Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 28, 2019 | Nov. 04, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Gates Industrial Corp plc | |
Entity Central Index Key | 0001718512 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 28, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 290,118,125 | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 746.6 | $ 828.4 | $ 2,361.4 | $ 2,555.5 |
Cost of sales | 474.2 | 501.2 | 1,480.3 | 1,534.9 |
Gross profit | 272.4 | 327.2 | 881.1 | 1,020.6 |
Selling, general and administrative expenses | 191.9 | 202.7 | 590.4 | 621.1 |
Transaction-related expenses | 1 | 0.2 | 0.7 | 6.2 |
Impairment of intangibles and other assets | 0.7 | 0.2 | 0.7 | 0.6 |
Restructuring expenses | 0.3 | 1.2 | 3.9 | 3.2 |
Other operating expenses | 1.8 | 5.1 | 6.6 | 12.5 |
Operating income from continuing operations | 76.7 | 117.8 | 278.8 | 377 |
Interest expense | 37.2 | 40.2 | 114.5 | 139.8 |
Other (income) expenses | (2.4) | 3.4 | (7.2) | 17.5 |
Income from continuing operations before taxes | 41.9 | 74.2 | 171.5 | 219.7 |
Income tax expense (benefit) | 4.4 | 7.2 | (497.8) | 30.4 |
Net income from continuing operations | 37.5 | 67 | 669.3 | 189.3 |
Loss on disposal of discontinued operations, net of tax, respectively, of $0, $0, $0 and $0 | 0.1 | 0.3 | 0.6 | 0.7 |
Net income | 37.4 | 66.7 | 668.7 | 188.6 |
Less: non-controlling interests | 1.9 | 6.8 | (2) | 18.9 |
Net income attributable to shareholders | $ 35.5 | $ 59.9 | $ 670.7 | $ 169.7 |
Basic | ||||
Earnings per share from continuing operations (in usd per share) | $ 0.12 | $ 0.21 | $ 2.31 | $ 0.60 |
Earnings per share from discontinued operations (in usd per share) | 0 | 0 | 0 | 0 |
Earnings per share (in usd per share) | 0.12 | 0.21 | 2.31 | 0.60 |
Diluted | ||||
Earnings per share from continuing operations (in usd per share) | 0.12 | 0.20 | 2.30 | 0.58 |
Earnings per share from discontinued operations (in usd per share) | 0 | 0 | 0 | 0 |
Earnings per share (in usd per share) | $ 0.12 | $ 0.20 | $ 2.30 | $ 0.58 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Income Statement [Abstract] | ||||
Gain on disposal of discontinued operations, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Net income | $ 37.4 | $ 66.7 | $ 668.7 | $ 188.6 |
Foreign currency translation: | ||||
—Net translation loss on foreign operations, net of tax expense, respectively, of $0.3, $1.3, $0.6 and $0.5 | (94.7) | (2.2) | (49.6) | (83.4) |
—Gain on net investment hedges, net of tax expense, respectively, of $0, $0.2, $0 and $0.2 | 13.3 | 3.8 | 14.1 | 4.7 |
Total foreign currency translation movements | (81.4) | 1.6 | (35.5) | (78.7) |
Cash flow hedges (Interest rate derivatives): | ||||
—(Loss) gain arising in the period, net of tax benefit, respectively, of $0.9, $0, $5.2 and $0 | (4) | (27.6) | ||
—(Loss) gain arising in the period, net of tax benefit, respectively, of $0.9, $0, $5.2 and $0 | 3.6 | 13.3 | ||
—Reclassification to net income, net of tax benefit, respectively, of $0, $3.3, $0 and $2.0 | 0.9 | 1.2 | ||
—Reclassification to net income, net of tax benefit, respectively, of $0, $3.3, $0 and $2.0 | 4.3 | 6.5 | ||
Total cash flow hedges movements | (3.1) | (26.4) | ||
Total cash flow hedges movements | 7.9 | 19.8 | ||
Available-for-sale investments: | ||||
—Net unrealized loss, net of tax expense, respectively, of $0, $0.1, $0 and $0.1 | 0 | (0.5) | 0 | (0.5) |
Total available-for-sale investments: | 0 | (0.5) | 0 | (0.5) |
Post-retirement benefits: | ||||
—Current year actuarial movements, net of tax benefit, respectively, of $0, $0, $0 and $0.1 | 0 | 0 | 0 | (0.1) |
—Reclassification of prior year actuarial movements to net income, net of tax benefit, respectively, of $0, $0, $0.1 and $0 | (0.1) | (0.1) | (0.2) | (0.4) |
Total post-retirement benefit movements | (0.1) | (0.1) | (0.2) | (0.5) |
Other comprehensive (loss) income | (84.6) | 8.9 | (62.1) | (59.9) |
Comprehensive (loss) income for the period | (47.2) | 75.6 | 606.6 | 128.7 |
Comprehensive (loss) income attributable to shareholders: | ||||
Comprehensive income attributable to parent | (37.5) | 81.9 | 616.4 | 129.9 |
Comprehensive loss attributable to non-controlling interests | (9.7) | (6.3) | (9.8) | (1.2) |
—(Loss) income arising from continuing operations | ||||
Comprehensive (loss) income attributable to shareholders: | ||||
Comprehensive income attributable to parent | (37.4) | 82.2 | 617 | 130.6 |
—Loss arising from discontinued operations | ||||
Comprehensive (loss) income attributable to shareholders: | ||||
Comprehensive income attributable to parent | $ (0.1) | $ (0.3) | $ (0.6) | $ (0.7) |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Foreign currency translation: | ||||
Net translation gain on foreign operations, tax expense | $ 0.3 | $ 1.3 | $ 0.6 | $ 0.5 |
Loss on net investment hedges, tax benefit | 0 | 0.2 | 0 | 0.2 |
Cash flow hedges (Interest rate derivatives): | ||||
Gain (loss) arising in the period, tax benefit | 0.9 | 5.2 | ||
Gain (loss) arising in the period, tax benefit | 0 | 0 | ||
Reclassification to net income, tax benefit | 0 | 0 | ||
Reclassification to net income, tax benefit | (3.3) | (2) | ||
Available-for-sale investments: | ||||
Unrealized loss, expense | 0 | 0.1 | 0 | 0.1 |
Post-retirement benefits: | ||||
Actuarial loss, tax (expense) benefit | 0 | 0 | 0 | 0.1 |
Reclassification of actuarial gain to net income, tax benefit | $ 0 | $ 0 | $ 0.1 | $ 0 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Current assets | ||
Cash and cash equivalents | $ 456.1 | $ 423.4 |
Trade accounts receivable, net | 733.2 | 742.3 |
Inventories | 507.8 | 537.6 |
Taxes receivable | 24.8 | 7.2 |
Prepaid expenses and other assets | 142 | 104.1 |
Total current assets | 1,863.9 | 1,814.6 |
Non-current assets | ||
Property, plant and equipment, net | 721.1 | 756.3 |
Goodwill | 2,024.1 | 2,045.9 |
Pension surplus | 52.8 | 52.6 |
Intangible assets, net | 1,888.2 | 1,990.6 |
Operating lease right-of-use assets | 117.3 | |
Taxes receivable | 34.2 | 27.9 |
Deferred income taxes | 552.6 | 5.1 |
Other non-current assets | 31.7 | 29.6 |
Total assets | 7,285.9 | 6,722.6 |
Current liabilities | ||
Debt, current portion | 43.5 | 51.6 |
Trade accounts payable | 328.5 | 424 |
Taxes payable | 17.4 | 19.2 |
Accrued expenses and other current liabilities | 193.8 | 184.2 |
Total current liabilities | 583.2 | 679 |
Non-current liabilities | ||
Debt, less current portion | 2,909.8 | 2,953.4 |
Post-retirement benefit obligations | 151 | 155.9 |
Lease liabilities | 109.3 | |
Taxes payable | 155.3 | 81.9 |
Deferred income taxes | 360.8 | 439.5 |
Other non-current liabilities | 86.5 | 79.2 |
Total liabilities | 4,355.9 | 4,388.9 |
Commitments and contingencies (note 20) | ||
Shareholders’ equity | ||
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 290,118,125 (December 29, 2018: authorized shares: 3,000,000,000; outstanding shares: 289,847,574) | 2.9 | 2.9 |
—Additional paid-in capital | 2,430.5 | 2,416.9 |
—Accumulated other comprehensive loss | (908.6) | (854.3) |
—Retained earnings | 1,052.6 | 381.9 |
Total shareholders’ equity | 2,577.4 | 1,947.4 |
Non-controlling interests | 352.6 | 386.3 |
Total equity | 2,930 | 2,333.7 |
Total liabilities and equity | $ 7,285.9 | $ 6,722.6 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 28, 2019 | Dec. 29, 2018 |
Statement of Financial Position [Abstract] | ||
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) | 290,118,125 | 289,847,574 |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Cash flows from operating activities | ||
Net income (loss) | $ 668.7 | $ 188.6 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation and amortization | 167.4 | 163.3 |
Non-cash currency transaction gain on net debt and hedging instruments | (29.2) | (35) |
Premium paid on redemption of long-term debt | 0 | 27 |
Other net non-cash financing costs | 31.2 | 54.9 |
Share-based compensation expense | 10.5 | 5.5 |
Decrease in post-employment benefit obligations, net | (6.4) | (2.5) |
Deferred income taxes | (635.6) | (44) |
Other operating activities | 3.4 | 1.5 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
—Increase in accounts receivable | (4) | (82.6) |
—Decrease (increase) in inventories | 25.2 | (81) |
—(Decrease) increase in accounts payable | (90.4) | 16.4 |
—Increase in prepaid expenses and other assets | (29.8) | (24.6) |
—Increase (decrease) in taxes payable | 48.2 | (6.4) |
—Decrease in other liabilities | (14) | (38.8) |
Net cash provided by operations | 145.2 | 142.3 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (50.5) | (143) |
Purchases of intangible assets | (8) | (11.9) |
Purchases of investments | (11.7) | 0 |
Net cash received (paid) under corporate-owned life insurance policies | 0.3 | (7.4) |
Purchase of businesses, net of cash acquired | 0 | (50.9) |
Other investing activities | 0.3 | (0.9) |
Net cash used in investing activities | (69.6) | (214.1) |
Cash flows from financing activities | ||
Issuance of shares, net of underwriting costs | 1.7 | 799.6 |
Other offering costs | 0 | (8.6) |
Payments of long-term debt | (18.9) | (933.5) |
Premium paid on redemption of long-term debt | 0 | (27) |
Dividends paid to non-controlling interests | (24.5) | (23.3) |
Other financing activities | 1.6 | 5.7 |
Net cash used in financing activities | (40.1) | (187.1) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (2.8) | (9.2) |
Net increase (decrease) in cash and cash equivalents and restricted cash | 32.7 | (268.1) |
Cash and cash equivalents and restricted cash at the beginning of the period | 424.6 | 566 |
Cash and cash equivalents and restricted cash at the end of the period | 457.3 | 297.9 |
Supplemental schedule of cash flow information | ||
Interest paid, net of amount capitalized | 112.5 | 142.4 |
Income taxes paid, net | 90.4 | 83.7 |
Accrued capital expenditures | $ 1.6 | $ 2.5 |
Unaudited Condensed Consolida_8
Unaudited Condensed 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. 30, 2017 | $ 1,428.4 | $ 2.5 | $ 1,622.6 | $ (747.4) | $ 136.9 | $ 1,014.6 | $ 413.8 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 188.6 | 169.7 | 169.7 | 18.9 | |||
Other comprehensive (loss) income | (59.9) | (39.8) | (39.8) | (20.1) | |||
Comprehensive (loss) income for the period | 128.7 | (39.8) | 169.7 | 129.9 | (1.2) | ||
—Issuance of shares | 841.6 | 0.4 | 841.2 | 841.6 | |||
—Share-based compensation | 4.7 | 4.7 | 4.7 | ||||
—Dividends paid to non-controlling interests | (23.3) | (23.3) | |||||
—Cost of shares issued | (53) | (53) | (53) | ||||
Ending Balance at Sep. 29, 2018 | 2,327.1 | 2.9 | 2,415.5 | (787.2) | 306.6 | 1,937.8 | 389.3 |
Beginning Balance at Jun. 30, 2018 | 2,256.5 | 2.9 | 2,413.4 | (809.2) | 246.7 | 1,853.8 | 402.7 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 66.7 | 59.9 | 59.9 | 6.8 | |||
Other comprehensive (loss) income | 8.9 | 22 | 22 | (13.1) | |||
Comprehensive (loss) income for the period | 75.6 | 22 | 59.9 | 81.9 | (6.3) | ||
—Issuance of shares | 0.4 | 0.4 | 0.4 | ||||
—Share-based compensation | 1.7 | 1.7 | 1.7 | ||||
—Dividends paid to non-controlling interests | (7.1) | (7.1) | |||||
Ending Balance at Sep. 29, 2018 | 2,327.1 | 2.9 | 2,415.5 | (787.2) | 306.6 | 1,937.8 | 389.3 |
Beginning 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 [Roll Forward] | |||||||
Net income (loss) | 668.7 | 670.7 | 670.7 | (2) | |||
Other comprehensive (loss) income | (62.1) | (54.3) | (54.3) | (7.8) | |||
Comprehensive (loss) income for the period | 606.6 | (54.3) | 670.7 | 616.4 | (9.8) | ||
—Issuance of shares | 1.7 | 1.7 | 1.7 | ||||
—Share-based compensation | 10.7 | 10.7 | 10.7 | ||||
—Change in ownership of a controlled subsidiary | 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 | (24.5) | (24.5) | |||||
Ending Balance at Sep. 28, 2019 | 2,930 | 2.9 | 2,430.5 | (908.6) | 1,052.6 | 2,577.4 | 352.6 |
Beginning Balance at Jun. 29, 2019 | 2,982.6 | 2.9 | 2,426.4 | (835.6) | 1,017.1 | 2,610.8 | 371.8 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 37.4 | 35.5 | 35.5 | 1.9 | |||
Other comprehensive (loss) income | (84.6) | (73) | (73) | (11.6) | |||
Comprehensive (loss) income for the period | (47.2) | (73) | 35.5 | (37.5) | (9.7) | ||
—Issuance of shares | 0.1 | 0.1 | 0.1 | ||||
—Share-based compensation | 4 | 4 | 4 | ||||
—Dividends paid to non-controlling interests | (9.5) | (9.5) | |||||
Ending Balance at Sep. 28, 2019 | $ 2,930 | $ 2.9 | $ 2,430.5 | $ (908.6) | $ 1,052.6 | $ 2,577.4 | $ 352.6 |
Introduction
Introduction | 9 Months Ended |
Sep. 28, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Introduction | Introduction A. Background Gates Industrial Corporation plc (the “Company”) is a public limited company that was organized 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 became the indirect owner of all of the equity interests in Omaha Topco Ltd. (“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. (“Blackstone” or our “Sponsor”), and Gates management equity holders. These equity owners of Omaha Topco received depositary receipts representing ordinary shares in the Company in consideration for their equity in Omaha Topco, at a ratio of 0.76293 of our ordinary shares for each outstanding ordinary share of Omaha Topco. All share and per share amounts in these condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of this ratio. The reorganization was accounted for as a transaction between entities under common control and the net assets were recorded on the historical cost basis, in a manner similar to a pooling of interests, when Omaha Topco was contributed into the Company. 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 for periods prior to those transactions reflects that of Omaha Topco. In these condensed consolidated financial statements and related notes, all references to “Gates,” “we,” “us,” and “our” refer, unless the context requires otherwise, to Gates Industrial Corporation plc and its consolidated subsidiaries. B. Accounting periods The Company prepares its annual consolidated financial statements for the period ending on the Saturday nearest December 31. Accordingly, the condensed consolidated balance sheet is presented as of September 28, 2019 and December 29, 2018 and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented, where relevant, for the 91 day period from June 30, 2019 to September 28, 2019 , with comparative information for the 91 day period from July 1, 2018 to September 29, 2018 and for the 273 day period from December 30, 2018 to September 28, 2019 , with comparative information for the 273 day period from December 31, 2017 to September 29, 2018 . C. Basis of preparation The condensed 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 condensed consolidated financial statements and related notes contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of September 28, 2019 and the results of its operations and cash flows for the periods ended September 28, 2019 and September 29, 2018 . Interim period results are not necessarily indicative of the results to be expected for the full fiscal year. These condensed consolidated financial statements are unaudited and, except as noted below, have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 29, 2018 . The condensed consolidated balance sheet as of December 29, 2018 has been derived from those audited financial statements. These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes for the year ended December 29, 2018 included in the Company’s Annual Report on Form 10-K. The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year, except for the adoption on the first day of the 2019 fiscal year of the following new Accounting Standard Updates (each, an “ASU”): • 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 will bring 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. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, which allows entities an additional, optional transition method of applying the new leases standard at the adoption date with comparative periods continuing to be presented in accordance with prior GAAP (Topic 840 “ Leases ”). We have adopted Topic 842 using this practical expedient, and, consequently, comparative information in these condensed 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 into the new right-of-use asset. Note 11 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 (“OCI”) 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 OCI will be released upon recognition of the related deferred tax basis differences. |
