its	foreign currency	forward	contracts,	interest	rate	swap	agreements,	treasury	lock	agreements	and	prepaid	equity	forward	agreements.	Snap-on	does	not	obtain	collateral	or	other security	to	support	financial	instruments	subject	to	credit	risk,	but	monitors	the	credit	standing	of	the	counterparties	and	generally	enters	into	agreements	with	financial institution	counterparties	with	a	credit	rating	of	A-	or	better.	Snap-on	does	not	anticipate	non-performance	by	its	counterparties,	but	cannot	provide	assurances.

Fair	value	of	financial	instruments:	The	fair	values	of	financial	instruments	that	do	not	approximate	the	carrying	values	in	the	financial	statements	as	of	2018	and	2017 year	end	are	as	follows:

|  | Carrying | Fair | Carrying | Fair |
| :--- | :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Value | Value | Value | Value |
| Finance\treceivables\t–\tnet | $1,592.9 | $1,845.4 | $1,544.6 | $1,791.5 |
| Contract\treceivables\t–\tnet | 443.2 | 481.2 | 419.4 | 459.1 |
| Long-term\tdebt,\tnotes\tpayable\tand\tcurrent\tmaturities\tof\nlong-term\tdebt | 1,132.3 | 1,136.0 | 1,186.8 | 1,235.6 |
|  | 2018\tANNUAL\tREPORT |  |  | 97 |

The	following	methods	and	assumptions	were	used	in	estimating	the	fair	value	of	financial	instruments:

•Finance	and	contract	receivables	include	both	short-term	and	long-term	receivables.	The	fair	value	estimates	of	finance	and	contract	receivables	are	derived utilizing	discounted	cash	flow	analyses	performed	on	groupings	of	receivables	that	are	similar	in	terms	of	loan	type	and	characteristics.	The	cash	flow	analyses consider	recent	prepayment	trends	where	applicable.	The	cash	flows	are	discounted	over	the	average	life	of	the	receivables	using	a	current	market	discount	rate of	a	similar	term	adjusted	for	credit	quality.	Significant	inputs	to	the	fair	value	measurements	of	the	receivables	are	unobservable	and,	as	such,	are	classified	as Level	3.

•Fair	value	of	long-term	debt	and	current	maturities	of	long-term	debt	were	estimated,	using	Level	2	fair	value	measurements,	based	on	quoted	market	values	of Snap-on's	publicly	traded	senior	debt.	The	carrying	value	of	long-term	debt	includes	adjustments	related	to	fair	value	hedges.	The	fair	value	of	notes	payable approximates	such	instruments'	carrying	value	due	to	their	short-term	nature.

•The	fair	value	of	all	other	financial	instruments,	including	trade	and	other	accounts	receivable,	accounts	payable	and	other	financial	instruments,	approximates such	instruments'	carrying	value	due	to	their	short-term	nature.

# Note	12:	Pension	Plans

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.

The	status	of	Snap-on's	pension	plans	as	of	2018	and	2017	year	end	is	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Change\tin\tprojected\tbenefit\tobligation: |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $1,467.6 | $1,361.4 |
| Service\tcost | 25.1 | 22.7 |
| Interest\tcost | 52.8 | 56.1 |
| Plan\tparticipant\tcontributions | 0.5 | 0.6 |
| Plan\tamendments | 1.0 | — |
| Plan\tsettlements | — | (0.3) |
| Benefits\tpaid | (68.5) | (66.6) |
| Actuarial\t(gain)\tloss | (77.9) | 69.5 |
| Foreign\tcurrency\timpact | (13.7) | 24.2 |
| Benefit\tobligation\tat\tend\tof\tyear | $1,386.9 | $1,467.6 |
| Change\tin\tplan\tassets: |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $1,305.0 | $1,110.8 |
| Actual\t(loss)\tgain\ton\tplan\tassets | (72.8) | 175.7 |
| Employer\tcontributions | 61.3 | 69.6 |
| Plan\tparticipant\tcontributions | 0.5 | 0.6 |
| Plan\tsettlements | — | (0.3) |
| Benefits\tpaid | (68.5) | (66.6) |
| Foreign\tcurrency\timpact | (9.9) | 15.2 |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | $1,215.6 | $1,305.0 |
| Unfunded\tstatus\tat\tend\tof\tyear | $(171.3) | $(162.6) |

Amounts	recognized	in	the	Consolidated	Balance	Sheets	as	of	2018	and	2017	year	end	are	as	follows:

| (Amounts	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Other\tassets | $4.3 | $1.5 |
| Accrued\tbenefits | (4.3) | (5.2) |
| Pension\tliabilities | (171.3) | (158.9) |
| Net\tliability | $(171.3) | $(162.6) |

Amounts	included	in	Accumulated	OCI	on	the	accompanying	Consolidated	Balance	Sheets	as	of	2018	and	2017	year	end	are	as	follows:

The	accumulated	benefit	obligation	for	Snap-on's	pension	plans	as	of	2018	and	2017	year	end	was	$1,316.1	million	and	$1,385.0	million,	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	2018	and	2017	year	end	are	as	follows:

The	components	of	net	periodic	pension	cost,	other	than	the	service	cost	component,	are	included	in	"Other	income	(expense)	-	net"	on	the	accompanying	Consolidated Statements	of	Earnings.	See	Note	17	for	additional	information	on	Other	income	(expense)	-	net.

Amounts	in	Accumulated	OCI	that	are	expected	to	be	amortized	as	net	expense	into	net	periodic	benefit	cost	during	2019	are	as	follows:

The	weighted-average	discount	rate	for	Snap-on's	domestic	pension	plans	of	4.4%	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	50	basis	points	(100	basis	points	("bps")	equals	1.0	percent)	would	have increased	Snap-on's	2018	domestic	pension	expense	and	projected	benefit	obligation	by	approximately	$3.7	million	and	$62.9	million,	respectively.	As	of	2018	year end,	 Snap-on's	 domestic	 projected	 benefit	 obligation	 comprised	 approximately	83%	 of	 Snap-on's	 worldwide	 projected	 benefit	 obligation.	The	 weighted-average discount	rate	for	Snap-on's	foreign	pension	plans	of	3.0%	represents	the	single	rate	that	produces	the	same	present	value	of	cash	flows	as	the	estimated	benefit	plan payments.	Lowering	Snap-on's	foreign	discount	rate	assumption	by	50	bps	would	have	 increased	Snap-on's	2018	foreign	pension	expense	and	projected	benefit obligation	by	approximately	$1.9	million	and	$21.0	million,	respectively.

As	a	practical	expedient,	Snap-on	uses	the	calendar	year	end	as	the	measurement	date	for	its	plans.	Snap-on	funds	its	pension	plans	as	required	by	governmental regulation	and	may	consider	discretionary	contributions	as	conditions	warrant.	Snap-on	intends	to	make	contributions	of	$9.4	million	to	its	foreign	pension	plans	and $1.9	million	to	its	domestic	pension	plans	in	2019,	as	required	by	law.	Depending	on	market	and	other	conditions,	Snap-on	may	make	discretionary	cash	contributions	to its	pension	plans	in	2019.

