England and Wales | 98-1395184 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
1144 Fifteenth Street, Denver, Colorado | 80202 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
Emerging growth company | ☐ |
Part I – Financial Information | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II – Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
• | “Gates,” the “Company,” “we,” “us” and “our” refer (1) prior to the completion of the reorganization transactions completed immediately prior to the initial public offering, to Omaha Topco and its consolidated subsidiaries and (2) after the completion of the reorganization transactions, to Gates Industrial Corporation plc and its consolidated subsidiaries, as the case may be; and |
• | “Blackstone” or “our Sponsor” refer to investment funds affiliated with The Blackstone Group L.P., our current majority owners. |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions, except per share amounts) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net sales | $ | 828.4 | $ | 760.6 | $ | 2,555.5 | $ | 2,259.9 | |||||||
Cost of sales | 501.2 | 449.8 | 1,534.9 | 1,343.9 | |||||||||||
Gross profit | 327.2 | 310.8 | 1,020.6 | 916.0 | |||||||||||
Selling, general and administrative expenses | 202.7 | 201.4 | 621.1 | 585.5 | |||||||||||
Transaction-related expenses | 0.2 | 7.2 | 6.2 | 11.3 | |||||||||||
Impairment of intangibles and other assets | 0.2 | — | 0.6 | — | |||||||||||
Restructuring expense | 1.2 | 2.4 | 3.2 | 8.3 | |||||||||||
Other operating expenses (income) | 5.1 | (0.1 | ) | 12.5 | (0.1 | ) | |||||||||
Operating income from continuing operations | 117.8 | 99.9 | 377.0 | 311.0 | |||||||||||
Interest expense | 40.2 | 55.0 | 139.8 | 179.0 | |||||||||||
Other expenses | 3.4 | 10.9 | 17.5 | 46.7 | |||||||||||
Income from continuing operations before taxes | 74.2 | 34.0 | 219.7 | 85.3 | |||||||||||
Income tax expense | 7.2 | 15.9 | 30.4 | 32.9 | |||||||||||
Net income from continuing operations | 67.0 | 18.1 | 189.3 | 52.4 | |||||||||||
Loss (gain) on disposal of discontinued operations, net of tax, respectively, of $0, $0, $0 and $0 | 0.3 | (0.1 | ) | 0.7 | (0.1 | ) | |||||||||
Net income | 66.7 | 18.2 | 188.6 | 52.5 | |||||||||||
Non-controlling interests | (6.8 | ) | (5.0 | ) | (18.9 | ) | (20.0 | ) | |||||||
Net income attributable to shareholders | $ | 59.9 | $ | 13.2 | $ | 169.7 | $ | 32.5 | |||||||
Earnings per share | |||||||||||||||
Basic | |||||||||||||||
Earnings per share from continuing operations | $ | 0.21 | $ | 0.05 | $ | 0.60 | $ | 0.13 | |||||||
Earnings per share from discontinued operations | — | — | — | — | |||||||||||
Net income per share | $ | 0.21 | $ | 0.05 | $ | 0.60 | $ | 0.13 | |||||||
Diluted | |||||||||||||||
Earnings per share from continuing operations | $ | 0.20 | $ | 0.05 | $ | 0.58 | $ | 0.13 | |||||||
Earnings per share from discontinued operations | — | — | — | — | |||||||||||
Net income per share | $ | 0.20 | $ | 0.05 | $ | 0.58 | $ | 0.13 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net income | $ | 66.7 | $ | 18.2 | $ | 188.6 | $ | 52.5 | |||||||
Other comprehensive income (loss) | |||||||||||||||
Foreign currency translation: | |||||||||||||||
—Net translation (loss) gain on foreign operations, net of tax (expense) benefit, respectively, of ($1.3), $4.2, ($0.5) and $13.7 | (2.2 | ) | 59.9 | (83.4 | ) | 280.4 | |||||||||
—Gain (loss) on net investment hedges, net of tax expense, respectively, of $0.2, $0, $0.2 and $0 | 3.8 | (26.1 | ) | 4.7 | (90.9 | ) | |||||||||
Total foreign currency translation movements | 1.6 | 33.8 | (78.7 | ) | 189.5 | ||||||||||
Cash flow hedges (Interest rate derivatives): | |||||||||||||||
—Gain (loss) arising in the period, net of tax expense, respectively, of $0, $0, $0 and $0 | 3.6 | (0.2 | ) | 13.3 | (6.4 | ) | |||||||||
—Reclassification to net income, net of tax benefit (expense), respectively, of $3.3, ($0.4), $2.0 and ($1.4) | 4.3 | 2.4 | 6.5 | 7.0 | |||||||||||
Total cash flow hedges movements | 7.9 | 2.2 | 19.8 | 0.6 | |||||||||||
Available-for-sale investments: | |||||||||||||||
—Net unrealized (loss) gain, net of tax expense, respectively, of $0.1, $0.1, $0.1 and $0 | (0.5 | ) | 0.3 | (0.5 | ) | 0.1 | |||||||||
Total available-for-sale investment movements | (0.5 | ) | 0.3 | (0.5 | ) | 0.1 | |||||||||
Post-retirement benefits: | |||||||||||||||
—Actuarial loss, net of tax benefit, respectively, of $0, $0, $0.1 and $0 | — | — | (0.1 | ) | — | ||||||||||
—Reclassification of actuarial (gain) loss to net income, net of tax expense, respectively, of $0, $1.1, $0 and $1.1 | (0.1 | ) | 2.0 | (0.4 | ) | 2.1 | |||||||||
Total post-retirement benefit movements | (0.1 | ) | 2.0 | (0.5 | ) | 2.1 | |||||||||
Other comprehensive income (loss) | 8.9 | 38.3 | (59.9 | ) | 192.3 | ||||||||||
Comprehensive income for the period | $ | 75.6 | $ | 56.5 | $ | 128.7 | $ | 244.8 | |||||||
Comprehensive income attributable to shareholders: | |||||||||||||||
—Income arising from continuing operations | $ | 82.2 | $ | 46.3 | $ | 130.6 | $ | 205.6 | |||||||
—(Loss) income arising from discontinued operations | (0.3 | ) | 0.1 | (0.7 | ) | 0.1 | |||||||||
81.9 | 46.4 | 129.9 | 205.7 | ||||||||||||
Comprehensive (loss) income attributable to non-controlling interests | (6.3 | ) | 10.1 | (1.2 | ) | 39.1 | |||||||||
$ | 75.6 | $ | 56.5 | $ | 128.7 | $ | 244.8 |
(dollars in millions, except share numbers and per share amounts) | As of September 29, 2018 | As of December 30, 2017 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 296.3 | $ | 564.4 | |||
Trade accounts receivable, net | 778.2 | 713.8 | |||||
Inventories | 526.8 | 457.1 | |||||
Taxes receivable | 7.3 | 14.1 | |||||
Prepaid expenses and other assets | 108.6 | 76.8 | |||||
Total current assets | 1,717.2 | 1,826.2 | |||||
Non-current assets | |||||||
Property, plant and equipment, net | 761.7 | 686.2 | |||||
Goodwill | 2,093.8 | 2,085.5 | |||||
Pension surplus | 57.3 | 57.7 | |||||
Intangible assets, net | 2,022.0 | 2,126.8 | |||||
Taxes receivable | 26.0 | 32.7 | |||||
Other non-current assets | 40.7 | 38.6 | |||||
Total assets | $ | 6,718.7 | $ | 6,853.7 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Debt, current portion | $ | 32.8 | $ | 66.4 | |||
Trade accounts payable | 402.1 | 392.0 | |||||
Taxes payable | 29.3 | 29.0 | |||||
Accrued expenses and other current liabilities | 190.2 | 210.4 | |||||
Total current liabilities | 654.4 | 697.8 | |||||
Non-current liabilities | |||||||
Debt, less current portion | 2,962.7 | 3,889.3 | |||||
Post-retirement benefit obligations | 155.2 | 157.1 | |||||
Taxes payable | 79.0 | 100.6 | |||||
Deferred income taxes | 468.3 | 517.1 | |||||
Other non-current liabilities | 72.0 | 63.4 | |||||
Total liabilities | 4,391.6 | 5,425.3 | |||||
Commitments and contingencies (note 18) | |||||||
Shareholders’ equity | |||||||
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 289,808,150 (December 30, 2017: authorized shares: 3,000,000,000; outstanding shares: 245,474,605) | 2.9 | 2.5 | |||||
—Additional paid-in capital | 2,415.5 | 1,622.6 | |||||
—Accumulated other comprehensive loss | (787.2 | ) | (747.4 | ) | |||
—Retained earnings | 306.6 | 136.9 | |||||
Total shareholders’ equity | 1,937.8 | 1,014.6 | |||||
Non-controlling interests | 389.3 | 413.8 | |||||
Total equity | 2,327.1 | 1,428.4 | |||||
Total liabilities and equity | $ | 6,718.7 | $ | 6,853.7 |
Nine months ended | |||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | |||||
Cash flows from operating activities | |||||||
Net income | $ | 188.6 | $ | 52.5 | |||
Adjustments to reconcile net income to net cash provided by operations: | |||||||
Depreciation and amortization | 163.3 | 158.2 | |||||
Non-cash currency transaction (gain) loss on net debt and hedging instruments | (35.0 | ) | 47.6 | ||||
Premium paid on redemption of long-term debt | 27.0 | — | |||||
Other net non-cash financing costs | 54.9 | 39.2 | |||||
Share-based compensation expense | 5.5 | 2.9 | |||||
Decrease in post-employment benefit obligations, net | (2.5 | ) | (5.6 | ) | |||
Deferred income taxes | (44.0 | ) | (37.0 | ) | |||
Other operating activities | 1.5 | 1.7 | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||
—Increase in accounts receivable | (82.6 | ) | (68.6 | ) | |||
—Increase in inventories | (81.0 | ) | (55.8 | ) | |||
—Increase in accounts payable | 16.4 | 30.1 | |||||
—(Increase) decrease in prepaid expenses and other assets | (24.6 | ) | 2.1 | ||||
—(Decrease) increase in taxes payable | (6.4 | ) | 6.6 | ||||
—Decrease in other liabilities | (38.8 | ) | (24.0 | ) | |||
Net cash provided by operations | 142.3 | 149.9 | |||||
Cash flows from investing activities | |||||||
Purchases of property, plant and equipment | (143.0 | ) | (57.8 | ) | |||
Purchases of intangible assets | (11.9 | ) | (6.9 | ) | |||
Net cash paid under corporate-owned life insurance policies | (7.4 | ) | (7.3 | ) | |||
Proceeds from the sale of property, plant and equipment | 1.6 | 1.9 | |||||
Purchase of businesses, net of cash acquired | (50.9 | ) | (36.7 | ) | |||
Other investing activities | (2.5 | ) | (0.3 | ) | |||
Net cash used in investing activities | (214.1 | ) | (107.1 | ) | |||
Cash flows from financing activities | |||||||
Issue of shares, net of cost of issuance | 799.6 | 0.6 | |||||
Deferred offering costs | (8.6 | ) | — | ||||
Buy-back of shares | — | (1.6 | ) | ||||
Proceeds from long-term debt | — | 644.7 | |||||
Payments of long-term debt | (933.5 | ) | (670.1 | ) | |||
Premium paid on redemption of long-term debt | (27.0 | ) | — | ||||
Debt issuance costs paid | — | (17.4 | ) | ||||
Dividends paid to non-controlling interests | (23.3 | ) | (17.9 | ) | |||
Other financing activities | 5.7 | 3.5 | |||||
Net cash used in financing activities | (187.1 | ) | (58.2 | ) | |||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (9.2 | ) | 16.6 | ||||
Net (decrease) increase in cash and cash equivalents and restricted cash | (268.1 | ) | 1.2 | ||||
Cash and cash equivalents and restricted cash at the beginning of the period | 566.0 | 528.8 | |||||
Cash and cash equivalents and restricted cash at the end of the period | $ | 297.9 | $ | 530.0 | |||
Supplemental schedule of cash flow information | |||||||
Interest paid | $ | 142.4 | $ | 169.2 | |||
Income taxes paid, net | $ | 83.7 | $ | 64.9 | |||
Accrued capital expenditures | $ | 2.5 | $ | 1.9 |
(dollars in millions) | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained (deficit) earnings | Total shareholders’ equity | Non- controlling interests | Total equity | ||||||||||||||||||||
As of December 31, 2016 | $ | 2.5 | $ | 1,619.0 | $ | (915.9 | ) | $ | (14.3 | ) | $ | 691.3 | $ | 377.1 | $ | 1,068.4 | |||||||||||
Net income | — | — | — | 32.5 | 32.5 | 20.0 | 52.5 | ||||||||||||||||||||
Other comprehensive income | — | — | 173.2 | — | 173.2 | 19.1 | 192.3 | ||||||||||||||||||||
Total comprehensive income | — | — | 173.2 | 32.5 | 205.7 | 39.1 | 244.8 | ||||||||||||||||||||
Other changes in equity: | |||||||||||||||||||||||||||
—Issue of shares | — | 0.6 | — | — | 0.6 | — | 0.6 | ||||||||||||||||||||
—Buy-back of shares | — | (1.6 | ) | — | — | (1.6 | ) | — | (1.6 | ) | |||||||||||||||||
—Share-based compensation | — | 2.9 | — | — | 2.9 | — | 2.9 | ||||||||||||||||||||
—Dividends paid to non-controlling interests | — | — | — | — | — | (17.9 | ) | (17.9 | ) | ||||||||||||||||||
As of September 30, 2017 | $ | 2.5 | $ | 1,620.9 | $ | (742.7 | ) | $ | 18.2 | $ | 898.9 | $ | 398.3 | $ | 1,297.2 |
(dollars in millions) | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders’ equity | Non- controlling interests | Total equity | ||||||||||||||||||||
As of December 30, 2017 | $ | 2.5 | $ | 1,622.6 | $ | (747.4 | ) | $ | 136.9 | $ | 1,014.6 | $ | 413.8 | $ | 1,428.4 | ||||||||||||
Net income | — | — | — | 169.7 | 169.7 | 18.9 | 188.6 | ||||||||||||||||||||
Other comprehensive loss | — | — | (39.8 | ) | — | (39.8 | ) | (20.1 | ) | (59.9 | ) | ||||||||||||||||
Total comprehensive (loss) income | — | — | (39.8 | ) | 169.7 | 129.9 | (1.2 | ) | 128.7 | ||||||||||||||||||
Other changes in equity: | |||||||||||||||||||||||||||
—Issue of shares | 0.4 | 841.2 | — | — | 841.6 | — | 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 | — | (53.0 | ) | — | — | (53.0 | ) | — | (53.0 | ) | |||||||||||||||||
As of September 29, 2018 | $ | 2.9 | $ | 2,415.5 | $ | (787.2 | ) | $ | 306.6 | $ | 1,937.8 | $ | 389.3 | $ | 2,327.1 |
• | ASU 2014-09 “Revenue From Contracts With Customers” (Topic 606): Revenue Recognition |
