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Receivables | 12 Months Ended
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Dec. 29, 2012
Receivables | Note 3: Receivables Trade and Other Accounts Receivable Snap-on’s trade and other accounts receivable primarily arise from the sale of tools, diagnostics and equipment to a broad range of industrial and commercial customers and to Snap-on’s independent franchise van channel on a non-extended-term basis with payment terms generally ranging from 30 to 120 days. The components of Snap-on’s trade and other accounts receivable as of 2012 and 2011 year end are as follows:
(Amounts in millions) |  | 2012 |  |  | 2011 |
Trade and other accounts receivable |  | $ | 516.9 |  |  | $ | 485.5 |
Allowances for doubtful accounts |  |  | (19.0) |  |  |  | (22.0) |
Total trade and other accounts receivable – net |  | $ | 497.9 |  |  | $ | 463.5 |
Finance and Contract Receivables SOC originates extended-term finance and contract receivables on sales of Snap-on product sold through the U.S. franchisee and customer network and to Snap-on’s industrial and other customers; Snap-on’s foreign finance subsidiaries provide similar financing internationally. Interest income on finance and contract receivables is included in “Financial services revenue” on the accompanying Consolidated Statements of Earnings. Snap-on’s finance receivables are comprised of extended-term installment loans to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics and equipment on an extended-term payment plan, generally with average payment terms of 32 months. Contract receivables, with payment terms of up to 10 years, are comprised of extended-term installment loans to a broad base of industrial and other customers worldwide, including shop owners, both independents and national chains, for their purchase of tools, diagnostics and equipment. Contract receivables also include extended-term installment loans to franchisees to meet a number of financing needs including van and truck leases, working capital loans, and loans to enable new franchisees to fund the purchase of the franchise. Finance and contract receivables are generally secured by the underlying tools, diagnostics or equipment financed and, for installment loans to franchisees, other franchisee assets. Snap-on did not purchase or sell any finance or contract receivables during 2012, 2011 or 2010. The components of Snap-on’s current finance and contract receivables as of 2012 and 2011 year end are as follows:
(Amounts in millions) |  | 2012 |  |  | 2011 |
Finance receivables, net of unearned finance charges of $8.4 million and $7.6 million, respectively |  | $ | 331.7 |  |  | $ | 285.3 |
Contract receivables, net of unearned finance charges of $9.3 million and $9.1 million, respectively |  |  | 63.7 |  |  |  | 51.2 |
Total |  |  | 395.4 |  |  |  | 336.5 |
Allowances for doubtful accounts: |  |  |  |  |  |  |  |
Finance receivables |  |  | (8.6) |  |  |  | (8.1) |
Contract receivables |  |  | (1.0) |  |  |  | (1.5) |
Total |  |  | (9.6) |  |  |  | (9.6) |
Total current finance and contract receivables – net |  | $ | 385.8 |  |  | $ | 326.9 |
Finance receivables – net |  | $ | 323.1 |  |  | $ | 277.2 |
Contract receivables – net |  |  | 62.7 |  |  |  | 49.7 |
Total current finance and contract receivables – net |  | $ | 385.8 |  |  | $ | 326.9 |
The components of Snap-on’s finance and contract receivables with payment terms beyond one year as of 2012 and 2011 year end are as follows:
(Amounts in millions) |  | 2012 |  |  | 2011 |
Finance receivables, net of unearned finance charges of $11.8 million and $9.4 million, respectively |  | $ | 512.5 |  |  | $ | 447.9 |
Contract receivables, net of unearned finance charges of $18.1 million and $12.1 million, respectively |  |  | 196.6 |  |  |  | 167.7 |
Total |  |  | 709.1 |  |  |  | 615.6 |
Allowances for doubtful accounts: |  |  |  |  |  |  |  |
Finance receivables |  |  | (17.9) |  |  |  | (16.1) |