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

| (Amounts	in	millions) | Amount |
| :--- | :--- |
| Year: |  |
| 2019 | $76.2 |
| 2020 | 80.1 |
| 2021 | 82.4 |
| 2022 | 92.4 |
| 2023 | 88.8 |
| 2024-2028 | 474.9 |

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	plans'	assets	is	to	achieve	net	of	expense	returns	that	meet	or	exceed	the	7.45%	domestic	long-term	return	on	plan	assets assumption	used	for	reporting	purposes.	Snap-on	uses	a	three-year,	market-related	value	asset	method	of	amortizing	the	difference	between	actual	and	expected	returns on	its	domestic	plans'	assets.	As	of	2018	year	end,	Snap-on's	domestic	pension	plans'	assets	comprised	approximately	86%	of	the	company's	worldwide	pension	plan assets.

The	basis	for	determining	the	overall	expected	long-term	return	on	plan	assets	assumption	is	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,	which	are	calculated	using	the	geometric	mean,	are	then adjusted	based	on	current	relative	valuation	levels,	macro-economic	conditions,	and	the	expected	alpha	related	to	active	investment	management.	The	asset	return assumption	is	also	adjusted	by	an	implicit	expense	load	for	estimated	administrative	and	investment-related	expenses.

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.

Investments	are	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. Asset/liability	studies	are	conducted	periodically	to	determine	if	any	revisions	to	the	strategic	asset	allocation	policy	are	necessary.

Snap-on's	domestic	pension	plans'	target	allocation	and	actual	weighted-average	asset	allocation	by	asset	category	and	fair	value	of	plan	assets	as	of	2018	and	2017	year end	are	as	follows:

|  | Target | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Asset\tcategory: |  |  |  |
| Equity\tsecurities | 51% | 49% | 51% |
| Debt\tsecurities\tand\tcash\tand\tcash\tequivalents | 37% | 40% | 38% |
| Real\testate\tand\tother\treal\tassets | 2% | 1% | 1% |
| Hedge\tfunds | 10% | 10% | 10% |
| Total | 100% | 100% | 100% |
| Fair\tvalue\tof\tplan\tassets\t(Amounts\tin\tmillions) |  | $1,049.0 | $1,122.7 |

The	fair	value	measurement	hierarchy	prioritizes	the	inputs	used	to	measure	fair	value.	The	hierarchy	gives	the	highest	priority	("Level	1")	to	unadjusted	quoted	prices	in active	markets	for	identical	assets	and	liabilities	and	the	lowest	priority	("Level	3")	to	unobservable	inputs.	Fair	value	measurements	primarily	based	on	observable market	information	are	given	a	"Level	2"	priority.

Certain	equity	and	debt	securities	are	valued	at	quoted	per	share	or	unit	market	prices	for	which	an	official	close	or	last	trade	pricing	on	an	active	exchange	is	available and	are	categorized	as	Level	1	in	the	fair	value	hierarchy.	If	quoted	market	prices	are	not	readily	available	for	specific	securities,	values	are	estimated	using	quoted	prices of	securities	with	similar	characteristics	and	are	categorized	as	Level	2	in	the	fair	value	hierarchy.	Insurance	contracts	are	valued	at	the	present	value	of	the	estimated future	cash	flows	promised	under	the	terms	of	the	insurance	contracts	and	are	categorized	as	Level	2	in	the	fair	value	hierarchy.

Commingled	equity	securities	and	commingled	multi-strategy	funds	are	valued	at	the	Net	Asset	Value	("NAV")	per	share	or	unit	multiplied	by	the	number	of	shares	or units	held	as	of	the	measurement	date,	as	reported	by	the	fund	managers.	The	share	or	unit	price	is	quoted	on	a	private	market	and	is	based	on	the	value	of	the	underlying investments,	which	are	primarily	based	on	observable	inputs;	such	investments	that	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical expedient	have	not	been	classified	in	the	fair	value	hierarchy.

Private	equity	partnership	funds,	hedge	funds,	and	real	estate	and	other	real	assets	are	valued	at	the	NAV	as	reported	by	the	fund	managers.	Private	equity	partnership funds,	certain	hedge	funds,	and	certain	real	estate	and	other	real	assets	are	valued	based	on	the	proportionate	interest	or	share	of	net	assets	held	by	the	pension	plan, which	is	based	on	the	estimated	fair	market	value	of	the	underlying	investments.	Certain	other	hedge	funds	and	real	estate	and	other	real	assets	are	valued	at	the	NAV per	share	or	unit	multiplied	by	the	number	of	shares	or	units	held	as	of	the	measurement	date,	based	on	the	estimated	value	of	the	underlying	investments	as	reported	by the	fund	managers.	These	investments	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical	expedient	and	have	not	been	classified	in	the	fair value	hierarchy.

The	company	regularly	reviews	fund	performance	directly	with	its	investment	advisor	and	the	fund	managers,	and	performs	qualitative	analysis	to	corroborate	the reasonableness	of	the	reported	NAVs.	For	funds	for	which	the	company	did	not	receive	a	year-end	NAV,	the	company	recorded	an	estimate	of	the	change	in	fair	value for	the	latest	period	based	on	return	estimates	and	other	fund	activity	obtained	from	the	fund	managers.

The	columns	labeled	"Investments	Measured	at	NAV"	in	the	following	tables	reflect	certain	investments	that	are	measured	at	fair	value	using	the	NAV	per	share	(or	its equivalent)	practical	expedient	and	have	not	been	categorized	in	the	fair	value	hierarchy.	The	fair	value	amounts	presented	in	these	tables	are	intended	to	permit	a reconciliation	of	the	fair	value	hierarchy	to	the	pension	plan	assets.

