10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 28, 2019

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 001-38366

Gates Industrial Corporation plc

(Exact Name of Registrant as Specified in its Charter)

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)

(303) 744-1911

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, $0.01 par value per share	GTES	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒ No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒ No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes  ☐ No  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No  ☒

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The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant's most recently completed second fiscal quarter was $526.2 million.

As of February 17, 2020, there were 290,465,572 ordinary shares of $0.01 par value outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement to be delivered to stockholders in connection with its 2020 annual general meeting of shareholders are incorporated by reference into Part III.

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TABLE OF CONTENTS

Part I	5
Item 1. Business	5
Item 1A. Risk Factors	11
Item 1B. Unresolved Staff Comments	31
Item 2. Properties	31
Item 3. Legal Proceedings	31
Item 4. Mine Safety Disclosures	31
Part II	32
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	32
Item 6. Selected Financial Data	32
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	52
Item 8. Financial Statements and Supplementary Data	55
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	55
Item 9A. Control and Procedures	55
Item 9B. Other Information	55
Part III	56
Item 10. Directors, Executive Officers and Corporate Governance	56
Item 11. Executive Compensation	56
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	56
Item 13. Certain Relationships and Related Transactions, and Director Independence	56
Item 14. Principal Accounting Fees and Services	56
Part IV	57
Item 15. Exhibits, Financial Statement Schedules	57
Item 16. Form 10-K Summary	59
Signatures	60

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Forward-looking Statements

This Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (this “annual report” or “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which involve risks and uncertainties. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Forward-looking statements are based on the Company’s current expectations and actual results may differ materially. These factors include those described under “Part I - Item 1A. Risk Factors” of this annual report. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this annual report and in our other periodic filings. Gates Industrial Corporation plc undertakes no obligation to update or supplement any forward-looking statements as a result of new information, future events or otherwise, except as required by law.

ABOUT THIS ANNUAL REPORT

Financial Statement Presentation

Gates Industrial Corporation plc is a public limited company that was incorporated under the Companies Act 2006 on September 25, 2017 and is registered in England and Wales. It is the financial reporting entity following the completion of certain reorganization transactions completed prior to its initial public offering (“IPO”) in January 2018, as described further in note 1 to the accompanying consolidated financial statements.

This annual report includes certain historical consolidated financial and other data for Omaha Topco Limited (“Omaha Topco”), which is incorporated in the Cayman Islands and was the financial reporting entity prior to the completion of the reorganization transactions referred to above. Omaha Topco was formed by affiliates of The Blackstone Group Inc. primarily as a vehicle to finance the acquisition of the Gates business in July 2014 by investment funds managed by The Blackstone Group Inc.

Certain monetary amounts, percentages and other figures included elsewhere in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

All amounts in this annual report are expressed in United States of America (the “U.S.”) dollars, unless indicated otherwise.

Certain Definitions

As used in this annual report, unless otherwise noted or the context requires otherwise:

• “Gates,” the “Company,” “we,” “us” and “our” refer (1) prior to the completion of the reorganization transactions completed immediately prior to the IPO, 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;

• “Fiscal 2019” refers to the fiscal year ended December 28, 2019, “Fiscal 2018” refers to the fiscal year ended December 29, 2018, “Fiscal 2017” refers to the fiscal year ended December 30, 2017, “Fiscal 2016” refers to the fiscal year ended December 31, 2016, and “Fiscal 2015” refers to the fiscal year ended January 2, 2016;

• “Blackstone” or “our Sponsor” refer to investment funds affiliated with The Blackstone Group Inc., which, although no individual fund owns a controlling interest in us, together represent our current majority owners;

• “notes issuers” refers to Gates Global LLC and Gates Corporation, Delaware companies and indirect subsidiaries of the Company, and Gates Global Co., a Delaware corporation and subsidiary of Gates Global LLC; and

• “pre-IPO owners” refer to our Sponsor together with the other owners of Omaha Topco, prior to the IPO.

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PART I

Item 1. Business

We are a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse replacement channel customers, and to original equipment (“first-fit”) manufacturers as specified components, with the majority of our revenue coming from replacement channels. Our products are used in applications across numerous end markets, which include construction, agriculture, energy, automotive, transportation, general industrial, consumer products and many others. Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to replacement markets. Key indicators of our performance include industrial production, industrial sales and manufacturer shipments. We sell our products globally under the Gates brand, which is recognized by distributors, equipment manufacturers, installers and end users as a premium brand for quality and technological innovation; this reputation has been built for over a century since Gates’ founding in 1911.

Within the diverse end markets we serve, our highly engineered products are often critical components in applications for which the cost of downtime is high relative to the cost of our products, resulting in the willingness of end users to pay a premium for superior performance and availability. These applications subject our products to normal wear and tear, resulting in a natural replacement cycle that drives high-margin, recurring revenue. Our product portfolio represents one of the broadest ranges of power transmission and fluid power products in the markets we serve, and we maintain long-standing relationships with a diversified group of blue-chip customers throughout the world. As a leading designer, manufacturer and marketer of highly engineered, mission-critical products, we have become an industry leader across most of the regions and end markets in which we operate.

Gates’ business is well-balanced and diversified across products, channels and geographies, as highlighted in the following charts showing breakdowns of our Fiscal 2019 net sales of $3,087.1 million.

Our History and Recent Developments

On October 1, 1911, Charles Gates, Sr. purchased the Colorado Tire and Leather Company, a manufacturer of steel-studded bands of leather that attached to tires to extend their mileage. In 1917, the Company commercialized the V-belt, which used rubber and woven threading instead of rope belts, which were more commonly used at that time. In 1963, we built the first of many international facilities in Erembodegem, Belgium, followed by Jacarei, Brazil, in 1973. In 1986, we acquired the Uniroyal Power Transmission Company, which included an interest in the Unitta joint venture that lay the groundwork for Gates’ growth in the Asia-Pacific region. We have financial and operational control over the joint venture, and as such, consolidate it in our financial statements.

In 1996, Gates was acquired by a publicly held engineering firm based in the United Kingdom (“U.K.”), Tomkins plc, which was itself acquired by Onex Partners and the Canada Pension Plan Investment Board, who proceeded to divest certain of Tomkins plc’s businesses under a new parent entity, Pinafore Holdings B.V. Gates was acquired by funds affiliated with The Blackstone Group L.P. in July 2014 and in 2015 established a new executive leadership team with Ivo Jurek as Chief Executive Officer.

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We have developed an active acquisition pipeline and the organizational capability to integrate acquired companies. In 2018, we acquired Rapro, based in Turkey, and in 2017 we closed two transactions, Techflow Flexibles in the U.K. and Atlas Hydraulics in North America. All three of our recent acquisitions have been focused on expanding our presence in industrial markets with new products, capabilities, capacity and geographic reach. In addition, we continue to invest organically in new production capacity. During Fiscal 2018, we opened two new facilities located in Poland and in Mexico, and we also expanded our Changzhou facility in China.

Our Solutions

We operate our business on a product-line basis through our two reporting segments - Power Transmission and Fluid Power. See note 5 of our audited consolidated financial statements included elsewhere in this report for additional information.

We sell our products under the Gates brand in all of the geographies and end markets we serve. Our power transmission segment includes elastomer drive belts and related components used to efficiently transfer motion in a broad range of applications. Power transmission products represented approximately 63% of our total net sales for Fiscal 2019. Our fluid power segment includes hoses, tubing and fittings designed to convey hydraulic fluid at high pressures in both mobile and stationary applications, and other high-pressure and fluid transfer hoses used to convey various fluids. Our fluid power products represented approximately 37% of our net sales for Fiscal 2019.

Our power transmission and fluid power products are often critical to the functioning of the equipment, process or system in which they are components, such that the cost of downtime or potential equipment damage is high relative to the cost of our products. Our products are therefore replaced not only as a result of normal wear and tear, but also preemptively as part of ongoing maintenance to the broader system.

We have a broad portfolio of both power transmission and fluid power products in the end markets we serve. We have a long history of focusing on customer engagement and training, driving product innovation and providing best-in-class order fulfilment services.

Power Transmission. Our Power Transmission solutions enable and control motion. They are used in applications in which belts, chains, cables, geared transmissions or direct drives transfer power from an engine or motor to another part or system. Belt-based power transmission drives typically consist of either a synchronous belt or an asynchronous belt (V-belt, CVT belt or Micro-V^® belt) and related components (sprockets, pulleys, water pumps, tensioners or other accessories). Within our Power Transmission segment, we offer solutions across the following key application platforms:

• Stationary drives: fixed drive systems such as those used in a factory driving a machine or pump, or on a grain elevator driving the lift auger;

• Mobile drives: drives on a piece of mobile machinery such as a combine harvester or a road compactor, or in applications such as the brush head of a vacuum cleaner;

• Engine systems: synchronous drives and related components for cam shafts and auxiliary drives and asynchronous accessory drives for air conditioning (“A/C”) compressors, power steering, alternators and starter/generator systems;

• Personal mobility: drives on motorcycles, scooters, bicycles, snowmobiles and other power sports vehicles that are used to transfer power between the power source and the drive wheel(s) or track; and

• Vertical lift: elevators, cargo lifts and other applications in which a belt, cable, chain or other lifting mechanism is used to carry load.

Customers choose power transmission solutions based on a number of factors, including application requirements such as load, speed, gear ratio, temperature, operating environment, ease of maintenance, noise, efficiency and reliability, as well as the support they receive from their suppliers, including application-specific engineering. Belt-based drive systems have many advantages over other alternatives, as they are typically clean, low-maintenance, lubrication-free, quiet with low-vibration, light-weight, compact, energy-efficient, durable and reliable. In applications where these advantages are valued, customers typically choose belts over other forms of power transmission solutions.

Our belts are classified by their general design into asynchronous and synchronous belts; in addition, we also manufacture metal drive products and assemble automotive replacement kits.

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Asynchronous Belts. Asynchronous belts are our highest-volume products and are used in a broad range of applications. Asynchronous belts are made of proprietary rubber formulations, textiles and embedded cords for reinforcement. We were a pioneer in the design and manufacturing of V-belts, which draw their name from the shape of their profile. We also manufacture “ribbed” V-belts, which are belts with lengthwise V-shaped grooves, which we market under the Micro-V^® name. This design results in a thinner belt for the same drive surface, making it more flexible and offering improved efficiency through lower friction losses. Belt starter/generator (“BSG”) belts are used in start/stop accessory drive systems on automobiles and other engine applications used to improve fuel economy. The demanding BSG system functionality, including engine starting, torque boosting and energy recuperation, requires a high-performance belt construction. Continuously-variable transmission (“CVT”) systems found in scooters, power sports vehicles and other applications use a specialized V-belt knows as a CVT belt.

In industrial end markets, asynchronous belts have a wide variety of applications, including use in pump drives, manufacturing lines, HVAC systems, industrial engines, truck, bus and marine engines, forestry and mining equipment and many other applications. In automotive applications, our asynchronous belts perform functions that include transferring power from the crankshaft to accessory drive components such as the alternator, A/C compressor, power steering system, water pump and, in some vehicles, a BSG system.

During Fiscal 2018, Gates introduced a new Micro-V^® platform for engine accessory drive systems. The combination of newly developed material compounds and product design reduces belt weight and results in lower bending stiffness. These improvements enable tighter pulley configurations and reduced drive bending losses as compared to existing belt technologies; lower losses result in reduced energy consumption, CO2 emissions and heat generation.

Synchronous Belts. Synchronous belts, also known as timing belts, are non-slipping mechanical drive belts. They have teeth molded onto the inner surface and they run over matching toothed pulleys or sprockets. Synchronous belts experience no slippage and are often used to transfer motion for indexing or timing purposes, as well as for linear positioning and positive drive conveying. They are typically used instead of chains or gears and we believe have a number of advantages over these alternatives, including less noise, no need for lubrication, improved durability and performance and a more compact design. Our synchronous belts are made of a flexible polymer over fabric reinforcement and are often built with Kevlar, aramid and carbon fibers.

Examples of industrial applications include use in HVAC systems, food processing and bottling plants, mining and agricultural equipment, automatic doors and robotics. In automotive applications, our synchronous belts are used to synchronize the rotation of the engine crankshaft with the camshaft due to engine combustion in a valve train system, as well as in electric power steering and parking brake systems which are present in gasoline-powered, hybrid and electric vehicles.

Metal Drive Components. We manufacture and sell the tensioners and idlers used in belt drive systems. These products are designed and engineered to work efficiently with our belts. Tensioners are devices that maintain a constant tension in the belt drive system, thereby ensuring proper function and preventing loss of power or system failure. Tensioners typically employ a spring that places pressure along the belt for an intricate hold, while still allowing enough movement for vibration and to prevent stretching. Idlers, which sometimes also perform as tensioners, are used to take up extra belt length.

Kits. Our kits for the automotive replacement market include all of the parts needed by an automotive service shop to perform a replacement of one of our products. Kits are created for specific makes and models and typically include belts, tensioners and idlers, and will sometimes also include water pumps as they are often replaced when a timing belt is replaced. Our kits are convenient for service technicians as they eliminate the need for more complicated product sourcing. On a comparable quantity basis, kits typically sell at a premium to a loose belt and single tensioner.

Our power transmission products are used in a broad range of applications in end markets including construction, agriculture, transportation, automotive, energy, general industrial and consumer products. The majority of our Fiscal 2019 net sales came from the replacement markets, which provide high-margin, recurring revenue streams and are driven by attractive market trends. The bulk of our power transmission replacement business resides in developed regions, in which a large, aging installed base of equipment follows a natural maintenance cycle and is served by well-developed distribution channels. For example, a combine harvester in North America has over 25 high-performance belts that are typically replaced at regular intervals, depending on wear and tear, with end users having access to replacement parts through an established channel. Similarly, in the North American automotive replacement market, maintenance intervals are well defined and miles driven per vehicle are increasing, leading to more wear and tear on vehicles. A smaller portion of our power transmission replacement business is generated in emerging markets, which generally have a smaller base of installed equipment and relatively immature distribution channels. As they continue to develop, these replacement markets represent a significant long-term opportunity for growth.

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In addition to our power transmission replacement business, we also serve a wide variety of blue-chip first-fit customers across all of our end markets. The majority of our automotive first-fit revenues in power transmission tend to come from emerging markets. These markets generally are higher-growth and result in higher-margin business than our developed regions. Our first-fit presence in these markets serves to further strengthen our brand, strongly positioning us to serve the growing base of installed equipment as the nascent replacement channels continue to develop.

Fluid Power. Our Fluid Power solutions are used in applications in which hoses and rigid tubing assemblies either transfer power hydraulically or convey fluids, gases or granular materials from one location to another. Within our Fluid Power segment, we offer solutions across the following key application platforms:

• Stationary hydraulics: applications within stationary machinery, such as an injection molding machine or a manufacturing press;

• Mobile hydraulics: applications used to power various implements in mobile equipment used in construction, agriculture, mining and other heavy industries;

• Engine systems: applications for engine systems such as coolant, fuel, A/C, turbocharger, air intake and selective catalytic reduction for diesel emissions; and

• Other industrial: applications in which hoses are used to convey fluids, gases or granular material across several industries such as oil and gas drilling and refining, food and beverage and other process industries.

Customers choose fluid power solutions based on a number of factors including application-specific product performance parameters such as pressure and temperature ratings, corrosion and leak resistance, weight, flexibility, abrasion resistance and cleanliness, as well as compliance with standards and product availability. Attributes associated with the supplier, including brand, global footprint and reputation for reliability and quality, are also considered.

Hydraulics. Our hydraulics product line is comprised of hoses, tubing and fittings, as well as assemblies consisting of these products. Our hydraulic products are key components of hydraulic systems in both stationary and mobile equipment applications. We provide a full selection of hose sizes and construction types for use in a wide variety of working requirements and conditions. Hydraulic hoses are made of synthetic rubber and reinforced with steel wire or a textile-based yarn, and typically operate at very high pressures, often in extreme environmental conditions. Hoses are designed for use in specific mechanical applications and require high levels of quality and durability.

Our hydraulic fittings and tubing are engineered to match the product performance of our hydraulic hoses. The high-pressure nature of hydraulic systems requires these products have high levels of performance similar to those found in our hydraulic hoses. The ultimate performance of a hydraulic assembly, in which our products function as part of a hydraulic circuit, depends not only on how well the components are made, but also on how well they complement each other. In order to ensure compatibility with numerous applications, our hydraulic fittings are manufactured in a wide assortment of sizes, crimping systems and materials, and are protected by a range of patents. Our hydraulic products and assemblies are used in construction, agricultural and forestry equipment, as well as in food and other processing lines and stationary machinery.

During Fiscal 2018, Gates introduced a new hydraulic hose family that is lighter weight and more flexible. Made with high-performance reinforcement and a robust, abrasion-resistant cover, the MXT line of hydraulic hose is a universally applicable, high-performance product that meets the needs of diversified applications. During Fiscal 2019, we launched the MXG line of hydraulic hose, a more flexible, lighter-weight solution with increased durability and temperature performance, which is designed to replace conventional spiral hoses typically used in the most demanding applications.

Engine Hose. Our engine hose products perform a variety of conveyance functions in engine applications in gasoline-powered, hybrid and electric vehicles. Engine system applications for which Gates provides solutions include coolant (radiator, heater), air system (turbocharger, intake, vacuum, crankcase ventilation), fuel, oil (transmission oil cooling, power steering) and emissions/Diesel Exhaust Filtration (“DEF”) systems.

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Industrial Hose. Our industrial hoses are capable of transferring a wide range of substances-chemicals, food and beverages, petroleum, fuels, bulk materials, water, steam and air-to meet the requirements of diverse applications, including manufacturing, mining, oil and gas drilling, marine, agriculture, industrial cleaning and construction. Our application engineering teams work with customers to assist them in selecting the appropriate hose solution to safely meet their operational needs. We leverage our materials science expertise to enable hose performance at varying pressures and levels of resistance to chemicals, oil, abrasion, ozone, flame and both hot and cold temperatures. For performance in extreme environments, many of our industrial hoses feature both crush-resistant and flexible designs. Gates industrial hoses are highly engineered to meet or exceed a multitude of industry standards and certifications, and are offered in a range of diameters, lengths and colors to allow customers to differentiate the hoses in applications. We also offer a wide range of couplings to provide complete assembly solutions to our customers.

Our fluid power products are used in numerous applications, including construction, agriculture, transportation, automotive, energy and general industrial. The largest portion of our Fiscal 2019 fluid power revenue came from replacement markets. Within these replacement markets, the majority of our revenue came from industrial applications. Approximately 15% of our Fiscal 2019 fluid power revenue came from products sold into the automotive end market, almost all of which was served through the higher-margin replacement channel.

Our Diverse Markets

We participate in many sectors of the industrial and consumer markets. Our products play essential roles in a diverse range of applications across a wide variety of end markets ranging from harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners. Virtually every form of transportation, ranging from trucks, buses and automobiles to personal mobility vehicles such as motorcycles, bicycles and snowmobiles uses our products.

Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to replacement markets. Key indicators include industrial production, industrial sales and manufacturer shipments.

Our products are sold in over 120 countries across our four commercial regions: (1) the Americas; (2) Europe, Middle East & Africa (“EMEA”); (3) Greater China; and (4) East Asia & India. We have a long-standing presence in each of these regions.

Our commercial capabilities are complemented by our global manufacturing footprint, which frequently allows us to manufacture products in close proximity to our customers. We have power transmission and fluid power operations in each commercial region and typically manufacture products for both first-fit customers and replacement customers in the same factory, which provides improved factory loading and demand leveling, as well as optimization of capital expenditures.

Our Channels

We sell our power transmission and fluid power products both as replacement components and as specified components on original equipment to customers worldwide. During the year ended December 28, 2019, approximately 63% of our net sales were generated from replacement markets and 37% from first-fit markets globally. Our mix of replacement channel sales to first-fit sales varies by region based on our market strategy and the maturity of the equipment fleet and replacement channel. For example, in emerging markets such as China, our business is characterized by a higher first-fit presence, given the relatively underdeveloped replacement channels and lower average age of cars. We believe that ultimately our first-fit presence in these emerging markets will allow us to better develop the replacement channels as they mature over time. By contrast, in North America and EMEA, where there are long-established replacement markets, approximately 68% and 71% of our Fiscal 2019 net sales, respectively, were derived from these higher-margin replacement channels. In the vast majority of the applications we service, we do not need to have been the first-fit provider to service these applications in the replacement markets.

Replacement. The majority of our sales are generated from customers in replacement channels, who primarily serve a large base of installed equipment that follows a natural maintenance cycle. Our ability to help replacement channel partners maximize revenue is an important part of our value proposition. These customers miss sales opportunities if a required product cannot be obtained quickly, either from a catalog or on-hand inventory.

In addition to our products, we offer digital tools and other content to distributors, installers and end users of equipment containing our products. We also assist with customer training on product installation and early identification of wear-and-tear on components, which helps drive sales for our channel customers while mitigating the risk of equipment failure for end users.

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First-Fit. We work closely with our customers by providing application engineering expertise to assist them in selecting the right products for their applications. In engine systems, we provide application engineering for cam drive and accessory drive applications, and complete all design and manufacturing of the system components in-house. Close interactions between our R&D organization and customer technical teams provide input into our innovation and product development processes. We selectively participate in first-fit projects, focusing on opportunities where we are able to differentiate with technology and innovative solutions.

Customers

We maintain long-standing relationships with many customers, who range from local distributors with one location to large, global manufacturers of equipment. No single customer accounted for more than 10% of our Fiscal 2019 net sales.

Sales and Marketing and Distribution Organization

Our sales and distribution operations are structured to serve our customers efficiently across the globe. We have field representatives who possess local knowledge of product and application requirements, allowing us to meet our customers’ product availability requirements with short lead times. Our global sales and service support team helps reinforce customer and distributor relationships by focusing on end markets and customers.

Manufacturing

We have a global, “in region, for region” manufacturing footprint and regional service model that enable us to operate efficiently and effectively in proximity to our customers. We operate 63 manufacturing facilities and service centers as well as several major technical centers giving us a presence in 29 countries throughout the world. Our in-country deployment of manufacturing and technical resources enables us to meet customer needs rapidly and satisfy regional variations in product preference, while our scale allows us to service global customers on a world-wide basis.

Competition

We operate in competitive markets and industries that are also very fragmented. We offer our products and solutions across numerous and varied end markets and geographies through over 120 locations in 29 countries. Consequently, we have many competitors across our various markets and product offerings. These competitors and the degree of competition vary by product line, geographic scope, end market and channel. Although each of our markets and product offerings has many competitors, no single competitor competes with us with respect to all of our products, solutions, channels and end markets. Our global presence makes it difficult for smaller regional and low-cost country manufacturers to penetrate our markets. We differentiate ourselves on the basis of product performance and quality, breadth of portfolio, customer support and training, service level, fill rates and product availability.

Research, Development and Intellectual Property

Applied R&D is important to our businesses and integral to our leading market positions. We have engineering teams in the U.S., Canada, the U.K., Germany, Spain, Poland, Turkey, Japan, China, Brazil, India, Mexico, Korea and Thailand that focus on the introduction of new and improved products with a particular emphasis on energy efficiency and safety, the application of technology to reduce unit and operating costs and improving services to our customers.

As of December 28, 2019, we held more than 2,500 patents and trademarks in various jurisdictions. While no individual patent or group of patents, taken alone, is considered critical to our business, collectively our patents and trademarks provide meaningful protection for our products and technical innovations.

Materials and Suppliers

We use a wide variety of materials, resulting in a highly diversified mix of inputs, which are sourced from a variety of suppliers around the world. Generally, we seek to obtain materials in the regions where our products are manufactured to minimize transportation and other costs. As of December 28, 2019, we had not experienced any significant shortages of raw materials and normally do not carry inventories of raw materials in excess of those required to meet our production schedules.

We continually seek to manage commodity and raw material costs using various strategies, including working with our suppliers to mitigate costs, exploring material substitution opportunities, combining purchase requirements across regions and changing suppliers when appropriate.

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Environmental

Our operations, products and properties are subject to extensive U.S. and foreign federal, state, local, and provincial laws and regulations relating to environmental, health and safety (“EHS”) protection, including laws and regulations governing air emissions, wastewater discharges, waste management and disposal, substances in products, and workplace health and safety, as well as the investigation and clean-up of contaminated sites. Under certain environmental laws, the obligation to investigate and remediate contamination at a facility may be imposed on current and former owners, lessees or operators or on persons who may have sent waste to that facility for disposal. We are currently performing environmental investigations and/or remediation at a number of former and current facilities in the U.S. and Canada and are incurring costs in relation to a number of offsite waste disposal sites.

Employees

As of December 28, 2019, we employed approximately 14,700 full time employees worldwide. Approximately 6,700 of our employees were located in North America, 3,700 in EMEA, 3,700 in Greater China and East Asia & India, and 600 in South America. Some of our employees are members of labor unions and over many years we have been able to maintain successful relationships with the unions and employment organizations. To date, employee relations have been flexible and constructive as we continue to pursue lean manufacturing improvements in our plants.

Where You Can Find More Information

We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC’s website at http://www.sec.gov. Our SEC filings are also available on our website, free of charge, at http://investors.gates.com as soon as reasonably practicable after they are filed with or furnished to the SEC.

We maintain an internet site at http://www.gates.com. Our website and the information contained on or connected to that site are not incorporated into this report.

Item 1A. Risk Factors

The risk factors noted in this section and other factors noted throughout this annual report, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement and should be considered carefully in evaluating our company and our business.

Risks Related to Our Business and Industry

Conditions in the global and regional economy and the major end markets we serve may materially and adversely affect the business and results of operations of our businesses should they deteriorate.

Our business and operating results have been, and will continue to be, affected by worldwide and regional economic conditions, including conditions in the end markets we serve. The level of demand for our products depends, in part, on the general economic conditions that exist in our served end markets. A substantial portion of our revenues are derived from customers in cyclical industries that typically are adversely affected by downward economic cycles. For example, in Fiscal 2019, a downturn in the short-cycle end markets, including sharp declines in agriculture and general industrial end markets, significantly impacted our business. Further, our historical results have been, and remain, highly correlated to global industrial activity and utilization and decreases in such activity or utilization may continue to impact our business, financial condition and results of operations.

During such downturns, our customers may experience deterioration of their businesses, cash flow shortages or difficulty obtaining financing. As a result, the demand for our products may be significantly reduced and existing or potential customers may delay or cancel plans to purchase our products and may not be able to fulfill their obligations to us in a timely fashion. Further, our vendors may experience similar conditions, which may impact their ability to fulfill their obligations to us.

We cannot predict the timing, strength or duration of any economic recovery, including in the short-cycle end markets, or downturn globally or within our end markets, If conditions in the global economy or in the regions and major end markets that we serve deteriorate, demand for our products may decline and our results of operations, financial position and cash flows could be materially adversely affected.