Contract receivables |  |  | (2.2) |  |  |  | (2.6) |
Total |  |  | (20.1) |  |  |  | (18.7) |
Total long-term finance and contract receivables – net |  | $ | 689.0 |  |  | $ | 596.9 |
Finance receivables – net |  | $ | 494.6 |  |  | $ | 431.8 |
Contract receivables – net |  |  | 194.4 |  |  |  | 165.1 |
Total long-term finance and contract receivables – net |  | $ | 689.0 |  |  | $ | 596.9 |
Long-term finance and contract receivables installments, net of unearned finance charges, as of 2012 and 2011 year end are scheduled as follows:
(Amounts in millions) |  | 2012 |  |  | 2011 |
| Finance Receivables |  |  | Contract Receivables |  |  | Finance Receivables |  |  | Contract Receivables |
Due in Months: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
13 – 24 |  | $ | 261.1 |  |  | $ | 54.6 |  |  | $ | 223.8 |  |  | $ | 44.9 |
25 – 36 |  |  | 160.1 |  |  |  | 45.4 |  |  |  | 141.9 |  |  |  | 37.0 |
37 – 48 |  |  | 65.1 |  |  |  | 32.4 |  |  |  | 59.2 |  |  |  | 28.6 |
49 – 60 |  |  | 25.5 |  |  |  | 21.4 |  |  |  | 22.4 |  |  |  | 18.6 |
Thereafter |  |  | 0.7 |  |  |  | 42.8 |  |  |  | 0.6 |  |  |  | 38.6 |
Total |  | $ | 512.5 |  |  | $ | 196.6 |  |  | $ | 447.9 |  |  | $ | 167.7 |
Delinquency is the primary indicator of credit quality for finance and contract receivables. Receivable balances are considered delinquent when contractual payments on the loans become 30 days past due. Finance receivables are generally placed on nonaccrual status (nonaccrual of interest and other fees) (i) when a customer is placed on repossession status; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer; or (iv) in other instances in which management concludes collectability is not reasonably assured. Finance receivables that are considered nonperforming include receivables that are on nonaccrual status and receivables that are generally more than 90 days past due. Contract receivables are generally placed on nonaccrual status (i) when a receivable is more than 90 days past due or at the point a customer’s account is placed on terminated status regardless of its delinquency status; (ii) upon notification of the death of a customer; or (iii) in other instances in which management concludes collectability is not reasonably assured. Contract receivables that are considered nonperforming include receivables that are on nonaccrual status and receivables that are generally more than 90 days past due. The accrual of interest and other fees is resumed when the finance or contract receivable becomes contractually current and collection of all remaining contractual amounts due is reasonably assured. Finance and contract receivables are evaluated for impairment on a collective basis; however, in circumstances where the company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. A receivable is impaired when it is probable that all amounts related to the receivable will not be collected according to the contractual terms of the loan agreement. Impaired receivables are covered by the company’s finance and contract allowances for doubtful accounts reserves and are charged-off against the reserves when appropriate. As of 2012 and 2011 year end, there were $13.4 million and $11.5 million, respectively, of impaired finance receivables, and there were $0.9 million and $0.7 million, respectively, of impaired contract receivables. The aging of finance and contract receivables as of 2012 and 2011 year end is as follows:
(Amounts in millions) |  | 30-59 Days Past Due |  |  | 60-90 Days Past Due |  |  | Greater Than 90 Days Past Due |  |  | Total Past Due |  |  | Total Not Past Due |  |  | Total |  |  | Greater Than 90 Days Past Due and Accruing |
2012 year end: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance receivables |  | $ | 9.2 |  |  | $ | 5.5 |  |  | $ | 8.4 |  |  | $ | 23.1 |  |  | $ | 821.1 |  |  | $ | 844.2 |  |  | $ | 6.2 |
Contract receivables |  |  | 1.3 |  |  |  | 0.6 |  |  |  | 1.0 |  |  |  | 2.9 |  |  |  | 257.4 |  |  |  | 260.3 |  |  |  | 0.3 |