• | ASU 2016-08 “Revenue from Contracts with Customers” (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) |
• | ASU 2016-10 “Revenue from Contracts with Customers” (Topic 606): Identifying Performance Obligations and Licensing |
• | ASU 2016-12 “Revenue from Contracts with Customers” (Topic 606): Narrow-Scope Improvements and Practical Expedients |
• | ASU 2016-20 “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” |
• | ASU 2017-13 “Revenue from Contracts with Customers” (Topic 606): Amendments to SEC Paragraphs |
• | ASU 2017-14 “Income Statement – Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606)” |
(i) | to exclude disclosures of transaction prices allocated to remaining performance obligations when we expect to recognize such revenue for all periods prior to the date of initial application of Topic 606; |
(ii) | to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less, which is the case in the substantial majority of our contracts with customers; |
(iii) | not to assess whether a contract has a significant financing component (as our standard payment terms are less than one year); |
(iv) | not to assess whether promised goods are performance obligations if they are immaterial in the context of the contract with the customer; |
(v) | to exclude from the measurement of the transaction price all taxes assessed by a governmental authority and collected by Gates from a customer; and |
(vi) | to account for shipping or handling activities occurring after control has passed to the customer as a fulfillment cost rather than as a performance obligation. |
• | ASU 2016-15 “Statement of Cash Flows” (Topic 230): Classification of Certain Cash Receipts and Cash Payments |
• | ASU 2016-18 “Statement of Cash Flows” (Topic 230): Restricted Cash |
• | ASU 2017-07 “Compensation-Retirement Benefits” (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Periodic Post-retirement Benefit Cost |
• | ASU 2017-12 “Derivatives and Hedging” (Topic 815): Targeted Improvements to Accounting for Hedging Activities |
• | ASU 2016-01 “Financial Instruments” (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities |
• | ASU 2016-16 “Income Taxes” (Topic 740): Intra-entity Transfers of Assets other than Inventory |
• | ASU 2017-01 “Business Combinations” (Topic 805): Clarifying the definition of a business |
• | ASU 2017-09 “Stock Compensation” (Topic 718): Scope of Modification Accounting |
• | ASU 2018-03 “Technical Corrections and Improvements to Financial Instruments - Overall” (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities |
• | 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 2016-13 “Financial Instruments” (Topic 326): Measurement of Credit Losses on Financial Instruments |
• | ASU 2018-02 “Income Statement – Reporting Comprehensive Income” (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
• | ASU 2018-13 “Fair Value Measurement” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement |
• | ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans |
• | 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 |
(dollars in millions) | Rapro | Atlas Hydraulics | Techflow Flexibles | ||||||||
Assets acquired | |||||||||||
Accounts receivable | $ | 2.9 | $ | 10.3 | $ | 1.7 | |||||
Inventories | 5.5 | 21.2 | 4.2 | ||||||||
Prepaid expenses and other receivables | 1.5 | 0.5 | 1.7 | ||||||||
Taxes receivable | 0.1 | 2.7 | — | ||||||||
Property, plant and equipment | 1.8 | 24.5 | 13.0 | ||||||||
Intangible assets | 0.1 | 23.0 | 3.8 | ||||||||
Total assets | 11.9 | 82.2 | 24.4 | ||||||||
Liabilities assumed | |||||||||||
Bank loans | 1.2 | — | — | ||||||||
Accounts payable | 3.7 | 5.5 | 2.6 | ||||||||
Accrued expenses | 0.3 | 2.4 | 4.8 | ||||||||
Other current liabilities | 1.8 | 11.6 | 0.3 | ||||||||
Taxes payable | 1.0 | 0.1 | 1.9 | ||||||||
Deferred income taxes | — | 11.6 | 0.6 | ||||||||
Total liabilities | 8.0 | 31.2 | 10.2 | ||||||||
Net assets acquired | $ | 3.9 | $ | 51.0 | $ | 14.2 |
(dollars in millions) | Rapro | Atlas Hydraulics | Techflow Flexibles | ||||||||
Consideration, net of cash acquired | $ | 50.9 | $ | 74.0 | $ | 36.7 | |||||
Net assets acquired | (3.9 | ) | (51.0 | ) | (14.2 | ) | |||||
Goodwill and provisional goodwill | $ | 47.0 | $ | 23.0 | $ | 22.5 |
Net Sales | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
North America | $ | 404.6 | $ | 345.9 | $ | 1,213.3 | $ | 1,049.0 | |||||||
EMEA | 207.1 | 198.3 | 665.3 | 583.1 | |||||||||||
East Asia and India | 95.9 | 98.3 | 296.9 | 287.8 | |||||||||||
Greater China | 90.2 | 83.6 | 281.7 | 239.3 | |||||||||||
South America | 30.6 | 34.5 | 98.3 | 100.7 | |||||||||||
Net Sales | $ | 828.4 | $ | 760.6 | $ | 2,555.5 | $ | 2,259.9 |
Net Sales | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Developed | $ | 558.4 | $ | 493.1 | $ | 1,671.1 | $ | 1,466.2 | |||||||
Emerging | 270.0 | 267.5 | 884.4 | 793.7 | |||||||||||
Net Sales | $ | 828.4 | $ | 760.6 | $ | 2,555.5 | $ | 2,259.9 |
• | 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; |
• | the effect on cost of sales of fair value adjustments to the carrying amount of inventory acquired in business combinations; |
• | impairments, comprising impairments of goodwill and significant impairments or write downs of other assets; |
• | restructuring expense; |
• | 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. |
Net Sales | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Power Transmission | $ | 512.5 | $ | 499.9 | $ | 1,608.1 | $ | 1,496.3 | |||||||
Fluid Power | 315.9 | 260.7 | 947.4 | 763.6 | |||||||||||
Continuing operations | $ | 828.4 | $ | 760.6 | $ | 2,555.5 | $ | 2,259.9 |
Adjusted EBITDA | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Power Transmission | $ | 119.0 | $ | 114.5 | $ | 377.6 | $ | 342.4 | |||||||
Fluid Power | 62.2 | 49.6 | 192.4 | 153.7 | |||||||||||
Continuing operations | $ | 181.2 | $ | 164.1 | $ | 570.0 | $ | 496.1 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net income from continuing operations | $ | 67.0 | $ | 18.1 | $ | 189.3 | $ | 52.4 | |||||||
Income tax expense | 7.2 | 15.9 | 30.4 | 32.9 | |||||||||||
Income from continuing operations before taxes | 74.2 | 34.0 | 219.7 | 85.3 | |||||||||||
Interest expense | 40.2 | 55.0 | 139.8 | 179.0 | |||||||||||
Other expenses | 3.4 | 10.9 | 17.5 | 46.7 | |||||||||||
Operating income from continuing operations | 117.8 | 99.9 | 377.0 | 311.0 | |||||||||||
Depreciation and amortization | 53.7 | 52.0 | 163.3 | 158.2 | |||||||||||
Transaction-related expenses (1) | 0.2 | 7.2 | 6.2 | 11.3 | |||||||||||
Impairment of intangibles and other assets | 0.2 | — | 0.6 | — | |||||||||||
Restructuring expense | 1.2 | 2.4 | 3.2 | 8.3 | |||||||||||
Share-based compensation | 2.3 | 1.2 | 5.5 | 2.9 | |||||||||||
Sponsor fees (included in other operating expenses) | 1.9 | 1.5 | 5.9 | 4.5 | |||||||||||
Impact of fair value adjustment on inventory (included in cost of sales) | — | — | 0.3 | — | |||||||||||
Non-recurring inventory adjustments (included in costs of sales) | — | — | 0.8 | — | |||||||||||
Other operating expenses (income) | 3.2 | (0.1 | ) | 6.6 | (0.1 | ) | |||||||||
Other non-recurring adjustments (included in SG&A) | 0.7 | — | 0.6 | — | |||||||||||
Adjusted EBITDA | $ | 181.2 | $ | 164.1 | $ | 570.0 | $ | 496.1 |
(1) | Transaction-related expenses relate primarily to advisory fees recognized in respect of our initial public offering, the acquisition of businesses and other corporate transactions such as debt refinancings. |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Power Transmission | $ | 0.9 | $ | 1.5 | $ | 2.1 | $ | 5.6 | |||||||
Fluid Power | 0.3 | 0.9 | 1.1 | 2.7 | |||||||||||
Continuing operations | $ | 1.2 | $ | 2.4 | $ | 3.2 | $ | 8.3 |
(dollars in millions) | As of September 29, 2018 | As of September 30, 2017 | |||||
Balance as of the beginning of the period | $ | 8.6 | $ | 5.0 | |||
Utilized during the period | (8.3 | ) | (7.1 | ) | |||
Net charge for the period | 3.5 | 6.5 | |||||
Released during the period | (0.3 | ) | (0.1 | ) | |||
Foreign currency translation | 0.1 | 0.1 | |||||
Balance as of the end of the period | $ | 3.6 | $ | 4.4 |
(dollars in millions) | As of September 29, 2018 | As of September 30, 2017 | |||||
Accrued expenses and other current liabilities | $ | 3.4 | $ | 3.9 | |||
Other non-current liabilities | 0.2 | 0.5 | |||||
$ | 3.6 | $ | 4.4 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions, except share numbers and per share amounts) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net income attributable to shareholders | $ | 59.9 | $ | 13.2 | $ | 169.7 | $ | 32.5 | |||||||
Weighted average number of shares outstanding | 289,783,061 | 245,483,659 | 284,750,794 | 245,535,788 | |||||||||||
Dilutive effect of share-based awards (number of shares) | 8,670,885 | 9,646,966 | 8,705,430 | 7,785,383 | |||||||||||
Diluted weighted average number of shares outstanding | 298,453,946 | 255,130,625 | 293,456,224 | 253,321,171 | |||||||||||
Basic net income per share | $ | 0.21 | $ | 0.05 | $ | 0.60 | $ | 0.13 | |||||||
Diluted net income per share | $ | 0.20 | $ | 0.05 | $ | 0.58 | $ | 0.13 |
(dollars in millions) | As of September 29, 2018 | As of December 30, 2017 | |||||
Raw materials and supplies | $ | 156.1 | $ | 128.0 | |||
Work in progress | 38.5 | 32.8 | |||||
Finished goods | 332.2 | 296.3 | |||||
Total inventories | $ | 526.8 | $ | 457.1 |
(dollars in millions) | Power Transmission | Fluid Power | Total | ||||||||
Cost and carrying amount | |||||||||||
As of December 30, 2017 | $ | 1,430.2 | $ | 655.3 | $ | 2,085.5 | |||||
Acquisitions | — | 48.2 | 48.2 | ||||||||
Foreign currency translation | (36.5 | ) | (3.4 | ) | (39.9 | ) | |||||
As of September 29, 2018 | $ | 1,393.7 | $ | 700.1 | $ | 2,093.8 |
As of September 29, 2018 | As of December 30, 2017 | ||||||||||||||||||||||
(dollars in millions) | Cost | Accumulated amortization and impairment | Net | Cost | Accumulated amortization and impairment | Net | |||||||||||||||||
Finite-lived: | |||||||||||||||||||||||
—Customer relationships | $ | 2,025.9 | $ | (509.7 | ) | $ | 1,516.2 | $ | 2,051.1 | $ | (424.4 | ) | $ | 1,626.7 | |||||||||
—Technology | 90.7 | (86.8 | ) | 3.9 | 90.8 | (86.2 | ) | 4.6 | |||||||||||||||
—Capitalized software | 59.6 | (27.1 | ) | 32.5 | 48.3 | (22.2 | ) | 26.1 | |||||||||||||||
2,176.2 | (623.6 | ) | 1,552.6 | 2,190.2 | (532.8 | ) | 1,657.4 | ||||||||||||||||
Indefinite-lived: | |||||||||||||||||||||||
—Brands and trade names | 513.4 | (44.0 | ) | 469.4 | 513.4 | (44.0 | ) | 469.4 | |||||||||||||||
Total intangible assets | $ | 2,689.6 | $ | (667.6 | ) | $ | 2,022.0 | $ | 2,703.6 | $ | (576.8 | ) | $ | 2,126.8 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net fair value gain (loss) recognized in OCI in relation to: | |||||||||||||||
—Euro-denominated debt | $ | 0.3 | $ | (17.9 | ) | $ | (11.5 | ) | $ | (60.5 | ) | ||||
—Designated cross currency swaps | 3.5 | (8.2 | ) | 16.2 | (30.4 | ) | |||||||||
Total net fair value gain (loss) | $ | 3.8 | $ | (26.1 | ) | $ | 4.7 | $ | (90.9 | ) |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Movement recognized in OCI in relation to: | |||||||||||||||
—Fair value gain (loss) on interest rate derivatives | $ | 3.6 | $ | (0.2 | ) | $ | 13.3 | $ | (6.4 | ) | |||||
—Deferred premium reclassified from OCI to net income | 1.0 | 2.8 | 4.5 | 8.4 | |||||||||||
Total movement | $ | 4.6 | $ | 2.6 | $ | 17.8 | $ | 2.0 |
As of September 29, 2018 | As of December 30, 2017 | ||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Prepaid expenses and other assets | Other non- current assets | Accrued expenses and other current liabilities | Other non- current liabilities | Net | Prepaid expenses and other assets | Other non- current assets | Accrued expenses and other current liabilities | Other non- current liabilities | Net | |||||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||
—Currency swaps | $ | 5.0 | $ | — | $ | — | $ | (32.3 | ) | $ | (27.3 | ) | $ | 3.2 | $ | — | $ | — | $ | (42.1 | ) | $ | (38.9 | ) | |||||||||||||||
—Interest rate caps | 3.3 | 7.2 | — | — | 10.5 | — | 0.6 | (3.8 | ) | (2.4 | ) | (5.6 | ) | ||||||||||||||||||||||||||
—Interest rate swaps | — | — | — | (1.6 | ) | (1.6 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||
—Currency forward contracts | 1.3 | — | (0.3 | ) | — | 1.0 | 0.5 | — | (1.6 | ) | — | (1.1 | ) | ||||||||||||||||||||||||||
$ | 9.6 | $ | 7.2 | $ | (0.3 | ) | $ | (33.9 | ) | $ | (17.4 | ) | $ | 3.7 | $ | 0.6 | $ | (5.4 | ) | $ | (44.5 | ) | $ | (45.6 | ) |
(in millions) | Notional value | ||
Covering current periods: | |||
Through June 30, 2019 | $ | 1,000.0 | |
