Note 6: Exit and Disposal Activities

Snap-on recorded costs associated with exit and disposal activities for the three and nine month periods ended September 28, 2013, and September 29, 2012, as follows:


	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
(Amounts in millions)	2013		2012		2013		2012
Exit and disposal costs:
Cost of goods sold:						1.8		1.8
Commercial & Industrial Group	$	0.3	$	0.9	$	2.5	$	3.6
Snap-on Tools Group		0.1		0.1		0.2		7.1
Repair Systems & Information Group		0.9		—		1.7		0.2

Total cost of goods sold		1.3		1.0		4.4		10.9

Operating expenses:
Commercial & Industrial Group		0.3		1.3		0.4		5.3
Snap-on Tools Group		0.1		—		0.3		0.1
Repair Systems & Information Group		—		—		1.2		0.2

Total operating expenses		0.4		1.3		1.9		5.6

Financial Services		—		—		0.1		—
Total exit and disposal costs:
Commercial & Industrial Group		0.6		2.2		2.9		8.9
Snap-on Tools Group		0.2		0.1		0.5		7.2
Repair Systems & Information Group		0.9		—		2.9		0.4
Financial Services		—		—		0.1		—

Total exit and disposal costs	$	1.7	$	2.3	$	6.4	$	16.5

Of the $1.7 million and $6.4 million of costs incurred during the respective three and nine month periods ended September 28, 2013, $1.7 million and $6.0 million, respectively, qualified for accrual treatment. Costs associated with exit and disposal activities in 2013 primarily related to headcount reductions from the ongoing optimization of the company’s cost structure in Europe and various other management and realignment actions. Costs associated with exit and disposal activities in 2012 primarily related to the settlement of a pension plan as a result of the 2011 closure of the company’s former Newmarket, Canada, facility, as well as other headcount reductions largely to improve the company’s cost structure in Europe. In the nine month period ended September 29, 2012, the Snap-on Tools Group incurred costs of $6.8 million (included in “Cost of goods sold” above) related to the Newmarket pension settlement.

Snap-on’s exit and disposal accrual activity for the first nine months of 2013 is as follows:


	Balance at December 29, 2012		Six Months					Balance at June 29, 2013		Third Quarter					Balance at September 28, 2013
(Amounts in millions)	Balance at December 29, 2012		Provision		Usage			Balance at June 29, 2013		Provision		Usage			Balance at September 28, 2013
Severance costs:
Commercial & Industrial Group	$	6.2	$	2.2	$	(4.9	)	$	3.5	$	0.6	$	(0.9	)	$	3.2
Snap-on Tools Group		0.1		0.1		(0.1	)		0.1		0.2		—			0.3
Repair Systems & Information Group		0.7		1.9		(0.8	)		1.8		0.9		(0.2	)		2.5
Financial Services		—		0.1		(0.1	)		—		—		—			—
Facility-related costs:
Commercial & Industrial Group		0.2		—		(0.1	)		0.1		—		(0.1	)		—

Total	$	7.2	$	4.3	$	(6.0	)	$	5.5	$	1.7	$	(1.2	)	$	6.0

The majority of the exit and disposal accrual as of September 28, 2013, is expected to be utilized in 2013.

Snap-on expects to fund the remaining cash requirements of its exit and disposal activities with available cash on hand, cash flows from operations and borrowings under the company’s existing credit facilities. The estimated costs for the exit and disposal activities were based on management’s best business judgment under prevailing circumstances.