Recent accounting pronouncement
Recent accounting pronouncements not yet adopted | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
Recent accounting pronouncements not yet adopted | 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. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of financial assets, is still being evaluated. • 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. Early adoption is permitted and an entity is permitted to early adopt any removed or modified disclosures upon issuance of the ASU and delay adoption of the additional disclosures until their effective date. The impact on our consolidated financial statements of adopting this ASU, which will affect our fair value disclosures, is still being evaluated. • 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. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of cloud computing software arrangements, is still being evaluated. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 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. Pro forma information has not been presented for this acquisition because it is not material. |
Segment information
Segment information | 9 Months Ended |
Sep. 28, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Segment information A. Background Topic 280 “ Segment Reporting ” requires segment information provided in the consolidated financial statements to reflect the information that was provided to 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. The segment information provided in these condensed 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. These decisions are based on net sales and Adjusted EBITDA (defined below). Certain amounts relating to prior periods have been reclassified in this footnote to conform to the current year presentation. 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 Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Power Transmission $ 474.4 $ 512.5 $ 1,475.4 $ 1,608.1 Fluid Power 272.2 315.9 886.0 947.4 Continuing operations $ 746.6 $ 828.4 $ 2,361.4 $ 2,555.5 The following table summarizes our net sales by key geographic region of origin: Net Sales Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 U.S. $ 284.3 $ 326.0 $ 909.6 $ 973.5 North America, excluding the U.S. 85.1 85.5 263.3 260.4 United Kingdom (“U.K.”) 18.7 23.3 62.6 73.8 Europe, Middle East and Africa (“EMEA”), excluding the U.K. 164.1 183.8 521.7 591.5 East Asia and India 87.9 95.9 274.2 296.9 Greater China 80.6 90.2 253.4 281.7 South America 25.9 23.7 76.6 77.7 Net Sales $ 746.6 $ 828.4 $ 2,361.4 $ 2,555.5 The following table summarizes our net sales into emerging and developed markets: Net Sales Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Developed $ 486.6 $ 558.4 $ 1,564.4 $ 1,671.1 Emerging 260.0 270.0 797.0 884.4 Net Sales $ 746.6 $ 828.4 $ 2,361.4 $ 2,555.5 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 ; • 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 Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Power Transmission $ 99.7 $ 119.0 $ 315.2 $ 377.6 Fluid Power 45.3 62.2 160.7 192.4 Continuing operations $ 145.0 $ 181.2 $ 475.9 $ 570.0 Reconciliation of net income from continuing operations to Adjusted EBITDA: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net income from continuing operations $ 37.5 $ 67.0 $ 669.3 $ 189.3 Income tax expense (benefit) 4.4 7.2 (497.8 ) 30.4 Income from continuing operations before taxes 41.9 74.2 171.5 219.7 Interest expense 37.2 40.2 114.5 139.8 Other (income) expenses (2.4 ) 3.4 (7.2 ) 17.5 Operating income from continuing operations 76.7 117.8 278.8 377.0 Depreciation and amortization 55.1 53.7 167.4 163.3 Transaction-related expenses (1) 1.0 0.2 0.7 6.2 Impairment of intangibles and other assets 0.7 0.2 0.7 0.6 Restructuring expenses 0.3 1.2 3.9 3.2 Share-based compensation expense 4.1 2.3 10.5 5.5 Sponsor fees (included in other operating expenses) 1.1 1.9 4.9 5.9 Impact of fair value adjustment on inventory (included in cost of sales) — — — 0.3 Inventory impairments and adjustments (included in cost of sales) 1.0 — 1.3 0.8 Duplicate expenses incurred on facility relocation — 1.5 — 4.6 Severance-related expenses (included in cost of sales) 2.5 — 3.0 — Other primarily severance-related expenses (included in SG&A) 1.8 0.7 3.0 0.6 Other operating expenses 0.7 1.7 1.7 2.0 Adjusted EBITDA $ 145.0 $ 181.2 $ 475.9 $ 570.0 (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. |
Restructuring and other strateg
Restructuring and other strategic initiatives | 9 Months Ended |
Sep. 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 selling, general and administrative (“SG&A”) back-office functions. Overall costs associated with our restructuring and other strategic initiatives have been recognized in the condensed consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP. Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Restructuring expenses: —Severance $ 0.4 $ 0.1 $ 3.3 $ — —Professional fees 0.1 0.8 1.4 3.0 —Other restructuring (benefits) expenses (0.2 ) 0.3 (0.8 ) 0.2 0.3 1.2 3.9 3.2 Restructuring expenses in cost of sales: —Impairment of inventory 1.0 — 1.3 — Total restructuring expenses $ 1.3 $ 1.2 $ 5.2 $ 3.2 Expenses related to other strategic initiatives: —Severance costs included in cost of sales $ 2.5 $ — $ 3.0 $ — —Severance costs included in SG&A 1.8 0.9 3.0 0.3 —Impairment of fixed assets 0.7 — 0.7 — Total expenses related to other strategic initiatives $ 5.0 $ 0.9 $ 6.7 $ 0.3 Restructuring and other strategic initiatives undertaken during the three months ended September 28, 2019 related primarily to reductions in force, particularly in the U.S. and Asia, and impacts from facility closures and consolidations, primarily the impairment of inventory and fixed assets. Expenses incurred during the prior year period in connection with our restructuring and other strategic initiatives related primarily to the reorganization of our European corporate center and a strategic restructuring of part of our Asian business. Restructuring and other strategic initiatives undertaken during the nine months ended September 28, 2019 related primarily to reductions in force, 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 $1.4 million of professional fees were incurred during the current period, relating primarily to the closure of one of our facilities in France, the reorganization of our European corporate center, and a strategic restructuring of part of our Asian business. Expenses incurred during the prior year period 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: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Power Transmission $ 0.3 $ 0.9 $ 3.5 $ 2.1 Fluid Power 1.0 0.3 1.7 1.1 Continuing operations $ 1.3 $ 1.2 $ 5.2 $ 3.2 The following summarizes the reserve for restructuring expenses for the nine month periods ended September 28, 2019 and September 29, 2018 , respectively: Nine months ended (dollars in millions) September 28, September 29, Balance as of the beginning of the period $ 2.6 $ 8.6 Utilized during the period (4.0 ) (8.3 ) Net charge for the period 3.9 3.5 Released during the period — (0.3 ) Foreign currency translation (0.1 ) 0.1 Balance as of the end of the period $ 2.4 $ 3.6 Restructuring reserves, the majority of which are expected to be utilized during the remainder of 2019 and in 2020 , are included in the condensed consolidated balance sheet as follows: (dollars in millions) As of As of Accrued expenses and other current liabilities $ 2.4 $ 3.4 Other non-current liabilities — 0.2 $ 2.4 $ 3.6 |
Income taxes
Income taxes | 9 Months Ended |
Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes We compute the year-to-date income tax provision by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust for discrete tax items in the period in which they occur. For the three months ended September 28, 2019 , we had an income tax expense of $4.4 million on pre-tax income of $41.9 million , which resulted in an effective tax rate of 10.5% , compared with an income tax expense of $7.2 million on pre-tax income of $74.2 million , which resulted in an effective tax rate of 9.7% for the three months ended September 29, 2018 . For the nine months ended September 28, 2019 , we had an income tax benefit of $497.8 million on pre-tax income of $171.5 million , which resulted in an effective tax rate of (290.3%) compared with an income tax expense of $30.4 million on pre-tax income of $219.7 million , which resulted in an effective tax rate of 13.8% for the nine months ended September 29, 2018 . The increase in the effective tax rate for the three months ended September 28, 2019 compared with the prior year period was primarily the result of a $5.3 million increase in discrete tax expense related to changes in previously released valuation allowances during the year, offset by an $8.0 million reduction in tax on ordinary operations. The decrease in the effective tax rate for the nine months ended September 28, 2019 compared with the prior year period was due primarily to the recognition of a discrete benefit of $605.1 million related to the release of valuation allowances, which occurred during the first quarter, in certain jurisdictions where it was determined that the realization of deferred tax assets was more likely than not. This benefit was offset partially by a discrete expense of $25.1 million related to the reduction in the Luxembourg corporate tax rate, which occurred during the second quarter, as well as a discrete expense of $65.6 million related to unrecognized tax benefits resulting primarily from the European business reorganization (the “Reorganization”), which occurred during the first quarter. In addition, during the prior year period, there was $21.1 million of non-operating costs for which no tax benefit was recognized, and there were no similar costs in the current period, which also contributed to the comparative reduction in the effective tax rate. Deferred Tax Assets and Liabilities We recognize deferred 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 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 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 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 that, as of March 30, 2019, it was more likely than not that deferred tax assets in Luxembourg, the U.K., and the U.S. totaling $627.6 million were realizable. Accordingly, we discretely recognized $617.3 million of our deferred tax asset in the first quarter of 2019, while the remaining $10.3 million was to be recognized either during the year through the effective tax rate or in accumulated OCI as a cumulative translation adjustment. For the period ended September 28, 2019 as a result of changes in the Luxembourg statutory tax rate, which occurred during the second quarter, further refinement of current year estimates and foreign currency movements, we reduced the recognition from $627.6 million to $570.1 million . Included within the $570.1 million total deferred tax assets are deferred tax assets totaling $564.0 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 2019 due to the implementation of the Reorganization. The Reorganization was implemented in the first quarter of 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 March 30, 2019 and ultimately outweighed the negative evidence included the following: • our profitability in Europe in 2018 and prior years and for the three months ended March 30, 2019, as well as our expectations regarding the sustainability of these profits; • the impact of the implementation in the quarter of the Reorganization, which created an expectation of future income in Luxembourg and, thereby, removed negative evidence that supported maintaining the valuation allowance against our deferred tax assets as of December 29, 2018 ; and • the fact that our net operating loss carryforwards in Luxembourg are indefinite lived. For the period ended September 28, 2019 , the recognition of deferred tax assets in Luxembourg was reduced from $615.6 million to $564.0 million primarily as a result of the reduction in the Luxembourg corporate tax rate from 18% to 17%, which occurred during the second quarter. This resulted in a $25.1 million reduction in the previously reported value of our deferred tax asset. The remaining $26.5 million reduction is the result of changes in foreign currency translation during the current period. Further, as a result of additional financing income realized in the first quarter of 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 regarding valuation allowances totaling $6.2 million related to indefinite lived net operating losses in the U.K. For the period ended September 28, 2019 , further refinement of estimated U.K. taxable profits resulted in a reduction of the valuation allowance release related to indefinite lived net operating losses from $6.2 million to $3.4 million . Finally, as a result of changes in estimates of future taxable profits in the first quarter of 2019, our judgment changed regarding the realizability of $4.3 million of U.S. foreign tax credits with related recorded valuation allowances. For the period ended September 28, 2019 , further refinement of estimated U.S. foreign tax credits expected to be utilized in the current year reduced the realizability of U.S. foreign tax credit carry forwards from $4.3 million to $2.7 million , as U.S. foreign tax credits generated in the current year must be utilized before U.S. foreign tax credit carry forwards. 