Through June 30, 2020 | $ | 200.0 | |
Covering future periods: | |||
June 28, 2019 to June 30, 2020 | $ | 1,000.0 | |
July 1, 2019 to June 30, 2023 | € | 425.0 |
• | “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). |
• | “Level 3” inputs are not based on observable market data (unobservable inputs). |
As of September 29, 2018 | As of December 30, 2017 | ||||||||||||||
(dollars in millions) | Carrying amount | Fair value | Carrying amount | Fair value | |||||||||||
Current | $ | 32.8 | $ | 32.6 | $ | 66.4 | $ | 66.2 | |||||||
Non-current | 2,962.7 | 2,997.2 | 3,889.3 | 3,970.7 | |||||||||||
$ | 2,995.5 | $ | 3,029.8 | $ | 3,955.7 | $ | 4,036.9 |
(dollars in millions) | Quoted prices in active markets (Level 1) | Significant observable inputs (Level 2) | Total | ||||||||
As of September 29, 2018 | |||||||||||
Available-for-sale securities | $ | 1.1 | $ | — | $ | 1.1 | |||||
Derivative assets | $ | — | $ | 16.8 | $ | 16.8 | |||||
Derivative liabilities | $ | — | $ | (34.2 | ) | $ | (34.2 | ) | |||
As of December 30, 2017 | |||||||||||
Available-for-sale securities | $ | 2.4 | $ | — | $ | 2.4 | |||||
Derivative assets | $ | — | $ | 4.3 | $ | 4.3 | |||||
Derivative liabilities | $ | — | $ | (49.9 | ) | $ | (49.9 | ) |
(dollars in millions) | As of September 29, 2018 | As of December 30, 2017 | |||||
Secured debt: | |||||||
—Dollar Term Loan | $ | 1,716.4 | $ | 1,729.4 | |||
—Euro Term Loan | 753.7 | 785.6 | |||||
Unsecured debt: | |||||||
—Dollar Senior Notes | 568.0 | 1,190.0 | |||||
—Euro Senior Notes | — | 282.5 | |||||
—Other loans | 0.7 | 0.4 | |||||
Total principal of debt | 3,038.8 | 3,987.9 | |||||
Deferred issuance costs | (51.1 | ) | (73.2 | ) | |||
Accrued interest | 7.8 | 41.0 | |||||
Total carrying value of debt | 2,995.5 | 3,955.7 | |||||
Debt, current portion | 32.8 | 66.4 | |||||
Debt, less current portion | $ | 2,962.7 | $ | 3,889.3 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Gain (loss) recognized in statement of operations | $ | 3.5 | $ | (14.0 | ) | $ | 32.6 | $ | (50.3 | ) | |||||
Gain (loss) recognized in OCI | 0.3 | (9.5 | ) | (6.5 | ) | (29.7 | ) | ||||||||
Total gains (losses) | $ | 3.8 | $ | (23.5 | ) | $ | 26.1 | $ | (80.0 | ) |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Loss recognized in statement of operations | $ | — | $ | — | $ | (4.2 | ) | $ | — | ||||||
Loss recognized in OCI | — | (8.4 | ) | (5.0 | ) | (30.8 | ) | ||||||||
Total losses | $ | — | $ | (8.4 | ) | $ | (9.2 | ) | $ | (30.8 | ) |
Dollar Senior Note Redemption price | ||
During the year commencing: | ||
—July 15, 2018 | 101.500 | % |
—July 15, 2019 and thereafter | 100.000 | % |
Three months ended September 29, 2018 | Three months ended September 30, 2017 | ||||||||||||||||||||||
(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 | $ | 1.4 | $ | — | $ | 1.4 | |||||||||||
Reported outside of operating income: | |||||||||||||||||||||||
—Interest cost | 5.8 | 0.6 | 6.4 | 8.0 | 0.9 | 8.9 | |||||||||||||||||
—Expected return on plan assets | (5.6 | ) | — | (5.6 | ) | (7.1 | ) | — | (7.1 | ) | |||||||||||||
—Amortization of net actuarial gain | — | (0.1 | ) | (0.1 | ) | (0.2 | ) | — | (0.2 | ) | |||||||||||||
—Settlements | 0.1 | — | 0.1 | (4.2 | ) | — | (4.2 | ) | |||||||||||||||
Net periodic benefit cost | $ | 1.6 | $ | 0.5 | $ | 2.1 | $ | (2.1 | ) | $ | 0.9 | $ | (1.2 | ) | |||||||||
Contributions | $ | 1.7 | $ | 1.2 | $ | 2.9 | $ | 1.9 | $ | 1.4 | $ | 3.3 |
Nine months ended September 29, 2018 | Nine months ended September 30, 2017 | ||||||||||||||||||||||
(dollars in millions) | Pensions | Other post-retirement benefits | Total | Pensions | Other post-retirement benefits | Total | |||||||||||||||||
Reported in operating income: | |||||||||||||||||||||||
—Employer service cost | $ | 4.0 | $ | — | $ | 4.0 | $ | 4.2 | $ | — | $ | 4.2 | |||||||||||
Reported outside of operating income: | |||||||||||||||||||||||
—Interest cost | 17.7 | 1.7 | 19.4 | 23.8 | 2.3 | 26.1 | |||||||||||||||||
—Expected return on plan assets | (17.0 | ) | — | (17.0 | ) | (21.2 | ) | — | (21.2 | ) | |||||||||||||
—Amortization of net actuarial loss (gain) | 0.1 | (0.5 | ) | (0.4 | ) | — | (0.1 | ) | (0.1 | ) | |||||||||||||
—Settlements | 0.4 | — | 0.4 | (4.2 | ) | — | (4.2 | ) | |||||||||||||||
Net periodic benefit cost | $ | 5.2 | $ | 1.2 | $ | 6.4 | $ | 2.6 | $ | 2.2 | $ | 4.8 | |||||||||||
Contributions | $ | 5.7 | $ | 3.2 | $ | 8.9 | $ | 6.3 | $ | 3.8 | $ | 10.1 |
(number of shares) | As of September 29, 2018 | As of September 30, 2017 | |||
Balance as of the beginning of the fiscal year | 245,474,605 | 245,627,952 | |||
Issuance of shares | 44,275,000 | 80,107 | |||
Exercise of share options | 58,545 | — | |||
Buy back of shares | — | (233,454 | ) | ||
Balance as of the end of the period | 289,808,150 | 245,474,605 |
(dollars in millions) | Available-for- sale investments | Post- retirement benefit | Cumulative translation adjustment | Cash flow hedges | Accumulated OCI attributable to shareholders | Non- controlling interests | Accumulated OCI | |||||||||||||||||||||
As of December 31, 2016 | $ | (0.2 | ) | $ | (6.5 | ) | $ | (884.1 | ) | $ | (25.1 | ) | $ | (915.9 | ) | $ | (55.4 | ) | $ | (971.3 | ) | |||||||
Foreign currency translation | — | — | 170.4 | — | 170.4 | 19.1 | 189.5 | |||||||||||||||||||||
Cash flow hedges movements | — | — | — | 0.6 | 0.6 | — | 0.6 | |||||||||||||||||||||
Available-for-sale investment movements | 0.1 | — | — | — | 0.1 | — | 0.1 | |||||||||||||||||||||
Post-retirement benefit movements | — | 2.1 | — | — | 2.1 | — | 2.1 | |||||||||||||||||||||
Other comprehensive income | 0.1 | 2.1 | 170.4 | 0.6 | 173.2 | 19.1 | 192.3 | |||||||||||||||||||||
As of September 30, 2017 | $ | (0.1 | ) | $ | (4.4 | ) | $ | (713.7 | ) | $ | (24.5 | ) | $ | (742.7 | ) | $ | (36.3 | ) | $ | (779.0 | ) |
(dollars in millions) | Available-for- sale investments | Post- retirement benefit | Cumulative translation adjustment | Cash flow hedges | Accumulated OCI attributable to shareholders | Non- controlling interests | 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 | ) |
• | 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. |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Sales | $ | 0.3 | $ | 0.6 | $ | 1.4 | $ | 1.4 | |||||||
Purchases | $ | (4.8 | ) | $ | (2.1 | ) | $ | (11.3 | ) | $ | (7.5 | ) |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Sales | $ | 13.7 | $ | 14.1 | $ | 45.4 | $ | 41.7 | |||||||
Purchases | $ | (5.5 | ) | $ | (4.7 | ) | $ | (16.0 | ) | $ | (15.6 | ) |
(dollars in millions) | As of September 29, 2018 | As of December 30, 2017 | |||||
Receivables | $ | 1.5 | $ | 1.2 | |||
Payables | $ | (0.2 | ) | $ | (0.2 | ) |
(dollars in millions) | As of September 29, 2018 | As of September 30, 2017 | |||||
Balance as of the beginning of the fiscal year | $ | 14.1 | $ | 14.3 | |||
Charge for the period | 9.2 | 10.5 | |||||
Payments made | (7.3 | ) | (12.2 | ) | |||
Acquisitions | — | 0.2 | |||||
Released during the period | (0.6 | ) | — | ||||
Foreign currency translation | (0.2 | ) | 0.6 | ||||
Balance as of the end of the period | $ | 15.2 | $ | 13.4 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net sales | $ | 828.4 | $ | 760.6 | $ | 2,555.5 | $ | 2,259.9 | |||||||
Cost of sales | 501.2 | 449.8 | 1,534.9 | 1,343.9 | |||||||||||
Gross profit | 327.2 | 310.8 | 1,020.6 | 916.0 | |||||||||||
Selling, general and administrative expenses | 202.7 | 201.4 | 621.1 | 585.5 | |||||||||||
Transaction-related expenses | 0.2 | 7.2 | 6.2 | 11.3 | |||||||||||
Impairment of intangibles and other assets | 0.2 | — | 0.6 | — | |||||||||||
Restructuring expense | 1.2 | 2.4 | 3.2 | 8.3 | |||||||||||
Other operating expenses (income) | 5.1 | (0.1 | ) | 12.5 | (0.1 | ) | |||||||||
Operating income from continuing operations | 117.8 | 99.9 | 377.0 | 311.0 | |||||||||||
Interest expense | 40.2 | 55.0 | 139.8 | 179.0 | |||||||||||
Other expenses | 3.4 | 10.9 | 17.5 | 46.7 | |||||||||||
Income from continuing operations before taxes | 74.2 | 34.0 | 219.7 | 85.3 | |||||||||||
Income tax expense | 7.2 | 15.9 | 30.4 | 32.9 | |||||||||||
Net income from continuing operations | $ | 67.0 | $ | 18.1 | $ | 189.3 | $ | 52.4 | |||||||
Adjusted EBITDA(1) | $ | 181.2 | $ | 164.1 | $ | 570.0 | $ | 496.1 | |||||||
Adjusted EBITDA margin (%) | 21.9 | % | 21.6 | % | 22.3 | % | 22.0 | % |
(1) | See “—Non-GAAP Measures” for a reconciliation of Adjusted EBITDA to net income from continuing operations, the closest comparable GAAP measure, for each of the periods presented. |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Debt: | |||||||||||||||
Dollar Term Loan | $ | 23.0 | $ | 22.9 | $ | 67.5 | $ | 74.0 | |||||||
Euro Term Loan | 5.5 | 6.9 | 17.3 | 15.4 | |||||||||||
Dollar Senior Notes | 8.1 | 17.6 | 28.4 | 51.3 | |||||||||||
Euro Senior Notes | — | 3.9 | 1.3 | 11.6 | |||||||||||
Other loans | — | — | — | 0.1 | |||||||||||
36.6 | 51.3 | 114.5 | 152.4 | ||||||||||||
Amortization of deferred issuance costs | 2.5 | 2.9 | 23.1 | 24.5 | |||||||||||
Other interest expense | 1.1 | 0.8 | 2.2 | 2.1 | |||||||||||
$ | 40.2 | $ | 55.0 | $ | 139.8 | $ | 179.0 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Interest income on bank deposits | $ | (1.0 | ) | $ | (1.2 | ) | $ | (2.7 | ) | $ | (3.3 | ) | |||
Foreign currency (gain) loss on net debt and hedging instruments | 3.9 | 12.5 | (8.4 | ) | 47.6 | ||||||||||
Premiums paid on debt redemptions | — | — | 27.0 | — | |||||||||||
Net adjustments related to post-retirement benefits | 0.8 | (2.6 | ) | 2.4 | 0.6 | ||||||||||
Other | (0.3 | ) | 2.2 | (0.8 | ) | 1.8 | |||||||||
$ | 3.4 | $ | 10.9 | $ | 17.5 | $ | 46.7 |
Three months ended | ||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | Period over Period Change | |||||||
Net sales | $ | 512.5 | $ | 499.9 | 2.5 | % | ||||
Adjusted EBITDA | $ | 119.0 | $ | 114.5 | 3.9 | % | ||||
Adjusted EBITDA margin (%) | 23.2 | % | 22.9 | % |
Nine months ended | ||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | Period over Period Change | |||||||
Net sales | $ | 1,608.1 | $ | 1,496.3 | 7.5 | % | ||||
Adjusted EBITDA | $ | 377.6 | $ | 342.4 | 10.3 | % | ||||
Adjusted EBITDA margin (%) | 23.5 | % | 22.9 | % |
Three months ended | ||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | Period over Period Change | |||||||
Net sales | $ | 315.9 | $ | 260.7 | 21.2 | % | ||||
Adjusted EBITDA | $ | 62.2 | $ | 49.6 | 25.4 | % | ||||
Adjusted EBITDA margin (%) | 19.7 | % | 19.0 | % |
Nine months ended | ||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | Period over Period Change | |||||||
Net sales | $ | 947.4 | $ | 763.6 | 24.1 | % | ||||
Adjusted EBITDA | $ | 192.4 | $ | 153.7 | 25.2 | % | ||||
Adjusted EBITDA margin (%) | 20.3 | % | 20.1 | % |
Carrying amount | Principal amount | ||||||||||||||
(dollars in millions) | As of September 29, 2018 | As of December 30, 2017 | As of September 29, 2018 | As of December 30, 2017 | |||||||||||
Debt: | |||||||||||||||
—Secured | |||||||||||||||
Term Loans (U.S. dollar and Euro denominated) | $ | 2,428.2 | $ | 2,467.8 | $ | 2,470.1 | $ | 2,515.0 | |||||||
—Unsecured | |||||||||||||||
Senior Notes (U.S. dollar and Euro denominated) | 566.6 | 1,487.5 | 568.0 | 1,472.5 | |||||||||||
Other debt | 0.7 | 0.4 | 0.7 | 0.4 | |||||||||||
$ | 2,995.5 | $ | 3,955.7 | $ | 3,038.8 | $ | 3,987.9 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Gain (loss) recognized in statement of operations | $ | 3.5 | $ | (14.0 | ) | $ | 32.6 | $ | (50.3 | ) | |||||
Gain (loss) recognized in OCI | 0.3 | (9.5 | ) | (6.5 | ) | (29.7 | ) | ||||||||
Total gains (losses) | $ | 3.8 | $ | (23.5 | ) | $ | 26.1 | $ | (80.0 | ) |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Loss recognized in statement of operations | $ | — | $ | — | $ | (4.2 | ) | $ | — | ||||||
Loss recognized in OCI | — | (8.4 | ) | (5.0 | ) | (30.8 | ) | ||||||||
Total losses | $ | — | $ | (8.4 | ) | $ | (9.2 | ) | $ | (30.8 | ) |
• | 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; |
• | the effect on cost of sales of fair value adjustments to the carrying amount of inventory acquired in business combinations; |
• | impairments, comprising impairments of goodwill and significant impairments or write downs of other assets; |
• | restructuring expense; |
• | 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. |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net income from continuing operations | $ | 67.0 | $ | 18.1 | $ | 189.3 | $ | 52.4 | |||||||
Income tax expense | 7.2 | 15.9 | 30.4 | 32.9 | |||||||||||
Net interest and other expenses | 43.6 | 65.9 | 157.3 | 225.7 | |||||||||||
