Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Feb. 17, 2020 | Jun. 29, 2019 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Gates Industrial Corp plc | ||
Entity Central Index Key | 0001718512 | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 28, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | Q4 | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 290,465,572 | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 526.2 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Income Statement [Abstract] | |||
Net sales | $ 3,087.1 | $ 3,347.6 | $ 3,041.7 |
Cost of sales | 1,944.6 | 2,017 | 1,823.7 |
Gross profit | 1,142.5 | 1,330.6 | 1,218 |
Selling, general and administrative expenses | 777.3 | 805.8 | 777.1 |
Transaction-related expenses | 2.6 | 6.7 | 18.1 |
Impairment of intangibles and other assets | 0.7 | 0.6 | 2.8 |
Restructuring expenses | 6 | 6.4 | 17.4 |
Other operating expenses (income) | 9.1 | 14.3 | (0.3) |
Operating income from continuing operations | 346.8 | 496.8 | 402.9 |
Interest expense | 157.8 | 175.9 | 234.6 |
Other (income) expenses | (9.8) | 17.4 | 58.8 |
Income from continuing operations before taxes | 198.8 | 303.5 | 109.5 |
Income tax (benefit) expense | (495.9) | 31.8 | (72.5) |
Net income from continuing operations | 694.7 | 271.7 | 182 |
Loss (income) on disposal of discontinued operations, net of tax, respectively, of $0, $0 and $0 | 0.6 | 0.6 | (0.7) |
Net income | 694.1 | 271.1 | 182.7 |
Less: non-controlling interests | 4 | 25.8 | 31.4 |
Net income attributable to shareholders | $ 690.1 | $ 245.3 | $ 151.3 |
Basic | |||
Earnings per share from continuing operations (in usd per share) | $ 2.38 | $ 0.86 | $ 0.62 |
Earnings per share from discontinued operations (in usd per share) | 0 | 0 | 0 |
Earnings per share (in usd per share) | 2.38 | 0.86 | 0.62 |
Diluted | |||
Earnings per share from continuing operations (in usd per share) | 2.37 | 0.84 | 0.60 |
Earnings per share from discontinued operations (in usd per share) | 0 | 0 | 0 |
Earnings per share (in usd per share) | $ 2.37 | $ 0.84 | $ 0.60 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Income Statement [Abstract] | |||
Gain on disposal of discontinued operations, tax | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net income | $ 694.1 | $ 271.1 | $ 182.7 |
Foreign currency translation: | |||
—Net translation gain (loss) on foreign operations, net of tax (expense) benefit, respectively, of ($0.8), ($1.2), and $15.0 | 29.4 | (134.9) | 280.2 |
—Gain (loss) on net investment hedges, net of tax expense, respectively, of $0, $0 and $0 | 5.5 | 9.8 | (109.4) |
Total foreign currency translation movements | 34.9 | (125.1) | 170.8 |
Cash flow hedges (Interest rate derivatives): | |||
—Loss arising in the period, net of tax benefit, respectively, of $4.5, $0 and $0 | (27.2) | ||
—Loss arising in the period, net of tax benefit, respectively, of $4.5, $0 and $0 | (4.5) | (2) | |
—Reclassification to net income, net of tax (expense) benefit, respectively, of ($0.2), $4.7 and ($2.0) | 2.3 | ||
—Reclassification to net income, net of tax (expense) benefit, respectively, of ($0.2), $4.7 and ($2.0) | 10.1 | 9.6 | |
Total cash flow hedges movements | (24.9) | ||
Total cash flow hedges movements | 5.6 | 7.6 | |
Available-for-sale investments: | |||
—Net unrealized loss, net of tax benefit, respectively, of $0, $0 and $0.1 | 0 | 0 | (0.2) |
Total available-for-sale investments: | 0 | 0 | (0.2) |
Post-retirement benefits: | |||
—Current year actuarial movements, net of tax benefit (expense), respectively, of $2.8, $2.2 and ($5.4) | (16.7) | (5.3) | 20.2 |
—Reclassification of prior year actuarial movements to net income, net of tax (expense) benefit, respectively, of ($0.2), $0.1 and $0 | 0.2 | (0.5) | 0 |
Total post-retirement benefit movements | (16.5) | (5.8) | 20.2 |
Other comprehensive (loss) income | (6.5) | (125.3) | 198.4 |
Comprehensive income for the period | 687.6 | 145.8 | 381.1 |
Comprehensive income attributable to shareholders: | |||
Comprehensive income attributable to parent | 686 | 138.1 | 319.8 |
Comprehensive income attributable to non-controlling interests | 1.6 | 7.7 | 61.3 |
—Income arising from continuing operations | |||
Comprehensive income attributable to shareholders: | |||
Comprehensive income attributable to parent | 686.6 | 138.7 | 319.1 |
—(Loss) income arising from discontinued operations | |||
Comprehensive income attributable to shareholders: | |||
Comprehensive income attributable to parent | $ (0.6) | $ (0.6) | $ 0.7 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Foreign currency translation: | |||
Net translation gain on foreign operations, tax benefit (expense) | $ (0.8) | $ (1.2) | $ 15 |
Loss on net investment hedges, tax benefit | 0 | 0 | 0 |
Cash flow hedges (Interest rate derivatives): | |||
Gain (loss) arising in the period, tax benefit | 4.5 | ||
Gain (loss) arising in the period, tax benefit | 0 | 0 | |
Reclassification to net income, tax benefit | (0.2) | ||
Reclassification to net income, tax benefit | 4.7 | (2) | |
Available-for-sale investments: | |||
Unrealized loss, expense | 0 | 0 | 0.1 |
Post-retirement benefits: | |||
Actuarial loss, tax (expense) benefit | 2.8 | 2.2 | (5.4) |
Reclassification of actuarial gain to net income, tax benefit | $ (0.2) | $ 0.1 | $ 0 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Current assets | ||
Cash and cash equivalents | $ 635.3 | $ 423.4 |
Trade accounts receivable, net of allowances of $8.6 and $7.4 | 694.7 | 742.3 |
Inventories | 475.1 | 537.6 |
Taxes receivable | 22.1 | 7.2 |
Prepaid expenses and other assets | 131.4 | 104.1 |
Total current assets | 1,958.6 | 1,814.6 |
Non-current assets | ||
Property, plant and equipment, net | 727.9 | 756.3 |
Goodwill | 2,060.5 | 2,045.9 |
Pension surplus | 38.1 | 52.6 |
Intangible assets, net | 1,876 | 1,990.6 |
Operating lease right-of-use assets | 123 | |
Taxes receivable | 23 | 27.9 |
Deferred income taxes | 587.1 | 5.1 |
Other non-current assets | 17.1 | 29.6 |
Total assets | 7,411.3 | 6,722.6 |
Current liabilities | ||
Debt, current portion | 46.1 | 51.6 |
Trade accounts payable | 374.7 | 424 |
Taxes payable | 48.5 | 19.2 |
Accrued expenses and other current liabilities | 188.8 | 184.2 |
Total current liabilities | 658.1 | 679 |
Non-current liabilities | ||
Debt, less current portion | 2,912.3 | 2,953.4 |
Post-retirement benefit obligations | 151.2 | 155.9 |
Lease liabilities | 116.2 | |
Taxes payable | 108.8 | 81.9 |
Deferred income taxes | 369.3 | 439.5 |
Other non-current liabilities | 84.7 | 79.2 |
Total liabilities | 4,400.6 | 4,388.9 |
Commitments and contingencies (note 23) | ||
Shareholders’ equity | ||
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 290,157,299 (December 29, 2018: authorized shares: 3,000,000,000; outstanding shares: 289,847,574) | 2.9 | 2.9 |
—Additional paid-in capital | 2,434.5 | 2,416.9 |
—Accumulated other comprehensive loss | (858.4) | (854.3) |
—Retained earnings | 1,072 | 381.9 |
Total shareholders’ equity | 2,651 | 1,947.4 |
Non-controlling interests | 359.7 | 386.3 |
Total equity | 3,010.7 | 2,333.7 |
Total liabilities and equity | $ 7,411.3 | $ 6,722.6 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for receivables | $ 8.6 | $ 7.4 |
Par value (in usd per share) | $ 0.01 | $ 0.01 |
Authorized shares (in shares) | 3,000,000,000 | 3,000,000,000 |
Outstanding shares (in shares) | 290,157,299 | 289,847,574 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Cash flows from operating activities | |||
Net income (loss) | $ 694.1 | $ 271.1 | $ 182.7 |
Adjustments to reconcile net income to net cash provided by operations: | |||
Depreciation and amortization | 222.2 | 218.5 | 212.2 |
Non-cash currency transaction (gain) loss on debt and hedging instruments | (16.8) | (45.5) | 57.4 |
Premium paid on redemption of long-term debt | 0 | 27 | 0 |
Other net non-cash financing costs | 27.4 | 65.6 | 47.6 |
Share-based compensation expense | 15 | 6 | 5.4 |
Decrease in post-employment benefit obligations, net | (9.4) | (4.6) | (7.4) |
Deferred income taxes | (648.4) | (64.9) | (162.8) |
Other operating activities | 6 | 4.8 | 5.5 |
Changes in operating assets and liabilities, net of effects of acquisitions: | |||
—Decrease (increase) in accounts receivable | 41.8 | (49.6) | (24.6) |
—Decrease (increase) in inventories | 65.1 | (96.1) | (45.4) |
—(Decrease) increase in accounts payable | (48.2) | 42.1 | 49.9 |
—(Increase) decrease in prepaid expenses and other assets | (2.6) | (27.5) | 2.3 |
—Increase (decrease) in taxes payable | 46.2 | (15.3) | 6.5 |
—Decrease in other liabilities | (43.5) | (18.1) | (9.4) |
Net cash provided by operations | 348.9 | 313.5 | 319.9 |
Cash flows from investing activities | |||
Purchases of property, plant and equipment | (72.1) | (166.1) | (101.1) |
Purchases of intangible assets | (11) | (16.6) | (10) |
Cash paid under corporate-owned life insurance policies | (10.7) | (10.3) | (9.5) |
Cash received under corporate-owned life insurance policies | 12 | 2.9 | 3.1 |
Purchase of businesses, net of cash acquired | 0 | (50.9) | (110.7) |
Other investing activities | 3.8 | (2.6) | 1.2 |
Net cash used in investing activities | (78) | (243.6) | (227) |
Cash flows from financing activities | |||
Issuance of shares, net of underwriting costs | 1.8 | 799.7 | 0.6 |
Other offering costs | 0 | (8.6) | (2.3) |
Buy-back of shares | 0 | 0 | (1.6) |
Proceeds from long-term debt | 568 | 0 | 644.7 |
Payments of long-term debt | (593.1) | (933.5) | (676.9) |
Premium paid on redemption of long-term debt | 0 | (27) | 0 |
Debt issuance costs paid | (8.3) | 0 | (18.8) |
Dividends paid to non-controlling interests | (28.8) | (35.2) | (24.6) |
Other financing activities | 1.1 | 5.7 | 3.6 |
Net cash used in financing activities | (59.3) | (198.9) | (75.3) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 0.4 | (12.4) | 19.6 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 212 | (141.4) | 37.2 |
Cash and cash equivalents and restricted cash at the beginning of the period | 424.6 | 566 | 528.8 |
Cash and cash equivalents and restricted cash at the end of the period | 636.6 | 424.6 | 566 |
Supplemental schedule of cash flow information | |||
Interest paid, net of amount capitalized | 150.8 | 157.9 | 198 |
Income taxes paid, net | 108.8 | 114 | 84.8 |
Accrued capital expenditures | $ 1.8 | $ 1 | $ 1.7 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders’ Equity - USD ($) $ in Millions | Total | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders’ equity | Non- controlling interests |
Beginning Balance at Dec. 31, 2016 | $ 1,068.4 | $ 2.5 | $ 1,619 | $ (915.9) | $ (14.3) | $ 691.3 | $ 377.1 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 182.7 | 151.3 | 151.3 | 31.4 | |||
Other comprehensive (loss) income | 198.4 | 168.5 | 168.5 | 29.9 | |||
Comprehensive (loss) income for the period | 381.1 | 168.5 | 151.3 | 319.8 | 61.3 | ||
—Issuance of shares | 0.6 | 0.6 | 0.6 | ||||
—Repurchase of shares | (1.6) | (1.5) | (0.1) | (1.6) | |||
—Share-based compensation | 4.5 | 4.5 | 4.5 | ||||
—Dividends paid to non-controlling interests | (24.6) | (24.6) | |||||
Ending Balance at Dec. 30, 2017 | 1,428.4 | 2.5 | 1,622.6 | (747.4) | 136.9 | 1,014.6 | 413.8 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 271.1 | 245.3 | 245.3 | 25.8 | |||
Other comprehensive (loss) income | (125.3) | (106.9) | (0.3) | (107.2) | (18.1) | ||
Comprehensive (loss) income for the period | 145.8 | (106.9) | 245 | 138.1 | 7.7 | ||
—Issuance of shares | 841.7 | 0.4 | 841.3 | 841.7 | |||
—Cost of shares issued | (53) | (53) | (53) | ||||
—Share-based compensation | 6 | 6 | 6 | ||||
—Dividends paid to non-controlling interests | (35.2) | (35.2) | |||||
Ending Balance at Dec. 29, 2018 | 2,333.7 | 2.9 | 2,416.9 | (854.3) | 381.9 | 1,947.4 | 386.3 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 694.1 | 690.1 | 690.1 | 4 | |||
Other comprehensive (loss) income | (6.5) | (4.1) | (4.1) | (2.4) | |||
Comprehensive (loss) income for the period | 687.6 | (4.1) | 690.1 | 686 | 1.6 | ||
—Issuance of shares | 1.8 | 1.8 | 1.8 | ||||
—Share-based compensation | 14.6 | 14.6 | 14.6 | ||||
—Change in ownership of a controlled subsidiary | 0 | 1.2 | 1.2 | (1.2) | |||
—Shares issued by a subsidiary to a non-controlling interest | 1.8 | 1.8 | |||||
—Dividends paid to non-controlling interests | (28.8) | (28.8) | |||||
Ending Balance at Dec. 28, 2019 | $ 3,010.7 | $ 2.9 | $ 2,434.5 | $ (858.4) | $ 1,072 | $ 2,651 | $ 359.7 |
Background
Background | 12 Months Ended |
Dec. 28, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | Background Gates Industrial Corporation plc (the “Company”) is a public limited company that was incorporated under the laws of England and Wales on September 25, 2017. Prior to the completion of the initial public offering of the Company’s shares in January 2018, the Company undertook certain reorganization transactions such that Gates Industrial Corporation plc now owns indirectly all of the equity interests in Omaha Topco Limited (“Omaha Topco”), and has become the holding company of the Gates business. The previous owners of Omaha Topco were various investment funds managed by affiliates of The Blackstone Group Inc. (together, “Blackstone” or our “Sponsor”), and Gates management equity holders. Gates Industrial Corporation plc had no significant business transactions or activities prior to the date of the reorganization transactions, and as a result, the historical financial information reflects that of Omaha Topco. In these consolidated financial statements and related notes, all references to the “Gates”, “we”, “us”, “our” refer, unless the context requires otherwise, to the Company and its subsidiaries. Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Gates is comprised of two operating segments: Power Transmission and Fluid Power. |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Dec. 28, 2019 | |
Accounting Policies [Abstract] | |
Significant accounting policies | Significant accounting policies A. Basis of presentation The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year: • ASU 2016-02 “ Leases ” (Topic 842) • ASU 2018-10 “ Leases ” (Topic 842): Codification Improvements to Topic 842, Leases • ASU 2018-11 “ Leases ” (Topic 842): Targeted Improvements • ASU 2019-01 “ Leases ” (Topic 842): Codification Improvements In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee. We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated. We applied the following additional practical expedients on transition to Topic 842: (i) we did not reassess whether or not any expired or existing contracts were or contained leases; (ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and (iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842. On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million , with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “ Leases ” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842. The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures: • ASU 2018-07 “ Compensation - Stock Compensation ” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting • ASU 2018-16 “ Derivatives and Hedging ” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes In addition, we adopted ASU 2018-02 “ Income Statement - Reporting Comprehensive Income ” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences. B. Accounting periods The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“ Fiscal 2019 ”), December 29, 2018 (“ Fiscal 2018 ”) and December 30, 2017 (“ Fiscal 2017 ”). C. Basis of consolidation The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees. We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation. D. Foreign currency transactions and translation Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million , compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017 . We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019 , compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017 . On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income. In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period. E. Net sales Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation. In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal. We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price. In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset. F. Selling, general and administrative expenses Shipping and handling costs Costs of outbound shipping and handling are included in SG&A. During Fiscal 2019 , we recognized shipping and handling costs of $145.2 million , compared with $159.9 million in Fiscal 2018 and $147.0 million in Fiscal 2017 . Research and development costs Research and development costs are charged to net income in the period in which they are incurred. Our research and development expense was $67.9 million in Fiscal 2019 , compared with $71.4 million in Fiscal 2018 and $68.6 million in Fiscal 2017 . These costs related primarily to product development and also to technology to enhance manufacturing processes. Advertising costs Advertising costs are expensed as incurred and included in SG&A. During Fiscal 2019 , we recognized advertising costs of $10.2 million , compared with $10.4 million in Fiscal 2018 and $10.4 million in Fiscal 2017 . G. Restructuring expenses Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6 . Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date. Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer. Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability. H. Business combinations A business combination is a transaction or other event in which control is obtained of one or more businesses. Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred. Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date. Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income. I. Goodwill Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition. Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019 , Fiscal 2018 or Fiscal 2017 . To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit. J. Other intangible assets Other intangible assets are stated at cost less accumulated amortization and any recognized impairment. (i) Assets acquired in business combinations An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows: Customer relationships 15 to 17 years Technology 5 to 7 years Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment. (ii) Computer software Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years. K. Property, plant and equipment Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred. Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges: Buildings and improvements 30 to 40 years Leasehold improvements Shorter of lease term or useful life Machinery, equipment and vehicles 2 to 20 years L. Impairment of long-lived assets and intangible assets Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value. M. Inventories Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory. Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019 , inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018 . N. Financial instruments (i) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits. (ii) Restricted cash Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes. Cash and cash equivalents for the purposes of the consolidated statement of cash flows includes restricted cash of $1.3 million as of December 28, 2019 , compared with $1.2 million and $1.6 million as of December 29, 2018 and December 30, 2017 , respectively. (iii) Trade accounts receivable Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information. (iv) Debt Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method. (v) Accounts payable Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made. (vi) Derivative financial instruments We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact. We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI. (vii) Investments Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “ Financial Instruments ” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI. (viii) Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period. O. Post-retirement benefits Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America. We account for our post-retirement benefit plans in accordance with Topic 715 “ Compensation – Retirement Benefits ”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees. For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations. Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees. Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs. P. Share-based compensation Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity. We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions. Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions. For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital. For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability. Q. Income taxes Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date. Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions. Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet. Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies. Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner. R. Use of estimates The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates. Recent accounting pronouncements not yet adopted The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted. • ASU 2016-13 “ Financial Instruments ” (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures. • ASU 2018-13 “ Fair Value Measurement ” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “ Fair Value Measurement ” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods p |
Recent accounting pronouncement
Recent accounting pronouncements not yet adopted | 12 Months Ended |
Dec. 28, 2019 | |
Accounting Policies [Abstract] | |
Recent accounting pronouncements not yet adopted | Significant accounting policies A. Basis of presentation The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year: • ASU 2016-02 “ Leases ” (Topic 842) • ASU 2018-10 “ Leases ” (Topic 842): Codification Improvements to Topic 842, Leases • ASU 2018-11 “ Leases ” (Topic 842): Targeted Improvements • ASU 2019-01 “ Leases ” (Topic 842): Codification Improvements In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee. We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated. We applied the following additional practical expedients on transition to Topic 842: (i) we did not reassess whether or not any expired or existing contracts were or contained leases; (ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and (iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842. On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million , with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “ Leases ” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842. The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures: • ASU 2018-07 “ Compensation - Stock Compensation ” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting • ASU 2018-16 “ Derivatives and Hedging ” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes In addition, we adopted ASU 2018-02 “ Income Statement - Reporting Comprehensive Income ” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences. B. Accounting periods The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“ Fiscal 2019 ”), December 29, 2018 (“ Fiscal 2018 ”) and December 30, 2017 (“ Fiscal 2017 ”). C. Basis of consolidation The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees. We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation. D. Foreign currency transactions and translation Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million , compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017 . We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019 , compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017 . On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income. In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period. E. Net sales Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation. In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal. We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price. In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset. F. Selling, general and administrative expenses Shipping and handling costs Costs of outbound shipping and handling are included in SG&A. During Fiscal 2019 , we recognized shipping and handling costs of $145.2 million , compared with $159.9 million in Fiscal 2018 and $147.0 million in Fiscal 2017 . Research and development costs Research and development costs are charged to net income in the period in which they are incurred. Our research and development expense was $67.9 million in Fiscal 2019 , compared with $71.4 million in Fiscal 2018 and $68.6 million in Fiscal 2017 . These costs related primarily to product development and also to technology to enhance manufacturing processes. Advertising costs Advertising costs are expensed as incurred and included in SG&A. During Fiscal 2019 , we recognized advertising costs of $10.2 million , compared with $10.4 million in Fiscal 2018 and $10.4 million in Fiscal 2017 . G. Restructuring expenses Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6 . Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date. Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer. Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability. H. Business combinations A business combination is a transaction or other event in which control is obtained of one or more businesses. Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred. Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date. Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income. I. Goodwill Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition. Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019 , Fiscal 2018 or Fiscal 2017 . To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit. J. Other intangible assets Other intangible assets are stated at cost less accumulated amortization and any recognized impairment. (i) Assets acquired in business combinations An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows: Customer relationships 15 to 17 years Technology 5 to 7 years Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment. (ii) Computer software Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years. K. Property, plant and equipment Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred. Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges: Buildings and improvements 30 to 40 years Leasehold improvements Shorter of lease term or useful life Machinery, equipment and vehicles 2 to 20 years L. Impairment of long-lived assets and intangible assets Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value. M. Inventories Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory. Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019 , inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018 . N. Financial instruments (i) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits. (ii) Restricted cash Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes. Cash and cash equivalents for the purposes of the consolidated statement of cash flows includes restricted cash of $1.3 million as of December 28, 2019 , compared with $1.2 million and $1.6 million as of December 29, 2018 and December 30, 2017 , respectively. (iii) Trade accounts receivable Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information. (iv) Debt Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method. (v) Accounts payable Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made. (vi) Derivative financial instruments We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact. We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI. (vii) Investments Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “ Financial Instruments ” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI. (viii) Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period. O. Post-retirement benefits Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America. We account for our post-retirement benefit plans in accordance with Topic 715 “ Compensation – Retirement Benefits ”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees. For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations. Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees. Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs. P. Share-based compensation Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity. We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions. Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions. For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital. For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability. Q. Income taxes Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date. Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions. Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet. Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies. Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner. R. Use of estimates The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates. Recent accounting pronouncements not yet adopted The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted. • ASU 2016-13 “ Financial Instruments ” (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures. • ASU 2018-13 “ Fair Value Measurement ” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “ Fair Value Measurement ” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods p |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 28, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Description and financial effect of acquisitions On April 26, 2018, Gates completed the acquisition of Rapro for $50.9 million , net of cash acquired. Rapro is a Turkey-based business that engineers, manufactures and sells molded and branched hoses and other products, the majority of which are sold into replacement markets. Rapro operates out of two facilities in Izmir, Turkey, with its products serving heavy-duty, commercial and light-vehicle applications. Goodwill of $34.4 million arose from this acquisition and related primarily to the expected benefit from the acceleration of our growth strategy within the Fluid Power product line and expansion of our product range and geographic coverage. In October 2017, we completed the acquisition of Atlas Hydraulics for $74.0 million , net of cash acquired. Atlas Hydraulics is a fully-integrated product engineering, manufacturing, and commercial business headquartered in Ontario, Canada. With locations in Canada, the U.S. and Mexico, the company specializes in the design, manufacture, and supply of hydraulic tube and hose assemblies. The goodwill of $23.0 million arising from the acquisition of Atlas Hydraulics relates primarily to the expansion of our presence in industrial markets through increased manufacturing capacity and geographic reach. In June 2017, we purchased 100% of GTF Engineering and Services UK Limited, the owner of the majority of the net assets of Techflow Flexibles, for $36.7 million . Techflow Flexibles is a fully integrated engineering, manufacturing and commercial operation based in the U.K. that specializes in high-pressure flexible hoses. The goodwill of $22.5 million arising from the acquisition of Techflow Flexibles relates largely to the expected enhancement to our ability to make and supply long-length and large-diameter hoses, primarily for the oil & gas exploration and production industries. All of the above acquired businesses are included in the Fluid Power reporting segment and none of the associated goodwill recognized is expected to be deductible for income tax purposes. During the years ended December 29, 2018 and December 30, 2017, we incurred expenses of $1.8 million and $3.0 million , respectively, related directly to these acquisitions, all of which are included in the transaction-related expenses line in the statement of operations. No expenses related to these acquisitions were incurred during the year ended December 28, 2019 . Pro forma information has not been presented for these acquisitions because it is not material. |
Segment information
Segment information | 12 Months Ended |
