Guarantees

The Company’s financial guarantees at June 28, 2014 are as follows:



(Millions of Dollars)	Term	Maximum Potential Payment		Carrying Amount of Liability
Guarantees on the residual values of leased properties	One to four years	$	28.4	$	—
Standby letters of credit	Up to three years	88.6		—
Commercial customer financing arrangements	Up to six years	32.0		12.9
Total		$	149.0	$	12.9

The Company has guaranteed a portion of the residual value arising from its synthetic lease program. This lease guarantee is for an amount up to $28.4 million while the fair value of the underlying building is estimated at $32.6 million. The related assets would be available to satisfy the guarantee obligations and therefore it is unlikely the Company will incur any future loss associated with this guarantee.

The Company has issued $88.6 million in standby letters of credit that guarantee future payments which may be required under certain insurance programs.

The Company provides various limited and full recourse guarantees to financial institutions that provide financing to Mac Tool distributors for their initial purchase of the inventory and trucks necessary to function as a distributor. In addition, the Company provides limited and full recourse guarantees to financial institutions that extend credit to certain end retail customers of its U.S. Mac Tool distributors. The gross amount guaranteed in these arrangements is $32.0 million and the $12.9 million carrying value of the guarantees issued is recorded in debt and other liabilities as appropriate in the Condensed Consolidated Balance Sheets.

The Company provides product and service warranties which vary across its businesses. The types of warranties offered generally range from one year to limited lifetime, while certain products carry no warranty. Further, the Company sometimes incurs discretionary costs to service its products in connection with product performance issues. Historical warranty and service claim experience forms the basis for warranty obligations recognized. Adjustments are recorded to the warranty liability as new information becomes available.

The changes in the carrying amount of product and service warranties for the six months ended June 28, 2014 and June 29, 2013 are as follows:



(Millions of Dollars)	2014			2013
Balance beginning of period	$	121.8		$	124.0
Warranties and guarantees issued	44.0			43.5
Warranty payments and currency	(48.9		)	(47.5		)
Balance end of period	$	116.9		$	120.0