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We are subject to economic, political and other risks associated with international operations, and this could adversely affect our business and our strategy to capitalize on our global reach.

One of our key strategies is to capitalize on our global commercial reach, and a substantial portion of our operations are conducted and located outside the U.S. For Fiscal 2019, approximately 62% of our net sales originated from outside of the U.S. We have manufacturing, sales and service facilities spanning five continents and sell to customers in over 120 countries. Moreover, a significant amount of our manufacturing functions and sources of our raw materials and components are from emerging markets such as China, India and Eastern Europe. Accordingly, our business and results of operations, as well as the business and results of operations of our vendors and customers, are subject to risks associated with doing business internationally, including:

• imposition of new or additional tariffs or other trade restrictions or embargoes, as well as import and export licensing and control requirements;

• political, social or economic instability, civil unrest, natural disasters, public health crises, war or terrorism that may disrupt economic activities in affected countries;

• exchange rate fluctuations, currency restructurings and hyperinflation or deflation in the countries in which we operate;

• imposition of currency restrictions and limitations on repatriation of earnings;

• the complexities of operating within multiple tax jurisdictions;

• partial or total expropriation by local, state or national governments;

• uncertainties as to local laws regarding, and enforcement of, contract and intellectual property rights;

• the ability to comply with or effect of complying with complex and changing laws, regulations and policies of foreign governments, including differing and, in some cases, more stringent labor and environmental regulations;

• differing local product preferences and product requirements; and

• difficulties involved in staffing and managing widespread operations, including challenges in administering and enforcing corporate policies, which may be different than the normal business practices of local cultures.

The likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable. Certain regions, including Latin America, Asia, the Middle East and Africa, are generally more economically and politically volatile and as a result, our operations in these regions could be subject to more significant fluctuations in sales and operating income. Because a significant percentage of our operating income in recent years has come from these regions, adverse fluctuations in the operating results in these regions could have a disproportionate impact on our results of operations in future periods. Currently, there is economic uncertainty in the Asia region, particularly China, due to the recent outbreak of the novel coronavirus (2019-nCoV) that was first reported from Wuhan, China, on December 31, 2019.

The U.S. administration has publicly supported certain potential tax and trade proposals, modifications to international trade policy and other changes which have and may continue to affect U.S. trade relations with other countries, particularly China. Our industry has been impacted by the ongoing uncertainty surrounding tariffs and international trade relations generally, and it is difficult for us to predict the impact future trade measures may have on our business and results of operations in the future.

In addition, economic and political uncertainty arose out of the June 23, 2016 vote in the U.K. that resulted in the U.K.’s exit from the European Union (the “E.U.”), commonly referred to as “Brexit,” on January 31, 2020. While the U.K. will continue to follow all of the E.U.’s rules and will maintain its current trading relationship with the E.U. during an 11-month transition period, the ongoing negotiations between the U.K. and the E.U. as to the terms of the U.K.’s trade agreements and other relationships with the E.U. following the transition period have created political and economic uncertainty, with concern about increased regulatory and legal complexities that could disrupt our operations and increase our cost of doing business.

Additionally, concerns persist regarding the debt burden of certain European countries and the ability of these countries to meet future financial obligations, as well as concerns regarding the overall stability of the euro and the suitability of the euro as a single currency given the diverse economic and political circumstances of individual euro-area countries. If a country within the euro area were to default on its debt or withdraw from the euro currency, or if the euro were to be dissolved entirely, the impact on markets around the world, and on our global business, could be immediate and material. Such a development could cause financial and capital markets within and outside Europe to constrict, thereby negatively impacting our ability to finance our business, and also could cause a substantial reduction in consumer confidence and spending that could negatively impact sales.

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While we have adopted certain operational and financial measures to reduce the risks associated with doing business internationally, any one of the risks listed above may impact us or require us to modify our business practices beyond what we can anticipate and could have a material adverse effect on our financial condition and results of operations.

If we are unable to obtain raw materials at favorable prices in sufficient quantities, or at the time we require them, our operating margins and results of operations may be materially adversely affected.

We purchase our energy, steel, aluminum, rubber and rubber-based materials, chemicals, polymers and other key manufacturing inputs from outside sources. We do not traditionally have long-term pricing contracts with raw material suppliers. The costs of these raw materials have been volatile historically and are influenced by factors that are outside our control. In recent years, the prices for energy, metal alloys, polymers and certain other of our raw materials have fluctuated significantly. While we strive to avoid this risk by using price escalation mechanisms with respect to our raw materials in certain of our customer contracts and we also seek to offset our increased costs with gains achieved through operational efficiencies, if we are unable to pass increases in the costs of our raw materials on to our customers, we experience a lag in our ability to pass increases to our customers, or operational efficiencies are not achieved, our operating margins and results of operations may be materially adversely affected.

Additionally, our businesses compete globally for key production inputs. The availability of qualified suppliers and of key inputs may be disrupted by market disturbances or any number of geopolitical factors, including political unrest and significant weather events. Such disruptions may require additional capital or operating expenditure by us or force reductions in our production volumes. In the event of an industry-wide general shortage of certain raw materials or key inputs, or a shortage or discontinuation of certain raw materials or key inputs from one or more of our suppliers, we may not be able to arrange for alternative sources of certain raw materials or key inputs. Any such shortage may materially adversely affect our competitive position versus companies that are able to better or more cheaply source such raw materials or key inputs.

Adverse changes in our relationships with, or the financial condition, performance, purchasing patterns or inventory levels of, key channel partners could adversely affect our business, financial condition and results of operations.

Certain of our businesses sell a significant amount of their products to key channel partners, including distributors, which have valuable relationships with end users. Some of these channel partners may also sell our competitors’ products, and if they favor competing products for any reason they may fail to market our products effectively. Adverse changes in our relationships with these channel partners, or adverse developments in their financial condition, performance or purchasing patterns, could adversely affect our business, financial condition and results of operations. The levels of inventory maintained by our distributors and other channel partners, and changes in those levels, can also significantly impact our results of operations in any given period, such as the destocking we experienced in both the automotive and industrial replacement channels during Fiscal 2019. In addition, the consolidation of channel partners and customers in certain of our end markets could adversely impact our profitability.

We face competition in all areas of our business and may not be able to successfully compete with our competitors, which could adversely affect our revenues and profitability.

We are subject to competition from other producers of products similar to ours. We compete on a number of factors, including product performance, quality, value, product availability, brand recognition, customer service and innovation and technology. Our customers often demand delivery of our products on a tight time schedule and in a number of geographic markets. If our quality of service declines or we cannot meet the demands of our customers, they may utilize the services or products of our competitors. Our competitors include manufacturers that may be better capitalized, may have a more extensive low-cost sourcing strategy and presence in low-cost regions or may receive significant governmental support and as a result, may be able to offer more aggressive pricing. Our competitors also may develop products that are superior to our products, or may develop more efficient or effective methods of providing products and services or may adapt more quickly than we do to new technologies or evolving customer requirements. If we are unable to continue providing technologically superior or better quality products, timely delivery and competitive pricing, our ability to compete could be harmed and we could lose customers or market share.

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Pricing pressures from our customers may materially adversely affect our business.

We generate strong margins by selling premium products at premium prices. Accordingly, our margins could suffer if our customers are no longer willing to pay a premium for our product and service offerings. We face the greatest pricing pressure from our customers in the automotive first-fit end market. Virtually all vehicle manufacturers seek price reductions in both the initial bidding process and during the term of the award. We are also, from time to time, subject to pricing pressures from customers in our other end markets. If we are not able to offset price reductions through improved operating efficiencies and reduced expenditures or new product introduction, those price reductions may have a material adverse effect on our results of operations.

We are dependent on the continued operation of our manufacturing facilities and we may need to make investments in new or existing facilities or consolidate facilities to align with our strategies.

While we are not heavily dependent on any single manufacturing facility, major disruptions at a number of our manufacturing facilities, due to labor unrest, adverse weather, natural disasters, terrorist attacks, significant mechanical failure of our facilities, or other catastrophic event, could result in significant interruption of our business and a potential loss of customers and sales or could significantly increase our operating costs.

In addition, we have in the past and may in the future need to make investments in new or existing manufacturing facilities or to consolidate manufacturing facilities to adapt our production capacity to changing market conditions and to align with our growth and efficiency strategies. The costs of such investments or consolidation efforts may be significant and we may not realize the expected benefits on our anticipated timeframe or at all, which may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to accurately forecast demand or meet significant increases in demand for our products.

Certain of our businesses operate with short lead times and we order raw materials and supplies and plan production based on discussions with our customers and internal forecasts of demand. If we are unable to accurately forecast demand for our products, in terms of both volume and specific products, or react appropriately to abrupt changes in demand, we may experience delayed product shipments and customer dissatisfaction. If demand increases significantly from current levels, both we and our suppliers may have difficulty meeting such demand, particularly if such demand increases occur rapidly. Additionally, we may carry excess inventory if demand for our products decreases below projected levels. Failure to accurately forecast demand or meet significant increases in demand could have a material adverse impact on our business, financial condition and operating results.

We are exposed to exchange rate fluctuations in the international markets in which we operate.

We conduct operations in many areas of the world involving transactions denominated in a variety of currencies. We are subject to currency exchange rate risk to the extent that our costs may be denominated in currencies other than those in which we earn and report revenues and vice versa. In addition, a decrease in the value of any of these currencies relative to the U.S. dollar could reduce our profits from non-U.S. operations and the translated value of the net assets of our non-U.S. operations when reported in U.S. dollars in our consolidated financial statements. Movements in average currency exchange rates in the future could have a negative impact on our business, financial condition or results of operations as reported in U.S. dollars. Fluctuations in currencies may also make it more difficult to perform period-to-period comparisons of our reported results of operations.

We anticipate that there will be instances in which costs and revenues will not be exactly matched with respect to currency denomination. As a result, to the extent we continue to expand geographically, we expect that increasing portions of our revenues, costs, assets and liabilities will be subject to fluctuations in foreign currency valuations. We may experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations. Further, the markets in which we operate could restrict the removal or conversion of the local or foreign currency, resulting in our inability to hedge against these risks.

We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation. Actions of this nature, if they occur or continue for significant periods of time, could have an adverse effect on our results of operations and financial condition in any given period.

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We are dependent on market acceptance of new product introductions and product innovations for continued revenue growth.

The markets in which we operate are subject to technological change. Our long-term operating results depend substantially upon our ability to continually develop, introduce, and market new and innovative products, to modify existing products, to respond to technological change, and to customize certain products to meet customer requirements and evolving industry standards. The development of new product introductions and product innovations may require significant investment by us. There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the direction of technological change or that we will be unable to develop and market new products and applications in a timely fashion to satisfy customer demands. For example, the increased adoption of electric vehicles may affect certain of the end markets that we serve and could alter the application platforms in which we offer solutions.

If we are unable to adapt to technological changes, including by developing and marketing new products, our business and results of operations may be adversely affected.

We have taken, and continue to take, cost-reduction actions, which may expose us to additional risk and we may not be able to maintain the level of cost reductions that we have achieved.

We have been implementing cost reduction actions in all of our businesses and have discontinued product lines, divested non-core businesses, consolidated manufacturing operations and reduced our employee population in some locations. The impact of these cost-reduction actions on our sales and profitability may be influenced by many factors and we may not be able to maintain the level of cost savings that we have achieved depending on our ability to successfully complete these efforts. In connection with the implementation and maintenance of our cost reduction measures, we may face delays in anticipated workforce reductions, a decline in employee morale and a potential inability to meet operational targets due to an inability to retain or recruit key employees.

We are subject to risks from litigation, legal and regulatory proceedings and obligations that may materially impact our operations.

We face an inherent business risk of exposure to various types of claims, lawsuits and proceedings. We are involved in various tax, intellectual property, product liability, product warranty and environmental claims and lawsuits, and other legal, antitrust and regulatory proceedings arising in the ordinary course of our business. Although it is not possible to predict with certainty the outcome of every claim, lawsuit or proceeding and the range of probable loss, we believe these claims, lawsuits and proceedings will not individually or in the aggregate have a material impact on our results. However, we could, in the future, be subject to various claims, lawsuits and proceedings, including, amongst others, tax, intellectual property, product liability, product warranty, environmental claims and antitrust claims, and we may incur judgments or enter into settlements of lawsuits and proceedings that could have a material adverse effect on our business, financial condition and results of operations.

Our products could infringe on the intellectual property of others, which may cause us to engage in costly litigation and, if we are not successful, could cause us to pay substantial damages and/or prohibit us from selling certain of our products.

Third parties may assert infringement or other intellectual property claims against us based on their patents or other intellectual property rights. Any claim relating to intellectual property infringement that is successfully asserted against us may require us to pay substantial damages, including treble damages, if we are found to be willfully infringing another party’s patents, for past use of the asserted intellectual property and royalties and other consideration going forward if we are forced to take a license. In addition, if any such claim were successfully asserted against us, we may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing certain of our products, product candidates or other technology, or those we develop with our R&D partners. Even if infringement claims against us are without merit, defending these types of lawsuits takes significant time, may be expensive and may divert management attention from other business concerns.

In addition, first-fit and other manufacturers have attempted to use claims of intellectual property infringement against manufacturers and distributors of aftermarket products to restrict or eliminate the sale of aftermarket products that are the subject of the claims. First-fit manufacturers have brought such claims in federal court and with the U.S. International Trade Commission and with various foreign government agencies.

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To the extent first-fit and other manufacturers are seeking and obtaining more utility and design patents than they have in the past and are successful in asserting infringement of these patents and defending their validity, if any of our products are found to infringe someone’s patent, we could be restricted or prohibited from selling such products, which could have an adverse effect on our business. If we are sued for intellectual property infringement, we will likely incur significant expenses investigating and defending such claims, even if we prevail.

In addition, certification by independent organizations of certain of our aftermarket products may be revoked or adversely affected by first-fit manufacturer claims. Lack of certification may negatively impact us because many major insurance companies recommend or require the use of aftermarket products only if they have been certified by an independent certifying organization.

Failure to adequately protect or enforce our intellectual property rights against counterfeiting activities could adversely affect our business.

Although we routinely conduct anti-counterfeiting activities in multiple jurisdictions, we have encountered counterfeit reproductions of our products or products that otherwise infringe on our intellectual property rights. The actions we take to establish and protect trademarks and other intellectual property rights may not be adequate to prevent such counterfeiting activities by others. If we are unsuccessful in challenging such products on the basis of trademark or other intellectual property infringement, continued sales of such imitating products may adversely affect market share and impact customer perceptions and demand, leading to the shift of consumer preference away from our products and loss of market share.

We will not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

Filing, prosecuting and defending patents on our products in all countries and jurisdictions throughout the world would be prohibitively expensive, and the laws of certain foreign countries may not protect or allow enforcement of intellectual property rights to the same extent as the laws of the U.S.

Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where the ability to enforce our patent rights is not as strong as in the U.S. These products may compete with our products, and our intellectual property rights may not be effective or sufficient to prevent such competition. In addition, we may face significant expenses in connection with the protection of our intellectual property rights outside the U.S. If we are unable to successfully protect our rights or resolve intellectual property conflicts with others, our business, financial condition and results of operations may be adversely affected.

Failure to develop, obtain, enforce and protect intellectual property rights could adversely affect our business.

Our success depends on our ability to develop technologies and inventions used in our products and to brand such products to obtain intellectual property rights in such technologies and inventions, and to protect and enforce such intellectual property rights. In this regard, we rely on U.S. and foreign trademark, patent, copyright, and trade secret laws, as well as license agreements, nondisclosure agreements, and confidentiality and other contractual provisions. Nevertheless, the technologies and inventions developed by our engineers in the future may not prove to be as valuable as those of competitors, or competitors may develop similar or identical technologies and inventions independently of us and before we do.

We may not be able to obtain patents or other intellectual property rights in our new technologies and inventions or, if we do, the scope of such rights may not be sufficiently broad to afford us any significant commercial advantage over our competitors. Owners of patents or other intellectual property rights that we need to conduct our business as it evolves may be unwilling to license such intellectual property rights to us on terms we consider reasonable. Competitors and other third parties may challenge the ownership, validity, and/or enforceability of our patents or other intellectual property rights. Further, we expect pirates to continue to counterfeit certain of our products using our trademarks, which has led to, and will likely continue to cause loss of sales. It is difficult to police such counterfeiting, particularly on a worldwide basis, and the efforts we take to stop such counterfeiting may not be effective.

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Our efforts to enforce our intellectual property rights against infringers may not prove successful and will likely be time consuming and expensive and may divert management’s attention from the day-to-day operation of our business. Adequate remedies may not be available in the event of an infringement or unauthorized use or disclosure of our trade secrets and manufacturing expertise. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our business, financial condition, results of operations and cash flows. Further, successful assertion of our intellectual property rights depends on the judicial strength and willingness of the issuing jurisdictions to enact and enforce sufficient intellectual property laws. Creation and enforcement of intellectual property rights is a relatively recent development in much of the world, and so some time may be necessary to realize reliable intellectual property systems across all markets and jurisdictions, if this occurs at all.

We may be subject to recalls, product liability claims or may incur costs related to product warranties that may materially and adversely affect our business.

Meeting or exceeding many government-mandated safety standards is costly and requires manufacturers to remedy defects related to product safety through recall campaigns if the products do not comply with safety, health or environmental standards. If we, customers or government regulators determine that a product is defective or does not comply with such standards prior to the start of production, the launch of a product could be delayed until such defect is remedied. The costs associated with any protracted delay of a product launch or a recall campaign to remedy defects in products that have been sold could be substantial.

We face an inherent risk of product liability claims if product failure results in any claim for injury or loss. Supplier consolidation and the increase in low-cost country sourcing may increase the likelihood of receiving defective materials, thereby increasing the risk of product failure and resulting liability claims. Litigation is inherently unpredictable and these claims, regardless of their outcome, may be costly, divert management attention and adversely affect our reputation. Although we have liability insurance, we cannot be certain that this insurance coverage will continue to be available to us at a reasonable cost or will be adequate. In addition, even if we are successful in defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and us.

From time to time, we receive product warranty claims from our customers, pursuant to which we may be required to bear costs of repair or replacement of certain of our products. Vehicle manufacturers are increasingly requiring their outside suppliers to participate in the warranty of their products and to be responsible for the operation of these component products in new vehicles sold to consumers. Warranty claims may range from individual customer claims to full recalls of all products in the field. It cannot be assured that costs associated with providing product warranties will not be material.

We are subject to anti-corruption laws in various jurisdictions, as well as other laws governing our international operations. If we fail to comply with these laws we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could materially adversely affect our business, financial condition and results of operations.

Our operations are subject to one or more anti-corruption laws in various jurisdictions, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act of 2010 and other anti-corruption laws. The FCPA and these other laws generally prohibit employees and intermediaries from bribing or making other prohibited payments to foreign officials or other persons to obtain or retain business or gain some other business advantage. We operate in a number of jurisdictions that pose a high risk of potential FCPA or other anti-corruption violations, and we participate in joint ventures and relationships with third parties whose actions could potentially subject us to liability under the FCPA or other anti-corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the manner in which existing laws might be administered or interpreted.

We are also subject to other laws and regulations governing our operations, including regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security, the U.S. Department of Treasury’s Office of Foreign Assets Control, and various non-U.S. government entities, including applicable export control regulations, economic sanctions on countries and persons, customs requirements, currency exchange regulations, and transfer pricing regulations (collectively, “Trade Control laws”).

We are also subject to U.K. corporate criminal offences for failure to prevent the facilitation of tax evasion pursuant to the Criminal Finances Act 2017 (“FTP offences”). The FTP offences impose criminal liability on a company where it has failed to prevent the criminal facilitation of tax evasion by a person associated with the company.

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We have instituted policies, procedures and ongoing training of certain employees with regard to business ethics, designed to ensure that we and our employees comply with the FCPA, other anticorruption laws, Trade Control laws and the Criminal Finances Act 2017. However, there is no assurance that our efforts have been and will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the FCPA, or other legal requirements. If we are not in compliance with the FCPA, other anti-corruption laws, Trade Control laws or the Criminal Finances Act 2017, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have a material adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the FCPA, other anti-corruption laws or the Criminal Finances Act 2017 by U.S. or foreign authorities could also have a material adverse impact on our reputation, business, financial condition and results of operations.

Existing or new laws and regulations may prohibit, restrict or burden the sale of aftermarket products.

Most states have passed laws that regulate or limit the use of aftermarket products in certain types of repair work. These laws include requirements relating to consumer disclosure, owner’s consent regarding the use of aftermarket products in the repair process, and the requirement to have aftermarket products certified by an independent testing organization. Additional legislation of this kind may be introduced in the future. If additional laws prohibiting or restricting the use of aftermarket products are passed, it could have an adverse impact on our aftermarket products business.

Certain organizations test the quality and safety of vehicle replacement products. If these organizations decide not to test a particular vehicle product, or in the event that such organizations decide that a particular vehicle product does not meet applicable quality or safety standards, we may decide to discontinue sales of such product or insurance companies may decide to discontinue authorization of repairs using such product. Such events could adversely affect our business.

Cyber security vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions, services and data.

Increased global cyber security vulnerabilities, threats, computer viruses and more sophisticated and targeted cyber related attacks, as well as cyber security failures resulting from human error and technological errors, pose a risk to our systems, products and data as well as potentially to our employees’, customers', partners', suppliers' and third-party service providers' data. An attack could result in security breaches, theft, lost or corrupted data, misappropriation of sensitive, confidential or personal data or information, loss of trade secrets and commercially valuable information, production downtimes and operational disruptions. We attempt to mitigate these risks by employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems and contingency plans, but we remain potentially vulnerable to additional known or unknown threats. There is no assurance the financial or operational impact from such threats will not be material.

Global privacy, data protection and data security requirements are highly complex and evolving rapidly.

To conduct our operations, we regularly move data across national borders, and consequently we are subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security. The scope of the laws that may be applicable to us is often uncertain and may be conflicting, particularly with respect to foreign laws. For example, the European Union’s General Data Protection Regulation (“GDPR”), which greatly increases the jurisdictional reach of European Union law and adds a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, became effective in May 2018. Other countries have enacted or are enacting data localization laws that require data to stay within their borders. All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time.

Information systems failure may disrupt our business and result in financial loss and liability to our customers.

We rely on information technology networks and systems, including the Cloud and third party service providers, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities. These information technology networks and systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components, power outages, hardware failures or computer viruses. If these information technology systems suffer severe damage or disruption and the issues are not resolved in a timely manner, our business, financial condition and operations could be materially adversely affected.

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Our operations are subject to various environmental, health and safety laws and regulations, and we may incur significant costs to comply with these requirements, or be subject to sanctions or held liable for damages resulting from any failure to comply.

Our operations, products and properties are subject to extensive foreign, federal, state, local and provincial laws and regulations relating to EHS protection around the world. EHS laws vary by jurisdiction governing air emissions, wastewater discharges, material handling and transportation, waste management and disposal, substances in products, and workplace health and safety, as well as the investigation and clean-up of contaminated sites. Failure to comply with EHS laws and regulations could have significant consequences on our business and operations, including the imposition of substantial fines and sanctions for violations, injunctive relief (including requirements that we limit or cease operations at affected facilities), and negative publicity.

EHS laws have become increasingly stringent and stricter interpretation or enforcement of new and existing EHS laws could adversely affect our business, financial condition and results of our operations and product demand. For example, increasing global efforts to control emissions of carbon dioxide, methane and other greenhouse gases (“GHGs”) have the potential to directly impact the price of the energy and raw materials we purchase. In addition, GHG regulations could impact oil and gas production, a key demand driver of our industrial end markets, and reduce demand for our products by driving down the use of fossil fuels.

The evolution of EHS laws beyond manufacturing operations to restrict specific chemical substances in our products or impose labeling and other requirements, such as California’s Safe Drinking Water and Toxic Enforcement Act (“Proposition 65”) or European Union’s Registration, Evaluation, Authorisation, and Restriction of Chemical Substances (“REACH”) Directive, could result in significant costs or limit access to certain markets.

We have incurred, and will continue to incur, both operating and capital costs to comply with EHS laws, including costs associated with the investigation and clean-up of some of our current and former properties and offsite disposal locations. As the present and former operator of industrial property that use and generate hazardous materials, we could be subject to additional liability for environmental contamination in the future, regardless of whether we caused such contamination.

Our insurance may not fully cover all future losses we may incur.

Manufacturers of products such as ours are subject to inherent risks. We maintain an amount of insurance protection that we consider adequate, but we cannot provide any assurance that our insurance will be sufficient or provide effective coverage under all circumstances and against all hazards or liabilities to which we may be subject. Specifically, our insurance may not be sufficient to replace facilities or equipment that are damaged in part or in full. Damages or third-party claims for which we are not fully insured could adversely affect our financial condition and results of operation. Further, due to rising insurance costs and changes in the insurance markets, insurance coverage may not continue to be available at all or at rates or on terms similar to those presently available. Additionally, our insurance may subject us to significant deductibles, self-insured retentions, retrospectively rated premiums or similar costs. Any losses not covered by insurance could have a material adverse effect on us. We typically purchase business interruption insurance for our facilities. However, if we have a stoppage, our insurance policies may not cover every contingency and may not be sufficient to cover all of our lost revenues. In the future, we may be unable to purchase sufficient business interruption insurance at desirable costs.

We supply products to industries that are subject to inherent risks, including equipment defects, malfunctions and failures and natural disasters, which could result in unforeseen and damaging events. These risks may expose us, as an equipment operator and supplier, to liability for personal injury, wrongful death, property damage, and pollution and other environmental damage. The insurance we carry against many of these risks may not be adequate to cover our claims or losses. Further, insurance covering the risks we expect to face or in the amounts we desire may not be available in the future or, if available, the premiums may not be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we were not able to obtain liability insurance, our business, results of operations, cash flows and financial condition could be negatively impacted. If our customers suffer damages as a result of the occurrence of such events, they may reduce their business with us.

Longer lives of products used in our end markets may adversely affect demand for some of our replacement products.

The average useful life of certain products in our end markets has increased in recent years due to innovations in technologies and manufacturing processes. The longer product lives allow end users to replace parts less often. As a result, a portion of sales in the replacement markets we serve may be displaced. If this trend continues, it could adversely impact our replacement market sales.

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The replacement market in emerging markets may develop in a manner that could limit our ability to grow in those markets.

In emerging markets such as China, India, Eastern Europe and Russia, the replacement markets are still nascent as compared to those in more developed nations. In these markets, we have focused on building a first-fit presence in order to establish brand visibility in the end markets we serve. However, as the replacement markets in these regions grow, our products may not be selected as the replacement product, although we are the first-fit provider. If we are not able to convert our first-fit presence in these emerging markets into sales in the replacement end market, there may be a material adverse effect on our replacement end market growth potential in these emerging markets.