Dec. 28, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Segment information A. Background The segment information provided in these consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based on net sales and Adjusted EBITDA (defined below). B. Operating segments and segment assets Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power. Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset base measure. C. Segment net sales and disaggregated net sales Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below. Net Sales For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Power Transmission $ 1,945.7 $ 2,098.8 $ 2,009.4 Fluid Power 1,141.4 1,248.8 1,032.3 Continuing operations $ 3,087.1 $ 3,347.6 $ 3,041.7 Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reporting segments, the CEO also reviews net sales information disaggregated by region, including between emerging and developed markets. The following table summarizes our net sales by key geographic region of origin: Net Sales For the year ended December 28, 2019 December 29, 2018 December 30, 2017 (dollars in millions) Power Transmission Fluid Power Power Transmission Fluid Power Power Transmission Fluid Power U.S. $ 580.4 $ 590.0 $ 606.3 $ 671.7 $ 582.2 $ 565.9 North America, excluding U.S. 165.3 175.9 159.3 185.6 148.2 134.8 United Kingdom (“U.K.”) 43.6 37.3 55.0 39.9 57.2 27.6 EMEA (1) , excluding U.K. 509.9 173.6 584.5 172.8 551.3 144.8 East Asia and India 288.6 74.3 311.7 87.5 308.7 78.0 Greater China 288.4 57.8 310.7 59.0 285.6 51.5 South America 69.5 32.5 71.3 32.3 76.2 29.7 Net Sales $ 1,945.7 $ 1,141.4 $ 2,098.8 $ 1,248.8 $ 2,009.4 $ 1,032.3 (1) Europe, Middle East and Africa (“EMEA”). The following table summarizes our net sales into emerging and developed markets: Net Sales For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Developed $ 2,013.4 $ 2,157.4 $ 1,964.4 Emerging 1,073.7 1,190.2 1,077.3 Net Sales $ 3,087.1 $ 3,347.6 $ 3,041.7 D. Measure of segment profit or loss The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures. “EBITDA” represents net income for the period before net interest and other (income) expenses , income taxes, depreciation and amortization derived from financial information prepared in accordance with U.S. GAAP. Adjusted EBITDA represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included: • the non-cash charges in relation to share-based compensation; • transaction-related expenses incurred in relation to business combinations and major corporate transactions, including acquisition integration activities; • impairments, comprising impairments of goodwill and significant impairments or write downs of other assets; • restructuring expenses , including severance-related expenses; • the net gain or loss on disposals and on the exit of businesses; and • fees paid to our private equity sponsor for monitoring, advisory and consulting services. Adjusted EBITDA by segment was as follows: Adjusted EBITDA For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Power Transmission $ 412.6 $ 492.2 $ 458.1 Fluid Power 198.4 263.6 211.0 Continuing operations $ 611.0 $ 755.8 $ 669.1 Reconciliation of net income from continuing operations to Adjusted EBITDA: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Net income from continuing operations $ 694.7 $ 271.7 $ 182.0 Income tax (benefit) expense (495.9 ) 31.8 (72.5 ) Income from continuing operations before taxes 198.8 303.5 109.5 Interest expense 157.8 175.9 234.6 Other (income) expenses (9.8 ) 17.4 58.8 Operating income from continuing operations 346.8 496.8 402.9 Depreciation and amortization 222.2 218.5 212.2 Transaction-related expenses (1) 2.6 6.7 18.1 Impairment of intangibles and other assets 0.7 0.6 2.8 Restructuring expenses 6.0 6.4 17.4 Share-based compensation expense 15.0 6.0 5.4 Sponsor fees (included in other operating expenses) 6.5 8.0 6.7 Impact of fair value adjustment on inventory (included in cost of sales) — 0.3 1.2 Inventory impairments and adjustments (included in cost of sales) 1.2 1.2 2.0 Duplicate expenses incurred on facility relocation — 5.2 — Severance-related expenses (included in cost of sales) 4.0 1.7 — Other primarily severance-related expenses (included in SG&A) 3.4 4.4 — Other items not directly related to current operations 2.6 — 0.4 Adjusted EBITDA $ 611.0 $ 755.8 $ 669.1 (1) Transaction-related expenses relate primarily to advisory fees recognized in respect of our initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings. E. Selected geographic information (dollars in millions) As of As of Property, plant and equipment, net by geographic location U.S. $ 199.2 $ 212.5 Rest of North America 117.3 107.4 U.K. 32.6 33.3 Rest of EMEA 154.4 157.3 East Asia and India 65.6 75.6 Greater China 138.4 149.3 South America 20.4 20.9 $ 727.9 $ 756.3 F. Information about major customers Gates has a significant concentration of sales in the U.S., which accounted for 43.2% of Gates’ net sales by destination from continuing operations during Fiscal 2019 , compared with 39.2% during Fiscal 2018 and 38.5% during Fiscal 2017 . During Fiscal 2019 , Fiscal 2018 and Fiscal 2017 , no single customer accounted for more than 10% of Gates’ net sales. Two customers of our North America businesses accounted for 18.9% and 11.3% , respectively, of our total trade accounts receivable balance as of December 28, 2019 , compared with 17.2% and 10.7% , respectively, as of December 29, 2018 . These concentrations are due to the extended payment terms common in the industry in which they operate. |
Restructuring and other strateg
Restructuring and other strategic initiatives | 12 Months Ended |
Dec. 28, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and other strategic initiatives | Restructuring and other strategic initiatives Gates continues to undertake various restructuring and other strategic initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, combine back-office workgroups and relocate certain operations to lower cost locations. Our recently completed manufacturing footprint investments and other productivity improvements in recent years have helped to position us to accelerate and expand upon our previously announced restructuring program, which is primarily intended to optimize our manufacturing and distribution footprint over the mid-term by removing structural fixed costs, and, to a lesser degree, to streamline our SG&A back-office functions. Overall costs associated with our restructuring and other strategic initiatives have been recognized in the consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP. For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Restructuring expenses: —Severance $ 4.7 $ 0.5 $ 13.6 —Professional fees 1.6 3.5 3.2 —Other restructuring (benefits) expenses (0.3 ) 2.4 0.6 6.0 6.4 17.4 Restructuring expenses in cost of sales: —Impairment of inventory 1.2 0.4 2.0 —Other restructuring expenses — 0.5 0.2 Total restructuring expenses $ 7.2 $ 7.3 $ 19.6 Expenses related to other strategic initiatives: —Severance costs included in cost of sales $ 4.0 $ 1.2 $ — —Severance costs included in SG&A 3.4 3.1 — —Impairment of fixed assets 0.7 — — Total expenses related to other strategic initiatives $ 8.1 $ 4.3 $ — Restructuring and other strategic initiatives undertaken during the year ended December 28, 2019 related primarily to reductions in workforce, across all regions and impairments of inventory and fixed assets related to facility closures in countries including France, the U.S., Turkey and Australia. An additional $1.6 million of professional fees were incurred during Fiscal 2019 , relating primarily to the closure of one of our facilities in France, the implementation of our European corporate center, and a strategic restructuring of part of our Asian business. Expenses incurred during the prior year in connection with our restructuring and other strategic initiatives also related primarily to the items described above. Restructuring activities As indicated above, restructuring expenses, as defined under U.S. GAAP, form a subset of our total expenses related to restructuring and other strategic initiatives. These expenses include the impairment of inventory, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Power Transmission $ 3.5 $ 2.8 $ 11.1 Fluid Power 3.7 4.5 8.5 Continuing operations $ 7.2 $ 7.3 $ 19.6 The following summarizes the reserve for restructuring expenses for the year s ended December 28, 2019 , December 29, 2018 , and December 30, 2017 , respectively: For the year ended (dollars in millions) December 28, December 29, Balance as of the beginning of the period $ 2.6 $ 8.6 Utilized during the period (5.7 ) (13.5 ) Net charge for the period 6.1 8.0 Released during the period (0.1 ) (0.7 ) Foreign currency translation — 0.2 Balance as of the end of the period $ 2.9 $ 2.6 Restructuring reserves, which are expected to be utilized in 2020 , are included in the consolidated balance sheet as follows: (dollars in millions) As of As of Accrued expenses and other current liabilities $ 2.9 $ 2.2 Other non-current liabilities — 0.4 $ 2.9 $ 2.6 |
Income taxes
Income taxes | 12 Months Ended |
Dec. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes Provision for income taxes Gates Industrial Corporation plc is domiciled in the United Kingdom. Income (loss) from continuing operations before taxes and income tax (benefit) expense are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable. Income (loss) before income taxes For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 U.K. $ (80.6 ) $ (12.8 ) $ 1.0 U.S. 0.9 (43.3 ) (63.1 ) Other 278.5 359.6 171.6 Income from continuing operations before income taxes $ 198.8 $ 303.5 $ 109.5 Income tax (benefit) expense on income from continuing operations analyzed by tax jurisdiction is as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Current tax U.K. $ 7.5 $ 0.8 $ 2.8 U.S. 21.0 9.0 7.8 Other foreign 124.3 86.9 79.7 Total current tax expense $ 152.8 $ 96.7 $ 90.3 Deferred income tax U.K. $ (4.7 ) $ 2.8 $ 0.9 U.S. (49.3 ) (45.3 ) (141.6 ) Other foreign (594.7 ) (22.4 ) (22.1 ) Total deferred income tax benefit (648.7 ) (64.9 ) (162.8 ) Income tax (benefit) expense $ (495.9 ) $ 31.8 $ (72.5 ) Reconciliation of the applicable statutory income tax rate to the reported effective income tax rate: For the year ended December 28, 2019 December 29, 2018 December 30, 2017 U.K. corporation tax rate 19.0 % 19.0 % U.S. corporation tax rate 35.0 % Effect of: —State tax provision, net of Federal benefit (2.1 %) (1.5 %) 2.5 % —Provision for unrecognized income tax benefits 34.0 % (1.3 %) 2.7 % —Company Owned Life Insurance (4.4 %) (2.8 %) (12.1 %) —Tax on international operations (1) (325.9 %) (1.1 %) 45.1 % —Manufacturing incentives (2) 0.5 % (4.2 %) (5.8 %) —Change in valuation allowance (3) 6.6 % 2.9 % 111.7 % —Deferred income tax rate changes 17.8 % 0.2 % (146.8 %) —Currency exchange rate movements 6.5 % 0.1 % (105.1 %) —Other permanent differences (1.4 %) (0.8 %) 6.6 % Reported effective income tax rate (249.4 %) 10.5 % (66.2 %) (1) “Tax on international operations” includes U.S. tax on foreign earnings, unremitted earnings of foreign subsidiaries, and effects of differences between statutory and foreign tax rates each of which was reported separately for the years ended December 28, 2019 , December 29, 2018 and December 30, 2017 . In addition, for the years ended December 28, 2019 and December 29, 2018 , it also includes the effects of global funding structures and the Tax Act; and for the year ended December 28, 2019 , it also includes $608.6 million for the generation of finite lived net operating losses in Luxembourg. (2) “Manufacturing incentives” for the year ended December 28, 2019 includes an adjustment of $5.0 million for the expiration of manufacturing incentives in the Czech Republic, offset partially by $4.1 million of incentives generated during the year. (3) “Change in valuation allowance” for the year ended December 28, 2019 is comprised primarily of an increase of $608.6 million of additional valuation allowance for finite lived net operating losses generated in Luxembourg, offset partially by a release of $579.0 million of valuation allowance against indefinite lived net operating losses in Luxembourg and by a release of $5.0 million of valuation allowances on manufacturing incentives in the Czech Republic. Tax Cuts and Jobs Act On December 22, 2017 the Tax Cuts and Jobs Act (“TCJA”) was enacted into law, which significantly changed U.S. tax law. TJCA among other things lowered the U.S. statutory federal tax rate from 35% to 21%, modified existing interest limitation regulations, and created new provisions for global intangible low-tax income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”) that taxes certain payments between U.S. corporation and their subsidiaries. During 2019, additional proposed and final regulations were released to clarify the provisions modified or created within TCJA. The effects of the final regulations and any proposed regulations that are anticipated to be enacted substantially in similar form were included in our annual results. Deferred income tax assets (liabilities) Deferred income tax assets (liabilities) recognized by the Company were as follows: (dollars in millions) As of As of Deferred income tax assets: Accounts receivable $ 3.1 $ 3.1 Inventories 6.2 6.2 Property, plant and equipment 5.9 5.2 Lease liabilities 37.0 6.2 Accrued expenses 46.8 41.9 Post-retirement benefit obligations 27.8 30.5 Compensation 12.8 15.2 Net operating losses 1,480.3 932.3 Capital losses 130.7 126.3 Credits 138.7 157.1 Interest 120.9 48.5 Other items 11.0 7.2 $ 2,021.2 $ 1,379.7 Valuation allowances (1,200.2 ) (1,191.5 ) Total deferred income tax assets $ 821.0 $ 188.2 Deferred income tax liabilities: Inventories (22.7 ) (21.6 ) Property, plant and equipment (51.2 ) (50.9 ) Lease right-of-use assets (30.1 ) (0.6 ) Intangible assets (450.7 ) (482.9 ) Post-retirement benefit obligations (6.8 ) (9.7 ) Undistributed earnings (40.9 ) (55.9 ) Other items (0.8 ) (1.0 ) Total deferred income tax liabilities $ (603.2 ) $ (622.6 ) Net deferred income tax assets (liabilities) $ 217.8 $ (434.4 ) As of December 28, 2019 : • Gates had U.S. federal, U.K. and foreign operating tax losses amounting to $5,918.7 million and U.S. state operating tax losses amounting to $154.0 million . Operating losses of $3,324.0 million can be carried forward indefinitely and $2,748.7 million have expiration dates between 2020 and 2039. We recognized a related deferred income tax asset of $597.7 million after valuation allowance of $882.6 million ; • Gates had U.S. state and U.K. capital tax losses amounting to $768.1 million . Capital losses of $768.0 million can be carried forward indefinitely and $0.1 million expire in 2028. We recognized no related deferred income tax asset after valuation allowance $130.7 million ; • Gates had U.S. federal, Luxembourg, Belgium and U.K. interest expense carried forward amounting to $518.1 million . Interest expense carried forward can be carried forward indefinitely. We recognized a related deferred tax asset of $73.0 million after valuation allowance of $47.9 million ; • Gates had U.S. federal foreign tax credits amounting to $135.5 million , which expire between 2020 and 2027. We recognized no related deferred income tax asset after valuation allowance of $135.5 million ; and • Gates had other tax credits amounting to $3.2 million , of which $0.6 million can be carried forward indefinitely and $2.6 million expire between 2020 and 2029. We recognized a deferred income tax asset of $1.8 million after valuation allowance of $1.4 million . As of December 28, 2019 , income and withholding taxes in the various tax jurisdictions in which Gates operates have not been provided on approximately $1,701.1 million of taxable temporary differences related to the investments in the Company’s subsidiaries. These temporary differences represent the estimated excess of the financial reporting over the tax basis in our investments in those subsidiaries, which are primarily the result of purchase accounting adjustments. These temporary differences are not expected to reverse in the foreseeable future, but could become subject to income and withholding taxes in the various tax jurisdictions in which Gates operates if they were to reverse. The amount of unrecognized deferred income tax liability on these taxable temporary differences has not been determined because the hypothetical calculation is not practicable due to the uncertainty as to how they may reverse. However, Gates has recognized a deferred income tax liability of $40.9 million on taxable temporary differences related to undistributed earnings of the Company’s subsidiaries. Recoverability of Deferred Income Tax Assets and Liabilities We recognize deferred income tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under U.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred income tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred income tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed. Our framework for assessing the recoverability of deferred income tax assets requires us to weigh all available evidence, including: • taxable income in prior carry back years if carry back is permitted under the relevant tax law; • future reversal of existing temporary differences; • tax-planning strategies that are prudent and feasible; and • future taxable income exclusive of reversing temporary differences and carryforwards. After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined in Fiscal 2019 that it was more likely than not that deferred income tax assets in Luxembourg, the U.K., and the U.S. totaling $586.2 million were realizable. Included within the $586.2 million total deferred income tax assets are deferred income tax assets totaling $579.0 million related to €2.1 billion of indefinite lived net operating losses in Luxembourg for which our evaluation of the positive and negative evidence changed during the first quarter of Fiscal 2019 due to the implementation of our European corporate center. Our European corporate center was implemented in Fiscal 2019 to centralize and strengthen regional operations in Europe, which thereafter became centrally managed from Luxembourg. The positive evidence that existed in favor of releasing the allowance as of December 28, 2019 and ultimately outweighed the negative evidence included the following: • our profitability in Europe in Fiscal 2018 and prior years and for Fiscal 2019 , as well as our expectations regarding the sustainability of these profits; • the impact of the implementation of our European corporate center, which created an expectation of future income in Luxembourg and, thereby, removed negative evidence that supported maintaining the valuation allowance against our deferred income tax assets as of December 29, 2018 ; and • the fact that our net operating loss carryforwards in Luxembourg are indefinite lived. Further, as a result of additional financing income realized in Fiscal 2019 that created taxable profits in the U.K., combined with our estimate that the financing income is likely to remain as a source of income through 2024, our judgment changed in the first quarter of Fiscal 2019 regarding valuation allowances totaling $6.1 million related to indefinite-lived net operating losses in the U.K. Finally, as a result of changes in estimates of future taxable profits in the first quarter of Fiscal 2019 , our judgment changed regarding the realizability of $1.1 million of U.S. foreign tax credits with related recorded valuation allowances. As of each reporting date, management considers new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred income tax assets. We will maintain our positions with regard to future realization of deferred income tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred income tax assets may impact materially our consolidated financial statements. Unrecognized income tax benefits The following is a reconciliation of the gross beginning and ending amount of unrecognized income tax benefits, excluding interest and penalties: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 At the beginning of the period $ 80.1 $ 106.1 $ 106.3 Increases for tax positions related to the current period 70.6 0.4 5.5 Increases for tax positions related to prior periods 5.8 0.2 4.6 Decreases for tax positions related to prior periods (2.1 ) (1.5 ) (2.8 ) Decreases related to settlements — — (0.7 ) Decreases due to lapsed statute of limitations (8.1 ) (21.0 ) (11.8 ) Foreign currency translation 1.0 (4.1 ) 5.0 At the end of the period $ 147.3 $ 80.1 $ 106.1 Unrecognized income tax benefits represent the difference between the income tax benefits that we are able to recognize for financial reporting purposes and the income tax benefits that we have recognized or expect to recognize in filed tax returns. Such amounts represent a reasonable provision for income taxes ultimately expected to be paid, and may need to be adjusted over time as more information becomes known. If all unrecognized income tax benefits were recognized, the net impact on the provision for income taxes which would impact the annual effective tax rate would be $122.6 million , including all competent authority offsets. As of December 28, 2019 , December 29, 2018 , and December 30, 2017 , Gates had accrued $19.6 million , $13.4 million , and $13.9 million , respectively, for the payment of worldwide interest and penalties on unrecognized income tax benefits, which are not included in the table above. Gates recognizes interest and penalties relating to unrecognized income tax benefits in the provision for income tax expense. We believe that it is reasonably possible that a decrease of up to $4.0 million of unrecognized income tax benefits will occur in the next 12 months as a result of the expiration of the statutes of limitations in multiple jurisdictions. Additionally, we believe it is reasonably possibly that a decrease of $20 to $25 million , of unrecognized tax benefits will occur in the next 12 months as a result of expected settlement of audits in Germany and Canada. As of December 28, 2019 , Gates remains subject to examination in the US for tax years 2015 to 2018 and in other major jurisdictions for tax years 2008 to 2018. |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 28, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings per share Basic earnings per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted earnings per share considers the dilutive effect of potential shares, unless the inclusion of the potential shares would have an anti-dilutive effect. The treasury stock method is used to determine the potential dilutive shares resulting from assumed exercises of equity-related instruments. The computation of earnings per share is presented below: For the year ended (dollars in millions, except share numbers and per share amounts) December 28, 2019 December 29, 2018 December 30, 2017 Net income attributable to shareholders $ 690.1 $ 245.3 $ 151.3 Weighted average number of shares outstanding 290,057,360 285,906,693 245,520,533 Dilutive effect of share-based awards 1,570,101 5,791,580 4,970,295 Diluted weighted average number of shares outstanding 291,627,461 291,698,273 250,490,828 Basic earnings per share $ 2.38 $ 0.86 $ 0.62 Diluted earnings per share $ 2.37 $ 0.84 $ 0.60 For the years ended December 28, 2019 , December 29, 2018 and December 30, 2017 , shares totaling 3,679,014 , 932,515 and 180,538 , respectively, were excluded from the diluted earnings per share calculation because they were anti-dilutive. |
Inventories
Inventories | 12 Months Ended |
Dec. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories (dollars in millions) As of As of Raw materials and supplies $ 118.9 $ 152.1 Work in progress 33.6 38.4 Finished goods 322.6 347.1 Total inventories $ 475.1 $ 537.6 |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | Property, plant and equipment (dollars in millions) As of As of Cost Land and buildings $ 318.6 $ 313.3 Machinery, equipment and vehicles 819.4 736.0 Assets under construction 49.8 84.3 1,187.8 1,133.6 Less: Accumulated depreciation and impairment (459.9 ) (377.3 ) Total $ 727.9 $ 756.3 During Fiscal 2019 , the depreciation expense in relation to the above assets was $92.3 million , compared with $87.8 million during Fiscal 2018 and $81.3 million during Fiscal 2017 . During Fiscal 2019 , no interest was capitalized to property, plant and equipment in relation to the construction of qualifying assets, compared with $4.5 million during Fiscal 2018 . No interest was capitalized during Fiscal 2017 . During Fiscal 2019 , an impairment of property, plant and equipment of $0.7 million was recognized, compared to $2.7 million in Fiscal 2018 , which included $2.1 million reported in restructuring expenses in relation to the planned closure of a facility in Europe. No significant impairments were recognized in relation to property, plant and equipment during Fiscal 2017 . Property, plant and equipment includes assets held under finance leases with a carrying amount of $2.8 million as of December 28, 2019 , compared with $2.2 million as of December 29, 2018 . Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and are secured by liens on substantially all of their assets, including property, plant and equipment. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill (dollars in millions) Power Fluid Total Cost and carrying amount As of December 30, 2017 $ 1,430.2 $ 655.3 $ 2,085.5 Acquisitions — 35.6 35.6 Foreign currency translation (56.1 ) (19.1 ) (75.2 ) As of December 29, 2018 1,374.1 671.8 2,045.9 Foreign currency translation 3.4 11.2 14.6 As of December 28, 2019 $ 1,377.5 $ 683.0 $ 2,060.5 As described further in note 4 , in April 2018, Gates completed the acquisition of Rapro. Included in the acquisitions line above for Fiscal 2018 is $34.4 million of goodwill arising from the acquisition of Rapro. An additional $1.2 million of goodwill was recognized during the second quarter of 2018 on finalization of the purchase accounting for the Atlas acquisition. |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Intangible assets As of December 28, 2019 As of December 29, 2018 (dollars in millions) Cost Accumulated Net Cost Accumulated Net Finite-lived: —Customer relationships $ 2,021.8 $ (656.3 ) $ 1,365.5 $ 2,017.4 $ (534.8 ) $ 1,482.6 —Technology 90.8 (87.8 ) 3.0 90.6 (87.0 ) 3.6 —Capitalized software 76.1 (38.0 ) 38.1 64.2 (29.2 ) 35.0 2,188.7 (782.1 ) 1,406.6 2,172.2 (651.0 ) 1,521.2 Indefinite-lived: —Brands and trade names 513.4 (44.0 ) 469.4 513.4 (44.0 ) 469.4 Total intangible assets $ 2,702.1 $ (826.1 ) $ 1,876.0 $ 2,685.6 $ (695.0 ) $ 1,990.6 During Fiscal 2019 and Fiscal 2018 , no significant impairments were recognized, compared with an impairment of $1.0 million recognized in relation to technology and know-how during Fiscal 2017 . Refer to note 15 .D. for additional detail on assets measured at fair value on a non-recurring basis. During Fiscal 2019 , the amortization expense recognized in respect of intangible assets was $129.9 million , compared with $130.7 million for Fiscal 2018 and $130.9 million for Fiscal 2017 . In addition, movements in foreign currency exchange rates resulted in an increase in the net carrying value of total intangible assets of $3.0 million in Fiscal 2019 , compared with a decrease of $35.3 million in Fiscal 2018 . The amortization expense for the next five years is estimated to be as follows: Fiscal year (dollars in millions) —2020 $ 131.6 —2021 131.1 —2022 129.7 —2023 124.5 —2024 123.5 |
Leases
Leases | 12 Months Ended |
Dec. 28, 2019 | |
Leases [Abstract] | |
Leases | Leases A. Overview As discussed in note 2 , at the beginning of our 2019 fiscal year, we adopted new lease accounting guidance under Topic 842 “ Leases ”, which brings most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases, although certain short-term leases are exempted from the standard. Under Topic 842, we evaluate our contracts and supply arrangements and conclude that they contain a lease at inception where (i) a tangible asset is explicitly or implicitly identified in the contract, (ii) we use the same asset identified over the course of the agreement, (iii) we obtain substantially all of the economic benefits from the use of the underlying asset, and (iv) we direct how and for what purpose the asset is used during the term of the contract. Leases are typically recognized on the balance sheet at their commencement date. However, if we take legal possession and have control over the asset before the commencement date, we would recognize the lease on the balance sheet at the earlier date. Gates has over 1,000 leases covering a wide variety of tangible assets that are used in our operations across the world. The value of our global leases is concentrated in approximately 90 real estate leases, which accounted for approximately 90% of the lease liability under non-cancellable leases as of December 28, 2019 . The remaining leases are predominantly comprised of equipment and vehicle leases. Options to extend or terminate leases In determining the lease term, we consider various economic factors, including real estate strategies, the nature, length and underlying terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these factors, where a contract has a renewal option, we generally assume with reasonable certainty that we will renew real estate leases and will not renew equipment, vehicles or any other leases. Variable payments We sometimes make payments under our lease agreements that are excluded from the measurement of our right-of-use assets and lease liabilities and are recognized instead as variable payments in the period in which the obligation for those payments is incurred. These costs include common area maintenance, insurance, taxes, utility costs, etc. A number of our leases, particularly real estate leases, include base rent escalation clauses. The majority of these are based on the change in a local consumer price or similar index. Payments that vary based on an index or rate are included in the measurement of our right-of-use assets and lease liabilities at the rate as of the commencement date with any subsequent changes to those payments being recognized as variable payments in the period in which they occur. Residual value guarantees, restrictions or covenants, and leases that have not yet commenced Gates does not have any significant leases containing residual value guarantees, restrictions or covenants. Additionally, as of December 28, 2019 , there were no significant new leases that have not yet commenced. B. Significant assumptions and judgments Discount rate The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily available. As most of our leases do not have a readily determinable implicit rate, we discount the future minimum lease payments using an incremental borrowing rate which represents the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We determine this rate at a country or lower level and take into account factors including currency, country risk premium, industry risk and adjustments for collateralized debt. Appropriate yield curves are used to derive different debt tenors to approximate the applicable lease term. The discount rate is reassessed when there is a remeasurement of the lease liability, which happens predominantly when there is a contract modification and that modification does not result in a separate contract. Elections and practical expedients The following practical expedients have been adopted as part of our accounting policy on leases: (i) we will not separate the lease component from the non-lease component for all asset classes. We have therefore not allocated consideration in a contract between lease and non-lease components; and (ii) we recognize the payments on short-term leases (leases with terms at inception of 12 months or fewer) in net income on a straight-line basis over the lease term. No amount is recognized on the balance sheet with respect to these leases. C. Quantitative disclosures ( dollars in millions ) For the year ended December 28, 2019 Lease expenses Operating lease expenses $ 30.3 Finance lease amortization expenses 0.3 Short-term lease expenses 4.6 Variable lease expenses 6.9 Sublease income (0.1 ) Total lease expenses $ 42.0 Other information Right-of-use assets obtained in exchange for new operating lease liabilities $ 19.7 Right-of-use assets obtained in exchange for new finance lease liabilities $ 0.9 Cash paid for amounts included in the measurement of lease liabilities: —Operating cash flows from operating leases $ 26.3 —Financing cash flows from finance leases 0.4 $ 26.7 Weighted-average remaining lease term — finance leases 8.5 years Weighted-average remaining lease term — operating leases 10.1 years Weighted-average discount rate — finance leases 2.5 % Weighted-average discount rate — operating leases 5.4 % Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.5 $ 0.6 Year 2 21.6 0.5 Year 3 18.2 0.5 Year 4 15.0 0.2 Year 5 13.4 — Year 6 and beyond 84.5 — Total lease payments 178.2 1.8 Interest (43.9 ) (0.1 ) Total present value of lease liabilities $ 134.3 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 8.5 years , the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022. Balance sheet presentation of leases as of December 28, 2019 ( dollars in millions ) Operating leases Finance leases Right-of-use assets $ 123.0 $ 2.8 Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) $ 19.5 $ 0.3 Long-term lease liabilities 114.8 1.4 Total lease liabilities $ 134.3 $ 1.7 Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the consolidated balance sheet. The amortization of right-of-use operating assets during the year ended December 28, 2019 was $23.6 million . This is included in the change in prepaid expenses and other assets line in the consolidated statement of cash flows. Topic 840 Disclosures Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows: ( dollars in millions ) Operating leases Finance leases Total Fiscal year 2019 $ 25.0 $ 0.3 $ 25.3 2020 21.3 0.3 21.6 2021 18.2 0.3 18.5 2022 14.4 0.3 14.7 2023 12.6 0.4 13.0 2024 and beyond 86.5 0.4 86.9 Total $ 178.0 $ 2.0 $ 180.0 |