Depreciation and amortization | 53.7 | 52.0 | 163.3 | 158.2 | |||||||||||
EBITDA | 171.5 | 151.9 | 540.3 | 469.2 | |||||||||||
Transaction-related expenses | 0.2 | 7.2 | 6.2 | 11.3 | |||||||||||
Impairment of intangibles and other assets | 0.2 | — | 0.6 | — | |||||||||||
Restructuring expense | 1.2 | 2.4 | 3.2 | 8.3 | |||||||||||
Share-based compensation | 2.3 | 1.2 | 5.5 | 2.9 | |||||||||||
Sponsor fees (included in other operating expenses) | 1.9 | 1.5 | 5.9 | 4.5 | |||||||||||
Impact of fair value adjustment on inventory (included in cost of sales) | — | — | 0.3 | — | |||||||||||
Non-recurring inventory adjustments (included in costs of sales) | — | — | 0.8 | — | |||||||||||
Other operating expenses (income) | 3.2 | (0.1 | ) | 6.6 | (0.1 | ) | |||||||||
Other non-recurring adjustments (included in SG&A) | 0.7 | — | 0.6 | — | |||||||||||
Adjusted EBITDA | $ | 181.2 | $ | 164.1 | $ | 570.0 | $ | 496.1 |
Three months ended | Nine months ended | ||||||||||||||
(dollars in millions) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net sales | $ | 828.4 | $ | 760.6 | $ | 2,555.5 | $ | 2,259.9 | |||||||
Adjusted EBITDA | $ | 181.2 | $ | 164.1 | $ | 570.0 | $ | 496.1 | |||||||
Adjusted EBITDA margin (%) | 21.9 | % | 21.6 | % | 22.3 | % | 22.0 | % |
(dollars in millions) | Power Transmission | Fluid Power | Total | ||||||||
Net sales for the three months ended September 29, 2018 | $ | 512.5 | $ | 315.9 | $ | 828.4 | |||||
Impact on net sales of movements in currency rates | 10.9 | 5.7 | 16.6 | ||||||||
Impact on net sales from recent acquisitions | — | (29.4 | ) | (29.4 | ) | ||||||
Core revenue for the three months ended September 29, 2018 | 523.4 | 292.2 | 815.6 | ||||||||
Net sales for the three months ended September 30, 2017 | 499.9 | 260.7 | 760.6 | ||||||||
Increase in net sales on a core basis (core revenue) | $ | 23.5 | $ | 31.5 | $ | 55.0 | |||||
Core revenue growth (%) | 4.7 | % | 12.1 | % | 7.2 | % |
(dollars in millions) | Power Transmission | Fluid Power | Total | ||||||||
Net sales for the nine months ended September 29, 2018 | $ | 1,608.1 | $ | 947.4 | $ | 2,555.5 | |||||
Impact on net sales of movements in currency rates | (34.9 | ) | (7.1 | ) | (42.0 | ) | |||||
Impact on net sales from recent acquisitions | — | (101.5 | ) | (101.5 | ) | ||||||
Core revenue for the nine months ended September 29, 2018 | 1,573.2 | 838.8 | 2,412.0 | ||||||||
Net sales for the nine months ended September 30, 2017 | 1,496.3 | 763.6 | 2,259.9 | ||||||||
Increase in net sales on a core basis (core revenue) | $ | 76.9 | $ | 75.2 | $ | 152.1 | |||||
Core revenue growth (%) | 5.1 | % | 9.8 | % | 6.7 | % |
• | the carrying amount of our debt; and |
• | the carrying amount of cash and cash equivalents. |
(dollars in millions) | As of September 29, 2018 | As of December 30, 2017 | |||||
Debt | $ | 2,995.5 | $ | 3,955.7 | |||
Cash and cash equivalents | 296.3 | 564.4 | |||||
Net debt | $ | 2,699.2 | $ | 3,391.3 |
Exhibit No. | Description |
3.1 | |
3.2 | |
10.1 | |
10.2 | |
10.3 | |
10.4 | |
10.5 | |
31.1 | |
31.2 | |
32.1 | |
101 | The following financial information from Gates Industrial Corporation's Quarterly Report on Form 10-Q for the three and nine months ended September 29, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 29, 2018 and September 30, 2017, (ii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 29, 2018 and September 30, 2017, (iii) Condensed Consolidated Balance Sheets as of September 29, 2018 and December 30, 2017, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 29, 2018 and September 30, 2017, (v) Condensed Consolidated Statements of Shareholders' Equity, and (vi) Notes to the Condensed Consolidated Financial Statements.* |
GATES INDUSTRIAL CORPORATION PLC (Registrant) | ||||
By: | /s/ David H. Naemura | |||
Name: | David H. Naemura | |||
Title: | Chief Financial Officer |
1. | Section 1 – Purpose |
2. | Section 2 – Definitions |
3. | Section 13 – General |
Participant: | [Insert Participant Name] |
Date of Grant | [Insert Grant Date] |
Restricted Stock: | [Insert No. of Shares of Restricted Stock Granted] |
Vesting Schedule: | Provided the Participant has not undergone a Termination at the time of each applicable vesting date (or event): |
• | 25% of the shares of Restricted Stock will vest on the first anniversary of the grant date; |
• | 25% of the shares of Restricted Stock will vest on the second anniversary of the grant date; |
• | 25% of the shares of Restricted Stock will vest on the third anniversary of the grant date; and |
• | the remaining unvested shares of Restricted Stock will vest on the fourth anniversary of the grant date; |
Participant: | [Insert Participant Name] |
Date of Grant: | [Insert Date of Grant] |
Restricted Stock Units: | [Insert No. of Restricted Stock Units Granted] |
Vesting Schedule: | Provided the Participant has not undergone a Termination at the time of the applicable vesting date (or event), 100% of the Restricted Stock Units will vest on the earlier of (i) the first anniversary of the grant date or (ii) the next regularly scheduled annual meeting of the stockholders of the Company following the grant date; provided, however, that in the event that the Participant undergoes a Termination as a result of such Participant’s death or Disability prior to the applicable vesting date (or event), such Participant shall fully vest in such Participant’s Restricted Stock Units. |
Participant: | [Insert Participant Name] |
Date of Grant: | [Insert Date of Grant] |
Restricted Stock Units: | [Insert No. of Restricted Stock Units Granted] |
Vesting Schedule: | Provided the Participant has not undergone a Termination at the time of each applicable vesting date (or event): |
• | 25% of the Restricted Stock Units will vest on the first anniversary of the grant date; |
• | 25% of the Restricted Stock Units will vest on the second anniversary of the grant date; |
• | 25% of the Restricted Stock Units will vest on the third anniversary of the grant date; and |
• | the remaining unvested Restricted Stock Units will vest on the fourth anniversary of the grant date; |
Participant: | [Insert Participant Name] |
Date of Grant: | [Insert Grant Date] |
Number of Stock Appreciation Rights: | [Insert Number of Stock Appreciation Rights] |
Strike Price: | [Insert Strike Price] |
SAR Period Expiration Date: | [Insert Expiration Date] |
Vesting Schedule: | Provided that the Participant has not undergone a Termination prior to the time of each applicable vesting date (or event): |
• | 25% of the Stock Appreciation Rights will vest and become exercisable on the first anniversary of the grant date; |
• | 25% of the Stock Appreciation Rights will vest and become exercisable on the second anniversary of the grant date; |
• | 25% of the Stock Appreciation Rights will vest and become exercisable on the third anniversary of the grant date; and |
• | the remaining unvested Stock Appreciation Rights will vest and become exercisable on the fourth anniversary of the grant date; |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 29, 2018 of Gates Industrial Corporation plc (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | [Reserved] |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 2, 2018 |
/s/ Ivo Jurek | |
Ivo Jurek | |
Chief Executive Officer | |
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 29, 2018 of Gates Industrial Corporation plc (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | [Reserved] |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 2, 2018 |
/s/ David H. Naemura | |
David H. Naemura | |
Chief Financial Officer | |
(Principal Financial Officer) |
(i) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(ii) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Ivo Jurek | |
Ivo Jurek | |
Chief Executive Officer | |
(Principal Executive Officer) | |
Date: | November 2, 2018 |
/s/ David H. Naemura | |
David H. Naemura | |
Chief Financial Officer | |
(Principal Financial Officer) | |
Date: | November 2, 2018 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Nov. 01, 2018 |
|
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. 29, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 289,808,150 |
Unaudited Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||||
Gain on disposal of discontinued operations, tax | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Unaudited Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Foreign currency translation: | ||||
Net translation gain on foreign operations, tax benefit (expense) | $ (1.3) | $ 4.2 | $ (0.5) | $ 13.7 |
Loss on net investment hedges, tax benefit | 0.2 | 0.0 | 0.2 | 0.0 |
Cash flow hedges (Interest rate derivatives): | ||||
Gain (loss) arising in the period, tax expense | 0.0 | 0.0 | 0.0 | 0.0 |
Reclassification to net income, tax expense | 3.3 | (0.4) | 2.0 | (1.4) |
Available-for-sale investments: | ||||
Unrealized loss, tax benefit | 0.1 | 0.1 | 0.1 | 0.0 |
Post-retirement benefits: | ||||
Actuarial loss, tax (expense) benefit | 0.0 | 0.0 | 0.1 | 0.0 |
Reclassification of actuarial gain to net income, tax benefit | $ 0.0 | $ 1.1 | $ 0.0 | $ 1.1 |
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 29, 2018 |
Dec. 30, 2017 |
---|---|---|
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) | 289,808,150 | 245,474,605 |
Unaudited Condensed Consolidated Statements of Shareholders’ Equity - USD ($) $ in Millions |
Total |
Share capital |
Additional paid-in capital |
Accumulated other comprehensive loss |
Retained (deficit) earnings |
Total shareholders’ equity |
Non- controlling interests |
---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2016 | $ 1,068.4 | $ 2.5 | $ 1,619.0 | $ (915.9) | $ (14.3) | $ 691.3 | $ 377.1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 52.5 | 32.5 | 32.5 | 20.0 | |||
Other comprehensive income | 192.3 | 173.2 | 173.2 | 19.1 | |||
Comprehensive income for the period | 244.8 | 173.2 | 32.5 | 205.7 | 39.1 | ||
—Issue of shares | 0.6 | 0.6 | 0.6 | ||||
—Buy-back of shares | (1.6) | (1.6) | (1.6) | ||||
—Share-based compensation | 2.9 | 2.9 | 2.9 | ||||
—Dividends paid to non-controlling interests | (17.9) | (17.9) | |||||
Ending Balance at Sep. 30, 2017 | 1,297.2 | 2.5 | 1,620.9 | (742.7) | 18.2 | 898.9 | 398.3 |
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 | 188.6 | 169.7 | 169.7 | 18.9 | |||
Other comprehensive income | (59.9) | (39.8) | (39.8) | (20.1) | |||
Comprehensive income for the period | 128.7 | (39.8) | 169.7 | 129.9 | (1.2) | ||
—Issue 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 | (53.0) | (53.0) | (53.0) | ||||
Ending Balance at Sep. 29, 2018 | $ 2,327.1 | $ 2.9 | $ 2,415.5 | $ (787.2) | $ 306.6 | $ 1,937.8 | $ 389.3 |
Introduction |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 Limited (“Omaha Topco”), and has become the holding company of the Gates business. The previous owners of Omaha Topco were various investment funds managed by affiliates of The Blackstone Group L.P. (“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, (1) prior to the completion of the reorganization transactions completed immediately prior to the initial public offering, to Omaha Topco and its consolidated subsidiaries and (2) after the completion of the reorganization transactions, to Gates Industrial Corporation plc and its consolidated subsidiaries, as the case may be. 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 29, 2018 and December 30, 2017 and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the 90 day period from July 1, 2018 to September 29, 2018, with comparative information for the 90 day period from July 2, 2017 to September 30, 2017 and the 272 day period from December 31, 2017 to September 29, 2018, with comparative information for the 272 day period from January 1, 2017 to September 30, 2017. 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 29, 2018 and the results of its operations and cash flows for the periods ended September 29, 2018 and September 30, 2017. 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 have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 30, 2017. The condensed consolidated balance sheet as of December 30, 2017 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 30, 2017, prepared in accordance with U.S. GAAP, 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 2018 fiscal year (unless otherwise noted) of the following new Accounting Standard Updates (each, an “ASU”):