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 tax assets. We will maintain our positions with regard to future realization of deferred 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 tax assets may impact materially our consolidated financial statements. |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 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: Three months ended Nine months ended (dollars in millions, except share numbers and per share amounts) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net income attributable to shareholders $ 35.5 $ 59.9 $ 670.7 $ 169.7 Weighted average number of shares outstanding 290,109,231 289,783,061 290,032,416 284,750,794 Dilutive effect of share-based awards 1,003,871 8,670,885 1,634,515 8,705,430 Diluted weighted average number of shares outstanding 291,113,102 298,453,946 291,666,931 293,456,224 Basic earnings per share $ 0.12 $ 0.21 $ 2.31 $ 0.60 Diluted earnings per share $ 0.12 $ 0.20 $ 2.30 $ 0.58 For the three months ended September 28, 2019 and September 29, 2018 , shares totaling 3,623,701 and 605,164 , respectively, were excluded from the diluted earnings per share calculation because they were anti-dilutive. For the nine months ended September 28, 2019 and September 29, 2018 , shares totaling 3,686,986 and 610,039 shares, respectively, were excluded from the diluted earnings per share calculation because they were anti-dilutive. |
Inventories
Inventories | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories (dollars in millions) As of As of Raw materials and supplies $ 129.3 $ 152.1 Work in progress 36.6 38.4 Finished goods 341.9 347.1 Total inventories $ 507.8 $ 537.6 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill (dollars in millions) Power Fluid Total Cost and carrying amount As of December 29, 2018 $ 1,374.1 $ 671.8 $ 2,045.9 Foreign currency translation (18.4 ) (3.4 ) (21.8 ) As of September 28, 2019 $ 1,355.7 $ 668.4 $ 2,024.1 |
Intangible assets
Intangible assets | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Intangible assets As of September 28, 2019 As of December 29, 2018 (dollars in millions) Cost Accumulated Net Cost Accumulated Net Finite-lived: —Customer relationships $ 1,998.4 $ (618.8 ) $ 1,379.6 $ 2,017.4 $ (534.8 ) $ 1,482.6 —Technology 90.5 (87.5 ) 3.0 90.6 (87.0 ) 3.6 —Capitalized software 71.6 (35.4 ) 36.2 64.2 (29.2 ) 35.0 2,160.5 (741.7 ) 1,418.8 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 $ 2,673.9 $ (785.7 ) $ 1,888.2 $ 2,685.6 $ (695.0 ) $ 1,990.6 During the three months ended September 28, 2019 , the amortization expense recognized in respect of intangible assets was $32.4 million , compared with $32.3 million for the three months ended September 29, 2018 . In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $21.0 million for the three months ended September 28, 2019 , compared with a decrease of $0.2 million for the three months ended September 29, 2018 . During the nine months ended September 28, 2019 , the amortization expense recognized in respect of intangible assets was $97.5 million , compared with $98.0 million for the nine months ended September 29, 2018 . In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $13.0 million for the nine months ended September 28, 2019 , compared with a decrease of $18.9 million for the nine months ended September 29, 2018 . |
Leases
Leases | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Leases | Leases A. Overview As discussed in note 1, 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 80 real estate leases, which accounted for approximately 88% of the lease liability under non-cancellable leases as of September 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 September 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 ) Three months ended September 28, 2019 Nine months ended September 28, 2019 Lease expenses Operating lease expenses $ 7.6 $ 22.6 Finance lease amortization expenses 0.1 0.2 Short-term lease expenses 1.3 3.2 Variable lease expenses 2.2 4.9 Sublease income — (0.1 ) Total lease expenses $ 11.2 $ 30.8 Other information Right-of-use assets obtained in exchange for new operating lease liabilities $ 4.6 $ 6.6 Cash paid for amounts included in the measurement of lease liabilities: —Operating cash flows from operating leases $ 20.1 —Financing cash flows from finance leases 0.3 $ 20.4 Weighted-average remaining lease term — finance leases 9.0 years Weighted-average remaining lease term — operating leases 10.3 years Weighted-average discount rate — finance leases 2.6 % Weighted-average discount rate — operating leases 5.7 % Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.3 $ 0.5 Year 2 21.1 0.5 Year 3 17.3 0.5 Year 4 14.4 0.3 Year 5 12.6 — Year 6 and beyond 83.7 — Total lease payments 174.4 1.8 Interest 46.7 0.1 Total present value of lease liabilities $ 127.7 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 9.0 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 September 28, 2019 ( dollars in millions ) Operating leases Finance leases Right-of-use assets $ 117.3 $ 3.0 Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) $ 19.2 $ 0.9 Long-term lease liabilities 108.5 0.8 Total lease liabilities $ 127.7 $ 1.7 Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the condensed consolidated balance sheet. 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 1, 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 80 real estate leases, which accounted for approximately 88% of the lease liability under non-cancellable leases as of September 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 September 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 ) Three months ended September 28, 2019 Nine months ended September 28, 2019 Lease expenses Operating lease expenses $ 7.6 $ 22.6 Finance lease amortization expenses 0.1 0.2 Short-term lease expenses 1.3 3.2 Variable lease expenses 2.2 4.9 Sublease income — (0.1 ) Total lease expenses $ 11.2 $ 30.8 Other information Right-of-use assets obtained in exchange for new operating lease liabilities $ 4.6 $ 6.6 Cash paid for amounts included in the measurement of lease liabilities: —Operating cash flows from operating leases $ 20.1 —Financing cash flows from finance leases 0.3 $ 20.4 Weighted-average remaining lease term — finance leases 9.0 years Weighted-average remaining lease term — operating leases 10.3 years Weighted-average discount rate — finance leases 2.6 % Weighted-average discount rate — operating leases 5.7 % Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.3 $ 0.5 Year 2 21.1 0.5 Year 3 17.3 0.5 Year 4 14.4 0.3 Year 5 12.6 — Year 6 and beyond 83.7 — Total lease payments 174.4 1.8 Interest 46.7 0.1 Total present value of lease liabilities $ 127.7 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 9.0 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 September 28, 2019 ( dollars in millions ) Operating leases Finance leases Right-of-use assets $ 117.3 $ 3.0 Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) $ 19.2 $ 0.9 Long-term lease liabilities 108.5 0.8 Total lease liabilities $ 127.7 $ 1.7 Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the condensed consolidated balance sheet. 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 | 9 Months Ended |
Sep. 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 condensed 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 September 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 $ 4.6 $ — $ — $ (14.1 ) $ (9.5 ) $ 5.4 $ — $ — $ (27.5 ) $ (22.1 ) —Interest rate caps — — (4.8 ) (3.2 ) (8.0 ) 3.5 1.6 — (10.9 ) (5.8 ) —Interest rate swaps — — (2.0 ) (33.8 ) (35.8 ) — — (0.3 ) (2.6 ) (2.9 ) Derivatives not designated as hedging instruments: —Currency swaps 0.1 — — — 0.1 — — — — — —Currency forward contracts 1.3 — (0.5 ) — 0.8 1.3 — (0.4 ) — 0.9 $ 6.0 $ — $ (7.3 ) $ (51.1 ) $ (52.4 ) $ 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 September 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, we have designated €75.5 million of our Euro-denominated debt as a net investment hedge of certain of our European operations. The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net fair value gains (losses) recognized in OCI in relation to: —Euro-denominated debt $ 3.2 $ 0.3 $ 2.5 $ (11.5 ) —Designated cross currency swaps 10.1 3.5 11.6 16.2 Total net fair value gains $ 13.3 $ 3.8 $ 14.1 $ 4.7 During the three and nine months ended September 28, 2019 , a net gain of $1.9 million and a net gain of $6.1 million , respectively, 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 $0.7 million during the three and nine months ended September 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 September 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 September 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: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Movement recognized in OCI in relation to: —Fair value (loss) gain on cash flow hedges $ (4.9 ) $ 3.6 $ (32.8 ) $ 13.3 —Deferred premium reclassified from OCI to net income 0.9 1.0 1.2 4.5 Total movement $ (4.0 ) $ 4.6 $ (31.6 ) $ 17.8 During the three and nine months ended September 28, 2019 , a net expense of $0.4 million and net expense of $1.2 million , respectively, was reclassified to interest expense in relation to our cash flow hedges, compared with net expense of $1.0 million and net expense of $4.5 million , respectively, during the three and nine months ended September 29, 2018 . 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 September 28, 2019 , the notional principal amount of outstanding currency swaps that are used to manage the currency profile of Gates’ cash was $26.4 million , compared with $0 as of December 29, 2018 . As of September 28, 2019 , the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $71.6 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: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Fair value gains recognized in relation to: —Currency forward contracts recognized in SG&A $ 0.3 $ 0.9 $ 2.0 $ 1.7 —Currency swaps recognized in other expenses 1.0 0.1 1.0 0.6 Total $ 1.3 $ 1.0 $ 3.0 $ 2.3 |
Fair value measurement
Fair value measurement | 9 Months Ended |
Sep. 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 September 28, 2019 As of December 29, 2018 (dollars in millions) Carrying amount Fair value Carrying amount Fair value Current $ 43.5 $ 43.0 $ 51.6 $ 50.4 Non-current 2,909.8 2,903.2 2,953.4 2,873.2 $ 2,953.3 $ 2,946.2 $ 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. Their principal amounts, derived from a market price, discounted for illiquidity, are considered to approximate fair value. 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 quoted market prices. 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 September 28, 2019 Available-for-sale securities $ 1.0 $ — $ 1.0 Derivative assets $ — $ 6.0 $ 6.0 Derivative liabilities $ — $ (58.4 ) $ (58.4 ) As of December 29, 2018 Available-for-sale securities $ 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 nine months ended September 28, 2019 or the year ended December 29, 2018 . |
Debt
Debt | 9 Months Ended |
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt (dollars in millions) As of As of Secured debt: —Dollar Term Loan $ 1,703.4 $ 1,716.4 —Euro Term Loan 704.3 742.1 Unsecured debt: —Dollar Senior Notes 568.0 568.0 —Other loans 0.2 0.6 Total principal of debt 2,975.9 3,027.1 Deferred issuance costs (41.5 ) (48.7 ) Accrued interest 18.9 26.6 Total carrying value of debt 2,953.3 3,005.0 Debt, current portion 43.5 51.6 Debt, less current portion $ 2,909.8 $ 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 condensed 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. Debt redemptions 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 . In addition, on February 8 and February 9, 2018, we redeemed 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. All of the above 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. In addition, in connection with certain reorganization transactions, a wholly-owned U.S. subsidiary of Gates Global LLC, has entered into intercompany agreements pursuant to which it became the principal obligor under the Term Loans and Senior Notes for U.S. federal income tax purposes and agreed to make future payments due on these tranches of debt. As a result, interest received by lenders of these debt tranches is U.S. source income. 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, with a springing maturity of April 15, 2022 if more than $500.0 million of the Dollar Senior Notes remain in issue at that time. 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 Euro LIBOR 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 September 28, 2019 , borrowings under this facility bore interest at a rate of 4.79% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As of September 28, 2019 , the Euro Term Loan bore interest at Euro LIBOR, 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 nine months ended September 28, 2019 , we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $13.0 million and $5.5 million , respectively. During the nine months ended September 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 2018 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 2019 . 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. Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Gain recognized in statement of operations $ 24.5 $ 3.5 $ 29.8 $ 32.6 Gain (loss) recognized in OCI 3.2 0.3 2.5 (6.5 ) Total gains $ 27.7 $ 3.8 $ 32.3 $ 26.1 Subsequent to our initial public offering, the above net transactional foreign exchange gains recognized in the other (income) expenses line of the condensed 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. Unsecured Senior Notes As of September 28, 2019 , there were $568.0 million of Dollar Senior Notes outstanding. These notes are scheduled to mature on July 15, 2022 and bear interest at an annual fixed rate of 6.00% with semi-annual interest payments. As noted above, on January 31, 2018, we redeemed in full our outstanding €235.0 million Euro Senior Notes and made partial redemptions of the 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. We may redeem the Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at 100% of their principal value, plus accrued and unpaid interest to the redemption date. In the event of a change of control over the Company, each holder will have the right to require Gates to repurchase all of such holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase, except to the extent that Gates has previously elected to redeem the notes. 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, with a springing maturity of April 15, 2022 if more than $500.0 million of the Dollar Senior Notes remain in issue at that time. As of both September 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 ( $309.2 million as of September 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, with a springing maturity of April 15, 2022 if more than $500.0 million of the Dollar Senior Notes remain in issue at that time. As of both September 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 $50.2 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. |
