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Income Taxes (Tables)

12 Months Ended

Dec. 28, 2013

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)		2013				2012				2011
United States		$	406.7			$	365.2			$	335.5
Foreign			119.5				95.0				77.4
Total		$	526.2			$	460.2			$	412.9

Components of Income Tax

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

(Amounts in millions)		2013				2012				2011
Current:
Federal		$	115.5			$	80.3			$	88.4
Foreign			27.6				26.1				26.0
State			14.1				12.5				14.2
Total current			157.2				118.9				128.6
Deferred:
Federal			6.9				32.7				8.4
Foreign			2.0				(8.2)				(0.8)
State			0.6				4.8				(2.5)
Total deferred			9.5				29.3				5.1
Total income tax provision		$	166.7			$	148.2			$	133.7

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:

		2013				2012				2011
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			2.1				2.5				2.7
Noncontrolling interests			(0.6)				(0.6)				(0.6)
Repatriation of foreign earnings			–				(1.3)				(1.9)
Change in valuation allowance for deferred tax assets			0.7				1.0				(0.1)
Adjustments to tax accruals and reserves			(1.3)				(1.7)				0.2
Foreign rate differences			(1.7)				(1.5)				(1.6)
Domestic production activities deduction			(2.7)				(1.6)				(0.1)
Other			0.2				0.4				(1.2)
Effective tax rate			31.7%				32.2%				32.4%

Schedule of Deferred Tax Assets and Liabilities

Temporary differences that give rise to the net deferred income tax asset (liability) as of 2013, 2012 and 2011 year end are as follows:
(Amounts in millions)		2013				2012				2011
Current deferred income tax assets (liabilities):
Inventories		$	24.4			$	25.0			$	24.2
Accruals not currently deductible			63.2				60.4				73.4
Valuation allowance			(2.4)				(3.7)				(5.6)
Total current (included in deferred income tax assets and other accrued liabilities)			85.2				81.7				92.0
Long-term deferred income tax assets (liabilities):
Employee benefits			62.5				108.1				133.9
Net operating losses			59.9				59.2				52.2
Depreciation and amortization			(180.8)				(161.4)				(150.4)
Valuation allowance			(43.0)				(40.2)				(34.8)
Equity-based compensation			17.6				17.1				14.8
Other			(2.9)				0.4				1.4
Total long term			(86.7)				(16.8)				17.1
Net deferred income tax asset (liability)		$	(1.5)			$	64.9			$	109.1

Operating Loss Carry Forwards

As of 2013 year end, Snap-on had tax net operating loss carryforwards totaling $328.6 million as follows:

(Amounts in millions)		State				United States				Foreign				Total
Year of expiration:
2014-2018		$	–			$	–			$	31.5			$	31.5
2019-2023			0.1				–				1.4				1.5
2024-2028			0.1				–				36.6				36.7
2029-2033			144.3				–				15.0				159.3
Indefinite			–				–				99.6				99.6
Total net operating loss carryforwards		$	144.5			$	–			$	184.1			$	328.6

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2013, 2012 and 2011:

(Amounts in millions)		2013				2012				2011
Unrecognized tax benefits at beginning of year		$	6.8			$	11.0			$	11.1
Gross increases – tax positions in prior periods			1.5				0.7				0.5
Gross decreases – tax positions in prior periods			(1.6)				(4.9)				(0.4)
Gross increases – tax positions in the current period			0.5				1.2				2.8
Settlements with taxing authorities			(2.1)				–				(1.2)
Lapsing of statutes of limitations			(0.5)				(1.2)				(1.8)
Unrecognized tax benefits at end of year		$	4.6			$	6.8			$	11.0

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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