Income Taxes (Tables)

12 Months Ended

Dec. 30, 2017

Income Tax Disclosure [Abstract]

Earnings Before Income Taxes and Equity Earnings

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

(Amounts in millions)	2017		2016		2015
United States	$	645.5	$	644.0	$	578.4
Foreign		176.4		157.4		132.1
Total	$	821.9	$	801.4	$	710.5

Components of Income Tax

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

(Amounts in millions)	2017		2016		2015
Current:
Federal	$	166.9	$	175.9	$	165.8
Foreign		41.1		39.9		40.8
State		30.6		27.2		19.7
Total current		238.6		243.0		226.3
Deferred:
Federal		8.7		6.3		(8.7)
Foreign		2.9		(6.7)		3.9
State		0.7		1.7		(0.3)
Total deferred		12.3		1.3		(5.1)
Total income tax provision	$	250.9	$	244.3	$	221.2

Reconciliation of Statutory Federal Income Tax Rate

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

	2017		2016		2015
Statutory federal income tax rate		35.0%		35.0%		35.0%
Increase (decrease) in tax rate resulting from:
State income taxes, net of federal benefit		2.4		2.4		2.3
Noncontrolling interests		(0.6)		(0.6)		(0.6)
Repatriation of foreign earnings		(1.2)		(0.1)		(3.0)
Change in valuation allowance for deferred tax assets		0.1		(1.0)		0.1
Adjustments to tax accruals and reserves		(0.3)		0.3		0.8
Foreign rate differences		(2.4)		(2.1)		(1.9)
Domestic production activities deduction		(2.1)		(1.9)		(1.9)
Excess tax benefits related to equity compensation		(1.4)		(1.8)		–
U.S. tax reform, net impact		0.9		–		–
Other		0.1		0.3		0.3
Effective tax rate		30.5%		30.5%		31.1%

Schedule of Deferred Tax Assets and Liabilities

Temporary differences that give rise to the net deferred income tax asset (liability) as of 2017, 2016 and 2015 year end are as follows:

(Amounts in millions)	2017		2016		2015
Long-term deferred income tax assets (liabilities):
Inventories		$    28.8		$33.3		$29.4
Accruals not currently deductible		61.7		77.7		71.1
Tax credit carryforward		2.1		15.1		10.2
Employee benefits		56.8		108.1		101.2
Net operating losses		44.0		42.8		44.4
Depreciation and amortization		(161.3)		(209.8)		(199.3)
Valuation allowance		(25.2)		(21.7)		(32.0)
Equity-based compensation		17.1		24.3		22.7
Cash flow hedge		(0.3)		(5.5)		–
Other		(0.1)		(4.6)		(1.6)
Net deferred income tax asset		$    23.6		$    59.7		$    46.1

Operating Loss Carry Forwards

As of 2017 year end, Snap-on had tax net operating loss carryforwards totaling $240.3 million as follows:

(Amounts in millions)	State		Federal		Foreign		Total
Year of expiration:
2018-2022		$      0.1		$    –		$    45.8		$      45.9
2023-2027		0.2		–		8.0		8.2
2028-2032		107.1		–		38.1		145.2
2033-2037		–		–		–		–
Indefinite		–		–		41.0		41.0
Total net operating loss carryforwards		$      107.4		$    –		$    132.9		$    240.3

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2017, 2016 and 2015:

(Amounts in millions)	2017		2016		2015
Unrecognized tax benefits at beginning of year		$    9.4		$    7.2		$    6.4
Gross increases – tax positions in prior periods		1.4		2.5		1.7
Gross decreases – tax positions in prior periods		–		(0.3)		(0.5)
Gross increases – tax positions in the current period		1.0		0.5		0.5
Settlements with taxing authorities		(3.6)		–		–
Lapsing of statutes of limitations		(0.5)		(0.5)		(0.9)
Unrecognized tax benefits at end of year		$    7.7		$    9.4		$    7.2