The	following	is	a	summary,	by	asset	category,	of	the	fair	value	and	the	level	within	the	fair	value	hierarchy	of	Snap-on's	domestic	pension	plans'	assets	as	of	2018	year end:

|  | Quoted | Other |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Prices\tfor | Observable | Investments |  |
|  | Identical | Inputs | Measured\tat |  |
| (Amounts\tin\tmillions) | Assets\t(Level\t1) | (Level\t2) | NAV | Total |
| Asset\tcategory: |  |  |  |  |
| Cash\tand\tcash\tequivalents | $17.8 | $— | $— | $17.8 |
| Equity\tsecurities: |  |  |  |  |
| Domestic | 70.5 | — | — | 70.5 |
| Foreign | 87.5 | — | — | 87.5 |
| Commingled\tfunds\t–\tdomestic | — | — | 200.6 | 200.6 |
| Commingled\tfunds\t–\tforeign | — | — | 128.4 | 128.4 |
| Private\tequity\tpartnerships | — | — | 22.7 | 22.7 |
| Debt\tsecurities: |  |  |  |  |
| Government | 131.2 | 2.6 | — | 133.8 |
| Corporate\tbonds | — | 271.3 | — | 271.3 |
| Real\testate\tand\tother\treal\tassets | — | — | 11.9 | 11.9 |
| Hedge\tfunds | — | — | 104.5 | 104.5 |
| Total | $307.0 | $273.9 | $468.1 | $1,049.0 |

|  | Quoted | Significant |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Prices\t\tfor | Other |  |  |
|  | Identical | Observable | Investments |  |
|  | Assets | Inputs | Measured\tat |  |
| (Amounts\tin\tmillions) | (Level\t1) | (Level\t2) | NAV | Total |
| Asset\tcategory: |  |  |  |  |
| Cash\tand\tcash\tequivalents | $20.6 | $— | $— | $20.6 |
| Equity\tsecurities: |  |  |  |  |
| Domestic | 73.4 | — | — | 73.4 |
| Foreign | 100.1 | — | — | 100.1 |
| Commingled\tfunds\t–\tdomestic | — | — | 225.0 | 225.0 |
| Commingled\tfunds\t–\tforeign | — | — | 148.8 | 148.8 |
| Private\tequity\tpartnerships | — | — | 27.5 | 27.5 |
| Debt\tsecurities: |  |  |  |  |
| Government | 152.8 | 2.2 | — | 155.0 |
| Corporate\tbonds | — | 253.0 | — | 253.0 |
| Real\testate\tand\tother\treal\tassets | — | — | 13.2 | 13.2 |
| Hedge\tfunds | — | — | 106.1 | 106.1 |
| Total | $346.9 | $255.2 | $520.6 | $1,122.7 |

Snap-on's	primary	investment	objective	for	its	foreign	pension	plans'	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	company	believes	the	foreign	pension	plans'	assets,	which	are	managed	locally	by professional	investment	firms,	are	well	diversified.

The	expected	long-term	rates	of	return	on	foreign	plans'	assets,	which	ranged	from	2.0%	to	6.1%	as	of	2018	year	end,	reflect	management's	expectations	of	long-term average	rates	of	return	on	funds	invested	to	provide	benefits	included	in	the	plans'	projected	benefit	obligation.	The	expected	returns	are	based	on	outlooks	for	inflation, fixed	income	returns	and	equity	returns,	asset	allocations	and	investment	strategies.	Differences	between	actual	and	expected	returns	on	foreign	pension	plans'	assets	are recorded	as	an	actuarial	gain	or	loss	and	amortized	accordingly.

Snap-on's	foreign	pension	plans'	target	allocation	and	actual	weighted-average	asset	allocation	by	asset	category	and	fair	value	of	plan	assets	as	of	2018	and	2017	year end	are	as	follows:

| Target | Target | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Asset\tcategory: |  |  |  |
| Equity\tsecurities* | 35% | 35% | 36% |
| Debt\tsecurities*\tand\tcash\tand\tcash\tequivalents | 40% | 42% | 42% |
| Insurance\tcontracts\tand\thedge\tfunds | 25% | 23% | 22% |
| Total | 100% | 100% | 100% |
| Fair\tvalue\tof\tplan\tassets\t(Amounts\tin\tmillions) |  | $166.6 | $182.3 |
| *\tIncludes\tcommingled\tfunds\t-\tmulti-strategy |  |  |  |
| 2018\tANNUAL\tREPORT | 2018\tANNUAL\tREPORT |  | 103 |

 *	Includes	commingled	funds	-	multi-strategy

The	following	is	a	summary,	by	asset	category,	of	the	fair	value	and	the	level	within	the	fair	value	hierarchy	of	Snap-on's	foreign	pension	plans'	assets	as	of	2018	year end:

|  | Quoted | Significant |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Prices\tfor | Other |  |  |
|  | Identical | Observable | Investments |  |
|  | Assets | Inputs | Measured\tat |  |
| (Amounts\tin\tmillions) | (Level\t1) | (Level\t2) | NAV | Total |
| Asset\tcategory: |  |  |  |  |
| Cash\tand\tcash\tequivalents | $1.2 | $— | $— | $1.2 |
| Commingled\tfunds\t–\tmulti-strategy | — | — | 101.5 | 101.5 |
| Debt\tsecurities: |  |  |  |  |
| Government | 8.3 | — | — | 8.3 |
| Corporate\tbonds | — | 17.5 | — | 17.5 |
| Insurance\tcontracts | — | 23.8 | — | 23.8 |
| Hedge\tfund | — | — | 14.3 | 14.3 |
| Total | $9.5 | $41.3 | $115.8 | $166.6 |

|  | Quoted | Significant |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Prices\tfor | Other |  |  |
|  | Identical | Observable | Investments |  |
|  | Assets | Inputs | Measured\tat |  |
| (Amounts\tin\tmillions) | (Level\t1) | (Level\t2) | NAV | Total |
| Asset\tcategory: |  |  |  |  |
| Cash\tand\tcash\tequivalents | $0.7 | $— | $— | $0.7 |
| Commingled\tfunds\t–\tmulti-strategy | — | — | 114.2 | 114.2 |
| Debt\tsecurities: |  |  |  |  |
| Government | 8.8 | — | — | 8.8 |
| Corporate\tbonds | — | 18.3 | — | 18.3 |
| Insurance\tcontracts | — | 24.2 | — | 24.2 |
| Hedge\tfund | — | — | 16.1 | 16.1 |
| Total | $9.5 | $42.5 | $130.3 | $182.3 |

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	2018,	2017	and 2016,	Snap-on	recognized	$9.4	million,	$8.9	million	and	$8.2	million,	respectively,	of	expense	related	to	its	401(k)	plans.

# Note	13:	Postretirement	Plans

Snap-on	provides	health	care	benefits	for	certain	retired	U.S.	employees.	Employees	retiring	prior	to	1989	were	eligible	for	retiree	medical	coverage	upon	reaching	early retirement	age,	with	no	retiree	contributions	required.	Benefits	are	paid	based	on	deductibles	and	percentages	of	covered	expenses	and	take	into	consideration	payments made	by	Medicare	and	other	insurance	coverage.

Since	1989,	U.S.	retirees	have	been	eligible	for	comprehensive	major	medical	plans.	Benefits	are	paid	based	on	deductibles	and	percentages	of	covered	expenses,	and plan	provisions	allow	for	benefit	and	coverage	changes.	Most	retirees	are	required	to	pay	the	entire	cost	of	the	coverage,	but	Snap-on	may	elect	to	subsidize	the	cost	of coverage	under	certain	circumstances.

Snap-on	has	a	Voluntary	Employees	Beneficiary	Association	("VEBA")	trust	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.