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in “Revenue Recognition” (Topic 605) (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled in exchange for those goods or services. The standards update provides a single, principles-based, five-step model to be applied to all contracts with customers. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The ASU also sets out requirements to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Subsequent to issuing this ASU, the FASB issued several amendments, listed above, which provide clarification, additional guidance, practical expedients and technical corrections. We adopted the requirements of Topic 606 as of December 31, 2017, the first day of our 2018 fiscal year, utilizing the modified retrospective method of transition. We have therefore not made any changes to the comparative information which continues to be reported under the prior guidance of Topic 605. As part of the implementation process, we comprehensively reviewed our relationships with our customers and analyzed a number of areas of potential change under Topic 606, including the treatment and calculation of warranty expenses, rebates, branded products, and consignment sales. Management concluded that the impact of Topic 606 on each of these areas on the Company's financial statements was not significant for any of the periods presented or for any of the annual periods that will be included in the Company's 2018 annual consolidated financial statements. No significant changes in net sales or other items in the condensed consolidated financial statements have therefore been made for the three and nine months ended September 29, 2018 in relation to the adoption of Topic 606. Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Our products are sold in more than 100 countries across our four commercial regions: (1) the Americas; (2) Europe, Middle East & Africa (“EMEA”); (3) Greater China; and (4) East Asia and India. We have a long-standing presence in each of these regions, including our emerging markets, which include China, Southeast Asia, Eastern Europe and South America. We sell to a large variety of customers in many sectors of the industrial and consumer markets, with no significant exposure to any one customer or market. In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transactions prices often include variable consideration, usually in the form of rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the amount of consideration to which we are entitled based on the terms of the contract. We allocate the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price. In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title has been transferred, and whether the risks and rewards of ownership have transferred to the customer. The majority of our net sales therefore continues to be recognized consistently with Topic 605, when products are shipped from our manufacturing or distribution facilities. As part of our adoption of Topic 606, we elected to use the following practical expedients:
In 2016, the FASB issued two ASUs that clarify the operating, investing and financing cash flow classifications when receiving or paying cash in certain situations including debt prepayments, distributions from equity method investees and proceeds from settlement of corporate-owned life insurance policies. In addition, the new requirement states that an entity should include restricted cash in the cash and cash equivalents line when reconciling the beginning-of-period and end-of-period amounts in the statement of cash flows. In accordance with the transition requirements of these ASUs, the presentation changes to the condensed consolidated statement of cash flows have been made retrospectively with comparative information restated accordingly. This resulted in the reclassification of a cash outflow of $7.3 million for the nine months ended September 30, 2017 related to the payment of premiums paid under our corporate-owned life insurance policies from cash flow from operating activities to cash flows from investing activities. A similar amount is presented as an investing cash outflow for the nine months ended September 29, 2018. In addition, cash and cash equivalents for the purposes of the condensed consolidated statement of cash flows included restricted cash of $1.6 million as of both September 29, 2018 and December 30, 2017, and $1.6 million as of both September 30, 2017 and December 31, 2016.
In March 2017, the FASB issued an ASU which requires that an employer report the service cost component of its net periodic pension and other post-retirement costs in the same line item as other compensation costs arising from services rendered by the relevant employees during the period. The other components of net periodic benefit cost (which include the interest cost, expected return on plan assets, gains or losses on settlements and curtailments, the amortization of any prior service cost or credit and prior year actuarial gains or losses) are required to be presented in the statement of operations separately from the service cost component and outside of operating income from continuing operations. Following adoption of this ASU, we continue to present the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components are now included in the other expenses line, outside of operating income from continuing operations. In accordance with the transition requirements of this ASU, these presentation changes to the statement of operations have been reflected retrospectively. We have adopted the practical expedient of using the amounts disclosed in our historical financial statements as the estimation basis for applying these retrospective presentation requirements. Please refer to note 14 for the components of the net periodic pension and other post-retirement costs that are now reported outside of operating income from continuing operations instead of within selling, general and administrative expenses.
In August 2017, the FASB issued an ASU with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in ASU 2017-12 require an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. The new approach no longer separately measures and reports hedge ineffectiveness. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early application is permitted in any interim period after issuance of ASU 2017-12. An entity should apply a cumulative effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income (“OCI”) and retained earnings as of the beginning of the fiscal year that the entity adopts. The amended presentation and disclosure guidance is required only prospectively. Following an assessment of its impact, we have elected to early adopt this ASU during the third quarter of 2018. On adoption, there was no cumulative effect adjustment on retained earnings. The following ASUs that were also adopted on the first day of the 2018 fiscal year did not have, and we believe will not have, a significant impact on our results, financial position or disclosures:
This ASU provides technical corrections and clarifications on various items included in ASU 2016-01, which we have adopted as of the beginning of the 2018 fiscal year. Consistent with our adoption of ASU 2016-01, none of these technical corrections or clarifications have an impact on Gates. |
Recent accounting pronouncements not yet adopted |
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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.
In February 2016, the 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, although certain short-term leases are exempted from the standard. 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. The impact on our consolidated financial statements of adopting this ASU, which will affect the recognition, measurement and presentation of leases, is expected to be material given the number and value of leases held. We are gathering and analyzing all relevant lease data and are continuing to evaluate the impact of the ASU. In July 2018, the FASB issued ASU 2018-11, which allows entities an additional, optional transition method. Previously, Topic 842 was required to be adopted on a modified retrospective basis; however, entities now have the option of initially applying the new leases standard at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, with comparative periods continuing to be presented in accordance with current GAAP (Topic 840, Leases). We currently anticipate adopting Topic 842 using this optional transition method.
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.
In February 2018, the FASB issued an ASU to address concerns about the guidance in current U.S. GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. This concern stemmed from the U.S. federal government’s enactment of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” known as the Tax Cuts and Jobs Act (the “Tax Act”), on December 22, 2017. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. The amendments are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and the amendments should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of taxes, is still being evaluated.
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 Update 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.
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.
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 |
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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. On October 2, 2017, Gates completed the acquisition of Atlas Hydraulics for $74.0 million, net of cash acquired. Atlas Hydraulics is a fully-integrated product engineering, manufacturing, and commercial business headquartered in Ontario, Canada. With locations in Canada, the U.S. and Mexico, the company specializes in the design, manufacture, and supply of hydraulic tube and hose assemblies. In June 2017, Gates purchased 100% of GTF Engineering and Services UK Limited, the owner of the majority of the net assets of Techflow Flexibles, for $36.7 million. Techflow Flexibles is a fully integrated engineering, manufacturing and commercial operation based in the United Kingdom that specializes in high-pressure flexible hoses. During the nine months ended September 29, 2018 and September 30, 2017, Gates incurred expenses of $1.2 million and $2.9 million, respectively, related directly to these acquisitions, all of which are included in the transaction-related expenses line in the statement of operations. The fair values of assets acquired and liabilities assumed are as follows:
Goodwill has been recognized as follows:
The provisional goodwill of $47.0 million arising from the acquisition of Rapro relates 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. The acquisition is expected to accelerate our growth in replacement channels, particularly in emerging markets. None of the goodwill recognized is expected to be deductible for income tax purposes. The acquisition accounting for Rapro’s inventories, property, plant and equipment, intangible assets, certain liabilities and related tax balances has not been completed as of September 29, 2018, and the values associated with the acquisition accounting are therefore still subject to change. Accordingly, goodwill is provisional pending the finalization of the valuation of these net assets. The goodwill of $23.0 million arising from the acquisition of Atlas Hydraulics relates primarily to the expansion of Gates’ presence in industrial markets through increased manufacturing capacity and geographic reach. None of the goodwill recognized is expected to be deductible for income tax purposes. The goodwill of $22.5 million arising from the acquisition of Techflow Flexibles relates largely to the expected enhancement to Gates’ ability to make and supply long-length and large-diameter hoses, primarily for the oil & gas exploration and production industries. None of the goodwill recognized is expected to be deductible for income tax purposes. Pro forma information has not been presented for these acquisitions due to their size relative to Gates. |
Segment information |
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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). B. Operating Segments 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. C. Disaggregated net sales The following table summarizes our net sales by key geographic region:
The following table summarizes our net sales into emerging and developed markets:
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 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:
