Note 7: Exit and Disposal Activities

Snap-on recorded costs associated with exit and disposal activities of $6.5 million and $6.4 million during 2014 and 2013, respectively. The 2014 and 2013 costs associated with exit and disposal activities by operating segment are as follows:


(Amounts in millions)	2014		2013
Exit and disposal costs:
Cost of goods sold:
Commercial & Industrial Group	$	1.0	$	2.5
Snap-on Tools Group		–		0.2
Repair Systems & Information Group		4.7		1.7

Total cost of goods sold		5.7		4.4

Operating expenses:
Commercial & Industrial Group		0.4		0.4
Snap-on Tools Group		–		0.3
Repair Systems & Information Group		0.4		1.2

Total operating expenses		0.8		1.9

Financial Services		–		0.1

Total exit and disposal costs:
Commercial & Industrial Group		1.4		2.9
Snap-on Tools Group		–		0.5
Repair Systems & Information Group		5.1		2.9
Financial Services		–		0.1

Total exit and disposal costs	$	6.5	$	6.4

Costs associated with exit and disposal activities in 2014 primarily related to headcount reduction and facility consolidation initiatives. 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. All $6.5 million of exit and disposal costs incurred in 2014 qualified for accrual treatment. Of the $6.4 million of exit and disposal costs incurred in 2013, $6.0 million qualified for accrual treatment.

Snap-on’s exit and disposal accrual activity related to 2014 and 2013 actions is as follows:


(Amounts in millions)	Balance at 2012 Year End		Provision in 2013		Usage in 2013		Balance at 2013 Year End		Provision in 2014		Usage in 2014		Balance at 2014 Year End
Severance costs:
Commercial & Industrial Group	$	6.2	$	2.8	$	(7.5)	$	1.5	$	1.4	$	(2.1)	$	0.8
Snap-on Tools Group		0.1		0.2		(0.1)		0.2		–		(0.2)		–
Repair Systems & Information Group		0.7		2.9		(1.3)		2.3		5.1		(1.7)		5.7
Financial Services		–		0.1		(0.1)		–		–		–		–

Facility-related costs:
Commercial & Industrial Group		0.2		–		(0.2)		–		–		–		–

Total	$	7.2	$	6.0	$	(9.2)	$	4.0	$	6.5	$	(4.0)	$	6.5

Snap-on reduced headcount by approximately 80 employees in 2014 as part of its restructuring actions. The exit and disposal accrual of $6.5 million as of 2014 year end is expected to be fully utilized in 2015.

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.