The	status	of	Snap-on's	U.S.	postretirement	health	care	plans	as	of	2018	and	2017	year	end	is	as	follows:

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tperiodic\tbenefit\tcost: |  |  |  |
| Service\tcost | $— | $— | $0.1 |
| Interest\tcost | 1.8 | 2.1 | 2.2 |
| Expected\treturn\ton\tplan\tassets | (0.8) | (0.8) | (0.9) |
| Amortization\tof\tunrecognized\tgain | (0.4) | (0.3) | (0.1) |
| Net\tperiodic\tbenefit\tcost | $0.6 | $1.0 | $1.3 |
| Changes\tin\tbenefit\tobligations\trecognized\tin\tOCI,\tnet\tof\ttax:\nNet\t(gain)\tloss | $(1.4) | $0.6 | $(0.3) |

The	 components	 of	 net	 periodic	 postretirement	 health	 care	 cost,	 other	 than	 the	 service	 cost	 component,	 are	 included in	 "Other income	 (expense)	 -	 net"	 on the accompanying	Consolidated	Statements	of	Earnings.	See	Note	17	for	additional	information	on	Other	income	(expense)	-	net.

Snap-on	expects	to	recognize	$0.8	million	of	prior	unrecognized	gains,	included	in	Accumulated	OCI	on	the	accompanying	2018	Consolidated	Balance	Sheet,	in	net periodic	benefit	cost	during	2019.

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

The	methodology	for	selecting	the	year-end	2018	and	2017	weighted-average	discount	rate	for	the	company's	domestic	postretirement	plans	was	to	match	the	plans' yearly	projected	cash	flows	for	benefits	and	service	costs	to	those	of	hypothetical	bond	portfolios	using	high-quality,	AA	rated	or	better,	corporate	bonds	from	either Moody's	Investors	Service	or	Standard	&	Poor's	credit	rating	agencies	available	at	the	measurement	date.	As	a	practical	expedient,	Snap-on	uses	the	calendar	year	end as	the	measurement	date	for	its	plans.

For	2019,	the	actuarial	calculations	assume	a	pre-65	health	care	cost	trend	rate	of	5.7%	and	a	post-65	health	care	cost	trend	rate	of	6.3%,	both	decreasing	gradually	to 4.5%	in	2038	and	thereafter.	As	of	2018	year	end,	a	one-percentage-point	increase	in	the	health	care	cost	trend	rate	for	future	years	would	increase	the	accumulated postretirement	benefit	obligation	by	approximately	$0.5	million	and	the	aggregate	of	the	service	cost	and	interest	cost	components	by	less	than	$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	$0.6	million	and the	aggregate	of	the	service	cost	and	interest	rate	components	by	less	than	$0.1	million.

| (Amounts	in	millions) | Amount |
| :--- | :--- |
| Year: |  |
| 2019 | $3.8 |
| 2020 | 3.9 |
| 2021 | 4.0 |
| 2022 | 4.1 |
| 2023 | 4.1 |
| 2024-2028 | 21.2 |

The	objective	of	the	VEBA	trust	is	to	achieve	net	of	expense	returns	that	meet	or	exceed	the	6.3%	long-term	return	on	plan	assets	assumption	used	for	reporting purposes.	Investments	are	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.

The	basis	for	determining	the	overall	expected	long-term	return	on	plan	assets	assumption	is	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,	which	are	calculated	using	the	geometric	mean,	are	then adjusted	based	on	current	relative	valuation	 levels	and	macro-economic	conditions.	The	asset	return	assumption	 is	also	adjusted	by	an	 implicit	expense	 load	for estimated	administrative	and	investment-related	expenses.

Snap-on's	VEBA	plan	target	allocation	and	actual	weighted-average	asset	allocation	by	asset	category	and	fair	value	of	plan	assets	as	of	2018	and	2017	year	end	are	as follows:

|  | Target | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Asset\tcategory: |  |  |  |
| Debt\tsecurities\tand\tcash\tand\tcash\tequivalents | 46% | 56% | 42% |
| Equity\tsecurities | 29% | 26% | 29% |
| Hedge\tfunds | 25% | 18% | 29% |
| Total | 100% | 100% | 100% |
| Fair\tvalue\tof\tplan\tassets\t(Amounts\tin\tmillions) |  | $12.1 | $13.4 |

Debt	securities	are	valued	at	quoted	per	share	or	unit	market	prices	for	which	an	official	close	or	last	trade	pricing	on	an	active	exchange	is	available	and	are	categorized as	Level	1	in	the	fair	value	hierarchy.

Equity	securities	are	valued	at	the	NAV	per	share	or	unit	multiplied	by	the	number	of	shares	or	units	held	as	of	the	measurement	date,	as	reported	by	the	fund	managers. The	share	or	unit	price	is	quoted	on	a	private	market	and	is	based	on	the	value	of	the	underlying	investments,	which	are	primarily	based	on	observable	inputs;	such investments	that	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical	expedient	have	not	been	classified	in	the	fair	value	hierarchy.

Hedge	funds	are	stated	at	the	NAV	per	share	or	unit	(based	on	the	estimated	fair	market	value	of	the	underlying	investments)	multiplied	by	the	number	of	shares	or	units held	as	of	the	measurement	date,	as	reported	by	the	fund	managers.	These	investments	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical expedient	and	have	not	been	classified	in	the	fair	value	hierarchy.

The	columns	labeled	"Investments	Measured	at	NAV"	in	the	following	tables	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical	expedient and	have	not	been	categorized	in	the	fair	value	hierarchy.	The	fair	value	amounts	presented	in	these	tables	are	intended	to	permit	a	reconciliation	of	the	fair	value hierarchy	to	the	VEBA	plan	assets.

The	following	is	a	summary,	by	asset	category,	of	the	fair	value	and	the	level	within	the	fair	value	hierarchy	of	the	VEBA	plan	assets	as	of	2018	year	end:

| Quoted | Quoted |  |  |
| :--- | :--- | :--- | :--- |
| Prices\tfor | Prices\tfor |  |  |
| Identical | Identical | Investments\tMeasured\tat |  |
| (Amounts\tin\tmillions) | Assets\t(Level\t1) | NAV | Total |
| Asset\tcategory: |  |  |  |
| Cash\tand\tcash\tequivalents | $1.3 | $— | $1.3 |
| Debt\tsecurities | 5.5 | — | 5.5 |
| Equity\tsecurities | — | 3.1 | 3.1 |
| Hedge\tfund | — | 2.2 | 2.2 |
| Total | $6.8 | $5.3 | $12.1 |
| 2018\tANNUAL\tREPORT | 2018\tANNUAL\tREPORT |  | 107 |

|  | Assets | Investments	Measured	at |  |
| :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | (Level\t1) | NAV | Total |
| Asset\tcategory: |  |  |  |
| Cash\tand\tcash\tequivalents | $0.2 | $— | $0.2 |
| Debt\tsecurities | 5.5 | — | 5.5 |
| Equity\tsecurities | — | 3.8 | 3.8 |
| Hedge\tfund | — | 3.9 | 3.9 |
| Total | $5.7 | $7.7 | $13.4 |

# Note	14:	Stock-based	Compensation	and	Other	Stock	Plans

The	2011	Incentive	Stock	and	Awards	Plan	(the	"2011	Plan")	provides	for	the	grant	of	stock	options,	performance	awards,	stock	appreciation	rights	("SARs")	and restricted	stock	awards	(which	may	be	designated	as	"restricted	stock	units"	or	"RSUs").	No	further	grants	are	being	made	under	its	predecessor,	the	2001	Incentive Stock	and	Awards	Plan	(the	"2001	Plan"),	although	outstanding	awards	under	the	2001	Plan	will	continue	in	accordance	with	their	terms.	As	of	2018	year	end,	the	2011 Plan	had	2,654,112	shares	available	for	future	grants.	The	company	uses	treasury	stock	to	deliver	shares	under	both	the	2001	and	2011	Plans.

