SNAP-ON Inc | 2013 | FY | 3


Note 15: Commitments and Contingencies

Snap-on leases facilities, office equipment and vehicles under non-cancelable operating and capital leases that extend for varying amounts of time. Snap-on’s future minimum lease commitments under these leases, net of sub-lease rental income, are as follows:

 

(Amounts in millions)      Operating 
Leases
     Capital
    Leases     
 

Year:

     

2014

       $      22.6               $ 6.8       

2015

     16.7             6.8       

2016

     11.3             5.1       

2017

     7.6             3.7       

2018

     5.1             2.5       

2019 and thereafter

     14.5             11.2       
  

 

 

    

 

 

 

Total minimum lease payments

       $ 77.8               $      36.1       
  

 

 

    

Less: amount representing interest

        (3.4)      
     

 

 

 

Total present value of minimum capital lease payments

          $ 32.7       
     

 

 

 

Amounts included in the accompanying Consolidated Balance Sheets for the present value of minimum capital lease payments as of 2013 year end are as follows:

 

(Amounts in millions)    2013  

Other accrued liabilities

       $ 6.0       

Other long-term liabilities

     26.7       
  

 

 

 

Total present value of minimum capital lease payments

       $     32.7       
  

 

 

 

Rent expense, net of sub-lease rental income, for worldwide facilities, office equipment and vehicles was $31.2 million, $29.7 million and $31.7 million in 2013, 2012 and 2011, respectively.

 

Snap-on provides product warranties for specific product lines and accrues for estimated future warranty cost in the period in which the sale is recorded. Snap-on calculates its accrual requirements based on historic warranty loss experience that is periodically adjusted for recent actual experience, including the timing of claims during the warranty period and actual costs incurred. Snap-on’s product warranty accrual activity for 2013, 2012 and 2011 is as follows:

 

(Amounts in millions)        2013              2012              2011      

Warranty reserve:

        

Beginning of year

       $ 18.9               $ 18.6               $ 16.9       

Additions

     9.3             10.4             15.3       

Usage

       (11.2)              (10.1)              (13.6)      
  

 

 

    

 

 

    

 

 

 

End of year

       $ 17.0               $ 18.9               $ 18.6       
  

 

 

    

 

 

    

 

 

 

Approximately 2,600 employees, or 23% of Snap-on's worldwide workforce, are represented by unions and/or covered under collective bargaining agreements. Approximately 1,200 employees are covered under agreements expiring in 2014. In recent years, Snap-on has not experienced any significant work slow-downs, stoppages or other labor disruptions.

Snap-on has credit risk exposure for certain SOC-originated contracts with recourse provisions related to franchisee van leases sold by SOC; as of 2013 and 2012 year end, $7.7 million and $13.3 million, respectively, of franchisee leases contain a recourse provision to Snap-on if the leases become more than 90 days past due. The asset value of the collateral underlying these recourse leases would serve to mitigate Snap-on’s loss in the event of default. The estimated fair value of the guarantees for all lease originations with recourse as of December 28, 2013, was not material.

Snap-on is involved in various legal matters that are being litigated and/or settled in the ordinary course of business. Although it is not possible to predict the outcome of these legal matters, management believes that the results of these legal matters will not have a material impact on Snap-on’s consolidated financial position, results of operations or cash flows.


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