We may acquire businesses or assets that we may not be able to successfully integrate and we may be unable to recoup our investment in these businesses or assets.

We consider strategic acquisitions of complementary businesses or assets to expand our product portfolio and geographic presence on an ongoing basis, and regularly have discussions concerning potential acquisitions, certain of which may be material. Acquisitions, particularly investments in emerging markets, involve legal, economic and political risks. We also encounter risks in the selection of appropriate investment and disposal targets, execution of the transactions and integration of acquired businesses or assets.

We may not be able to effectively integrate acquisitions or successfully implement appropriate operational, financial and management systems and controls to achieve the benefits expected to result from these acquisitions. As a result, we may not be able to recoup our investment in those acquisitions or achieve the economic benefits that we anticipate from these acquisitions. Our efforts to integrate these businesses or assets could be affected by a number of factors beyond our control, such as general economic conditions and increased competition. In addition, the process of integrating these businesses or assets could cause the interruption of, or loss of momentum in, the activities of our existing business and the diversion of management’s attention. Furthermore:

• the key personnel of the acquired company may decide not to work for us;

• customers of the acquired company may decide not to purchase products from us;

• suppliers of the acquired company may decide not to sell products to us;

• the markets may reject the acquired technologies, or they may not integrate with our existing technologies as expected;

• we may experience business disruptions as a result of information technology systems conversions;

• we may experience additional financial and accounting challenges and complexities in areas such as tax planning, treasury management, and financial reporting;

• we may be held liable for environmental, tax or other risks and liabilities as a result of our acquisitions, some of which we may not have discovered during our due diligence;

• we may intentionally assume the liabilities of the companies we acquire, which could result in material adverse effects on our business;

• our existing business may be disrupted or receive insufficient management attention;

• we may not be able to realize the cost savings or other financial benefits we anticipated, either in the amount or in the time frame that we expect; and

• we may incur debt or issue equity securities to pay for any future acquisition, the issuance of which could involve the imposition of restrictive covenants or be dilutive to our existing shareholders.

These impacts and any delays or difficulties encountered in connection with the integration of these businesses or assets could negatively impact our business and results of operations.

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In addition, certain of the businesses that we have acquired and may acquire have unaudited financial statements that have been prepared by the management of such companies and have not been independently reviewed or audited. We cannot assure you that the financial statements of companies we have acquired or will acquire would not be materially different if such statements were audited. Finally, we cannot assure you that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete future acquisitions at all. We cannot assure you that there will be attractive acquisition opportunities at reasonable prices, that financing will be available or that we can successfully integrate such acquired businesses into our existing operations. In addition, our results of operations from these acquisitions could, in the future, result in impairment charges for any of our intangible assets, including goodwill, or other long-lived assets, particularly if economic conditions worsen unexpectedly. These changes could materially negatively affect our business, results of operations or financial condition.

If we lose our senior management or key personnel, our business may be materially and adversely affected.

The success of our business is largely dependent on our senior management team, as well as on our ability to attract and retain other qualified key personnel. In addition, there is significant demand in our industry for skilled workers. It cannot be assured that we will be able to retain all of our current senior management personnel and attract and retain other necessary personnel, including skilled workers, necessary for the development of our business. Further, in the event we do lose key personnel, the success of our business may depend on whether we have appropriate succession plans in place and can implement on such plans to identify and integrate new personnel. The loss of the services of senior management and other key personnel or the failure to attract additional personnel and implement succession plans as required could have a material adverse effect on our business, financial condition and results of operations.

Our business depends on our strong brand, and if we are not able to maintain and enhance our brand we may be unable to sell our products.

Our brand has worldwide recognition and our success depends on our ability to maintain and enhance our brand image and reputation. In particular, we believe that maintaining and enhancing the Gates brand is critical to maintaining and expanding our customer base. Maintaining, promoting and enhancing our brand may require us to make substantial investments in areas such as product innovation, product quality, intellectual property protection, marketing and employee training, and these investments may not have the desired impact on our brand image and reputation. Our business could be adversely impacted if we fail to achieve any of these objectives or if the reputation or image of our brand is tarnished or receives negative publicity. In addition, adverse publicity about regulatory or legal action against us could damage our reputation and brand image and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations. If we are unable to maintain or enhance the image of our brand, it could materially adversely affect our business, financial condition and results of operations.

We may be materially adversely impacted by work stoppages and other labor matters.

As of December 28, 2019, we had approximately 14,700 employees worldwide. Certain of our employees are represented by various unions under collective bargaining agreements. While we have no reason to believe that we will be impacted by work stoppages and other labor matters, we cannot assure you that future issues with our labor unions will be resolved favorably or that we will not encounter future strikes, work stoppages, or other types of conflicts with labor unions or our employees. Increased unionization of our workforce, new labor legislation or changes in regulations could disrupt our operations, reduce our profitability or interfere with the ability of our management to focus on executing our business strategies. Any of these factors may have a materially adverse effect on us or may limit our flexibility in dealing with our workforce. In addition, many of our customers and vendors have unionized workforces. If one or more of our customers or vendors experience a material work stoppage, it could similarly have a material adverse effect on our business, results of operations and financial condition.

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We have investments in joint ventures, which limits our ability to manage third-party risks associated with these projects.

We have investments in joint ventures which may involve risks such as the possibility that a co-venturer in an investment might become bankrupt, be unable to meet its capital contribution obligations, have economic or business interests or goals that are inconsistent with our business interests or goals or take actions that are contrary to our instructions or to applicable laws and regulations. Actions by a co-venturer or other third party could expose us to claims for damages, financial penalties and reputational harm, any of which could adversely affect our business and operations. In addition, we may agree to guarantee indebtedness incurred by a joint venture or co-venturer or provide standard indemnifications to lenders for loss liability or damage occurring as a result of our actions or actions of the joint venture or other co-venturers. Such a guarantee or indemnity may be on a joint and several basis with a co-venturer, in which case we may be liable in the event that our co-venturer defaults on its guarantee obligation. The non-performance of a co-venturer’s obligations may cause losses to us in excess of the capital we have invested or committed.

Preparing our financial statements requires us to have access to information regarding the results of operations, financial position and cash flows of our joint ventures. Any deficiencies in our joint ventures’ internal controls over financial reporting may affect our ability to report our financial results accurately or prevent or detect fraud. Such deficiencies also could result in restatements of, or other adjustments to, our previously reported or announced operating results, which could diminish investor confidence and reduce the market price for our ordinary shares. Additionally, if our joint ventures are unable to provide this information for any meaningful period or fail to meet expected deadlines, we may be unable to satisfy our financial reporting obligations or timely file our periodic reports.

Although our joint ventures may generate positive cash flow, in some cases they may be unable to distribute that cash to the joint venture partners. Additionally, in some cases our joint venture partners may control distributions and may choose to leave cash in the joint venture rather than distribute it. Because our ability to generate liquidity from our joint ventures depends in part on their ability to distribute cash to us, our failure to receive distributions from our joint venture partners could reduce our cash flow return on these investments.

We are subject to liabilities with respect to businesses that we have divested in the past.

In recent years, we have divested a number of businesses. With respect to some of these former businesses, we have contractually agreed to indemnify the buyer against liabilities arising prior to the divestiture, including lawsuits, tax liabilities, product liability claims or environmental matters. Even without ongoing contractual indemnification obligations, we could be exposed to liabilities arising out of such divestitures. As a result of these types of arrangements, conditions outside our control could materially adversely affect our future financial results.

Terrorist acts, conflicts and wars may materially adversely affect our business, financial condition and results of operations.

As we have a large international footprint, we are subject to increased risk of damage or disruption to us, our employees, facilities, partners, suppliers, distributors, resellers or customers due to terrorist acts, conflicts and wars, wherever located around the world. The potential for future attacks, the national and international responses to attacks or perceived threats to national security, and other actual or potential conflicts or wars have created many economic and political uncertainties. Although it is impossible to predict the occurrences or consequences of any such events, they could result in a decrease in demand for our products, make it difficult or impossible to deliver products to our customers or to receive raw materials from our suppliers, create delays and inefficiencies in our supply chain and result in the need to impose employee travel restrictions, and thereby materially adversely affect our business, financial condition, results of operations and cash flows.

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If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, it may have a material adverse effect on our business, financial condition and results of operations.

Our facilities, supply chains, distribution systems and information technology systems are subject to catastrophic loss due to fire, flood, earthquake, hurricane, public health crisis such as the novel coronavirus (2019-nCoV) that was first reported from Wuhan, China, on December 31, 2019, or other natural or man-made disasters. If any of these facilities, supply chains or systems were to experience a catastrophic loss or ongoing closure or disruption, it could negatively impact our operations, delay production and shipments, result in defective products or services, damage customer relationships and our reputation and result in legal exposure and large repair or replacement expenses. The third-party insurance coverage that we maintain will vary from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against losses.

Certain of our defined benefit pension plans are underfunded, and additional cash contributions we may be required to make will reduce the cash available for our business, such as the payment of our interest expense.

Certain of our employees in the U.S., the U.K., Canada, Mexico, Germany and Japan are participants in defined benefit pension plans which we sponsor and/or have obligations to contribute to. As of December 28, 2019, the unfunded amount of our defined benefit pension plans on a worldwide basis was $62.9 million on a Topic 715 “Compensation-Retirement Benefits” basis. The amount of our contributions to our underfunded plans will depend upon asset returns, funding assumptions, regulatory requirements and a number of other factors and, as a result, the amount we may be required to contribute to such plans in the future may vary. Such cash contributions to the plans will reduce the cash available for our business such as the payment of interest expense on our notes or our other indebtedness.

The loss or financial instability of any significant customer or customers could adversely affect our business, financial condition, results of operations or cash flows.

A substantial part of our business is concentrated with a few customers, and we have certain customers that are significant to our business. During Fiscal 2019, our top ten customers accounted for approximately 23% of our consolidated net sales and accounted for approximately 36% of our trade accounts receivable balance as of December 28, 2019, and our largest customer accounted for approximately 9% and 19% of our Fiscal 2019 consolidated net sales and trade accounts receivable balance as of December 28, 2019, respectively. The loss of one or more of these customers or other major customers, or a deterioration in our relationship with any of them or their failure to pay amounts due to us could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Our contracted backlog is comprised of future orders for our products from a broad number of customers. Defaults by any of the customers that have placed significant orders with us could have a significant adverse effect on our net sales, profitability and cash flow. Our customers may in the future default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons deriving from the general economic environment or circumstances affecting those customers in particular. If a customer defaults on its obligations to us, it could have a material adverse effect on our backlog, business, financial condition, results of operations or cash flows.

Changes in our effective tax rate or additional tax liabilities could adversely impact our net income.

We are subject to income taxes as well as non-income based taxes in the U.K., the U.S. and various other jurisdictions in which we operate. The laws and regulations in these jurisdictions are inherently complex and the Company and its subsidiaries will be obliged to make judgments and interpretations about the application of these laws and regulations to the Company and its subsidiaries and their operations and businesses, including those related to any restructuring of intercompany operations, holdings or financings; the valuation of intercompany services; cross-border payments between affiliated companies; and the related effects on income tax, VAT and transfer tax. Further, our tax liabilities could be adversely affected by numerous other factors, including income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, and changes in tax laws and regulations. We are regularly under audit by taxing authorities in certain of the jurisdictions in which we operate. Although we believe our tax estimates are reasonable, including our estimates of reserves for unrecognized tax benefits related to the implementation of our European corporate center in Fiscal 2019, any changes in our judgments and interpretation of tax laws or any material differences as a result of the audits could result in unfavorable tax adjustments that have an adverse effect on our overall tax liability.

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Changes in tax laws could result in additional tax liabilities.

Changes in tax laws can and do occur. For example, in 2017, the U.S. government enacted the Tax Cuts and Jobs Act, which is complex and continues to be further clarified with supplemental guidance. Changes to tax laws may require the Company to make significant judgment in determining the appropriate provision and related accruals for these taxes; and as a result, such changes could result in substantially higher taxes and, therefore, could have a significant adverse effect on our results of operations, financial conditions and liquidity. In addition, the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, has recommended fundamental tax reforms affecting the taxation of multinational corporations, including the Base Erosion and Profit Shifting project, which in part aims to address international corporate tax avoidance. Countries have already enacted significant measures in this regard. The OECD has undertaken a new project to address the tax challenges of the digitization of the economy. The proposal seeks to allocate a greater share of taxing rights to countries where consumers are located, regardless of the physical presence of a business, and by implementing a global minimum tax. Such OECD projects are likely to result in further changes to the international tax regime which could adversely impact our effective tax rate and tax liabilities.

Further, the U.K.’s decision to leave the E.U. may result in changes to the interpretation and application of tax laws and regulations including changes to the interpretations of double tax treaties which could lead to significant changes in the U.K. tax burden of the Company. In addition, it may become more difficult for cash to be repatriated to U.K. companies without the application of withholding tax and the tax treatment of the interest on any intra-group loans may be impacted by these changes, both resulting in significant changes to the tax burden of the Company.

Any such developments to the tax regime in the U.K., the U.S. or in other countries in which we operate could materially affect our tax burden and/or have a negative impact on our ability to compete in the global marketplace.

We operate so as to be treated exclusively as a resident of the U.K. for tax purposes, but the relevant tax authorities may treat us as also being a resident of another jurisdiction for tax purposes.

We are a company incorporated in the U.K. Current U.K. tax law provides that we will be regarded as being U.K. resident for tax purposes from incorporation and shall remain so unless (i) we were concurrently resident of another jurisdiction (applying the tax residence rules of that jurisdiction) that has a double tax treaty with the U.K. and (ii) there is a tiebreaker provision in that tax treaty which allocates exclusive residence to that other jurisdiction.

Based upon our management and organizational structure, we believe that we should be regarded solely as resident in the U.K. from our incorporation for tax purposes. However, because this analysis is highly factual and may depend on future changes in our management and organizational structure, there can be no assurance regarding the final determination of our tax residence. Should we be treated as resident in a country or jurisdiction other than the U.K., we could be subject to taxation in that country or jurisdiction on our worldwide income and may be required to comply with a number of material and formal tax obligations, including withholding tax and/or reporting obligations provided under the relevant tax law, which could result in additional costs and expenses. Further, we may not qualify for benefits under the tax treaties entered into between the U.K. and other countries. Not being treated exclusively as a resident of the U.K. for tax purposes could result in adverse tax consequences to us.

Risks Related to Our Indebtedness

Our substantial leverage could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry or our ability to pay our debts, and could divert our cash flow from operations to debt payments.

We are highly leveraged. As of December 28, 2019, the total principal amount of our debt was $2,985.0 million. Subject to the limits contained in the credit agreements that govern our senior secured credit facilities, the indenture that governs our notes and the applicable agreements governing our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could increase. Specifically, our high level of debt could have important consequences, including the following:

• making it more difficult for us to satisfy our obligations with respect to our debt;

• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

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• requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

• increasing our vulnerability to general adverse economic and industry conditions;

• exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

• limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

• placing us at a disadvantage compared to other, less leveraged competitors; and

• increasing our cost of borrowing.

We are a holding company, and our consolidated assets are owned by, and our business is conducted through, our subsidiaries. Earnings from these subsidiaries are our primary source of funds for debt payments and operating expenses. If our subsidiaries are restricted from making distributions, our ability to meet our debt service obligations or otherwise fund our operations may be impaired. Moreover, there may be restrictions on payments by subsidiaries to their parent companies under applicable laws, including laws that require companies to maintain minimum amounts of capital and to make payments to shareholders only from profits. As a result, although a subsidiary of ours may have cash, we may not be able to obtain that cash to satisfy our obligation to service our outstanding debt or fund our operations.

Despite our current level of indebtedness, we may be able to incur substantially more debt and enter into other transactions which could further exacerbate the risks to our financial condition described above.

We may be able to incur significant additional indebtedness in the future. Although certain of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our current debt levels, the substantial leverage risks described in the immediately preceding risk factor would increase.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Interest rates may increase in the future. As a result, interest rates on our revolving credit facility or other variable rate debt offerings could be higher or lower than current levels. As of December 28, 2019, after taking into account our interest rate derivatives, $741.7 million (equivalent), or 24.8%, of our outstanding debt had variable interest rates. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

In addition, we have $2,416.8 million of variable rate indebtedness that uses LIBOR or EURIBOR as a benchmark for establishing the rate of interest. LIBOR, and its foreign currency counterparts, are the subject of recent national, international and other regulatory guidance and proposals for reform and are not expected to be maintained after 2021. We therefore may need to renegotiate certain of our loan agreements that extend past 2021, which could require us to incur significant expense and may subject us to disputes or litigation over the appropriateness or comparability to LIBOR or EURIBOR of the replacement reference rates. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities, as its preferred alternative rate for LIBOR. In Europe, a working group in conjunction with the European Central Bank has recommended the euro short-term rate, or €STR as the possible replacement to the Euro OverNight Index Average, which provides the discounting curve for collateralized euro cash flows used in EURIBOR. At this time, it is not possible to predict how markets will respond in coming years to SOFR, €STR, or other alternative reference rates as replacements to the current interbank rates. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness and could challenge our ability to renegotiate our revolving credit facility or other variable rate debt offerings.

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Certain of our debt agreements impose significant operating and financial restrictions on us and our subsidiaries, which could prevent us from capitalizing on business opportunities.

The credit agreements that govern our senior secured term loan facilities and the indenture that governs our notes impose significant operating and financial restrictions on our subsidiaries. These restrictions limit the ability of certain of our subsidiaries to, among other things:

• incur or guarantee additional debt or issue disqualified stock or preferred stock;

• pay dividends and make other distributions on, or redeem or repurchase, capital stock;

• make certain investments;

• incur certain liens;

• enter into transactions with affiliates;

• merge or consolidate;

• enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments;

• designate restricted subsidiaries as unrestricted subsidiaries; and

• transfer or sell assets.

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include similar or more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders or amend the covenants.

Our failure to comply with the restrictive covenants described above as well as other terms of our other indebtedness or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our results of operations and our financial condition.

If there is an event of default under any of the agreements relating to our outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that our assets or cash flows would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure our indebtedness under our secured debt, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.

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Risks Related to the Ownership of our Ordinary Shares

Our Sponsor and its affiliates control us and their interests may conflict with ours or yours in the future.

Our Sponsor and its affiliates beneficially owned approximately 85.4% of our outstanding ordinary shares as of December 28, 2019. Moreover, under our articles of association (the “Articles”) and our shareholders agreement with our Sponsor, for so long as our Sponsor and its affiliates retain significant ownership of us, we have agreed to nominate to our board individuals designated by such Sponsor. Even when our Sponsor and its affiliates cease to own ordinary shares representing a majority of the total voting power, for so long as our Sponsor continues to own a significant percentage of our ordinary shares, such Sponsor will still be able to significantly influence the composition of our board of directors and the approval of actions requiring shareholder approval through their voting power. Accordingly, for such period of time, our Sponsor will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our Sponsor continues to own a significant percentage of our ordinary shares, such Sponsor will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your ordinary shares as part of a sale of our company and ultimately might affect the market price of our ordinary shares.

Our Sponsor and its affiliates engage in a broad spectrum of activities. In the ordinary course of their business activities, our Sponsor and its affiliates may engage in activities where their interests conflict with our interests or those of our shareholders. Our shareholders’ agreement provides that none of our Sponsor, any of its affiliates or any director who is not employed by us or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our Sponsor also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our Sponsor may have an interest in our pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to us and our shareholders.

We are a “controlled company” within the meaning of the rules of the NYSE and, as a result, rely on and intend to continue to rely on, exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements.

Our Sponsor controls a majority of the combined voting power of all classes of our shares entitled to vote generally in the election of directors. As a result, we are a “controlled company” within the meaning of the corporate governance standards of the NYSE. Under these rules, a company of which more than 50% of the voting power in the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements. For example, controlled companies:

• are not required to have a board that is composed of a majority of “independent directors,” as defined under the rules of such exchange;

• are not required to have a compensation committee that is composed entirely of independent directors; and

• are not required to have a nominating and corporate governance committee that is composed entirely of independent directors.

We intend to continue to utilize these exemptions. As a result, we currently do not have a majority of the directors on our board that have been affirmatively determined to be independent by our board. In addition, our compensation committee and nominating and governance committees are not comprised entirely of directors that have been affirmatively determined to be independent by our board. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE.

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The market price of our ordinary shares has been and may in the future be volatile, which could cause the value of your investment to decline.

The market price of our ordinary shares has been and may in the future be volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. During 2019, the per share trading price of our ordinary shares fluctuated from a low of $6.76 to a high of $17.60. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our ordinary shares regardless of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to shareholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals, and in response the market price of our ordinary shares could decrease significantly.

Stock markets and the price of our ordinary shares may experience extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

Because we have no current plans to pay dividends on our ordinary shares, you may not receive any return on your investment unless you sell your ordinary shares for a price greater than that which you paid for them.

We have no current plans to pay dividends on our ordinary shares. The declaration, amount and payment of any future dividends on our ordinary shares will be at the sole discretion of our board of directors. Our board of directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our shareholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant. In addition, our ability to pay dividends is limited by our senior secured credit facilities and notes and may be limited by covenants of other indebtedness we or our subsidiaries incur in the future. As a result, you may not receive any return on an investment in our ordinary shares unless you sell your ordinary shares for a price greater than that which you paid for them.

You may be diluted by the future issuance of additional ordinary shares in connection with our incentive plans, acquisitions or otherwise.

Our shareholders adopted a resolution authorizing our board of directors to allot our ordinary shares and to grant rights to subscribe for or convert any security into such shares for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. Additionally, we have reserved 12,500,000 ordinary shares for issuance under our Omnibus Incentive Plan. Any ordinary shares that we issue, including under our Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the holders of our ordinary shares.

Future issuances of ordinary shares by us, and the availability for resale of shares held by our Sponsor, may cause the market price of our ordinary shares to decline.

Sales of a substantial number of our ordinary shares in the public market, or the perception that these sales could occur, could substantially decrease the market price of our ordinary shares.

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Pursuant to a registration rights agreement, we granted our Sponsor the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our ordinary shares held by them or to participate in future registration of securities by us. In Fiscal 2019, the SEC declared effective a registration statement on Form S-3 that, among other things, registers (i) up to a maximum aggregate offering price of $1,000,000,000 of our securities, and (ii) the resale of 243,985,383 shares held by our Sponsor, which represented approximately 85.4% of our outstanding ordinary shares as of December 28, 2019. These shares held by our Sponsor also may be sold pursuant to Rule 144 under the Securities Act subject to certain volume, manner of sale, and other limitations. The market price of our ordinary shares could drop significantly if we or our Sponsor sell these shares or are perceived by the market as intending to sell them.

We may issue a new class or classes of shares whose terms could adversely affect the voting power or value of our ordinary shares.

Our articles of association, as amended, authorize us to issue, subject to the limit therein on the authority of our Board of Directors to allot new shares of the Company, without the approval of the holders of our ordinary shares, a new class or classes of shares, including preference shares, with nominal value in any currency and with, or having attached to them, such powers, designations, preferences, voting rights, rights and terms of redemption, and relative participating, optional or other special rights and qualifications, limitations and restrictions attaching thereto as the Board of Directors may determine, including rights to (a) receive dividends (which may include rights to receive preferential or cumulative dividends), (b) distributions made on a winding up of the Company and (c) be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of shares, at such price or prices (subject to the Companies Act 2006 (“Companies Act”)) or at such rates of exchange and with such adjustments as may be determined by our Board of Directors.

The terms of one or more classes of shares could adversely impact the voting power of our ordinary shares. For example, we might grant holders of a new class of shares the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.

Similarly, the repurchase or redemption rights or liquidation preferences we might assign to a new class of shares could affect the residual value of our ordinary shares.

U.S. investors may have difficulty enforcing civil liabilities against our company, our directors or members of senior management.

There is doubt as to whether English courts would enforce certain civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition, awards of punitive damages in actions brought in the U.S. or elsewhere may be unenforceable in the U.K. An award for monetary damages under the U.S. securities laws would be considered punitive if it does not seek to compensate the claimant for loss or damage suffered and is intended to punish the defendant. The enforceability of any judgment in the U.K. will depend on the particular facts of the case as well as the laws and treaties in effect at the time. The U.S. and the U.K. do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters.

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.

We are incorporated under English law. The rights of holders of ordinary shares are governed by English law, including the provisions of the Companies Act, and by our Articles. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations.

The U.K. City Code on Takeovers and Mergers (the “Takeover Code”) applies, among other things, to an offer for a public company whose registered office is in the U.K. and whose securities are not admitted to trading on a regulated market in the U.K. if the company is considered by the Panel on Takeovers and Mergers (the “Takeover Panel”) to have its place of central management and control in the U.K. This is known as the “residency test”. Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the U.K. by looking at various factors, including the structure of our board of directors, the functions of the directors and where they are resident.

29

If at the time of a takeover offer the Takeover Panel determines that we have our place of central management and control in the U.K., we would be subject to a number of rules and restrictions, including but not limited to the following: (i) our ability to enter into deal protection arrangements with a bidder would be extremely limited; (ii) we might not, without the approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (iii) we would be obliged to provide equality of information to all bona fide competing bidders.

Our Sponsor has an interest in over 50% of our voting share capital, and therefore, if the Takeover Panel were to determine that we were subject to the Takeover Code, our Sponsor would be able to increase its aggregate holding in us without triggering the requirement under Rule 9 of the Takeover Code to make a cash offer for the outstanding shares in the issuer.

The Takeover Panel has confirmed to our representatives that, on the basis of our board of directors, it does not consider the Takeover Code to apply to the Company, although that position is subject to change if our place of central management and control is subsequently found to move to the U.K.

Our Articles provide that the courts of England and Wales have exclusive jurisdiction to determine shareholder and derivative disputes, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, former directors, officers or employees.

Our Articles provide that the courts of England and Wales have exclusive jurisdiction to determine any dispute brought by a shareholder in that shareholder’s capacity as such, or related to or connected with any derivative claim in respect of a cause of action vested in the Company or seeking relief on behalf of the Company, against the Company and/or the board and/or any of the directors, former directors, officers or other employees individually, arising out of or in connection with these Articles or (to the maximum extent permitted by applicable law) otherwise. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder believes is favorable for disputes with us or our directors, former directors, officers or other employees, which may discourage lawsuits against us and our directors, former directors, officers and employees. The rights of stockholders under Delaware law and shareholders under English law in relation to the bringing of shareholder suits differ in several significant respects. Any person or entity purchasing or otherwise acquiring or holding any interest in our ordinary shares shall be deemed to have notice of and to have consented to the provisions of our governing documents described above, as they may be amended from time to time.