2011 year end: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance receivables |  | $ | 8.0 |  |  | $ | 3.0 |  |  | $ | 6.6 |  |  | $ | 17.6 |  |  | $ | 715.6 |  |  | $ | 733.2 |  |  | $ | 4.8 |
Contract receivables |  |  | 0.9 |  |  |  | 0.4 |  |  |  | 0.6 |  |  |  | 1.9 |  |  |  | 217.0 |  |  |  | 218.9 |  |  |  | 0.2 |
The amount of performing and nonperforming finance and contract receivables based on payment activity as of 2012 and 2011 year end is as follows:
|  | 2012 |  |  | 2011 |
(Amounts in millions) |  | Finance Receivables |  |  | Contract Receivables |  |  | Finance Receivables |  |  | Contract Receivables |
Performing |  | $ | 830.8 |  |  | $ | 259.4 |  |  | $ | 721.7 |  |  | $ | 218.2 |
Nonperforming |  |  | 13.4 |  |  |  | 0.9 |  |  |  | 11.5 |  |  |  | 0.7 |
Total |  | $ | 844.2 |  |  | $ | 260.3 |  |  | $ | 733.2 |  |  | $ | 218.9 |
The amount of finance and contract receivables on nonaccrual status as of 2012 and 2011 year end is as follows:
(Amounts in millions) |  | 2012 |  |  | 2011 |
Finance receivables |  | $ | 7.2 |  |  | $ | 6.8 |
Contract receivables |  |  | 0.9 |  |  |  | 0.7 |
The following is a rollforward of the allowances for credit losses for finance and contract receivables for 2012 and 2011:
|  | 2012 |  |  | 2011 |
(Amounts in millions) |  | Finance Receivables |  |  | Contract Receivables |  |  | Finance Receivables |  |  | Contract Receivables |
Allowances for doubtful accounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year |  | $ | 24.2 |  |  | $ | 4.1 |  |  | $ | 21.5 |  |  | $ | 4.0 |
Provision for bad debt expense |  |  | 18.7 |  |  |  | 0.5 |  |  |  | 13.3 |  |  |  | 0.8 |
Charge-offs |  |  | (20.6) |  |  |  | (1.7) |  |  |  | (14.3) |  |  |  | (1.5) |
Recoveries |  |  | 4.2 |  |  |  | 0.3 |  |  |  | 3.8 |  |  |  | 0.8 |
Currency translation |  |  | – |  |  |  | – |  |  |  | (0.1) |  |  |  | – |
End of year |  | $ | 26.5 |  |  | $ | 3.2 |  |  | $ | 24.2 |  |  | $ | 4.1 |
The following is a rollforward of the combined allowances for doubtful accounts related to trade and other accounts receivable, as well as finance and contract receivables for 2012, 2011 and 2010:
(Amounts in millions) |  | Balance at Beginning of Year |  |  | Expenses |  |  | Deductions (1) |  |  | Balance at End of Year |
Allowances for doubtful accounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2012 |  | $ | 50.3 |  |  | $ | 31.3 |  |  | $ | (32.9) |  |  | $ | 48.7 |
2011 |  |  | 52.5 |  |  |  | 26.2 |  |  |  | (28.4) |  |  |  | 50.3 |
2010 |  |  | 40.6 |  |  |  | 34.4 |  |  |  | (22.5) |  |  |  | 52.5 |
(1) | Represents write-offs of bad debts, net of recoveries, and the net impact of currency translation.
The increase in the allowances for doubtful accounts over beginning-of-year 2010 levels primarily reflects the building of allowances as a result of the growth of the on-book finance portfolio at SOC following the July 2009 termination of the company’s financial services joint venture with CIT. Prior to the termination of the financial services joint venture with CIT, SOC sold substantially all new finance and contract loan originations to CIT on a limited recourse basis and SOC retained the right to service such loans for a contractual servicing fee. As of 2012 year end, the remaining portfolio of receivables owned by CIT that is being serviced by SOC was $53.8 million. Contractual servicing fees were $1.4 million in 2012, $2.3 million in 2011 and $4.9 million in 2010.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 3, 4 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5074-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5162-111524 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 01-6 -Paragraph 13 -Subparagraph d -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5066-111524 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 + Details
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