Leases | Leases A. Overview As discussed in note 2 , at the beginning of our 2019 fiscal year, we adopted new lease accounting guidance under Topic 842 “ Leases ”, which brings most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases, although certain short-term leases are exempted from the standard. Under Topic 842, we evaluate our contracts and supply arrangements and conclude that they contain a lease at inception where (i) a tangible asset is explicitly or implicitly identified in the contract, (ii) we use the same asset identified over the course of the agreement, (iii) we obtain substantially all of the economic benefits from the use of the underlying asset, and (iv) we direct how and for what purpose the asset is used during the term of the contract. Leases are typically recognized on the balance sheet at their commencement date. However, if we take legal possession and have control over the asset before the commencement date, we would recognize the lease on the balance sheet at the earlier date. Gates has over 1,000 leases covering a wide variety of tangible assets that are used in our operations across the world. The value of our global leases is concentrated in approximately 90 real estate leases, which accounted for approximately 90% of the lease liability under non-cancellable leases as of December 28, 2019 . The remaining leases are predominantly comprised of equipment and vehicle leases. Options to extend or terminate leases In determining the lease term, we consider various economic factors, including real estate strategies, the nature, length and underlying terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these factors, where a contract has a renewal option, we generally assume with reasonable certainty that we will renew real estate leases and will not renew equipment, vehicles or any other leases. Variable payments We sometimes make payments under our lease agreements that are excluded from the measurement of our right-of-use assets and lease liabilities and are recognized instead as variable payments in the period in which the obligation for those payments is incurred. These costs include common area maintenance, insurance, taxes, utility costs, etc. A number of our leases, particularly real estate leases, include base rent escalation clauses. The majority of these are based on the change in a local consumer price or similar index. Payments that vary based on an index or rate are included in the measurement of our right-of-use assets and lease liabilities at the rate as of the commencement date with any subsequent changes to those payments being recognized as variable payments in the period in which they occur. Residual value guarantees, restrictions or covenants, and leases that have not yet commenced Gates does not have any significant leases containing residual value guarantees, restrictions or covenants. Additionally, as of December 28, 2019 , there were no significant new leases that have not yet commenced. B. Significant assumptions and judgments Discount rate The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily available. As most of our leases do not have a readily determinable implicit rate, we discount the future minimum lease payments using an incremental borrowing rate which represents the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We determine this rate at a country or lower level and take into account factors including currency, country risk premium, industry risk and adjustments for collateralized debt. Appropriate yield curves are used to derive different debt tenors to approximate the applicable lease term. The discount rate is reassessed when there is a remeasurement of the lease liability, which happens predominantly when there is a contract modification and that modification does not result in a separate contract. Elections and practical expedients The following practical expedients have been adopted as part of our accounting policy on leases: (i) we will not separate the lease component from the non-lease component for all asset classes. We have therefore not allocated consideration in a contract between lease and non-lease components; and (ii) we recognize the payments on short-term leases (leases with terms at inception of 12 months or fewer) in net income on a straight-line basis over the lease term. No amount is recognized on the balance sheet with respect to these leases. C. Quantitative disclosures ( dollars in millions ) For the year ended December 28, 2019 Lease expenses Operating lease expenses $ 30.3 Finance lease amortization expenses 0.3 Short-term lease expenses 4.6 Variable lease expenses 6.9 Sublease income (0.1 ) Total lease expenses $ 42.0 Other information Right-of-use assets obtained in exchange for new operating lease liabilities $ 19.7 Right-of-use assets obtained in exchange for new finance lease liabilities $ 0.9 Cash paid for amounts included in the measurement of lease liabilities: —Operating cash flows from operating leases $ 26.3 —Financing cash flows from finance leases 0.4 $ 26.7 Weighted-average remaining lease term — finance leases 8.5 years Weighted-average remaining lease term — operating leases 10.1 years Weighted-average discount rate — finance leases 2.5 % Weighted-average discount rate — operating leases 5.4 % Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.5 $ 0.6 Year 2 21.6 0.5 Year 3 18.2 0.5 Year 4 15.0 0.2 Year 5 13.4 — Year 6 and beyond 84.5 — Total lease payments 178.2 1.8 Interest (43.9 ) (0.1 ) Total present value of lease liabilities $ 134.3 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 8.5 years , the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022. Balance sheet presentation of leases as of December 28, 2019 ( dollars in millions ) Operating leases Finance leases Right-of-use assets $ 123.0 $ 2.8 Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) $ 19.5 $ 0.3 Long-term lease liabilities 114.8 1.4 Total lease liabilities $ 134.3 $ 1.7 Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the consolidated balance sheet. The amortization of right-of-use operating assets during the year ended December 28, 2019 was $23.6 million . This is included in the change in prepaid expenses and other assets line in the consolidated statement of cash flows. Topic 840 Disclosures Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows: ( dollars in millions ) Operating leases Finance leases Total Fiscal year 2019 $ 25.0 $ 0.3 $ 25.3 2020 21.3 0.3 21.6 2021 18.2 0.3 18.5 2022 14.4 0.3 14.7 2023 12.6 0.4 13.0 2024 and beyond 86.5 0.4 86.9 Total $ 178.0 $ 2.0 $ 180.0 |
Derivative financial instrument
Derivative financial instruments | 12 Months Ended |
Dec. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | Derivative financial instruments We are exposed to certain risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact. We recognize derivative instruments as either assets or liabilities in the consolidated balance sheet. We designate certain of our currency swaps as net investment hedges and designate our interest rate caps and interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in OCI and reclassified into net income in the same period or periods during which the hedged transaction affects earnings. Derivative instruments that have not been designated in an effective hedging relationship are considered economic hedges, and their change in fair value is recognized in net income in each period. The period end fair values of derivative financial instruments were as follows: As of December 28, 2019 As of December 29, 2018 (dollars in millions) Prepaid expenses and other assets Other non- Accrued expenses and other Other Net Prepaid expenses and other assets Other non- Accrued expenses and other Other non- Net Derivatives designated as hedging instruments: —Currency swaps $ 4.2 $ — $ — $ (19.3 ) $ (15.1 ) $ 5.4 $ — $ — $ (27.5 ) $ (22.1 ) —Interest rate caps — — (4.0 ) (3.0 ) (7.0 ) 3.5 1.6 — (10.9 ) (5.8 ) —Interest rate swaps — — (5.3 ) (29.0 ) (34.3 ) — — (0.3 ) (2.6 ) (2.9 ) Derivatives not designated as hedging instruments: —Currency swaps — — (0.1 ) — (0.1 ) — — — — — —Currency forward contracts 1.2 — (0.2 ) — 1.0 1.3 — (0.4 ) — 0.9 $ 5.4 $ — $ (9.6 ) $ (51.3 ) $ (55.5 ) $ 10.2 $ 1.6 $ (0.7 ) $ (41.0 ) $ (29.9 ) A. Instruments designated as net investment hedges We hold cross currency swaps that have been designated as net investment hedges of certain of our European operations. As of December 28, 2019 and December 29, 2018 , the notional principal amount of these contracts was $270.0 million . During July 2019, we extended the maturity of these contracts from March 2020 to March 2022. In addition, as of December 28, 2019 , we have designated €147.0 million of our Euro-denominated debt as a net investment hedge of certain of our European operations, compared with €30.6 million designated as such as of December 29, 2018 . The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Net fair value gains (losses) recognized in OCI in relation to: —Euro-denominated debt $ (0.2 ) $ (11.0 ) $ (73.3 ) —Designated cross currency swaps 5.7 20.8 (36.1 ) Total net fair value gains (losses) $ 5.5 $ 9.8 $ (109.4 ) During the year ended December 28, 2019 , a net gain of $7.8 million was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges, compared with a net gain of $2.5 million during the year ended December 29, 2018 . B. Instruments designated as cash flow hedges We use interest rate swaps and interest rate caps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. As of December 28, 2019 and December 29, 2018 , we held three pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $870.0 million , which run from June 30, 2020 through June 30, 2023 . Our interest rate caps involve the receipt of variable rate payments from a counterparty if interest rates rise above the strike rate on the contract in exchange for a premium. As of December 28, 2019 and December 29, 2018 , the notional amount of the interest rate cap contracts outstanding was $1.7 billion and $2.7 billion , respectively. The periods covered by our interest rate caps and their notional values are as follows: (in millions) Notional value June 30, 2017 to June 30, 2020 $ 200.0 June 28, 2019 to June 30, 2020 $ 1,000.0 July 1, 2019 to June 30, 2023 € 425.0 The movements before tax recognized in OCI in relation to our cash flow hedges were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Movement recognized in OCI in relation to: —Fair value loss on cash flow hedges $ (31.7 ) $ (4.5 ) $ (2.0 ) —Deferred premium reclassified from OCI to net income 2.5 5.4 11.6 Total movement $ (29.2 ) $ 0.9 $ 9.6 As of December 28, 2019 , we expect to reclassify an estimated $10.4 million in OCI, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions. C. Derivative instruments not designated as hedging instruments We do not designate our currency forward contracts, which are used primarily in respect of operational currency exposures related to payables, receivables and material procurement, or the currency swap contracts that are used to manage the currency profile of Gates’ cash as hedging instruments for the purposes of hedge accounting. As of December 28, 2019 , the notional principal amount of outstanding currency swaps that are used to manage the currency profile of Gates’ cash was $16.7 million , compared with $0 as of December 29, 2018 . As of December 28, 2019 , the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $82.5 million , compared with $108.0 million as of December 29, 2018 . The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Fair value gains (losses) recognized in relation to: —Currency forward contracts recognized in SG&A $ 3.0 $ 2.4 $ 2.8 —Currency swaps recognized in other (income) expenses 0.6 0.6 (0.5 ) Total $ 3.6 $ 3.0 $ 2.3 |
Fair value measurement
Fair value measurement | 12 Months Ended |
Dec. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement | Fair value measurement A. Fair value hierarchy We account for certain assets and liabilities at fair value. Topic 820 “ Fair Value Measurements and Disclosures ” establishes the following hierarchy for the inputs that are used in fair value measurement: • “Level 1” inputs are unadjusted quoted prices in active markets for identical assets or liabilities; • “Level 2” inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and • “Level 3” inputs are not based on observable market data (unobservable inputs). Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation. B. Financial instruments not held at fair value Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values. The carrying amount and fair value of our debt are set out below: As of December 28, 2019 As of December 29, 2018 (dollars in millions) Carrying amount Fair value Carrying amount Fair value Current $ 46.1 $ 45.9 $ 51.6 $ 50.4 Non-current 2,912.3 2,946.8 2,953.4 2,873.2 $ 2,958.4 $ 2,992.7 $ 3,005.0 $ 2,923.6 Debt is comprised principally of borrowings under the secured credit facilities and the unsecured senior notes. Loans under the secured credit facilities pay interest at floating rates, subject to a 1% LIBOR floor on the Dollar Term Loan and a 0% EURIBOR floor on the Euro Term Loan. The fair values of the term loans are derived from a market price, discounted for illiquidity. The unsecured senior notes have fixed interest rates, are traded by “Qualified Institutional Buyers” and certain other eligible investors, and their fair value is derived from their quoted market price. C. Assets and liabilities measured at fair value on a recurring basis The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis: (dollars in millions) Quoted prices in active Significant observable Total As of December 28, 2019 Equity investments $ 1.1 $ — $ 1.1 Derivative assets $ — $ 5.4 $ 5.4 Derivative liabilities $ — $ (60.9 ) $ (60.9 ) As of December 29, 2018 Equity investments $ 0.8 $ — $ 0.8 Derivative assets $ — $ 11.8 $ 11.8 Derivative liabilities $ — $ (41.7 ) $ (41.7 ) Available-for-sale securities represent equity securities that are traded in an active market and therefore are measured using quoted prices in an active market. Derivative assets and liabilities included in Level 2 represent foreign currency exchange forward and swap contracts, and interest rate derivative contracts. We value our foreign currency exchange derivatives using models consistent with those used by a market participant that maximize the use of market observable inputs including forward prices for currencies. We value our interest rate derivative contracts using a widely accepted discounted cash flow valuation methodology that reflects the contractual terms of each derivative, including the period to maturity. The methodology derives the fair values of the derivatives using the market standard methodology of netting the discounted future cash payments and the discounted expected receipts. The inputs used in the calculation are based on observable market-based inputs, including interest rate curves, implied volatilities and credit spreads. We incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Transfers between levels of the fair value hierarchy During the periods presented, there were no transfers between Levels 1 and 2, and Gates had no assets or liabilities measured at fair value on a recurring basis using Level 3 inputs. D. Assets measured at fair value on a non-recurring basis Gates has non-recurring fair value measurements related to certain assets, including goodwill, intangible assets, and property, plant, and equipment. No significant impairment was recognized during either the year ended December 28, 2019 or the year ended December 29, 2018 . |
Debt
Debt | 12 Months Ended |
Dec. 28, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt (dollars in millions) As of As of Secured debt: —Dollar Term Loan $ 1,699.1 $ 1,716.4 —Euro Term Loan 717.7 742.1 Unsecured debt: —6.25% Dollar Senior Notes due 2026 568.0 — —6.00% Dollar Senior Notes due 2022 — 568.0 —Other loans 0.2 0.6 Total principal of debt 2,985.0 3,027.1 Deferred issuance costs (41.8 ) (48.7 ) Accrued interest 15.2 26.6 Total carrying value of debt 2,958.4 3,005.0 Debt, current portion 46.1 51.6 Debt, less current portion $ 2,912.3 $ 2,953.4 Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets. Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements. The principal payments due under our financing agreements over the next five years and thereafter are as follows: (dollars in millions) Total Fiscal year —2020 $ 30.9 —2021 24.7 —2022 24.7 —2023 24.7 —2024 2,312.0 Thereafter 568.0 $ 2,985.0 Debt issuances and redemptions On November 22, 2019, we issued and sold $568.0 million of unsecured Dollar Senior Notes, described further below. The proceeds from this debt issuance were used on December 5, 2019 to redeem all $568.0 million of our outstanding 6.00% Dollar Senior Notes, plus interest accrued up to and including the redemption date of $13.2 million . The majority of the costs totaling approximately $8.6 million related to the refinancing transactions have been deferred and will be amortized to interest expense over the remaining term of the related borrowings using the effective interest method. On January 31, 2018, we redeemed in full our outstanding €235.0 million Euro Senior Notes, plus interest accrued up to and including the redemption date of $0.7 million . The Euro Senior Notes were redeemed at a price of 102.875% and a redemption premium of $8.4 million was therefore paid in addition to the principal of $291.7 million . On February 8 and February 9, 2018, we redeemed 6.00% Dollar Senior Notes with a principal of $522.0 million and $100.0 million , respectively. Both of these calls were made at a price of 103.0% , incurring redemption premiums of $15.6 million and $3.0 million , respectively. Interest accrued of $2.0 million and $0.4 million , respectively, was also paid on these dates. The 2018 prepayments, totaling $913.7 million in principal, $27.0 million in redemption premiums and $3.1 million in accrued interest, were funded primarily by the net proceeds from our initial public offering, with the remainder of the funds coming from cash on hand. As a result of these redemptions, the recognition of $15.4 million of deferred financing costs was accelerated and recognized in interest expense in the first three months of 2018. Dollar and Euro Term Loans Our secured credit facilities include a Dollar Term Loan credit facility and a Euro Term Loan credit facility that were drawn on July 3, 2014. The maturity date for each of the term loan facilities is March 31, 2024. These term loan facilities bear interest at a floating rate, which for U.S. dollar debt can be either a base rate as defined in the credit agreement plus an applicable margin, or at our option, LIBOR plus an applicable margin. The Euro Term Loan bears interest at EURIBOR subject to a floor of 0% , plus a margin of 3.00% . On January 29, 2018, the applicable margin on each of the term loans was lowered by 0.25% following the successful completion of our initial public offering. The Dollar Term Loan interest rate is currently LIBOR, subject to a floor of 1.00% , plus a margin of 2.75% , and as of December 28, 2019 , borrowings under this facility bore interest at a rate of 4.45% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As of December 28, 2019 , the Euro Term Loan bore interest at EURIBOR, which is currently below 0% , subject to a floor of 0% , plus a margin of 3.00% . The Euro Term Loan interest rate is re-set on the last business day of each quarter. Both term loans are subject to quarterly amortization payments of 0.25% , based on the original principal amount less certain prepayments with the balance payable on maturity. During the year ended December 28, 2019 , we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $17.3 million and $7.4 million , respectively. During the year ended December 29, 2018 , we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $13.0 million and $5.8 million , respectively. Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the agreement, based on the preceding year’s final results. Based on our 2019 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment is required to be made in 2020. During the periods presented, foreign exchange gains were recognized in respect of the Euro Term Loans as summarized in the table below. As a portion of the facility was designated as a net investment hedge of certain of our Euro investments, a corresponding portion of the foreign exchange gains (losses) were recognized in OCI. For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Gain (loss) recognized in statement of operations $ 17.3 $ 43.6 $ (60.2 ) Loss recognized in OCI (0.2 ) (6.0 ) (36.5 ) Total gain (loss) $ 17.1 $ 37.6 $ (96.7 ) Subsequent to our initial public offering, the above net foreign exchange gains recognized in the other (income) expenses line of the consolidated statement of operations have been substantially offset by net foreign exchange movements on Euro-denominated intercompany loans as part of our overall hedging strategy. A wholly-owned U.S. subsidiary of Gates Global LLC is the principal obligor under the Term Loans for U.S. federal income tax purposes and makes the payments due on this tranche of debt. As a result, interest received by lenders of this tranche of debt is U.S. source income. Unsecured Senior Notes As of December 28, 2019 , we had $568.0 million of Dollar Senior Notes outstanding that were issued in November 2019. These notes are scheduled to mature on January 15, 2026 and bear interest at an annual fixed rate of 6.25% with semi-annual interest payments. On and after January 15, 2022, we may redeem the Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date: Redemption Price During the year commencing: —2022 103.125 % —2023 101.563 % —2024 and thereafter 100.000 % Additionally, net cash proceeds from an equity offering can be utilized at any time prior to January 15, 2022, to redeem up to 40% of the notes at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date. Upon the occurrence of a change of control or a certain qualifying asset sales, the holders of the notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. As noted above, on December 5, 2019, we redeemed all $568.0 million of our 6.00% Dollar Senior Notes due in 2022, and, on January 31, 2018, we redeemed in full all €235.0 million of our outstanding Euro Senior Notes and made partial redemptions of the 6.00% Dollar Senior Notes totaling $622.0 million . Up to the date of their redemption, foreign exchange losses of $9.2 million were recognized in respect of the Euro Senior Notes. Of these losses, $5.0 million was recognized in OCI for the period during which the facility was designated as a net investment hedge of certain of our Euro investments, and $4.2 million was recognized in the statement of operations. Revolving credit facility We also have a secured revolving credit facility, maturing on January 29, 2023, that provides for multi-currency revolving loans up to an aggregate principal amount of $185.0 million , with a letter of credit sub-facility of $20.0 million . The facility matures on January 29, 2023. As of both December 28, 2019 and December 29, 2018 , there were no drawings for cash under the revolving credit facility and there were no letters of credit outstanding. Debt under the revolving credit facility bears interest at a floating rate, which can be either a base rate as defined in the credit agreement plus an applicable margin or, at our option, LIBOR, plus an applicable margin. Asset-backed revolver We have a revolving credit facility backed by certain of our assets in North America. The facility allows for loans of up to a maximum of $325.0 million ( $294.6 million as of December 28, 2019 , compared with $325.0 million as of December 29, 2018 , based on the values of the secured assets on those dates) with a letter of credit sub-facility of $150.0 million within this maximum. The facility matures on January 29, 2023. As of both December 28, 2019 and December 29, 2018 , there were no drawings for cash under the asset-backed revolver, but there were letters of credit outstanding of $50.1 million and $57.8 million , respectively. Debt under the facility bears interest at a floating rate, which can be either a base rate as defined in the credit agreement plus an applicable margin or, at our option, LIBOR, plus an applicable margin. |
Accrued expenses and other liab
Accrued expenses and other liabilities | 12 Months Ended |
Dec. 28, 2019 | |
Payables and Accruals [Abstract] | |
Accrued expenses and other liabilities | Accrued expenses and other liabilities Accrued expenses and other liabilities consisted of the following: (dollars in millions) As of As of Accrued compensation $ 47.3 $ 75.0 Current portion of lease obligations 19.8 0.1 Derivative financial instruments 60.9 41.7 Payroll and related taxes payable 11.3 13.6 VAT and other taxes payable 11.5 10.9 Warranty reserve 17.7 14.3 Workers’ compensation reserve 10.0 11.1 Other accrued expenses and other liabilities 95.0 96.7 $ 273.5 $ 263.4 The above liabilities are presented in Gates’ balance sheet within other current liabilities and other non-current liabilities as follows: (dollars in millions) As of As of —Accrued expenses and other current liabilities $ 188.8 $ 184.2 —Other non-current liabilities 84.7 79.2 $ 273.5 $ 263.4 Changes in warranty reserves (included in accrued expenses and other liabilities) were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Balance at the beginning of the period $ 14.3 $ 14.1 $ 14.3 Charge for the period 16.5 11.6 12.3 Utilized during the period (10.9 ) (11.0 ) (13.1 ) Released during the period (2.2 ) (0.1 ) (0.1 ) Foreign currency translation — (0.3 ) 0.7 Balance at the end of the period $ 17.7 $ 14.3 $ 14.1 Warranty reserves An accrual is made for warranty claims on various products depending on specific market expectations and the type of product. These estimates are established using historical information on the nature, frequency and average cost of warranty claims. The majority of the warranty accruals are expected to be utilized during 2019 , with the remainder estimated to be utilized within the next three years. An accrual is made for the cost of product recalls if management considers it probable that it will be necessary to recall a specific product and the amount can be reasonably estimated. |
Post-retirement benefits
Post-retirement benefits | 12 Months Ended |
Dec. 28, 2019 | |
Postemployment Benefits [Abstract] | |