# Stock	Options

Stock	options	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.	Stock	option	grants	vest	ratably	on	the	first,	second	and	third	anniversaries	of	the	date	of	grant.

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	and	forfeiture	behaviors	for	different	participating	groups	to	estimate	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	2018,	2017 and	2016,	using	the	Black-Scholes valuation	model:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Expected\tterm\tof\toption\t(in\tyears) | 5.35 | 5.15 | 5.05 |
| Expected\tvolatility\tfactor | 20.08% | 22.01% | 22.17% |
| Expected\tdividend\tyield | 1.68% | 1.63% | 1.77% |
| Risk-free\tinterest\trate | 2.71% | 1.78% | 1.04% |

A	summary	of	stock	option	activity	during	2018	is	presented	below:

|  |  |  | Remaining | Aggregate |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Exercise | Contractual | Intrinsic |
|  |  | \tPrice\tper | Term* | Value |
|  | Shares\t(in\tthousands) | Share* | (in\tyears) | (in\tmillions) |
| Outstanding\tat\tbeginning\tof\tyear | 3,198 | $115.30 |  |  |
| Granted | 515 | 161.18 |  |  |
| Exercised | (537) | 84.00 |  |  |
| Forfeited\tor\texpired | (46) | 159.33 |  |  |
| Outstanding\tat\tend\tof\tyear | 3,130 | 127.57 | 6.3 | $75.3 |
| Exercisable\tat\tend\tof\tyear | 2,047 | 110.48 | 5.1 | 74.1 |

# *	Weighted-average

As	of	2018	year	end,	there	was	$18.0	million	of	unrecognized	compensation	cost	related	to	non-vested	stock	options	that	is	expected	to	be	recognized	as	a	charge	to earnings	over	a	weighted-average	period	of	1.4	years.

# Performance	Awards

Performance	awards,	which	are	granted	as	performance	share	units	("PSUs")	and	performance-based	RSUs,	are	earned	and	expensed	using	the	fair	value	of	the	award over	a	contractual	term	of	three	years	based	on	the	company's	performance.	Vesting	of	the	performance	awards	is	dependent	upon	performance	relative	to	pre-defined goals	for	revenue	growth	and	return	on	net	assets	for	the	applicable	performance	period.	For	performance	achieved	above	specified	levels,	the	recipient	may	earn additional	shares	of	stock,	not	to	exceed	100%	of	the	number	of	performance	awards	initially	granted.

The	PSUs	have	a	three-year	performance	period	based	on	the	results	of	the	consolidated	financial	metrics	of	the	company.	The	performance-based	RSUs	have	a	one-year performance	period	based	on	 the	results	of	 the	consolidated	financial	metrics	of	 the	company	followed	by	a	two-year	cliff	vesting	schedule,	assuming	continued employment.

The	fair	value	of	performance	awards	is	calculated	using	the	market	value	of	a	share	of	Snap-on's	common	stock	on	the	date	of	grant	and	assumed	forfeitures	based	on recent	historical	experience;	in	recent	years,	forfeitures	have	not	been	significant.	The	weighted-average	grant	date	fair	value	of	performance	awards	granted	during 2018,	2017	and	2016	was	$161.18,	$168.70	and	$138.83,	respectively.	Vested	PSUs	totaled	32,154	shares	as	of	2018	year	end,	50,316	shares	as	of	2017	year	end	and 61,149	shares	as	of	2016	year	end.	PSUs	related	to	50,182	shares,	60,980	shares	and	94,186	shares	were	paid	out	in	2018,	2017	and	2016,	respectively.	Earned	PSUs vest	and	are	generally	paid	out	following	 the	conclusion	of	 the	applicable	performance	period	upon	approval	by	 the	Organization	and	Executive	Compensation Committee	of	the	company's	Board	of	Directors	(the	"Board").

Based	on	the	company's	2018	performance,	33,170	RSUs	granted	in	2018	were	earned;	assuming	continued	employment,	these	RSUs	will	vest	at	the	end	of	fiscal	2020. Based	on	the	company's	2017	performance,	13,648	RSUs	granted	in	2017	were	earned;	assuming	continued	employment,	these	RSUs	will	vest	at	the	end	of	fiscal	2019. Based	 on	 the	 company's	2016	 performance,	45,502	 RSUs	 granted	 in	2016	were	earned;	 these	RSUs	vested	as	of	fiscal	2018	year	end	and	were	paid	out	shortly thereafter.

Changes	to	the	company's	non-vested	performance	awards	in	2018	are	as	follows:

As	of	2018	year	end,	there	was	$10.6	million	of	unrecognized	compensation	cost	related	to	non-vested	performance	awards	that	is	expected	to	be	recognized	as	a	charge to	earnings	over	a	weighted-average	period	of	1.8	years.

# Stock	Appreciation	Rights	("SARs")

The	company	also	issues	stock-settled	and	cash-settled	SARs	to	certain	key	non-U.S.	employees.	SARs	have	a	contractual	term	of	ten	years	and	vest	ratably	on	the	first, second	and	third	anniversaries	of	the	date	of	grant.	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.

Stock-settled	SARs	are	accounted	for	as	equity	instruments	and	provide	for	the	issuance	of	Snap-on	common	stock	equal	to	the	amount	by	which	the	company's	stock has	appreciated	over	the	exercise	price.	Stock-settled	SARs	have	an	effect	on	dilutive	shares	and	shares	outstanding	as	any	appreciation	of	Snap-on's	common	stock value	over	the	exercise	price	will	be	settled	in	shares	of	common	stock.	Cash-settled	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.	Cash-settled	SARs	have	no	effect	on	dilutive	shares	or	shares	outstanding	as	any	appreciation	of Snap-on's	common	stock	over	the	grant	price	is	paid	in	cash	and	not	in	common	stock.