Post-retirement benefits
Post-retirement benefits | 9 Months Ended |
Sep. 28, 2019 | |
Retirement Benefits [Abstract] | |
Post-retirement benefits | 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 September 28, 2019 Three months ended September 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 Nine months ended September 28, 2019 Nine months ended September 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 condensed 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 | 9 Months Ended |
Sep. 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 three and nine months ended September 28, 2019 , we recognized a charge of $4.1 million and $10.5 million , compared with $2.3 million and $5.5 million , respectively, in the prior year period. Share-based incentive awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan Gates has a number of awards in issue 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. There were no movements in these RSUs during the current period. 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 Nine months ended September 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 (102,135 ) $ 6.62 —Tier II (391,792 ) $ 6.59 —Tier III (391,792 ) $ 6.59 —Tier IV (391,792 ) $ 9.88 —Share options (44,895 ) $ 17.03 (1,322,406 ) $ 7.92 Expired during the period: —Share options (1,250 ) $ 17.72 (1,250 ) $ 17.72 Exercised during the period: —Tier I (257,322 ) $ 6.58 (257,322 ) $ 6.58 Outstanding at the end of the period: —Tier I 3,853,080 $ 7.07 —Tier II 4,445,988 $ 7.00 —Tier III 4,445,988 $ 7.00 —Tier IV 4,445,988 $ 10.51 —SARs 795,522 $ 8.91 —Share options 1,636,077 $ 16.69 —Premium-priced options 796,460 $ 19.00 20,419,103 $ 9.10 Exercisable at the end of the period 2,838,515 $ 7.36 As of September 28, 2019 , the unrecognized compensation charge relating to the nonvested options other than Tier II, Tier III and Tier IV options, was $11.2 million , which is expected to be recognized over a weighted-average period of 2.7 years . The unrecognized compensation charge relating to the nonvested Tier II, Tier III and Tier IV options was $29.0 million , which will be recognized on occurrence of a liquidity event as described above. During the three and nine months ended September 28, 2019 , cash of $0 and $1.6 million , respectively, was received in relation to the exercise of vested options. The aggregate intrinsic value of options exercised during the three and nine months ended September 28, 2019 was $0 and $2.0 million , respectively. Summary of movements in RSUs and PRSUs outstanding Nine months ended September 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 728,436 $ 16.28 —PRSUs 248,550 20.07 976,986 $ 17.25 Forfeited during the period: —RSUs (34,573 ) $ 16.67 (34,573 ) $ 16.67 Vested during the period: —RSUs (19,250 ) $ 17.21 (19,250 ) $ 17.21 Outstanding at the end of the period —RSUs 756,413 $ 16.33 —PRSUs 248,550 20.07 1,004,963 $ 17.25 As of September 28, 2019 , the unrecognized compensation charge relating to nonvested RSUs and PRSUs was $11.3 million , which is expected to be recognized over a weighted average period of 2.3 years , subject, where relevant, to the achievement of the performance conditions described above. The aggregate intrinsic value of RSUs and PRSUs vested during the three and nine months ended September 28, 2019 was $0.1 million and $0.3 million , respectively. 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. The weighted average fair values and relevant assumptions were as follows: Nine months ended September 28, 2019 Fair value: —SARs $ 5.88 —Share options $ 5.88 —Premium-priced options $ 5.65 —RSUs $ 16.28 —PRSUs $ 20.07 Inputs to the model: —Expected volatility - SARs, share options and premium-priced options 31.9 % —Expected volatility - PRSUs 32.8 % —Expected option life for SARs and share options 6.0 —Expected option life for premium-priced options 7.0 —Risk-free interest rate: SARs and share options 2.51 % Premium-priced options 2.53 % PRSUs 2.48 % —Expected dividends — |
Equity
Equity | 9 Months Ended |
Sep. 28, 2019 | |
Equity [Abstract] | |
Equity | Equity In January 2018, Gates completed an initial public offering of 38,500,000 shares at $19.00 each. Shortly thereafter, the underwriters of the initial public offering exercised their over-allotment option for a further 5,775,000 shares, also at $19.00 each. Movements in the Company’s number of shares in issue for the nine month periods ended September 28, 2019 and September 29, 2018 , respectively, were as follows: Nine months ended (number of shares) September 28, September 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 257,322 58,545 Vesting of restricted stock units, net of withholding taxes 13,229 — Balance as of the end of the period 290,118,125 289,808,150 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 | 9 Months Ended |
Sep. 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 30, 2017 $ (0.3 ) $ 13.2 $ (742.8 ) $ (17.5 ) $ (747.4 ) $ (25.5 ) $ (772.9 ) Foreign currency translation — — (58.7 ) — (58.7 ) (20.0 ) (78.7 ) Cash flow hedges movements — — — 19.8 19.8 — 19.8 Available-for-sale investment movements (0.4 ) — — — (0.4 ) (0.1 ) (0.5 ) Post-retirement benefit movements — (0.5 ) — — (0.5 ) — (0.5 ) Other comprehensive (loss) income (0.4 ) (0.5 ) (58.7 ) 19.8 (39.8 ) (20.1 ) (59.9 ) As of September 29, 2018 $ (0.7 ) $ 12.7 $ (801.5 ) $ 2.3 $ (787.2 ) $ (45.6 ) $ (832.8 ) (dollars in millions) Available-for- Post- Cumulative Cash flow Accumulated OCI attributable to Non- Accumulated OCI As of December 29, 2018 $ — $ 7.6 $ (850.0 ) $ (11.9 ) $ (854.3 ) $ (43.6 ) $ (897.9 ) Foreign currency translation — — (27.7 ) — (27.7 ) (7.8 ) (35.5 ) Cash flow hedges movements — — — (26.4 ) (26.4 ) — (26.4 ) Post-retirement benefit movements — (0.2 ) — — (0.2 ) — (0.2 ) Other comprehensive loss — (0.2 ) (27.7 ) (26.4 ) (54.3 ) (7.8 ) (62.1 ) As of September 28, 2019 $ — $ 7.4 $ (877.7 ) $ (38.3 ) $ (908.6 ) $ (51.4 ) $ (960.0 ) |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 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 three months ended September 28, 2019 , Gates incurred $1.1 million , compared with $1.9 million during the prior year period, and during the nine months ended September 28, 2019 , Gates incurred $4.9 million , compared with $5.9 million during the prior year period, in respect of these oversight services and out-of-pocket expenses, of which there was no amount owing at September 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 the periods presented, no amounts were paid or outstanding under this agreement. 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 . B. Equity method investees Sales to and purchases from equity method investees were as follows: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Sales $ 0.4 $ 0.3 $ 1.1 $ 1.4 Purchases $ (3.9 ) $ (4.8 ) $ (11.9 ) $ (11.3 ) Amounts outstanding in respect of these transactions were payables of $0.2 million as of September 28, 2019 , compared with $0.1 million as of December 29, 2018 . During the three months ended September 28, 2019 , we received dividends of $0 from our equity method investees, compared with $0 in the prior year period. During the nine months ended September 28, 2019 , we received dividends of $0 from our equity method investees, compared with $0.4 million in the prior year period. C. Non-Gates entities controlled by non-controlling shareholders Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Sales $ 12.7 $ 13.7 $ 38.5 $ 45.4 Purchases $ (5.0 ) $ (5.5 ) $ (15.3 ) $ (16.0 ) Amounts outstanding in respect of these transactions were as follows: (dollars in millions) As of As of Receivables $ 4.4 $ 0.6 Payables $ (5.4 ) $ (0.3 ) D. 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. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies A. Performance bonds, letters of credit and bank guarantees As of September 28, 2019 , letters of credit totaling $50.2 million were outstanding against the asset-backed revolving facility, compared with $57.8 million as of December 29, 2018 . Gates had additional outstanding performance bonds, letters of credit and bank guarantees amounting to $3.8 million , compared with $3.4 million as of December 29, 2018 . B. Contingencies Gates is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business. Gates is also, from time to time, party to legal proceedings and claims in respect of environmental obligations, product liability, intellectual property and other matters which arise in the ordinary course of business and against which management believes Gates has meritorious defenses available. 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. C. Warranties The following summarizes the movements in the warranty liability for the nine month periods ended September 28, 2019 and September 29, 2018 , respectively: Nine months ended (dollars in millions) September 28, September 29, Balance as of the beginning of the fiscal year $ 14.3 $ 14.1 Charge for the period 10.2 9.2 Payments made (7.4 ) (7.3 ) Released during the period (1.0 ) (0.6 ) Foreign currency translation (0.1 ) (0.2 ) Balance as of the end of the period $ 16.0 $ 15.2 |
Introduction (Policies)
Introduction (Policies) | 9 Months Ended |
Sep. 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 organized 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 became the indirect owner of all of the equity interests in Omaha Topco Ltd. (“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. (“Blackstone” or our “Sponsor”), and Gates management equity holders. These equity owners of Omaha Topco received depositary receipts representing ordinary shares in the Company in consideration for their equity in Omaha Topco, at a ratio of 0.76293 of our ordinary shares for each outstanding ordinary share of Omaha Topco. All share and per share amounts in these condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of this ratio. The reorganization was accounted for as a transaction between entities under common control and the net assets were recorded on the historical cost basis, in a manner similar to a pooling of interests, when Omaha Topco was contributed into the Company. |
Historical financial information | 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 for periods prior to those transactions reflects that of Omaha Topco. |
Accounting periods | Accounting periods The Company prepares its annual consolidated financial statements for the period ending on the Saturday nearest December 31. Accordingly, the condensed consolidated balance sheet is presented as of September 28, 2019 and December 29, 2018 and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented, where relevant, for the 91 day period from June 30, 2019 to September 28, 2019 , with comparative information for the 91 day period from July 1, 2018 to September 29, 2018 and for the 273 day period from December 30, 2018 to September 28, 2019 , with comparative information for the 273 day period from December 31, 2017 to September 29, 2018 . |
Basis of preparation | Basis of preparation The condensed 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 condensed consolidated financial statements and related notes contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of September 28, 2019 and the results of its operations and cash flows for the periods ended September 28, 2019 and September 29, 2018 . Interim period results are not necessarily indicative of the results to be expected for the full fiscal year. These condensed consolidated financial statements are unaudited and, except as noted below, have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 29, 2018 . The condensed consolidated balance sheet as of December 29, 2018 has been derived from those audited financial statements. These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes for the year ended December 29, 2018 included in the Company’s Annual Report on Form 10-K. |