Post-retirement benefits | Post-retirement benefits A. Defined contribution pension plans Gates provides defined contribution pension benefits in most of the countries in which it operates; in particular, the majority of its employees in the U.S. are entitled to such benefits. During Fiscal 2019 , the expense recognized by Gates in respect of defined contribution pension plans was $17.9 million , compared with $19.1 million in Fiscal 2018 and $18.6 million in Fiscal 2017 . B. Defined benefit pension plans Gates operates defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. Generally, the pension benefits provided under these plans are based on pensionable salary and the period of service of the individual employees. Plan assets are held separately from those of Gates in funds that are under the control of trustees. All of the defined benefit pension plans operated by Gates are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees. Funded status The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows: (dollars in millions) As of As of Pension surplus $ (38.1 ) $ (52.6 ) Accrued expenses and other current liabilities 2.3 2.4 Post-retirement benefit obligations 98.7 102.4 Net unfunded pension obligation $ 62.9 $ 52.2 Plans whose projected benefit obligation was in excess of plan assets: —Aggregate projected benefit obligation $ 391.7 $ 378.2 —Aggregate plan assets $ 290.7 $ 273.4 Plans whose accumulated benefit obligation was in excess of the plan assets: —Aggregate accumulated benefit obligation $ 381.6 $ 372.3 —Aggregate plan assets $ 286.2 $ 273.0 Benefit obligation Changes in the projected benefit obligation in relation to defined benefit pension plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Benefit obligation at the beginning of the period $ 827.1 $ 932.9 Employer service cost 5.5 5.3 Plan participants’ contributions 0.2 0.2 Plan amendments — 11.4 Interest cost 23.4 23.6 Net actuarial loss (gain) 83.1 (41.1 ) Benefits paid (51.6 ) (56.5 ) Expenses paid from assets (2.3 ) (1.8 ) Curtailments and settlements (3.6 ) (13.4 ) Foreign currency translation 16.3 (33.5 ) Benefit obligation at the end of the period $ 898.1 $ 827.1 Accumulated benefit obligation $ 892.4 $ 821.3 Changes in plan assets Changes in the fair value of the assets held by defined benefit pension plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Plan assets at the beginning of the period $ 774.9 $ 893.6 Actual return on plan assets 90.4 (19.7 ) Employer contributions 8.5 8.9 Plan participants’ contributions 0.2 0.2 Curtailments and settlements (2.3 ) (13.4 ) Benefits paid (51.6 ) (56.5 ) Expenses paid from assets (2.3 ) (1.8 ) Foreign currency translation 17.4 (36.4 ) Plan assets at the end of the period $ 835.2 $ 774.9 During December 2018, we reflected a plan amendment in respect of certain of our U.K. pension plans. This amendment arose as a result of a recent U.K. High Court ruling in a case unrelated to Gates that has consequences for many U.K. pension plans. The amendment relates to the equalization of benefits in order to address inequalities that arise due to differing guaranteed minimum pension entitlements for men and women. The resulting increase of $11.4 million in the pension liability has been accounted for through OCI as a prior year service cost. Gates’ desired investment objectives for pension plan assets include maintaining an adequate level of diversification to reduce interest rate and market risk, and to provide adequate liquidity to meet immediate and future benefit payment requirements. Outside the U.S., Gates’ defined benefit pension plans target a mix of growth seeking assets, comprising equities, and income generating assets, comprising government and corporate bonds, that is considered by the trustees to be appropriate in the circumstances. Plan assets are rebalanced periodically to maintain target asset allocations. Certain benefit obligations outside the U.S. are matched by insurance contracts. Investments in equities and fixed income securities are held in pooled investment funds that are managed by investment managers on a passive (or “index-tracking”) basis. The trustees ensure that there is no significant concentration of credit risk in any one financial institution. Plan assets do not include any financial instruments issued by, any property occupied by, or other assets used by Gates. The fair values of pension plan assets by asset category were as follows: As of December 28, 2019 As of December 29, 2018 (dollars in millions) Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Collective investment trusts: Equity Securities $ — $ 102.7 $ — $ 102.7 $ — $ 83.2 $ — $ 83.2 Debt Securities —Corporate bonds — 207.9 — 207.9 — 156.5 — 156.5 —Government bonds — 231.3 — 231.3 — 302.9 — 302.9 Annuities and insurance — 48.7 235.9 284.6 — 4.0 223.9 227.9 Cash and cash equivalents 8.7 — — 8.7 4.4 — — 4.4 Total $ 8.7 $ 590.6 $ 235.9 $ 835.2 $ 4.4 $ 546.6 $ 223.9 $ 774.9 Investments in equities and bonds held in pooled investment funds are measured at the bid price quoted by the investment managers, which reflect the quoted prices of the underlying securities. Insurance contracts are measured at their surrender value quoted by the insurers. Cash and cash equivalents largely attract floating interest rates. Changes in the fair value of plan assets measured using significant unobservable inputs (level 3) were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Fair value at the beginning of the period $ 224.0 $ 248.1 Actual return on plan assets 17.9 (0.3 ) Purchases 1.4 1.7 Sales (0.9 ) (0.9 ) Impacts of benefits paid (12.3 ) (10.5 ) Foreign currency translation 5.8 (14.1 ) Fair value at the end of the period $ 235.9 $ 224.0 Estimated future contributions and benefit payments Gates’ funding policy for its defined benefit pension plans is to contribute amounts determined annually on an actuarial basis to provide for current and future benefits in accordance with federal law and other regulations. During Fiscal 2020, Gates expects to contribute approximately $4.3 million to its defined benefit pension plans. Benefit payments, reflecting expected future service, are expected to be made by Gates’ defined benefit pension plans as follows: (dollars in millions) Fiscal year —2020 $ 48.2 —2021 46.8 —2022 48.3 —2023 47.8 —2024 47.6 —2025 through 2029 239.2 Net periodic benefit cost Components of the net periodic benefit cost for defined benefit pension plans relating to continuing operations were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Employer service cost $ 5.5 $ 5.3 $ 5.8 Settlements and curtailments (0.6 ) 0.3 (3.8 ) Interest cost 23.4 23.6 30.4 Expected return on plan assets (27.8 ) (22.6 ) (26.9 ) Amortization of prior net actuarial loss — 0.1 0.4 Amortization of prior service cost 0.8 0.1 — Net periodic benefit cost $ 1.3 $ 6.8 $ 5.9 Other comprehensive income Changes in plan assets and benefit obligations of defined benefit pension plans recognized in OCI were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Current period net actuarial loss (gain) $ 20.5 $ 1.2 $ (20.9 ) Amortization of prior net actuarial loss — (0.1 ) (0.4 ) Prior service cost — 11.4 0.7 Amortization of prior service cost (0.8 ) (0.1 ) — (Gain) loss recognized due to settlements and curtailments (0.8 ) (0.3 ) 3.8 Pre-tax changes recognized in OCI other than foreign currency translation 18.9 12.1 (16.8 ) Foreign currency translation 1.0 (0.1 ) (0.9 ) Total pre-tax changes recognized in OCI $ 19.9 $ 12.0 $ (17.7 ) Cumulative losses (gains) before tax recognized in OCI in respect of post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Actuarial loss $ 21.2 $ 1.5 $ 0.7 Prior service costs 11.1 11.9 0.6 Foreign currency translation (2.9 ) (3.9 ) (3.8 ) Cumulative total $ 29.4 $ 9.5 $ (2.5 ) It is estimated that a net $1.0 million loss will be amortized from accumulated other comprehensive loss into net periodic benefit cost during the period from December 29, 2019 through January 2, 2021. Assumptions Major assumptions used in determining the benefit obligation and the net periodic benefit cost for defined benefit pension plans are presented in the following table as weighted averages: As of As of Benefit obligation: —Discount rate 2.261 % 2.932 % —Rate of salary increase 3.173 % 3.190 % Net periodic benefit cost: —Discount rate 2.932 % 2.619 % —Rate of salary increase 3.190 % 3.178 % —Expected return on plan assets 3.622 % 2.844 % In determining the expected return on plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance. Return projections are validated using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns. C. Other defined benefit plans Gates provides other post-employment benefits, principally health and life insurance cover, on an unfunded basis to certain of its employees in the U.S. and Canada. Funded status The deficit recognized in respect of other defined benefit plans is presented in the balance sheet as follows: (dollars in millions) As of As of Accrued expenses and other current liabilities $ 5.4 $ 6.5 Post-retirement benefit obligations 52.5 53.5 $ 57.9 $ 60.0 Benefit obligation Changes in the accumulated benefit obligation in relation to other defined benefit plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Benefit obligation at the beginning of the period $ 60.0 $ 68.4 Interest cost 2.3 2.2 Actuarial gain (1.8 ) (4.8 ) Benefits paid (3.5 ) (4.1 ) Foreign currency translation 0.9 (1.7 ) Benefit obligation at the end of the period $ 57.9 $ 60.0 Accumulated benefit obligation $ 57.9 $ 60.0 Estimated future contributions and benefit payments Contributions are made to our other defined benefit plans as and when benefits are paid from the plans. During Fiscal 2020, Gates expects to contribute approximately $5.5 million to its other benefit plans. Benefit payments, reflecting expected future service, are expected to be made by Gates’ other defined benefit plans as follows: (dollars in millions) Fiscal years: —2020 $ 5.5 —2021 5.2 —2022 4.9 —2023 4.6 —2024 4.3 —2025 through 2029 18.3 Net periodic benefit cost Components of the net periodic benefit cost for other defined benefit plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Interest cost $ 2.3 $ 2.2 $ 2.7 Amortization of prior net actuarial gain (0.8 ) (0.4 ) (0.2 ) Amortization of prior service credit (0.4 ) (0.4 ) (0.1 ) Net periodic benefit cost $ 1.1 $ 1.4 $ 2.4 The net periodic benefit cost relates entirely to continuing operations. Other comprehensive income Changes in the benefit obligation of other defined benefit plans recognized in OCI were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Current period net actuarial gain $ (1.8 ) $ (4.8 ) $ (3.9 ) Amortization of prior net actuarial gain 0.8 0.4 0.2 Prior service credit — — (4.3 ) Amortization of prior service credit 0.4 0.4 0.1 Pre-tax changes recognized in OCI other than foreign currency translation (0.6 ) (4.0 ) (7.9 ) Foreign currency translation (0.2 ) — — Total pre-tax changes recognized in OCI $ (0.8 ) $ (4.0 ) $ (7.9 ) Cumulative gains before tax recognized in OCI in respect of other post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Actuarial gains $ (17.3 ) $ (16.3 ) $ (11.9 ) Prior service credits (3.4 ) (3.8 ) (4.2 ) Other adjustments 0.2 0.2 0.2 Foreign currency translation (0.2 ) — — Cumulative total $ (20.7 ) $ (19.9 ) $ (15.9 ) It is estimated that a $1.4 million gain will be amortized from accumulated other comprehensive income into net periodic benefit cost during the period from December 29, 2019 through January 2, 2021. Assumptions Major assumptions used in determining the benefit obligation and the net periodic benefit cost for other defined benefit plans are presented in the following table as weighted averages: Benefit obligation Net periodic benefit cost As of As of As of As of Discount rate 3.08 % 4.01 % 4.01 % 3.42 % The initial healthcare cost trend rate as of December 28, 2019 , starts at 6.56% , compared with 7.01% as of December 29, 2018 , with an ultimate trend rate of 4.93% , compared with 4.94% as of December 29, 2018 , beginning in 2023 . Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percentage point change in the assumed health care cost trend rate as of December 28, 2019 would have the following effects: (dollars in millions) 1% point increase 1% point decrease Increase (decrease) in the total of service and interest cost $ 0.1 $ (0.2 ) Increase (decrease) in the benefit obligation $ 2.1 $ (1.8 ) Post-retirement benefits Gates provides defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. All of the defined benefit pension plans are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees. Gates also provides other post-retirement benefits, principally health and life insurance coverage, on an unfunded basis to certain of its employees in the U.S. and Canada. Net periodic benefit cost The components of the net periodic benefit cost for pensions and other post-retirement benefits were as follows: Three months ended December 28, 2019 Three months ended December 29, 2018 (dollars in millions) Pensions Other post-retirement benefits Total Pensions Other post-retirement benefits Total Reported in operating income: —Employer service cost $ 1.3 $ — $ 1.3 $ 1.3 $ — $ 1.3 Reported outside of operating income: —Interest cost 5.8 0.6 6.4 5.8 0.6 6.4 —Expected return on plan assets (7.0 ) — (7.0 ) (5.6 ) — (5.6 ) —Net amortization of prior period losses (gains) 0.2 (0.3 ) (0.1 ) — (0.1 ) (0.1 ) —Settlements and curtailments — — — 0.1 — 0.1 Net periodic benefit cost $ 0.3 $ 0.3 $ 0.6 $ 1.6 $ 0.5 $ 2.1 Contributions $ 1.9 $ 0.8 $ 2.7 $ 1.7 $ 1.2 $ 2.9 Year ended December 28, 2019 Year ended December 29, 2018 (dollars in millions) Pensions Other post-retirement benefits Total Pensions Other post-retirement benefits Total Reported in operating income: —Employer service cost $ 4.1 $ — $ 4.1 $ 4.0 $ — $ 4.0 Reported outside of operating income: —Interest cost 17.6 1.7 19.3 17.7 1.7 19.4 —Expected return on plan assets (20.9 ) — (20.9 ) (17.0 ) — (17.0 ) —Net amortization of prior period losses (gains) 0.6 (0.9 ) (0.3 ) 0.1 (0.5 ) (0.4 ) —Settlements and curtailments (0.7 ) — (0.7 ) 0.4 — 0.4 Net periodic benefit cost $ 0.7 $ 0.8 $ 1.5 $ 5.2 $ 1.2 $ 6.4 Contributions $ 5.3 $ 2.8 $ 8.1 $ 5.7 $ 3.2 $ 8.9 The components of the above net periodic benefit cost for pensions and other post-retirement benefits that are reported outside of operating income are all included in the other (income) expenses line in the consolidated statement of operations. For 2019 as a whole, we expect to contribute approximately $4.6 million to our defined benefit pension plans and approximately $6.7 million to our other post-retirement benefit plans. |
Share-based compensation
Share-based compensation | 12 Months Ended |
Dec. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-based compensation | Share-based compensation The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the year ended December 28, 2019 , we recognized a charge of $15.0 million , compared with $6.0 million and $5.4 million , respectively, during the year s ended December 29, 2018 and December 30, 2017 . Share-based incentive awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan Gates has a number of awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018. No new awards have been granted under this plan since 2017. The options are split equally into four tiers, each with specific vesting conditions. Tier I options vest evenly over 5 years from the grant date, subject to the participant’s continuing to provide service to Gates on the vesting date. Tier II, III and IV options vest on achievement of specified investment returns by Blackstone at the time of a defined liquidity event, which is also subject to the participant’s continued provision of service to Gates on the vesting date. The performance conditions associated with Tiers II, III and IV must be achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant. Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “ Compensation - Stock Compensation ” and are revalued to their fair value at each period end. In addition to the above, in 2017, under the same plan, the Company issued 76,293 restricted stock units (“RSUs”). These RSUs vest evenly over three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The awards expire ten years after the date of grant, in December 2027. Changes in the awards granted under this plan are summarized in the tables below. Share-based incentive awards issued under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan In conjunction with the initial public offering in January 2018, Gates adopted a new equity-based compensation plan, which is a market-based long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and RSUs. The SARs and the majority of the share options issued under this plan vest evenly over either three years or four years from the grant date. The remainder of the options, the premium-priced options, vest evenly over a three year period, starting two years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expire ten years after the date of grant. The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over either one or three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The PRSUs provide that 50% of the award will generally vest if Gates achieves a certain level of average annual adjusted return on invested capital as defined in the plan (“Adjusted ROIC”) and the remaining 50% of the PRSUs will generally vest if Gates achieves certain relative total shareholder return (“Relative TSR”) goals, in each case, measured over a three year performance period and subject to the participant’s continued employment through the end of the performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% of the target based on actual performance against a pre-established scale. New awards and movements in existing awards granted under this plan are summarized in the tables below. Summary of movements in options outstanding For the year ended December 28, 2019 Number of Weighted average exercise price $ Outstanding at the beginning of the period: —Tier I 4,212,537 $ 7.03 —Tier II 4,837,780 $ 6.97 —Tier III 4,837,780 $ 6.97 —Tier IV 4,837,780 $ 10.46 —SARs 724,372 $ 8.17 —Share options 582,717 $ 17.14 20,032,966 $ 8.16 Granted during the period: —SARs 71,150 $ 16.46 —Share options 1,099,505 $ 16.46 —Premium-priced options 796,460 $ 19.00 1,967,115 $ 17.49 Forfeited during the period: —Tier I (115,685 ) $ 6.61 —Tier II (432,440 ) $ 6.58 —Tier III (432,440 ) $ 6.58 —Tier IV (432,440 ) $ 9.88 —SARs (22,119 ) $ 15.43 —Share options (69,862 ) $ 16.86 (1,504,986 ) $ 8.14 Expired during the period: —SARs (953 ) $ 13.44 —Share options (1,875 ) $ 17.72 (2,828 ) $ 16.28 Exercised during the period: —Tier I (270,997 ) $ 6.61 (270,997 ) $ 6.61 Outstanding at the end of the period: —Tier I 3,825,855 $ 7.07 —Tier II 4,405,340 $ 7.01 —Tier III 4,405,340 $ 7.01 —Tier IV 4,405,340 $ 10.52 —SARs 772,450 $ 8.72 —Share options 1,610,485 $ 16.69 —Premium-priced options 796,460 $ 19.00 20,221,270 $ 9.09 Exercisable at the end of the period 2,864,411 $ 7.37 Vested and expected to vest at the end of the period 6,978,259 $ 10.81 As of December 28, 2019 , the aggregate intrinsic value of options that were vested or expected to vest was $29.4 million and these options had a weighted average remaining contractual term of 7.1 years . As of December 28, 2019 , the aggregate intrinsic value of options that were exercisable was $18.6 million and these options had a weighted average remaining contractual term of 5.8 years . As of December 28, 2019 , the unrecognized compensation charge relating to the nonvested options other than Tier II, Tier III and Tier IV options, was $9.3 million , which is expected to be recognized over a weighted-average period of 2.4 years . The unrecognized compensation charge relating to the nonvested Tier II, Tier III and Tier IV options was $28.8 million , which will be recognized on occurrence of a liquidity event as described above. During the year ended December 28, 2019 , cash of $1.8 million was received in relation to the exercise of vested options, compared with $0.6 million during the year ended December 29, 2018 . The aggregate intrinsic value of options exercised during the year ended December 28, 2019 was $2.1 million , compared with $0.8 million during the year ended December 29, 2018 . Summary of movements in RSUs and PRSUs outstanding For the year ended December 28, 2019 Number of Weighted average $ Outstanding at the beginning of the period: —RSUs 81,800 $ 17.13 81,800 $ 17.13 Granted during the period: —RSUs 741,936 $ 16.19 —PRSUs 248,550 20.07 990,486 $ 17.16 Forfeited during the period: —RSUs (54,335 ) $ 16.59 (54,335 ) $ 16.59 Vested during the period: —RSUs (51,132 ) $ 17.00 (51,132 ) $ 17.00 Outstanding at the end of the period: —RSUs 718,269 $ 16.20 —PRSUs 248,550 20.07 966,819 $ 17.19 As of December 28, 2019 , the unrecognized compensation charge relating to nonvested RSUs and PRSUs was $9.0 million , which is expected to be recognized over a weighted average period of 2.1 years , subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the year ended December 28, 2019 was $0.6 million , compared with $0.4 million during the year ended December 29, 2018 . Valuation of awards granted during the period The fair value of the options at their grant date was measured using a Black-Scholes valuation model in the case of SARs and share options. RSUs are valued at the share price on the date of grant. The premium-priced options and PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its initial public offering, this volatility has been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows: For the year ended December 28, 2019 December 29, 2018 December 30, 2017 Grant date fair value: —SARs $ 5.88 $ 6.44 $ 3.94 —Share options $ 5.88 $ 7.44 n/a —Premium-priced options $ 5.65 n/a n/a —RSUs $ 16.19 $ 16.97 $ 17.23 —PRSUs $ 20.07 n/a n/a Inputs to the model: —Expected volatility - SARs 31.9 % 38.9 % 43.6 % —Expected volatility - share options 31.9 % 39.6 % n/a —Expected volatility - premium-priced options 31.9 % n/a n/a —Expected volatility - PRSUs 32.8 % n/a n/a —Expected volatility - Tiers I-IV options n/a n/a 43.6 % —Expected option life for SARs 6.0 6.3 n/a —Expected option life for share options 6.0 6.3 n/a —Expected option life for premium-priced options 7.0 n/a n/a —Expected option life for Tier I options n/a n/a 6.5 —Expected option life for Tier II-IV options n/a n/a 6.0 —Expected option life after liquidity event for Tier II-IV options n/a n/a 4.0 —Risk-free interest rate: SARs 2.51 % 2.89 % n/a Share options 2.51 % 2.80 % n/a Premium-priced options 2.53 % n/a n/a PRSUs 2.48 % n/a n/a Tier I options n/a n/a 2.04 % Tiers II-IV options n/a n/a 1.98 % |
Equity
Equity | 12 Months Ended |
Dec. 28, 2019 | |
Equity [Abstract] | |
Equity | Equity In January 2018, Gates completed an initial public offering of 38,500,000 shares at a price of $19.00 per share. Shortly thereafter, the underwriters of the initial public offering exercised their over-allotment option for a further 5,775,000 shares, also at a price of $19.00 per share. Movements in the Company’s number of shares in issue for the year s ended December 28, 2019 and December 29, 2018 , respectively, were as follows: For the year ended (number of shares) December 28, December 29, Balance as of the beginning of the fiscal year 289,847,574 245,474,605 Issuance of shares — 44,275,000 Exercise of share options 270,997 79,014 Vesting of restricted stock units, net of withholding taxes 38,728 18,955 Balance as of the end of the period 290,157,299 289,847,574 The Company has one class of authorized and issued shares, with a par value of $0.01 , and each share has equal voting rights. |
Analysis of accumulated other c
Analysis of accumulated other comprehensive (loss) income | 12 Months Ended |
Dec. 28, 2019 | |
Equity [Abstract] | |
Analysis of accumulated other comprehensive (loss) income | Analysis of accumulated other comprehensive (loss) income Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows: (dollars in millions) Available-for- Post- Cumulative Cash flow Accumulated OCI attributable to Non- Accumulated OCI As of December 31, 2016 $ (0.2 ) $ (6.5 ) $ (884.1 ) $ (25.1 ) $ (915.9 ) $ (55.4 ) $ (971.3 ) Foreign currency translation — — 141.3 — 141.3 29.5 170.8 Cash flow hedges movements — — — 7.6 7.6 — 7.6 Available-for-sale investment movements (0.1 ) — — — (0.1 ) (0.1 ) (0.2 ) Post-retirement benefit movements — 19.7 — — 19.7 0.5 20.2 Other comprehensive (loss) income (0.1 ) 19.7 141.3 7.6 168.5 29.9 198.4 As of December 30, 2017 (0.3 ) 13.2 (742.8 ) (17.5 ) (747.4 ) (25.5 ) (772.9 ) Foreign currency translation — — (107.2 ) — (107.2 ) (17.9 ) (125.1 ) Cash flow hedges movements — — — 5.6 5.6 — 5.6 Post-retirement benefit movements — (5.6 ) — — (5.6 ) (0.2 ) (5.8 ) Other comprehensive (loss) income — (5.6 ) (107.2 ) 5.6 (107.2 ) (18.1 ) (125.3 ) Reclassification to retained earnings on adoption of ASU 2016-01 "Financial Instruments" 0.3 — — — 0.3 — 0.3 As of December 29, 2018 — 7.6 (850.0 ) (11.9 ) (854.3 ) (43.6 ) (897.9 ) Foreign currency translation — — 37.7 — 37.7 (2.8 ) 34.9 Cash flow hedges movements — — — (24.9 ) (24.9 ) — (24.9 ) Post-retirement benefit movements — (16.9 ) — — (16.9 ) 0.4 (16.5 ) Other comprehensive (loss) income — (16.9 ) 37.7 (24.9 ) (4.1 ) (2.4 ) (6.5 ) As of December 28, 2019 $ — $ (9.3 ) $ (812.3 ) $ (36.8 ) $ (858.4 ) $ (46.0 ) $ (904.4 ) |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 28, 2019 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions A. Entities affiliated with Blackstone In January 2018, Gates and Blackstone Management Partners L.L.C. (“BMP”) and Blackstone Tactical Opportunities Advisors L.L.C., each affiliates of our Sponsor (the “Managers”), entered into a new Transaction and Monitoring Fee Agreement (the “New Monitoring Fee Agreement”). Under this agreement, Gates Industrial Corporation plc and certain of its direct and indirect subsidiaries (collectively the “Monitoring Service Recipients”) engaged the Managers to provide certain monitoring, advisory and consulting services in the following areas: • advice regarding financings and relationships with lenders and bankers; • advice regarding the selection, retention and supervision of independent auditors, outside legal counsel, investment bankers and other advisors or consultants; • advice regarding environmental, social and governance issues pertinent to our affairs; • advice regarding the strategic direction of our business; and • such other advice directly related to or ancillary to the above advisory services as we may reasonably request. In consideration of these oversight services, Gates agreed to pay BMP an annual fee of 1% of a covenant EBITDA measure defined under the agreements governing our senior secured credit facilities. In addition, the Monitoring Service Recipients agreed to reimburse the Managers for any related out-of-pocket expenses incurred by the Managers and their affiliates. During the year ended December 28, 2019 , Gates incurred $6.5 million , compared with $8.0 million during Fiscal 2018 and $6.7 million during Fiscal 2017 , in respect of these oversight services and out-of-pocket expenses, of which there was no amount owing at December 28, 2019 or December 29, 2018 . The New Monitoring Fee Agreement terminates upon the earlier to occur of (i) the second anniversary of the closing date of the initial public offering of Gates or (ii) the date our Sponsor beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million . Following termination of the New Monitoring Fee Agreement, the Managers will refund us any portion of the monitoring fee previously paid in respect of fiscal quarters that follow the termination date. In addition, in connection with the initial public offering, we entered into a new Support and Services Agreement with BMP, under which Gates Industrial Corporation plc and certain of its direct and indirect subsidiaries reimburse BMP for customary support services provided by Blackstone’s portfolio operations group to the Company at BMP’s direction. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period and Blackstone’s allocated costs of such personnel. During Fiscal 2019 , $0.1 million was paid under this agreement, compared with $0 during Fiscal 2018 and Fiscal 2017 . This agreement terminates on the date our Sponsor beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million , or such earlier date as may be chosen by Blackstone. In connection with our initial public offering in January 2018, Blackstone Advisory Partners L.P., an affiliate of Blackstone, received underwriting fees of $3.2 million . In addition, Blackstone Advisory Partners L.P. served as an initial purchaser of $99.4 million of the 6.25% Dollar Senior Notes issued in November 2019 and received compensation of $1.2 million in connection therewith. B. Commercial transactions with sponsor portfolio companies Our Sponsor and its affiliates have ownership interests in a broad range of companies. We have entered and may in the future enter into commercial transactions in the ordinary course of our business with some of these companies, including the sale of goods and services and the purchase of goods and services. During the periods presented, our Sponsor held an interest in Custom Truck One Source (“Custom Truck”), a single-source provider of specialized truck and heavy equipment solutions in North America. Net sales by Gates to Custom Truck were $0.2 million during Fiscal 2019 , compared with $0 during Fiscal 2018 and Fiscal 2017 . In addition, during the period through to November 2, 2017, Blackstone held a controlling interest in Alliance Automotive Group (“Alliance”), a wholesale distributor of automotive parts in France and the U.K. Net sales by Gates to affiliates of Alliance during the portion of Fiscal 2017 in which Blackstone controlled Alliance were $27.2 million . C. Equity method investees Sales to and purchases from equity method investees were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Sales $ 1.4 $ 1.6 $ 1.8 Purchases $ (15.4 ) $ (15.2 ) $ (9.8 ) Amounts outstanding in respect of these transactions were payables of $0.2 million as of December 28, 2019 , compared with $0.1 million as of December 29, 2018 . During the year ended December 28, 2019 , we received dividends of $0 from our equity method investees, compared with $0.4 million during Fiscal 2018 and $0.3 million during Fiscal 2017 . D. Non-Gates entities controlled by non-controlling shareholders Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Sales $ 51.3 $ 60.6 $ 55.2 Purchases $ (20.5 ) $ (20.7 ) $ (21.7 ) Amounts outstanding in respect of these transactions were as follows: (dollars in millions) As of As of Receivables $ 4.2 $ 0.6 Payables $ (5.9 ) $ (0.3 ) E. Majority-owned subsidiaries We finalized an agreement with the non-controlling interest holder in certain of our consolidated, majority-owned subsidiaries, regarding the scope of business of such subsidiaries, which will result in a smaller share of net income allocated to non-controlling interests. This change is retrospectively effective from the beginning of 2019 and includes a one-time adjustment of $15.0 million , which has been recorded in the first quarter of 2019 in the non-controlling interests line in the consolidated statement of operations. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies A. Capital and other commitments As of December 28, 2019 , we had entered into contractual commitments for the purchase of property, plant and equipment amounting to $5.3 million , compared with $18.8 million as of December 29, 2018 , and for the purchase of non-integral computer software amounting to $1.9 million , compared with $2.5 million as of December 29, 2018 . As of December 28, 2019 , we had entered into contractual commitments for non-capital items such as raw materials and supplies amounting to $33.7 million , compared with $32.2 million as of December 29, 2018 . B. Performance bonds, letters of credit and bank guarantees As of December 28, 2019 , letters of credit were outstanding against the asset-backed revolving facility amounting to $50.1 million , compared with $57.8 million as of December 29, 2018 . We had additional outstanding performance bonds, letters of credit and bank guarantees amounting to $4.1 million as of December 28, 2019 , compared with $3.4 million as of December 29, 2018 . C. Company–owned life insurance policies Gates is the beneficiary of a number of corporate-owned life insurance policies against which it borrows from the relevant life insurance company. As of December 28, 2019 , the surrender value of the policies was $933.8 million , compared with $930.0 million as of December 29, 2018 , and the amount outstanding on the related loans was $932.0 million , compared with $928.2 million as of December 29, 2018 . For financial reporting purposes, these amounts are offset as a legal right of offset exists and the net receivable of $1.8 million , compared with $1.8 million as of December 29, 2018 , is included in other receivables. D. Contingencies The Company is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business including those relating to environmental obligations, product liability, intellectual property, commercial and contractual disputes, employment matters and other business matters. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as set forth by GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there are no material amounts accrued. While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect Gates’ financial position, results of operations or cash flows. E. Allowance for doubtful accounts Movements in our allowance for doubtful accounts were as follows: (dollars in millions) Balance at beginning of year Charged to net income Deductions Foreign currency translation Balance at end of year 2017 $ 3.4 $ 3.7 $ (0.8 ) $ 0.5 $ 6.8 2018 $ 6.8 $ 1.4 $ (0.5 ) $ (0.3 ) $ 7.4 2019 $ 7.4 $ 2.4 $ (1.3 ) $ 0.1 $ 8.6 |
Quarterly financial data (unaud
Quarterly financial data (unaudited) | 12 Months Ended |
Dec. 28, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly financial data (unaudited) | Quarterly financial data (unaudited) The following table sets forth selected unaudited quarterly financial information for the years ended December 28, 2019 and December 29, 2018 . The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report. These quarterly results of operations are not necessarily indicative of our results of operations to be expected for any future period. (dollars in millions, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter 2019 Statement of operations data: Net sales $ 804.9 $ 809.9 $ 746.6 $ 725.7 Gross profit 307.3 301.4 272.4 261.4 Income from continuing operations before income taxes 65.4 64.2 41.9 27.3 Net income 604.8 26.5 37.4 25.4 Net income attributable to shareholders 613.7 21.5 35.5 19.4 Basic earnings per share from continuing operations 2.12 0.07 0.12 0.07 Basic earnings per share from discontinued operations — — — — Diluted earnings per share from continuing operations 2.08 0.07 0.12 0.07 Diluted earnings per share from discontinued operations — — — — 2018 Statement of operations data: Net sales $ 852.0 $ 875.1 $ 828.4 $ 792.1 Gross profit 335.9 357.5 327.2 310.0 Income from continuing operations before income taxes 41.1 104.4 74.2 83.8 Net income 29.3 92.6 66.7 82.5 Net income attributable to shareholders 24.2 85.6 59.9 75.6 Basic earnings per share from continuing operations 0.09 0.30 0.21 0.26 Basic earnings per share from discontinued operations — — — — Diluted earnings per share from continuing operations 0.09 0.29 0.20 0.26 Diluted earnings per share from discontinued operations — — — — Earnings per share amounts are computed independently for each of the quarters presented, therefore, the sum of the quarterly earnings per share amounts may not equal the total computed for the year. |
Significant accounting polici_2
Significant accounting policies (Policies) | 12 Months Ended |
Dec. 28, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. |