E. Net sales and Adjusted EBITDA – continuing operations 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.
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 above. Reconciliation of net income from continuing operations to Adjusted EBITDA:
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Restructuring initiatives |
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Restructuring initiatives | Restructuring initiatives Gates continues to undertake various restructuring activities to streamline its operations, consolidate and take advantage of available capacity and resources, and ultimately achieve net cost reductions. Restructuring activities include efforts to integrate and rationalize Gates’ businesses and to relocate certain operations to lower cost locations. A majority of the accrual for restructuring expense is expected to be utilized during 2018 and 2019. Restructuring expense of $1.2 million was recognized during the three months ended September 29, 2018, relating primarily to the reorganization of our European corporate center and a strategic restructuring of part of our Asian business. Restructuring expense of $2.4 million was recognized during the prior year period, including $1.9 million in relation to severance costs, largely in the U.S. and Europe. Restructuring expense of $3.2 million was recognized during the nine months ended September 29, 2018, predominantly in the second quarter of 2018, relating to the items described above. Restructuring expense of $8.3 million was recognized during the nine months ended September 30, 2017, including $6.1 million in relation to severance costs, largely in the U.S., Europe and China. Restructuring expense recognized in the condensed consolidated statements of operations for each segment were as follows:
The following summarizes the restructuring activity for the nine month periods ended September 29, 2018 and September 30, 2017, respectively:
Restructuring reserves are included in the accompanying condensed consolidated balance sheet as follows:
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Income taxes |
9 Months Ended |
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Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes For interim income tax reporting we estimate our annual effective tax rate and apply it to our year to date pre-tax income. The tax effects of unusual or infrequently occurring items, including the effects of changes in tax laws or rates, are reported in the interim period in which they occur. For the three months ended September 29, 2018, we had 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%, compared with an income tax expense of $15.9 million on pre-tax income of $34.0 million, which resulted in an effective tax rate of 46.8% for the three months ended September 30, 2017. For the nine months ended September 29, 2018, we had 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% compared with an income tax expense of $32.9 million on pre-tax income of $85.3 million, which resulted in an effective tax rate of 38.6% for the nine months ended September 30, 2017. The decrease in the effective tax rate for the three and nine months ended September 29, 2018 compared with the prior year periods was due primarily to the beneficial impact of the change in our geographical mix of earnings, which in 2017 included a non-operating loss that was not subject to tax. In 2018 our effective tax rate included the benefit of global restructuring which helped offset the adverse impacts of the 2017 Tax Cuts and Jobs Act (the "Tax Act”). Primary factors of the Tax Act that increased our effective tax rate include the decrease in the U.S. tax rate, the base erosion anti-abuse tax (“BEAT”) and global intangible low-taxed income (“GILTI”). These increases were partially offset by the incentive for foreign-derived intangible income. The three-month period ending September 29, 2018 was reduced further by $5.7 million of discrete items, which included an adjustment to the measurement period provisional estimate associated with the Tax Act. On December 22, 2017, the U.S. government enacted comprehensive legislation commonly referred to as the Tax Act. In the fourth quarter of 2017, we recorded a provisional benefit of $118.2 million in accordance with SAB 118 for the income tax effects of the Tax Act. The provisional estimate included $153.7 million deferred tax benefit for revaluing our deferred tax liabilities from the U.S. Corporate tax rate of 35% to 21%. For the three months ended September 29, 2018 we recorded a measurement period adjustment of $0.8 million to income tax expense and deferred tax for the revaluation of our deferred tax liabilities. The provisional estimate also included $33.6 million of tax expense for the estimated cost of the mandatory repatriation of non-U.S. earnings, including changes in the deferred tax liability related to the amount of earnings not indefinitely reinvested. For the three months ended September 29, 2018 we recorded a measurement period adjustment of $3.0 million to income tax benefit for the estimated cost of the mandatory deemed repatriation of non-U.S. earnings. We will continue to update our calculations as additional required information is prepared and analyzed, interpretations and assumptions are refined, and additional guidance is issued. The Tax Act established new provisions for GILTI and BEAT that taxes certain payments between U.S. corporations and their subsidiaries. We are subject to both the GILTI and BEAT provisions beginning January 1, 2018. For the period ended September 29, 2018, we have included the estimated impacts of both GILTI and BEAT in the annual effective tax rate. However, due to the complexity of these provisions, we continue to monitor additional regulatory and administrative guidance to further refine the impacts. We have recorded valuation allowances against certain of our deferred tax assets and we intend to continue maintaining such valuation allowances until there is sufficient evidence to support the reduction of all or some portion of these allowances. However, we believe there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to conclude that a portion of these valuation allowances will no longer be required. A reduction in valuation allowances would result in an increase in our net deferred tax assets and a corresponding non-cash decrease in income tax expense in the period in which the reduction is recorded. The exact timing and amount of any such reduction is subject to change based on our continued evaluation of the Tax Act implications and associated tax planning, and may be material. |
Earnings per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | Earnings per share Basic income per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted income 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 net income per share is presented below:
For the three months ended September 29, 2018 and September 30, 2017, shares totaling 605,164 and 180,540, respectively, were excluded from the diluted income per share calculation because they were anti-dilutive. For the nine months ended September 29, 2018 and September 30, 2017, shares totaling 610,039 and 180,540 shares, respectively, were excluded from the diluted income per share calculation because they were anti-dilutive. |
Inventories |
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Inventories | Inventories
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill
Included in the acquisitions line above is $47.0 million of provisional goodwill arising from the acquisition of Rapro. An additional $1.2 million of goodwill was recognized during the second quarter of 2018 on finalization of the purchase accounting for the Atlas acquisition. |
Intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets | Intangible assets
During the three months ended September 29, 2018, the amortization expense recognized in respect of intangible assets was $32.3 million, compared with $31.8 million for the three months ended September 30, 2017. In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $0.2 million for the three months ended September 29, 2018, compared with an increase of $16.2 million for the three months ended September 30, 2017. During the nine months ended September 29, 2018, the amortization expense recognized in respect of intangible assets was $98.0 million, compared with $98.3 million for the nine months ended September 30, 2017. In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $18.9 million for the nine months ended September 29, 2018, compared with an increase of $76.4 million for the nine months ended September 30, 2017. |
Derivative financial instruments |
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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. All other derivative instruments not 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 following table sets out the fair value gain (loss) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments:
During the three months ended September 29, 2018 and the nine months ended September 29, 2018, a net gain of $0.7 million was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges. The following table sets out the movement before tax recognized in OCI in relation to the interest rate derivatives:
During the three and nine months ended September 29, 2018, a net expense of $1.0 million and $4.5 million, respectively, was recognized in interest expense in relation to our cash flow hedges. 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, as hedging instruments for the purposes of hedge accounting under Topic 815 “Derivatives and Hedging”. During the three months ended September 29, 2018, a net gain of $0.9 million was recognized in selling, general and administrative expenses on the fair valuation of these currency contracts, compared with a net loss of $5.4 million in the prior year period. During the nine months ended September 29, 2018, a net gain of $1.7 million was recognized in selling, general and administrative expenses on the fair valuation of these currency contracts, compared with a net loss of $8.4 million in the prior year period. The fair values of derivative financial instruments were as follows:
A. Currency derivatives As of September 29, 2018, the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $109.4 million, compared with $99.2 million as of December 30, 2017, none of which have been designated as hedging instruments. In addition, we hold cross currency swaps that have been designated as net investment hedges. As of September 29, 2018 and December 30, 2017, the notional principal amount of these contracts was $270.0 million. B. Interest rate caps and interest rate swaps We use interest rate caps and interest rate swaps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. Interest rate caps designated as cash flow hedges 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. On June 7, 2018, we entered into two new interest rate caps with a notional amount of €425.0 million which run from July 1, 2019 through June 30, 2023. As of September 29, 2018, the notional amount of the interest rate cap contracts outstanding was $2.7 billion, compared with $2.2 billion as of December 30, 2017. The periods covered by our interest rate caps are as follows:
Also on June 7, 2018, we entered into 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. |
Fair value measurement |
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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:
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:
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:
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 cap 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 29, 2018 or the year ended December 30, 2017. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term debt, including the current portion and bank overdrafts, was as follows:
Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and are secured by liens on substantially all of their assets. 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, Gates redeemed in full its 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, Gates 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 premium and $3.1 million in accrued interest, were funded primarily by the net proceeds from our initial public offering of $799.1 million, with the remainder of the funds coming from excess 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 the reorganization transactions completed in connection with our initial public offering, a wholly-owned U.S. subsidiary of Gates Global LLC, entered into an intercompany agreement pursuant to which it became an obligor under the Dollar Senior Notes for U.S. federal income tax purposes and agreed to make future payments due on the Dollar Senior Notes. As a result, interest on the Dollar Senior Notes is U.S. source income. Dollar and Euro Term Loans Gates’ 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 Gates’ option, LIBOR plus an applicable margin. 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 29, 2018, borrowings under this facility bore interest at a rate of 4.99% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As of September 29, 2018, the Euro Term Loan bears interest at Euro LIBOR, which is currently below 0%, subject to a floor of 0%, plus a margin of 3.00%. The next Euro Term Loan interest rate re-set date is on December 31, 2018. 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 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. During the nine months ended September 30, 2017, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $15.0 million and $4.3 million, respectively. Under the terms of the credit agreement, Gates is 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 2017 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 was required to be made in 2018. During the periods presented, foreign exchange gains (losses) 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 Gates' Euro investments, a corresponding portion of the foreign exchange gains (losses) were recognized in OCI.
During the three and nine months ended September 29, 2018, the transactional foreign exchange gains recognized in the other expenses line in the statement of operations have been substantially offset by foreign exchange losses on Euro-denominated intercompany loans as part of our overall hedging strategy. Unsecured Senior Notes As of September 29, 2018, 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, Gates redeemed in full its 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 were recognized in respect of the Euro Senior Notes as summarized in the table below. A portion of these losses were recognized in OCI for the period during which the facility was designated as a net investment hedge of certain of Gates' Euro investments.
