Snap-on’s business segments are based on the organization structure used by management
for making operating and investment decisions and for assessing performance. Snap-on’s
reportable business segments include: (1) the Snap-on Dealer Group, (2) the Commercial
and Industrial Group, and (3) the Diagnostics and Information Group. The Snap-on
Dealer Group consists of Snap-on’s business operations serving the worldwide franchised
dealer van channel. The Commercial and Industrial Group consists of the business
operations providing tools and equipment products to a broad range of industrial
and commercial customers worldwide through direct, distributor and other non-franchised
distribution channels. The Diagnostics and Information Group consists of the business
operations providing diagnostics equipment, vehicle service information, business
management systems, equipment repair services and other solutions for customers
in the worldwide vehicle service and repair marketplace.
Products and Services
Snap-on’s business segments offer a broad line of products and complementary
services that are grouped into two categories, tools and equipment, described
below. Further product line information is not presented, as it is not practicable
to do so.
The tools product category is comprised of hand tools, power tools and tool
storage products. Hand tools include wrenches, screwdrivers, sockets, pliers,
ratchets, saws and cutting tools, pruning tools and other similar products.
Power tools include pneumatic (air), cordless (battery) and corded (electric)
tools such as impact wrenches, ratchets, chisels, drills, sanders, polishers
and similar products. Tool storage units include tool chests, roll cabinets
and other similar products. The majority of products are manufactured by Snap-on,
and in completing the product line, some items are purchased from external manufacturers.
The equipment product category is comprised of solutions for the diagnosis
and service of automotive and industrial equipment. Products include engine
analyzers, air conditioning service equipment, brake service equipment, fluid
exchange equipment, wheel balancing and alignment equipment, transmission troubleshooting
equipment, safety testing equipment, battery chargers, lifts and hoists, diagnostics
equipment, service and collision repair equipment. Also included are service
and repair information products, diagnostic services, business management systems,
point-of-sale systems, integrated systems for vehicle service shops, equipment
repair services and purchasing facilitation services. Snap-on supports the sale
of its diagnostics and vehicle service shop equipment by offering training programs
for its customers, primarily focusing on the technologies and the application
of specific products developed and marketed by Snap-on.
Snap-on also derives income from financing its products through a 50%-owned
financial services joint venture and through Snap-on’s wholly owned credit subsidiaries.
Snap-on utilizes various financing programs to facilitate the sales of its products.
Snap-on established a joint venture in January 1999 with Newcourt Financial
USA Inc., now The CIT Group, Inc. (“CIT”). The joint venture, Snap-on Credit
LLC (“SOC”), is a 50%-owned joint venture that provides financial services to
Snap-on’s U.S. dealer and customer network and to Snap-on’s industrial and other
customers.
SOC originates loans primarily in three ways. First, extended-term contracts
are offered to technicians to enable them to purchase tools and equipment on
an extended-term payment plan, generally with an average term of 32 months.
Second, lease financing is offered to shop owners and managers, both independent
and national chains, who purchase equipment items. The duration of lease contracts
is often two to five years. Third, financing options are also available to dealers
to meet a number of financing needs, including van and truck leases, working
capital loans, and loans to enable new dealers to fund the purchase of the franchise.
The duration of these contracts can be up to 10 years. The above contracts are
generally secured by the underlying tools or equipment financed and other dealer
assets.
Currently, the majority of finance income is derived from the vehicle service
industry in North America. Internationally, Snap-on continues to provide financing
directly to its dealer and customer networks through its wholly owned credit
subsidiaries.