New accounting pronouncements adopted and not yet adopted | The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year: • ASU 2016-02 “ Leases ” (Topic 842) • ASU 2018-10 “ Leases ” (Topic 842): Codification Improvements to Topic 842, Leases • ASU 2018-11 “ Leases ” (Topic 842): Targeted Improvements • ASU 2019-01 “ Leases ” (Topic 842): Codification Improvements In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee. We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated. We applied the following additional practical expedients on transition to Topic 842: (i) we did not reassess whether or not any expired or existing contracts were or contained leases; (ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and (iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842. On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million , with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “ Leases ” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842. The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures: • ASU 2018-07 “ Compensation - Stock Compensation ” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting • ASU 2018-16 “ Derivatives and Hedging ” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes In addition, we adopted ASU 2018-02 “ Income Statement - Reporting Comprehensive Income ” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences. Recent accounting pronouncements not yet adopted The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted. • ASU 2016-13 “ Financial Instruments ” (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures. • ASU 2018-13 “ Fair Value Measurement ” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “ Fair Value Measurement ” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods presented, but a few amendments should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. We expect that the adoption of this ASU will not have a significant impact on our financial instrument disclosures, but we are still finalizing our evaluation. • ASU 2018-14 “ Compensation - Retirement Benefits - Defined Benefit Plans - General ” (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued an ASU to modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant. The amendments are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. The impact on our consolidated financial statements of adopting this ASU, which will affect our disclosures, is still being evaluated. • ASU 2018-15 “ Intangibles - Goodwill and Other - Internal-Use Software ” (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued an ASU to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement). The guidance permits capitalization of costs associated with the implementation of cloud-based software arrangements and aligns the criteria for capitalization with those for purchased or internally-generated computer software intangible assets. Implementation costs meeting the criteria for capitalization would not be classified as intangible assets but would instead be classified as prepaid expenses that are then amortized over the period of the arrangement as an additional expense consistent with the ongoing costs under the cloud computing arrangement. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and entities may choose to apply the requirements either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We do not expect any significant impact on our consolidated financial statements on adoption of this ASU. • ASU 2019-12 “ Simplifying the Accounting for Income Taxes ” (Topic 740): Income Taxes In December 2019, the FASB issued an ASU to simplify and reduce the complexity of general principles in Topic 740: Income Taxes. Such simplifications include the elimination of certain exceptions to: 1) the incremental approach for intraperiod tax allocation, 2) the requirement to recognize a deferred income tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) the ability not to recognize a deferred income tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and 4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The ASU provides for a number of different approaches to applying the changes, depending on the amendment, from full retrospective to modified retrospective to fully prospective. The impact on our consolidated financial statements of adopting this ASU is still being evaluated. |
Accounting periods | Accounting periods The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“ Fiscal 2019 ”), December 29, 2018 (“ Fiscal 2018 ”) and December 30, 2017 (“ Fiscal 2017 ”). |
Basis of Consolidation | Basis of consolidation The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees. We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation. |
Foreign currency transactions and translation | Foreign currency transactions and translation Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million , compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017 . We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019 , compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017 . On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income. In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period. |
Net sales and Shipping and handling costs | Net sales Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation. In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal. We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price. In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset. F. Selling, general and administrative expenses Shipping and handling costs Costs of outbound shipping and handling are included in SG&A. |
Research and development costs | Research and development costs Research and development costs are charged to net income in the period in which they are incurred. |
Advertising costs | Advertising costs Advertising costs are expensed as incurred and included in SG&A. |
Restructuring expenses | Restructuring expenses Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6 . Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date. Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer. Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability. |
Business combinations | Business combinations A business combination is a transaction or other event in which control is obtained of one or more businesses. Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred. Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date. Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income. |
Goodwill | Goodwill Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition. Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019 , Fiscal 2018 or Fiscal 2017 . To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit. |
Other intangible assets | Other intangible assets Other intangible assets are stated at cost less accumulated amortization and any recognized impairment. (i) Assets acquired in business combinations An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows: Customer relationships 15 to 17 years Technology 5 to 7 years Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment. (ii) Computer software Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years. |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred. Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges: Buildings and improvements 30 to 40 years Leasehold improvements Shorter of lease term or useful life Machinery, equipment and vehicles 2 to 20 years |
Impairment or long-lived assets and intangible assets | Impairment of long-lived assets and intangible assets Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value. |
Inventory | Inventories Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory. Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019 , inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018 . |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits. |
Restricted cash | Restricted cash Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes. |
Trade accounts receivable | Trade accounts receivable Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information. |
Debt | Debt Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method. |
Accounts payable | Accounts payable Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made. |
Derivative financial instruments | Derivative financial instruments We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact. We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI. |
Investments | Investments Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “ Financial Instruments ” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI. |
Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period. |
Post-retirement benefits | Post-retirement benefits Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America. We account for our post-retirement benefit plans in accordance with Topic 715 “ Compensation – Retirement Benefits ”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees. For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations. Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees. Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs. |
Share-based compensation | Share-based compensation Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity. We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions. Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions. For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital. For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability. |
Income taxes | Income taxes Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date. Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions. Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet. Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies. Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner. |
Use of estimates | Use of estimates The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates. |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Segment Reporting [Abstract] | |
Schedule of net sales by operating segment | Adjusted EBITDA by segment was as follows: Adjusted EBITDA For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Power Transmission $ 412.6 $ 492.2 $ 458.1 Fluid Power 198.4 263.6 211.0 Continuing operations $ 611.0 $ 755.8 $ 669.1 Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below. Net Sales For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Power Transmission $ 1,945.7 $ 2,098.8 $ 2,009.4 Fluid Power 1,141.4 1,248.8 1,032.3 Continuing operations $ 3,087.1 $ 3,347.6 $ 3,041.7 |
Schedule of net sales by key geographic regions and markets | The following table summarizes our net sales by key geographic region of origin: Net Sales For the year ended December 28, 2019 December 29, 2018 December 30, 2017 (dollars in millions) Power Transmission Fluid Power Power Transmission Fluid Power Power Transmission Fluid Power U.S. $ 580.4 $ 590.0 $ 606.3 $ 671.7 $ 582.2 $ 565.9 North America, excluding U.S. 165.3 175.9 159.3 185.6 148.2 134.8 United Kingdom (“U.K.”) 43.6 37.3 55.0 39.9 57.2 27.6 EMEA (1) , excluding U.K. 509.9 173.6 584.5 172.8 551.3 144.8 East Asia and India 288.6 74.3 311.7 87.5 308.7 78.0 Greater China 288.4 57.8 310.7 59.0 285.6 51.5 South America 69.5 32.5 71.3 32.3 76.2 29.7 Net Sales $ 1,945.7 $ 1,141.4 $ 2,098.8 $ 1,248.8 $ 2,009.4 $ 1,032.3 (1) Europe, Middle East and Africa (“EMEA”). The following table summarizes our net sales into emerging and developed markets: Net Sales For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Developed $ 2,013.4 $ 2,157.4 $ 1,964.4 Emerging 1,073.7 1,190.2 1,077.3 Net Sales $ 3,087.1 $ 3,347.6 $ 3,041.7 |
Reconciliation of Adjusted EBITDA to net income from continuing operations | Reconciliation of net income from continuing operations to Adjusted EBITDA: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Net income from continuing operations $ 694.7 $ 271.7 $ 182.0 Income tax (benefit) expense (495.9 ) 31.8 (72.5 ) Income from continuing operations before taxes 198.8 303.5 109.5 Interest expense 157.8 175.9 234.6 Other (income) expenses (9.8 ) 17.4 58.8 Operating income from continuing operations 346.8 496.8 402.9 Depreciation and amortization 222.2 218.5 212.2 Transaction-related expenses (1) 2.6 6.7 18.1 Impairment of intangibles and other assets 0.7 0.6 2.8 Restructuring expenses 6.0 6.4 17.4 Share-based compensation expense 15.0 6.0 5.4 Sponsor fees (included in other operating expenses) 6.5 8.0 6.7 Impact of fair value adjustment on inventory (included in cost of sales) — 0.3 1.2 Inventory impairments and adjustments (included in cost of sales) 1.2 1.2 2.0 Duplicate expenses incurred on facility relocation — 5.2 — Severance-related expenses (included in cost of sales) 4.0 1.7 — Other primarily severance-related expenses (included in SG&A) 3.4 4.4 — Other items not directly related to current operations 2.6 — 0.4 Adjusted EBITDA $ 611.0 $ 755.8 $ 669.1 (1) Transaction-related expenses relate primarily to advisory fees recognized in respect of our initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings. |
Schedule of long lived assets by geography | (dollars in millions) As of As of Property, plant and equipment, net by geographic location U.S. $ 199.2 $ 212.5 Rest of North America 117.3 107.4 U.K. 32.6 33.3 Rest of EMEA 154.4 157.3 East Asia and India 65.6 75.6 Greater China 138.4 149.3 South America 20.4 20.9 $ 727.9 $ 756.3 |
Restructuring and other strat_2
Restructuring and other strategic initiatives (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring costs | These expenses include the impairment of inventory, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Power Transmission $ 3.5 $ 2.8 $ 11.1 Fluid Power 3.7 4.5 8.5 Continuing operations $ 7.2 $ 7.3 $ 19.6 Overall costs associated with our restructuring and other strategic initiatives have been recognized in the consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP. For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Restructuring expenses: —Severance $ 4.7 $ 0.5 $ 13.6 —Professional fees 1.6 3.5 3.2 —Other restructuring (benefits) expenses (0.3 ) 2.4 0.6 6.0 6.4 17.4 Restructuring expenses in cost of sales: —Impairment of inventory 1.2 0.4 2.0 —Other restructuring expenses — 0.5 0.2 Total restructuring expenses $ 7.2 $ 7.3 $ 19.6 Expenses related to other strategic initiatives: —Severance costs included in cost of sales $ 4.0 $ 1.2 $ — —Severance costs included in SG&A 3.4 3.1 — —Impairment of fixed assets 0.7 — — Total expenses related to other strategic initiatives $ 8.1 $ 4.3 $ — |
Schedule of restructuring reserves activity | The following summarizes the reserve for restructuring expenses for the year s ended December 28, 2019 , December 29, 2018 , and December 30, 2017 , respectively: For the year ended (dollars in millions) December 28, December 29, Balance as of the beginning of the period $ 2.6 $ 8.6 Utilized during the period (5.7 ) (13.5 ) Net charge for the period 6.1 8.0 Released during the period (0.1 ) (0.7 ) Foreign currency translation — 0.2 Balance as of the end of the period $ 2.9 $ 2.6 Restructuring reserves, which are expected to be utilized in 2020 , are included in the consolidated balance sheet as follows: (dollars in millions) As of As of Accrued expenses and other current liabilities $ 2.9 $ 2.2 Other non-current liabilities — 0.4 $ 2.9 $ 2.6 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income from continuing operations before taxes | Gates Industrial Corporation plc is domiciled in the United Kingdom. Income (loss) from continuing operations before taxes and income tax (benefit) expense are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable. Income (loss) before income taxes For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 U.K. $ (80.6 ) $ (12.8 ) $ 1.0 U.S. 0.9 (43.3 ) (63.1 ) Other 278.5 359.6 171.6 Income from continuing operations before income taxes $ 198.8 $ 303.5 $ 109.5 |
Income tax expense (benefit) on income from continuing operations analyzed by tax jurisdiction | Income tax (benefit) expense on income from continuing operations analyzed by tax jurisdiction is as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Current tax U.K. $ 7.5 $ 0.8 $ 2.8 U.S. 21.0 9.0 7.8 Other foreign 124.3 86.9 79.7 Total current tax expense $ 152.8 $ 96.7 $ 90.3 Deferred income tax U.K. $ (4.7 ) $ 2.8 $ 0.9 U.S. (49.3 ) (45.3 ) (141.6 ) Other foreign (594.7 ) (22.4 ) (22.1 ) Total deferred income tax benefit (648.7 ) (64.9 ) (162.8 ) Income tax (benefit) expense $ (495.9 ) $ 31.8 $ (72.5 ) |
Schedule of effective income tax rate reconciliation | Reconciliation of the applicable statutory income tax rate to the reported effective income tax rate: For the year ended December 28, 2019 December 29, 2018 December 30, 2017 U.K. corporation tax rate 19.0 % 19.0 % U.S. corporation tax rate 35.0 % Effect of: —State tax provision, net of Federal benefit (2.1 %) (1.5 %) 2.5 % —Provision for unrecognized income tax benefits 34.0 % (1.3 %) 2.7 % —Company Owned Life Insurance (4.4 %) (2.8 %) (12.1 %) —Tax on international operations (1) (325.9 %) (1.1 %) 45.1 % —Manufacturing incentives (2) 0.5 % (4.2 %) (5.8 %) —Change in valuation allowance (3) 6.6 % 2.9 % 111.7 % —Deferred income tax rate changes 17.8 % 0.2 % (146.8 %) —Currency exchange rate movements 6.5 % 0.1 % (105.1 %) —Other permanent differences (1.4 %) (0.8 %) 6.6 % Reported effective income tax rate (249.4 %) 10.5 % (66.2 %) (1) “Tax on international operations” includes U.S. tax on foreign earnings, unremitted earnings of foreign subsidiaries, and effects of differences between statutory and foreign tax rates each of which was reported separately for the years ended December 28, 2019 , December 29, 2018 and December 30, 2017 . In addition, for the years ended December 28, 2019 and December 29, 2018 , it also includes the effects of global funding structures and the Tax Act; and for the year ended December 28, 2019 , it also includes $608.6 million for the generation of finite lived net operating losses in Luxembourg. (2) “Manufacturing incentives” for the year ended December 28, 2019 includes an adjustment of $5.0 million for the expiration of manufacturing incentives in the Czech Republic, offset partially by $4.1 million of incentives generated during the year. (3) “Change in valuation allowance” for the year ended December 28, 2019 is comprised primarily of an increase of $608.6 million of additional valuation allowance for finite lived net operating losses generated in Luxembourg, offset partially by a release of $579.0 million of valuation allowance against indefinite lived net operating losses in Luxembourg and by a release of $5.0 million of valuation allowances on manufacturing incentives in the Czech Republic. |
Schedule of deferred tax assets (liabilities) | Deferred income tax assets (liabilities) recognized by the Company were as follows: (dollars in millions) As of As of Deferred income tax assets: Accounts receivable $ 3.1 $ 3.1 Inventories 6.2 6.2 Property, plant and equipment 5.9 5.2 Lease liabilities 37.0 6.2 Accrued expenses 46.8 41.9 Post-retirement benefit obligations 27.8 30.5 Compensation 12.8 15.2 Net operating losses 1,480.3 932.3 Capital losses 130.7 126.3 Credits 138.7 157.1 Interest 120.9 48.5 Other items 11.0 7.2 $ 2,021.2 $ 1,379.7 Valuation allowances (1,200.2 ) (1,191.5 ) Total deferred income tax assets $ 821.0 $ 188.2 Deferred income tax liabilities: Inventories (22.7 ) (21.6 ) Property, plant and equipment (51.2 ) (50.9 ) Lease right-of-use assets (30.1 ) (0.6 ) Intangible assets (450.7 ) (482.9 ) Post-retirement benefit obligations (6.8 ) (9.7 ) Undistributed earnings (40.9 ) (55.9 ) Other items (0.8 ) (1.0 ) Total deferred income tax liabilities $ (603.2 ) $ (622.6 ) Net deferred income tax assets (liabilities) $ 217.8 $ (434.4 ) |
Schedule of unrecognized tax positions | For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 At the beginning of the period $ 80.1 $ 106.1 $ 106.3 Increases for tax positions related to the current period 70.6 0.4 5.5 Increases for tax positions related to prior periods 5.8 0.2 4.6 Decreases for tax positions related to prior periods (2.1 ) (1.5 ) (2.8 ) Decreases related to settlements — — (0.7 ) Decreases due to lapsed statute of limitations (8.1 ) (21.0 ) (11.8 ) Foreign currency translation 1.0 (4.1 ) 5.0 At the end of the period $ 147.3 $ 80.1 $ 106.1 |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of computation of net income per share | The computation of earnings per share is presented below: For the year ended (dollars in millions, except share numbers and per share amounts) December 28, 2019 December 29, 2018 December 30, 2017 Net income attributable to shareholders $ 690.1 $ 245.3 $ 151.3 Weighted average number of shares outstanding 290,057,360 285,906,693 245,520,533 Dilutive effect of share-based awards 1,570,101 5,791,580 4,970,295 Diluted weighted average number of shares outstanding 291,627,461 291,698,273 250,490,828 Basic earnings per share $ 2.38 $ 0.86 $ 0.62 Diluted earnings per share $ 2.37 $ 0.84 $ 0.60 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | (dollars in millions) As of As of Raw materials and supplies $ 118.9 $ 152.1 Work in progress 33.6 38.4 Finished goods 322.6 347.1 Total inventories $ 475.1 $ 537.6 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property plant, and equipment details | (dollars in millions) As of As of Cost Land and buildings $ 318.6 $ 313.3 Machinery, equipment and vehicles 819.4 736.0 Assets under construction 49.8 84.3 1,187.8 1,133.6 Less: Accumulated depreciation and impairment (459.9 ) (377.3 ) Total $ 727.9 $ 756.3 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | (dollars in millions) Power Fluid Total Cost and carrying amount As of December 30, 2017 $ 1,430.2 $ 655.3 $ 2,085.5 Acquisitions — 35.6 35.6 Foreign currency translation (56.1 ) (19.1 ) (75.2 ) As of December 29, 2018 1,374.1 671.8 2,045.9 Foreign currency translation 3.4 11.2 14.6 As of December 28, 2019 $ 1,377.5 $ 683.0 $ 2,060.5 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | As of December 28, 2019 As of December 29, 2018 (dollars in millions) Cost Accumulated Net Cost Accumulated Net Finite-lived: —Customer relationships $ 2,021.8 $ (656.3 ) $ 1,365.5 $ 2,017.4 $ (534.8 ) $ 1,482.6 —Technology 90.8 (87.8 ) 3.0 90.6 (87.0 ) 3.6 —Capitalized software 76.1 (38.0 ) 38.1 64.2 (29.2 ) 35.0 2,188.7 (782.1 ) 1,406.6 2,172.2 (651.0 ) 1,521.2 Indefinite-lived: —Brands and trade names 513.4 (44.0 ) 469.4 513.4 (44.0 ) 469.4 Total intangible assets $ 2,702.1 $ (826.1 ) $ 1,876.0 $ 2,685.6 $ (695.0 ) $ 1,990.6 |
Schedule of indefinite-lived intangible assets | As of December 28, 2019 As of December 29, 2018 (dollars in millions) Cost Accumulated Net Cost Accumulated Net Finite-lived: —Customer relationships $ 2,021.8 $ (656.3 ) $ 1,365.5 $ 2,017.4 $ (534.8 ) $ 1,482.6 —Technology 90.8 (87.8 ) 3.0 90.6 (87.0 ) 3.6 —Capitalized software 76.1 (38.0 ) 38.1 64.2 (29.2 ) 35.0 2,188.7 (782.1 ) 1,406.6 2,172.2 (651.0 ) 1,521.2 Indefinite-lived: —Brands and trade names 513.4 (44.0 ) 469.4 513.4 (44.0 ) 469.4 Total intangible assets $ 2,702.1 $ (826.1 ) $ 1,876.0 $ 2,685.6 $ (695.0 ) $ 1,990.6 |
Schedule of future amortization of finite-lived intangible assets | The amortization expense for the next five years is estimated to be as follows: Fiscal year (dollars in millions) —2020 $ 131.6 —2021 131.1 —2022 129.7 —2023 124.5 —2024 123.5 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Leases [Abstract] | |
Lease cost and quantitative disclosures | ( dollars in millions ) For the year ended December 28, 2019 Lease expenses Operating lease expenses $ 30.3 Finance lease amortization expenses 0.3 Short-term lease expenses 4.6 Variable lease expenses 6.9 Sublease income (0.1 ) Total lease expenses $ 42.0 Other information Right-of-use assets obtained in exchange for new operating lease liabilities $ 19.7 Right-of-use assets obtained in exchange for new finance lease liabilities $ 0.9 Cash paid for amounts included in the measurement of lease liabilities: —Operating cash flows from operating leases $ 26.3 —Financing cash flows from finance leases 0.4 $ 26.7 Weighted-average remaining lease term — finance leases 8.5 years Weighted-average remaining lease term — operating leases 10.1 years Weighted-average discount rate — finance leases 2.5 % Weighted-average discount rate — operating leases 5.4 % |
Operating lease - Maturity analysis of liability | Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.5 $ 0.6 Year 2 21.6 0.5 Year 3 18.2 0.5 Year 4 15.0 0.2 Year 5 13.4 — Year 6 and beyond 84.5 — Total lease payments 178.2 1.8 Interest (43.9 ) (0.1 ) Total present value of lease liabilities $ 134.3 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 8.5 years , the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022. |
Finance lease - Maturity analysis of liability | Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.5 $ 0.6 Year 2 21.6 0.5 Year 3 18.2 0.5 Year 4 15.0 0.2 Year 5 13.4 — Year 6 and beyond 84.5 — Total lease payments 178.2 1.8 Interest (43.9 ) (0.1 ) Total present value of lease liabilities $ 134.3 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 8.5 years , the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022. |
Balance Sheet Location | Balance sheet presentation of leases as of December 28, 2019 ( dollars in millions ) Operating leases Finance leases Right-of-use assets $ 123.0 $ 2.8 Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) $ 19.5 $ 0.3 Long-term lease liabilities 114.8 1.4 Total lease liabilities $ 134.3 $ 1.7 |
Contractual obligation future payments | Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows: ( dollars in millions ) Operating leases Finance leases Total Fiscal year 2019 $ 25.0 $ 0.3 $ 25.3 2020 21.3 0.3 21.6 2021 18.2 0.3 18.5 2022 14.4 0.3 14.7 2023 12.6 0.4 13.0 2024 and beyond 86.5 0.4 86.9 Total $ 178.0 $ 2.0 $ 180.0 |
Derivative financial instrume_2
Derivative financial instruments (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair values of derivative financial instruments | The period end fair values of derivative financial instruments were as follows: As of December 28, 2019 As of December 29, 2018 (dollars in millions) Prepaid expenses and other assets Other non- Accrued expenses and other Other Net Prepaid expenses and other assets Other non- Accrued expenses and other Other non- Net Derivatives designated as hedging instruments: —Currency swaps $ 4.2 $ — $ — $ (19.3 ) $ (15.1 ) $ 5.4 $ — $ — $ (27.5 ) $ (22.1 ) —Interest rate caps — — (4.0 ) (3.0 ) (7.0 ) 3.5 1.6 — (10.9 ) (5.8 ) —Interest rate swaps — — (5.3 ) (29.0 ) (34.3 ) — — (0.3 ) (2.6 ) (2.9 ) Derivatives not designated as hedging instruments: —Currency swaps — — (0.1 ) — (0.1 ) — — — — — —Currency forward contracts 1.2 — (0.2 ) — 1.0 1.3 — (0.4 ) — 0.9 $ 5.4 $ — $ (9.6 ) $ (51.3 ) $ (55.5 ) $ 10.2 $ 1.6 $ (0.7 ) $ (41.0 ) $ (29.9 ) |
Schedule of derivative effect on OCI | The movements before tax recognized in OCI in relation to our cash flow hedges were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Movement recognized in OCI in relation to: —Fair value loss on cash flow hedges $ (31.7 ) $ (4.5 ) $ (2.0 ) —Deferred premium reclassified from OCI to net income 2.5 5.4 11.6 Total movement $ (29.2 ) $ 0.9 $ 9.6 The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Net fair value gains (losses) recognized in OCI in relation to: —Euro-denominated debt $ (0.2 ) $ (11.0 ) $ (73.3 ) —Designated cross currency swaps 5.7 20.8 (36.1 ) Total net fair value gains (losses) $ 5.5 $ 9.8 $ (109.4 ) |
Schedule of interest rate caps | The periods covered by our interest rate caps and their notional values are as follows: (in millions) Notional value June 30, 2017 to June 30, 2020 $ 200.0 June 28, 2019 to June 30, 2020 $ 1,000.0 July 1, 2019 to June 30, 2023 € 425.0 |
Gain recognized from derivative instruments | The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Fair value gains (losses) recognized in relation to: —Currency forward contracts recognized in SG&A $ 3.0 $ 2.4 $ 2.8 —Currency swaps recognized in other (income) expenses 0.6 0.6 (0.5 ) Total $ 3.6 $ 3.0 $ 2.3 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying amount and fair value of debt | The carrying amount and fair value of our debt are set out below: As of December 28, 2019 As of December 29, 2018 (dollars in millions) Carrying amount Fair value Carrying amount Fair value Current $ 46.1 $ 45.9 $ 51.6 $ 50.4 Non-current 2,912.3 2,946.8 2,953.4 2,873.2 $ 2,958.4 $ 2,992.7 $ 3,005.0 $ 2,923.6 |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis: (dollars in millions) Quoted prices in active Significant observable Total As of December 28, 2019 Equity investments $ 1.1 $ — $ 1.1 Derivative assets $ — $ 5.4 $ 5.4 Derivative liabilities $ — $ (60.9 ) $ (60.9 ) As of December 29, 2018 Equity investments $ 0.8 $ — $ 0.8 Derivative assets $ — $ 11.8 $ 11.8 Derivative liabilities $ — $ (41.7 ) $ (41.7 ) |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | (dollars in millions) As of As of Secured debt: —Dollar Term Loan $ 1,699.1 $ 1,716.4 —Euro Term Loan 717.7 742.1 Unsecured debt: —6.25% Dollar Senior Notes due 2026 568.0 — —6.00% Dollar Senior Notes due 2022 — 568.0 —Other loans 0.2 0.6 Total principal of debt 2,985.0 3,027.1 Deferred issuance costs (41.8 ) (48.7 ) Accrued interest 15.2 26.6 Total carrying value of debt 2,958.4 3,005.0 Debt, current portion 46.1 51.6 Debt, less current portion $ 2,912.3 $ 2,953.4 |
Schedule of princpal maturities due | The principal payments due under our financing agreements over the next five years and thereafter are as follows: (dollars in millions) Total Fiscal year —2020 $ 30.9 —2021 24.7 —2022 24.7 —2023 24.7 —2024 2,312.0 Thereafter 568.0 $ 2,985.0 |
Foreign exchange gains (losses) | For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Gain (loss) recognized in statement of operations $ 17.3 $ 43.6 $ (60.2 ) Loss recognized in OCI (0.2 ) (6.0 ) (36.5 ) Total gain (loss) $ 17.1 $ 37.6 $ (96.7 ) |
Schedule of redemption prices plus accrued and unpaid interest | On and after January 15, 2022, we may redeem the Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date: Redemption Price During the year commencing: —2022 103.125 % —2023 101.563 % —2024 and thereafter 100.000 % |
Accrued expenses and other li_2
Accrued expenses and other liabilities (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consisted of the following: (dollars in millions) As of As of Accrued compensation $ 47.3 $ 75.0 Current portion of lease obligations 19.8 0.1 Derivative financial instruments 60.9 41.7 Payroll and related taxes payable 11.3 13.6 VAT and other taxes payable 11.5 10.9 Warranty reserve 17.7 14.3 Workers’ compensation reserve 10.0 11.1 Other accrued expenses and other liabilities 95.0 96.7 $ 273.5 $ 263.4 |
Schedule of other non-current liabilities | The above liabilities are presented in Gates’ balance sheet within other current liabilities and other non-current liabilities as follows: (dollars in millions) As of As of —Accrued expenses and other current liabilities $ 188.8 $ 184.2 —Other non-current liabilities 84.7 79.2 $ 273.5 $ 263.4 |
Schedule of warranty liabilities | Changes in warranty reserves (included in accrued expenses and other liabilities) were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Balance at the beginning of the period $ 14.3 $ 14.1 $ 14.3 Charge for the period 16.5 11.6 12.3 Utilized during the period (10.9 ) (11.0 ) (13.1 ) Released during the period (2.2 ) (0.1 ) (0.1 ) Foreign currency translation — (0.3 ) 0.7 Balance at the end of the period $ 17.7 $ 14.3 $ 14.1 |
Post-retirement benefits (Table
Post-retirement benefits (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Schedule of components of net periodic benefit cost for pensions and other post-retirement benefits | The components of the net periodic benefit cost for pensions and other post-retirement benefits were as follows: Three months ended December 28, 2019 Three months ended December 29, 2018 (dollars in millions) Pensions Other post-retirement benefits Total Pensions Other post-retirement benefits Total Reported in operating income: —Employer service cost $ 1.3 $ — $ 1.3 $ 1.3 $ — $ 1.3 Reported outside of operating income: —Interest cost 5.8 0.6 6.4 5.8 0.6 6.4 —Expected return on plan assets (7.0 ) — (7.0 ) (5.6 ) — (5.6 ) —Net amortization of prior period losses (gains) 0.2 (0.3 ) (0.1 ) — (0.1 ) (0.1 ) —Settlements and curtailments — — — 0.1 — 0.1 Net periodic benefit cost $ 0.3 $ 0.3 $ 0.6 $ 1.6 $ 0.5 $ 2.1 Contributions $ 1.9 $ 0.8 $ 2.7 $ 1.7 $ 1.2 $ 2.9 Year ended December 28, 2019 Year ended December 29, 2018 (dollars in millions) Pensions Other post-retirement benefits Total Pensions Other post-retirement benefits Total Reported in operating income: —Employer service cost $ 4.1 $ — $ 4.1 $ 4.0 $ — $ 4.0 Reported outside of operating income: —Interest cost 17.6 1.7 19.3 17.7 1.7 19.4 —Expected return on plan assets (20.9 ) — (20.9 ) (17.0 ) — (17.0 ) —Net amortization of prior period losses (gains) 0.6 (0.9 ) (0.3 ) 0.1 (0.5 ) (0.4 ) —Settlements and curtailments (0.7 ) — (0.7 ) 0.4 — 0.4 Net periodic benefit cost $ 0.7 $ 0.8 $ 1.5 $ 5.2 $ 1.2 $ 6.4 Contributions $ 5.3 $ 2.8 $ 8.1 $ 5.7 $ 3.2 $ 8.9 |
Schedule of effect of change in assumed health care trend | A one percentage point change in the assumed health care cost trend rate as of December 28, 2019 would have the following effects: (dollars in millions) 1% point increase 1% point decrease Increase (decrease) in the total of service and interest cost $ 0.1 $ (0.2 ) Increase (decrease) in the benefit obligation $ 2.1 $ (1.8 ) |