Gates may redeem the Dollar Senior Notes, at its option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:
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 Gates also has 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. In January 2018, the maturity date of this facility was extended to 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. In addition, as part of this amendment, the facility size was increased from $125.0 million to $185.0 million. As of both September 29, 2018 and December 30, 2017, there were $0 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 Gates’ option LIBOR, plus an applicable margin. Asset-backed revolver Gates has a revolving credit facility backed by certain of its assets in North America. The facility allows for loans of up to a maximum of $325.0 million ($325.0 million as of September 29, 2018, compared with $293.7 million as of December 30, 2017, 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. In January 2018, the maturity date of this facility was extended to 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 29, 2018 and December 30, 2017, there were $0 drawings for cash under the asset-backed revolver. 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 Gates’ option, LIBOR, plus an applicable margin. The letters of credit outstanding under the asset-backed revolver as of September 29, 2018 amounted to $56.7 million, compared with $58.0 million as of December 30, 2017. |
Post-retirement benefits |
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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:
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 expenses line in the condensed consolidated statement of operations. For 2018 as a whole, we expect to contribute approximately $5.5 million to our defined benefit pension plans and approximately $6.1 million to our other post-retirement benefit plans. |
Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity In January 2018, we 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 29, 2018 and September 30, 2017, respectively, were as follows:
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 comprehensive (loss) income |
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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:
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Related party transactions |
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Related party transactions | Related party transactions A. Entities affiliated with Blackstone On July 3, 2014, 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 Transaction and Monitoring Fee Agreement (the “Former Transaction and Monitoring Fee Agreement”) with Omaha Topco. Under this agreement, Omaha Topco 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:
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 29, 2018, Gates incurred $1.9 million, compared with $1.5 million during the prior year period, and during the nine months ended September 29, 2018, Gates incurred $5.9 million, compared with $4.5 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 29, 2018 or December 30, 2017. The Former Transaction and Monitoring Fee Agreement also contemplated that Gates would pay to the Managers a milestone payment upon the consummation of an initial public offering. In January 2018, we and the Managers terminated this agreement and entered into a new Monitoring Fee Agreement (the “New Monitoring Fee Agreement”) with the Managers that is substantially similar to the terminated agreement, except that the New Monitoring Fee Agreement does not require the payment of a milestone payment in connection with the initial public offering and terminates upon the earlier to occur of (i) the second anniversary of the closing date of the initial public offering and (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, we have entered into a Support and Services Agreement with BMP. Under this agreement, the Company 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. In connection with the initial public offering in January 2018, we and BMP terminated this agreement and we entered into a new agreement with the Managers that is substantially similar to the existing agreement, except that it 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, Blackstone Advisory Partners L.P., an affiliate of Blackstone, received underwriting fees of $3.2 million. During the periods presented, through to November 2, 2017, Blackstone held a controlling interest in Alliance Automotive Group (“Alliance”), a wholesale distributor of automotive parts in France and the United Kingdom. Net sales by Gates to affiliates of Alliance for the three and nine months ended September 30, 2017 were $5.6 million and $23.4 million, respectively. B. Equity method investees Sales to and purchases from equity method investees were as follows:
Amounts outstanding in respect of these transactions were payables of $0.2 million as of September 29, 2018, compared with $0.2 million as of December 30, 2017. During the three months ended September 29, 2018, we received dividends of $0 from our equity method investees, compared with $0.1 million in the prior year period. During the nine months ended September 29, 2018, we received dividends of $0.4 million 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:
Amounts outstanding in respect of these transactions were as follows:
D. Majority-owned subsidiaries We are engaged in ongoing discussions with the non-controlling interest holder in certain of our consolidated, majority-owned subsidiaries, regarding the scope of business of such subsidiaries. If we successfully reach an agreement on a change in scope, we expect to reduce the magnitude of net income currently allocated to non-controlling interests and the change could be material. |
Commitments and contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies | Commitments and contingencies A. Performance bonds, letters of credit and bank guarantees As of September 29, 2018, letters of credit were outstanding against the asset-backed revolving facility amounting to $56.7 million, compared with $58.0 million as of December 30, 2017. Gates had additional outstanding performance bonds, letters of credit and bank guarantees amounting to $3.4 million, compared with $3.4 million as of December 30, 2017. 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 29, 2018 and September 30, 2017, respectively:
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Introduction (Policies) |
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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 Limited (“Omaha Topco”), and has become the holding company of the Gates business. The previous owners of Omaha Topco were various investment funds managed by affiliates of The Blackstone Group L.P. (“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. |
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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. |
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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 29, 2018 and December 30, 2017 and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the 90 day period from July 1, 2018 to September 29, 2018, with comparative information for the 90 day period from July 2, 2017 to September 30, 2017 and the 272 day period from December 31, 2017 to September 29, 2018, with comparative information for the 272 day period from January 1, 2017 to September 30, 2017. |
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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 29, 2018 and the results of its operations and cash flows for the periods ended September 29, 2018 and September 30, 2017. 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 have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 30, 2017. The condensed consolidated balance sheet as of December 30, 2017 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 30, 2017, prepared in accordance with U.S. GAAP, included in the Company’s Annual Report on Form 10-K. |
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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 2018 fiscal year (unless otherwise noted) of the following new Accounting Standard Updates (each, an “ASU”):
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in “Revenue Recognition” (Topic 605) (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled in exchange for those goods or services. The standards update provides a single, principles-based, five-step model to be applied to all contracts with customers. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The ASU also sets out requirements to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Subsequent to issuing this ASU, the FASB issued several amendments, listed above, which provide clarification, additional guidance, practical expedients and technical corrections. We adopted the requirements of Topic 606 as of December 31, 2017, the first day of our 2018 fiscal year, utilizing the modified retrospective method of transition. We have therefore not made any changes to the comparative information which continues to be reported under the prior guidance of Topic 605. As part of the implementation process, we comprehensively reviewed our relationships with our customers and analyzed a number of areas of potential change under Topic 606, including the treatment and calculation of warranty expenses, rebates, branded products, and consignment sales. Management concluded that the impact of Topic 606 on each of these areas on the Company's financial statements was not significant for any of the periods presented or for any of the annual periods that will be included in the Company's 2018 annual consolidated financial statements. No significant changes in net sales or other items in the condensed consolidated financial statements have therefore been made for the three and nine months ended September 29, 2018 in relation to the adoption of Topic 606. Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Our products are sold in more than 100 countries across our four commercial regions: (1) the Americas; (2) Europe, Middle East & Africa (“EMEA”); (3) Greater China; and (4) East Asia and India. We have a long-standing presence in each of these regions, including our emerging markets, which include China, Southeast Asia, Eastern Europe and South America. We sell to a large variety of customers in many sectors of the industrial and consumer markets, with no significant exposure to any one customer or market. In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transactions prices often include variable consideration, usually in the form of rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the amount of consideration to which we are entitled based on the terms of the contract. We allocate the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price. In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title has been transferred, and whether the risks and rewards of ownership have transferred to the customer. The majority of our net sales therefore continues to be recognized consistently with Topic 605, when products are shipped from our manufacturing or distribution facilities. As part of our adoption of Topic 606, we elected to use the following practical expedients:
In 2016, the FASB issued two ASUs that clarify the operating, investing and financing cash flow classifications when receiving or paying cash in certain situations including debt prepayments, distributions from equity method investees and proceeds from settlement of corporate-owned life insurance policies. In addition, the new requirement states that an entity should include restricted cash in the cash and cash equivalents line when reconciling the beginning-of-period and end-of-period amounts in the statement of cash flows. In accordance with the transition requirements of these ASUs, the presentation changes to the condensed consolidated statement of cash flows have been made retrospectively with comparative information restated accordingly. This resulted in the reclassification of a cash outflow of $7.3 million for the nine months ended September 30, 2017 related to the payment of premiums paid under our corporate-owned life insurance policies from cash flow from operating activities to cash flows from investing activities. A similar amount is presented as an investing cash outflow for the nine months ended September 29, 2018. In addition, cash and cash equivalents for the purposes of the condensed consolidated statement of cash flows included restricted cash of $1.6 million as of both September 29, 2018 and December 30, 2017, and $1.6 million as of both September 30, 2017 and December 31, 2016.
In March 2017, the FASB issued an ASU which requires that an employer report the service cost component of its net periodic pension and other post-retirement costs in the same line item as other compensation costs arising from services rendered by the relevant employees during the period. The other components of net periodic benefit cost (which include the interest cost, expected return on plan assets, gains or losses on settlements and curtailments, the amortization of any prior service cost or credit and prior year actuarial gains or losses) are required to be presented in the statement of operations separately from the service cost component and outside of operating income from continuing operations. Following adoption of this ASU, we continue to present the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components are now included in the other expenses line, outside of operating income from continuing operations. In accordance with the transition requirements of this ASU, these presentation changes to the statement of operations have been reflected retrospectively. We have adopted the practical expedient of using the amounts disclosed in our historical financial statements as the estimation basis for applying these retrospective presentation requirements. Please refer to note 14 for the components of the net periodic pension and other post-retirement costs that are now reported outside of operating income from continuing operations instead of within selling, general and administrative expenses.
In August 2017, the FASB issued an ASU with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in ASU 2017-12 require an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. The new approach no longer separately measures and reports hedge ineffectiveness. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early application is permitted in any interim period after issuance of ASU 2017-12. An entity should apply a cumulative effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income (“OCI”) and retained earnings as of the beginning of the fiscal year that the entity adopts. The amended presentation and disclosure guidance is required only prospectively. Following an assessment of its impact, we have elected to early adopt this ASU during the third quarter of 2018. On adoption, there was no cumulative effect adjustment on retained earnings. The following ASUs that were also adopted on the first day of the 2018 fiscal year did not have, and we believe will not have, a significant impact on our results, financial position or disclosures:
This ASU provides technical corrections and clarifications on various items included in ASU 2016-01, which we have adopted as of the beginning of the 2018 fiscal year. Consistent with our adoption of ASU 2016-01, none of these technical corrections or clarifications have an impact on Gates. Recent accounting pronouncements not yet adopted The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted.
In February 2016, the 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, although certain short-term leases are exempted from the standard. 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. The impact on our consolidated financial statements of adopting this ASU, which will affect the recognition, measurement and presentation of leases, is expected to be material given the number and value of leases held. We are gathering and analyzing all relevant lease data and are continuing to evaluate the impact of the ASU. In July 2018, the FASB issued ASU 2018-11, which allows entities an additional, optional transition method. Previously, Topic 842 was required to be adopted on a modified retrospective basis; however, entities now have the option of initially applying the new leases standard at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, with comparative periods continuing to be presented in accordance with current GAAP (Topic 840, Leases). We currently anticipate adopting Topic 842 using this optional transition method.
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.
In February 2018, the FASB issued an ASU to address concerns about the guidance in current U.S. GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. This concern stemmed from the U.S. federal government’s enactment of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” known as the Tax Cuts and Jobs Act (the “Tax Act”), on December 22, 2017. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. The amendments are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and the amendments should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of taxes, is still being evaluated.
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 Update 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.
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.
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 (Tables) |
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Schedule of fair value of net assets acquired and liabilities assumed | The fair values of assets acquired and liabilities assumed are as follows:
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Schedule of goodwill recognized | Goodwill has been recognized as follows:
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Segment information (Tables) |
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Schedule of net sales by key geographic regions and markets | The following table summarizes our net sales by key geographic region:
The following table summarizes our net sales into emerging and developed markets:
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Schedule of net sales by operating segment |
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted EBITDA to net income from continuing operations | Reconciliation of net income from continuing operations to Adjusted EBITDA:
|
Restructuring initiatives (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring costs | recognized in the condensed consolidated statements of operations for each segment were as follows:
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Schedule of restructuring reserves activity | The following summarizes the restructuring activity for the nine month periods ended September 29, 2018 and September 30, 2017, respectively:
Restructuring reserves are included in the accompanying condensed consolidated balance sheet as follows:
|
Earnings per share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of net income per share | The computation of net income per share is presented below:
|
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories |
|
Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill |
|
Intangible assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finite-lived intangible assets |
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Schedule of indefinite-lived intangible assets |
|
Derivative financial instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative effect on OCI | The following table sets out the fair value gain (loss) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments:
The following table sets out the movement before tax recognized in OCI in relation to the interest rate derivatives:
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Schedule of fair values of derivative financial instruments | The fair values of derivative financial instruments were as follows:
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Schedule of interest rate caps | The periods covered by our interest rate caps are as follows:
|
Fair value measurement (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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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:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt, including the current portion and bank overdrafts, was as follows:
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Foreign exchange gains (losses) | Up to the date of their redemption, foreign exchange losses were recognized in respect of the Euro Senior Notes as summarized in the table below. A portion of these losses were recognized in OCI for the period during which the facility was designated as a net investment hedge of certain of Gates' Euro investments.
During the periods presented, foreign exchange gains (losses) 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 Gates' Euro investments, a corresponding portion of the foreign exchange gains (losses) were recognized in OCI.
