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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2016
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) |  | 2016 |  |  | 2015 |  |  | 2014 |
United States |  | $ | 644.0 |  |  | $ | 578.4 |  |  | $ | 481.1 |
Foreign |  |  | 157.4 |  |  |  | 132.1 |  |  |  | 149.8 |
Total |  | $ | 801.4 |  |  | $ | 710.5 |  |  | $ | 630.9 |
Components of Income Tax | The provision (benefit) for income taxes consisted of the following:
(Amounts in millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | $ 175.9 |  |  |  | $ 165.8 |  |  |  | $ 137.6 |
Foreign |  |  | 39.9 |  |  |  | 40.8 |  |  |  | 41.2 |
State |  |  | 27.2 |  |  |  | 19.7 |  |  |  | 17.5 |
Total current |  |  | 243.0 |  |  |  | 226.3 |  |  |  | 196.3 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 6.3 |  |  |  | (8.7) |  |  |  | 10.0 |
Foreign |  |  | (6.7) |  |  |  | 3.9 |  |  |  | (8.2) |
State |  |  | 1.7 |  |  |  | (0.3) |  |  |  | 1.4 |
Total deferred |  |  | 1.3 |  |  |  | (5.1) |  |  |  | 3.2 |
Total income tax provision |  |  | $ 244.3 |  |  |  | $ 221.2 |  |  |  | $ 199.5 |
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: |
|  | 2016 |  |  | 2015 |  |  | 2014 |
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 |  |  |  | 2.3 |  |  |  | 2.2 |
Noncontrolling interests |  |  | (0.6) |  |  |  | (0.6) |  |  |  | (0.5) |
Repatriation of foreign earnings |  |  | (0.1) |  |  |  | (3.0) |  |  |  | (0.4) |
Change in valuation allowance for deferred tax assets |  |  | (1.0) |  |  |  | 0.1 |  |  |  | (0.9) |
Adjustments to tax accruals and reserves |  |  | 0.3 |  |  |  | 0.8 |  |  |  | 0.5 |
Foreign rate differences |  |  | (2.1) |  |  |  | (1.9) |  |  |  | (2.2) |
Domestic production activities deduction |  |  | (1.9) |  |  |  | (1.9) |  |  |  | (2.0) |
Excess tax benefits related to equity compensation |  |  | (1.8) |  |  |  | – |  |  |  | – |
Other |  |  | 0.3 |  |  |  | 0.3 |  |  |  | (0.1) |
Effective tax rate |  |  | 30.5% |  |  |  | 31.1% |  |  |  | 31.6%
Schedule of Deferred Tax Assets and Liabilities | Temporary differences that give rise to the net deferred income tax asset (liability) as of 2016, 2015 and 2014 year end are as follows:
(Amounts in millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Long-term deferred income tax assets (liabilities): |  |  |  |  |  |  |  |  |  |  |  |
Inventories |  |  | $ 33.3 |  |  |  | $ 29.4 |  |  |  | $ 29.2 |
Accruals not currently deductible |  |  | 77.7 |  |  |  | 71.1 |  |  |  | 72.7 |
Tax credit carryforward |  |  | 15.1 |  |  |  | 10.2 |  |  |  | – |
Employee benefits |  |  | 108.1 |  |  |  | 101.2 |  |  |  | 91.5 |
Net operating losses |  |  | 42.8 |  |  |  | 44.4 |  |  |  | 53.5 |
Depreciation and amortization |  |  | (209.8) |  |  |  | (199.3) |  |  |  | (191.2) |
Valuation allowance |  |  | (21.7) |  |  |  | (32.0) |  |  |  | (34.8) |
Equity-based compensation |  |  | 24.3 |  |  |  | 22.7 |  |  |  | 19.6 |
Cash flow hedge |  |  | (5.5) |  |  |  | – |  |  |  | – |
Other |  |  | (4.6) |  |  |  | (1.6) |  |  |  | (5.7) |
Net deferred income tax asset |  |  | $ 59.7 |  |  |  | $ 46.1 |  |  |  | $ 34.8 |
Operating Loss Carry Forwards | As of 2016 year end, Snap-on had tax net operating loss carryforwards totaling $253.8 million as follows:
(Amounts in millions) |  | State |  |  | Federal |  |  | Foreign |  |  | Total |
Year of expiration: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2017-2021 |  |  | $ – |  |  |  | $ – |  |  |  | $ 37.6 |  |  |  | $ 37.6 |
2022-2026 |  |  | 0.3 |  |  |  | – |  |  |  | 6.5 |  |  |  | 6.8 |
2027-2031 |  |  | 122.1 |  |  |  | – |  |  |  | 37.6 |  |  |  | 159.7 |
2032-2036 |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Indefinite |  |  | – |  |  |  | – |  |  |  | 49.7 |  |  |  | 49.7 |
Total net operating loss carryforwards |  |  | $ 122.4 |  |  |  | $ – |  |  |  | $ 131.4 |  |  |  | $ 253.8 |
Reconciliation of Unrecognized Tax Benefits | The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2016, 2015 and 2014:
(Amounts in millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Unrecognized tax benefits at beginning of year |  |  | $ 7.2 |  |  |  | $ 6.4 |  |  |  | $ 4.6 |
Gross increases – tax positions in prior periods |  |  | 2.5 |  |  |  | 1.7 |  |  |  | 2.1 |
Gross decreases – tax positions in prior periods |  |  | (0.3) |  |  |  | (0.5) |  |  |  | – |
Gross increases – tax positions in the current period |  |  | 0.5 |  |  |  | 0.5 |  |  |  | 1.8 |
Settlements with taxing authorities |  |  | – |  |  |  | – |  |  |  | (1.6) |
Lapsing of statutes of limitations |  |  | (0.5) |  |  |  | (0.9) |  |  |  | (0.5) |
Unrecognized tax benefits at end of year |  |  | $ 9.4 |  |  |  | $ 7.2 |  |  |  | $ 6.4 |

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