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Income Taxes (Tables)

12 Months Ended

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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