Transfers of our shares outside DTC may be subject to stamp duty or stamp duty reserve tax in the U.K., which would increase the cost of dealing in our shares.

On completion of the IPO, as noted below, the new ordinary shares were issued to a nominee for The Depository Trust Company (“DTC”) and corresponding book-entry interests credited in the facilities of DTC. On the basis of current law, no charges to U.K. stamp duty or stamp duty reserve tax (“SDRT”) are expected to arise on the issue of the ordinary shares into DTC’s facilities or on transfers of book-entry interests in ordinary shares within DTC’s facilities and investors are strongly encouraged to hold ordinary shares in book-entry form through the facilities of DTC.

A transfer of title in the ordinary shares from within the DTC system to a purchaser out of DTC and any subsequent transfers that occur entirely outside the DTC system, will attract a charge to stamp duty at a rate of 0.5% of any consideration, which is payable by the transferee of the ordinary shares. Any such duty must be paid and the relevant transfer document, if any, stamped by HM Revenue & Customs (“HMRC”) before the transfer can be registered in our company books. However, if those ordinary shares are redeposited into DTC, the redeposit will attract stamp duty or SDRT at the rate of 1.5% to be paid by the transferor.

We have put in place arrangements to require that our ordinary shares held in certificated form cannot be transferred into the DTC system until the transferor of the ordinary shares has first delivered the ordinary shares to a depositary specified by us so that stamp duty (and/or SDRT) may be collected in connection with the initial delivery to the depositary. Any such ordinary shares will be evidenced by a receipt issued by the depositary. Before the transfer can be registered in our books, the transferor will also be required to put funds in the depositary to settle the resultant liability to stamp duty (and/or SDRT), which will be charged at a rate of 1.5% of the value of the shares.

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If our ordinary shares are not eligible for continued deposit and clearing within the facilities of DTC, then transactions in our securities may be disrupted.

The facilities of DTC are a widely-used mechanism that allow for rapid electronic transfers of securities between the participants in the DTC system, which include many large banks and brokerage firms. Our ordinary shares are currently eligible for deposit and clearing within the DTC system. DTC generally has discretion to cease to act as a depository and clearing agency for the ordinary shares including to the extent that any changes in U.K. law (including changes as a result of the U.K.’s decision to leave the E.U.) changes the stamp duty or SDRT position in relation to the ordinary shares. If DTC were to determine that our ordinary shares are not eligible for continued deposit and clearance within its facilities, our ordinary shares may not be eligible for continued listing on the NYSE and trading in our ordinary shares would be disrupted. While we would pursue alternative arrangements to preserve our listing and maintain trading, any such disruption could have a material adverse effect on the market price of our ordinary shares and our access to the capital markets.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We have a presence in over 120 locations in 29 countries across the Americas, Europe, Asia and Australia. Our corporate operations center is located in Denver, Colorado, and we also maintain regional headquarters in Denver, Colorado, Luxembourg, Shanghai, China and Singapore.

As of December 28, 2019, the carrying amount of our property, plant and equipment was $727.9 million of which $2.8 million related to assets held under finance leases. This compares to a carrying amount of our property, plant and equipment of $756.3 million as of December 29, 2018, of which $2.2 million related to assets held under finance leases.

Included in property, plant and equipment are land and buildings with a total carrying amount of $249.2 million as of December 28, 2019, compared with $256.3 million as of December 29, 2018, representing manufacturing facilities, service centers, distribution centers and offices located throughout the world, predominantly in North America. As of December 28, 2019, Gates owned 33 of these facilities, including 24 manufacturing or service centers.

Additionally, we lease approximately 90 locations. These leased locations included 39 manufacturing or service centers as of December 28, 2019. Management believes that the Company’s properties are suitable and adequate for its current and anticipated business operations.

Item 3. Legal Proceedings

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 meritorious defenses are 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 have a material adverse effect upon our financial position, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information

Our ordinary shares are traded on the New York Stock Exchange (“NYSE”) under the symbol “GTES”. As of February 17, 2020, there were three holders of record of our ordinary shares. This stockholder figure does not include a substantially greater number of holders whose ordinary shares are held by these recordholders.

Dividends

We have no current plans to pay dividends on our ordinary shares. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. We are a holding company and have no direct operations, accordingly, we will only be able to pay dividends from funds we receive from our subsidiaries. In addition, the ability of our subsidiaries to pay dividends will be limited by covenants in our existing indebtedness and may be limited by the agreements governing any indebtedness we or our subsidiaries may incur in the future.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 6. Selected Financial Data

Upon completion of the IPO of the Company’s shares in January 2018, the Company undertook certain reorganization transactions (the “Transactions”) such that Gates Industrial Corporation plc now owns indirectly all of the equity interests in Omaha Topco, an exempted limited company incorporated in the Cayman Islands with limited liability and has become the holding company of the Gates business. The reorganization was accounted for as a transaction between entities under common control and the net assets were recorded at the historical cost basis 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 Transactions.

The following table sets forth the selected historical consolidated financial information of Gates Industrial Corporation plc for the periods and dates indicated, which therefore reflects the historical consolidated financial information of Omaha Topco for the periods prior to the date of the Transactions. The balance sheet data as of December 28, 2019 and December 29, 2018 and the statement of operations data for Fiscal 2019, Fiscal 2018 and Fiscal 2017 have been derived from the audited consolidated financial statements of Gates Industrial Corporation plc included elsewhere in this annual report. The balance sheet data as of December 30, 2017 and the statement of operations data for Fiscal 2016 have been derived from the audited consolidated financial statements of Gates Industrial Corporation plc that are not included in this annual report. The balance sheet data as of December 31, 2016 and January 2, 2016 and the statement of operations data for Fiscal 2015 have been derived from the audited consolidated financial statements of Omaha Topco that are not included in this annual report.

You should read the following selected consolidated financial data together with our consolidated financial statements and the related notes included elsewhere in this annual report and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this annual report. See also “About this Annual Report—Financial Statement Presentation.”

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(dollars in millions)	Fiscal 2019			Fiscal 2018		Fiscal 2017			Fiscal 2016			Fiscal 2015
Statement of operations data:
Net sales	$	3,087.1		$	3,347.6	$	3,041.7		$	2,747.0		$	2,745.1
Income from continuing operations before taxes	198.8			303.5		109.5			93.0			41.7
Income tax (benefit) expense	(495.9		)	31.8		(72.5		)	21.1			(9.2		)
Net income from continuing operations	694.7			271.7		182.0			71.9			50.9
Loss (gain) on disposal of discontinued operations, net of tax	0.6			0.6		(0.7		)	(12.4		)	—
Net income	694.1			271.1		182.7			84.3			50.9
Non-controlling interests	4.0			25.8		31.4			26.6			26.0
Net income attributable to shareholders	$	690.1		$	245.3	$	151.3		$	57.7		$	24.9
Basic earnings per share data
Earnings per share from continuing operations	$	2.38		$	0.86	$	0.62		$	0.18		$	0.10
Earnings per share from discontinued operations	—			—		—			0.05			—
Net income per share	$	2.38		$	0.86	$	0.62		$	0.23		$	0.10
Diluted earnings per share data
Earnings per share from continuing operations	$	2.37		$	0.84	$	0.60		$	0.18		$	0.10
Earnings per share from discontinued operations	—			—		—			0.05			—
Net income per share	$	2.37		$	0.84	$	0.60		$	0.23		$	0.10

(dollars in millions)	As of December 28, 2019		As of December 29, 2018		As of December 30, 2017		As of December 31, 2016		As of January 2, 2016
Balance sheet data:
Total assets	$	7,411.3	$	6,722.6	$	6,853.7	$	6,383.3	$	6,565.6
Debt, long term and current portion	$	2,958.4	$	3,005.0	$	3,955.7	$	3,836.9	$	3,907.3

Item 7: Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this annual report. This discussion and analysis addresses Fiscal 2019 and Fiscal 2018. For discussion and analysis of our financial condition and results of operations for Fiscal 2018 and Fiscal 2017, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2018, filed with the Securities and Exchange Commission on February 14, 2019. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in “Forward-Looking Statements” and “Risk Factors” above.

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Our Company

We are a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse replacement channel customers and to original equipment (“first-fit”) manufacturers as specified components, with the majority of our revenue coming from replacement channels. Our products are used in applications across numerous end markets, which include construction, agriculture, energy, automotive, transportation, general industrial, consumer products and many others. We sell our products globally under the Gates brand, which is recognized by distributors, equipment manufacturers, installers and end users as a premium brand for quality and technological innovation; this reputation has been built for over a century since Gates’ founding in 1911. Within the diverse end markets we serve, our highly engineered products are often critical components in applications for which the cost of downtime is high relative to the cost of our products, resulting in the willingness of end users to pay a premium for superior performance and availability. These applications subject our products to normal wear and tear, resulting in a natural replacement cycle that drives high-margin, recurring revenue. Our product portfolio represents one of the broadest ranges of power transmission and fluid power products in the markets we serve, and we maintain long-standing relationships with a diversified group of blue-chip customers throughout the world. As a leading designer, manufacturer and marketer of highly engineered, mission-critical products, we have become an industry leader across most of the regions and end markets in which we operate.

Business Trends

Our net sales have historically been, and remain, highly correlated with industrial activity and utilization and not with any single end market given the diversification of our business and high exposure to replacement channels. This diversification limits our exposure to trends in any given end market. In addition, a majority of our sales are generated from customers in replacement channels, who serve primarily a large base of installed equipment that follows a natural maintenance cycle that is somewhat less susceptible to various trends that affect our end markets. Such trends include infrastructure investment and construction activity, agricultural production and related commodity prices, commercial and passenger vehicle production, miles driven and fleet age, evolving regulatory requirements related to emissions and fuel economy and oil and gas prices and production. Key indicators of our performance include industrial production, industrial sales and manufacturer shipments.

During the year ended December 28, 2019, sales into replacement channels accounted for approximately 63% of our total net sales. Our replacement sales cover a very broad range of applications and industries and, accordingly, are highly correlated with industrial activity and utilization and not a single end market. Replacement products are principally sold through distribution partners that may carry a very broad line of products or may specialize in products associated with a smaller set of end market applications.

During the year ended December 28, 2019, sales into first-fit channels accounted for approximately 37% of our total net sales. First-fit sales are to a variety of industrial and automotive customers. Our industrial first-fit customers cover a diverse range of industries and applications and many of our largest first-fit customers manufacture construction and agricultural equipment. Among our automotive first-fit customers, a majority of our net sales are to emerging market customers, where we believe our first-fit presence provides us with a strategic advantage in developing those markets and ultimately increasing our higher margin replacement channel sales. First-fit automotive sales in developed markets represented approximately 7% of our total net sales for the year ended December 28, 2019, with first-fit automotive sales in North America contributing less than 3% of total sales. As a result of the foregoing factors, we do not believe that our historical consolidated net sales have had any meaningful correlation to global automotive production but are positively correlated to industrial production.

Our recently completed manufacturing footprint investments and other productivity improvements in recent years have helped to position us to continue to make progress on our restructuring program, which is primarily intended to optimize our manufacturing and distribution footprint over the mid-term by removing structural fixed costs, and, to a lesser degree, to streamline our selling, general and administrative (“SG&A”) back-office functions. We anticipate that most of the costs associated with these actions will be incurred during 2020 and 2021. Some of these costs will, in accordance with U.S. GAAP, be classified in cost of sales, negatively impacting gross margin, but due to their nature and impact of hindering comparison of the performance of our businesses on a period-over-period basis or with other businesses, they will be excluded from Adjusted EBITDA, consistent with the treatment of similar costs in the current and prior years.

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Results for the year endedDecember 28, 2019 compared with the results for the year endedDecember 29, 2018

Summary Gates Performance

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Net sales	$	3,087.1		$	3,347.6
Cost of sales	1,944.6			2,017.0
Gross profit	1,142.5			1,330.6
Selling, general and administrative expenses	777.3			805.8
Transaction-related expenses	2.6			6.7
Impairment of intangibles and other assets	0.7			0.6
Restructuring expenses	6.0			6.4
Other operating expenses	9.1			14.3
Operating income from continuing operations	346.8			496.8
Interest expense	157.8			175.9
Other (income) expenses	(9.8		)	17.4
Income from continuing operations before taxes	198.8			303.5
Income tax (benefit) expense	(495.9		)	31.8
Net income from continuing operations	$	694.7		$	271.7
Adjusted EBITDA(1)	$	611.0		$	755.8
Adjusted EBITDA margin	19.8		%	22.6		%

⁽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.

Net sales

Net sales during the year ended December 28, 2019 were $3,087.1 million, down by 7.8%, or $260.5 million, compared with net sales during the prior year of $3,347.6 million. Our net sales for the year ended December 28, 2019 were adversely impacted by movements in average currency exchange rates of $77.0 million compared with the prior year, due principally to the strengthening of the U.S. dollar against a number of currencies, including the Euro ($31.7 million), the Chinese Renminbi ($13.6 million), the Brazilian Real ($7.9 million) and the Canadian dollar ($6.7 million). In addition, the acquisition of Rapro in April 2018 contributed$7.5 millionto our net sales for theyearendedDecember 28, 2019. Excluding these impacts, core salesdecreased by $191.0 million, or 5.7%, during the year ended December 28, 2019 compared with the prior year. This decrease was due primarily to lower volumes of $249.3 million, offset partially by a $58.3 million benefit from favorable, inflation-mitigating pricing actions.

Core sales in our Power Transmission and Fluid Power businesses declined by 4.6% and 7.6%, respectively, for the year ended December 28, 2019. Globally, these declines arose primarily in sales to our industrial customers, with these sales declining by $113.2 million on a core basis, compared with a $77.8 million decline in core sales to our automotive customers. Industrial first-fit and replacement sales declined by 6.9% and 6.5%, respectively, during the year ended December 28, 2019 compared with the prior year, driven primarily by declines in the agriculture and construction end markets in North America. Sales to the industrial end markets in Greater China and East Asia & India both were down during the year ended December 28, 2019 compared with the prior year, driven by a 7.9% decline in the general industrial end markets in both regions, with increasing weakness in construction equipment sales as the year has progressed. This was broadly offset by growth in sales to the industrial end markets in EMEA, with growth across all end markets except for agriculture.

Global sales to the automotive end markets declined by 6.3% during the year ended December 28, 2019 compared with the prior year, driven by sales to first-fit customers, which declined by 9.2% during the year ended December 28, 2019 compared with the prior year. The decline in automotive end market sales was driven mostly by the broad economic softness in EMEA, with sales from this region declining by 13.6%, or $70.5 million, during the year ended December 28, 2019 compared with the prior year. Growth in Greater China and South America was flat, but the other regions declined by low single digits on a percentage basis as compared with the prior year.

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Cost of sales

Cost of sales for the year ended December 28, 2019 was $1,944.6 million, a decrease of 3.6%, or $72.4 million, compared with $2,017.0 million for the prior year. The decrease was driven primarily by lower volumes of $110.9 million, favorable movements in average currency exchange rates of $51.8 million, and $33.8 million of benefits from our procurement initiatives. These decreases were offset primarily by $63.2 million of a combination of wage and material inflation and $47.2 million from lower manufacturing performance driven by the lower absorption of fixed costs on lower production volumes and some excess variable costs as we continued to adjust our production costs to align with the demand outlook. In addition, cost of sales for the year ended December 28, 2019 was adversely impacted by $10.1 million of increases in tariffs and $7.0 million of higher depreciation relating primarily to the new facilities opened in 2018, compared with the prior year.

Gross profit

Gross profit for the year ended December 28, 2019 was $1,142.5 million, down14.1% from $1,330.6 million for the prior year, driven primarily by lower volumes of $138.4 million, $47.2 million of lower manufacturing performance driven by the lower absorption of fixed costs on lower production volumes, $63.2 million of unfavorable wage and material inflation, and $25.2 million of unfavorable movements in average currency exchange rates, offset by a $58.3 million benefit from favorable, inflation-mitigating pricing actions and $33.8 million of benefits from our procurement initiatives.

Our gross profit margin dropped by 270 basis points to 37.0% for the year ended December 28, 2019. Excluding the impact of facility closure-related inventory impairments of $1.2 million and $4.0 million of involuntary termination benefits paid in relation to permanent reductions in force, primarily in Asia and North America, gross margin was 37.2%, down from 39.7% for the prior year. In both cases, these decreases were driven by the factors described above.

Selling, general and administrative expenses

SG&A expenses for the year ended December 28, 2019 were $777.3 million compared with $805.8 million for the prior year. This decrease of $28.5 million was driven primarily by $17.8 million of favorable impacts from movements in average currency exchange rates and $12.1 million of net labor-related benefits which related primarily to headcount reductions and lower variable compensation, offset partially by higher stock-based compensation.

Transaction-related expenses

Transaction-related expenses for the year ended December 28, 2019 were $2.6 million compared with an expense of $6.7 million for the prior year. Net expenses for the year ended December 28, 2019 related primarily to exploratory merger and acquisition activity, as well as to corporate filings and transactions to provide the Company with flexibility for future raising of capital and debt, share buybacks and dividend payments. These expenses were offset partially by the release of an accrual from a prior period acquisition. The transaction-related expenses incurred in the prior year included $4.2 million related to our initial public offering and a further $0.3 million related to the extension in January 2018 of the maturity of our two revolving credit facilities. The remainder of the transaction-related expenses in the prior year related to the recent business acquisitions.

Restructuring expenses

We continue to make progress on our restructuring program, which, as described further under “Business Trends” above, is primarily intended to optimize our manufacturing and distribution footprint over the mid-term by removing structural fixed costs, and, to a lesser degree, to streamline our SG&A back-office functions.

Restructuring expenses of $7.2 million were recognized during the year ended December 28, 2019, including an impairment of inventory of $1.2 million due to facility closures and consolidations, which is included in cost of sales. The remainder of the expenses related primarily to severance costs, predominantly due to the closure of one of our facilities in France, a refocusing of operations in our Galesburg, Illinois facility, and a strategic restructuring of part of our Asian business. Restructuring expenses of $7.3 million were recognized during the prior year, related primarily to the implementation of our European corporate center and a strategic restructuring of part of our Asian business. Also included in restructuring expenses in the prior year was an impairment of inventory of $0.9 million, which was recognized in cost of sales.

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Interest expense

Our interest expense was as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018
Debt:
Dollar Term Loan	$	80.7	$	86.7
Euro Term Loan	22.4		22.8
Dollar Senior Notes	35.4		36.6
Euro Senior Notes	—		1.2
Other loans	0.1		—
	138.6		147.3
Amortization of deferred issuance costs	16.6		25.6
Other interest expense	2.6		3.0
	$	157.8	$	175.9

Details of our long-term debt are presented in note 16 to the consolidated financial statements included elsewhere in this report.

Interest on debt for the year endedDecember 28, 2019 decreased when compared with the equivalent prior year due primarily to the interest savings from debt repayments, in particular, the repayment of $913.7 million of senior notes in the first quarter of 2018 in conjunction with our initial public offering, in addition to margin reductions that came into effect partway during the prior year. The amortization of deferred issuance costs was lower in the year ended December 28, 2019, due to the acceleration in the prior year of $15.4 million of deferred issuance cost amortization as a consequence of the repayment of debt during the first quarter of 2018. This benefit was offset partially by the accelerated amortization of deferred issuance costs of $6.1 million during the current year, due to prepayment of our outstanding 6.00% Senior Notes due 2022 (the “6.00% Dollar Senior Notes”) as part of the refinancing transactions described further in note 16 to the consolidated financial statements included elsewhere in this report.

Other (income) expenses

Our other (income) expenses were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Interest income on bank deposits	$	(5.7	)	$	(3.7	)
Foreign currency gain on net debt and hedging instruments	(0.8		)	(8.7		)
Premiums paid on debt redemptions	—			27.0
Net adjustments related to post-retirement benefits	(3.1		)	3.1
Other	(0.2		)	(0.3		)
	$	(9.8	)	$	17.4

Other income for the year ended December 28, 2019 was $9.8 million, compared with an expense of $17.4 million in the prior year. This change was driven primarily by the payment in the prior year of $27.0 million of redemption premiums on repayment of the Euro Senior Notes and partial repayment of the 6.00% Dollar Senior Notes in January and February of 2018. Partially offsetting this cost in the prior year was a $5.8 million gain on a derivative used to lock in the exchange rate used to repay the Euro Senior Notes. Higher expected returns on plan assets based on actuarial valuations drove the majority of the remaining increase in other (income) expenses during the year ended December 28, 2019 compared with the prior year.

Income tax (benefit) expense

For the year ended December 28, 2019, we had an income tax benefit of $495.9 million on pre-tax income of $198.8 million, which resulted in an effective tax rate of (249.4%) compared with an income tax expense of $31.8 million on pre-tax income of $303.5 million, which resulted in an effective tax rate of 10.5% for the year ended December 29, 2018.

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Our effective tax rate for the year ended December 28, 2019 is lower than our effective tax rate for the year ended December 29, 2018 primarily due to a $579.0 million tax benefit from the release of a valuation allowance against certain deferred tax assets, partially offset by $59.7 million of tax expense from related unrecognized tax benefits, both of which resulted from the implementation of our European corporate center. Excluding these one-time impacts our 2019 effective tax rate would have been 11.8%, which is slightly higher when compared to our 2018 effective rate of 10.5%. This was driven by certain one-time tax benefits in 2018, including $37.6 million of tax benefits for manufacturing incentives, unrecognized tax benefits, and changes in valuation allowances, which were partially offset by $16.0 million of increase in tax on international operations and U.S. base erosion and anti-abuse tax. In addition, in 2019 our tax on international operations was lower by $19.9 million than in 2018, which was partially offset by an increase of $7.9 million in unrecognized tax benefits.

Deferred Income Tax Assets and Liabilities

We recognize deferred income tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under U.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred income tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred income tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed.

Our framework for assessing the recoverability of deferred income tax assets requires us to weigh all available evidence, including:

• taxable income in prior carry back years if carry back is permitted under the relevant tax law;

• future reversal of existing temporary differences;

• tax-planning strategies that are prudent and feasible; and

• future taxable income exclusive of reversing temporary differences and carryforwards.

After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined in 2019 that it was more likely than not that deferred income tax assets in Luxembourg, the U.K., and the U.S. totaling $586.2 million were realizable.

Included within the $586.2 million total deferred income tax assets are deferred income tax assets totaling $579.0 million related to €2.1 billion of indefinite lived net operating losses in Luxembourg for which our evaluation of the positive and negative evidence changed during the first quarter of 2019 due to the implementation of our European corporate center. Our European corporate center was implemented in 2019 to centralize and strengthen regional operations in Europe, which thereafter became centrally managed from Luxembourg.

The positive evidence that existed in favor of releasing the allowance as of December 28, 2019 and ultimately outweighed the negative evidence included the following:

• our profitability in Europe in 2018 and prior years and for 2019, as well as our expectations regarding the sustainability of these profits;

• the impact of the implementation of our European corporate center, which created an expectation of future income in Luxembourg and, thereby, removed negative evidence that supported maintaining the valuation allowance against our deferred income tax assets as of December 29, 2018; and

• the fact that our net operating loss carryforwards in Luxembourg are indefinite lived.

Further, as a result of additional financing income realized in 2019 that created taxable profits in the U.K., combined with our estimate that the financing income is likely to remain as a source of income through 2024, our judgment changed in the first quarter of 2019 regarding valuation allowances totaling $6.1 million related to indefinite lived net operating losses in the U.K.

Finally, as a result of changes in estimates of future taxable profits in the first quarter of 2019, our judgment changed regarding the realizability of $1.1 million of U.S. foreign tax credits with related recorded valuation allowances.

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As of each reporting date, management considers new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred income tax assets. We will maintain our positions with regard to future realization of deferred income tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred income tax assets may impact materially our consolidated financial statements.

Adjusted EBITDA

Adjusted EBITDA for the year ended December 28, 2019 was $611.0 million, a decrease of 19.2% or $144.8 million, compared with Adjusted EBITDA of $755.8 million for the prior year. Adjusted EBITDA margin was 19.8% for the year ended December 28, 2019, a 280 basis point decrease from the prior year margin of 22.6%. The decrease in Adjusted EBITDA was driven primarily by reduced gross profit of $188.1 million, which was primarily the result of lower sales of $260.5 million, as well as the impact of lower fixed cost absorption on cost of sales as described above. Partially offsetting this decrease were lower SG&A expenses as noted above.

For a reconciliation of net income to Adjusted EBITDA for each of the periods presented and the calculation of the Adjusted EBITDA margin, see “—Non-GAAP Measures.”

Analysis by Operating Segment

Power Transmission (63.0% of Gates’ net sales for the year endedDecember 28, 2019)

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			Period over Period Change
Net sales	$	1,945.7		$	2,098.8		(7.3	%)
Adjusted EBITDA	$	412.6		$	492.2		(16.2	%)
Adjusted EBITDA margin	21.2		%	23.5		%

Net sales in Power Transmission for the year ended December 28, 2019 were $1,945.7 million, a decrease of 7.3%, or $153.1 million, when compared with the prior year net sales of $2,098.8 million. Excluding the adverse impact of movements in average currency exchange rates of $56.5 million, core sales decreased by 4.6%, or $96.6 million, compared with the prior year. The majority of this decrease was due to lower sales volumes of $123.1 million, offset partially by benefits from favorable, inflation-mitigating pricing actions.

Power Transmission’s core growth decline was driven by a decrease in sales to automotive first-fit customers, which decreased by 9.2% during the year endedDecember 28, 2019 compared with the prior year, due primarily to weak demand in Europe and Greater China resulting from a combination of market softness, macroeconomic headwinds and continuing trade tensions. A decrease in sales to automotive replacement customers also contributed to the decline, but less significantly, with core sales lower by 3.1% during the year endedDecember 28, 2019 compared with the prior year. Sales into the industrial end markets were relatively flat during the year endedDecember 28, 2019. General industrial end market sales declined by 3.4%, driven primarily by East Asia & India and Greater China, but this was decline was mostly offset by growth in all other regions, particularly in EMEA.

Our Power Transmission Adjusted EBITDA for the year ended December 28, 2019 was $412.6 million, a decrease of 16.2% or $79.6 million, compared with the prior year Adjusted EBITDA of $492.2 million. Movements in average currency exchange rates drove $10.5 million of this decrease. Excluding this impact, the decrease in Adjusted EBITDA was driven by similar factors as described above with lower volumes of $64.7 million, $39.6 million of unfavorable wage and material inflation and lower manufacturing performance of $25.8 million. Partially offsetting these decreases were benefits from procurement initiatives of $24.7 million, benefits from favorable, inflation-mitigating pricing actions of $26.5 million and lower SG&A spend. Adjusted EBITDA margin for the year ended December 28, 2019 was 21.2%, a 230 basis point decline from the prior year Adjusted EBITDA margin of 23.5%, driven by the impacts described above.