Pensions | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Schedule of funded status and balance sheet location | The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows: (dollars in millions) As of As of Pension surplus $ (38.1 ) $ (52.6 ) Accrued expenses and other current liabilities 2.3 2.4 Post-retirement benefit obligations 98.7 102.4 Net unfunded pension obligation $ 62.9 $ 52.2 Plans whose projected benefit obligation was in excess of plan assets: —Aggregate projected benefit obligation $ 391.7 $ 378.2 —Aggregate plan assets $ 290.7 $ 273.4 Plans whose accumulated benefit obligation was in excess of the plan assets: —Aggregate accumulated benefit obligation $ 381.6 $ 372.3 —Aggregate plan assets $ 286.2 $ 273.0 |
Schedule of benefit obligation in excess of fair value of plan assets | The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows: (dollars in millions) As of As of Pension surplus $ (38.1 ) $ (52.6 ) Accrued expenses and other current liabilities 2.3 2.4 Post-retirement benefit obligations 98.7 102.4 Net unfunded pension obligation $ 62.9 $ 52.2 Plans whose projected benefit obligation was in excess of plan assets: —Aggregate projected benefit obligation $ 391.7 $ 378.2 —Aggregate plan assets $ 290.7 $ 273.4 Plans whose accumulated benefit obligation was in excess of the plan assets: —Aggregate accumulated benefit obligation $ 381.6 $ 372.3 —Aggregate plan assets $ 286.2 $ 273.0 |
Schedule of accumulated benefit obligation in excess of fair value of plan assets | The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows: (dollars in millions) As of As of Pension surplus $ (38.1 ) $ (52.6 ) Accrued expenses and other current liabilities 2.3 2.4 Post-retirement benefit obligations 98.7 102.4 Net unfunded pension obligation $ 62.9 $ 52.2 Plans whose projected benefit obligation was in excess of plan assets: —Aggregate projected benefit obligation $ 391.7 $ 378.2 —Aggregate plan assets $ 290.7 $ 273.4 Plans whose accumulated benefit obligation was in excess of the plan assets: —Aggregate accumulated benefit obligation $ 381.6 $ 372.3 —Aggregate plan assets $ 286.2 $ 273.0 |
Schedule of changes in the projected benefit obligation | Changes in the projected benefit obligation in relation to defined benefit pension plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Benefit obligation at the beginning of the period $ 827.1 $ 932.9 Employer service cost 5.5 5.3 Plan participants’ contributions 0.2 0.2 Plan amendments — 11.4 Interest cost 23.4 23.6 Net actuarial loss (gain) 83.1 (41.1 ) Benefits paid (51.6 ) (56.5 ) Expenses paid from assets (2.3 ) (1.8 ) Curtailments and settlements (3.6 ) (13.4 ) Foreign currency translation 16.3 (33.5 ) Benefit obligation at the end of the period $ 898.1 $ 827.1 Accumulated benefit obligation $ 892.4 $ 821.3 |
Schedule of changes in the fair value of the assets | Changes in the fair value of the assets held by defined benefit pension plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Plan assets at the beginning of the period $ 774.9 $ 893.6 Actual return on plan assets 90.4 (19.7 ) Employer contributions 8.5 8.9 Plan participants’ contributions 0.2 0.2 Curtailments and settlements (2.3 ) (13.4 ) Benefits paid (51.6 ) (56.5 ) Expenses paid from assets (2.3 ) (1.8 ) Foreign currency translation 17.4 (36.4 ) Plan assets at the end of the period $ 835.2 $ 774.9 |
Schedule of plan asset by category | The fair values of pension plan assets by asset category were as follows: As of December 28, 2019 As of December 29, 2018 (dollars in millions) Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Collective investment trusts: Equity Securities $ — $ 102.7 $ — $ 102.7 $ — $ 83.2 $ — $ 83.2 Debt Securities —Corporate bonds — 207.9 — 207.9 — 156.5 — 156.5 —Government bonds — 231.3 — 231.3 — 302.9 — 302.9 Annuities and insurance — 48.7 235.9 284.6 — 4.0 223.9 227.9 Cash and cash equivalents 8.7 — — 8.7 4.4 — — 4.4 Total $ 8.7 $ 590.6 $ 235.9 $ 835.2 $ 4.4 $ 546.6 $ 223.9 $ 774.9 |
Schedule of changes in the fair value of plan assets measured using significant unobservable inputs | Changes in the fair value of plan assets measured using significant unobservable inputs (level 3) were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Fair value at the beginning of the period $ 224.0 $ 248.1 Actual return on plan assets 17.9 (0.3 ) Purchases 1.4 1.7 Sales (0.9 ) (0.9 ) Impacts of benefits paid (12.3 ) (10.5 ) Foreign currency translation 5.8 (14.1 ) Fair value at the end of the period $ 235.9 $ 224.0 |
Schedule of estimated future payments | Benefit payments, reflecting expected future service, are expected to be made by Gates’ defined benefit pension plans as follows: (dollars in millions) Fiscal year —2020 $ 48.2 —2021 46.8 —2022 48.3 —2023 47.8 —2024 47.6 —2025 through 2029 239.2 |
Schedule of components of net periodic benefit cost for pensions and other post-retirement benefits | Components of the net periodic benefit cost for defined benefit pension plans relating to continuing operations were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Employer service cost $ 5.5 $ 5.3 $ 5.8 Settlements and curtailments (0.6 ) 0.3 (3.8 ) Interest cost 23.4 23.6 30.4 Expected return on plan assets (27.8 ) (22.6 ) (26.9 ) Amortization of prior net actuarial loss — 0.1 0.4 Amortization of prior service cost 0.8 0.1 — Net periodic benefit cost $ 1.3 $ 6.8 $ 5.9 |
Schedule of defined benefit amounts recognized in OCI | Changes in plan assets and benefit obligations of defined benefit pension plans recognized in OCI were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Current period net actuarial loss (gain) $ 20.5 $ 1.2 $ (20.9 ) Amortization of prior net actuarial loss — (0.1 ) (0.4 ) Prior service cost — 11.4 0.7 Amortization of prior service cost (0.8 ) (0.1 ) — (Gain) loss recognized due to settlements and curtailments (0.8 ) (0.3 ) 3.8 Pre-tax changes recognized in OCI other than foreign currency translation 18.9 12.1 (16.8 ) Foreign currency translation 1.0 (0.1 ) (0.9 ) Total pre-tax changes recognized in OCI $ 19.9 $ 12.0 $ (17.7 ) Cumulative losses (gains) before tax recognized in OCI in respect of post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Actuarial loss $ 21.2 $ 1.5 $ 0.7 Prior service costs 11.1 11.9 0.6 Foreign currency translation (2.9 ) (3.9 ) (3.8 ) Cumulative total $ 29.4 $ 9.5 $ (2.5 ) |
Schedule of major assumptions used | Major assumptions used in determining the benefit obligation and the net periodic benefit cost for defined benefit pension plans are presented in the following table as weighted averages: As of As of Benefit obligation: —Discount rate 2.261 % 2.932 % —Rate of salary increase 3.173 % 3.190 % Net periodic benefit cost: —Discount rate 2.932 % 2.619 % —Rate of salary increase 3.190 % 3.178 % —Expected return on plan assets 3.622 % 2.844 % |
Other post-retirement benefits | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Schedule of funded status and balance sheet location | The deficit recognized in respect of other defined benefit plans is presented in the balance sheet as follows: (dollars in millions) As of As of Accrued expenses and other current liabilities $ 5.4 $ 6.5 Post-retirement benefit obligations 52.5 53.5 $ 57.9 $ 60.0 |
Schedule of changes in the projected benefit obligation | Changes in the accumulated benefit obligation in relation to other defined benefit plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 Benefit obligation at the beginning of the period $ 60.0 $ 68.4 Interest cost 2.3 2.2 Actuarial gain (1.8 ) (4.8 ) Benefits paid (3.5 ) (4.1 ) Foreign currency translation 0.9 (1.7 ) Benefit obligation at the end of the period $ 57.9 $ 60.0 Accumulated benefit obligation $ 57.9 $ 60.0 |
Schedule of estimated future payments | Benefit payments, reflecting expected future service, are expected to be made by Gates’ other defined benefit plans as follows: (dollars in millions) Fiscal years: —2020 $ 5.5 —2021 5.2 —2022 4.9 —2023 4.6 —2024 4.3 —2025 through 2029 18.3 |
Schedule of components of net periodic benefit cost for pensions and other post-retirement benefits | Components of the net periodic benefit cost for other defined benefit plans were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Interest cost $ 2.3 $ 2.2 $ 2.7 Amortization of prior net actuarial gain (0.8 ) (0.4 ) (0.2 ) Amortization of prior service credit (0.4 ) (0.4 ) (0.1 ) Net periodic benefit cost $ 1.1 $ 1.4 $ 2.4 |
Schedule of defined benefit amounts recognized in OCI | Changes in the benefit obligation of other defined benefit plans recognized in OCI were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Current period net actuarial gain $ (1.8 ) $ (4.8 ) $ (3.9 ) Amortization of prior net actuarial gain 0.8 0.4 0.2 Prior service credit — — (4.3 ) Amortization of prior service credit 0.4 0.4 0.1 Pre-tax changes recognized in OCI other than foreign currency translation (0.6 ) (4.0 ) (7.9 ) Foreign currency translation (0.2 ) — — Total pre-tax changes recognized in OCI $ (0.8 ) $ (4.0 ) $ (7.9 ) Cumulative gains before tax recognized in OCI in respect of other post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Actuarial gains $ (17.3 ) $ (16.3 ) $ (11.9 ) Prior service credits (3.4 ) (3.8 ) (4.2 ) Other adjustments 0.2 0.2 0.2 Foreign currency translation (0.2 ) — — Cumulative total $ (20.7 ) $ (19.9 ) $ (15.9 ) |
Schedule of major assumptions used | Major assumptions used in determining the benefit obligation and the net periodic benefit cost for other defined benefit plans are presented in the following table as weighted averages: Benefit obligation Net periodic benefit cost As of As of As of As of Discount rate 3.08 % 4.01 % 4.01 % 3.42 % |
Share-based compensation (Table
Share-based compensation (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Summary of movements in options outstanding For the year ended December 28, 2019 Number of Weighted average exercise price $ Outstanding at the beginning of the period: —Tier I 4,212,537 $ 7.03 —Tier II 4,837,780 $ 6.97 —Tier III 4,837,780 $ 6.97 —Tier IV 4,837,780 $ 10.46 —SARs 724,372 $ 8.17 —Share options 582,717 $ 17.14 20,032,966 $ 8.16 Granted during the period: —SARs 71,150 $ 16.46 —Share options 1,099,505 $ 16.46 —Premium-priced options 796,460 $ 19.00 1,967,115 $ 17.49 Forfeited during the period: —Tier I (115,685 ) $ 6.61 —Tier II (432,440 ) $ 6.58 —Tier III (432,440 ) $ 6.58 —Tier IV (432,440 ) $ 9.88 —SARs (22,119 ) $ 15.43 —Share options (69,862 ) $ 16.86 (1,504,986 ) $ 8.14 Expired during the period: —SARs (953 ) $ 13.44 —Share options (1,875 ) $ 17.72 (2,828 ) $ 16.28 Exercised during the period: —Tier I (270,997 ) $ 6.61 (270,997 ) $ 6.61 Outstanding at the end of the period: —Tier I 3,825,855 $ 7.07 —Tier II 4,405,340 $ 7.01 —Tier III 4,405,340 $ 7.01 —Tier IV 4,405,340 $ 10.52 —SARs 772,450 $ 8.72 —Share options 1,610,485 $ 16.69 —Premium-priced options 796,460 $ 19.00 20,221,270 $ 9.09 Exercisable at the end of the period 2,864,411 $ 7.37 Vested and expected to vest at the end of the period 6,978,259 $ 10.81 |
Schedule of RSU and PRSU activity | Summary of movements in RSUs and PRSUs outstanding For the year ended December 28, 2019 Number of Weighted average $ Outstanding at the beginning of the period: —RSUs 81,800 $ 17.13 81,800 $ 17.13 Granted during the period: —RSUs 741,936 $ 16.19 —PRSUs 248,550 20.07 990,486 $ 17.16 Forfeited during the period: —RSUs (54,335 ) $ 16.59 (54,335 ) $ 16.59 Vested during the period: —RSUs (51,132 ) $ 17.00 (51,132 ) $ 17.00 Outstanding at the end of the period: —RSUs 718,269 $ 16.20 —PRSUs 248,550 20.07 966,819 $ 17.19 |
Schedule of share based compensation valuation techniques | The premium-priced options and PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its initial public offering, this volatility has been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows: For the year ended December 28, 2019 December 29, 2018 December 30, 2017 Grant date fair value: —SARs $ 5.88 $ 6.44 $ 3.94 —Share options $ 5.88 $ 7.44 n/a —Premium-priced options $ 5.65 n/a n/a —RSUs $ 16.19 $ 16.97 $ 17.23 —PRSUs $ 20.07 n/a n/a Inputs to the model: —Expected volatility - SARs 31.9 % 38.9 % 43.6 % —Expected volatility - share options 31.9 % 39.6 % n/a —Expected volatility - premium-priced options 31.9 % n/a n/a —Expected volatility - PRSUs 32.8 % n/a n/a —Expected volatility - Tiers I-IV options n/a n/a 43.6 % —Expected option life for SARs 6.0 6.3 n/a —Expected option life for share options 6.0 6.3 n/a —Expected option life for premium-priced options 7.0 n/a n/a —Expected option life for Tier I options n/a n/a 6.5 —Expected option life for Tier II-IV options n/a n/a 6.0 —Expected option life after liquidity event for Tier II-IV options n/a n/a 4.0 —Risk-free interest rate: SARs 2.51 % 2.89 % n/a Share options 2.51 % 2.80 % n/a Premium-priced options 2.53 % n/a n/a PRSUs 2.48 % n/a n/a Tier I options n/a n/a 2.04 % Tiers II-IV options n/a n/a 1.98 % |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Equity [Abstract] | |
Schedule of movement in number of shares in issue | Movements in the Company’s number of shares in issue for the year s ended December 28, 2019 and December 29, 2018 , respectively, were as follows: For the year ended (number of shares) December 28, December 29, Balance as of the beginning of the fiscal year 289,847,574 245,474,605 Issuance of shares — 44,275,000 Exercise of share options 270,997 79,014 Vesting of restricted stock units, net of withholding taxes 38,728 18,955 Balance as of the end of the period 290,157,299 289,847,574 |
Analysis of accumulated other_2
Analysis of accumulated other comprehensive (loss) income (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows: (dollars in millions) Available-for- Post- Cumulative Cash flow Accumulated OCI attributable to Non- Accumulated OCI As of December 31, 2016 $ (0.2 ) $ (6.5 ) $ (884.1 ) $ (25.1 ) $ (915.9 ) $ (55.4 ) $ (971.3 ) Foreign currency translation — — 141.3 — 141.3 29.5 170.8 Cash flow hedges movements — — — 7.6 7.6 — 7.6 Available-for-sale investment movements (0.1 ) — — — (0.1 ) (0.1 ) (0.2 ) Post-retirement benefit movements — 19.7 — — 19.7 0.5 20.2 Other comprehensive (loss) income (0.1 ) 19.7 141.3 7.6 168.5 29.9 198.4 As of December 30, 2017 (0.3 ) 13.2 (742.8 ) (17.5 ) (747.4 ) (25.5 ) (772.9 ) Foreign currency translation — — (107.2 ) — (107.2 ) (17.9 ) (125.1 ) Cash flow hedges movements — — — 5.6 5.6 — 5.6 Post-retirement benefit movements — (5.6 ) — — (5.6 ) (0.2 ) (5.8 ) Other comprehensive (loss) income — (5.6 ) (107.2 ) 5.6 (107.2 ) (18.1 ) (125.3 ) Reclassification to retained earnings on adoption of ASU 2016-01 "Financial Instruments" 0.3 — — — 0.3 — 0.3 As of December 29, 2018 — 7.6 (850.0 ) (11.9 ) (854.3 ) (43.6 ) (897.9 ) Foreign currency translation — — 37.7 — 37.7 (2.8 ) 34.9 Cash flow hedges movements — — — (24.9 ) (24.9 ) — (24.9 ) Post-retirement benefit movements — (16.9 ) — — (16.9 ) 0.4 (16.5 ) Other comprehensive (loss) income — (16.9 ) 37.7 (24.9 ) (4.1 ) (2.4 ) (6.5 ) As of December 28, 2019 $ — $ (9.3 ) $ (812.3 ) $ (36.8 ) $ (858.4 ) $ (46.0 ) $ (904.4 ) |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Sales $ 51.3 $ 60.6 $ 55.2 Purchases $ (20.5 ) $ (20.7 ) $ (21.7 ) Amounts outstanding in respect of these transactions were as follows: (dollars in millions) As of As of Receivables $ 4.2 $ 0.6 Payables $ (5.9 ) $ (0.3 ) Sales to and purchases from equity method investees were as follows: For the year ended (dollars in millions) December 28, 2019 December 29, 2018 December 30, 2017 Sales $ 1.4 $ 1.6 $ 1.8 Purchases $ (15.4 ) $ (15.2 ) $ (9.8 ) |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Allowance for doubtful accounts | Movements in our allowance for doubtful accounts were as follows: (dollars in millions) Balance at beginning of year Charged to net income Deductions Foreign currency translation Balance at end of year 2017 $ 3.4 $ 3.7 $ (0.8 ) $ 0.5 $ 6.8 2018 $ 6.8 $ 1.4 $ (0.5 ) $ (0.3 ) $ 7.4 2019 $ 7.4 $ 2.4 $ (1.3 ) $ 0.1 $ 8.6 |
Quarterly financial data (una_2
Quarterly financial data (unaudited) (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of results from quarterly operations | The following table sets forth selected unaudited quarterly financial information for the years ended December 28, 2019 and December 29, 2018 . The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report. These quarterly results of operations are not necessarily indicative of our results of operations to be expected for any future period. (dollars in millions, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter 2019 Statement of operations data: Net sales $ 804.9 $ 809.9 $ 746.6 $ 725.7 Gross profit 307.3 301.4 272.4 261.4 Income from continuing operations before income taxes 65.4 64.2 41.9 27.3 Net income 604.8 26.5 37.4 25.4 Net income attributable to shareholders 613.7 21.5 35.5 19.4 Basic earnings per share from continuing operations 2.12 0.07 0.12 0.07 Basic earnings per share from discontinued operations — — — — Diluted earnings per share from continuing operations 2.08 0.07 0.12 0.07 Diluted earnings per share from discontinued operations — — — — 2018 Statement of operations data: Net sales $ 852.0 $ 875.1 $ 828.4 $ 792.1 Gross profit 335.9 357.5 327.2 310.0 Income from continuing operations before income taxes 41.1 104.4 74.2 83.8 Net income 29.3 92.6 66.7 82.5 Net income attributable to shareholders 24.2 85.6 59.9 75.6 Basic earnings per share from continuing operations 0.09 0.30 0.21 0.26 Basic earnings per share from discontinued operations — — — — Diluted earnings per share from continuing operations 0.09 0.29 0.20 0.26 Diluted earnings per share from discontinued operations — — — — |
Background (Details)
Background (Details) | 12 Months Ended |
Dec. 28, 2019segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 2 |
Significant accounting polici_3
Significant accounting policies - Accounting policies (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease right-of-use assets | $ 123 | |
Operating lease liability | $ 134.3 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease right-of-use assets | $ 126 | |
Operating lease liability | $ 132.9 |
Significant accounting polici_4
Significant accounting policies - Foreign currency transaction and translation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle | |||
Foreign currency transaction gain (loss) | $ 16.8 | $ 45.5 | $ (57.4) |
Operating income (loss) | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Foreign currency transaction gain (loss) | (1.7) | (4) | (7.6) |
Other income (expenses) | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Foreign currency transaction gain (loss) | $ 0.8 | $ 8.7 | $ (57.4) |
Significant accounting polici_5
Significant accounting policies - Selling, general and administrative expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Condensed Income Statements | |||
Selling, general and administrative expenses | $ 777.3 | $ 805.8 | $ 777.1 |
Shipping and handling | |||
Condensed Income Statements | |||
Selling, general and administrative expenses | $ 145.2 | $ 159.9 | $ 147 |
Significant accounting polici_6
Significant accounting policies - Research and development costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Accounting Policies [Abstract] | |||
Research and development costs | $ 67.9 | $ 71.4 | $ 68.6 |
Significant accounting polici_7
Significant accounting policies - Advertising costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Accounting Policies [Abstract] | |||
Advertising cost | $ 10.2 | $ 10.4 | $ 10.4 |
Significant accounting polici_8
Significant accounting policies - Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Accounting Policies [Abstract] | |||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 |
Significant accounting polici_9
Significant accounting policies - Other Intangibles (Details) | 12 Months Ended |
Dec. 28, 2019 | |
Customer relationships | Minimum | |
Finite-Lived Intangible Assets | |
Finite-lived intangible asset (useful life) | 15 years |
Customer relationships | Maximum | |
Finite-Lived Intangible Assets | |
Finite-lived intangible asset (useful life) | 17 years |
Technology | Maximum | |
Finite-Lived Intangible Assets | |
Finite-lived intangible asset (useful life) | 7 years |
Computer software | Minimum | |
Finite-Lived Intangible Assets | |
Finite-lived intangible asset (useful life) | 2 years |
Computer software | Maximum | |
Finite-Lived Intangible Assets | |
Finite-lived intangible asset (useful life) | 6 years |
Significant accounting polic_10
Significant accounting policies - Property, plant and equipment (Details) | 12 Months Ended |
Dec. 28, 2019 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment | |
Fixed assets (useful life) | 30 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment | |
Fixed assets (useful life) | 40 years |
Machinery, equipment and vehicles | Minimum | |
Property, Plant and Equipment | |
Fixed assets (useful life) | 2 years |
Machinery, equipment and vehicles | Maximum | |
Property, Plant and Equipment | |
Fixed assets (useful life) | 20 years |
Significant accounting polic_11
Significant accounting policies - inventory (Details) | Dec. 28, 2019 | Dec. 29, 2018 |
Accounting Policies [Abstract] | ||
Percentage of LIFO inventory | 32.50% | 31.60% |
Significant accounting polic_12
Significant accounting policies - Restricted cash (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Accounting Policies [Abstract] | |||
Restricted cash | $ 1.3 | $ 1.2 | $ 1.6 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) | Apr. 26, 2018USD ($)facility | Oct. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) |
Business Acquisition | ||||||
Goodwill and provisional goodwill | $ 2,060,500,000 | $ 2,045,900,000 | $ 2,085,500,000 | |||
Transaction-related expenses | 2,600,000 | 6,700,000 | 18,100,000 | |||
Rapro | ||||||
Business Acquisition | ||||||
Purchase price, net of cash acquired | $ 50,900,000 | |||||
Number of facilities | facility | 2 | |||||
Goodwill and provisional goodwill | $ 34,400,000 | |||||
Atlas Hydraulics | ||||||
Business Acquisition | ||||||
Purchase price, net of cash acquired | $ 74,000,000 | |||||
Goodwill and provisional goodwill | $ 23,000,000 | |||||
GTF Engineering and Services UK Limited | ||||||
Business Acquisition | ||||||
Purchase price, net of cash acquired | $ 36,700,000 | |||||
Goodwill and provisional goodwill | $ 22,500,000 | |||||
Ownership interest acquired (as a percent) | 100.00% | |||||
Acquisitions For 2018 And 2017 | ||||||
Business Acquisition | ||||||
Transaction-related expenses | $ 0 | $ 1,800,000 | $ 3,000,000 |
Segment information - Sales and
Segment information - Sales and Adjusted EBITDA by Reporting Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Segment Reporting Information | |||||||||||
Net sales | $ 725.7 | $ 746.6 | $ 809.9 | $ 804.9 | $ 792.1 | $ 828.4 | $ 875.1 | $ 852 | $ 3,087.1 | $ 3,347.6 | $ 3,041.7 |
Adjusted EBITDA | 611 | 755.8 | 669.1 | ||||||||
Power Transmission | |||||||||||
Segment Reporting Information | |||||||||||
Net sales | 1,945.7 | 2,098.8 | 2,009.4 | ||||||||
Adjusted EBITDA | 412.6 | 492.2 | 458.1 | ||||||||
Fluid Power | |||||||||||
Segment Reporting Information | |||||||||||
Net sales | 1,141.4 | 1,248.8 | 1,032.3 | ||||||||
Adjusted EBITDA | $ 198.4 | $ 263.6 | $ 211 |
Segment information - Net Sales
Segment information - Net Sales by Geographic Regions and Markets (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | $ 725.7 | $ 746.6 | $ 809.9 | $ 804.9 | $ 792.1 | $ 828.4 | $ 875.1 | $ 852 | $ 3,087.1 | $ 3,347.6 | $ 3,041.7 |
Developed | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 2,013.4 | 2,157.4 | 1,964.4 | ||||||||
Emerging | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 1,073.7 | 1,190.2 | 1,077.3 | ||||||||
Power Transmission | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 1,945.7 | 2,098.8 | 2,009.4 | ||||||||
Power Transmission | U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 580.4 | 606.3 | 582.2 | ||||||||
Power Transmission | North America, excluding the U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 165.3 | 159.3 | 148.2 | ||||||||
Power Transmission | United Kingdom (“U.K.”) | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 43.6 | 55 | 57.2 | ||||||||
Power Transmission | EMEA, excluding U.K. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 509.9 | 584.5 | 551.3 | ||||||||
Power Transmission | East Asia and India | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 288.6 | 311.7 | 308.7 | ||||||||
Power Transmission | Greater China | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 288.4 | 310.7 | 285.6 | ||||||||
Power Transmission | South America | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 69.5 | 71.3 | 76.2 | ||||||||
Fluid Power | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 1,141.4 | 1,248.8 | 1,032.3 | ||||||||
Fluid Power | U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 590 | 671.7 | 565.9 | ||||||||
Fluid Power | North America, excluding the U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 175.9 | 185.6 | 134.8 | ||||||||
Fluid Power | United Kingdom (“U.K.”) | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 37.3 | 39.9 | 27.6 | ||||||||
Fluid Power | EMEA, excluding U.K. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 173.6 | 172.8 | 144.8 | ||||||||
Fluid Power | East Asia and India | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 74.3 | 87.5 | 78 | ||||||||
Fluid Power | Greater China | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | 57.8 | 59 | 51.5 | ||||||||
Fluid Power | South America | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net sales | $ 32.5 | $ 32.3 | $ 29.7 |
Segment information - Reconcili
Segment information - Reconciliation of Adjusted EBITDA to Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Segment Reporting Information | |||||||||||
Net income from continuing operations | $ 694.7 | $ 271.7 | $ 182 | ||||||||
Income tax (benefit) expense | (495.9) | 31.8 | (72.5) | ||||||||
Income from continuing operations before taxes | $ 27.3 | $ 41.9 | $ 64.2 | $ 65.4 | $ 83.8 | $ 74.2 | $ 104.4 | $ 41.1 | 198.8 | 303.5 | 109.5 |
Interest expense | 157.8 | 175.9 | 234.6 | ||||||||
Other (income) expenses | (9.8) | 17.4 | 58.8 | ||||||||
Operating income from continuing operations | 346.8 | 496.8 | 402.9 | ||||||||
Depreciation and amortization | 222.2 | 218.5 | 212.2 | ||||||||
Transaction-related expenses | 2.6 | 6.7 | 18.1 | ||||||||
Impairment of intangibles and other assets | 0.7 | 0.6 | 2.8 | ||||||||
Restructuring expenses | 6 | 6.4 | 17.4 | ||||||||
Share-based compensation expense | 15 | 6 | 5.4 | ||||||||
Sponsor fees (included in other operating expenses) | 6.5 | 8 | 6.7 | ||||||||
Impact of fair value adjustment on inventory (included in cost of sales) | 0 | 0.3 | 1.2 | ||||||||
Inventory impairments and adjustments (included in cost of sales) | 1.2 | 1.2 | 2 | ||||||||
Duplicate expenses incurred on facility relocation | 0 | 5.2 | 0 | ||||||||
Other items not directly related to current operations | 2.6 | 0 | 0.4 | ||||||||
Adjusted EBITDA | 611 | 755.8 | 669.1 | ||||||||
Cost of sales | |||||||||||
Segment Reporting Information | |||||||||||
Severance-related expenses (included in cost of sales) | 4 | 1.7 | 0 | ||||||||
SG&A | |||||||||||
Segment Reporting Information | |||||||||||
Other primarily severance-related expenses (included in SG&A) | $ 3.4 | $ 4.4 | $ 0 |
Segment information - Long live
Segment information - Long lived assets by geography (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | $ 727.9 | $ 756.3 |
U.S. | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | 199.2 | 212.5 |
Rest of North America | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | 117.3 | 107.4 |
U.K. | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | 32.6 | 33.3 |
Rest of EMEA | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | 154.4 | 157.3 |
East Asia and India | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | 65.6 | 75.6 |
Greater China | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | 138.4 | 149.3 |
South America | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-Lived Assets | $ 20.4 | $ 20.9 |
Segment information - Narrative
Segment information - Narratives (Details) | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
U.S. | Geographic concentration risk | Revenue | |||
Segment Reporting Information | |||
Concentration risk (percent) | 43.20% | 39.20% | 38.50% |
Major customer one | North America | Customer concentration risk | Accounts receivable | |||
Segment Reporting Information | |||
Concentration risk (percent) | 18.90% | 17.20% | |
Major customer two | North America | Customer concentration risk | Accounts receivable | |||
Segment Reporting Information | |||
Concentration risk (percent) | 11.30% | 10.70% |
Restructuring and other strat_3
Restructuring and other strategic initiatives - Income Statement Location (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Restructuring Cost and Reserve | |||
Restructuring expenses | $ 7.2 | $ 7.3 | $ 19.6 |
—Impairment of fixed assets | 0.7 | 0 | 0 |
Total expenses related to other strategic initiatives | 8.1 | 4.3 | 0 |
—Other restructuring (benefits) expenses | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | 0 | 0.5 | 0.2 |
—Impairment of inventory | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | 1.2 | 0.4 | 2 |
Restructuring expenses: | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | 6 | 6.4 | 17.4 |
Restructuring expenses: | —Severance | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | 4.7 | 0.5 | 13.6 |
Restructuring expenses: | —Professional fees | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | 1.6 | 3.5 | 3.2 |
Restructuring expenses: | —Other restructuring (benefits) expenses | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | (0.3) | 2.4 | 0.6 |
Cost of sales | |||
Restructuring Cost and Reserve | |||
Severance-related expenses (included in cost of sales) | 4 | 1.2 | 0 |
SG&A | |||
Restructuring Cost and Reserve | |||
Severance-related expenses (included in cost of sales) | $ 3.4 | $ 3.1 | $ 0 |
Restructuring and other strat_4
Restructuring and other strategic initiatives - Narratives (Details) $ in Millions | 12 Months Ended |
Dec. 28, 2019USD ($) | |
—Impairment of inventory | |
Restructuring Cost and Reserve | |
Consulting expenses | $ 1.6 |
Restructuring and other strat_5
Restructuring and other strategic initiatives - Restructuring Costs by Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Restructuring Cost and Reserve | |||
Restructuring expenses | $ 7.2 | $ 7.3 | $ 19.6 |
Power Transmission | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | 3.5 | 2.8 | 11.1 |
Fluid Power | |||
Restructuring Cost and Reserve | |||
Restructuring expenses | $ 3.7 | $ 4.5 | $ 8.5 |
Restructuring and other strat_6
Restructuring and other strategic initiatives - Restructuring Reserve Activity (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Restructuring reserves | ||
Balance as of the beginning of the period | $ 2.6 | $ 8.6 |
Utilized during the period | (5.7) | (13.5) |
Net charge for the period | 6.1 | 8 |
Released during the period | (0.1) | (0.7) |
Foreign currency translation | 0 | 0.2 |
Balance as of the end of the period | $ 2.9 | $ 2.6 |
Restructuring and other strat_7
Restructuring and other strategic initiatives - Restructuring Reserve Balance Sheet Impact (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Restructuring Cost and Reserve | |||
Restructuring reserve | $ 2.9 | $ 2.6 | $ 8.6 |
Accrued expenses and other current liabilities | |||
Restructuring Cost and Reserve | |||
Restructuring reserve | 2.9 | 2.2 | |
Other non-current liabilities | |||
Restructuring Cost and Reserve | |||
Restructuring reserve | $ 0 | $ 0.4 |
Income taxes - Narratives (Deta
Income taxes - Narratives (Details) € in Billions | 12 Months Ended | ||||
Dec. 28, 2019USD ($) | Dec. 28, 2019EUR (€) | Mar. 30, 2019USD ($) | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) | |
Operating Loss Carryforwards | |||||
Change in valuation allowance | $ 608,600,000 | ||||
Non cash benefit to income tax expense | 579,000,000 | ||||
Expiration of manufacturing incentives | 5,000,000 | ||||
Manufacturing incentives utilized | 4,100,000 | ||||
Operating loss carryforwards, not subject to expiration | 3,324,000,000 | ||||
Operating loss carryforwards, subject to expiration | 2,748,700,000 | ||||
Operating loss carryforwards, valuation allowance | 882,600,000 | ||||
Operating loss carryforward net of valuation allowance | 597,700,000 | ||||
Deferred tax asset, net | 821,000,000 | $ 188,200,000 | |||
Deferred tax asset, valuaton allowance | 1,200,200,000 | 1,191,500,000 | |||
Interest expense carryforward | 518,100,000 | ||||
Deferred tax asset, interest expense valuation allowance | 47,900,000 | ||||