Recent accounting pronouncements adopted and not yet adopted | The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year, except for the adoption on the first day of the 2019 fiscal year of the following new Accounting Standard Updates (each, an “ASU”): • 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 will bring 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. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, which allows entities an additional, optional transition method of applying the new leases standard at the adoption date with comparative periods continuing to be presented in accordance with prior GAAP (Topic 840 “ Leases ”). We have adopted Topic 842 using this practical expedient, and, consequently, comparative information in these condensed 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 into the new right-of-use asset. Note 11 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 (“OCI”) 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 OCI 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. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of financial assets, is still being evaluated. • 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. Early adoption is permitted and an entity is permitted to early adopt any removed or modified disclosures upon issuance of the ASU and delay adoption of the additional disclosures until their effective date. The impact on our consolidated financial statements of adopting this ASU, which will affect our fair value disclosures, is still being evaluated. • 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. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of cloud computing software arrangements, is still being evaluated. |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Segment Reporting [Abstract] | |
Schedule of net sales by operating segment | 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 Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Power Transmission $ 474.4 $ 512.5 $ 1,475.4 $ 1,608.1 Fluid Power 272.2 315.9 886.0 947.4 Continuing operations $ 746.6 $ 828.4 $ 2,361.4 $ 2,555.5 Adjusted EBITDA by segment was as follows: Adjusted EBITDA Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Power Transmission $ 99.7 $ 119.0 $ 315.2 $ 377.6 Fluid Power 45.3 62.2 160.7 192.4 Continuing operations $ 145.0 $ 181.2 $ 475.9 $ 570.0 |
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 Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 U.S. $ 284.3 $ 326.0 $ 909.6 $ 973.5 North America, excluding the U.S. 85.1 85.5 263.3 260.4 United Kingdom (“U.K.”) 18.7 23.3 62.6 73.8 Europe, Middle East and Africa (“EMEA”), excluding the U.K. 164.1 183.8 521.7 591.5 East Asia and India 87.9 95.9 274.2 296.9 Greater China 80.6 90.2 253.4 281.7 South America 25.9 23.7 76.6 77.7 Net Sales $ 746.6 $ 828.4 $ 2,361.4 $ 2,555.5 The following table summarizes our net sales into emerging and developed markets: Net Sales Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Developed $ 486.6 $ 558.4 $ 1,564.4 $ 1,671.1 Emerging 260.0 270.0 797.0 884.4 Net Sales $ 746.6 $ 828.4 $ 2,361.4 $ 2,555.5 |
Reconciliation of Adjusted EBITDA to net income from continuing operations | Reconciliation of net income from continuing operations to Adjusted EBITDA: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net income from continuing operations $ 37.5 $ 67.0 $ 669.3 $ 189.3 Income tax expense (benefit) 4.4 7.2 (497.8 ) 30.4 Income from continuing operations before taxes 41.9 74.2 171.5 219.7 Interest expense 37.2 40.2 114.5 139.8 Other (income) expenses (2.4 ) 3.4 (7.2 ) 17.5 Operating income from continuing operations 76.7 117.8 278.8 377.0 Depreciation and amortization 55.1 53.7 167.4 163.3 Transaction-related expenses (1) 1.0 0.2 0.7 6.2 Impairment of intangibles and other assets 0.7 0.2 0.7 0.6 Restructuring expenses 0.3 1.2 3.9 3.2 Share-based compensation expense 4.1 2.3 10.5 5.5 Sponsor fees (included in other operating expenses) 1.1 1.9 4.9 5.9 Impact of fair value adjustment on inventory (included in cost of sales) — — — 0.3 Inventory impairments and adjustments (included in cost of sales) 1.0 — 1.3 0.8 Duplicate expenses incurred on facility relocation — 1.5 — 4.6 Severance-related expenses (included in cost of sales) 2.5 — 3.0 — Other primarily severance-related expenses (included in SG&A) 1.8 0.7 3.0 0.6 Other operating expenses 0.7 1.7 1.7 2.0 Adjusted EBITDA $ 145.0 $ 181.2 $ 475.9 $ 570.0 (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. |
Restructuring and other strat_2
Restructuring and other strategic initiatives (Tables) | 9 Months Ended |
Sep. 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: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Power Transmission $ 0.3 $ 0.9 $ 3.5 $ 2.1 Fluid Power 1.0 0.3 1.7 1.1 Continuing operations $ 1.3 $ 1.2 $ 5.2 $ 3.2 Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Restructuring expenses: —Severance $ 0.4 $ 0.1 $ 3.3 $ — —Professional fees 0.1 0.8 1.4 3.0 —Other restructuring (benefits) expenses (0.2 ) 0.3 (0.8 ) 0.2 0.3 1.2 3.9 3.2 Restructuring expenses in cost of sales: —Impairment of inventory 1.0 — 1.3 — Total restructuring expenses $ 1.3 $ 1.2 $ 5.2 $ 3.2 Expenses related to other strategic initiatives: —Severance costs included in cost of sales $ 2.5 $ — $ 3.0 $ — —Severance costs included in SG&A 1.8 0.9 3.0 0.3 —Impairment of fixed assets 0.7 — 0.7 — Total expenses related to other strategic initiatives $ 5.0 $ 0.9 $ 6.7 $ 0.3 |
Schedule of restructuring reserves activity | The following summarizes the reserve for restructuring expenses for the nine month periods ended September 28, 2019 and September 29, 2018 , respectively: Nine months ended (dollars in millions) September 28, September 29, Balance as of the beginning of the period $ 2.6 $ 8.6 Utilized during the period (4.0 ) (8.3 ) Net charge for the period 3.9 3.5 Released during the period — (0.3 ) Foreign currency translation (0.1 ) 0.1 Balance as of the end of the period $ 2.4 $ 3.6 Restructuring reserves, the majority of which are expected to be utilized during the remainder of 2019 and in 2020 , are included in the condensed consolidated balance sheet as follows: (dollars in millions) As of As of Accrued expenses and other current liabilities $ 2.4 $ 3.4 Other non-current liabilities — 0.2 $ 2.4 $ 3.6 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of computation of net income per share | The computation of earnings per share is presented below: Three months ended Nine months ended (dollars in millions, except share numbers and per share amounts) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net income attributable to shareholders $ 35.5 $ 59.9 $ 670.7 $ 169.7 Weighted average number of shares outstanding 290,109,231 289,783,061 290,032,416 284,750,794 Dilutive effect of share-based awards 1,003,871 8,670,885 1,634,515 8,705,430 Diluted weighted average number of shares outstanding 291,113,102 298,453,946 291,666,931 293,456,224 Basic earnings per share $ 0.12 $ 0.21 $ 2.31 $ 0.60 Diluted earnings per share $ 0.12 $ 0.20 $ 2.30 $ 0.58 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | (dollars in millions) As of As of Raw materials and supplies $ 129.3 $ 152.1 Work in progress 36.6 38.4 Finished goods 341.9 347.1 Total inventories $ 507.8 $ 537.6 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | (dollars in millions) Power Fluid Total Cost and carrying amount As of December 29, 2018 $ 1,374.1 $ 671.8 $ 2,045.9 Foreign currency translation (18.4 ) (3.4 ) (21.8 ) As of September 28, 2019 $ 1,355.7 $ 668.4 $ 2,024.1 |
Intangible assets (Tables)
Intangible assets (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | As of September 28, 2019 As of December 29, 2018 (dollars in millions) Cost Accumulated Net Cost Accumulated Net Finite-lived: —Customer relationships $ 1,998.4 $ (618.8 ) $ 1,379.6 $ 2,017.4 $ (534.8 ) $ 1,482.6 —Technology 90.5 (87.5 ) 3.0 90.6 (87.0 ) 3.6 —Capitalized software 71.6 (35.4 ) 36.2 64.2 (29.2 ) 35.0 2,160.5 (741.7 ) 1,418.8 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 $ 2,673.9 $ (785.7 ) $ 1,888.2 $ 2,685.6 $ (695.0 ) $ 1,990.6 |
Schedule of indefinite-lived intangible assets | As of September 28, 2019 As of December 29, 2018 (dollars in millions) Cost Accumulated Net Cost Accumulated Net Finite-lived: —Customer relationships $ 1,998.4 $ (618.8 ) $ 1,379.6 $ 2,017.4 $ (534.8 ) $ 1,482.6 —Technology 90.5 (87.5 ) 3.0 90.6 (87.0 ) 3.6 —Capitalized software 71.6 (35.4 ) 36.2 64.2 (29.2 ) 35.0 2,160.5 (741.7 ) 1,418.8 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 $ 2,673.9 $ (785.7 ) $ 1,888.2 $ 2,685.6 $ (695.0 ) $ 1,990.6 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Lease cost and quantitative disclosures | ( dollars in millions ) Three months ended September 28, 2019 Nine months ended September 28, 2019 Lease expenses Operating lease expenses $ 7.6 $ 22.6 Finance lease amortization expenses 0.1 0.2 Short-term lease expenses 1.3 3.2 Variable lease expenses 2.2 4.9 Sublease income — (0.1 ) Total lease expenses $ 11.2 $ 30.8 Other information Right-of-use assets obtained in exchange for new operating lease liabilities $ 4.6 $ 6.6 Cash paid for amounts included in the measurement of lease liabilities: —Operating cash flows from operating leases $ 20.1 —Financing cash flows from finance leases 0.3 $ 20.4 Weighted-average remaining lease term — finance leases 9.0 years Weighted-average remaining lease term — operating leases 10.3 years Weighted-average discount rate — finance leases 2.6 % Weighted-average discount rate — operating leases 5.7 % |
Operating lease - Maturity analysis of liability | Maturity analysis of liabilities ( dollars in millions ) Operating leases Finance leases (1) Next 12 months $ 25.3 $ 0.5 Year 2 21.1 0.5 Year 3 17.3 0.5 Year 4 14.4 0.3 Year 5 12.6 — Year 6 and beyond 83.7 — Total lease payments 174.4 1.8 Interest 46.7 0.1 Total present value of lease liabilities $ 127.7 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 9.0 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 $ 25.3 $ 0.5 Year 2 21.1 0.5 Year 3 17.3 0.5 Year 4 14.4 0.3 Year 5 12.6 — Year 6 and beyond 83.7 — Total lease payments 174.4 1.8 Interest 46.7 0.1 Total present value of lease liabilities $ 127.7 $ 1.7 (1) Although our finance leases have a weighted average remaining lease term of 9.0 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 September 28, 2019 ( dollars in millions ) Operating leases Finance leases Right-of-use assets $ 117.3 $ 3.0 Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) $ 19.2 $ 0.9 Long-term lease liabilities 108.5 0.8 Total lease liabilities $ 127.7 $ 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) | 9 Months Ended |
Sep. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative effect on OCI | The movements before tax recognized in OCI in relation to our cash flow hedges were as follows: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Movement recognized in OCI in relation to: —Fair value (loss) gain on cash flow hedges $ (4.9 ) $ 3.6 $ (32.8 ) $ 13.3 —Deferred premium reclassified from OCI to net income 0.9 1.0 1.2 4.5 Total movement $ (4.0 ) $ 4.6 $ (31.6 ) $ 17.8 The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net fair value gains (losses) recognized in OCI in relation to: —Euro-denominated debt $ 3.2 $ 0.3 $ 2.5 $ (11.5 ) —Designated cross currency swaps 10.1 3.5 11.6 16.2 Total net fair value gains $ 13.3 $ 3.8 $ 14.1 $ 4.7 |
Schedule of fair values of derivative financial instruments | The period end fair values of derivative financial instruments were as follows: As of September 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 $ 4.6 $ — $ — $ (14.1 ) $ (9.5 ) $ 5.4 $ — $ — $ (27.5 ) $ (22.1 ) —Interest rate caps — — (4.8 ) (3.2 ) (8.0 ) 3.5 1.6 — (10.9 ) (5.8 ) —Interest rate swaps — — (2.0 ) (33.8 ) (35.8 ) — — (0.3 ) (2.6 ) (2.9 ) Derivatives not designated as hedging instruments: —Currency swaps 0.1 — — — 0.1 — — — — — —Currency forward contracts 1.3 — (0.5 ) — 0.8 1.3 — (0.4 ) — 0.9 $ 6.0 $ — $ (7.3 ) $ (51.1 ) $ (52.4 ) $ 10.2 $ 1.6 $ (0.7 ) $ (41.0 ) $ (29.9 ) |
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: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Fair value gains recognized in relation to: —Currency forward contracts recognized in SG&A $ 0.3 $ 0.9 $ 2.0 $ 1.7 —Currency swaps recognized in other expenses 1.0 0.1 1.0 0.6 Total $ 1.3 $ 1.0 $ 3.0 $ 2.3 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 9 Months Ended |
Sep. 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 September 28, 2019 As of December 29, 2018 (dollars in millions) Carrying amount Fair value Carrying amount Fair value Current $ 43.5 $ 43.0 $ 51.6 $ 50.4 Non-current 2,909.8 2,903.2 2,953.4 2,873.2 $ 2,953.3 $ 2,946.2 $ 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 September 28, 2019 Available-for-sale securities $ 1.0 $ — $ 1.0 Derivative assets $ — $ 6.0 $ 6.0 Derivative liabilities $ — $ (58.4 ) $ (58.4 ) As of December 29, 2018 Available-for-sale securities $ 0.8 $ — $ 0.8 Derivative assets $ — $ 11.8 $ 11.8 Derivative liabilities $ — $ (41.7 ) $ (41.7 ) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | (dollars in millions) As of As of Secured debt: —Dollar Term Loan $ 1,703.4 $ 1,716.4 —Euro Term Loan 704.3 742.1 Unsecured debt: —Dollar Senior Notes 568.0 568.0 —Other loans 0.2 0.6 Total principal of debt 2,975.9 3,027.1 Deferred issuance costs (41.5 ) (48.7 ) Accrued interest 18.9 26.6 Total carrying value of debt 2,953.3 3,005.0 Debt, current portion 43.5 51.6 Debt, less current portion $ 2,909.8 $ 2,953.4 |
Foreign exchange gains (losses) | Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Gain recognized in statement of operations $ 24.5 $ 3.5 $ 29.8 $ 32.6 Gain (loss) recognized in OCI 3.2 0.3 2.5 (6.5 ) Total gains $ 27.7 $ 3.8 $ 32.3 $ 26.1 |
Post-retirement benefits (Table
Post-retirement benefits (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Retirement Benefits [Abstract] | |
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 September 28, 2019 Three months ended September 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 Nine months ended September 28, 2019 Nine months ended September 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 |
Share-based compensation (Table
Share-based compensation (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Summary of movements in options outstanding Nine months ended September 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 (102,135 ) $ 6.62 —Tier II (391,792 ) $ 6.59 —Tier III (391,792 ) $ 6.59 —Tier IV (391,792 ) $ 9.88 —Share options (44,895 ) $ 17.03 (1,322,406 ) $ 7.92 Expired during the period: —Share options (1,250 ) $ 17.72 (1,250 ) $ 17.72 Exercised during the period: —Tier I (257,322 ) $ 6.58 (257,322 ) $ 6.58 Outstanding at the end of the period: —Tier I 3,853,080 $ 7.07 —Tier II 4,445,988 $ 7.00 —Tier III 4,445,988 $ 7.00 —Tier IV 4,445,988 $ 10.51 —SARs 795,522 $ 8.91 —Share options 1,636,077 $ 16.69 —Premium-priced options 796,460 $ 19.00 20,419,103 $ 9.10 Exercisable at the end of the period 2,838,515 $ 7.36 |
Schedule of RSU and PRSU activity | Summary of movements in RSUs and PRSUs outstanding Nine months ended September 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 728,436 $ 16.28 —PRSUs 248,550 20.07 976,986 $ 17.25 Forfeited during the period: —RSUs (34,573 ) $ 16.67 (34,573 ) $ 16.67 Vested during the period: —RSUs (19,250 ) $ 17.21 (19,250 ) $ 17.21 Outstanding at the end of the period —RSUs 756,413 $ 16.33 —PRSUs 248,550 20.07 1,004,963 $ 17.25 |
