Note 7: Exit and Disposal Activities
Snap-on recorded costs associated with exit and disposal activities of $6.4 million and $16.5 million during 2013 and 2012, respectively. The 2013 and 2012 costs associated with exit and disposal activities by operating segment are as follows:
| (Amounts in millions) | 2013 | 2012 | ||||||
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Exit and disposal costs: |
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Cost of goods sold: |
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Commercial & Industrial Group |
$ | 2.5 | $ | 3.6 | ||||
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Snap-on Tools Group |
0.2 | 7.1 | ||||||
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Repair Systems & Information Group |
1.7 | 0.2 | ||||||
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Total cost of goods sold |
4.4 | 10.9 | ||||||
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Operating expenses: |
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Commercial & Industrial Group |
0.4 | 5.3 | ||||||
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Snap-on Tools Group |
0.3 | 0.1 | ||||||
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Repair Systems & Information Group |
1.2 | 0.2 | ||||||
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Total operating expenses |
1.9 | 5.6 | ||||||
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Financial Services |
0.1 | – | ||||||
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Total exit and disposal costs: |
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Commercial & Industrial Group |
2.9 | 8.9 | ||||||
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Snap-on Tools Group |
0.5 | 7.2 | ||||||
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Repair Systems & Information Group |
2.9 | 0.4 | ||||||
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Financial Services |
0.1 | – | ||||||
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Total exit and disposal costs |
$ | 6.4 | $ | 16.5 | ||||
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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 headcount reductions largely to improve the company’s cost structure in Europe. Of the $6.4 million of exit and disposal costs incurred in 2013, $6.0 million qualified for accrual treatment. Of the $16.5 million of exit and disposal costs incurred in 2012, $8.8 million qualified for accrual treatment.
Snap-on’s exit and disposal accrual activity related to 2013 and 2012 actions is as follows:
| (Amounts in millions) | Balance at 2011 Year End |
Provision (reversal) in 2012 |
Usage in 2012 |
Balance at 2012 Year End |
Provision in 2013 |
Usage in 2013 |
Balance at 2013 Year End |
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Severance costs: |
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Commercial & Industrial Group |
$ | 3.6 | $ | 8.7 | $ | (6.1) | $ | 6.2 | $ | 2.8 | $ | (7.5) | $ | 1.5 | ||||||||||||||
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Snap-on Tools Group |
0.6 | (0.1) | (0.4) | 0.1 | 0.2 | (0.1) | 0.2 | |||||||||||||||||||||
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Repair Systems & Information Group |
3.8 | 0.2 | (3.3) | 0.7 | 2.9 | (1.3) | 2.3 | |||||||||||||||||||||
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Financial Services |
– | – | – | – | 0.1 | (0.1) | – | |||||||||||||||||||||
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Facility-related costs: |
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Commercial & Industrial Group |
0.4 | – | (0.2) | 0.2 | – | (0.2) | – | |||||||||||||||||||||
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Total |
$ | 8.4 | $ | 8.8 | $ | (10.0) | $ | 7.2 | $ | 6.0 | $ | (9.2) | $ | 4.0 | ||||||||||||||
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Snap-on reduced headcount by approximately 125 employees in 2013 as part of its restructuring actions. The exit and disposal accrual of $4.0 million as of 2013 year end is expected to be fully utilized in 2014.
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.