Deferred tax interest expense net of valuation allowance | 73,000,000 | ||||
Taxable temporary differences related to investments in subsidiaries | 1,701,100,000 | ||||
Deferred tax liability related to subsidiaries | 40,900,000 | 55,900,000 | |||
Net deferred tax asset realizable | $ 586,200,000 | ||||
Deferred tax asset, foreign | 579,000,000 | ||||
Indefinite lived net operating loss | € | € 2.1 | ||||
Unrecognized tax benefit that if recognized would impact tax rate | 122,600,000 | ||||
Accrued taxes interest and penalties | 19,600,000 | $ 13,400,000 | $ 13,900,000 | ||
Anticipated decrease in income tax liability from settlement of tax audit | 4,000,000 | ||||
Minimum | |||||
Operating Loss Carryforwards | |||||
Reasonable decrease in unrecognized tax benefit in the next 12 months | 20,000,000 | ||||
Maximum | |||||
Operating Loss Carryforwards | |||||
Reasonable decrease in unrecognized tax benefit in the next 12 months | 25,000,000 | ||||
Net Operating Loss | |||||
Operating Loss Carryforwards | |||||
Change in valuation allowance | 6,100,000 | ||||
Foreign Tax Credits | |||||
Operating Loss Carryforwards | |||||
Deferred tax asset, net | 1,100,000 | ||||
Luxembourg, United Kingdom, United States | |||||
Operating Loss Carryforwards | |||||
Deferred tax asset, net | 586,200,000 | ||||
Capital loss carryforward | |||||
Operating Loss Carryforwards | |||||
Tax credit carryforward | 768,100,000 | ||||
Tax credit carryforward, not subject to expiration | 768,000,000 | ||||
Tax credit carryforward, subject to expiration | 100,000 | ||||
Tax credit carryforward, valuation allowance | 130,700,000 | ||||
Deferred tax asset, net | 0 | ||||
Foreign tax credit carryforward | |||||
Operating Loss Carryforwards | |||||
Tax credit carryforward | 135,500,000 | ||||
Tax credit carryforward, valuation allowance | 135,500,000 | ||||
Deferred tax asset, net | 0 | ||||
Other tax credits | |||||
Operating Loss Carryforwards | |||||
Tax credit carryforward | 3,200,000 | ||||
Tax credit carryforward, not subject to expiration | 600,000 | ||||
Tax credit carryforward, subject to expiration | 2,600,000 | ||||
Deferred tax asset, net | 1,800,000 | ||||
Deferred tax asset, valuaton allowance | 1,400,000 | ||||
Domestic And Foreign Authorities | |||||
Operating Loss Carryforwards | |||||
Operating loss carry forward | 5,918,700,000 | ||||
U.S | |||||
Operating Loss Carryforwards | |||||
Operating loss carry forward | $ 154,000,000 |
Income taxes - Income from cont
Income taxes - Income from continuing operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Income Tax Examination | |||||||||||
Income from continuing operations before taxes | $ 27.3 | $ 41.9 | $ 64.2 | $ 65.4 | $ 83.8 | $ 74.2 | $ 104.4 | $ 41.1 | $ 198.8 | $ 303.5 | $ 109.5 |
U.K. | |||||||||||
Income Tax Examination | |||||||||||
Income from domestic operations | (80.6) | (12.8) | 1 | ||||||||
U.S. | |||||||||||
Income Tax Examination | |||||||||||
Income from foreign operations | 0.9 | (43.3) | (63.1) | ||||||||
Other | |||||||||||
Income Tax Examination | |||||||||||
Income from foreign operations | $ 278.5 | $ 359.6 | $ 171.6 |
Income taxes - Income tax expen
Income taxes - Income tax expense (benefit) on income from continuing operations analyzed (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Current tax | |||
U.S. | $ 21 | $ 9 | $ 7.8 |
Total current tax expense | 152.8 | 96.7 | 90.3 |
Deferred income tax | |||
U.S. | (49.3) | (45.3) | (141.6) |
Total deferred tax benefit | (648.7) | (64.9) | (162.8) |
Income tax expense (benefit) | (495.9) | 31.8 | (72.5) |
U.K. | |||
Current tax | |||
Current tax, foreign | 7.5 | 0.8 | 2.8 |
Deferred income tax | |||
Deferred tax, foreign | (4.7) | 2.8 | 0.9 |
Other foreign | |||
Current tax | |||
Current tax, foreign | 124.3 | 86.9 | 79.7 |
Deferred income tax | |||
Deferred tax, foreign | $ (594.7) | $ (22.4) | $ (22.1) |
Income taxes - Schedule of effe
Income taxes - Schedule of effective income tax rate reconciliation (Details) | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Effective Income Tax Rate Reconciliation, Percent | |||
Corporation tax rate | 19.00% | 19.00% | 35.00% |
Effect of: | |||
—State tax provision, net of Federal benefit | (2.10%) | (1.50%) | 2.50% |
—Provision for unrecognized income tax benefits | 34.00% | (1.30%) | 2.70% |
—Company Owned Life Insurance | (4.40%) | (2.80%) | (12.10%) |
—Tax on international operations | (325.90%) | (1.10%) | 45.10% |
—Manufacturing incentives | 0.50% | (4.20%) | (5.80%) |
—Change in valuation allowance | 6.60% | 2.90% | 111.70% |
—Deferred income tax rate changes | 17.80% | 0.20% | (146.80%) |
—Currency exchange rate movements | 6.50% | 0.10% | (105.10%) |
—Other permanent differences | (1.40%) | (0.80%) | 6.60% |
Reported effective income tax rate | (249.40%) | 10.50% | (66.20%) |
Income taxes - Schedule of defe
Income taxes - Schedule of deferred tax assets (liabilities) (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Deferred income tax assets: | ||
Accounts receivable | $ 3.1 | $ 3.1 |
Inventories | 6.2 | 6.2 |
Property, plant and equipment | 5.9 | 5.2 |
Lease liabilities | 37 | 6.2 |
Accrued expenses | 46.8 | 41.9 |
Post-retirement benefit obligations | 27.8 | 30.5 |
Compensation | 12.8 | 15.2 |
Net operating losses | 1,480.3 | 932.3 |
Capital losses | 130.7 | 126.3 |
Credits | 138.7 | 157.1 |
Interest | 120.9 | 48.5 |
Other items | 11 | 7.2 |
Deferred tax assets, gross | 2,021.2 | 1,379.7 |
Valuation allowances | (1,200.2) | (1,191.5) |
Total deferred income tax assets | 821 | 188.2 |
Deferred income tax liabilities: | ||
Inventories | (22.7) | (21.6) |
Property, plant and equipment | (51.2) | (50.9) |
Lease right-of-use assets | (30.1) | (0.6) |
Intangible assets | (450.7) | (482.9) |
Post-retirement benefit obligations | (6.8) | (9.7) |
Undistributed earnings | (40.9) | (55.9) |
Other items | (0.8) | (1) |
Total deferred income tax liabilities | (603.2) | (622.6) |
Net deferred income tax assets (liabilities) | $ 217.8 | |
Net deferred income tax assets (liabilities) | $ (434.4) |
Income taxes - Schedule of unre
Income taxes - Schedule of unrecognized tax positions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Reconciliation of Unrecognized Tax Benefits | |||
At the beginning of the period | $ 80.1 | $ 106.1 | $ 106.3 |
Increases for tax positions related to the current period | 70.6 | 0.4 | 5.5 |
Increases for tax positions related to prior periods | 5.8 | 0.2 | 4.6 |
Decreases for tax positions related to prior periods | (2.1) | (1.5) | (2.8) |
Decreases related to settlements | 0 | 0 | (0.7) |
Decreases due to lapsed statute of limitations | (8.1) | (21) | (11.8) |
Foreign currency translation | (4.1) | ||
Foreign currency translation | 1 | 5 | |
At the end of the period | $ 147.3 | $ 80.1 | $ 106.1 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Earnings Per Share [Abstract] | |||||||||||
Net income attributable to shareholders | $ 19.4 | $ 35.5 | $ 21.5 | $ 613.7 | $ 75.6 | $ 59.9 | $ 85.6 | $ 24.2 | $ 690.1 | $ 245.3 | $ 151.3 |
Weighted average number of shares outstanding (in shares) | 290,057,360 | 285,906,693 | 245,520,533 | ||||||||
Dilutive effect of share-based awards (in shares) | 1,570,101 | 5,791,580 | 4,970,295 | ||||||||
Diluted weighted average number of shares outstanding (in shares) | 291,627,461 | 291,698,273 | 250,490,828 | ||||||||
Basic earnings per share (in usd per share) | $ 2.38 | $ 0.86 | $ 0.62 | ||||||||
Diluted earnings per share (in usd per share) | $ 2.37 | $ 0.84 | $ 0.60 | ||||||||
Anti-dilutive shares excluded from diluted income per share calculation (in shares) | 3,679,014 | 932,515 | 180,538 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 118.9 | $ 152.1 |
Work in progress | 33.6 | 38.4 |
Finished goods | 322.6 | 347.1 |
Total inventories | $ 475.1 | $ 537.6 |
Property, plant and equipment_2
Property, plant and equipment (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 1,187.8 | |
Less: Accumulated depreciation and impairment | (459.9) | |
Total | 727.9 | $ 756.3 |
Property, plant and equipment, gross | 1,133.6 | |
Less: Accumulated depreciation and impairment | (377.3) | |
Total | 756.3 | |
Land and buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 318.6 | |
Property, plant and equipment, gross | 313.3 | |
Machinery, equipment and vehicles | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 819.4 | |
Property, plant and equipment, gross | 736 | |
Assets under construction | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 49.8 | |
Property, plant and equipment, gross | $ 84.3 |
Property, plant and equipment -
Property, plant and equipment - Narratives (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Property, Plant and Equipment | |||
Depreciation | $ 92.3 | $ 87.8 | $ 81.3 |
Interest costs capitalized | 0 | 4.5 | 0 |
Impairment of fixed assets | 0.7 | 2.7 | 0 |
Restructuring expenses | 7.2 | 7.3 | 19.6 |
Right-of-use assets | 2.8 | ||
Assets under finance lease | 2.2 | ||
Facility Closing | |||
Property, Plant and Equipment | |||
Restructuring expenses | $ 1.2 | 0.4 | $ 2 |
Facility Closing | Europe | |||
Property, Plant and Equipment | |||
Restructuring expenses | $ 2.1 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Cost and carrying amount | ||
Beginning balance | $ 2,045.9 | $ 2,085.5 |
Acquisitions | 35.6 | |
Foreign currency translation | 14.6 | (75.2) |
Ending balance | 2,060.5 | 2,045.9 |
Power Transmission | ||
Cost and carrying amount | ||
Beginning balance | 1,374.1 | 1,430.2 |
Acquisitions | 0 | |
Foreign currency translation | 3.4 | (56.1) |
Ending balance | 1,377.5 | 1,374.1 |
Fluid Power | ||
Cost and carrying amount | ||
Beginning balance | 671.8 | 655.3 |
Acquisitions | 35.6 | |
Foreign currency translation | 11.2 | (19.1) |
Ending balance | $ 683 | $ 671.8 |
Goodwill - Narratives (Details)
Goodwill - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 29, 2018 | |
Goodwill | ||
Goodwill acquired | $ 35.6 | |
Fluid Power | ||
Goodwill | ||
Goodwill acquired | 35.6 | |
Fluid Power | Rapro | ||
Goodwill | ||
Goodwill acquired | $ 34.4 | |
Fluid Power | Atlas Hydraulics | ||
Goodwill | ||
Goodwill acquired | $ 1.2 |
Intangible assets - Finite-Live
Intangible assets - Finite-Lived and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Finite-Lived Intangible Assets | ||
Finite-lived, cost | $ 2,188.7 | $ 2,172.2 |
Finite-lived, accumulated amortization | (782.1) | (651) |
Finite-lived, net | 1,406.6 | 1,521.2 |
Indefinite-lived, cost | 513.4 | 513.4 |
Indefinite-lived, accumulated impairment | (44) | (44) |
Indefinite-lived, net | 469.4 | 469.4 |
Cost | 2,702.1 | 2,685.6 |
Accumulated amortization and impairment | (826.1) | (695) |
Net | 1,876 | 1,990.6 |
—Customer relationships | ||
Finite-Lived Intangible Assets | ||
Finite-lived, cost | 2,021.8 | 2,017.4 |
Finite-lived, accumulated amortization | (656.3) | (534.8) |
Finite-lived, net | 1,365.5 | 1,482.6 |
—Technology | ||
Finite-Lived Intangible Assets | ||
Finite-lived, cost | 90.8 | 90.6 |
Finite-lived, accumulated amortization | (87.8) | (87) |
Finite-lived, net | 3 | 3.6 |
—Capitalized software | ||
Finite-Lived Intangible Assets | ||
Finite-lived, cost | 76.1 | 64.2 |
Finite-lived, accumulated amortization | (38) | (29.2) |
Finite-lived, net | $ 38.1 | $ 35 |
Intangible assets - Narrative (
Intangible assets - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment of Intangible Assets (Excluding Goodwill) | $ 0 | $ 0 | $ 1,000,000 |
Amortization expense | 129,900,000 | 130,700,000 | $ 130,900,000 |
Intangible assets, foreign currency translation gain (loss) | $ 3,000,000 | $ (35,300,000) |
Intangible assets - Schedule of
Intangible assets - Schedule of future amortization of finite-lived intangible assets (Details) $ in Millions | Dec. 28, 2019USD ($) |
Fiscal year | |
—2020 | $ 131.6 |
—2021 | 131.1 |
—2022 | 129.7 |
—2023 | 124.5 |
—2024 | $ 123.5 |
Leases - Narratives (Details)
Leases - Narratives (Details) lease in Thousands, $ in Millions | 12 Months Ended |
Dec. 28, 2019USD ($)propertylease | |
Lessor, Leases | |
Number of leases (leases) | lease | 1 |
Number properties (properties) | property | 90 |
Weighted-average remaining lease term — finance leases | 8 years 6 months |
Finance lease rent free period | 10 years |
Amortization of right of use assets | $ | $ 23.6 |
real estate | |
Lessor, Leases | |
Percentage of total lease liability (percent) | 90.00% |
Leases - Quantitative Disclosur
Leases - Quantitative Disclosures (Details) $ in Millions | 12 Months Ended |
Dec. 28, 2019USD ($) | |
Lease expenses | |
Operating lease expenses | $ 30.3 |
Finance lease amortization expenses | 0.3 |
Short-term lease expenses | 4.6 |
Variable lease expenses | 6.9 |
Sublease income | (0.1) |
Total lease expenses | 42 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 19.7 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 0.9 |
—Operating cash flows from operating leases | 26.3 |
—Financing cash flows from finance leases | 0.4 |
Cash paid for amounts included in the measurement of lease liabilities: | $ 26.7 |
Weighted-average remaining lease term — finance leases | 8 years 6 months |
Weighted-average remaining lease term — operating leases | 10 years 1 month |
Weighted-average discount rate — finance leases (percent) | 2.50% |
Weighted-average discount rate — operating leases (percent) | 5.40% |
Leases - Minimum Future Payment
Leases - Minimum Future Payments (Details) $ in Millions | Dec. 28, 2019USD ($) |
Operating leases | |
Next 12 months | $ 25.5 |
Year 2 | 21.6 |
Year 3 | 18.2 |
Year 4 | 15 |
Year 5 | 13.4 |
Year 6 and beyond | 84.5 |
Total lease payments | 178.2 |
Interest | (43.9) |
Total present value of lease liabilities | 134.3 |
Finance leases | |
Next 12 months | 0.6 |
Year 2 | 0.5 |
Year 3 | 0.5 |
Year 4 | 0.2 |
Year 5 | 0 |
Year 6 and beyond | 0 |
Total lease payments | 1.8 |
Interest | (0.1) |
Total present value of lease liabilities | $ 1.7 |
Leases - Balance Sheet Location
Leases - Balance Sheet Location (Details) $ in Millions | Dec. 28, 2019USD ($) |
Operating leases | |
Operating lease right-of-use assets | $ 123 |
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) | 19.5 |
Long-term lease liabilities | 114.8 |
Operating Lease, Liability | 134.3 |
Finance leases | |
Right-of-use assets | 2.8 |
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) | 0.3 |
Long-term lease liabilities | 1.4 |
Total lease liabilities | $ 1.7 |
Leases - Maturity Schedule Befo
Leases - Maturity Schedule Before Adoption of Lease Guidance (Details) $ in Millions | Dec. 29, 2018USD ($) |
Operating leases | |
2019 | $ 25 |
2020 | 21.3 |
2021 | 18.2 |
2022 | 14.4 |
2023 | 12.6 |
2024 and beyond | 86.5 |
Total | 178 |
Finance leases | |
2019 | 0.3 |
2020 | 0.3 |
2021 | 0.3 |
2022 | 0.3 |
2023 | 0.4 |
2024 and beyond | 0.4 |
Total | 2 |
Total | |
2019 | 25.3 |
2020 | 21.6 |
2021 | 18.5 |
2022 | 14.7 |
2023 | 13 |
2024 and beyond | 86.9 |
Total | $ 180 |
Derivative financial instrume_3
Derivative financial instruments - Fair Values of Derivative Instruments (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Derivatives, Fair Value | ||
Derivative liabilities | $ (60.9) | $ (41.7) |
Net | (55.5) | (29.9) |
Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 5.4 | 10.2 |
Other non- current assets | ||
Derivatives, Fair Value | ||
Derivative assets | 0 | 1.6 |
Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (9.6) | (0.7) |
Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (51.3) | (41) |
Derivatives designated as hedging instruments: | —Currency swaps | ||
Derivatives, Fair Value | ||
Net | (15.1) | (22.1) |
Derivatives designated as hedging instruments: | —Currency swaps | Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 4.2 | 5.4 |
Derivatives designated as hedging instruments: | —Currency swaps | Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (19.3) | (27.5) |
Derivatives designated as hedging instruments: | —Interest rate caps | ||
Derivatives, Fair Value | ||
Net | (7) | (5.8) |
Derivatives designated as hedging instruments: | —Interest rate caps | Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 3.5 | |
Derivatives designated as hedging instruments: | —Interest rate caps | Other non- current assets | ||
Derivatives, Fair Value | ||
Derivative assets | 1.6 | |
Derivatives designated as hedging instruments: | —Interest rate caps | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (4) | |
Derivatives designated as hedging instruments: | —Interest rate caps | Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (3) | (10.9) |
Derivatives designated as hedging instruments: | —Interest rate swaps | ||
Derivatives, Fair Value | ||
Net | (34.3) | (2.9) |
Derivatives designated as hedging instruments: | —Interest rate swaps | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (5.3) | (0.3) |
Derivatives designated as hedging instruments: | —Interest rate swaps | Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (29) | (2.6) |
Derivatives not designated as hedging instruments: | —Currency swaps | ||
Derivatives, Fair Value | ||
Net | (0.1) | |
Derivatives not designated as hedging instruments: | —Currency swaps | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (0.1) | |
Derivatives not designated as hedging instruments: | —Currency forward contracts | ||
Derivatives, Fair Value | ||
Net | 1 | 0.9 |
Derivatives not designated as hedging instruments: | —Currency forward contracts | Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 1.2 | 1.3 |
Derivatives not designated as hedging instruments: | —Currency forward contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | $ (0.2) | $ (0.4) |
Derivative financial instrume_4
Derivative financial instruments - Narratives (Details) | 12 Months Ended | ||||
Dec. 28, 2019USD ($)instrument | Dec. 29, 2018USD ($)instrument | Dec. 30, 2017USD ($) | Dec. 28, 2019EUR (€)instrument | Dec. 29, 2018EUR (€)instrument | |
Derivative | |||||
Amount of OCI related to interest rate hedge expected to be reclassified to earnings in the next 12 months | $ 10,400,000 | ||||
Interest rate swaps due June 30, 2020 through June 30, 2023 | |||||
Derivative | |||||
Notional amount of derivative contracts | $ 870,000,000 | $ 870,000,000 | |||
Number of derivative instruments (instruments) | instrument | 3 | 3 | 3 | 3 | |
Interest rate cap | |||||
Derivative | |||||
Notional amount of derivative contracts | $ 1,700,000,000 | $ 2,700,000,000 | |||
Not designated as hedging instrument | |||||
Derivative | |||||
Gain (loss) on derivative, recognized in the income statement | 3,600,000 | 3,000,000 | $ 2,300,000 | ||
Not designated as hedging instrument | —Currency swaps | |||||
Derivative | |||||
Notional amount of derivative contracts | 270,000,000 | 270,000,000 | |||
Not designated as hedging instrument | Currency forward contracts | |||||
Derivative | |||||
Notional amount of derivative contracts | 16,700,000 | 0 | |||
Not designated as hedging instrument | Forward contracts | |||||
Derivative | |||||
Notional amount of derivative contracts | 82,500,000 | 108,000,000 | |||
Derivatives designated as hedging instruments: | Euro Term Loan | Secured debt | Net investment hedges | |||||
Derivative | |||||
Debt instrument principal amount | € | € 147,000,000 | € 30,600,000 | |||
Derivatives designated as hedging instruments: | —Currency swaps | Net investment hedges | Interest Expense | |||||
Derivative | |||||
Gain (loss) on derivative, recognized in the income statement | $ 7,800,000 | $ 2,500,000 |
Derivative financial instrume_5
Derivative financial instruments - Net Investment Hedging Instruments in OCI (Details) - Net investment hedges - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Derivative Instruments, Gain (Loss) | |||
Total net fair value gains (losses) | $ 5.5 | $ 9.8 | $ (109.4) |
—Interest rate caps | |||
Derivative Instruments, Gain (Loss) | |||
Total net fair value gains (losses) | (0.2) | (11) | (73.3) |
—Currency swaps | |||
Derivative Instruments, Gain (Loss) | |||
Total net fair value gains (losses) | $ 5.7 | $ 20.8 | $ (36.1) |
Derivative financial instrume_6
Derivative financial instruments - Interest Rate Caps (Details) - Dec. 28, 2019 € in Millions, $ in Millions | USD ($) | EUR (€) |
June 30, 2017 to June 30, 2020 | ||
Derivative | ||
Notional amount of derivative contracts | $ 200 | |
June 28, 2019 to June 30, 2020 | ||
Derivative | ||
Notional amount of derivative contracts | $ 1,000 | |
July 1, 2019 to June 30, 2023 | ||
Derivative | ||
Notional amount of derivative contracts | € | € 425 |
Derivative financial instrume_7
Derivative financial instruments - OCI Movement (Details) - Interest Rate Contract - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Movement recognized in OCI in relation to: | |||
—Fair value loss on cash flow hedges | $ (31.7) | ||
—Fair value loss on cash flow hedges | $ (4.5) | $ (2) | |
—Deferred premium reclassified from OCI to net income | 2.5 | ||
—Deferred premium reclassified from OCI to net income | 5.4 | 11.6 | |
Total movement | $ (29.2) | ||
Total movement | $ 0.9 | $ 9.6 |
Derivative financial instrume_8
Derivative financial instruments - Gain Loss From Derivative Instruments Not Designated As Hedging Instruments (Details) - Not designated as hedging instrument - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Derivative Instruments, Gain (Loss) | |||
Gain (loss) on derivative, recognized in the income statement | $ 3.6 | $ 3 | $ 2.3 |
Currency forward contracts | SG&A | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) on derivative, recognized in the income statement | 3 | 2.4 | 2.8 |
Currency swap | Other expense (income) | |||
Derivative Instruments, Gain (Loss) | |||
Gain (loss) on derivative, recognized in the income statement | $ 0.6 | $ 0.6 | $ (0.5) |
Fair value measurement - Schedu
Fair value measurement - Schedule of carrying amount and fair value of debt (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Carrying amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current | $ 46.1 | $ 51.6 |
Non-current | 2,912.3 | 2,953.4 |
Fair value of debt | 2,958.4 | 3,005 |
Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current | 45.9 | 50.4 |
Non-current | 2,946.8 | 2,873.2 |
Fair value of debt | $ 2,992.7 | $ 2,923.6 |
Fair value measurement - Narrat
Fair value measurement - Narrative (Details) | 12 Months Ended |
Dec. 28, 2019 | |
Secured credit facilities | Secured debt | LIBOR | |
Debt Instrument | |
Variable rate floor | 1.00% |
Euro Term Loan | Secured debt | LIBOR | |
Debt Instrument | |
Variable rate floor | 3.00% |
Euro Term Loan | Term loan | EURIBOR | |
Debt Instrument | |
Variable rate floor | 0.00% |
Fair value measurement - Sche_2
Fair value measurement - Schedule of assets and liabilities measured at fair value on a recurring basis (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $ (60.9) | $ (41.7) |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments | 1.1 | 0.8 |
Derivative assets | 5.4 | 11.8 |
Derivative liabilities | (60.9) | (41.7) |
Fair Value, Measurements, Recurring | Quoted prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments | 1.1 | 0.8 |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments | 0 | 0 |
Derivative assets | 5.4 | 11.8 |
Derivative liabilities | $ (60.9) | $ (41.7) |
Debt - Schedule of long-term de
Debt - Schedule of long-term debt (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Nov. 22, 2019 | Dec. 29, 2018 | Feb. 08, 2018 |
Debt Instrument | ||||
Total principal of debt | $ 2,985 | $ 3,027.1 | ||
Deferred issuance costs | (41.8) | (48.7) | ||
Accrued interest | 15.2 | 26.6 | ||
Total carrying value of debt | 2,958.4 | 3,005 | ||
Debt, current portion | 46.1 | 51.6 | ||
Debt, less current portion | 2,912.3 | 2,953.4 | ||
Secured debt: | —Dollar Term Loan | ||||
Debt Instrument | ||||
Total principal of debt | 1,699.1 | 1,716.4 | ||
Secured debt: | —Euro Term Loan | ||||
Debt Instrument | ||||
Total principal of debt | $ 717.7 | $ 742.1 | ||
Unsecured debt: | —6.25% Dollar Senior Notes due 2026 | ||||
Debt Instrument | ||||
Stated interest rate on debt (percent) | 6.25% | |||
Total principal of debt | $ 568 | $ 568 | ||
Unsecured debt: | —6.00% Dollar Senior Notes due 2022 | ||||
Debt Instrument | ||||
Stated interest rate on debt (percent) | 6.00% | 6.00% | 6.00% | |
Total principal of debt | $ 568 | |||
Unsecured debt: | —Other loans | ||||
Debt Instrument | ||||
Total principal of debt | $ 0.2 | $ 0.6 |
Debt - Schedule of principal ma
Debt - Schedule of principal maturities due (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Fiscal year | ||
—2020 | $ 30.9 | |
—2021 | 24.7 | |
—2022 | 24.7 | |
—2023 | 24.7 | |
—2024 | 2,312 | |
Thereafter | 568 | |
Total carrying value of debt | $ 2,985 | $ 3,027.1 |
Debt - Debt issuances and redem
Debt - Debt issuances and redemptions Narratives (Details) € in Millions, $ in Millions | Dec. 05, 2019USD ($) | Feb. 09, 2018USD ($) | Feb. 08, 2018USD ($) | Jan. 31, 2018USD ($) | Jan. 31, 2018EUR (€) | Mar. 31, 2018USD ($) | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) | Nov. 22, 2019USD ($) |
Debt Instrument | ||||||||||
Principal amount of debt outstanding | $ 2,985 | $ 3,027.1 | ||||||||
Premium paid on redemption of debt | 0 | 27 | $ 0 | |||||||
Unsecured debt | ||||||||||
Debt Instrument | ||||||||||
Repayments of debt | 913.7 | |||||||||
Payments of accrued interest | 3.1 | |||||||||
Premium paid on redemption of debt | 27 | |||||||||
Accelerated recognition of deferred financing costs | $ 15.4 | |||||||||
Unsecured debt | —6.25% Dollar Senior Notes due 2026 | ||||||||||
Debt Instrument | ||||||||||
Principal amount of debt outstanding | $ 568 | $ 568 | ||||||||
Stated interest rate on debt (percent) | 6.25% | |||||||||
Redemption price (percent) | 103.00% | |||||||||
Unsecured debt | —6.00% Dollar Senior Notes due 2022 | ||||||||||
Debt Instrument | ||||||||||
Principal amount of debt outstanding | $ 568 | |||||||||
Repayments of debt | $ 568 | $ 100 | $ 522 | $ 622 | ||||||
Stated interest rate on debt (percent) | 6.00% | 6.00% | 6.00% | |||||||
Payments of accrued interest | 13.2 | 0.4 | $ 2 | |||||||
Capitalized debt financing costs | $ 8.6 | |||||||||
Redemption price (percent) | 103.00% | |||||||||
Premium paid on redemption of debt | $ 3 | $ 15.6 | ||||||||
Unsecured debt | Euro Senior Notes | ||||||||||
Debt Instrument | ||||||||||
Repayments of debt | 291.7 | € 235 | ||||||||
Payments of accrued interest | $ 0.7 | |||||||||
Redemption price (percent) | 102.875% | 102.875% | ||||||||
Premium paid on redemption of debt | $ 8.4 |
Debt - Dollar and Euro Term Loa
Debt - Dollar and Euro Term Loans Narratives (Details) - Secured debt - USD ($) $ in Millions | Jan. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 |
Euro Term Loan | |||
Debt Instrument | |||
Decrease in applicable variable interest rate margin | 0.25% | ||
Interest rate during period on debt | 0.00% | ||
Quarterly amortization payment rate | 0.25% | ||
Quarterly amortization payment on debt | $ 7.4 | $ 5.8 | |
Euro Term Loan | LIBOR | |||
Debt Instrument | |||
Variable interest rate on debt | 3.00% | ||
Euro Term Loan | LIBOR | Minimum | |||
Debt Instrument | |||
Variable interest rate on debt | 0.00% | ||
Dollar Term Loan | |||
Debt Instrument | |||
Decrease in applicable variable interest rate margin | 0.25% | ||
Interest rate during period on debt | 4.45% | ||
Quarterly amortization payment rate | 0.25% | ||
Quarterly amortization payment on debt | $ 17.3 | $ 13 | |
Dollar Term Loan | LIBOR | |||
Debt Instrument | |||
Variable interest rate on debt | 2.75% | ||
Dollar Term Loan | LIBOR | Minimum | |||
Debt Instrument | |||
Variable interest rate on debt | 1.00% |
Debt - Foreign exchange gains a
Debt - Foreign exchange gains and losses (Details) - Secured debt - Euro Term Loan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Debt Instrument | |||
Gain (loss) recognized in statement of operations | $ 17.3 | $ 43.6 | $ (60.2) |
Loss recognized in OCI | (0.2) | (6) | (36.5) |
Total gain (loss) | $ 17.1 | $ 37.6 | $ (96.7) |
Debt - Unsecured Senior Notes N
Debt - Unsecured Senior Notes Narratives (Details) € in Millions, $ in Millions | Dec. 05, 2019USD ($) | Feb. 09, 2018USD ($) | Feb. 08, 2018USD ($) | Jan. 31, 2018USD ($) | Jan. 31, 2018EUR (€) | Sep. 28, 2019USD ($) | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Nov. 22, 2019USD ($) |
Debt Instrument | |||||||||
Principal amount of debt outstanding | $ 2,985 | $ 3,027.1 | |||||||
Unsecured debt | |||||||||
Debt Instrument | |||||||||
Redemption price in the event of change in control (percent) | 101.00% | ||||||||
Redemption price in the event of sale (percent) | 100.00% | ||||||||
Repayments of debt | 913.7 | ||||||||
Unsecured debt | Prior to Jan 15, 2022 | |||||||||
Debt Instrument | |||||||||
Percentage of total debt redeemable (percent) | 40.00% | ||||||||
Redemption price (percent) | 106.25% | ||||||||
Unsecured debt | —6.25% Dollar Senior Notes due 2026 | |||||||||
Debt Instrument | |||||||||
Principal amount of debt outstanding | $ 568 | $ 568 | |||||||
Stated interest rate on debt (percent) | 6.25% | ||||||||
Redemption price (percent) | 103.00% | ||||||||
Unsecured debt | —6.00% Dollar Senior Notes due 2022 | |||||||||
Debt Instrument | |||||||||
Principal amount of debt outstanding | $ 568 | ||||||||
Stated interest rate on debt (percent) | 6.00% | 6.00% | 6.00% | ||||||
Redemption price (percent) | 103.00% | ||||||||
Repayments of debt | $ 568 | $ 100 | $ 522 | $ 622 | |||||
Unsecured debt | Euro Senior Notes | |||||||||
Debt Instrument | |||||||||
Redemption price (percent) | 102.875% | 102.875% | |||||||
Repayments of debt | $ 291.7 | € 235 | |||||||
Foreign exchange loss | $ 9.2 | ||||||||
Loss recognized in OCI | 5 | ||||||||
Loss recognized in statement of operations | $ 4.2 |
Debt - Schedule of redemption p
Debt - Schedule of redemption prices plus accrued and unpaid interest (Details) - Unsecured debt - Dollar Senior Note redemption price | Feb. 09, 2018 | Dec. 28, 2019 |
Debt Instrument, Redemption | ||
Redemption price (percent) | 103.00% | |
—2022 | ||
Debt Instrument, Redemption | ||
Redemption price (percent) | 103.125% | |
—2023 | ||
Debt Instrument, Redemption | ||
Redemption price (percent) | 101.563% | |
—2024 and thereafter | ||
Debt Instrument, Redemption | ||
Redemption price (percent) | 100.00% |
Debt - Revolving credit facilit
Debt - Revolving credit facility Narratives (Details) - USD ($) | Dec. 28, 2019 | Dec. 29, 2018 |
Revolving credit facility | ||
Line of Credit Facility | ||
Line of credit carrying value | $ 0 | |
Revolving credit facility | Secured multi-currency facility | ||
Line of Credit Facility | ||
Maximum borrowing capacity of credit facility | $ 185,000,000 | |
Line of credit carrying value | 0 | |
Letter of credit sub-facility | ||
Line of Credit Facility | ||
Line of credit carrying value | $ 0 | |
Letter of credit sub-facility | Secured multi-currency facility | ||
Line of Credit Facility | ||
Maximum borrowing capacity of credit facility | 20,000,000 | |
Line of credit carrying value | $ 0 |
Debt - Asset-backed revolver Na
Debt - Asset-backed revolver Narratives (Details) - USD ($) | Dec. 28, 2019 | Dec. 29, 2018 |
Revolving credit facility | ||
Line of Credit Facility | ||
Line of credit carrying value | $ 0 | |
Revolving credit facility | Asset-backed revolver | ||
Line of Credit Facility | ||
Maximum borrowing capacity of credit facility | $ 325,000,000 | |
Current borrowing capacity of credit facility | 294,600,000 | 325,000,000 |
Line of credit carrying value | 0 | 0 |
Letter of credit sub-facility | ||
Line of Credit Facility | ||
Line of credit carrying value | 0 | |
Letter of credit sub-facility | Asset-backed revolver | ||
Line of Credit Facility | ||
Maximum borrowing capacity of credit facility | 150,000,000 | |
Line of credit carrying value | $ 50,100,000 | $ 57,800,000 |
Accrued expenses and other li_3
Accrued expenses and other liabilities - Accrued expenses and other liabilities (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||||
Accrued compensation | $ 47.3 | $ 75 | ||
Current portion of lease obligations | 19.8 | 0.1 | ||
Derivative financial instruments | 60.9 | 41.7 | ||
Payroll and related taxes payable | 11.3 | 13.6 | ||
VAT and other taxes payable | 11.5 | 10.9 | ||
Warranty reserve | 17.7 | 14.3 | $ 14.1 | $ 14.3 |
Workers’ compensation reserve | 10 | 11.1 | ||
Other accrued expenses and other liabilities | 95 | 96.7 | ||
Accrued expenses and other liabilities | $ 273.5 | $ 263.4 |
Accrued expenses and other li_4
Accrued expenses and other liabilities - Classification (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Payables and Accruals [Abstract] | ||