The	fair	value	of	stock-settled	SARs	is	estimated	on	the	date	of	grant	using	the	Black-Scholes	valuation	model.	The	fair	value	of	cash-settled	SARs	is	revalued	(mark-to- market)	each	reporting	period	using	the	Black-Scholes	valuation	model	based	on	Snap-on's	period-end	stock	price.	The	company	uses	historical	data	regarding	SARs exercise	and	forfeiture	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	as	of	the	grant	date	(for	stock-settled	SARs)	or	reporting	date	(for	cash-settled	SARs)	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	stock-settled	SARs	granted	during	2018,	2017	and	2016,	using	the	Black-Scholes valuation	model:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Expected\tterm\tof\tstock-settled\tSARs\t(in\tyears) | 3.58 | 3.99 | 4.03 |
| Expected\tvolatility\tfactor | 20.08% | 19.39% | 20.09% |
| Expected\tdividend\tyield | 1.63% | 1.46% | 1.66% |
| Risk-free\tinterest\trate | 2.40% | 1.55% | 1.11% |

Changes	to	the	company's	stock-settled	SARs	in	2018	are	as	follows:

|  |  |  | Remaining | Aggregate |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Exercise | Contractual | Intrinsic |
|  | Stock-settled | \tPrice\tper | Term* | Value |
|  | SARs\t(in\tthousands) | Share* | (in\tyears) | (in\tmillions) |
| Outstanding\tat\tbeginning\tof\tyear | 360 | $138.63 |  |  |
| Granted | 89 | 161.18 |  |  |
| Exercised | (24) | 105.55 |  |  |
| Forfeited\tor\texpired | (53) | 129.40 |  |  |
| Outstanding\tat\tend\tof\tyear | 372 | 147.41 | 7.4 | $2.6 |
| Exercisable\tat\tend\tof\tyear | 191 | 135.42 | 6.3 | 2.4 |

As	of	2018	year	end	there	was	$2.5	million	of	unrecognized	compensation	cost	related	to	non-vested	stock-settled	SARs	that	is	expected	to	be	recognized	as	a	charge	to earnings	over	a	weighted-average	period	of	1.4	years.

The	following	weighted-average	assumptions	were	used	in	calculating	the	fair	value	of	cash-settled	SARs	granted	during	2018,	2017	and	2016,	using	the	Black-Scholes valuation	model:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Expected\tterm\tof\tcash-settled\tSARs\t(in\tyears) | 2.76 | 3.09 | 3.11 |
| Expected\tvolatility\tfactor | 21.96% | 19.93% | 19.53% |
| Expected\tdividend\tyield | 1.75% | 1.59% | 1.56% |
| Risk-free\tinterest\trate | 2.50% | 1.98% | 1.47% |

Changes	to	the	company's	non-vested	cash-settled	SARs	in	2018	are	as	follows:

|  |  | Fair	Value |
| :--- | :--- | :--- |
|  | Cash-settled | \tPrice\tper |
|  | SARs\t\t\t\t\t(in\tthousands) | Share* |
| Non-vested\tcash-settled\tSARs\tat\tbeginning\tof\tyear | 5 | $35.41 |
| Granted | 1 | 14.98 |
| Vested | (3) | 15.61 |
| Non-vested\tcash-settled\tSARs\tat\tend\tof\tyear | 3 | 14.89 |

As	of	2018	year	end	there	was	$0.1	million	of	unrecognized	compensation	cost	related	to	non-vested	cash-settled	SARs	that	is	expected	to	be	recognized	as	a	charge	to earnings	over	a	weighted-average	period	of	1.1	years.

# Restricted	Stock	Awards	–	Non-employee	Directors

The	company	awarded	6,975	shares,	6,966	shares	and	7,145	shares	of	restricted	stock	to	non-employee	directors	in	2018,	2017	and	2016,	respectively.	The	fair	value	of the	restricted	stock	awards	is	expensed	over	a	one-year	vesting	period	based	on	the	fair	value	on	the	date	of	grant.	All	restrictions	for	the	restricted	stock	generally	lapse upon	the	earlier	of	the	first	anniversary	of	the	grant	date,	the	recipient's	death	or	disability	or	in	the	event	of	a	change	in	control,	as	defined	in	the	2011	Plan.	If termination	of	the	recipient's	service	occurs	prior	to	the	first	anniversary	of	the	grant	date	for	any	reason	other	than	death	or	disability,	the	shares	of	restricted	stock would	be	forfeited,	unless	otherwise	determined	by	the	Board.

# Directors'	Fee	Plan

Under	the	Directors'	1993	Fee	Plan,	as	amended,	non-employee	directors	may	elect	to	receive	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.	For	2018,	2017	and	2016,	issuances	under	the	Directors'	Fee	Plan	totaled	1,727	shares,	1,800 shares	 and	2,579	shares,	respectively,	of	which	1,315	 shares,	1,312	 shares	 and	2,019	shares,	respectively,	were	deferred.	As	of	2018	year	end,	shares	reserved	for issuance	to	directors	under	this	plan	totaled	176,724	shares.

# Employee	Stock	Purchase	Plan

Substantially	all	Snap-on	employees	in	the	United	States	and	Canada	are	eligible	to	participate	in	an	employee	stock	purchase	plan.	The	purchase	price	of	the	company's common	stock	to	participants	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	2018,	2017	and	2016,	issuances	under	this	plan	totaled	22,794	shares,	26,963	shares	and	27,156	shares,	respectively.	As	of	2018	year	end,	shares reserved	for	issuance	under	this	plan	totaled	730,806	shares	and	Snap-on	held	participant	contributions	of	approximately	$2.8	million.	Participants	are	able	to	withdraw from	the	plan	at	any	time	prior	to	the	ending	date	and	receive	back	all	contributions	made	during	the	plan	year.	Compensation	expense	for	plan	participants	was	$0.3 million	in	2018,	$0.1	million	in	2017	and	zero	in	2016.

# Franchisee	Stock	Purchase	Plan

All	franchisees	in	the	United	States	and	Canada	are	eligible	to	participate	in	a	franchisee	stock	purchase	plan.	The	purchase	price	of	the	company's	common	stock	to participants	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 2018,	2017	and	2016,	issuances	under	this	plan	totaled	46,704	shares,	47,314	shares	and	42,867	shares,	respectively.	As	of	2018	year	end,	shares	reserved	for	issuance under	this	plan	totaled	519,451	shares	and	Snap-on	held	participant	contributions	of	approximately	$4.9	million.	Participants	are	able	to	withdraw	from	the	plan	at	any time	prior	to	the	ending	date	and	receive	back	all	contributions	made	during	the	plan	year.	The	company	recognized	mark-to-market	expense	of	$0.6	million	in	2018,	and $0.2	million	in	2017,	and	a	mark-to-market	benefit	of	$0.2	million	in	2016.

# Note	15:	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	franchisee	stock	purchase plans,	stock	awards	and	other	corporate	purposes.	Snap-on	repurchased	1,769,000	shares,	1,820,000	shares	and	758,000	shares	in	2018,	2017	and	2016,	respectively.	As of	2018	year	end,	Snap-on	has	remaining	availability	to	repurchase	up	to	an	additional	$215.7	million	in	common	stock	pursuant	to	Board	authorizations.	The	purchase of	Snap-on	common	stock	is	at	the	company's	discretion,	subject	to	prevailing	financial	and	market	conditions.