Schedule of share based compensation valuation techniques | The premium-priced options and PRSUs were valued using Monte Carlo simulations. The weighted average fair values and relevant assumptions were as follows: Nine months ended September 28, 2019 Fair value: —SARs $ 5.88 —Share options $ 5.88 —Premium-priced options $ 5.65 —RSUs $ 16.28 —PRSUs $ 20.07 Inputs to the model: —Expected volatility - SARs, share options and premium-priced options 31.9 % —Expected volatility - PRSUs 32.8 % —Expected option life for SARs and share options 6.0 —Expected option life for premium-priced options 7.0 —Risk-free interest rate: SARs and share options 2.51 % Premium-priced options 2.53 % PRSUs 2.48 % —Expected dividends — |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 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 nine month periods ended September 28, 2019 and September 29, 2018 , respectively, were as follows: Nine months ended (number of shares) September 28, September 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 257,322 58,545 Vesting of restricted stock units, net of withholding taxes 13,229 — Balance as of the end of the period 290,118,125 289,808,150 |
Analysis of accumulated other_2
Analysis of accumulated other comprehensive (loss) income (Tables) | 9 Months Ended |
Sep. 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 30, 2017 $ (0.3 ) $ 13.2 $ (742.8 ) $ (17.5 ) $ (747.4 ) $ (25.5 ) $ (772.9 ) Foreign currency translation — — (58.7 ) — (58.7 ) (20.0 ) (78.7 ) Cash flow hedges movements — — — 19.8 19.8 — 19.8 Available-for-sale investment movements (0.4 ) — — — (0.4 ) (0.1 ) (0.5 ) Post-retirement benefit movements — (0.5 ) — — (0.5 ) — (0.5 ) Other comprehensive (loss) income (0.4 ) (0.5 ) (58.7 ) 19.8 (39.8 ) (20.1 ) (59.9 ) As of September 29, 2018 $ (0.7 ) $ 12.7 $ (801.5 ) $ 2.3 $ (787.2 ) $ (45.6 ) $ (832.8 ) (dollars in millions) Available-for- Post- Cumulative Cash flow Accumulated OCI attributable to Non- Accumulated OCI As of December 29, 2018 $ — $ 7.6 $ (850.0 ) $ (11.9 ) $ (854.3 ) $ (43.6 ) $ (897.9 ) Foreign currency translation — — (27.7 ) — (27.7 ) (7.8 ) (35.5 ) Cash flow hedges movements — — — (26.4 ) (26.4 ) — (26.4 ) Post-retirement benefit movements — (0.2 ) — — (0.2 ) — (0.2 ) Other comprehensive loss — (0.2 ) (27.7 ) (26.4 ) (54.3 ) (7.8 ) (62.1 ) As of September 28, 2019 $ — $ 7.4 $ (877.7 ) $ (38.3 ) $ (908.6 ) $ (51.4 ) $ (960.0 ) |
Related party transactions (Tab
Related party transactions (Tables) | 9 Months Ended |
Sep. 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: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Sales $ 12.7 $ 13.7 $ 38.5 $ 45.4 Purchases $ (5.0 ) $ (5.5 ) $ (15.3 ) $ (16.0 ) Amounts outstanding in respect of these transactions were as follows: (dollars in millions) As of As of Receivables $ 4.4 $ 0.6 Payables $ (5.4 ) $ (0.3 ) Sales to and purchases from equity method investees were as follows: Three months ended Nine months ended (dollars in millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Sales $ 0.4 $ 0.3 $ 1.1 $ 1.4 Purchases $ (3.9 ) $ (4.8 ) $ (11.9 ) $ (11.3 ) |
Commitments and contingencies (
Commitments and contingencies (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of warranty liabilities | The following summarizes the movements in the warranty liability for the nine month periods ended September 28, 2019 and September 29, 2018 , respectively: Nine months ended (dollars in millions) September 28, September 29, Balance as of the beginning of the fiscal year $ 14.3 $ 14.1 Charge for the period 10.2 9.2 Payments made (7.4 ) (7.3 ) Released during the period (1.0 ) (0.6 ) Foreign currency translation (0.1 ) (0.2 ) Balance as of the end of the period $ 16.0 $ 15.2 |
Introduction (Details)
Introduction (Details) $ in Millions | Sep. 28, 2019USD ($) | Jan. 01, 2019USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Depository receipts ratio | 0.76293 | |
Operating lease right-of-use assets | $ 117.3 | |
Total present value of lease liabilities | $ 127.7 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 126 | |
Total present value of lease liabilities | $ 132.9 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Millions | Apr. 26, 2018USD ($)facility | Sep. 28, 2019USD ($) | Dec. 29, 2018USD ($) |
Business Acquisition [Line Items] | |||
Goodwill and provisional goodwill | $ 2,024.1 | $ 2,045.9 | |
Rapro | |||
Business Acquisition [Line Items] | |||
Purchase price, net of cash acquired | $ 50.9 | ||
Number of facilities | facility | 2 | ||
Goodwill and provisional goodwill | $ 34.4 |
Segment information - Sales and
Segment information - Sales and Adjusted EBITDA by Reporting Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 746.6 | $ 828.4 | $ 2,361.4 | $ 2,555.5 |
Adjusted EBITDA | 145 | 181.2 | 475.9 | 570 |
Power Transmission | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 474.4 | 512.5 | 1,475.4 | 1,608.1 |
Adjusted EBITDA | 99.7 | 119 | 315.2 | 377.6 |
Fluid Power | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 272.2 | 315.9 | 886 | 947.4 |
Adjusted EBITDA | $ 45.3 | $ 62.2 | $ 160.7 | $ 192.4 |
Segment information - Net Sales
Segment information - Net Sales by Geographic Regions and Markets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 746.6 | $ 828.4 | $ 2,361.4 | $ 2,555.5 |
U.S. | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 284.3 | 326 | 909.6 | 973.5 |
North America, excluding the U.S. | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 85.1 | 85.5 | 263.3 | 260.4 |
United Kingdom (“U.K.”) | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 18.7 | 23.3 | 62.6 | 73.8 |
Europe, Middle East and Africa (“EMEA”), excluding the U.K. | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 164.1 | 183.8 | 521.7 | 591.5 |
East Asia and India | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 87.9 | 95.9 | 274.2 | 296.9 |
Greater China | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 80.6 | 90.2 | 253.4 | 281.7 |
South America | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 25.9 | 23.7 | 76.6 | 77.7 |
Developed | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 486.6 | 558.4 | 1,564.4 | 1,671.1 |
Emerging | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 260 | $ 270 | $ 797 | $ 884.4 |
Segment information - Reconcili
Segment information - Reconciliation of Adjusted EBITDA to Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Segment Reporting Information [Line Items] | ||||
Net income from continuing operations | $ 37.5 | $ 67 | $ 669.3 | $ 189.3 |
Income tax expense (benefit) | 4.4 | 7.2 | (497.8) | 30.4 |
Income from continuing operations before taxes | 41.9 | 74.2 | 171.5 | 219.7 |
Interest expense | 37.2 | 40.2 | 114.5 | 139.8 |
Other (income) expenses | (2.4) | 3.4 | (7.2) | 17.5 |
Operating income from continuing operations | 76.7 | 117.8 | 278.8 | 377 |
Depreciation and amortization | 55.1 | 53.7 | 167.4 | 163.3 |
Transaction-related expenses | 1 | 0.2 | 0.7 | 6.2 |
Impairment of intangibles and other assets | 0.7 | 0.2 | 0.7 | 0.6 |
Restructuring expenses | 0.3 | 1.2 | 3.9 | 3.2 |
Share-based compensation expense | 4.1 | 2.3 | 10.5 | 5.5 |
Sponsor fees (included in other operating expenses) | 1.1 | 1.9 | 4.9 | 5.9 |
Impact of fair value adjustment on inventory (included in cost of sales) | 0 | 0 | 0 | 0.3 |
Inventory impairments and adjustments (included in cost of sales) | 1 | 0 | 1.3 | 0.8 |
Duplicate expenses incurred on facility relocation | 0 | 1.5 | 0 | 4.6 |
Other operating expenses | 0.7 | 1.7 | 1.7 | 2 |
Adjusted EBITDA | 145 | 181.2 | 475.9 | 570 |
Cost of sales | ||||
Segment Reporting Information [Line Items] | ||||
Severance costs | 2.5 | 0 | 3 | 0 |
SG&A | ||||
Segment Reporting Information [Line Items] | ||||
Severance costs | 1.8 | 0.9 | 3 | 0.3 |
Other Severance Related Costs | $ 1.8 | $ 0.7 | $ 3 | $ 0.6 |
Restructuring and other strat_3
Restructuring and other strategic initiatives - Income Statement Location (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Restructuring Cost and Reserve | ||||
Restructuring expenses | $ 1.3 | $ 1.2 | $ 5.2 | $ 3.2 |
—Impairment of fixed assets | 0.7 | 0 | 0.7 | 0 |
Total expenses related to other strategic initiatives | 5 | 0.9 | 6.7 | 0.3 |
—Impairment of inventory | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | 1 | 0 | 1.3 | 0 |
Restructuring expenses: | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | 0.3 | 1.2 | 3.9 | 3.2 |
Restructuring expenses: | —Severance | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | 0.4 | 0.1 | 3.3 | 0 |
Restructuring expenses: | —Professional fees | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | 0.1 | 0.8 | 1.4 | 3 |
Restructuring expenses: | —Other restructuring (benefits) expenses | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | (0.2) | 0.3 | (0.8) | 0.2 |
Cost of sales | ||||
Restructuring Cost and Reserve | ||||
Severance costs | 2.5 | 0 | 3 | 0 |
SG&A | ||||
Restructuring Cost and Reserve | ||||
Severance costs | $ 1.8 | $ 0.9 | $ 3 | $ 0.3 |
Restructuring and other strat_4
Restructuring and other strategic initiatives - Restructuring Costs by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Restructuring Cost and Reserve | ||||
Restructuring expenses | $ 1.3 | $ 1.2 | $ 5.2 | $ 3.2 |
Power Transmission | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | 0.3 | 0.9 | 3.5 | 2.1 |
Fluid Power | ||||
Restructuring Cost and Reserve | ||||
Restructuring expenses | $ 1 | $ 0.3 | $ 1.7 | $ 1.1 |
Restructuring and other strat_5
Restructuring and other strategic initiatives - Restructuring Reserve Activity (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Restructuring Reserve [Roll Forward] | ||
Balance as of the beginning of the period | $ 2.6 | $ 8.6 |
Utilized during the period | (4) | (8.3) |
Net charge for the period | 3.9 | 3.5 |
Released during the period | 0 | (0.3) |
Foreign currency translation | (0.1) | 0.1 |
Balance as of the end of the period | $ 2.4 | $ 3.6 |
Restructuring and other strat_6
Restructuring and other strategic initiatives - Restructuring Reserve Balance Sheet Impact (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Dec. 30, 2017 |
Restructuring Cost and Reserve | ||||
Restructuring reserve | $ 2.4 | $ 2.6 | $ 3.6 | $ 8.6 |
Accrued expenses and other current liabilities | ||||
Restructuring Cost and Reserve | ||||
Restructuring reserve | 2.4 | 3.4 | ||
Other non-current liabilities | ||||
Restructuring Cost and Reserve | ||||
Restructuring reserve | $ 0 | $ 0.2 |
Restructuring and other strat_7
Restructuring and other strategic initiatives - Narratives (Details) $ in Millions | 9 Months Ended |
Sep. 28, 2019USD ($) | |
—Impairment of inventory | |
Restructuring Cost and Reserve | |
Consulting expenses | $ 1.4 |
Income taxes (Details)
Income taxes (Details) € in Billions | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Sep. 28, 2019USD ($) | Jun. 29, 2019USD ($) | Mar. 30, 2019USD ($) | Sep. 29, 2018USD ($) | Jun. 29, 2019USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019EUR (€) | |
Operating Loss Carryforwards | ||||||||
Income tax expense (benefit) | $ 4,400,000 | $ 7,200,000 | $ (497,800,000) | $ 30,400,000 | ||||
Pre-tax income | $ 41,900,000 | $ 74,200,000 | $ 171,500,000 | $ 219,700,000 | ||||
Effective income tax rate | 10.50% | 9.70% | (290.30%) | 13.80% | ||||
Discrete tax expense (benefit) | $ 5,300,000 | $ 25,100,000 | ||||||
Reduction in tax on ordinary operations | 8,000,000 | |||||||
Foreign currency translation adjustment, tax | $ 26,500,000 | |||||||
Tax benefit related to reorganization | 65,600,000 | |||||||
Change in valuation allowance | $ (617,300,000) | $ (605,100,000) | ||||||
Non-operating cost | 0 | $ 21,100,000 | ||||||
Deferred tax asset, net | 570,100,000 | 627,600,000 | 570,100,000 | |||||
Deferred tax asset to be recognized in the next 12 months | 10,300,000 | |||||||
Deferred tax asset, foreign | 564,000,000 | $ 615,600,000 | $ 615,600,000 | 564,000,000 | ||||
Indefinite lived net operating loss | € | € 2.1 | |||||||
Net Operating Loss | ||||||||
Operating Loss Carryforwards | ||||||||
Change in valuation allowance | (6,200,000) | (3,400,000) | ||||||
Foreign Tax Credits | ||||||||
Operating Loss Carryforwards | ||||||||
Deferred tax asset, net | $ 2,700,000 | $ 4,300,000 | $ 2,700,000 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to shareholders | $ 35.5 | $ 59.9 | $ 670.7 | $ 169.7 |
Weighted average number of shares outstanding (in shares) | 290,109,231 | 289,783,061 | 290,032,416 | 284,750,794 |
Dilutive effect of share-based awards (in shares) | 1,003,871 | 8,670,885 | 1,634,515 | 8,705,430 |
Diluted weighted average number of shares outstanding (in shares) | 291,113,102 | 298,453,946 | 291,666,931 | 293,456,224 |
Basic earnings per share (in usd per share) | $ 0.12 | $ 0.21 | $ 2.31 | $ 0.60 |
Diluted earnings per share (in usd per share) | $ 0.12 | $ 0.20 | $ 2.30 | $ 0.58 |
Anti-dilutive shares excluded from diluted income per share calculation (in shares) | 3,623,701 | 605,164 | 3,686,986 | 610,039 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 129.3 | $ 152.1 |
Work in progress | 36.6 | 38.4 |
Finished goods | 341.9 | 347.1 |
Total inventories | $ 507.8 | $ 537.6 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 28, 2019USD ($) | |
Cost and carrying amount | |
December 29, 2018 | $ 2,045.9 |
Foreign currency translation | (21.8) |
September 28, 2019 | 2,024.1 |
Power Transmission | |
Cost and carrying amount | |
December 29, 2018 | 1,374.1 |
Foreign currency translation | (18.4) |
September 28, 2019 | 1,355.7 |
Fluid Power | |
Cost and carrying amount | |
December 29, 2018 | 671.8 |
Foreign currency translation | (3.4) |
September 28, 2019 | $ 668.4 |
Intangible assets - Finite-Live
Intangible assets - Finite-Lived and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived, cost | $ 2,160.5 | $ 2,172.2 |
Finite-lived, accumulated amortization | (741.7) | (651) |
Finite-lived, net | 1,418.8 | 1,521.2 |
Indefinite-lived, cost | 513.4 | 513.4 |
Indefinite-lived, accumulated impairment | (44) | (44) |
Indefinite-lived, net | 469.4 | 469.4 |
Cost | 2,673.9 | 2,685.6 |
Accumulated amortization and impairment | (785.7) | (695) |
Net | 1,888.2 | 1,990.6 |
—Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived, cost | 1,998.4 | 2,017.4 |