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Schedule of redemption prices plus accrued and unpaid interest | Gates may redeem the Dollar Senior Notes, at its option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:
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Post-retirement benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
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 29, 2018 and September 30, 2017, respectively, were as follows:
|
Analysis of accumulated other comprehensive (loss) income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) | Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:
|
Related party transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
Amounts outstanding in respect of these transactions were as follows:
Sales to and purchases from equity method investees were as follows:
|
Commitments and contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 29, 2018 and September 30, 2017, respectively:
|
Introduction (Details) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Sep. 29, 2018
USD ($)
country
region
|
Sep. 30, 2017
USD ($)
|
Dec. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Number of countries products are sold in (more than) | country | 100 | |||
Number of regions products are sold in | region | 4 | |||
Depository receipts ratio | 0.76293 | |||
Cash flow from operating activities | $ 142.3 | $ 149.9 | ||
Restricted cash | $ 1.6 | 1.6 | $ 1.6 | $ 1.6 |
Accounting Standards Update 2016-15 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash flow from operating activities | $ (7.3) |
Acquisitions - Schedule of goodwill recognized (Details) - USD ($) $ in Millions |
1 Months Ended | ||||
---|---|---|---|---|---|
Apr. 26, 2018 |
Oct. 02, 2017 |
Jun. 30, 2017 |
Sep. 29, 2018 |
Dec. 30, 2017 |
|
Business Acquisition [Line Items] | |||||
Goodwill and provisional goodwill | $ 2,093.8 | $ 2,085.5 | |||
Techflow Flexibles | |||||
Business Acquisition [Line Items] | |||||
Consideration, net of cash acquired | $ 50.9 | ||||
Net assets acquired | (3.9) | ||||
Goodwill and provisional goodwill | $ 47.0 | ||||
Atlas Hydraulics | |||||
Business Acquisition [Line Items] | |||||
Consideration, net of cash acquired | $ 74.0 | ||||
Net assets acquired | (51.0) | ||||
Goodwill and provisional goodwill | $ 23.0 | ||||
Rapro | |||||
Business Acquisition [Line Items] | |||||
Consideration, net of cash acquired | $ 36.7 | ||||
Net assets acquired | (14.2) | ||||
Goodwill and provisional goodwill | $ 22.5 |
Segment information - Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 828.4 | $ 760.6 | $ 2,555.5 | $ 2,259.9 |
Adjusted EBITDA | 181.2 | 164.1 | 570.0 | 496.1 |
Power Transmission | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 512.5 | 499.9 | 1,608.1 | 1,496.3 |
Adjusted EBITDA | 119.0 | 114.5 | 377.6 | 342.4 |
Fluid Power | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 315.9 | 260.7 | 947.4 | 763.6 |
Adjusted EBITDA | $ 62.2 | $ 49.6 | $ 192.4 | $ 153.7 |
Restructuring initiatives - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Restructuring and Related Activities [Abstract] | ||||
Restructuring expense | $ 1.2 | $ 2.4 | $ 3.2 | $ 8.3 |
Severance costs | $ 1.9 | $ 6.1 |
Restructuring initiatives - Restructuring Costs by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense | $ 1.2 | $ 2.4 | $ 3.2 | $ 8.3 |
Power Transmission | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense | 0.9 | 1.5 | 2.1 | 5.6 |
Fluid Power | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense | $ 0.3 | $ 0.9 | $ 1.1 | $ 2.7 |
Restructuring initiatives - Restructuring Reserve Activity (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Restructuring Reserve [Roll Forward] | ||
Balance as of the beginning of the period | $ 8.6 | $ 5.0 |
Net charge for the period | (8.3) | (7.1) |
Utilized during the period | 3.5 | 6.5 |
Released during the period | (0.3) | (0.1) |
Foreign currency translation | 0.1 | 0.1 |
Balance as of the end of the period | $ 3.6 | $ 4.4 |
Restructuring initiatives - Restructuring Reserve Balance Sheet Impact (Details) - USD ($) $ in Millions |
Sep. 29, 2018 |
Dec. 30, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring reserve | $ 3.6 | $ 8.6 | $ 4.4 | $ 5.0 |
Accrued expenses and other current liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring reserve | 3.4 | 3.9 | ||
Other non-current liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring reserve | $ 0.2 | $ 0.5 |
Income taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 29, 2018 |
Dec. 30, 2017 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 7.2 | $ 15.9 | $ 30.4 | $ 32.9 | |
Pre-tax income | $ 74.2 | $ 34.0 | $ 219.7 | $ 85.3 | |
Effective income tax rate | 9.70% | 46.80% | 13.80% | 38.60% | |
Decrease in effective tax rate - discrete items | $ 5.7 | ||||
Provisional income tax benefit | $ 118.2 | ||||
Provisional income tax benefit - revaluation of deferred tax liabilities | 153.7 | ||||
Measurement period adjustment, income tax expense - revaluation of deferred tax liabilities | 0.8 | ||||
Provisional income tax expense - repatriation of foreign earnings | $ 33.6 | ||||
Measurement period adjustment, income tax benefit - repatriation of foreign earnings | $ 3.0 |
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to shareholders | $ 59.9 | $ 13.2 | $ 169.7 | $ 32.5 |
Weighted average number of shares outstanding (in shares) | 289,783,061 | 245,483,659 | 284,750,794 | 245,535,788 |
Dilutive effect of share-based awards (in shares) | 8,670,885 | 9,646,966 | 8,705,430 | 7,785,383 |
Diluted weighted average number of shares outstanding (in shares) | 298,453,946 | 255,130,625 | 293,456,224 | 253,321,171 |
Basic net income per share (in usd per share) | $ 0.21 | $ 0.05 | $ 0.60 | $ 0.13 |
Diluted net income per share (in usd per share) | $ 0.20 | $ 0.05 | $ 0.58 | $ 0.13 |
Anti-dilutive shares excluded from diluted income per share calculation (in shares) | 605,164 | 180,540 | 610,039 | 180,540 |
Inventories (Details) - USD ($) $ in Millions |
Sep. 29, 2018 |
Dec. 30, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 156.1 | $ 128.0 |
Work in progress | 38.5 | 32.8 |
Finished goods | 332.2 | 296.3 |
Total inventories | $ 526.8 | $ 457.1 |
Goodwill (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Jun. 30, 2018 |
Sep. 29, 2018 |
|
Cost and carrying amount | ||
December 30, 2017 | $ 2,085.5 | |
Acquisitions | 48.2 | |
Foreign currency translation | (39.9) | |
September 29, 2018 | 2,093.8 | |
Power Transmission | ||
Cost and carrying amount | ||
December 30, 2017 | 1,430.2 | |
Acquisitions | 0.0 | |
Foreign currency translation | (36.5) | |
September 29, 2018 | 1,393.7 | |
Fluid Power | ||
Cost and carrying amount | ||
December 30, 2017 | 655.3 | |
Acquisitions | 48.2 | |
Foreign currency translation | (3.4) | |
September 29, 2018 | 700.1 | |
Fluid Power | Rapro | ||
Cost and carrying amount | ||
Acquisitions | $ 47.0 | |
Fluid Power | Atlas Hydraulics | ||
Cost and carrying amount | ||
Goodwill increase (decrease), purchase accounting adjustment | $ 1.2 |
Intangible assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 32.3 | $ 31.8 | $ 98.0 | $ 98.3 |
Intangible assets, foreign currency translation gain (loss) | $ (0.2) | $ 16.2 | $ (18.9) | $ 76.4 |
Derivative financial instruments - Net Investment Hedging Instruments in OCI (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total net fair value gain (loss) | $ 7.9 | $ 2.2 | $ 19.8 | $ 0.6 |
Net investment hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total net fair value gain (loss) | 3.8 | (26.1) | 4.7 | (90.9) |
Interest Rate Cap | Net investment hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total net fair value gain (loss) | 0.3 | (17.9) | (11.5) | (60.5) |
Currency Swap | Net investment hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total net fair value gain (loss) | $ 3.5 | $ (8.2) | $ 16.2 | $ (30.4) |
Derivative financial instruments - OCI Movement (Details) - Interest Rate Contract - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Movement recognized in OCI in relation to: | ||||
—Fair value gain (loss) on interest rate derivatives | $ 3.6 | $ (0.2) | $ 13.3 | $ (6.4) |
—Deferred premium reclassified from OCI to net income | 1.0 | 2.8 | 4.5 | 8.4 |
Total movement | $ 4.6 | $ 2.6 | $ 17.8 | $ 2.0 |
Derivative financial instruments - Interest Rate Caps (Details) $ in Millions |
Sep. 29, 2018
USD ($)
|
Sep. 29, 2018
EUR (€)
|
Jun. 07, 2018
EUR (€)
|
---|---|---|---|
Through June 30, 2019 | |||
Derivative [Line Items] | |||
Notional amount of derivative contracts | $ 1,000.0 | ||
Through June 30, 2020 | |||
Derivative [Line Items] | |||
Notional amount of derivative contracts | 200.0 | ||
June 28, 2019 to June 30, 2020 | |||
Derivative [Line Items] | |||
Notional amount of derivative contracts | $ 1,000.0 | ||
July 1, 2019 to June 30, 2023 | |||
Derivative [Line Items] | |||
Notional amount of derivative contracts | € | € 425,000,000 | € 425,000,000 |
Fair value measurement - Schedule of carrying amount and fair value of debt (Details) - USD ($) $ in Millions |
Sep. 29, 2018 |
Dec. 30, 2017 |
---|---|---|
Carrying amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current | $ 32.8 | $ 66.4 |
Non-current | 2,962.7 | 3,889.3 |
Fair value of debt | 2,995.5 | 3,955.7 |
Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current | 32.6 | 66.2 |
Non-current | 2,997.2 | 3,970.7 |
Fair value of debt | $ 3,029.8 | $ 4,036.9 |
Fair value measurement - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 29, 2018 | |
Secured credit facilities | Secured debt | LIBOR | |
Debt Instrument [Line Items] | |
Variable rate floor | 1.00% |
Euro Term Loan | Secured debt | LIBOR | |
Debt Instrument [Line Items] | |
Variable rate floor | 3.00% |
Euro Term Loan | Term loan | EURIBOR | |
Debt Instrument [Line Items] | |
Variable rate floor | 0.00% |
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. 29, 2018 |
Dec. 30, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 1.1 | $ 2.4 |
Derivative assets | 16.8 | 4.3 |
Derivative liabilities | (34.2) | (49.9) |
Quoted prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 1.1 | 2.4 |
Derivative assets | 0.0 | 0.0 |
Derivative liabilities | 0.0 | 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 | 0.0 |
Derivative assets | 16.8 | 4.3 |
Derivative liabilities | $ (34.2) | $ (49.9) |
Debt - Schedule of long-term debt (Details) - USD ($) $ in Millions |
Sep. 29, 2018 |
Dec. 30, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total principal of debt | $ 3,038.8 | $ 3,987.9 |
Deferred issuance costs | (51.1) | (73.2) |
Accrued interest | 7.8 | 41.0 |
Total carrying value of debt | 2,995.5 | 3,955.7 |
Debt, current portion | 32.8 | 66.4 |
Debt, less current portion | 2,962.7 | 3,889.3 |
Secured debt: | —Dollar Term Loan | ||
Debt Instrument [Line Items] | ||
Total principal of debt | 1,716.4 | 1,729.4 |
Secured debt: | —Euro Term Loan | ||
Debt Instrument [Line Items] | ||
Total principal of debt | 753.7 | 785.6 |
Unsecured debt: | —Dollar Senior Notes | ||
Debt Instrument [Line Items] | ||
Total principal of debt | 568.0 | 1,190.0 |
Unsecured debt: | —Euro Senior Notes | ||
Debt Instrument [Line Items] | ||
Total principal of debt | 0.0 | 282.5 |
Unsecured debt: | —Other loans | ||
Debt Instrument [Line Items] | ||
Total principal of debt | $ 0.7 | $ 0.4 |
Debt - Foreign exchange gains and losses (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Secured debt | Euro Term Loan | ||||
Debt Instrument [Line Items] | ||||
Loss recognized in statement of operations | $ 3.5 | $ (14.0) | $ 32.6 | $ (50.3) |
Loss recognized in OCI | 0.3 | (9.5) | (6.5) | (29.7) |
Total losses | 3.8 | (23.5) | 26.1 | (80.0) |
Unsecured debt | Euro Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Loss recognized in statement of operations | 0.0 | 0.0 | (4.2) | 0.0 |
Loss recognized in OCI | 0.0 | (8.4) | (5.0) | (30.8) |
Total losses | $ 0.0 | $ (8.4) | $ (9.2) | $ (30.8) |
Debt - Unsecured Senior Notes narrative (Details) € in Millions, $ in Millions |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Feb. 09, 2018
USD ($)
|
Feb. 08, 2018
USD ($)
|
Jan. 31, 2018
USD ($)
|
Jan. 31, 2018
EUR (€)
|
Sep. 29, 2018
USD ($)
|
Dec. 30, 2017
USD ($)
|
|
Debt Instrument [Line Items] | ||||||
Principal amount of debt outstanding | $ 3,038.8 | $ 3,987.9 | ||||
Unsecured debt | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of debt | 913.7 | |||||
Unsecured debt | Dollar Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount of debt outstanding | $ 568.0 | 1,190.0 | ||||
Stated interest rate on debt | 6.00% | |||||
Repayments of debt | $ 100.0 | $ 522.0 | $ 622.0 | |||
Unsecured debt | Euro Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount of debt outstanding | $ 0.0 | $ 282.5 | ||||
Repayments of debt | $ 291.7 | € 235.0 |
Debt - Schedule of redemption prices plus accrued and unpaid interest (Details) - Unsecured debt |
9 Months Ended | ||
---|---|---|---|
Feb. 09, 2018 |
Feb. 08, 2018 |
Sep. 29, 2018 |
|
Debt Instrument, Redemption [Line Items] | |||
Redemption price (as a percent) | 101.00% | ||
Dollar Senior Note Redemption price | |||
Debt Instrument, Redemption [Line Items] | |||
Redemption price (as a percent) | 103.00% | 103.00% | |
Dollar Senior Note Redemption price | During the year commencing July 15, 2018 | |||
Debt Instrument, Redemption [Line Items] | |||
Redemption price (as a percent) | 101.50% | ||
Dollar Senior Note Redemption price | During the year commencing July 15, 2019 and thereafter | |||
Debt Instrument, Redemption [Line Items] | |||
Redemption price (as a percent) | 100.00% |
Debt - Revolving credit facility Narrative (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Dec. 30, 2017 |
|
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 | 125,000,000 |
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 Narrative (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Dec. 30, 2017 |
|
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 | 325,000,000 | 293,700,000 |
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 | $ 56,700,000 | $ 58,000,000 |
Post-retirement benefits - Narrative (Details) $ in Millions |
Sep. 29, 2018
USD ($)
|
---|---|
Pensions | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected future employer contributions in current fiscal year | $ 5.5 |
Other post-retirement benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected future employer contributions in current fiscal year | $ 6.1 |
Equity - Narrative (Details) - $ / shares |
1 Months Ended | ||
---|---|---|---|
Jan. 31, 2018 |
Sep. 29, 2018 |
Dec. 30, 2017 |
|
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 Shares in Issue (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance as of the beginning of the period (in shares) | 245,474,605 | 245,627,952 |
Issuance of shares (in shares) | 44,275,000 | 80,107 |
Exercise of share options (in shares) | 58,545 | 0 |
Buy back of shares (in shares) | 0 | (233,454) |
Balance as of the end of the period (in shares) | 289,808,150 | 245,474,605 |
Related party transactions - Sales and Purchases with Equity Method Investees (Details) - Equity method investees - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Related Party Transaction [Line Items] | ||||
Sales | $ 0.3 | $ 0.6 | $ 1.4 | $ 1.4 |
Purchases | $ (4.8) | $ (2.1) | $ (11.3) | $ (7.5) |
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. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
Dec. 30, 2017 |
|
Related Party Transaction [Line Items] | |||||
Sales | $ 13.7 | $ 14.1 | $ 45.4 | $ 41.7 | |
Purchases | (5.5) | $ (4.7) | (16.0) | $ (15.6) | |
Receivables | 1.5 | 1.5 | $ 1.2 | ||
Payables | $ (0.2) | $ (0.2) | $ (0.2) |
Commitments and contingencies - Narrative (Details) - USD ($) $ in Millions |
Sep. 29, 2018 |
Dec. 30, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Letters of credit outstanding | $ 56.7 | $ 58.0 |
Bonds, letters of credit, and bank guarantees | $ 3.4 | $ 3.4 |
Commitments and contingencies - Warranty Liability (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance as of the beginning of the fiscal year | $ 14.1 | $ 14.3 |
Charge for the period | 9.2 | 10.5 |
Payments made | (7.3) | (12.2) |
Acquisitions | 0.0 | 0.2 |
Released during the period | (0.6) | 0.0 |
Foreign currency translation | (0.2) | 0.6 |
Balance as of the end of the period | $ 15.2 | $ 13.4 |
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