# Note	16:	Commitments	and	Contingencies

Snap-on	leases	facilities,	office	equipment	and	vehicles	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:

|  | Operating | Capital |
| :--- | :--- | :--- |
| (Amounts\tin\tmillions) | Leases | Leases |
| Year: |  |  |
| 2019 | $25.6 | $3.3 |
| 2020 | 18.4 | 3.2 |
| 2021 | 13.9 | 2.9 |
| 2022 | 9.8 | 2.5 |
| 2023 | 4.9 | 2.2 |
| 2024\tand\tthereafter | 4.4 | 1.9 |
| Total\tminimum\tlease\tpayments | $77.0 | 16.0 |
| Less:\tamount\trepresenting\tinterest |  | (0.9) |
| Total\tpresent\tvalue\tof\tminimum\tcapital\tlease\tpayments |  | $15.1 |

Amounts	included	in	the	accompanying	Consolidated	Balance	Sheets	for	the	present	value	of	minimum	capital	lease	payments	as	of	2018	year	end	are	as	follows:

| (Amounts	in	millions) | 2018 |
| :--- | :--- |
| Other\taccrued\tliabilities | $3.0 |
| Other\tlong-term\tliabilities | 12.1 |
| Total\tpresent\tvalue\tof\tminimum\tcapital\tlease\tpayments | $15.1 |

Rent	expense	for	worldwide	facilities,	office	equipment	and	vehicles,	net	of	sub-lease	rental	income,	was	$33.0	million,	$35.2	million	and	$31.2	million	in	2018,	2017 and	2016,	respectively.

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.	Snap-on's	product	warranty	accrual	activity	for	2018,	2017	and	2016	is	as	follows:

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Warranty\taccrual: |  |  |  |
| Beginning\tof\tyear | $17.2 | $16.0 | $16.4 |
| Additions | 14.9 | 15.2 | 12.8 |
| Usage | (15.0) | (14.0) | (13.2) |
| End\tof\tyear | $17.1 | $17.2 | $16.0 |

Snap-on	is	involved	in	various	legal	matters	that	are	being	litigated	and/or	settled	in	the	ordinary	course	of	business.	For	the	year	ended	December	30,	2017,	accruals were	recorded	for	$45.9	million	related	to	judgments	in	a	patent-related	litigation	matter	that	is	being	appealed,	and	an	employment-related	litigation	matter,	which	was subsequently	settled	in	2018.	The	company	recognized	a	$4.3	million	benefit	in	operating	expenses	in	2018	as	a	result	of	the	settlement.

Although	it	is	not	possible	to	predict	the	outcome	of	the	above	and	other	legal	matters,	management	believes	that	the	results	of	all	legal	matters	will	not	have	a	material impact	on	Snap-on's	consolidated	financial	position,	results	of	operations	or	cash	flows.

# Note	17:	Other	Income	(Expense)	–	Net

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

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $0.6 | $0.3 | $0.6 |
| Net\tforeign\texchange\tloss | (3.9) | (7.0) | (1.3) |
| Net\tperiodic\tpension\tand\tpostretirement\tbenefits\t(costs)\t-\tnon-service | 3.7 | (0.6) | (6.9) |
| Settlement\tof\ttreasury\tlock | 13.3 | — | — |
| Loss\ton\tearly\textinguishment\tof\tdebt | (7.8) | — | — |
| Other | (1.7) | (0.5) | 0.1 |
| Total\tother\tincome\t(expense)\t–\tnet | $4.2 | $(7.8) | $(7.5) |
| 2018\tANNUAL\tREPORT |  |  | 113 |

# Note	18:	Accumulated	Other	Comprehensive	Income	(Loss)

The	following	is	a	summary	of	net	changes	in	Accumulated	OCI	by	component	and	net	of	tax	for	2018	and	2017:

|  | Foreign |  | Pension	and |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Currency |  | Postretirement |  |
| (Amounts\tin\tmillions) | Translation | Cash\tFlow\tHedges | Plans | Total |
| Balance\tas\tof\t2016\tyear\tend | $(217.7) | $9.2 | $(290.0) | $(498.5) |
| Other\tcomprehensive\tincome\tbefore\treclassifications | 135.2 | 6.9 | 11.8 | 153.9 |
| Amounts\treclassified\tfrom\tAccumulated\tOCI | — | (1.6) | 17.2 | 15.6 |
| Net\tother\tcomprehensive\tincome | 135.2 | 5.3 | 29.0 | 169.5 |
| Balance\tas\tof\t2017\tyear\tend | $(82.5) | $14.5 | $(261.0) | $(329.0) |
| Other\tcomprehensive\tloss\tbefore\treclassifications | (95.4) | (0.8) | (59.0) | (155.2) |
| Amounts\treclassified\tfrom\tAccumulated\tOCI | — | (1.5) | 23.5 | 22.0 |
| Net\tother\tcomprehensive\tloss | (95.4) | (2.3) | (35.5) | (133.2) |
| Balance\tas\tof\t2018\tyear\tend | $(177.9) | $12.2 | $(296.5) | $(462.2) |

The	reclassifications	out	of	Accumulated	OCI	in	2018	and	2017	are	as	follows:

|  | Amounts	Reclassified	from<br>Accumulated	OCI | Amounts	Reclassified	from<br>Accumulated	OCI | Statement	of	Earnings<br>Presentation |
| :--- | :--- | :--- | :--- |
| (Amounts\tin\tmillions) | 2018 | 2017 |  |
| Gains\ton\tcash\tflow\thedges: |  |  |  |
| Treasury\tlocks | $1.5 | $1.6 | Interest\texpense |
| Income\ttax\texpense | — | — | Income\ttax\texpense |
| Net\tof\ttax | 1.5 | 1.6 |  |
| Amortization\tof\tnet\tunrecognized\tlosses\tand\tprior\tservice\tcredits | (31.1) | (26.6) | See\tfootnote\tbelow* |
| Income\ttax\tbenefit | 7.6 | 9.4 | Income\ttax\texpense |
| Net\tof\ttax | (23.5) | (17.2) |  |
| Total\treclassifications\tfor\tthe\tperiod,\tnet\tof\ttax | $(22.0) | $(15.6) |  |

*	These	Accumulated	OCI	components	are	included	in	the	computation	of	net	periodic	pension	and	postretirement	health	care	costs;	See	Note	12	and	Note	13	for	further	information.