Finite-lived, accumulated amortization | (618.8) | (534.8) |
Finite-lived, net | 1,379.6 | 1,482.6 |
—Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived, cost | 90.5 | 90.6 |
Finite-lived, accumulated amortization | (87.5) | (87) |
Finite-lived, net | 3 | 3.6 |
—Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived, cost | 71.6 | 64.2 |
Finite-lived, accumulated amortization | (35.4) | (29.2) |
Finite-lived, net | $ 36.2 | $ 35 |
Intangible assets - Narrative (
Intangible assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 32.4 | $ 32.3 | $ 97.5 | $ 98 |
Intangible assets, foreign currency translation gain (loss) | $ (21) | $ (0.2) | $ (13) | $ (18.9) |
Leases - Narratives (Details)
Leases - Narratives (Details) lease in Thousands | 9 Months Ended |
Sep. 28, 2019propertylease | |
Lessor, Leases | |
Number of leases (leases) | lease | 1 |
Number properties (properties) | property | 80 |
Weighted-average remaining lease term — finance leases | 9 years |
Finance lease rent free period | 10 years |
real estate | |
Lessor, Leases | |
Percentage of total lease liability (percent) | 88.00% |
Leases - Quantitative Disclosur
Leases - Quantitative Disclosures (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019USD ($) | Sep. 28, 2019USD ($) | |
Lease expenses | ||
Operating lease expenses | $ 7.6 | $ 22.6 |
Finance lease amortization expenses | 0.1 | 0.2 |
Short-term lease expenses | 1.3 | 3.2 |
Variable lease expenses | 2.2 | 4.9 |
Sublease income | 0 | (0.1) |
Total lease expenses | 11.2 | 30.8 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 4.6 | 6.6 |
—Operating cash flows from operating leases | 20.1 | |
—Financing cash flows from finance leases | 0.3 | |
Cash paid for amounts included in the measurement of lease liabilities: | $ 20.4 | |
Weighted-average remaining lease term — finance leases | 9 years | 9 years |
Weighted-average remaining lease term — operating leases | 10 years 4 months | 10 years 4 months |
Weighted-average discount rate — finance leases (percent) | 2.60% | 2.60% |
Weighted-average discount rate — operating leases (percent) | 5.70% | 5.70% |
Leases - Minimum Future Payment
Leases - Minimum Future Payments (Details) $ in Millions | Sep. 28, 2019USD ($) |
Operating leases | |
Next 12 months | $ 25.3 |
2020 | 21.1 |
2021 | 17.3 |
2022 | 14.4 |
2023 | 12.6 |
Year 6 and beyond | 83.7 |
Total lease payments | 174.4 |
Interest | 46.7 |
Total present value of lease liabilities | 127.7 |
Finance leases (1) | |
Next 12 months | 0.5 |
2020 | 0.5 |
2021 | 0.5 |
2022 | 0.3 |
2023 | 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 | Sep. 28, 2019USD ($) |
Operating leases | |
Operating lease right-of-use assets | $ 117.3 |
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) | 19.2 |
Long-term lease liabilities | 108.5 |
Operating Lease, Liability | 127.7 |
Finance leases | |
Right-of-use assets | 3 |
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”) | 0.9 |
Long-term lease liabilities | 0.8 |
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 | Sep. 28, 2019 | Dec. 29, 2018 |
Derivatives, Fair Value | ||
Net | $ (52.4) | $ (29.9) |
Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 6 | 10.2 |
Other non- current assets | ||
Derivatives, Fair Value | ||
Derivative assets | 1.6 | |
Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (7.3) | (0.7) |
Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (51.1) | (41) |
Derivatives designated as hedging instruments: | —Currency swaps | ||
Derivatives, Fair Value | ||
Net | (9.5) | (22.1) |
Derivatives designated as hedging instruments: | —Currency swaps | Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 4.6 | 5.4 |
Derivatives designated as hedging instruments: | —Currency swaps | Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (14.1) | (27.5) |
Derivatives designated as hedging instruments: | —Interest rate caps | ||
Derivatives, Fair Value | ||
Net | (8) | (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 | (4.8) | |
Derivatives designated as hedging instruments: | —Interest rate caps | Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (3.2) | (10.9) |
Derivatives designated as hedging instruments: | —Interest rate swaps | ||
Derivatives, Fair Value | ||
Net | (35.8) | (2.9) |
Derivatives designated as hedging instruments: | —Interest rate swaps | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (2) | (0.3) |
Derivatives designated as hedging instruments: | —Interest rate swaps | Other non- current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | (33.8) | (2.6) |
Derivatives not designated as hedging instruments: | —Currency swaps | ||
Derivatives, Fair Value | ||
Net | 0.1 | |
Derivatives not designated as hedging instruments: | —Currency swaps | Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 0.1 | |
Derivatives not designated as hedging instruments: | —Currency forward contracts | ||
Derivatives, Fair Value | ||
Net | 0.8 | 0.9 |
Derivatives not designated as hedging instruments: | —Currency forward contracts | Prepaid expenses and other assets | ||
Derivatives, Fair Value | ||
Derivative assets | 1.3 | 1.3 |
Derivatives not designated as hedging instruments: | —Currency forward contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liabilities | $ (0.5) | $ (0.4) |
Derivative financial instrume_4
Derivative financial instruments - Net Investment Hedging Instruments in OCI (Details) - Net investment hedges - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Derivative Instruments, Gain (Loss) | ||||
Total net fair value gains | $ 13.3 | $ 3.8 | $ 14.1 | $ 4.7 |
—Interest rate caps | ||||
Derivative Instruments, Gain (Loss) | ||||
Total net fair value gains | 3.2 | 0.3 | 2.5 | (11.5) |
—Currency swaps | ||||
Derivative Instruments, Gain (Loss) | ||||
Total net fair value gains | $ 10.1 | $ 3.5 | $ 11.6 | $ 16.2 |
Derivative financial instrume_5
Derivative financial instruments - Interest Rate Caps (Details) - Sep. 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_6
Derivative financial instruments - OCI Movement (Details) - Interest Rate Contract - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Movement recognized in OCI in relation to: | ||||
—Fair value (loss) gain on cash flow hedges | $ (4.9) | $ (32.8) | ||
—Fair value (loss) gain on cash flow hedges | $ 3.6 | $ 13.3 | ||
—Deferred premium reclassified from OCI to net income | (0.9) | (1.2) | ||
—Deferred premium reclassified from OCI to net income | 1 | 4.5 | ||
Total movement | $ (4) | $ (31.6) | ||
Total movement | $ 4.6 | $ 17.8 |
Derivative financial instrume_7
Derivative financial instruments - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 28, 2019USD ($)instrument | Sep. 29, 2018USD ($) | Sep. 28, 2019USD ($)instrument | Sep. 29, 2018USD ($) | Jul. 31, 2019EUR (€) | Dec. 29, 2018USD ($)instrument | |
Interest rate swaps due June 30, 2020 through June 30, 2023 | ||||||
Derivative | ||||||
Notional amount of derivative contracts | $ 870,000,000 | $ 870,000,000 | $ 870,000,000 | |||
Number of derivative instruments (instruments) | instrument | 3 | 3 | 3 | |||
Interest rate cap | ||||||
Derivative | ||||||
Notional amount of derivative contracts | $ 1,700,000,000 | $ 1,700,000,000 | $ 2,700,000,000 | |||
Derivatives designated as hedging instruments: | Euro Term Loan | Secured debt | Net investment hedges | ||||||
Derivative | ||||||
Debt instrument principal amount | € | € 75,500,000 | |||||
Derivatives designated as hedging instruments: | —Currency swaps | Net investment hedges | Interest Expense | ||||||
Derivative | ||||||
Gain (loss) on derivative, recognized in the income statement | 1,900,000 | $ 700,000 | 6,100,000 | $ 700,000 | ||
Derivatives designated as hedging instruments: | Interest Rate Contract | Cash Flow Hedging | Interest Expense | ||||||
Derivative | ||||||
Gain (loss) on derivative, recognized in the income statement | (400,000) | (1,000,000) | (1,200,000) | (4,500,000) | ||
Not designated as hedging instrument | ||||||
Derivative | ||||||
Gain (loss) on derivative, recognized in the income statement | 1,300,000 | $ 1,000,000 | 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 | 270,000,000 | |||
Not designated as hedging instrument | Currency forward contracts | ||||||
Derivative | ||||||
Notional amount of derivative contracts | 26,400,000 | 26,400,000 | 0 | |||
Not designated as hedging instrument | Forward contracts | ||||||
Derivative | ||||||
Notional amount of derivative contracts | $ 71,600,000 | $ 71,600,000 | $ 108,000,000 |
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 | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) on derivative, recognized in the income statement | $ 1.3 | $ 1 | $ 3 | $ 2.3 |
Currency forward contracts | SG&A | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) on derivative, recognized in the income statement | 0.3 | 0.9 | 2 | 1.7 |
Currency swap | Other expense (income) | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) on derivative, recognized in the income statement | $ (1) | $ (0.1) | $ (1) | $ (0.6) |
Fair value measurement - Schedu
Fair value measurement - Schedule of carrying amount and fair value of debt (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Carrying amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current | $ 43.5 | $ 51.6 |
Non-current | 2,909.8 | 2,953.4 |
Fair value of debt | 2,953.3 | 3,005 |
Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current | 43 | 50.4 |
Non-current | 2,903.2 | 2,873.2 |
Fair value of debt | $ 2,946.2 | $ 2,923.6 |
Fair value measurement - Narrat
Fair value measurement - Narrative (Details) | 9 Months Ended |
Sep. 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) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 1 | $ 0.8 |
Derivative assets | 6 | 11.8 |
Derivative liabilities | (58.4) | (41.7) |
Quoted prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 1 | 0.8 |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Significant observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Derivative assets | 6 | 11.8 |
Derivative liabilities | $ (58.4) | $ (41.7) |
Debt - Schedule of long-term de
Debt - Schedule of long-term debt (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Debt Instrument | ||
Total principal of debt | $ 2,975.9 | $ 3,027.1 |
Deferred issuance costs | (41.5) | (48.7) |
Accrued interest | 18.9 | 26.6 |
Total carrying value of debt | 2,953.3 | 3,005 |
Debt, current portion | 43.5 | 51.6 |
Debt, less current portion | 2,909.8 | 2,953.4 |
Secured debt: | —Dollar Term Loan | ||
Debt Instrument | ||
Total principal of debt | 1,703.4 | 1,716.4 |
Secured debt: | —Euro Term Loan | ||
Debt Instrument | ||
Total principal of debt | 704.3 | 742.1 |
Unsecured debt: | —Dollar Senior Notes | ||
Debt Instrument | ||
Total principal of debt | 568 | 568 |
Unsecured debt: | —Other loans | ||
Debt Instrument | ||
Total principal of debt | $ 0.2 | $ 0.6 |
Debt - Debt redemptions narrati
Debt - Debt redemptions narrative (Details) € in Millions, $ in Millions | Feb. 09, 2018USD ($) | Feb. 08, 2018USD ($) | Jan. 31, 2018USD ($) | Jan. 31, 2018EUR (€) | Mar. 31, 2018USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) |
Debt Instrument | |||||||
Premium paid on redemption of debt | $ 0 | $ 27 | |||||
Unsecured debt | |||||||
Debt Instrument | |||||||
Repayments of debt | 913.7 | ||||||
Payments of accrued interest | $ 3.1 | ||||||
Redemption price (as a percent) | 101.00% | ||||||
Premium paid on redemption of debt | $ 27 | ||||||
Accelerated recognition of deferred financing costs | $ 15.4 | ||||||
Unsecured debt | Euro Senior Notes | |||||||
Debt Instrument | |||||||
Repayments of debt | $ 291.7 | € 235 | |||||
Payments of accrued interest | $ 0.7 | ||||||
Redemption price (as a percent) | 102.875% | 102.875% | |||||
Premium paid on redemption of debt | $ 8.4 | ||||||
Unsecured debt | Dollar Senior Notes | |||||||
Debt Instrument | |||||||
Repayments of debt | $ 100 | $ 522 | $ 622 | ||||
Payments of accrued interest | $ 0.4 | $ 2 | |||||
Redemption price (as a percent) | 103.00% | 103.00% | 100.00% | ||||
Premium paid on redemption of debt | $ 3 | $ 15.6 |
Debt - Dollar and Euro Term Loa
Debt - Dollar and Euro Term Loans narrative (Details) - Secured debt - USD ($) $ in Millions | Jan. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 |
Debt Instrument | |||
Springing maturity trigger on debt | $ 500 | ||
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 | $ 5.5 | $ 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 | 4.79% | ||
Quarterly amortization payment rate | 0.25% | ||
Quarterly amortization payment on debt | $ 13 | $ 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 | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Debt Instrument | ||||
Gain recognized in statement of operations | $ 24.5 | $ 3.5 | $ 29.8 | $ 32.6 |
Gain (loss) recognized in OCI | 3.2 | 0.3 | 2.5 | (6.5) |
Total gains | $ 27.7 | $ 3.8 | $ 32.3 | $ 26.1 |
Debt - Unsecured Senior Notes N
Debt - Unsecured Senior Notes Narrative (Details) € in Millions, $ in Millions | Feb. 09, 2018USD ($) | Feb. 08, 2018USD ($) | Jan. 31, 2018USD ($) | Jan. 31, 2018EUR (€) | Sep. 28, 2019USD ($) | Sep. 28, 2019USD ($) | Dec. 29, 2018USD ($) |
Debt Instrument | |||||||
Principal amount of debt outstanding | $ 2,975.9 | $ 2,975.9 | $ 3,027.1 | ||||
Unsecured debt | |||||||
Debt Instrument | |||||||
Repayments of debt | $ 913.7 | ||||||
Redemption price (as a percent) | 101.00% | ||||||
Unsecured debt | Dollar Senior Notes | |||||||
Debt Instrument | |||||||
Principal amount of debt outstanding | $ 568 | $ 568 | $ 568 | ||||
Stated interest rate on debt | 6.00% | 6.00% | |||||
Repayments of debt | $ 100 | $ 522 | $ 622 | ||||
Redemption price (as a percent) | 103.00% | 103.00% | 100.00% | ||||
Unsecured debt | Euro Senior Notes | |||||||
Debt Instrument | |||||||
Repayments of debt | $ 291.7 | € 235 | |||||
Foreign exchange loss | $ 9.2 | ||||||
Loss recognized in OCI | 5 | ||||||
Loss recognized in statement of operations | $ 4.2 | ||||||
Redemption price (as a percent) | 102.875% | 102.875% |
Debt - Revolving credit facilit
Debt - Revolving credit facility Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 28, 2019 | Dec. 29, 2018 | |
Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Line of credit carrying value | $ 0 | |
Revolving credit facility | Secured multi-currency facility | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity of credit facility | $ 185,000,000 | |
Springing maturity trigger on debt | 500,000,000 | |
Line of credit carrying value | 0 | |