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Fluid Power (37.0% of Gates’ net sales for the year endedDecember 28, 2019)

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			Period over Period Change
Net sales	$	1,141.4		$	1,248.8		(8.6	%)
Adjusted EBITDA	$	198.4		$	263.6		(24.7	%)
Adjusted EBITDA margin	17.4		%	21.1		%

Net sales in Fluid Power for the year ended December 28, 2019 were $1,141.4 million, a decrease of 8.6%, or $107.4 million, compared with net sales during the prior year of $1,248.8 million. Excluding the adverse impact of movements in average currency exchange rates of $20.5 million and the benefit of $7.5 million from the acquisition of Rapro in April 2018, core sales decreased by 7.6%, or $94.4 million, compared with the prior year. This decrease was due primarily to lower volumes of $126.2 million, offset partially by benefits from favorable, inflation-mitigating pricing actions.

The lower core sales growth in the year endedDecember 28, 2019 was driven almost exclusively by a decrease in sales to industrial end markets, which declined by 8.8% during the year endedDecember 28, 2019 compared with the prior year. This decrease was driven by the agriculture and construction end markets, which have continued to be challenging, declining by 18.8% and 8.2%, respectively, during the year endedDecember 28, 2019, compared with the prior year, primarily in North America. Fluid Power’s sales to automotive end markets were flat during the year endedDecember 28, 2019 compared with the prior year, with sales in the emerging markets outperforming sales to the developed markets.

Adjusted EBITDA for the year ended December 28, 2019 was $198.4 million, a decrease of 24.7%, or $65.2 million, compared with the prior year Adjusted EBITDA of $263.6 million. The decrease in Adjusted EBITDA was driven primarily lower volumes of $68.3 million, a $23.6 million adverse impact from inflation and lower manufacturing performance of $21.4 million driven by lower fixed cost absorption on lower volumes and some excess variable costs. These impacts were offset partially by a $31.8 million benefit from favorable, inflation-mitigating pricing actions and a $10.8 million benefit from our procurement initiatives. The Adjusted EBITDA margin consequently decreased by 370 basis points.

Liquidity and Capital Resources

Treasury Responsibilities and Philosophy

Our primary liquidity and capital resource needs are for working capital, debt service requirements, capital expenditures, facility expansions and acquisitions. We expect to finance our future cash requirements with cash on hand, cash flows from operations and, where necessary, borrowings under our revolving credit facilities. We have historically relied on our cash flow from operations and various debt and equity financings for liquidity.

From time to time, we enter into currency derivative contracts to manage currency transaction exposures. Similarly from time to time, we may enter into interest rate derivatives to maintain the desired mix of floating and fixed rate debt.

As market conditions warrant, we and our majority equity holders, Blackstone and its affiliates, may from time to time, seek to repurchase securities that we have issued or loans that we have borrowed in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any such purchases may be funded by existing cash or by incurring new secured or unsecured debt, including borrowings under our credit facilities. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may relate to a substantial amount of a particular tranche of debt, with a corresponding reduction, where relevant, in the trading liquidity of that debt. In addition, any such purchases made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which may be material, and result in related adverse tax consequences to us.

It is our policy to retain sufficient liquidity throughout the capital expenditure cycle to maintain our financial flexibility. We do not anticipate any material long-term deterioration in our overall liquidity position in the foreseeable future, and we believe that as of December 28, 2019, we have adequate liquidity and capital resources for the next twelve months.

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Cash Flow

Year ended December 28, 2019 compared with the year ended December 29, 2018

Cash provided by operations was $348.9 million during the year ended December 28, 2019 compared with cash provided by operations of $313.5 million during the prior year. Operating cash inflow before movements in operating assets and liabilities was $290.1 million during the year ended December 28, 2019 compared with $478.0 million during the prior year, a decrease of $187.9 million which was due largely to the lower operational performance which adversely impacted operating income. The movement in taxes payable, which was an increase of $46.2 million during the current year compared with a decrease of $15.3 million in the prior year, was due primarily to a non-cash increase in tax contingencies associated with our business reorganization in Europe. Movements in operating assets and liabilities other than taxes payable during the year ended December 28, 2019 gave rise to an increase of $12.6 million in cash compared with a decrease of $149.2 million in the prior year. The increase, or source of cash, during the current period was driven primarily by the decreases in trade accounts payable and inventories, both linked to lower production volumes and our continued focus on management of working capital. During the prior year, the decrease was due primarily to increases in accounts receivable and inventories due to the strong demand environment at the time.

Net cash used in investing activities during the year ended December 28, 2019 was $78.0 million, compared with $243.6 million in the prior year. Capital expenditures decreased by $99.6 million from $182.7 million in the year ended December 29, 2018 to $83.1 million in the year ended December 28, 2019, driven primarily by expenditures in the prior year related to the expansion of one of our existing facilities and construction of two new facilities. Net cash used in investing activities in the prior year also included $50.9 million of cash paid in relation to the acquisition of Rapro in April 2018.

Net cash used in financing activities was $59.3 million during the year ended December 28, 2019, compared with $198.9 million in the prior year. This net outflow in the year ended December 28, 2019 related primarily to quarterly amortization payments of $24.7 million under the term loans, together with $28.8 million of dividend payments to non-controlling shareholders of certain majority-owned subsidiaries. As described further in note 16 to the accompanying consolidated financial statements, during November 2019, we issued and sold $568.0 million of unsecured 6.25% Senior Notes due 2026 (the “6.25% Dollar Senior Notes”) and used the proceeds from this debt issuance in December 2019 to redeem all $568.0 million of our outstanding 6.00% Dollar Senior Notes. Costs of approximately $8.6 million were incurred in relation to these transactions, of which $8.3 million was paid during the year ended December 28, 2019.

In the prior year, net cash used in financing activities related primarily to the net cash received from our initial public offering of $799.1 million and the use of those funds (in addition to a portion of cash on hand) to redeem debt of $913.7 million and to pay premiums thereon of $27.0 million. In addition, during the prior year, we made $35.2 million of dividend payments to non-controlling shareholders of certain majority-owned subsidiaries.

Indebtedness

Our long-term debt, consisting principally of two term loans and U.S. dollar denominated unsecured notes, was as follows:

	Carrying amount				Principal amount
(dollars in millions)	As of December 28, 2019		As of December 29, 2018		As of December 28, 2019		As of December 29, 2018
Debt:
—Secured
Term Loans (U.S. dollar and Euro denominated)	$	2,395.0	$	2,428.7	$	2,416.8	$	2,458.5
—Unsecured
Senior Notes (U.S. dollar)	563.2		575.7		568.0		568.0
Other debt	0.2		0.6		0.2		0.6
	$	2,958.4	$	3,005.0	$	2,985.0	$	3,027.1

Details of our long-term debt are presented in note 16 to the consolidated financial statements included elsewhere in this annual report.

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On November 22, 2019, we issued and sold $568.0 million of 6.25% Dollar Senior Notes, described further below. The proceeds from this debt issuance were used on December 5, 2019 to redeem all $568.0 million of our outstanding 6.00% Dollar Senior Notes, plus interest accrued up to and including the redemption date of $13.2 million. The majority of the costs totaling approximately $8.6 million related to the refinancing transactions have been deferred and will be amortized to interest expense over the remaining term of the related borrowings using the effective interest method.

During January 2018, upon completion of our initial public offering, the applicable margins on each of the term loans was reduced by a further 0.25%, as agreed as part of the refinancing completed in November 2017.

During the first quarter of 2018, we redeemed in full our outstanding €235.0 million of Euro Senior Notes and made partial redemptions of the 6.00% Dollar Senior Notes. All of the 2018 prepayments, totaling $913.7 million in principal, $27.0 million in redemption premiums and $3.1 million in accrued interest, were funded primarily by the net proceeds from our IPO, with the remainder of the funds coming from cash on hand.

A wholly-owned U.S. subsidiary of Gates Global LLC is the principal obligor under the Term Loans for U.S. federal income tax purposes and makes the payments due on this tranche of debt. As a result, interest received by lenders of this tranche of debt is U.S. source income.

Dollar and Euro Term Loans

Our secured credit facilities include a Dollar Term Loan credit facility and a Euro Term Loan credit facility that were drawn on July 3, 2014. These facilities mature on March 31, 2024. These term loan facilities bear interest at a floating rate. As of December 28, 2019, borrowings under the Dollar Term Loan facility, which currently bears interest at LIBOR, subject to a floor of 1.00%, plus a margin of 2.75%, bore interest at a rate of 4.45% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As of December 28, 2019, the Euro Term Loan bore interest at EURIBOR, which is currently below 0%, subject to a floor of 0%, plus a margin of 3.00%. The Euro Term Loan interest rate is re-set on the last business day of each quarter.

Both term loans are subject to quarterly amortization payments of 0.25%, based on the original principal amount less certain prepayments with the balance payable on maturity. During the year ended December 28, 2019, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $17.3 million and $7.4 million, respectively. During the year ended December 29, 2018, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $13.0 million and $5.8 million, respectively.

Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the agreement, based on the preceding year’s final results. Based on our 2019 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment will be required to be made in 2020.

During the periods presented, foreign exchange gains were recognized in respect of the Euro Term Loans as summarized in the table below. As a portion of the facility was designated as a net investment hedge of certain of our Euro investments, a corresponding portion of the foreign exchange gains (losses) were recognized in other comprehensive income (“OCI”).

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Gain recognized in statement of operations	$	17.3		$	43.6
Loss recognized in OCI	(0.2		)	(6.0		)
Total gain	$	17.1		$	37.6

During the year endedDecember 28, 2019, the above net foreign exchange gains recognized in the other (income) expenses line have been substantially offset by net foreign exchange movements on Euro-denominated intercompany loans as part of our overall hedging strategy.

Our Term Loans, which mature after 2021, use LIBOR as a benchmark for establishing the rate of interest. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform and is not expected to be maintained after 2021. The transition to alternatives to LIBOR could be modestly disruptive to credit markets, and while we don't believe that the impact would be material to us, we do not yet have insight into what those impacts might be.

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Unsecured Senior Notes

As of December 28, 2019, we had $568.0 million of 6.25% Dollar Senior Notes outstanding that were issued in November 2019. These notes are scheduled to mature on January 15, 2026 and bear interest at an annual fixed rate of 6.25% with semi-annual interest payments.

On and after January 15, 2022, we may redeem the 6.25% Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption Price
During the year commencing:
—2022	103.125	%
—2023	101.563	%
—2024 and thereafter	100.000	%

Additionally, net cash proceeds from an equity offering can be utilized at any time prior to January 15, 2022, to redeem up to 40% of the notes at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date.

Upon the occurrence of a change of control or a certain qualifying asset sales, the holders of the notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest.

As noted above, on December 5, 2019, we redeemed in full all $568.0 million of our outstanding 6.00% Dollar Senior Notes due in 2022, and, on January 31, 2018, we redeemed in full all €235.0 million of our outstanding Euro Senior Notes and made partial redemptions of the outstanding 6.00% Dollar Senior Notes due in 2022 totaling $622.0 million.

Up to the date of their redemption, foreign exchange losses of $9.2 million were recognized in respect of the Euro Senior Notes. Of these losses, $5.0 million was recognized in OCI for the period during which the facility was designated as a net investment hedge of certain of our Euro investments, and $4.2 million was recognized in the statement of operations.

Revolving Credit Facility

We also have a secured revolving credit facility, maturing on January 29, 2023, that provides for multi-currency revolving loans up to an aggregate principal amount of $185.0 million, with a letter of credit sub-facility of $20.0 million. This facility matures on January 29, 2023.

As of both December 28, 2019 and December 29, 2018, there were no drawings for cash under the revolving credit facility and there were no letters of credit outstanding.

Asset-Backed Revolver

We have a revolving credit facility backed by certain of our assets in North America. The facility allows for loans of up to a maximum of $325.0 million ($294.6 million as of December 28, 2019, compared with $325.0 million as of December 29, 2018, based on the values of the secured assets on those dates) with a letter of credit sub-facility of $150.0 million within this maximum. The facility matures on January 29, 2023.

As of both December 28, 2019 and December 29, 2018, there were no drawings for cash under the asset-backed revolver, but there were letters of credit outstanding of $50.1 million and $57.8 million, respectively.

Non-guarantor subsidiaries

The majority of the Company’s U.S. subsidiaries are guarantors of the senior secured credit facilities.

For the year ended December 28, 2019, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 70% of our net sales and 65% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities. As of December 28, 2019, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 54% of our total assets and approximately 21% of our total liabilities.

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Net Debt

Net debt is a non-GAAP measure representing the principal amount of our debt less the carrying amount of cash and cash equivalents. During the year ended December 28, 2019, our net debt decreased by $254.0 million from $2,603.7 million as of December 29, 2018 to $2,349.7 million as of December 28, 2019. Excluding changes in foreign currency exchange rates, the decrease in net debt during the year ended December 28, 2019 was driven primarily by the increase in cash, a function of cash provided by operating activities of $348.9 million, offset partially by capital expenditures of $83.1 million and dividends paid to non-controlling shareholders of $28.8 million.

Movements in foreign currency exchange rates had a favorable net impact of $17.5 million on net debt during the year ended December 28, 2019, with the majority of the movement relating to the impact of the weakening of the Euro against the U.S. dollar on our Euro-denominated debt.

Borrowing Headroom

As of December 28, 2019, our asset-backed revolving credit facility had a borrowing base of $294.6 million, being the maximum amount we can draw down based on the current value of the secured assets. The facility was undrawn for cash, but there were letters of credit outstanding against the facility amounting to $50.1 million. We also have a secured revolving credit facility that provides for multi-currency revolving loans up to an aggregate principal amount of $185.0 million.

In total, our committed borrowing headroom was $429.5 million, in addition to cash balances of $635.3 million.

Cash Balances

As of December 28, 2019, our total cash and cash equivalents were $635.3 million, compared with $423.4 million as of December 29, 2018.

Restricted cash was $1.3 million as of December 28, 2019, compared to $1.2 million as of December 29, 2018, primarily $1.0 million as of December 28, 2019 and $1.0 million as of December 29, 2018 was held in escrow for insurance purposes. Cash held in our non-wholly owned Asian subsidiaries was $141.5 million and $130.3 million as of December 28, 2019 and December 29, 2018, respectively.

Off-Balance Sheet Arrangements

We have not entered into any transaction, agreement or other contractual arrangement that is considered to be an off-balance sheet arrangement that is required to be disclosed.

Tabular Disclosure of Contractual Obligations

Our consolidated contractual obligations and commercial commitments are summarized in the following table which includes aggregate information about our contractual obligations as of December 28, 2019 and the periods in which payments are due, based on the earliest date on which we could be required to settle the liabilities. The table below excludes our gross liability for uncertain tax positions of $108.8 million because the timing of cash settlement, if any, is unknown at this time.

Floating interest payments and payments and receipts on interest rate derivatives are estimated based on market interest rates prevailing at the balance sheet date. Amounts in respect of purchase obligations are items that we are obligated to pay in the future, but they are not required to be included on the consolidated balance sheet.

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			Earliest period in which payments are due
(dollars in millions)	Total		2020		2021 and 2022		2023 and 2024		2025 and beyond
Bank overdrafts and debt:
—Principal	$	2,985.0	$	30.9	$	49.4	$	2,336.7	$	568.0
—Interest payments(1)(2)	680.2		138.1		282.6		206.2		53.3
Derivative financial instruments(3)	31.7		3.4		25.3		3.0		—
Finance leases	1.8		0.6		1.0		0.2		—
Operating leases	178.2		25.5		39.8		28.4		84.5
Post-retirement benefits(4)	9.8		9.8		—		—		—
Indemnified tax liabilities	3.3		2.8		0.5		—		—
Purchase obligations(5)	40.9		21.2		15.4		4.3		—
Total	$	3,930.9	$	232.3	$	414.0	$	2,578.8	$	705.8

⁽¹⁾  Future interest payments include payments on fixed and floating rate debt.

⁽²⁾  Floating rate interest payments are estimated based on market interest rates and terms prevailing as of December 28, 2019.

⁽³⁾  Net payments on cross currency swaps, interest rate caps, interest rate swaps and currency forward contracts are estimated based on market rates prevailing as of December 28, 2019.

⁽⁴⁾  Post-retirement benefit obligations represent our expected cash contributions to defined benefit pension and other post-retirement benefit plans in 2020. It is not practicable to present expected cash contributions for subsequent years because they are determined annually on an actuarial basis to provide for current and future benefits in accordance with federal law and other regulations.

⁽⁵⁾  A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

Distributable Reserves

Under the laws of England and Wales, future dividend payments or share repurchases may only be made out of “distributable reserves” on the Company’s statutory balance sheet. During August 2019, the High Court of Justice in London sanctioned a reduction in the Company’s statutory capital for the purpose of creating distributable reserves by approving the cancellation of the deferred shares in issue and the cancellation of the entire amount standing to the credit of the Company’s share premium account, creating $5.5 billion of distributable reserves. These transactions, which have no impact on the consolidated U.S. GAAP financial statements, facilitate the possible future payment of dividends to shareholders of the Company or possible future share repurchases.

Non-GAAP Measures

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP measure that represents net income or loss for the period before the impact of income taxes, net interest and other expenses, depreciation and amortization. EBITDA is widely used by securities analysts, investors and other interested parties to evaluate the profitability of companies. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting net finance costs), tax positions (such as the availability of net operating losses against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).

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Management uses Adjusted EBITDA as its key profitability measure. This is a non-GAAP measure that 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. We use Adjusted EBITDA as our measure of segment profitability to assess the performance of our businesses, and it is used for total Gates as well because we believe it is important to consider our profitability on a basis that is consistent with that of our operating segments, as well as that of our peer companies with a similar leveraged, private equity ownership history. We believe that Adjusted EBITDA should, therefore, be made available to securities analysts, investors and other interested parties to assist in their assessment of the performance of our businesses.

During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

• the non-cash charges in relation to share-based compensation;

• transaction-related expenses incurred in relation to business combinations and major corporate transactions, including acquisition integration activities;

• impairments, comprising impairments of goodwill and significant impairments or write downs of other assets;

• restructuring expenses, including severance-related expenses;

• the net gain or loss on disposals and on the exit of businesses; and

• fees paid to our private equity sponsor for monitoring, advisory and consulting services.

Differences exist among our businesses and from period to period in the extent to which their respective employees receive share-based compensation or a charge for such compensation is recognized. We therefore exclude from Adjusted EBITDA the non-cash charges in relation to share-based compensation in order to assess the relative performance of our businesses.

We exclude from Adjusted EBITDA acquisition-related costs that are required to be expensed in accordance with U.S. GAAP. In particular, we exclude the effect on cost of sales of the uplift to the carrying amount of inventory held by entities acquired by Gates. We also exclude costs associated with major corporate transactions because we do not believe that they relate to our performance. Other items are excluded from Adjusted EBITDA because they are individually or collectively significant items that are not considered to be representative of the performance of our businesses. During the periods presented, we excluded restructuring expenses and severance-related expenses that reflect specific, strategic actions taken by management to shutdown, downsize, or otherwise fundamentally reorganize areas of Gates’ business; the net gain or loss on disposals of assets other than in the ordinary course of operations and gains and losses incurred in relation to non-Gates businesses disposed of in prior periods; significant impairments of intangibles and of other assets, representing the excess of their carrying amounts over the amounts that are expected to be recovered from them in the future; and fees paid to our private equity sponsor.

EBITDA and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used in conjunction with, not as substitutes for, profit or loss for the period. Management compensates for these limitations by separately monitoring net income from continuing operations for the period.

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The following table reconciles net income from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Net income from continuing operations	$	694.7		$	271.7	$	182.0
Income tax (benefit) expense	(495.9		)	31.8		(72.5		)
Net interest and other expenses	148.0			193.3		293.4
Depreciation and amortization	222.2			218.5		212.2
EBITDA	569.0			715.3		615.1
Transaction-related expenses	2.6			6.7		18.1
Impairment of intangibles and other assets	0.7			0.6		2.8
Restructuring expenses	6.0			6.4		17.4
Share-based compensation expense	15.0			6.0		5.4
Sponsor fees (included in other operating expenses)	6.5			8.0		6.7
Impact of fair value adjustment on inventory (included in cost of sales)	—			0.3		1.2
Inventory impairments and adjustments (included in cost of sales)	1.2			1.2		2.0
Duplicate expenses incurred on facility relocation	—			5.2		—
Severance-related expenses (included in cost of sales)	4.0			1.7		—
Other primarily severance-related expenses (included in SG&A)	3.4			4.4		—
Other items not directly related to current operations	2.6			—		0.4
Adjusted EBITDA	$	611.0		$	755.8	$	669.1

Adjusted EBITDA Margin

Adjusted EBITDA margin is a non-GAAP measure that represents Adjusted EBITDA expressed as a percentage of net sales. We use Adjusted EBITDA margin to measure the success of our businesses in managing our cost base and improving profitability.

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Net sales	$	3,087.1		$	3,347.6		$	3,041.7
Adjusted EBITDA	$	611.0		$	755.8		$	669.1
Adjusted EBITDA margin	19.8		%	22.6		%	22.0		%

Core growth reconciliations

Core sales growth is a non-GAAP measure that represents net sales for the period excluding the impacts of movements in average currency exchange rates and the first-year impacts of acquisitions and disposals. We present core growth because it allows for a meaningful comparison of year-over-year performance without the volatility caused by foreign currency gains or losses or the incomparability that would be caused by impacts of acquisitions or disposals. Management believes that this measure is therefore useful for securities analysts, investors and other interested parties to assist in their assessment of the operating performance of our businesses. The closest GAAP measure is net sales.

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	For the year ended December 28, 2019
(dollars in millions)	Power Transmission			Fluid Power			Total
Net sales for the year ended December 28, 2019	$	1,945.7		$	1,141.4		$	3,087.1
Impact on net sales of movements in currency rates	56.5			20.5			77.0
Impact on net sales from recent acquisitions	—			(7.5		)	(7.5		)
Core revenue for the year ended December 28, 2019	$	2,002.2		$	1,154.4		$	3,156.6
Net sales for the year ended December 29, 2018	2,098.8			1,248.8			3,347.6
Decrease in net sales on a core basis (core revenue)	$	(96.6	)	$	(94.4	)	$	(191.0	)
Core revenue growth	(4.6		%)	(7.6		%)	(5.7		%)

	For the year ended December 29, 2018
(dollars in millions)	Power Transmission			Fluid Power			Total
Net sales for the year ended December 29, 2018	$	2,098.8		$	1,248.8		$	3,347.6
Impact on net sales of movements in currency rates	(17.8		)	(1.1		)	(18.9		)
Impact on net sales from recent acquisitions	—			(107.2		)	(107.2		)
Core revenue for the year ended December 29, 2018	$	2,081.0		$	1,140.5		$	3,221.5
Net sales for the year ended December 30, 2017	2,009.4			1,032.3			3,041.7
Increase in net sales on a core basis (core revenue)	$	71.6		$	108.2		$	179.8
Core revenue growth	3.6		%	10.5		%	5.9		%

Net Debt

Management uses net debt, rather than the narrower measure of cash and cash equivalents and restricted cash which forms the basis for the consolidated statement of cash flows, as a measure of our liquidity and in assessing the strength of our balance sheet.

Management analyzes the key cash flow items driving the movement in net debt to better understand and assess Gates’ cash performance and utilization in order to maximize the efficiency with which resources are allocated. The analysis of cash movements in net debt also allows management to more clearly identify the level of cash generated from operations that remains available for distribution after servicing our debt and post-employment benefit obligations and after the cash impacts of acquisitions and disposals.

Net debt represents the net total of:

• the principal amount of our debt; and

• the carrying amount of cash and cash equivalents.

Net debt was as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Principal amount of debt	$	2,985.0	$	3,027.1
Less: Cash and cash equivalents	635.3		423.4
Net debt	$	2,349.7	$	2,603.7

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The principal amount of debt is reconciled to the carrying amount of debt as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Principal amount of debt	$	2,985.0		$	3,027.1
Accrued interest	15.2			26.6
Deferred issuance costs	(41.8		)	(48.7		)
Carrying amount of debt	$	2,958.4		$	3,005.0

Adjusted EBITDA adjustments for ratio calculation purposes

The financial maintenance ratio in our revolving credit agreement and other ratios related to incurrence-based covenants (measured only upon the taking of certain actions, including the incurrence of additional indebtedness) under our revolving credit facility, our term loan facility and the indenture governing our outstanding notes are calculated in part based on financial measures similar to Adjusted EBITDA as presented elsewhere in this report, which financial measures are determined at the Gates Global LLC level and adjust for certain additional items such as severance costs, the pro forma impacts of acquisitions and the pro forma impacts of cost-saving initiatives. These additional adjustments during the last 12 months, as calculated pursuant to such agreements, resulted in a net benefit to Adjusted EBITDA for ratio calculation purposesof $12.1 million.

Gates Industrial Corporation plc is not an obligor under our revolving credit facility, our term loan facility or the indenture governing our outstanding notes. Gates Global LLC, an indirect subsidiary of Gates Industrial Corporation plc, is the borrower under our revolving credit facility and our term loan facility and the issuer of our outstanding notes. The only significant difference between the results of operations and net assets that would be shown in the consolidated financial statements of Gates Global LLC and those for the Company that are included elsewhere in this report is a receivable of $9.2 million and $11.8 million as of December 28, 2019 and December 29, 2018, respectively, due to Gates Global LLC and its subsidiaries from indirect parent entities of Gates Global LLC and additional cash and cash equivalents held by the Company of $2.0 million and $1.1 million as of December 28, 2019 and December 29, 2018, respectively.

Critical Accounting Estimates and Judgments

Details of our significant accounting policies are set out in note 2 to our audited consolidated financial statements included elsewhere in this annual report.

When applying our accounting policies, we must make assumptions, judgments and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. We makes these assumptions, estimates and judgments based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions, estimates and judgments, the actual outcomes could be different. The policies discussed below are considered by management to be more critical than other policies because their application involves a significant amount of estimation uncertainty that increases the risk of a material adjustment to the carrying amounts of our assets and liabilities.

Net Sales

We derive our 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.

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In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimates 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 that is not probable of significant reversal.

We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order or similar binding contract is considered to be the standalone selling price. In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and the customer accepts the asset.

Impairment of Goodwill and Other Indefinite-Lived Assets

Goodwill and other indefinite-lived intangible assets are subject to an annual impairment test but are also tested for impairment if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount.

Goodwill

Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition. Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit.

Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment.

To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit.

Management based the fair value calculations on a weighted blend of the income and market approaches. The income approach was based on cash flow forecasts derived from the most recent financial plans approved by the board of directors, in which the principal assumptions were those regarding sales growth rates, selling prices and changes in direct costs. Forecasts for the following two years were based on region-specific growth assumptions determined by management, taking into account strategic initiatives.

Cash flows for each of the reporting units for the years beyond this period were projected to grow at compound annual growth rates reflecting annual decreases over the next seven years from the 2022 growth rates to the terminal growth rate. For Gates as a whole, this growth rate was 3.7%. The terminal growth rate for both reporting units was set at 2.5%, a rate that does not exceed the expected long-term growth rates in the respective principal end markets.

Management applied discount rates to the resulting cash flow projections that reflect current market assessments of the time value of money and the risks specific to each reporting unit. In each case, the discount rate was determined using a capital asset pricing model. The discount rates used in the impairment tests of goodwill during Fiscal 2019 were 10.5% for both reporting units.

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For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019, Fiscal 2018, or Fiscal 2017. However, due primarily to the current challenging market conditions and their impact on our near-term outlook, the fair values of each of the Power Transmission and Fluid Power reporting units as calculated on first day of the fourth quarter of Fiscal 2019 were 15.8% and 14.4% lower, respectively, as compared with their fair values as calculated as part of the Fiscal 2018 annual impairment test. This has accordingly reduced the excess of the fair values of our reporting units over their carrying values. A further decline in the fair value of greater than 14% and 8% on our Power Transmission and Fluid Power reporting units, respectively, all else being equal, would result in an impairment of the goodwill allocated to those reporting units.

We base our fair value estimates on assumptions we believe to be reasonable at the time but that are unpredictable and inherently uncertain. In addition, we make certain judgments and assumptions in allocating goodwill between reporting units and in allocating shared assets and liabilities to determine the carrying values for each of our reporting units tested. Changes in assumptions or circumstances could result in an additional impairment in the period in which the change occurs and in future years.

Indefinite-Lived Assets Other than Goodwill

To identify a potential impairment of indefinite-lived assets other than goodwill, the fair value of the asset is compared with its carrying amount. If the fair value of the indefinite-lived asset exceeds its carrying amount, it is not considered impaired. Fair value is calculated based on the anticipated net cash inflows and outflows related to the indefinite-lived asset.

During the periods covered by this annual report, we held indefinite-lived brand and trade name intangible assets. We test these intangibles for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment.

The fair value for our indefinite-lived brand and trade name intangible assets was determined using a relief from royalty valuation methodology in which the key assumptions included sales growth rates and an estimated royalty rate. Sales forecasts were determined on the same basis as those used for the annual impairment testing of goodwill (as described above).

Management applied discount rates to the calculated royalty savings that reflect current market assessments of the time value of money and the risks specific to each region in which those royalty savings arose. In each case, the discount rate was determined using a capital asset pricing model adjusted for a premium to reflect the higher risk specific to the nature of the intangible asset. The discount rates used in Fiscal 2019 impairment test was 11.5%. As a result of the impairment testing, no impairment was recognized during Fiscal 2019. However, due primarily to the current challenging market conditions and their impact on our near-term outlook, the fair value of our brand and trade name intangible assets as calculated on first day of the fourth quarter of Fiscal 2019 was 23.3% lower than their fair value as calculated as part of the Fiscal 2018 annual impairment test. This has accordingly reduced the excess of the fair value of these assets over their carrying value. A further decline in the fair value of greater than 16%, all else being equal, would result in an impairment of the brand and trade name intangible assets.

We base our fair value estimates on assumptions we believe to be reasonable at the time but that are unpredictable and inherently uncertain. Changes in assumptions or circumstances could result in an additional impairment in the period in which the change occurs and in future years.

Taxation

We are subject to income tax in most of the jurisdictions in which we operate. Management is required to exercise significant judgment in determining our provision for income taxes. Management’s judgment is required in relation to unrecognized income tax benefits whereby additional current tax may become payable in the future following the audit by tax authorities of previously-filed tax returns. It is possible that the final outcome of these unrecognized income tax benefits may differ from management’s estimates.

Management assesses unrecognized income tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized income tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions.

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Deferred income tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred income taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred income tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred income tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies.

Deferred income tax is provided on certain taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax-free manner.

We have recorded valuation allowances against certain of our deferred income 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. During the year ended December 28, 2019, we determined that it was more likely than not that certain deferred income tax assets in Luxembourg, the U.K., and the U.S. totaling $586.2 million were realizable.

Accounting Pronouncements Not Yet Adopted

Recently-issued accounting pronouncements that may be relevant to our operations but have not yet been adopted are outlined in note 3 to our audited consolidated financial statements included elsewhere in this annual report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our market risk includes the potential loss arising from adverse changes in foreign currency exchange rates, interest rates, commodity prices, and the credit risk of our customers and third-party depository institutions that hold our cash and short-term deposits. 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. Our objective in managing these risks is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates and interest rate movements.

On a regular basis, we monitor third-party depository institutions that hold our cash and short-term investments and we diversify these assets among counterparties to minimize exposure to any one of these entities. We also monitor the creditworthiness of our customers and suppliers to mitigate any adverse impact.

Foreign Currency Exchange Risk

We have global operations and thus make investments and enter into transactions denominated in various foreign currencies. Our operating results are impacted by buying, selling and financing in currencies other than the functional currency of our operating companies. We monitor exposure to transactions denominated in currencies other than the functional currency of each country in which we operate, and enter into forward contracts to mitigate that exposure as needed. We also naturally hedge foreign currency through our production in the countries in which we sell our products.

In addition, we are exposed to currency risk associated with translating our non-U.S. dollar financial statements into U.S. dollars, which is our reporting currency. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar. Translational foreign exchange risks arise predominantly on the potential increase in our significant euro debt when translated to U.S. dollars, as well as on the potential decreases in the value of our earnings, cash balances and other net assets denominated in euro and other currencies when translated to U.S. dollars.

52

The currency profiles of our cash and debt are centrally managed as are decisions about the location of cash. The currency profile of cash and debt, after taking into account the effect of the currency swaps and forwards used to manage those profiles, were as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Cash and cash equivalents by currency:
—U.S. dollar	$	336.9	$	170.8
—Chinese Yuan Renminbi	81.1		59.8
—Indian Rupee	43.2		30.7
—Euro	28.0		45.0
—Japanese Yen	29.9		35.6
—Other	116.2		81.5
	$	635.3	$	423.4
Principal amount of debt by currency:
—U.S. dollar	$	1,982.7	$	2,014.4
—Euro	1,002.3		1,012.7
	$	2,985.0	$	3,027.1

As described in note 14 to the audited consolidated financial statements included elsewhere in this annual report, during Fiscal 2019 and Fiscal 2018 we had designated a portion of our Euro Term Loans, and, prior to their repayment in January 2018, €235.0 million of our Euro Notes, as well as a €254.5 million cross currency swap as hedges of a portion of our net investment in euro-denominated foreign operations. Changes in the value of these instruments resulting from fluctuations in the euro to U.S. dollar exchange rate are accordingly recorded as foreign currency translation adjustments within other comprehensive income.

Interest Rate Risk

Our prevailing market risk on interest rates is the potential fluctuation in interest costs and in the fair value of long-term debt resulting from movements in interest rates.

We use interest rate derivatives as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. The interest rate caps are designated as cash flow hedges and 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. The following table summarizes the key terms of the active interest rate derivatives held by the Company:

	Notional principal amount (millions)		Interest rate
			Payable				Receivable
			Variable		Fixed		Variable		Fixed		Variable rate index
As of December 28, 2019
Maturity date:
—June 2020	$	1,200.0	—	%	0.5	%	—	%	—	%	3 month LIBOR
—June 2023	€	425.0	—	%	0.3	%	—	%	—	%	3 month EURIBOR
As of December 29, 2018
Maturity date:
—June 2019	$	1,000.0	—	%	1.3	%	1.8	%	—	%	3 month LIBOR
—June 2020	$	200.0	—	%	0.3	%	0.8	%	—	%	3 month LIBOR

Additionally, as of December 28, 2019 and December 29, 2018, we held three pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $870.0 million, which run from June 30, 2020 through June 30, 2023.

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The interest rate profile of the Company’s financial assets and liabilities, after taking into account the effect of the interest rate hedging activities, was as follows:

	As of December 28, 2019												As of December 29, 2018
	Interest-bearing												Interest-bearing
(dollars in millions)	Floating rate			Fixed rate			Non-interest bearing			Total			Floating rate			Fixed rate			Non-interest bearing			Total
Financial assets:
Available-for-sale investments	$	—		$	—		$	0.8		$	0.8		$	—		$	—		$	0.8		$	0.8
Cash and cash equivalents	380.4			—			254.9			635.3			193.7			—			229.7			423.4
Restricted cash	—			—			1.3			1.3			—			—			1.2			1.2
	380.4			—			257.0			637.4			193.7			—			231.7			425.4
Financial liabilities:
Debt	(741.7		)	(2,243.1		)	(0.2		)	(2,985.0		)	(1,258.8		)	(1,768.0		)	(0.3		)	(3,027.1		)
Obligations under finance leases	—			(1.7		)	—			(1.7		)	—			(1.1		)	—			(1.1		)
	(741.7		)	(2,244.8		)	(0.2		)	(2,986.7		)	(1,258.8		)	(1,769.1		)	(0.3		)	(3,028.2		)
	$	(361.3	)	$	(2,244.8	)	$	256.8		$	(2,349.3	)	$	(1,065.1	)	$	(1,769.1	)	$	231.4		$	(2,602.8	)

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Our debt facilities are monitored against forecast requirements and timely action is taken to put in place, renew or replace credit lines. We aim to reduce liquidity risk by diversifying our funding sources, maintaining adequate headroom under our debt facilities and by staggering the maturities of our debt.

We have established long-term credit ratings of B2 Stable with Moody’s and B+ Stable with Standard & Poor’s. Credit ratings are subject to regular review by the credit rating agencies and may change in response to economic and commercial developments.

For the expected timing of contractual cash flows relating to the financial liabilities and related financial assets see the table set out above under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tabular Disclosure of Contractual Obligations.”

Commodity Risk

We source a wide variety of materials and components from a network of global suppliers. While such materials are typically available from numerous suppliers, commodity raw materials such as aluminum, steel and polymers are subject to price fluctuations, which could have a negative impact on our results. We primarily manage these risks through normal operating activities. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and utilize lean initiatives to further mitigate the impact of commodity raw material price fluctuations as we achieve improved efficiencies. We historically have not entered into any derivative commodity instruments to manage the exposure to changing price risk for supplies, but we will continue to evaluate their viability.

Credit risk

Our principal financial assets are cash and cash equivalents, trade and other receivables, derivatives and investments.

We regularly monitor third-party depository institutions that hold our cash and short-term investments, primarily for safety of principal and secondarily for maximizing yield on those funds. We diversify our cash and short-term investments among counterparties to minimize exposure to any one of these entities.

To mitigate the credit risk attributable to our trade receivables we perform credit verifications and monitor closely the creditworthiness of new and existing customers. The amounts presented in the balance sheet for trade receivables are net of allowances for doubtful receivables. An allowance for doubtful receivables is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.

The credit risk on derivative financial instruments is limited because the counterparties are financial institutions with high credit-ratings assigned by international credit-rating agencies.

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We have no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.

Item 8. Financial Statements and Supplementary Data

The information required by this Item is included as a separate section in this annual report. See Part IV. Item 15. “Exhibits, Financial Statement Schedules,” which is incorporated herein by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) as of the end of the period covered by this annual report. Based upon that evaluation required by paragraph (b) of Rules 13a-15 or 15d-15, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 28, 2019, the Company’s disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, misstatements due to error or fraud may not be prevented or detected on a timely basis.

Our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, performed an assessment of the effectiveness of the Company’s internal control over financial reporting at December 28, 2019, utilizing the criteria discussed in the “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective at December 28, 2019. Based on management’s assessment, we have concluded that our internal control over financial reporting was effective at December 28, 2019.

Deloitte & Touche LLP, the independent registered accounting firm that audited the Company’s consolidated financial statements included elsewhere in this report, has issued an attestation report on our internal control over financial reporting as of December 28, 2019, as stated in its report which is included herein.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

55

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

The information called for by this Item 10 is incorporated by reference to our definitive proxy statement for our 2020 annual general meeting of shareholders (our “2020 Proxy Statement”), anticipated to be filed with the Securities and Exchange Commission within 120 days of December 28, 2019, under the headings “Proposal 1- Election of Directors,” “Corporate Governance,” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

Code of Ethics

We maintain a Code of Business Conduct and Ethics that applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, which is posted on our website. Our Code of Business Conduct and Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website. The information contained on, or accessible from, our website is not part of this annual report by reference or otherwise.

Item 11. Executive Compensation

The information called for by this Item 11 is incorporated by reference to our 2020 Proxy Statement anticipated to be filed with the Securities and Exchange Commission within 120 days of December 28, 2019, under the headings “Executive Compensation” and “Corporate Governance - Compensation Interlocks and Insider Participation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information called for by this Item 12 is incorporated by reference to our 2020 Proxy Statement anticipated to be filed with the Securities and Exchange Commission within 120 days of December 28, 2019, under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Item 13. Certain Relationships and Related Person Transactions, and Director Independence

The information called for by this Item 13 is incorporated by reference to our 2020 Proxy Statement anticipated to be filed with the Securities and Exchange Commission within 120 days of December 28, 2019, under the headings “Corporate Governance” and “Related-Person Transactions Policies and Procedures.”

Item 14. Principal Accounting Fees and Services

The information called for by this Item 14 is incorporated by reference to our 2020 Proxy Statement anticipated to be filed with the Securities and Exchange Commission within 120 days of December 28, 2019, under the heading “Independent Registered Public Accounting Firm.”

56

PART IV

Item 15. Exhibits, Financial Statement Schedules

The financial statements filed as part of this report are indexed below. Financial statement schedules have been omitted since they either are not required, not applicable, or the information is otherwise included.

Index to Financial Statements

Audited Consolidated Financial Statements of Gates Industrial Corporation plc and its subsidiaries:
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Statements of Operations for the fiscal years ended December 28, 2019, December 29, 2018, and December 30, 2017	F-3
Consolidated Statements of Comprehensive Income for the fiscal years ended December 28, 2019, December 29, 2018, and December 30, 2017	F-4
Consolidated Balance Sheets as of December 28, 2019 and December 29, 2018	F-5
Consolidated Statements of Cash Flows for the fiscal years ended December 28, 2019, December 29, 2018, and December 30, 2017	F-6
Consolidated Statements of Shareholders’ Equity for the fiscal years ended December 28, 2019, December 29, 2018, and December 30, 2017	F-7
Notes to the Consolidated Financial Statements	F-8

Exhibits

		Incorporated by Reference
Exhibit No.	Description	Form	Exhibit	Filing Date
3.1	Certificate of Incorporation of Gates Industrial Corporation plc	S-1	3.1	1/8/2018
3.2	Articles of Association of Gates Industrial Corporation plc, effective October 7, 2019	10-Q	3.2	11/6/2019
4.1	Description of Securities of Gates Industrial Corporation plc*
4.2	Indenture, dated as of November 22, 2019, by and among Gates Global LLC, Gates Corporation, the subsidiary guarantors named on the signature pages thereto and U.S. Bank National Association, as trustee, which includes the Form of 6.25% Senior Notes due 2026	8-K	4.1	11/27/2019
10.1	Shareholders Agreement	8-K	10.1	1/29/2018
10.2	Registration Rights Agreement	8-K	10.2	1/29/2018
10.3	Monitoring Fee Agreement	8-K	10.3	1/29/2018
10.4	Support and Services Agreement	8-K	10.4	1/29/2018
10.5	Agreement for the Provision of Depositary Services and Custody Services in respect of Gates Industrial Corporation plc Depositary Receipts	8-K	10.5	1/29/2018
10.6	Amended and Restated Credit Agreement, dated as of January 24, 2018	8-K	10.7	1/29/2018
10.7	Credit Agreement, dated as of July 3, 2014, among Omaha Holdings LLC, Gates Global LLC, the guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, collateral agent, swing line lender and L/C issuer, and the lenders party thereto	S-1	10.18	12/27/2017
10.8	Amendment No. 1 to Credit Agreement, dated as of April 7, 2017, among Omaha Holdings LLC, Gates Global LLC, the guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as the additional B-1 euro term lender and additional B-1 dollar term lender	S-1	10.19	12/27/2017

57

10.9	Amendment No. 2 to Credit Agreement, dated as of November 22, 2017, among Omaha Holdings LLC, Gates Global LLC, the guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as the additional B-2 euro term lender and additional B-2 dollar term lender	S-1	10.20	12/27/2017
10.10	Amendment No. 3, dated as of January 24, 2018, to the Credit Agreement dated as of July 3, 2014, among Omaha Holdings LLC, Gates Global LLC, the guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the lenders party thereto	8-K	10.6	1/29/2018
10.11	ABL Intercreditor Agreement, dated as of July 3, 2014, among Citibank, N.A., as ABL agent, Credit Suisse AG, Cayman Islands Branch, as cash flow agent, Gates Global LLC, Omaha Holdings LLC and the other grantors party thereto	S-1	10.23	12/27/2017
10.12	Security Agreement, dated as of July 3, 2014, among Omaha Holdings LLC, Gates Global LLC, the other grantors party thereto and Citibank, N.A., as collateral agent for the secured parties	S-1	10.24	12/27/2017
10.13	Security Agreement, dated as of July 3, 2014, among Tomkins Automotive Canada Limited, Gates Canada Inc. and Citibank, N.A., as collateral agent for the secured parties	S-1	10.25	12/27/2017
10.14	Security Agreement, dated as of July 3, 2014, among Omaha Holdings LLC, Gates Global LLC, the other grantors party thereto and Credit Suisse AG, Cayman Islands Branch, as collateral agent for the secured parties	S-1	10.26	12/27/2017
10.15	Gates Industrial Corporation plc 2014 Stock Incentive Plan†	10-K	10.15	2/14/2019
10.16	Form of Nonqualified Stock Option Agreement under the Gates Industrial Corporation plc 2014 Stock Incentive Plan (Pre-2017 grants to Ivo Jurek, David Naemura, Walter Lifsey and Rasmani Bhattacharya†	10-K	10.16	2/14/2019
10.17	Form of Nonqualified Stock Option Agreement under the Gates Industrial Corporation plc 2014 Stock Incentive Plan (Pre-2017 grant to Roger Gaston)†	10-K	10.17	2/14/2019
10.18	Form of Nonqualified Stock Option Agreement under the Gates Industrial Corporation plc 2014 Stock Incentive Plan (2017 grant to Ivo Jurek)†	10-K	10.18	2/14/2019
10.19	Form of Nonqualified Stock Option Agreement under the Gates Industrial Corporation plc 2014 Stock Incentive Plan (2017 grant to Roger Gaston)†	10-K	10.19	2/14/2019
10.20	Form of Management Equity Subscription Agreement under the Gates Industrial Corporation plc 2014 Stock Incentive Plan†	10-K	10.20	2/14/2019
10.21	Gates Industrial Corporation plc 2015 Non-Employee Director Stock Incentive Plan†	10-K	10.21	2/14/2019
10.22	Form of Nonqualified Stock Option Agreement under the Gates Industrial Corporation plc 2015 Non-Employee Director Stock Incentive Plan†	10-K	10.22	2/14/2019
10.23	Gates Industrial Corporation plc 2018 Omnibus Incentive Plan†	10-Q	10.1	11/2/2018
10.24	Form of Option Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan†	10-Q	10.2	5/3/2018
10.25	Form of Time-Based Restricted Stock Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan†	10-Q	10.2	11/2/2018
10.26	Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Non-Employee Director)†	10-Q	10.3	11/2/2018
10.27	Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Employee)†	10-Q	10.4	11/2/2018
10.28	Form of Stock Appreciation Right Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan†	10-Q	10.5	11/2/2018
10.29	Form of Option Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (3 yr.)†	10-Q	10.1	5/8/2019
10.30	Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Employee)†	10-Q	10.2	5/8/2019
10.31	Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Non-Employee Director)†	10-Q	10.3	5/8/2019
10.32	Form of Performance-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan†	10-Q	10.4	5/8/2019
10.33	Special Option Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (5 yr.)†	10-Q	10.5	5/8/2019

58

10.34	Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Executive Officer), effective January 1, 2020.*†
10.35	Form of Option Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Executive Officer), effective January 1, 2020.*†
10.36	Form of Performance-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan, effective January 1, 2020.*†
10.37	Gates Corporation Supplemental Retirement Plan, amended and restated effective March 8, 2018†	10-Q	10.1	5/3/2018
10.38	Form of Director and Officer Deed of Indemnity†	S-1	10.12	1/8/2018
10.39	Form of Executive Severance Plan†	S-1	10.15	12/27/2017
10.40	Form of Executive Change in Control Plan†	S-1	10.16	12/27/2017
21.1	Subsidiaries of the Registrant*
23.1	Consent of Deloitte & Touche LLP*
31.1	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101	The following financial information from Gates Industrial Corporation's Annual Report on Form 10-K for the year ended December 28, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Operations for the years end ended December 28, 2019, December 29, 2018 and December 30, 2017 (ii) Consolidated Statements of Comprehensive Income for the years ended December 28, 2019, December 29, 2018 and December 30, 2017 (iii) Consolidated Balance Sheets as of December 28, 2019 and December 29, 2018, (iv) Consolidated Statements of Cash Flows for the years ended December 28, 2019, December 29, 2018 and December 30, 2017 (v) Consolidated Statements of Shareholders' Equity for the years ended December 28, 2019, December 29, 2018 and December 30, 2017, and (vi) Notes to the Consolidated Financial Statements.*

*    Filed herewith.

**    Furnished herewith.

†    Management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary

Not applicable.

59

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GATES INDUSTRIAL CORPORATION PLC (Registrant)
By:	/s/ Ivo Jurek
	Name:	Ivo Jurek
	Title:	Chief Executive Officer and Director (Principal Executive Officer)

Date: February 21, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 21, 2020.

Signature	Title
/s/ Ivo Jurek	Chief Executive Officer and Director
Ivo Jurek	(Principal Executive Officer)
/s/ David M. Wisniewski	Chief Financial Officer and Chief Accounting Officer
David M. Wisniewski	(Principal Financial and Accounting Officer)
/s/ Neil P. Simpkins	Director
Neil P. Simpkins
/s/ Julia C. Kahr	Director
Julia C. Kahr
/s/ Terry Klebe	Director
Terry Klebe
/s/ James W. Ireland	Director
James W. Ireland
/s/ Stephanie Mains	Director
Stephanie Mains

60

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Gates Industrial Corporation plc

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Gates Industrial Corporation plc and subsidiaries (the "Company") as of December 28, 2019 and December 29, 2018, the related consolidated statements of operations, comprehensive income, cash flows, and shareholders' equity, for each of the three years in the period ended December 28, 2019, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 28, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 28, 2019 and December 29, 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2019, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

Basis for Opinion

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-1

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Denver, Colorado

February 21, 2020

We have served as the Company’s auditor since 2014.

F-2

Gates Industrial Corporation plc

Consolidated Statements of Operations

	For the year ended
(dollars in millions, except per share amounts)	December 28, 2019			December 29, 2018		December 30, 2017
Net sales	$	3,087.1		$	3,347.6	$	3,041.7
Cost of sales	1,944.6			2,017.0		1,823.7
Gross profit	1,142.5			1,330.6		1,218.0
Selling, general and administrative expenses	777.3			805.8		777.1
Transaction-related expenses	2.6			6.7		18.1
Impairment of intangibles and other assets	0.7			0.6		2.8
Restructuring expenses	6.0			6.4		17.4
Other operating expenses (income)	9.1			14.3		(0.3		)
Operating income from continuing operations	346.8			496.8		402.9
Interest expense	157.8			175.9		234.6
Other (income) expenses	(9.8		)	17.4		58.8
Income from continuing operations before taxes	198.8			303.5		109.5
Income tax (benefit) expense	(495.9		)	31.8		(72.5		)
Net income from continuing operations	694.7			271.7		182.0
Loss (income) on disposal of discontinued operations, net of tax, respectively, of $0, $0 and $0	0.6			0.6		(0.7		)
Net income	694.1			271.1		182.7
Less: non-controlling interests	4.0			25.8		31.4
Net income attributable to shareholders	$	690.1		$	245.3	$	151.3
Earnings per share
Basic
Earnings per share from continuing operations	$	2.38		$	0.86	$	0.62
Earnings per share from discontinued operations	—			—		—
Earnings per share	$	2.38		$	0.86	$	0.62
Diluted
Earnings per share from continuing operations	$	2.37		$	0.84	$	0.60
Earnings per share from discontinued operations	—			—		—
Earnings per share	$	2.37		$	0.84	$	0.60

The accompanying notes form an integral part of these consolidated financial statements.

F-3

Gates Industrial Corporation plc

Consolidated Statements of Comprehensive Income

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Net income	$	694.1		$	271.1		$	182.7
Other comprehensive (loss) income
Foreign currency translation:
—Net translation gain (loss) on foreign operations, net of tax (expense) benefit, respectively, of ($0.8), ($1.2), and $15.0	29.4			(134.9		)	280.2
—Gain (loss) on net investment hedges, net of tax expense, respectively, of $0, $0 and $0	5.5			9.8			(109.4		)
Total foreign currency translation movements	34.9			(125.1		)	170.8
Cash flow hedges (Interest rate derivatives):
—Loss arising in the period, net of tax benefit, respectively, of $4.5, $0 and $0	(27.2		)	(4.5		)	(2.0		)
—Reclassification to net income, net of tax (expense) benefit, respectively, of ($0.2), $4.7 and ($2.0)	2.3			10.1			9.6
Total cash flow hedges movements	(24.9		)	5.6			7.6
Available-for-sale investments:
—Net unrealized loss, net of tax benefit, respectively, of $0, $0 and $0.1	—			—			(0.2		)
Total available-for-sale investments:	—			—			(0.2		)
Post-retirement benefits:
—Current year actuarial movements, net of tax benefit (expense), respectively, of $2.8, $2.2 and ($5.4)	(16.7		)	(5.3		)	20.2
—Reclassification of prior year actuarial movements to net income, net of tax (expense) benefit, respectively, of ($0.2), $0.1 and $0	0.2			(0.5		)	—
Total post-retirement benefit movements	(16.5		)	(5.8		)	20.2
Other comprehensive (loss) income	(6.5		)	(125.3		)	198.4
Comprehensive income for the period	$	687.6		$	145.8		$	381.1
Comprehensive income attributable to shareholders:
—Income arising from continuing operations	$	686.6		$	138.7		$	319.1
—(Loss) income arising from discontinued operations	(0.6		)	(0.6		)	0.7
	686.0			138.1			319.8
Comprehensive income attributable to non-controlling interests	1.6			7.7			61.3
	$	687.6		$	145.8		$	381.1

The accompanying notes form an integral part of these consolidated financial statements.

F-4

Gates Industrial Corporation plc

Consolidated Balance Sheets

(dollars in millions, except share numbers and per share amounts)	As of December 28, 2019			As of December 29, 2018
Assets
Current assets
Cash and cash equivalents	$	635.3		$	423.4
Trade accounts receivable, net of allowances of $8.6 and $7.4	694.7			742.3
Inventories	475.1			537.6
Taxes receivable	22.1			7.2
Prepaid expenses and other assets	131.4			104.1
Total current assets	1,958.6			1,814.6
Non-current assets
Property, plant and equipment, net	727.9			756.3
Goodwill	2,060.5			2,045.9
Pension surplus	38.1			52.6
Intangible assets, net	1,876.0			1,990.6
Operating lease right-of-use assets	123.0			—
Taxes receivable	23.0			27.9
Deferred income taxes	587.1			5.1
Other non-current assets	17.1			29.6
Total assets	$	7,411.3		$	6,722.6
Liabilities and equity
Current liabilities
Debt, current portion	$	46.1		$	51.6
Trade accounts payable	374.7			424.0
Taxes payable	48.5			19.2
Accrued expenses and other current liabilities	188.8			184.2
Total current liabilities	658.1			679.0
Non-current liabilities
Debt, less current portion	2,912.3			2,953.4
Post-retirement benefit obligations	151.2			155.9
Lease liabilities	116.2			—
Taxes payable	108.8			81.9
Deferred income taxes	369.3			439.5
Other non-current liabilities	84.7			79.2
Total liabilities	4,400.6			4,388.9
Commitments and contingencies (note 23)
Shareholders’ equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 290,157,299 (December 29, 2018: authorized shares: 3,000,000,000; outstanding shares: 289,847,574)	2.9			2.9
—Additional paid-in capital	2,434.5			2,416.9
—Accumulated other comprehensive loss	(858.4		)	(854.3		)
—Retained earnings	1,072.0			381.9
Total shareholders’ equity	2,651.0			1,947.4
Non-controlling interests	359.7			386.3
Total equity	3,010.7			2,333.7
Total liabilities and equity	$	7,411.3		$	6,722.6

The accompanying notes form an integral part of these consolidated financial statements.

F-5

Gates Industrial Corporation plc

Consolidated Statements of Cash Flows

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Cash flows from operating activities
Net income	$	694.1		$	271.1		$	182.7
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	222.2			218.5			212.2
Non-cash currency transaction (gain) loss on debt and hedging instruments	(16.8		)	(45.5		)	57.4
Premium paid on redemption of long-term debt	—			27.0			—
Other net non-cash financing costs	27.4			65.6			47.6
Share-based compensation expense	15.0			6.0			5.4
Decrease in post-employment benefit obligations, net	(9.4		)	(4.6		)	(7.4		)
Deferred income taxes	(648.4		)	(64.9		)	(162.8		)
Other operating activities	6.0			4.8			5.5
Changes in operating assets and liabilities, net of effects of acquisitions:
—Decrease (increase) in accounts receivable	41.8			(49.6		)	(24.6		)
—Decrease (increase) in inventories	65.1			(96.1		)	(45.4		)
—(Decrease) increase in accounts payable	(48.2		)	42.1			49.9
—(Increase) decrease in prepaid expenses and other assets	(2.6		)	(27.5		)	2.3
—Increase (decrease) in taxes payable	46.2			(15.3		)	6.5
—Decrease in other liabilities	(43.5		)	(18.1		)	(9.4		)
Net cash provided by operations	348.9			313.5			319.9
Cash flows from investing activities
Purchases of property, plant and equipment	(72.1		)	(166.1		)	(101.1		)
Purchases of intangible assets	(11.0		)	(16.6		)	(10.0		)
Cash paid under corporate-owned life insurance policies	(10.7		)	(10.3		)	(9.5		)
Cash received under corporate-owned life insurance policies	12.0			2.9			3.1
Purchase of businesses, net of cash acquired	—			(50.9		)	(110.7		)
Other investing activities	3.8			(2.6		)	1.2
Net cash used in investing activities	(78.0		)	(243.6		)	(227.0		)
Cash flows from financing activities
Issuance of shares, net of underwriting costs	1.8			799.7			0.6
Other offering costs	—			(8.6		)	(2.3		)
Buy-back of shares	—			—			(1.6		)
Proceeds from long-term debt	568.0			—			644.7
Payments of long-term debt	(593.1		)	(933.5		)	(676.9		)
Premium paid on redemption of long-term debt	—			(27.0		)	—
Debt issuance costs paid	(8.3		)	—			(18.8		)
Dividends paid to non-controlling interests	(28.8		)	(35.2		)	(24.6		)
Other financing activities	1.1			5.7			3.6
Net cash used in financing activities	(59.3		)	(198.9		)	(75.3		)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	0.4			(12.4		)	19.6
Net increase (decrease) in cash and cash equivalents and restricted cash	212.0			(141.4		)	37.2
Cash and cash equivalents and restricted cash at the beginning of the period	424.6			566.0			528.8
Cash and cash equivalents and restricted cash at the end of the period	$	636.6		$	424.6		$	566.0
Supplemental schedule of cash flow information
Interest paid, net of amount capitalized	$	150.8		$	157.9		$	198.0
Income taxes paid, net	$	108.8		$	114.0		$	84.8
Accrued capital expenditures	$	1.8		$	1.0		$	1.7

The accompanying notes form an integral part of these consolidated financial statements.

F-6

Gates Industrial Corporation plc

Consolidated Statements of Shareholders’ Equity

(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	—		—			—			151.3			151.3			31.4			182.7
Other comprehensive income, net	—		—			168.5			—			168.5			29.9			198.4
Total comprehensive income	—		—			168.5			151.3			319.8			61.3			381.1
Other changes in equity:
—Issuance of shares	—		0.6			—			—			0.6			—			0.6
—Repurchase of shares	—		(1.5		)	—			(0.1		)	(1.6		)	—			(1.6		)
—Share-based compensation	—		4.5			—			—			4.5			—			4.5
—Dividends paid to non-controlling interests	—		—			—			—			—			(24.6		)	(24.6		)
As of December 30, 2017	2.5		1,622.6			(747.4		)	136.9			1,014.6			413.8			1,428.4
Net income	—		—			—			245.3			245.3			25.8			271.1
Other comprehensive loss, net	—		—			(106.9		)	(0.3		)	(107.2		)	(18.1		)	(125.3		)
Total comprehensive (loss) income	—		—			(106.9		)	245.0			138.1			7.7			145.8
Other changes in equity:
—Issuance of shares	0.4		841.3			—			—			841.7			—			841.7
—Cost of shares issued	—		(53.0		)	—			—			(53.0		)	—			(53.0		)
—Share-based compensation	—		6.0			—			—			6.0			—			6.0
—Dividends paid to non-controlling interests	—		—			—			—			—			(35.2		)	(35.2		)
As of December 29, 2018	2.9		2,416.9			(854.3		)	381.9			1,947.4			386.3			2,333.7
Net income	—		—			—			690.1			690.1			4.0			694.1
Other comprehensive loss, net	—		—			(4.1		)	—			(4.1		)	(2.4		)	(6.5		)
Total comprehensive (loss) income	—		—			(4.1		)	690.1			686.0			1.6			687.6
Other changes in equity:
—Issuance of shares	—		1.8			—			—			1.8			—			1.8
—Share-based compensation	—		14.6			—			—			14.6			—			14.6
—Change in ownership of a controlled subsidiary	—		1.2			—			—			1.2			(1.2		)	—
—Shares issued by a subsidiary to a non-controlling interest	—		—			—			—			—			1.8			1.8
—Dividends paid to non-controlling interests	—		—			—			—			—			(28.8		)	(28.8		)
As of December 28, 2019	$	2.9	$	2,434.5		$	(858.4	)	$	1,072.0		$	2,651.0		$	359.7		$	3,010.7

The accompanying notes form an integral part of these consolidated financial statements.

F-7

Gates Industrial Corporation plc

Notes to the Consolidated Financial Statements

1. Background

Gates Industrial Corporation plc (the “Company”) is a public limited company that was incorporated under the laws of England and Wales on September 25, 2017. Prior to the completion of the initial public offering of the Company’s shares in January 2018, the Company undertook certain reorganization transactions such that Gates Industrial Corporation plc now owns indirectly all of the equity interests in Omaha Topco Limited (“Omaha Topco”), and has become the holding company of the Gates business. The previous owners of Omaha Topco were various investment funds managed by affiliates of The Blackstone Group Inc. (together, “Blackstone” or our “Sponsor”), and Gates management equity holders. Gates Industrial Corporation plc had no significant business transactions or activities prior to the date of the reorganization transactions, and as a result, the historical financial information reflects that of Omaha Topco.

In these consolidated financial statements and related notes, all references to the “Gates”, “we”, “us”, “our” refer, unless the context requires otherwise, to the Company and its subsidiaries.

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Gates is comprised of two operating segments: Power Transmission and Fluid Power.

2. Significant accounting policies

A. Basis of presentation

The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated.

The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year:

• ASU 2016-02 “Leases” (Topic 842)

• ASU 2018-10 “Leases” (Topic 842): Codification Improvements to Topic 842, Leases

• ASU 2018-11 “Leases” (Topic 842): Targeted Improvements

• ASU 2019-01 “Leases” (Topic 842): Codification Improvements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee.

We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated.

We applied the following additional practical expedients on transition to Topic 842:

(i) we did not reassess whether or not any expired or existing contracts were or contained leases;

(ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and

(iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842.

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On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million, with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “Leases” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842.

The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures:

• ASU 2018-07 “Compensation - Stock Compensation” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

• ASU 2018-16 “Derivatives and Hedging” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

In addition, we adopted ASU 2018-02 “Income Statement - Reporting Comprehensive Income” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences.

B. Accounting periods

The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“Fiscal 2019”), December 29, 2018 (“Fiscal 2018”) and December 30, 2017 (“Fiscal 2017”).

C. Basis of consolidation

The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees.

We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation.

D. Foreign currency transactions and translation

Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million, compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017. We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019, compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017.

On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income.

In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period.

F-9

E. Net sales

Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.

Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation.

In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal.

We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price.

In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset.

F. Selling, general and administrative expenses

Shipping and handling costs

Costs of outbound shipping and handling are included in SG&A. During Fiscal 2019, we recognized shipping and handling costs of $145.2 million, compared with $159.9 million in Fiscal 2018 and $147.0 million in Fiscal 2017.

Research and development costs

Research and development costs are charged to net income in the period in which they are incurred. Our research and development expense was $67.9 million in Fiscal 2019, compared with $71.4 million in Fiscal 2018 and $68.6 million in Fiscal 2017. These costs related primarily to product development and also to technology to enhance manufacturing processes.

Advertising costs

Advertising costs are expensed as incurred and included in SG&A. During Fiscal 2019, we recognized advertising costs of $10.2 million, compared with $10.4 million in Fiscal 2018 and $10.4 million in Fiscal 2017.

G. Restructuring expenses

Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6.

Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date.

F-10

Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer.

Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability.

H. Business combinations

A business combination is a transaction or other event in which control is obtained of one or more businesses.

Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred.

Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date.

Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income.

I. Goodwill

Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition.

Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019, Fiscal 2018 or Fiscal 2017.

To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit.

J. Other intangible assets

Other intangible assets are stated at cost less accumulated amortization and any recognized impairment.

(i) Assets acquired in business combinations

F-11

An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows:

Customer relationships	15 to 17 years
Technology	5 to 7 years

Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment.

(ii) Computer software

Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years.

K. Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred.

Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges:

Buildings and improvements	30 to 40 years
Leasehold improvements	Shorter of lease term or useful life
Machinery, equipment and vehicles	2 to 20 years

L. Impairment of long-lived assets and intangible assets

Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable.

Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value.

M. Inventories

Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory.

Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019, inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018.

F-12

N. Financial instruments

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits.

(ii) Restricted cash

Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes. Cash and cash equivalents for the purposes of the consolidated statement of cash flows includes restricted cash of $1.3 million as of December 28, 2019, compared with $1.2 million and $1.6 million as of December 29, 2018 and December 30, 2017, respectively.

(iii) Trade accounts receivable

Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information.

(iv) Debt

Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method.

(v) Accounts payable

Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made.

(vi) Derivative financial instruments

We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI.

(vii) Investments

Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “Financial Instruments” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI.

(viii) Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period.

O. Post-retirement benefits

Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America.

F-13

We account for our post-retirement benefit plans in accordance with Topic 715 “Compensation – Retirement Benefits”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees.

For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations.

Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees.

Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs.

P. Share-based compensation

Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity.

We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions.

Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions.

For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital.

For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability.

Q. Income taxes

Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date.

F-14

Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions.

Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet.

Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies.

Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner.

R. Use of estimates

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates.

3. Recent accounting pronouncements not yet adopted

The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted.

• ASU 2016-13 “Financial Instruments” (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected.

The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures.

• ASU 2018-13 “Fair Value Measurement” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “Fair Value Measurement” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

F-15

The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods presented, but a few amendments should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. We expect that the adoption of this ASU will not have a significant impact on our financial instrument disclosures, but we are still finalizing our evaluation.

• ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued an ASU to modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. The impact on our consolidated financial statements of adopting this ASU, which will affect our disclosures, is still being evaluated.

• ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software” (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued an ASU to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement). The guidance permits capitalization of costs associated with the implementation of cloud-based software arrangements and aligns the criteria for capitalization with those for purchased or internally-generated computer software intangible assets. Implementation costs meeting the criteria for capitalization would not be classified as intangible assets but would instead be classified as prepaid expenses that are then amortized over the period of the arrangement as an additional expense consistent with the ongoing costs under the cloud computing arrangement.

The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and entities may choose to apply the requirements either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We do not expect any significant impact on our consolidated financial statements on adoption of this ASU.

• ASU 2019-12 “Simplifying the Accounting for Income Taxes” (Topic 740): Income Taxes

In December 2019, the FASB issued an ASU to simplify and reduce the complexity of general principles in Topic 740: Income Taxes. Such simplifications include the elimination of certain exceptions to: 1) the incremental approach for intraperiod tax allocation, 2) the requirement to recognize a deferred income tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) the ability not to recognize a deferred income tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and 4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

The amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The ASU provides for a number of different approaches to applying the changes, depending on the amendment, from full retrospective to modified retrospective to fully prospective. The impact on our consolidated financial statements of adopting this ASU is still being evaluated.

4. Acquisitions

Description and financial effect of acquisitions

On April 26, 2018, Gates completed the acquisition of Rapro for $50.9 million, net of cash acquired. Rapro is a Turkey-based business that engineers, manufactures and sells molded and branched hoses and other products, the majority of which are sold into replacement markets. Rapro operates out of two facilities in Izmir, Turkey, with its products serving heavy-duty, commercial and light-vehicle applications.

Goodwill of $34.4 million arose from this acquisition and related primarily to the expected benefit from the acceleration of our growth strategy within the Fluid Power product line and expansion of our product range and geographic coverage.

F-16

In October 2017, we completed the acquisition of Atlas Hydraulics for $74.0 million, net of cash acquired. Atlas Hydraulics is a fully-integrated product engineering, manufacturing, and commercial business headquartered in Ontario, Canada. With locations in Canada, the U.S. and Mexico, the company specializes in the design, manufacture, and supply of hydraulic tube and hose assemblies. The goodwill of $23.0 million arising from the acquisition of Atlas Hydraulics relates primarily to the expansion of our presence in industrial markets through increased manufacturing capacity and geographic reach.

In June 2017, we purchased 100% of GTF Engineering and Services UK Limited, the owner of the majority of the net assets of Techflow Flexibles, for $36.7 million. Techflow Flexibles is a fully integrated engineering, manufacturing and commercial operation based in the U.K. that specializes in high-pressure flexible hoses. The goodwill of $22.5 million arising from the acquisition of Techflow Flexibles relates largely to the expected enhancement to our ability to make and supply long-length and large-diameter hoses, primarily for the oil & gas exploration and production industries.

All of the above acquired businesses are included in the Fluid Power reporting segment and none of the associated goodwill recognized is expected to be deductible for income tax purposes.

During the years ended December 29, 2018 and December 30, 2017, we incurred expenses of $1.8 million and $3.0 million, respectively, related directly to these acquisitions, all of which are included in the transaction-related expenses line in the statement of operations. No expenses related to these acquisitions were incurred during the year ended December 28, 2019.

Pro forma information has not been presented for these acquisitions because it is not material.

5. Segment information

A. Background

The segment information provided in these consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based on net sales and Adjusted EBITDA (defined below).

B. Operating segments and segment assets

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.

Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power.

Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset base measure.

C. Segment net sales and disaggregated net sales

Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

	Net Sales
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	1,945.7	$	2,098.8	$	2,009.4
Fluid Power	1,141.4		1,248.8		1,032.3
Continuing operations	$	3,087.1	$	3,347.6	$	3,041.7

F-17

Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reporting segments, the CEO also reviews net sales information disaggregated by region, including between emerging and developed markets.

The following table summarizes our net sales by key geographic region of origin:

	Net Sales
	For the year ended
	December 28, 2019				December 29, 2018				December 30, 2017
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	580.4	$	590.0	$	606.3	$	671.7	$	582.2	$	565.9
North America,excluding U.S.	165.3		175.9		159.3		185.6		148.2		134.8
United Kingdom (“U.K.”)	43.6		37.3		55.0		39.9		57.2		27.6
EMEA(1), excluding U.K.	509.9		173.6		584.5		172.8		551.3		144.8
East Asia and India	288.6		74.3		311.7		87.5		308.7		78.0
Greater China	288.4		57.8		310.7		59.0		285.6		51.5
South America	69.5		32.5		71.3		32.3		76.2		29.7
Net Sales	$	1,945.7	$	1,141.4	$	2,098.8	$	1,248.8	$	2,009.4	$	1,032.3

⁽¹⁾  Europe, Middle East and Africa (“EMEA”).

The following table summarizes our net sales into emerging and developed markets:

	Net Sales
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Developed	$	2,013.4	$	2,157.4	$	1,964.4
Emerging	1,073.7		1,190.2		1,077.3
Net Sales	$	3,087.1	$	3,347.6	$	3,041.7

D. Measure of segment profit or loss

The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures.

“EBITDA” represents net income for the period before net interest and other (income) expenses, income taxes, depreciation and amortization derived from financial information prepared in accordance with U.S. GAAP.

Adjusted EBITDA represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

• the non-cash charges in relation to share-based compensation;

• transaction-related expenses incurred in relation to business combinations and major corporate transactions, including acquisition integration activities;

• impairments, comprising impairments of goodwill and significant impairments or write downs of other assets;

• restructuring expenses, including severance-related expenses;

• the net gain or loss on disposals and on the exit of businesses; and

• fees paid to our private equity sponsor for monitoring, advisory and consulting services.

F-18

Adjusted EBITDA by segment was as follows:

	Adjusted EBITDA
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	412.6	$	492.2	$	458.1
Fluid Power	198.4		263.6		211.0
Continuing operations	$	611.0	$	755.8	$	669.1

Reconciliation of net income from continuing operations to Adjusted EBITDA:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Net income from continuing operations	$	694.7		$	271.7	$	182.0
Income tax (benefit) expense	(495.9		)	31.8		(72.5		)
Income from continuing operations before taxes	198.8			303.5		109.5
Interest expense	157.8			175.9		234.6
Other (income) expenses	(9.8		)	17.4		58.8
Operating income from continuing operations	346.8			496.8		402.9
Depreciation and amortization	222.2			218.5		212.2
Transaction-related expenses (1)	2.6			6.7		18.1
Impairment of intangibles and other assets	0.7			0.6		2.8
Restructuring expenses	6.0			6.4		17.4
Share-based compensation expense	15.0			6.0		5.4
Sponsor fees (included in other operating expenses)	6.5			8.0		6.7
Impact of fair value adjustment on inventory (included in cost of sales)	—			0.3		1.2
Inventory impairments and adjustments (included in cost of sales)	1.2			1.2		2.0
Duplicate expenses incurred on facility relocation	—			5.2		—
Severance-related expenses (included in cost of sales)	4.0			1.7		—
Other primarily severance-related expenses (included in SG&A)	3.4			4.4		—
Other items not directly related to current operations	2.6			—		0.4
Adjusted EBITDA	$	611.0		$	755.8	$	669.1

⁽¹⁾  Transaction-related expenses relate primarily to advisory fees recognized in respect of our initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings.

E. Selected geographic information

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Property, plant and equipment, net by geographic location
U.S.	$	199.2	$	212.5
Rest of North America	117.3		107.4
U.K.	32.6		33.3
Rest of EMEA	154.4		157.3
East Asia and India	65.6		75.6
Greater China	138.4		149.3
South America	20.4		20.9
	$	727.9	$	756.3

F-19

F. Information about major customers

Gates has a significant concentration of sales in the U.S., which accounted for 43.2% of Gates’ net sales by destination from continuing operations during Fiscal 2019, compared with 39.2% during Fiscal 2018 and 38.5% during Fiscal 2017. During Fiscal 2019, Fiscal 2018 and Fiscal 2017, no single customer accounted for more than 10% of Gates’ net sales. Two customers of our North America businesses accounted for 18.9% and 11.3%, respectively, of our total trade accounts receivable balance as of December 28, 2019, compared with 17.2% and 10.7%, respectively, as of December 29, 2018. These concentrations are due to the extended payment terms common in the industry in which they operate.

6. Restructuring and other strategic initiatives

Gates continues to undertake various restructuring and other strategic initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, combine back-office workgroups and relocate certain operations to lower cost locations. Our recently completed manufacturing footprint investments and other productivity improvements in recent years have helped to position us to accelerate and expand upon our previously announced restructuring program, which is primarily intended to optimize our manufacturing and distribution footprint over the mid-term by removing structural fixed costs, and, to a lesser degree, to streamline our SG&A back-office functions.

Overall costs associated with our restructuring and other strategic initiatives have been recognized in the consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Restructuring expenses:
—Severance	$	4.7		$	0.5	$	13.6
—Professional fees	1.6			3.5		3.2
—Other restructuring (benefits) expenses	(0.3		)	2.4		0.6
	6.0			6.4		17.4
Restructuring expenses in cost of sales:
—Impairment of inventory	1.2			0.4		2.0
—Other restructuring expenses	—			0.5		0.2
Total restructuring expenses	$	7.2		$	7.3	$	19.6
Expenses related to other strategic initiatives:
—Severance costs included in cost of sales	$	4.0		$	1.2	$	—
—Severance costs included in SG&A	3.4			3.1		—
—Impairment of fixed assets	0.7			—		—
Total expenses related to other strategic initiatives	$	8.1		$	4.3	$	—

Restructuring and other strategic initiatives undertaken during the year ended December 28, 2019 related primarily to reductions in workforce, across all regions and impairments of inventory and fixed assets related to facility closures in countries including France, the U.S., Turkey and Australia. An additional $1.6 million of professional fees were incurred during Fiscal 2019, relating primarily to the closure of one of our facilities in France, the implementation of our European corporate center, and a strategic restructuring of part of our Asian business. Expenses incurred during the prior year in connection with our restructuring and other strategic initiatives also related primarily to the items described above.

F-20

Restructuring activities

As indicated above, restructuring expenses, as defined under U.S. GAAP, form a subset of our total expenses related to restructuring and other strategic initiatives. These expenses include the impairment of inventory, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	3.5	$	2.8	$	11.1
Fluid Power	3.7		4.5		8.5
Continuing operations	$	7.2	$	7.3	$	19.6

The following summarizes the reserve for restructuring expenses for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Balance as of the beginning of the period	$	2.6		$	8.6
Utilized during the period	(5.7		)	(13.5		)
Net charge for the period	6.1			8.0
Released during the period	(0.1		)	(0.7		)
Foreign currency translation	—			0.2
Balance as of the end of the period	$	2.9		$	2.6

Restructuring reserves, which are expected to be utilized in 2020, are included in the consolidated balance sheet as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued expenses and other current liabilities	$	2.9	$	2.2
Other non-current liabilities	—		0.4
	$	2.9	$	2.6

7. Income taxes

Provision for income taxes

Gates Industrial Corporation plc is domiciled in the United Kingdom. Income (loss) from continuing operations before taxes and income tax (benefit) expense are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable.

	Income (loss) before income taxes
	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
U.K.	$	(80.6	)	$	(12.8	)	$	1.0
U.S.	0.9			(43.3		)	(63.1		)
Other	278.5			359.6			171.6
Income from continuing operations before income taxes	$	198.8		$	303.5		$	109.5

F-21

Income tax (benefit) expense on income from continuing operations analyzed by tax jurisdiction is as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current tax
U.K.	$	7.5		$	0.8		$	2.8
U.S.	21.0			9.0			7.8
Other foreign	124.3			86.9			79.7
Total current tax expense	$	152.8		$	96.7		$	90.3
Deferred income tax
U.K.	$	(4.7	)	$	2.8		$	0.9
U.S.	(49.3		)	(45.3		)	(141.6		)
Other foreign	(594.7		)	(22.4		)	(22.1		)
Total deferred income tax benefit	(648.7		)	(64.9		)	(162.8		)
Income tax (benefit) expense	$	(495.9	)	$	31.8		$	(72.5	)

Reconciliation of the applicable statutory income tax rate to the reported effective income tax rate:

	For the year ended
	December 28, 2019		December 29, 2018		December 30, 2017
U.K. corporation tax rate	19.0	%	19.0	%
U.S. corporation tax rate					35.0	%
Effect of:
—State tax provision, net of Federal benefit	(2.1	%)	(1.5	%)	2.5	%
—Provision for unrecognized income tax benefits	34.0	%	(1.3	%)	2.7	%
—Company Owned Life Insurance	(4.4	%)	(2.8	%)	(12.1	%)
—Tax on international operations(1)	(325.9	%)	(1.1	%)	45.1	%
—Manufacturing incentives(2)	0.5	%	(4.2	%)	(5.8	%)
—Change in valuation allowance(3)	6.6	%	2.9	%	111.7	%
—Deferred income tax rate changes	17.8	%	0.2	%	(146.8	%)
—Currency exchange rate movements	6.5	%	0.1	%	(105.1	%)
—Other permanent differences	(1.4	%)	(0.8	%)	6.6	%
Reported effective income tax rate	(249.4	%)	10.5	%	(66.2	%)

⁽¹⁾  “Tax on international operations” includes U.S. tax on foreign earnings, unremitted earnings of foreign subsidiaries, and effects of differences between statutory and foreign tax rates each of which was reported separately for the years ended December 28, 2019, December 29, 2018 and December 30, 2017. In addition, for the years ended December 28, 2019 and December 29, 2018, it also includes the effects of global funding structures and the Tax Act; and for the year ended December 28, 2019, it also includes $608.6 million for the generation of finite lived net operating losses in Luxembourg.