# Note	19:	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	are:	(i)	the	Commercial	&	Industrial	Group;	(ii)	the	Snap-on	Tools	Group;	(iii)	the	Repair	Systems	&	Information	Group;	and (iv)	Financial	Services.	The	Commercial	&	Industrial	Group	consists	of	business	operations	serving	a	broad	range	of	industrial	and	commercial	customers	worldwide, including	customers	in	the	aerospace,	natural	resources,	government,	power	generation,	transportation	and	technical	education	market	segments	(collectively,	"critical industries"),	primarily	through	direct	and	distributor	channels.	The	Snap-on	Tools	Group	consists	of	business	operations	primarily	serving	vehicle	service	and	repair technicians	through	the	company's	worldwide	mobile	tool	distribution	channel.	The	Repair	Systems	&	Information	Group	consists	of	business	operations	serving	other professional	vehicle	repair	customers	worldwide,	primarily	owners	and	managers	of	independent	repair	shops	and	OEM	dealership	service	and	repair	shops	("OEM dealerships"),	through	direct	and	distributor	channels.	Financial	Services	consists	of	the	business	operations	of	Snap-on's	finance	subsidiaries.

Snap-on	evaluates	the	performance	of	its	operating	segments	based	on	segment	revenues,	including	both	external	and	intersegment	net	sales,	and	segment	operating earnings.	 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.	Corporate	assets	consist	of	cash	and	cash	equivalents	(excluding cash	held	at	Financial	Services),	deferred	income	taxes	and	certain	other	assets.	Intersegment	amounts	are	eliminated	to	arrive	at	Snap-on's	consolidated	financial results.	See	Note	1	for	additional	information	on	the	retrospective	adoption	of	ASU	No.	2017-07	for	full	year	2017	and	2016.

Neither	Snap-on	nor	any	of	its	segments	depend	on	any	single	customer,	small	group	of	customers	or	government	for	more	than	10%	of	its	revenues.

# Financial	Data	by	Segment:

# Financial	Data	by	Segment	(continued):

| (Amounts	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Capital\texpenditures: |  |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $21.5 | $22.6 | $19.3 |
| Snap-on\tTools\tGroup | 46.0 | 40.1 | 38.3 |
| Repair\tSystems\t&amp;\tInformation\tGroup | 19.7 | 13.4 | 13.1 |
| Financial\tServices | 0.5 | 1.2 | 0.6 |
| Total\tfrom\treportable\tsegments | 87.7 | 77.3 | 71.3 |
| Corporate | 3.2 | 4.7 | 3.0 |
| Total\tcapital\texpenditures | $90.9 | $82.0 | $74.3 |
| Depreciation\tand\tamortization: |  |  |  |
| Commercial\t&amp;\tIndustrial\tGroup | $23.6 | $22.8 | $20.7 |
| Snap-on\tTools\tGroup | 29.9 | 29.1 | 27.6 |
| Repair\tSystems\t&amp;\tInformation\tGroup | 36.7 | 37.8 | 33.9 |
| Financial\tServices | 0.8 | 0.6 | 0.6 |
| Total\tfrom\treportable\tsegments | 91.0 | 90.3 | 82.8 |
| Corporate | 3.1 | 2.9 | 2.8 |
| Total\tdepreciation\tand\tamortization | $94.1 | $93.2 | $85.6 |
| Revenues\tby\tgeographic\tregion:* |  |  |  |
| United\tStates | $2,727.9 | $2,703.3 | $2,588.8 |
| Europe | 784.7 | 748.8 | 654.4 |
| All\tother | 557.8 | 548.2 | 468.6 |
| Total\trevenues | $4,070.4 | $4,000.3 | $3,711.8 |

*	Revenues	are	attributed	to	countries	based	on	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,	information	and	management	systems;	and	(iii)	equipment.	The	tools	product	category	includes	hand	tools,	power	tools,	tool	storage	products	and	other similar	products.	The	diagnostics,	information	and	management	systems	product	category	includes	handheld	and	PC-based	diagnostic	products,	service	and	repair information	products,	diagnostic	software	solutions,	electronic	parts	catalogs,	business	management	systems	and	services,	point-of-sale	systems,	integrated	systems	for vehicle	service	shops,	OEM	purchasing	facilitation	services,	and	warranty	management	systems	and	analytics	to	help	OEM	dealerships	manage	and	track	performance. The	equipment	product	category	includes	solutions	for	the	service	of	vehicles	and	industrial	equipment.	Snap-on	supports	the	sale	of	its	diagnostics	and	vehicle	service shop	equipment	by	offering	training	programs	as	well	as	after-sales	service	support	to	its	customers.	Through	its	financial	services	businesses,	Snap-on	also	derives revenue	from	various	financing	programs	designed	to	facilitate	the	sales	of	its	products	and	support	its	franchise	business.	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) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tsales: |  |  |  |
| Tools | $2,021.2 | $1,946.7 | $1,899.2 |
| Diagnostics,\tinformation\tand\tmanagement\tsystems | 797.9 | 800.4 | 748.2 |
| Equipment | 921.6 | 939.8 | 783.0 |
| Total\tnet\tsales | 3,740.7 | 3,686.9 | 3,430.4 |
| Financial\tservices\trevenue | 329.7 | 313.4 | 281.4 |
| Total\trevenues | $4,070.4 | $4,000.3 | $3,711.8 |

# Note	20:	Quarterly	Data	(unaudited)

# SIGNATURES

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.

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.

| By: | /s/	David	C.	Adams | Date: | February	14,	2019 |
| :--- | :--- | :--- | :--- |
|  | David\tC.\tAdams,\tDirector |  |  |
| By: | /s/\tKaren\tL.\tDaniel | Date: | February\t14,\t2019 |
|  | Karen\tL.\tDaniel,\tDirector |  |  |
| By: | /s/\tRuth\tAnn\tM.\tGillis | Date: | February\t14,\t2019 |
|  | Ruth\tAnn\tM.\tGillis,\tDirector |  |  |
| By: | /s/\tJames\tP.\tHolden | Date: | February\t14,\t2019 |
|  | James\tP.\tHolden,\tDirector |  |  |
| By: | /s/\tNathan\tJ.\tJones | Date: | February\t14,\t2019 |
|  | Nathan\tJ.\tJones,\tDirector |  |  |
| By: | /s/\tHenry\tW.\tKnueppel | Date: | February\t14,\t2019 |
|  | Henry\tW.\tKnueppel,\tDirector |  |  |
| By: | /s/\tW.\tDudley\tLehman | Date: | February\t14,\t2019 |
|  | W.\tDudley\tLehman,\tDirector |  |  |
| By: | /s/\tNicholas\tT.\tPinchuk | Date: | February\t14,\t2019 |
|  | Nicholas\tT.\tPinchuk,\tDirector |  |  |
| By: | /s/\tGregg\tM.\tSherrill | Date: | February\t14,\t2019 |

Donald	J.	Stebbins,	Director



Question: for the quarter ended 12/29/2018 what was the percent of the total shares bought after 11/25/2018
Calculation: shares_repurchased = 205000
shares_total = 630000
percent_repurchased = shares_repurchased / shares_total
answer = percent_repurchased * 100
Answer: 32.5%