Letter of credit sub-facility | ||
Line of Credit Facility [Line Items] | ||
Line of credit carrying value | $ 0 | |
Letter of credit sub-facility | Secured multi-currency facility | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity of credit facility | 20,000,000 | |
Line of credit carrying value | $ 0 |
Debt - Asset-backed revolver Na
Debt - Asset-backed revolver Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 28, 2019 | Dec. 29, 2018 | |
Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Line of credit carrying value | $ 0 | |
Revolving credit facility | Asset-backed revolver | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity of credit facility | $ 325,000,000 | |
Current borrowing capacity of credit facility | 309,200,000 | 325,000,000 |
Springing maturity trigger on debt | 500,000,000 | |
Line of credit carrying value | 0 | 0 |
Letter of credit sub-facility | ||
Line of Credit Facility [Line Items] | ||
Line of credit carrying value | 0 | |
Letter of credit sub-facility | Asset-backed revolver | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity of credit facility | 150,000,000 | |
Line of credit carrying value | $ 50,200,000 | $ 57,800,000 |
Post-retirement benefits - Comp
Post-retirement benefits - Components of net periodic benefit cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
—Employer service cost | $ 1.3 | $ 1.3 | $ 4.1 | $ 4 |
—Interest cost | 6.4 | 6.4 | 19.3 | 19.4 |
—Expected return on plan assets | (7) | (5.6) | (20.9) | (17) |
—Net amortization of prior period losses (gains) | (0.1) | (0.1) | (0.3) | (0.4) |
—Settlements and curtailments | 0 | 0.1 | (0.7) | 0.4 |
Net periodic benefit cost | 0.6 | 2.1 | 1.5 | 6.4 |
Contributions | 2.7 | 2.9 | 8.1 | 8.9 |
Pensions | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
—Employer service cost | 1.3 | 1.3 | 4.1 | 4 |
—Interest cost | 5.8 | 5.8 | 17.6 | 17.7 |
—Expected return on plan assets | (7) | (5.6) | (20.9) | (17) |
—Net amortization of prior period losses (gains) | 0.2 | 0 | 0.6 | 0.1 |
—Settlements and curtailments | 0 | 0.1 | (0.7) | 0.4 |
Net periodic benefit cost | 0.3 | 1.6 | 0.7 | 5.2 |
Contributions | 1.9 | 1.7 | 5.3 | 5.7 |
Other post-retirement benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
—Employer service cost | 0 | 0 | 0 | 0 |
—Interest cost | 0.6 | 0.6 | 1.7 | 1.7 |
—Expected return on plan assets | 0 | 0 | 0 | 0 |
—Net amortization of prior period losses (gains) | (0.3) | (0.1) | (0.9) | (0.5) |
—Settlements and curtailments | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 0.3 | 0.5 | 0.8 | 1.2 |
Contributions | $ 0.8 | $ 1.2 | $ 2.8 | $ 3.2 |
Post-retirement benefits - Narr
Post-retirement benefits - Narrative (Details) $ in Millions | Sep. 28, 2019USD ($) |
Pensions | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected future employer contributions in current fiscal year | $ 4.6 |
Other post-retirement benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected future employer contributions in current fiscal year | $ 6.7 |
Share-based compensation - Narr
Share-based compensation - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation expense recognized | $ 4.1 | $ 2.3 | $ 10.5 | $ 5.5 | |
Proceeds from stock options exercised | 0 | 1.6 | |||
—Share options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation relating to non-vested awards | 11.2 | $ 11.2 | |||
Unrecognized compensation relating to non-vested awards, recognition period (term) | 2 years 8 months 12 days | ||||
Unrecognized compensation relating to non-vested awards recognizable upon liquidity | 29 | $ 29 | |||
Aggregate intrinsic value of options exercised | 0 | $ 2 | |||
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 3 months 18 days | ||||
Unrecognized compensation relating to non-vested awards other than option | 11.3 | $ 11.3 | |||
Aggregate intrinsic value of non options vested | $ 0.1 | $ 0.3 | |||
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% | 50.00% | |||
Percentage of shares expected to vest upon achievement of certain relative shareholders return (percentage) | 50.00% | 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 | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Number of options | ||
Beginning balance (shares) | 20,032,966 | |
Granted (shares) | 1,967,115 | |
Forfeited (shares) | (1,322,406) | |
Expired (shares) | (1,250) | |
Exercised (shares) | (257,322) | (58,545) |
Ending balance (shares) | 20,419,103 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 8.16 | |
Granted (usd per share) | 17.49 | |
Forfeited (usd per share) | 7.92 | |
Expired (usd per share) | 17.72 | |
Exercised (usd per share) | 6.58 | |
Ending balance (usd per share) | $ 9.10 | |
—Share options | ||
Number of options | ||
Beginning balance (shares) | 582,717 | |
Granted (shares) | 1,099,505 | |
Forfeited (shares) | (44,895) | |
Expired (shares) | (1,250) | |
Ending balance (shares) | 1,636,077 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 17.14 | |
Granted (usd per share) | 16.46 | |
Forfeited (usd per share) | 17.03 | |
Expired (usd per share) | 17.72 | |
Ending balance (usd per share) | $ 16.69 | |
Exercisable at the end of the period (shares) | 2,838,515 | |
Exercisable at the end of the period (usd per share) | $ 7.36 | |
—Share options | —Tier I | ||
Number of options | ||
Beginning balance (shares) | 4,212,537 | |
Forfeited (shares) | (102,135) | |
Exercised (shares) | (257,322) | |
Ending balance (shares) | 3,853,080 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 7.03 | |
Forfeited (usd per share) | 6.62 | |
Exercised (usd per share) | 6.58 | |
Ending balance (usd per share) | $ 7.07 | |
—Share options | —Tier II | ||
Number of options | ||
Beginning balance (shares) | 4,837,780 | |
Forfeited (shares) | (391,792) | |
Ending balance (shares) | 4,445,988 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 6.97 | |
Forfeited (usd per share) | 6.59 | |
Ending balance (usd per share) | $ 7 | |
—Share options | —Tier III | ||
Number of options | ||
Beginning balance (shares) | 4,837,780 | |
Forfeited (shares) | (391,792) | |
Ending balance (shares) | 4,445,988 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 6.97 | |
Forfeited (usd per share) | 6.59 | |
Ending balance (usd per share) | $ 7 | |
—Share options | —Tier IV | ||
Number of options | ||
Beginning balance (shares) | 4,837,780 | |
Forfeited (shares) | (391,792) | |
Ending balance (shares) | 4,445,988 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 10.46 | |
Forfeited (usd per share) | 9.88 | |
Ending balance (usd per share) | $ 10.51 | |
—SARs | ||
Number of options | ||
Beginning balance (shares) | 724,372 | |
Granted (shares) | 71,150 | |
Ending balance (shares) | 795,522 | |
Weighted average exercise price $ | ||
Beginning balance (usd per share) | $ 8.17 | |
Granted (usd per share) | 16.46 | |
Ending balance (usd per share) | $ 8.91 | |
—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) | 9 Months Ended |
Sep. 28, 2019$ / sharesshares | |
Number of awards | |
Beginning balance (shares) | shares | 81,800 |
Granted (shares) | shares | 976,986 |
Forfeited (shares) | shares | (34,573) |
Vested (shares) | shares | (19,250) |
Ending balance (shares) | shares | 1,004,963 |
Weighted average grant date fair value $ | |
Beginning balance (usd per share) | $ / shares | $ 17.13 |
Granted (usd per share) | $ / shares | 17.25 |
Expired (usd per share) | $ / shares | 16.67 |
Vested (usd per share) | $ / shares | 17.21 |
Ending balance (usd per share) | $ / shares | $ 17.25 |
—RSUs | |
Number of awards | |
Beginning balance (shares) | shares | 81,800 |
Granted (shares) | shares | 728,436 |
Forfeited (shares) | shares | (34,573) |
Vested (shares) | shares | (19,250) |
Ending balance (shares) | shares | 756,413 |
Weighted average grant date fair value $ | |
Beginning balance (usd per share) | $ / shares | $ 17.13 |
Granted (usd per share) | $ / shares | 16.28 |
Expired (usd per share) | $ / shares | 16.67 |
Vested (usd per share) | $ / shares | 17.21 |
Ending balance (usd per share) | $ / shares | $ 16.33 |
—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) | 9 Months Ended |
Sep. 28, 2019$ / shares | |
—SARs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Assumed fair value exercise price (usd per share) | $ 5.88 |
Expected volatility (percentage) | 31.90% |
Expected option life (years) | 6 years |
Risk-free interest rate (percentage) | 2.51% |
—Share options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Assumed fair value exercise price (usd per share) | $ 5.88 |
Expected dividend (percentage) | 0.00% |
—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 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) | $ 16.28 |
—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 | Sep. 28, 2019 | Dec. 29, 2018 | |
Subsidiary, Sale of Stock [Line Items] | |||
Par value (in usd per share) | $ 0.01 | $ 0.01 | |
Initial public offering | |||
Subsidiary, Sale of Stock [Line Items] | |||
Shares sold in offering (in shares) | 38,500,000 | ||
Offering price (in usd per share) | $ 19 | ||
Underwriters option | |||
Subsidiary, Sale of Stock [Line Items] | |||
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 | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
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) | 257,322 | 58,545 |
Vesting of restricted stock units, net of witholding taxes (in shares) | 13,229 | 0 |
Balance as of the end of the period (in shares) | 290,118,125 | 289,808,150 |
Analysis of accumulated other_3
Analysis of accumulated other comprehensive (loss) income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | $ 2,982.6 | $ 2,256.5 | $ 2,333.7 | $ 1,428.4 |
Other comprehensive (loss) income | (84.6) | 8.9 | (62.1) | (59.9) |
Ending Balance | 2,930 | 2,327.1 | 2,930 | 2,327.1 |
Accumulated OCI attributable to shareholders | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (835.6) | (809.2) | (854.3) | (747.4) |
Other comprehensive (loss) income, net of tax, attributable to parent | (54.3) | (39.8) | ||
Other comprehensive (loss) income | (73) | 22 | (54.3) | (39.8) |
Ending Balance | (908.6) | (787.2) | (908.6) | (787.2) |
Available-for- sale investments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | 0 | (0.3) | ||
Other comprehensive (loss) income, net of tax, attributable to parent | 0 | (0.4) | ||
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | (0.1) | |||
Other comprehensive (loss) income | (0.5) | |||
Ending Balance | 0 | (0.7) | 0 | (0.7) |
Post- retirement benefit | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | 7.6 | 13.2 | ||
Other comprehensive (loss) income, net of tax, attributable to parent | (0.2) | (0.5) | ||
Ending Balance | 7.4 | 12.7 | 7.4 | 12.7 |
Cumulative translation adjustment | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (850) | (742.8) | ||
Other comprehensive (loss) income, net of tax, attributable to parent | (27.7) | (58.7) | ||
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | (7.8) | (20) | ||
Other comprehensive (loss) income | (35.5) | (78.7) | ||
Ending Balance | (877.7) | (801.5) | (877.7) | (801.5) |
Cash flow hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (17.5) | |||
Other comprehensive (loss) income, net of tax, attributable to parent | 19.8 | |||
Ending Balance | 2.3 | 2.3 | ||
Cash flow hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (11.9) | |||
Other comprehensive (loss) income, net of tax, attributable to parent | (26.4) | |||
Ending Balance | (38.3) | (38.3) | ||
Non- controlling interests | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (43.6) | (25.5) | ||
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest | (7.8) | (20.1) | ||
Ending Balance | (51.4) | (45.6) | (51.4) | (45.6) |
Accumulated OCI | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (897.9) | (772.9) | ||
Ending Balance | $ (960) | $ (832.8) | $ (960) | $ (832.8) |
Related party transactions - Na
Related party transactions - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Jan. 31, 2018 | Sep. 28, 2019 | Mar. 30, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | Jul. 03, 2014 | |
Related Party Transaction [Line Items] | ||||||||
Dividends received from equity method investees | $ 0 | $ 0 | $ 0 | $ 400,000 | ||||
Effects of change in ownership interest | $ 15,000,000 | |||||||
Blackstone, The Sponsor | Former transaction and monitoring fee agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, fee as a percentage of EBITDA | 1.00% | |||||||
Related party transaction, expenses incurred | 1,100,000 | $ 1,900,000 | 4,900,000 | $ 5,900,000 | ||||
Blackstone, The Sponsor | New monitoring fee agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
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 | |||||||
Blackstone, The Sponsor | Support and services agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
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 | |||||||
Blackstone, The Sponsor | Underwriting fees | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, expenses incurred | $ 3,200,000 | |||||||
Equity method investees | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payables to related parties | $ 200,000 | $ 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 | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Related Party Transaction [Line Items] | ||||
Sales | $ 0.4 | $ 0.3 | $ 1.1 | $ 1.4 |
Purchases | $ (3.9) | $ (4.8) | $ (11.9) | $ (11.3) |
Related party transactions - Tr
Related party transactions - Transactions with Non-Gates entities (Details) - Non-Gates entities controlled by non-controlling shareholders - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | |
Related Party Transaction [Line Items] | |||||
Sales | $ 12.7 | $ 13.7 | $ 38.5 | $ 45.4 | |
Purchases | (5) | $ (5.5) | (15.3) | $ (16) | |
Receivables | 4.4 | 4.4 | $ 0.6 | ||
Payables | $ (5.4) | $ (5.4) | $ (0.3) |
Commitments and contingencies -
Commitments and contingencies - Narrative (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Letters of credit outstanding | $ 50.2 | $ 57.8 |
Bonds, letters of credit, and bank guarantees | $ 3.8 | $ 3.4 |
Commitments and contingencies_2
Commitments and contingencies - Warranty Liability (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance as of the beginning of the fiscal year | $ 14.3 | $ 14.1 |
Charge for the period | 10.2 | 9.2 |
Payments made | (7.4) | (7.3) |
Released during the period | (1) | (0.6) |
Foreign currency translation | (0.1) | (0.2) |
Balance as of the end of the period | $ 16 | $ 15.2 |