—Accrued expenses and other current liabilities | $ 188.8 | $ 184.2 |
—Other non-current liabilities | 84.7 | 79.2 |
Accrued expenses and other liabilities | $ 273.5 | $ 263.4 |
Accrued expenses and other li_5
Accrued expenses and other liabilities - Warranty reserves (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
December 28, 2019 | |||
Balance as of the beginning of the fiscal year | $ 14.3 | $ 14.1 | $ 14.3 |
Charge for the period | 16.5 | 11.6 | 12.3 |
Utilized during the period | (10.9) | (11) | (13.1) |
Released during the period | (2.2) | (0.1) | (0.1) |
Foreign currency translation | 0 | (0.3) | 0.7 |
Balance as of the end of the period | $ 17.7 | $ 14.3 | $ 14.1 |
Post-retirement benefits - Narr
Post-retirement benefits - Narratives (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Initial health care cost trend (percentage) | 6.56% | 7.01% | |
Ultimate health care cost trend (percentage) | 4.93% | 4.94% | |
Pensions | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Defined contribution expense | $ 17.9 | $ 19.1 | $ 18.6 |
Prior service cost (credit) | 0 | (11.4) | (0.7) |
Expected future employer contributions in current fiscal year | 4.3 | ||
Estimated future amortization gain (loss) from AOCI to net periodic benefit cost | 1 | ||
Other post-retirement benefits | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Prior service cost (credit) | 0 | $ 0 | $ 4.3 |
Expected future employer contributions in current fiscal year | 5.5 | ||
Estimated future amortization gain (loss) from AOCI to net periodic benefit cost | $ 1.4 |
Post-retirement benefits - Fund
Post-retirement benefits - Funded status (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position | ||
Post-retirement benefit obligations | $ 151.2 | $ 155.9 |
Pensions | ||
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position | ||
Pension surplus | (38.1) | (52.6) |
Accrued expenses and other current liabilities | 2.3 | 2.4 |
Post-retirement benefit obligations | 98.7 | 102.4 |
Net unfunded pension obligation | 62.9 | 52.2 |
Defined Benefit Plan, Pension Plan with Project Benefit Obligation in Excess of Plan Assets [Abstract] | ||
—Aggregate projected benefit obligation | 391.7 | 378.2 |
—Aggregate plan assets | 290.7 | 273.4 |
Plans whose accumulated benefit obligation was in excess of the plan assets: | ||
—Aggregate accumulated benefit obligation | 381.6 | 372.3 |
—Aggregate plan assets | 286.2 | 273 |
Other post-retirement benefits | ||
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position | ||
Accrued expenses and other current liabilities | 5.4 | 6.5 |
Post-retirement benefit obligations | 52.5 | 53.5 |
Net unfunded pension obligation | $ 57.9 | $ 60 |
Post-retirement benefits - Sche
Post-retirement benefits - Schedule of changes in the projected benefit obligation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Pensions | |||
Defined Benefit Plan, Change in Benefit Obligation | |||
Benefit obligation at the beginning of the period | $ 827.1 | $ 932.9 | |
Employer service cost | 5.5 | 5.3 | |
Plan participants’ contributions | 0.2 | 0.2 | |
Plan amendments | 0 | 11.4 | |
Interest cost | 23.4 | 23.6 | $ 30.4 |
Net actuarial loss (gain) | 83.1 | (41.1) | |
Benefits paid | (51.6) | (56.5) | |
Expenses paid from assets | (2.3) | (1.8) | |
Curtailments and settlements | (3.6) | (13.4) | |
Foreign currency translation | 16.3 | (33.5) | |
Benefit obligation at the end of the period | 898.1 | 827.1 | 932.9 |
Accumulated benefit obligation | 892.4 | 821.3 | |
Other post-retirement benefits | |||
Defined Benefit Plan, Change in Benefit Obligation | |||
Benefit obligation at the beginning of the period | 60 | 68.4 | |
Interest cost | 2.3 | 2.2 | 2.7 |
Net actuarial loss (gain) | (1.8) | (4.8) | |
Benefits paid | (3.5) | (4.1) | |
Foreign currency translation | 0.9 | (1.7) | |
Benefit obligation at the end of the period | 57.9 | 60 | $ 68.4 |
Accumulated benefit obligation | $ 57.9 | $ 60 |
Post-retirement benefits - Chan
Post-retirement benefits - Change in plan assets (Details) - Pensions - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets | ||
Plan assets at the beginning of the period | $ 774.9 | $ 893.6 |
Actual return on plan assets | 90.4 | (19.7) |
Employer contributions | 8.5 | 8.9 |
Plan participants’ contributions | 0.2 | 0.2 |
Curtailments and settlements | (2.3) | (13.4) |
Benefits paid | (51.6) | (56.5) |
Expenses paid from assets | (2.3) | (1.8) |
Foreign currency translation | 17.4 | (36.4) |
Plan assets at the end of the period | $ 835.2 | $ 774.9 |
Post-retirement benefits - Plan
Post-retirement benefits - Plan asset by asset category (Details) - Pensions - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | $ 835.2 | $ 774.9 | $ 893.6 |
Total | 835.2 | 774.9 | |
Quoted prices in active markets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Total | 8.7 | 4.4 | |
Significant observable inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Total | 590.6 | 546.6 | |
Significant unobservable inputs (Level 3) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 235.9 | 224 | $ 248.1 |
Total | 235.9 | 223.9 | |
Equity Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 102.7 | 83.2 | |
Equity Securities | Quoted prices in active markets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
Equity Securities | Significant observable inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 102.7 | 83.2 | |
Equity Securities | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
—Corporate bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 207.9 | 156.5 | |
—Corporate bonds | Quoted prices in active markets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
—Corporate bonds | Significant observable inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 207.9 | 156.5 | |
—Corporate bonds | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
—Government bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 231.3 | 302.9 | |
—Government bonds | Quoted prices in active markets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
—Government bonds | Significant observable inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 231.3 | 302.9 | |
—Government bonds | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
Annuities and insurance | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 284.6 | 227.9 | |
Annuities and insurance | Quoted prices in active markets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
Annuities and insurance | Significant observable inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 48.7 | 4 | |
Annuities and insurance | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 235.9 | 223.9 | |
Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 8.7 | 4.4 | |
Cash and cash equivalents | Quoted prices in active markets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 8.7 | 4.4 | |
Cash and cash equivalents | Significant observable inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | 0 | 0 | |
Cash and cash equivalents | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Plan asset | $ 0 | $ 0 |
Post-retirement benefits - Ch_2
Post-retirement benefits - Changes in the fair value of plan assets measured using significant unobservable inputs (Details) - Pensions - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward] | ||
Plan assets at the beginning of the period | $ 774.9 | $ 893.6 |
Plan assets at the end of the period | 835.2 | 774.9 |
Significant unobservable inputs (Level 3) | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward] | ||
Plan assets at the beginning of the period | 224 | 248.1 |
Actual return on plan assets | 17.9 | (0.3) |
Purchases | 1.4 | 1.7 |
Sales | (0.9) | (0.9) |
Impacts of benefits paid | (12.3) | (10.5) |
Foreign currency translation | 5.8 | (14.1) |
Plan assets at the end of the period | $ 235.9 | $ 224 |
Post-retirement benefits - Expe
Post-retirement benefits - Expected future benefit payments (Details) $ in Millions | Dec. 28, 2019USD ($) |
Pensions | |
Fiscal year | |
—2020 | $ 48.2 |
—2021 | 46.8 |
—2022 | 48.3 |
—2023 | 47.8 |
—2024 | 47.6 |
—2025 through 2029 | 239.2 |
Other post-retirement benefits | |
Fiscal year | |
—2020 | 5.5 |
—2021 | 5.2 |
—2022 | 4.9 |
—2023 | 4.6 |
—2024 | 4.3 |
—2025 through 2029 | $ 18.3 |
Post-retirement benefits - Comp
Post-retirement benefits - Components of net periodic benefit cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Pensions | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | |||
Employer service cost | $ 5.5 | $ 5.3 | $ 5.8 |
Settlements and curtailments | (0.6) | 0.3 | (3.8) |
Interest cost | 23.4 | 23.6 | 30.4 |
Expected return on plan assets | (27.8) | (22.6) | (26.9) |
Amortization of prior net actuarial loss | 0 | 0.1 | 0.4 |
Amortization of prior service cost | 0.8 | 0.1 | 0 |
Net periodic benefit cost | 1.3 | 6.8 | 5.9 |
Other post-retirement benefits | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | |||
Interest cost | 2.3 | 2.2 | 2.7 |
Amortization of prior net actuarial loss | (0.8) | (0.4) | (0.2) |
Amortization of prior service cost | (0.4) | (0.4) | (0.1) |
Net periodic benefit cost | $ 1.1 | $ 1.4 | $ 2.4 |
Post-retirement benefits - Effe
Post-retirement benefits - Effects of pension plan recognized in OCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Pensions | |||
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax | |||
Current period net actuarial loss (gain) | $ 20.5 | $ 1.2 | $ (20.9) |
Amortization of prior net actuarial loss | 0 | (0.1) | (0.4) |
Prior service cost (credit) | 0 | 11.4 | 0.7 |
Amortization of prior service cost (credit) | (0.8) | (0.1) | 0 |
(Gain) loss recognized due to settlements and curtailments | (0.8) | (0.3) | 3.8 |
Pre-tax changes recognized in OCI other than foreign currency translation | 18.9 | 12.1 | (16.8) |
Foreign currency translation | 1 | (0.1) | (0.9) |
Total pre-tax changes recognized in OCI | 19.9 | 12 | (17.7) |
Other post-retirement benefits | |||
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax | |||
Current period net actuarial loss (gain) | (1.8) | (4.8) | (3.9) |
Amortization of prior net actuarial loss | 0.8 | 0.4 | 0.2 |
Prior service cost (credit) | 0 | 0 | (4.3) |
Amortization of prior service cost (credit) | 0.4 | 0.4 | 0.1 |
Pre-tax changes recognized in OCI other than foreign currency translation | (0.6) | (4) | (7.9) |
Foreign currency translation | (0.2) | 0 | 0 |
Total pre-tax changes recognized in OCI | $ (0.8) | $ (4) | $ (7.9) |
Post-retirement benefits - Cumu
Post-retirement benefits - Cumulative losses (gains) not recognized in net period pension plan (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Pensions | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Actuarial loss | $ 21.2 | $ 1.5 | $ 0.7 |
Prior service costs | 11.1 | 11.9 | 0.6 |
Foreign currency translation | (2.9) | (3.9) | (3.8) |
Cumulative total | 29.4 | 9.5 | (2.5) |
Other post-retirement benefits | |||
Defined Benefit Plans and Other Postretirement Benefit Plans | |||
Actuarial loss | (17.3) | (16.3) | (11.9) |
Prior service costs | (3.4) | (3.8) | (4.2) |
Other adjustments | 0.2 | 0.2 | 0.2 |
Foreign currency translation | (0.2) | 0 | 0 |
Cumulative total | $ (20.7) | $ (19.9) | $ (15.9) |
Post-retirement benefits - Sc_2
Post-retirement benefits - Schedule of major assumptions used (Details) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Pensions | ||
Benefit obligation | ||
Discount rate (percentage) | 2.261% | 2.932% |
Rate of salary increase (percentage) | 3.173% | 3.19% |
Net periodic benefit cost | ||
Discount rate (percentage) | 2.932% | 2.619% |
Rate of salary increase (percentage) | 3.19% | 3.178% |
Expected return on plan assets (percentage) | 3.622% | 2.844% |
Other post-retirement benefits | ||
Benefit obligation | ||
Discount rate (percentage) | 3.08% | 4.01% |
Net periodic benefit cost | ||
Discount rate (percentage) | 4.01% | 3.42% |
Post-retirement benefits - Ef_2
Post-retirement benefits - Effect of one percent change in healthcare assumption (Details) $ in Millions | 12 Months Ended |
Dec. 28, 2019USD ($) | |
Postemployment Benefits [Abstract] | |
Effects of one percent increase in service and interest cost | $ 0.1 |
Effects of one percent decrease in service and interest cost | (0.2) |
Effects of one percent increase in defined benefit obligation | 2.1 |
Effects of one percent decrease in defined benefit obligation | $ (1.8) |
Share-based compensation - Narr
Share-based compensation - Narratives (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation expense recognized | $ 15 | $ 6 | $ 5.4 |
Proceeds from stock options exercised | 1.8 | 0.6 | |
—Share options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value of options that were vested or expected to vest | $ 29.4 | ||
Contractual term of options that were vested or expect to vest | 7 years 1 month 6 days | ||
Aggregate intrinsic value of options exercisable | $ 18.6 | ||
Contractual term of options exercisable | 5 years 9 months | ||
Unrecognized compensation relating to non-vested awards | $ 9.3 | ||
Unrecognized compensation relating to non-vested awards, recognition period (term) | 2 years 4 months 24 days | ||
Unrecognized compensation relating to non-vested awards recognizable upon liquidity | $ 28.8 | ||
Aggregate intrinsic value of options exercised | $ 2.1 | 0.8 | |
RSU's and PRSU's | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation relating to non-vested awards, recognition period (term) | 2 years 1 month 6 days | ||
Unrecognized compensation relating to non-vested awards other than option | $ 9 | ||
Aggregate intrinsic value of non options vested | $ 0.6 | $ 0.4 | |
Omaha Topco Ltd. Stock Incentive Plan | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Omaha Topco Ltd. Stock Incentive Plan | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Omaha Topco Ltd. Stock Incentive Plan | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Omaha Topco Ltd. Stock Incentive Plan | Tranche Four | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Omaha Topco Ltd. Stock Incentive Plan | Tranche Five | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Omaha Topco Ltd. Stock Incentive Plan | —RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Shares granted (shares) | 76,293 | ||
Term of award | 10 years | ||
Omaha Topco Ltd. Stock Incentive Plan | —Tier I | —Share options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 5 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche One | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche One | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Two | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Two | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Three | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Three | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Four | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of shares expected to vest upon achievement of average annual adjusted return on invested capital (percentage) | 50.00% | ||
Percentage of shares expected to vest upon achievement of certain relative shareholders return (percentage) | 50.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
Total number of shares expected to vest at term of award arrangement (percentage) | 0.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Total number of shares expected to vest at term of award arrangement (percentage) | 200.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche One | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche One | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Two | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Two | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Three | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Three | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Four | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Term of award | 10 years | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% |
Share-based compensation - Stoc
Share-based compensation - Stock Option and SAR Rollforward (Details) - $ / shares | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Number of options | ||
Beginning balance (shares) | 20,032,966 | |
Granted (shares) | 1,967,115 | |
Forfeited (shares) | (1,504,986) | |
Expired (shares) | (2,828) | |
Exercised (shares) | (270,997) | (79,014) |
Ending balance (shares) | 20,221,270 | 20,032,966 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 8.16 | |
Granted (usd per share) | 17.49 | |
Forfeited (usd per share) | 8.14 | |
Expired (usd per share) | 16.28 | |
Exercised (usd per share) | 6.61 | |
Ending balance (usd per share) | $ 9.09 | $ 8.16 |
—Share options | ||
Number of options | ||
Beginning balance (shares) | 582,717 | |
Granted (shares) | 1,099,505 | |
Forfeited (shares) | (69,862) | |
Expired (shares) | (1,875) | |
Ending balance (shares) | 1,610,485 | 582,717 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 17.14 | |
Granted (usd per share) | 16.46 | |
Forfeited (usd per share) | 16.86 | |
Expired (usd per share) | 17.72 | |
Ending balance (usd per share) | $ 16.69 | $ 17.14 |
Exercisable at the end of the period (shares) | 2,864,411 | |
Exercisable at the end of the period (usd per share) | $ 7.37 | |
Vested and expected to vest at the end of the period (shares) | 6,978,259 | |
Vested and expected to vest at the end of the period (usd per share) | $ 10.81 | |
—Share options | —Tier I | ||
Number of options | ||
Beginning balance (shares) | 4,212,537 | |
Forfeited (shares) | (115,685) | |
Exercised (shares) | (270,997) | |
Ending balance (shares) | 3,825,855 | 4,212,537 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 7.03 | |
Forfeited (usd per share) | 6.61 | |
Exercised (usd per share) | 6.61 | |
Ending balance (usd per share) | $ 7.07 | $ 7.03 |
—Share options | —Tier II | ||
Number of options | ||
Beginning balance (shares) | 4,837,780 | |
Forfeited (shares) | (432,440) | |
Ending balance (shares) | 4,405,340 | 4,837,780 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 6.97 | |
Forfeited (usd per share) | 6.58 | |
Ending balance (usd per share) | $ 7.01 | $ 6.97 |
—Share options | —Tier III | ||
Number of options | ||
Beginning balance (shares) | 4,837,780 | |
Forfeited (shares) | (432,440) | |
Ending balance (shares) | 4,405,340 | 4,837,780 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 6.97 | |
Forfeited (usd per share) | 6.58 | |
Ending balance (usd per share) | $ 7.01 | $ 6.97 |
—Share options | —Tier IV | ||
Number of options | ||
Beginning balance (shares) | 4,837,780 | |
Forfeited (shares) | (432,440) | |
Ending balance (shares) | 4,405,340 | 4,837,780 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 10.46 | |
Forfeited (usd per share) | 9.88 | |
Ending balance (usd per share) | $ 10.52 | $ 10.46 |
—SARs | ||
Number of options | ||
Beginning balance (shares) | 724,372 | |
Granted (shares) | 71,150 | |
Forfeited (shares) | (22,119) | |
Expired (shares) | (953) | |
Ending balance (shares) | 772,450 | 724,372 |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 8.17 | |
Granted (usd per share) | 16.46 | |
Forfeited (usd per share) | 15.43 | |
Expired (usd per share) | 13.44 | |
Ending balance (usd per share) | $ 8.72 | $ 8.17 |
—Premium-priced options | ||
Number of options | ||
Granted (shares) | 796,460 | |
Ending balance (shares) | 796,460 | |
Weighted average exercise price $ | ||
Granted (usd per share) | $ 19 | |
Ending balance (usd per share) | $ 19 |
Share-based compensation - RSU
Share-based compensation - RSU and PRSU Rollforward (Details) | 12 Months Ended |
Dec. 28, 2019$ / sharesshares | |
Number of awards | |
Granted (shares) | shares | 990,486 |
Forfeited (shares) | shares | (54,335) |
Vested (shares) | shares | (51,132) |
Ending balance (shares) | shares | 966,819 |
Weighted average grant date fair value $ | |
Granted (usd per share) | $ / shares | $ 17.16 |
Expired (usd per share) | $ / shares | 16.59 |
Vested (usd per share) | $ / shares | 17 |
Ending balance (usd per share) | $ / shares | $ 17.19 |
—RSUs | |
Number of awards | |
Beginning balance (shares) | shares | 81,800 |
Granted (shares) | shares | 741,936 |
Forfeited (shares) | shares | (54,335) |
Vested (shares) | shares | (51,132) |
Ending balance (shares) | shares | 718,269 |
Weighted average grant date fair value $ | |
Beginning balance (usd per share) | $ / shares | $ 17.13 |
Granted (usd per share) | $ / shares | 16.19 |
Expired (usd per share) | $ / shares | 16.59 |
Vested (usd per share) | $ / shares | 17 |
Ending balance (usd per share) | $ / shares | $ 16.20 |
—PRSUs | |
Number of awards | |
Granted (shares) | shares | 248,550 |
Ending balance (shares) | shares | 248,550 |
Weighted average grant date fair value $ | |
Granted (usd per share) | $ / shares | $ 20.07 |
Ending balance (usd per share) | $ / shares | $ 20.07 |
Share-based compensation - Fair
Share-based compensation - Fair value and valuation assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
—SARs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Assumed fair value exercise price (usd per share) | $ 5.88 | $ 6.44 | $ 3.94 |
Expected volatility (percentage) | 31.90% | 38.90% | 43.60% |
Expected option life (years) | 6 years | 6 years 3 months 18 days | |
Risk-free interest rate (percentage) | 2.51% | 2.89% | |
—Share options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Assumed fair value exercise price (usd per share) | $ 5.88 | $ 7.44 | |
Expected volatility (percentage) | 31.90% | 39.60% | 43.60% |
Expected option life (years) | 6 years | 6 years 3 months 18 days | |
Risk-free interest rate (percentage) | 2.51% | 2.80% | |
—Share options | —Tier I | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected option life (years) | 6 years 6 months | ||
—Share options | - Tier II-IV | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected option life (years) | 6 years | ||
Risk-free interest rate (percentage) | 2.04% | ||
—Share options | - Liquidity Event Tier II-IV | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected option life (years) | 4 years | ||
Risk-free interest rate (percentage) | 1.98% | ||
—Premium-priced options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Assumed fair value exercise price (usd per share) | $ 5.65 | ||
Expected volatility (percentage) | 31.90% | ||
Expected option life (years) | 7 years | ||
Risk-free interest rate (percentage) | 2.53% | ||
—RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Assumed fair value exercise price (usd per share) | $ 16.19 | $ 16.97 | $ 17.23 |
—PRSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Assumed fair value exercise price (usd per share) | $ 20.07 | ||
Expected volatility (percentage) | 32.80% | ||
Risk-free interest rate (percentage) | 2.48% |
Equity - Narrative (Details)
Equity - Narrative (Details) - $ / shares | 1 Months Ended | ||
Jan. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Subsidiary, Sale of Stock | |||
Par value (in usd per share) | $ 0.01 | $ 0.01 | |
Initial public offering | |||
Subsidiary, Sale of Stock | |||
Shares sold in offering (in shares) | 38,500,000 | ||
Offering price (in usd per share) | $ 19 | ||
Underwriters option | |||
Subsidiary, Sale of Stock | |||
Shares sold in offering (in shares) | 5,775,000 | ||
Offering price (in usd per share) | $ 19 |
Equity - Movement in Number of
Equity - Movement in Number of Shares in Issue (Details) - shares | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Increase (Decrease) in Stockholders' Equity | ||
Balance as of the beginning of the period (in shares) | 289,847,574 | 245,474,605 |
Issuance of shares (in shares) | 0 | 44,275,000 |
Exercise of share options (in shares) | 270,997 | 79,014 |
Vesting of restricted stock units, net of witholding taxes (in shares) | 38,728 | 18,955 |
Balance as of the end of the period (in shares) | 290,157,299 | 289,847,574 |
Analysis of accumulated other_3
Analysis of accumulated other comprehensive (loss) income (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | Jan. 01, 2018 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | $ 2,333.7 | $ 1,428.4 | $ 1,068.4 | |
Other comprehensive (loss) income | (6.5) | (125.3) | 198.4 | |
As of December 29, 2018 | $ 0.3 | |||
Ending Balance | 3,010.7 | 2,333.7 | 1,428.4 | |
Accumulated OCI attributable to shareholders | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | (854.3) | (747.4) | (915.9) | |
Other comprehensive (loss) income, net of tax, attributable to parent | (4.1) | (107.2) | 168.5 | |
Other comprehensive (loss) income | (4.1) | (106.9) | 168.5 | |
As of December 29, 2018 | 0.3 | |||
Ending Balance | (858.4) | (854.3) | (747.4) | |
Available-for- sale investments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | 0 | (0.3) | (0.2) | |
Other comprehensive (loss) income, net of tax, attributable to parent | 0 | (0.1) | ||
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | (0.1) | |||
Other comprehensive (loss) income | (0.2) | |||
As of December 29, 2018 | $ 0.3 | |||
Ending Balance | 0 | 0 | (0.3) | |
Post- retirement benefit | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | 7.6 | 13.2 | (6.5) | |
Other comprehensive (loss) income, net of tax, attributable to parent | (16.9) | (5.6) | 19.7 | |
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | 0.4 | (0.2) | 0.5 | |
Other comprehensive (loss) income | (16.5) | (5.8) | 20.2 | |
Ending Balance | (9.3) | 7.6 | 13.2 | |
Cumulative translation adjustment | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | (850) | (742.8) | (884.1) | |
Other comprehensive (loss) income, net of tax, attributable to parent | 37.7 | (107.2) | 141.3 | |
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | (2.8) | (17.9) | 29.5 | |
Other comprehensive (loss) income | 34.9 | (125.1) | 170.8 | |
Ending Balance | (812.3) | (850) | (742.8) | |
Cash flow hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | (17.5) | (25.1) | ||
Other comprehensive (loss) income, net of tax, attributable to parent | 5.6 | 7.6 | ||
Ending Balance | (17.5) | |||
Cash flow hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | (11.9) | |||
Other comprehensive (loss) income, net of tax, attributable to parent | (24.9) | 5.6 | ||
Ending Balance | (36.8) | (11.9) | ||
Non- controlling interests | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | (43.6) | (25.5) | (55.4) | |
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | (2.4) | (18.1) | 29.9 | |
Ending Balance | (46) | (43.6) | (25.5) | |
Accumulated OCI | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Beginning Balance | (897.9) | (772.9) | (971.3) | |
Other comprehensive (loss) income | 198.4 | |||
Ending Balance | $ (904.4) | $ (897.9) | $ (772.9) |
Related party transactions - Na
Related party transactions - Narrative (Details) - USD ($) | Nov. 22, 2019 | Jan. 31, 2018 | Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | Jul. 03, 2014 |
Related Party Transaction | ||||||||||||||
Net sales | $ 725,700,000 | $ 746,600,000 | $ 809,900,000 | $ 804,900,000 | $ 792,100,000 | $ 828,400,000 | $ 875,100,000 | $ 852,000,000 | $ 3,087,100,000 | $ 3,347,600,000 | $ 3,041,700,000 | |||
Dividends received from equity method investees | $ 0 | 400,000 | 300,000 | |||||||||||
Effects of change in ownership interest | $ 15,000,000 | |||||||||||||
Unsecured debt | —6.25% Dollar Senior Notes due 2026 | ||||||||||||||
Related Party Transaction | ||||||||||||||
Stated interest rate on debt (percent) | 6.25% | 6.25% | ||||||||||||
Sponsor | Former transaction and monitoring fee agreement | ||||||||||||||
Related Party Transaction | ||||||||||||||
Related party transaction, fee as a percentage of EBITDA | 1.00% | |||||||||||||
Related party transaction, expenses incurred | $ 6,500,000 | 8,000,000 | 6,700,000 | |||||||||||
Sponsor | New monitoring fee agreement | ||||||||||||||
Related Party Transaction | ||||||||||||||
Related party transaction, ownership percentage threshold which terminates milestone payment | 5.00% | |||||||||||||
Related party transaction, fair value of equity threshold which terminates milestone payment | $ 25,000,000 | |||||||||||||
Sponsor | Support and services agreement | ||||||||||||||
Related Party Transaction | ||||||||||||||
Related party transaction, expenses incurred | 100,000 | 0 | 0 | |||||||||||
Related party transaction, ownership percentage threshold which terminates milestone payment | 5.00% | |||||||||||||
Related party transaction, fair value of equity threshold which terminates milestone payment | $ 25,000,000 | |||||||||||||
Sponsor | Underwriting fees | ||||||||||||||
Related Party Transaction | ||||||||||||||
Related party transaction, expenses incurred | $ 3,200,000 | |||||||||||||
Sponsor | Issuance Of 6.25% Dollar Senior Notes | Unsecured debt | —6.25% Dollar Senior Notes due 2026 | ||||||||||||||
Related Party Transaction | ||||||||||||||
Related party, amount of transaction | $ 99,400,000 | |||||||||||||
Stated interest rate on debt (percent) | 6.25% | |||||||||||||
Compensation expense for debt issued | $ 1,200,000 | |||||||||||||
Sponsor | Commercial Transactions With Sponsor Portfolio Companies | ||||||||||||||
Related Party Transaction | ||||||||||||||
Net sales | 200,000 | 0 | 0 | |||||||||||
Affiliated entity of majority shareholder | ||||||||||||||
Related Party Transaction | ||||||||||||||
Sales | 27,200,000 | |||||||||||||
Equity method investees | ||||||||||||||
Related Party Transaction | ||||||||||||||
Sales | 1,400,000 | 1,600,000 | $ 1,800,000 | |||||||||||
Payables to related parties | $ 200,000 | $ 100,000 | $ 200,000 | $ 100,000 |
Related party transactions - Sa
Related party transactions - Sales and Purchases with Equity Method Investees (Details) - Equity method investees - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Related Party Transaction | |||
Sales | $ 1.4 | $ 1.6 | $ 1.8 |
Purchases | $ (15.4) | $ (15.2) | $ (9.8) |
Related party transactions - Tr
Related party transactions - Transactions with Non-Gates entities (Details) - Non-Gates entities controlled by non-controlling shareholders - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Related Party Transaction | |||
Sales | $ 51.3 | $ 60.6 | $ 55.2 |
Purchases | (20.5) | (20.7) | $ (21.7) |
Receivables | 4.2 | 0.6 | |
Payables | $ (5.9) | $ (0.3) |
Commitments and contingencies -
Commitments and contingencies - Narratives (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Long-term Purchase Commitment | ||
Letters of credit outstanding | $ 50.1 | $ 57.8 |
Bonds, letters of credit, and bank guarantees | 4.1 | 3.4 |
Cash surrender value | 933.8 | 930 |
Underlying loan for life assurance policy | 932 | 928.2 |
Estimated receivable from policy | 1.8 | 1.8 |
Property, Plant and Equipment | ||
Long-term Purchase Commitment | ||
Remaining minimum amount committed | 5.3 | 18.8 |
—Capitalized software | ||
Long-term Purchase Commitment | ||
Remaining minimum amount committed | 1.9 | 2.5 |
Inventories | ||
Long-term Purchase Commitment | ||
Remaining minimum amount committed | $ 33.7 | $ 32.2 |
Commitments and contingencies_2
Commitments and contingencies - Allowance for doubtful accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Accounts Receivable, Allowance for Credit Loss | |||
Balance at beginning of year | $ 7.4 | $ 6.8 | $ 3.4 |
Charged to net income | 2.4 | 1.4 | 3.7 |
Deductions | (1.3) | (0.5) | (0.8) |
Foreign currency translation | 0.1 | (0.3) | 0.5 |
Balance at end of year | $ 8.6 | $ 7.4 | $ 6.8 |
Quarterly financial data (una_3
Quarterly financial data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 725.7 | $ 746.6 | $ 809.9 | $ 804.9 | $ 792.1 | $ 828.4 | $ 875.1 | $ 852 | $ 3,087.1 | $ 3,347.6 | $ 3,041.7 |
Gross profit | 261.4 | 272.4 | 301.4 | 307.3 | 310 | 327.2 | 357.5 | 335.9 | 1,142.5 | 1,330.6 | 1,218 |
Income from continuing operations before income taxes | 27.3 | 41.9 | 64.2 | 65.4 | 83.8 | 74.2 | 104.4 | 41.1 | 198.8 | 303.5 | 109.5 |
Net income | 25.4 | 37.4 | 26.5 | 604.8 | 82.5 | 66.7 | 92.6 | 29.3 | 694.1 | 271.1 | 182.7 |
Net income attributable to shareholders | $ 19.4 | $ 35.5 | $ 21.5 | $ 613.7 | $ 75.6 | $ 59.9 | $ 85.6 | $ 24.2 | $ 690.1 | $ 245.3 | $ 151.3 |
Basic earnings per share from continuing operations (in usd per share) | $ 0.07 | $ 0.12 | $ 0.07 | $ 2.12 | $ 0.26 | $ 0.21 | $ 0.30 | $ 0.09 | $ 2.38 | $ 0.86 | $ 0.62 |
Basic earnings per share from discontinued operations (in usd per share) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Diluted earnings per share from continuing operations (in usd per share) | 0.07 | 0.12 | 0.07 | 2.08 | 0.26 | 0.20 | 0.29 | 0.09 | 2.37 | 0.84 | 0.60 |
Diluted earnings per share from discontinued operations (in usd per share) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |