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Income Taxes (Tables)

12 Months Ended

Jan. 03, 2015

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)		2014				2013				2012
United States		$	481.1			$	406.7			$	365.2
Foreign			149.8				119.5				95.0
Total		$	630.9			$	526.2			$	460.2

Components of Income Tax

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

(Amounts in millions)		2014				2013				2012
Current:
Federal		$	137.6			$	115.5			$	80.3
Foreign			41.2				27.6				26.1
State			17.5				14.1				12.5
Total current			196.3				157.2				118.9
Deferred:
Federal			10.0				6.9				32.7
Foreign			(8.2)				2.0				(8.2)
State			1.4				0.6				4.8
Total deferred			3.2				9.5				29.3
Total income tax provision		$	199.5			$	166.7			$	148.2

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:

		2014				2013				2012
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			2.2				2.1				2.5
Noncontrolling interests			(0.5)				(0.6)				(0.6)
Repatriation of foreign earnings			(0.4)				–				(1.3)
Change in valuation allowance for deferred tax assets			(0.9)				0.7				1.0
Adjustments to tax accruals and reserves			0.5				(1.3)				(1.7)
Foreign rate differences			(2.2)				(1.7)				(1.5)
Domestic production activities deduction			(2.0)				(2.7)				(1.6)
Other			(0.1)				0.2				0.4
Effective tax rate			31.6%				31.7%				32.2%

Schedule of Deferred Tax Assets and Liabilities

Temporary differences that give rise to the net deferred income tax asset (liability) as of 2014, 2013 and 2012 year end are as follows:

(Amounts in millions)		2014				2013				2012
Current deferred income tax assets (liabilities):
Inventories		$	29.2			$	24.4			$	25.0
Accruals not currently deductible			72.7				63.2				60.4
Valuation allowance			(1.1)				(2.4)				(3.7)
Total current (included in deferred income tax assets and other accrued liabilities)			100.8				85.2				81.7
Long-term deferred income tax assets (liabilities):
Employee benefits			91.5				62.5				108.1
Net operating losses			53.5				59.9				59.2
Depreciation and amortization			(191.2)				(180.8)				(161.4)
Valuation allowance			(33.7)				(43.0)				(40.2)
Equity-based compensation			19.6				17.6				17.1
Other			(5.7)				(2.9)				0.4
Total long term			(66.0)				(86.7)				(16.8)
Net deferred income tax asset (liability)		$	34.8			$	(1.5)			$	64.9

Operating Loss Carry Forwards

As of 2014 year end, Snap-on had tax net operating loss carryforwards totaling $305.3 million as follows:

(Amounts in millions)		State				United States				Foreign				Total
Year of expiration:
2015 – 2019		$	–			$	–			$	32.6			$	32.6
2020 – 2024			0.3				–				13.7				14.0
2025 – 2029			–				–				21.1				21.1
2030 – 2034			142.8				–				14.3				157.1
Indefinite			–				–				80.5				80.5
Total net operating loss carryforwards		$	143.1			$	–			$	162.2			$	305.3

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2014, 2013 and 2012:

(Amounts in millions)		2014				2013				2012
Unrecognized tax benefits at beginning of year		$	4.6			$	6.8			$	11.0
Gross increases – tax positions in prior periods			2.1				1.5				0.7
Gross decreases – tax positions in prior periods			–				(1.6)				(4.9)
Gross increases – tax positions in the current period			1.8				0.5				1.2
Settlements with taxing authorities			(1.6)				(2.1)				–
Lapsing of statutes of limitations			(0.5)				(0.5)				(1.2)
Unrecognized tax benefits at end of year		$	6.4			$	4.6			$	6.8

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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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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