⁽²⁾  “Manufacturing incentives” for the year ended December 28, 2019 includes an adjustment of $5.0 million for the expiration of manufacturing incentives in the Czech Republic, offset partially by $4.1 million of incentives generated during the year.

⁽³⁾  “Change in valuation allowance” for the year ended December 28, 2019 is comprised primarily of an increase of $608.6 million of additional valuation allowance for finite lived net operating losses generated in Luxembourg, offset partially by a release of $579.0 million of valuation allowance against indefinite lived net operating losses in Luxembourg and by a release of $5.0 million of valuation allowances on manufacturing incentives in the Czech Republic.

F-22

Tax Cuts and Jobs Act

On December 22, 2017 the Tax Cuts and Jobs Act (“TCJA”) was enacted into law, which significantly changed U.S. tax law. TJCA among other things lowered the U.S. statutory federal tax rate from 35% to 21%, modified existing interest limitation regulations, and created new provisions for global intangible low-tax income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”) that taxes certain payments between U.S. corporation and their subsidiaries. During 2019, additional proposed and final regulations were released to clarify the provisions modified or created within TCJA. The effects of the final regulations and any proposed regulations that are anticipated to be enacted substantially in similar form were included in our annual results.

Deferred income tax assets (liabilities)

Deferred income tax assets (liabilities) recognized by the Company were as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Deferred income tax assets:
Accounts receivable	$	3.1		$	3.1
Inventories	6.2			6.2
Property, plant and equipment	5.9			5.2
Lease liabilities	37.0			6.2
Accrued expenses	46.8			41.9
Post-retirement benefit obligations	27.8			30.5
Compensation	12.8			15.2
Net operating losses	1,480.3			932.3
Capital losses	130.7			126.3
Credits	138.7			157.1
Interest	120.9			48.5
Other items	11.0			7.2
	$	2,021.2		$	1,379.7
Valuation allowances	(1,200.2		)	(1,191.5		)
Total deferred income tax assets	$	821.0		$	188.2
Deferred income tax liabilities:
Inventories	(22.7		)	(21.6		)
Property, plant and equipment	(51.2		)	(50.9		)
Lease right-of-use assets	(30.1		)	(0.6		)
Intangible assets	(450.7		)	(482.9		)
Post-retirement benefit obligations	(6.8		)	(9.7		)
Undistributed earnings	(40.9		)	(55.9		)
Other items	(0.8		)	(1.0		)
Total deferred income tax liabilities	$	(603.2	)	$	(622.6	)
Net deferred income tax assets (liabilities)	$	217.8		$	(434.4	)

As of December 28, 2019:

• Gates had U.S. federal, U.K. and foreign operating tax losses amounting to $5,918.7 million and U.S. state operating tax losses amounting to $154.0 million. Operating losses of $3,324.0 million can be carried forward indefinitely and $2,748.7 million have expiration dates between 2020 and 2039. We recognized a related deferred income tax asset of $597.7 million after valuation allowance of $882.6 million;

• Gates had U.S. state and U.K. capital tax losses amounting to $768.1 million. Capital losses of $768.0 million can be carried forward indefinitely and $0.1 million expire in 2028. We recognized no related deferred income tax asset after valuation allowance $130.7 million;

F-23

• Gates had U.S. federal, Luxembourg, Belgium and U.K. interest expense carried forward amounting to $518.1 million. Interest expense carried forward can be carried forward indefinitely. We recognized a related deferred tax asset of $73.0 million after valuation allowance of $47.9 million;

• Gates had U.S. federal foreign tax credits amounting to $135.5 million, which expire between 2020 and 2027. We recognized no related deferred income tax asset after valuation allowance of$135.5 million; and

• Gates had other tax credits amounting to $3.2 million, of which $0.6 million can be carried forward indefinitely and $2.6 million expire between 2020 and 2029. We recognized a deferred income tax asset of $1.8 million after valuation allowance of $1.4 million.

As of December 28, 2019, income and withholding taxes in the various tax jurisdictions in which Gates operates have not been provided on approximately $1,701.1 million of taxable temporary differences related to the investments in the Company’s subsidiaries. These temporary differences represent the estimated excess of the financial reporting over the tax basis in our investments in those subsidiaries, which are primarily the result of purchase accounting adjustments. These temporary differences are not expected to reverse in the foreseeable future, but could become subject to income and withholding taxes in the various tax jurisdictions in which Gates operates if they were to reverse. The amount of unrecognized deferred income tax liability on these taxable temporary differences has not been determined because the hypothetical calculation is not practicable due to the uncertainty as to how they may reverse. However, Gates has recognized a deferred income tax liability of $40.9 million on taxable temporary differences related to undistributed earnings of the Company’s subsidiaries.

Recoverability of Deferred Income Tax Assets and Liabilities

We recognize deferred income tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under U.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred income tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred income tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed.

Our framework for assessing the recoverability of deferred income tax assets requires us to weigh all available evidence, including:

• taxable income in prior carry back years if carry back is permitted under the relevant tax law;

• future reversal of existing temporary differences;

• tax-planning strategies that are prudent and feasible; and

• future taxable income exclusive of reversing temporary differences and carryforwards.

After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined in Fiscal 2019 that it was more likely than not that deferred income tax assets in Luxembourg, the U.K., and the U.S. totaling $586.2 million were realizable.

Included within the $586.2 million total deferred income tax assets are deferred income tax assets totaling $579.0 million related to €2.1 billion of indefinite lived net operating losses in Luxembourg for which our evaluation of the positive and negative evidence changed during the first quarter of Fiscal 2019 due to the implementation of our European corporate center. Our European corporate center was implemented in Fiscal 2019 to centralize and strengthen regional operations in Europe, which thereafter became centrally managed from Luxembourg.

The positive evidence that existed in favor of releasing the allowance as of December 28, 2019 and ultimately outweighed the negative evidence included the following:

• our profitability in Europe in Fiscal 2018 and prior years and for Fiscal 2019, as well as our expectations regarding the sustainability of these profits;

• the impact of the implementation of our European corporate center, which created an expectation of future income in Luxembourg and, thereby, removed negative evidence that supported maintaining the valuation allowance against our deferred income tax assets as of December 29, 2018; and

F-24

• the fact that our net operating loss carryforwards in Luxembourg are indefinite lived.

Further, as a result of additional financing income realized in Fiscal 2019 that created taxable profits in the U.K., combined with our estimate that the financing income is likely to remain as a source of income through 2024, our judgment changed in the first quarter of Fiscal 2019 regarding valuation allowances totaling $6.1 million related to indefinite-lived net operating losses in the U.K.

Finally, as a result of changes in estimates of future taxable profits in the first quarter of Fiscal 2019, our judgment changed regarding the realizability of $1.1 million of U.S. foreign tax credits with related recorded valuation allowances.

As of each reporting date, management considers new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred income tax assets. We will maintain our positions with regard to future realization of deferred income tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred income tax assets may impact materially our consolidated financial statements.

Unrecognized income tax benefits

The following is a reconciliation of the gross beginning and ending amount of unrecognized income tax benefits, excluding interest and penalties:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
At the beginning of the period	$	80.1		$	106.1		$	106.3
Increases for tax positions related to the current period	70.6			0.4			5.5
Increases for tax positions related to prior periods	5.8			0.2			4.6
Decreases for tax positions related to prior periods	(2.1		)	(1.5		)	(2.8		)
Decreases related to settlements	—			—			(0.7		)
Decreases due to lapsed statute of limitations	(8.1		)	(21.0		)	(11.8		)
Foreign currency translation	1.0			(4.1		)	5.0
At the end of the period	$	147.3		$	80.1		$	106.1

Unrecognized income tax benefits represent the difference between the income tax benefits that we are able to recognize for financial reporting purposes and the income tax benefits that we have recognized or expect to recognize in filed tax returns. Such amounts represent a reasonable provision for income taxes ultimately expected to be paid, and may need to be adjusted over time as more information becomes known.

If all unrecognized income tax benefits were recognized, the net impact on the provision for income taxes which would impact the annual effective tax rate would be $122.6 million, including all competent authority offsets.

As of December 28, 2019, December 29, 2018, and December 30, 2017, Gates had accrued $19.6 million, $13.4 million, and $13.9 million, respectively, for the payment of worldwide interest and penalties on unrecognized income tax benefits, which are not included in the table above. Gates recognizes interest and penalties relating to unrecognized income tax benefits in the provision for income tax expense.

We believe that it is reasonably possible that a decrease of up to $4.0 million of unrecognized income tax benefits will occur in the next 12 months as a result of the expiration of the statutes of limitations in multiple jurisdictions. Additionally, we believe it is reasonably possibly that a decrease of $20 to $25 million, of unrecognized tax benefits will occur in the next 12 months as a result of expected settlement of audits in Germany and Canada.

As of December 28, 2019, Gates remains subject to examination in the US for tax years 2015 to 2018 and in other major jurisdictions for tax years 2008 to 2018.

F-25

8. Earnings per share

Basic earnings per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted earnings per share considers the dilutive effect of potential shares, unless the inclusion of the potential shares would have an anti-dilutive effect. The treasury stock method is used to determine the potential dilutive shares resulting from assumed exercises of equity-related instruments.

The computation of earnings per share is presented below:

	For the year ended
(dollars in millions, except share numbers and per share amounts)	December 28, 2019		December 29, 2018		December 30, 2017
Net income attributable to shareholders	$	690.1	$	245.3	$	151.3
Weighted average number of shares outstanding	290,057,360		285,906,693		245,520,533
Dilutive effect of share-based awards	1,570,101		5,791,580		4,970,295
Diluted weighted average number of shares outstanding	291,627,461		291,698,273		250,490,828
Basic earnings per share	$	2.38	$	0.86	$	0.62
Diluted earnings per share	$	2.37	$	0.84	$	0.60

For the years ended December 28, 2019, December 29, 2018 and December 30, 2017, shares totaling 3,679,014, 932,515 and 180,538, respectively, were excluded from the diluted earnings per share calculation because they were anti-dilutive.

9. Inventories

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Raw materials and supplies	$	118.9	$	152.1
Work in progress	33.6		38.4
Finished goods	322.6		347.1
Total inventories	$	475.1	$	537.6

10. Property, plant and equipment

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Cost
Land and buildings	$	318.6		$	313.3
Machinery, equipment and vehicles	819.4			736.0
Assets under construction	49.8			84.3
	1,187.8			1,133.6
Less: Accumulated depreciation and impairment	(459.9		)	(377.3		)
Total	$	727.9		$	756.3

During Fiscal 2019, the depreciation expense in relation to the above assets was $92.3 million, compared with $87.8 million during Fiscal 2018 and $81.3 million during Fiscal 2017. During Fiscal 2019, no interest was capitalized to property, plant and equipment in relation to the construction of qualifying assets, compared with $4.5 million during Fiscal 2018. No interest was capitalized during Fiscal 2017.

During Fiscal 2019, an impairment of property, plant and equipment of $0.7 million was recognized, compared to $2.7 million in Fiscal 2018, which included $2.1 million reported in restructuring expenses in relation to the planned closure of a facility in Europe. No significant impairments were recognized in relation to property, plant and equipment during Fiscal 2017.

F-26

Property, plant and equipment includes assets held under finance leases with a carrying amount of $2.8 million as of December 28, 2019, compared with $2.2 million as of December 29, 2018.

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and are secured by liens on substantially all of their assets, including property, plant and equipment.

11. Goodwill

(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	—			35.6			35.6
Foreign currency translation	(56.1		)	(19.1		)	(75.2		)
As of December 29, 2018	1,374.1			671.8			2,045.9
Foreign currency translation	3.4			11.2			14.6
As of December 28, 2019	$	1,377.5		$	683.0		$	2,060.5

As described further in note 4, in April 2018, Gates completed the acquisition of Rapro. Included in the acquisitions line above for Fiscal 2018 is $34.4 million of goodwill arising from the acquisition of Rapro. An additional $1.2 million of goodwill was recognized during the second quarter of 2018 on finalization of the purchase accounting for the Atlas acquisition.

12. Intangible assets

	As of December 28, 2019							As of December 29, 2018
(dollars in millions)	Cost		Accumulated amortization and impairment			Net		Cost		Accumulated amortization and impairment			Net
Finite-lived:
—Customer relationships	$	2,021.8	$	(656.3	)	$	1,365.5	$	2,017.4	$	(534.8	)	$	1,482.6
—Technology	90.8		(87.8		)	3.0		90.6		(87.0		)	3.6
—Capitalized software	76.1		(38.0		)	38.1		64.2		(29.2		)	35.0
	2,188.7		(782.1		)	1,406.6		2,172.2		(651.0		)	1,521.2
Indefinite-lived:
—Brands and trade names	513.4		(44.0		)	469.4		513.4		(44.0		)	469.4
Total intangible assets	$	2,702.1	$	(826.1	)	$	1,876.0	$	2,685.6	$	(695.0	)	$	1,990.6

During Fiscal 2019 and Fiscal 2018, no significant impairments were recognized, compared with an impairment of $1.0 million recognized in relation to technology and know-how during Fiscal 2017. Refer to note 15.D. for additional detail on assets measured at fair value on a non-recurring basis.

During Fiscal 2019, the amortization expense recognized in respect of intangible assets was $129.9 million, compared with $130.7 million for Fiscal 2018 and $130.9 million for Fiscal 2017. In addition, movements in foreign currency exchange rates resulted in an increase in the net carrying value of total intangible assets of $3.0 million in Fiscal 2019, compared with a decrease of $35.3 million in Fiscal 2018.

The amortization expense for the next five years is estimated to be as follows:

Fiscal year	(dollars in millions)
—2020	$	131.6
—2021	131.1
—2022	129.7
—2023	124.5
—2024	123.5

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13. Leases

A. Overview

As discussed in note 2, at the beginning of our 2019 fiscal year, we adopted new lease accounting guidance under Topic 842 “Leases”, which brings most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases, although certain short-term leases are exempted from the standard.

Under Topic 842, we evaluate our contracts and supply arrangements and conclude that they contain a lease at inception where (i) a tangible asset is explicitly or implicitly identified in the contract, (ii) we use the same asset identified over the course of the agreement, (iii) we obtain substantially all of the economic benefits from the use of the underlying asset, and (iv) we direct how and for what purpose the asset is used during the term of the contract. Leases are typically recognized on the balance sheet at their commencement date. However, if we take legal possession and have control over the asset before the commencement date, we would recognize the lease on the balance sheet at the earlier date.

Gates has over 1,000 leases covering a wide variety of tangible assets that are used in our operations across the world. The value of our global leases is concentrated in approximately 90 real estate leases, which accounted for approximately 90% of the lease liability under non-cancellable leases as of December 28, 2019. The remaining leases are predominantly comprised of equipment and vehicle leases.

Options to extend or terminate leases

In determining the lease term, we consider various economic factors, including real estate strategies, the nature, length and underlying terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these factors, where a contract has a renewal option, we generally assume with reasonable certainty that we will renew real estate leases and will not renew equipment, vehicles or any other leases.

Variable payments

We sometimes make payments under our lease agreements that are excluded from the measurement of our right-of-use assets and lease liabilities and are recognized instead as variable payments in the period in which the obligation for those payments is incurred. These costs include common area maintenance, insurance, taxes, utility costs, etc. A number of our leases, particularly real estate leases, include base rent escalation clauses. The majority of these are based on the change in a local consumer price or similar index. Payments that vary based on an index or rate are included in the measurement of our right-of-use assets and lease liabilities at the rate as of the commencement date with any subsequent changes to those payments being recognized as variable payments in the period in which they occur.

Residual value guarantees, restrictions or covenants, and leases that have not yet commenced

Gates does not have any significant leases containing residual value guarantees, restrictions or covenants. Additionally, as of December 28, 2019, there were no significant new leases that have not yet commenced.

B. Significant assumptions and judgments

Discount rate

The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily available. As most of our leases do not have a readily determinable implicit rate, we discount the future minimum lease payments using an incremental borrowing rate which represents the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We determine this rate at a country or lower level and take into account factors including currency, country risk premium, industry risk and adjustments for collateralized debt. Appropriate yield curves are used to derive different debt tenors to approximate the applicable lease term.

The discount rate is reassessed when there is a remeasurement of the lease liability, which happens predominantly when there is a contract modification and that modification does not result in a separate contract.

F-28

Elections and practical expedients

The following practical expedients have been adopted as part of our accounting policy on leases:

(i) we will not separate the lease component from the non-lease component for all asset classes. We have therefore not allocated consideration in a contract between lease and non-lease components; and

(ii) we recognize the payments on short-term leases (leases with terms at inception of 12 months or fewer) in net income on a straight-line basis over the lease term. No amount is recognized on the balance sheet with respect to these leases.

C. Quantitative disclosures

(dollars in millions)	For the year ended December 28, 2019
Lease expenses
Operating lease expenses	$	30.3
Finance lease amortization expenses	0.3
Short-term lease expenses	4.6
Variable lease expenses	6.9
Sublease income	(0.1		)
Total lease expenses	$	42.0
Other information
Right-of-use assets obtained in exchange for new operating lease liabilities	$	19.7
Right-of-use assets obtained in exchange for new finance lease liabilities	$	0.9
Cash paid for amounts included in the measurement of lease liabilities:
—Operating cash flows from operating leases	$	26.3
—Financing cash flows from finance leases	0.4
	$	26.7
Weighted-average remaining lease term — finance leases	8.5 years
Weighted-average remaining lease term — operating leases	10.1 years
Weighted-average discount rate — finance leases	2.5		%
Weighted-average discount rate — operating leases	5.4		%

Maturity analysis of liabilities

(dollars in millions)	Operating leases			Finance leases (1)
Next 12 months	$	25.5		$	0.6
Year 2	21.6			0.5
Year 3	18.2			0.5
Year 4	15.0			0.2
Year 5	13.4			—
Year 6 and beyond	84.5			—
Total lease payments	178.2			1.8
Interest	(43.9		)	(0.1		)
Total present value of lease liabilities	$	134.3		$	1.7

⁽¹⁾  Although our finance leases have a weighted average remaining lease term of 8.5 years, the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022.

F-29

Balance sheet presentation of leases as of December 28, 2019

(dollars in millions)	Operating leases		Finance leases
Right-of-use assets	$	123.0	$	2.8
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”)	$	19.5	$	0.3
Long-term lease liabilities	114.8		1.4
Total lease liabilities	$	134.3	$	1.7

Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the consolidated balance sheet. The amortization of right-of-use operating assets during the year ended December 28, 2019 was $23.6 million. This is included in the change in prepaid expenses and other assets line in the consolidated statement of cash flows.

Topic 840 Disclosures

Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows:

(dollars in millions)	Operating leases		Finance leases		Total
Fiscal year
2019	$	25.0	$	0.3	$	25.3
2020	21.3		0.3		21.6
2021	18.2		0.3		18.5
2022	14.4		0.3		14.7
2023	12.6		0.4		13.0
2024 and beyond	86.5		0.4		86.9
Total	$	178.0	$	2.0	$	180.0

14. Derivative financial instruments

We are exposed to certain risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize derivative instruments as either assets or liabilities in the consolidated balance sheet. We designate certain of our currency swaps as net investment hedges and designate our interest rate caps and interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in OCI and reclassified into net income in the same period or periods during which the hedged transaction affects earnings.

Derivative instruments that have not been designated in an effective hedging relationship are considered economic hedges, and their change in fair value is recognized in net income in each period.

F-30

The period end fair values of derivative financial instruments were as follows:

	As of December 28, 2019													As of December 29, 2018
(dollars in millions)	Prepaid expenses and other assets		Other non- 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	$	4.2	$	—	$	—		$	(19.3	)	$	(15.1	)	$	5.4	$	—	$	—		$	(27.5	)	$	(22.1	)
—Interest rate caps	—		—		(4.0		)	(3.0		)	(7.0		)	3.5		1.6		—			(10.9		)	(5.8		)
—Interest rate swaps	—		—		(5.3		)	(29.0		)	(34.3		)	—		—		(0.3		)	(2.6		)	(2.9		)
Derivatives not designated as hedging instruments:
—Currency swaps	—		—		(0.1		)	—			(0.1		)	—		—		—			—			—
—Currency forward contracts	1.2		—		(0.2		)	—			1.0			1.3		—		(0.4		)	—			0.9
	$	5.4	$	—	$	(9.6	)	$	(51.3	)	$	(55.5	)	$	10.2	$	1.6	$	(0.7	)	$	(41.0	)	$	(29.9	)

A. Instruments designated as net investment hedges

We hold cross currency swaps that have been designated as net investment hedges of certain of our European operations. As of December 28, 2019 and December 29, 2018, the notional principal amount of these contracts was $270.0 million. During July 2019, we extended the maturity of these contracts from March 2020 to March 2022. In addition, as of December 28, 2019, we have designated €147.0 million of our Euro-denominated debt as a net investment hedge of certain of our European operations, compared with €30.6 million designated as such as of December 29, 2018.

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Net fair value gains (losses) recognized in OCI in relation to:
—Euro-denominated debt	$	(0.2	)	$	(11.0	)	$	(73.3	)
—Designated cross currency swaps	5.7			20.8			(36.1		)
Total net fair value gains (losses)	$	5.5		$	9.8		$	(109.4	)

During the year endedDecember 28, 2019, a net gain of $7.8 million was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges, compared with a net gain of $2.5 million during the year ended December 29, 2018.

B. Instruments designated as cash flow hedges

We use interest rate swaps and interest rate caps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. As of December 28, 2019 and December 29, 2018, we held three pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $870.0 million, which run from June 30, 2020 through June 30, 2023. Our interest rate caps involve the receipt of variable rate payments from a counterparty if interest rates rise above the strike rate on the contract in exchange for a premium. As of December 28, 2019 and December 29, 2018, the notional amount of the interest rate cap contracts outstanding was $1.7 billion and $2.7 billion, respectively.

F-31

The periods covered by our interest rate caps and their notional values are as follows:

(in millions)	Notional value
June 30, 2017 to June 30, 2020	$	200.0
June 28, 2019 to June 30, 2020	$	1,000.0
July 1, 2019 to June 30, 2023	€	425.0

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Movement recognized in OCI in relation to:
—Fair value loss on cash flow hedges	$	(31.7	)	$	(4.5	)	$	(2.0	)
—Deferred premium reclassified from OCI to net income	2.5			5.4			11.6
Total movement	$	(29.2	)	$	0.9		$	9.6

As of December 28, 2019, we expect to reclassify an estimated $10.4 million in OCI, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions.

C. Derivative instruments not designated as hedging instruments

We do not designate our currency forward contracts, which are used primarily in respect of operational currency exposures related to payables, receivables and material procurement, or the currency swap contracts that are used to manage the currency profile of Gates’ cash as hedging instruments for the purposes of hedge accounting.

As of December 28, 2019, the notional principal amount of outstanding currency swaps that are used to manage the currency profile of Gates’ cash was $16.7 million, compared with $0 as of December 29, 2018.

As of December 28, 2019, the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $82.5 million, compared with $108.0 million as of December 29, 2018.

The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Fair value gains (losses) recognized in relation to:
—Currency forward contracts recognized in SG&A	$	3.0	$	2.4	$	2.8
—Currency swaps recognized in other (income) expenses	0.6		0.6		(0.5		)
Total	$	3.6	$	3.0	$	2.3

15. Fair value measurement

A. Fair value hierarchy

We account for certain assets and liabilities at fair value. Topic 820 “Fair Value Measurements and Disclosures” establishes the following hierarchy for the inputs that are used in fair value measurement:

• “Level 1” inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

• “Level 2” inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• “Level 3” inputs are not based on observable market data (unobservable inputs).

F-32

Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation.

B. Financial instruments not held at fair value

Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values.

The carrying amount and fair value of our debt are set out below:

	As of December 28, 2019				As of December 29, 2018
(dollars in millions)	Carrying amount		Fair value		Carrying amount		Fair value
Current	$	46.1	$	45.9	$	51.6	$	50.4
Non-current	2,912.3		2,946.8		2,953.4		2,873.2
	$	2,958.4	$	2,992.7	$	3,005.0	$	2,923.6

Debt is comprised principally of borrowings under the secured credit facilities and the unsecured senior notes. Loans under the secured credit facilities pay interest at floating rates, subject to a 1% LIBOR floor on the Dollar Term Loan and a 0% EURIBOR floor on the Euro Term Loan. The fair values of the term loans are derived from a market price, discounted for illiquidity. The unsecured senior notes have fixed interest rates, are traded by “Qualified Institutional Buyers” and certain other eligible investors, and their fair value is derived from their quoted market price.

C. Assets and liabilities measured at fair value on a recurring basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)			Total
As of December 28, 2019
Equity investments	$	1.1	$	—		$	1.1
Derivative assets	$	—	$	5.4		$	5.4
Derivative liabilities	$	—	$	(60.9	)	$	(60.9	)
As of December 29, 2018
Equity investments	$	0.8	$	—		$	0.8
Derivative assets	$	—	$	11.8		$	11.8
Derivative liabilities	$	—	$	(41.7	)	$	(41.7	)

Available-for-sale securities represent equity securities that are traded in an active market and therefore are measured using quoted prices in an active market. Derivative assets and liabilities included in Level 2 represent foreign currency exchange forward and swap contracts, and interest rate derivative contracts.

We value our foreign currency exchange derivatives using models consistent with those used by a market participant that maximize the use of market observable inputs including forward prices for currencies.

We value our interest rate derivative contracts using a widely accepted discounted cash flow valuation methodology that reflects the contractual terms of each derivative, including the period to maturity. The methodology derives the fair values of the derivatives using the market standard methodology of netting the discounted future cash payments and the discounted expected receipts. The inputs used in the calculation are based on observable market-based inputs, including interest rate curves, implied volatilities and credit spreads.

We incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

F-33

Transfers between levels of the fair value hierarchy

During the periods presented, there were no transfers between Levels 1 and 2, and Gates had no assets or liabilities measured at fair value on a recurring basis using Level 3 inputs.

D. Assets measured at fair value on a non-recurring basis

Gates has non-recurring fair value measurements related to certain assets, including goodwill, intangible assets, and property, plant, and equipment. No significant impairment was recognized during either the year ended December 28, 2019 or the year ended December 29, 2018.

16. Debt

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Secured debt:
—Dollar Term Loan	$	1,699.1		$	1,716.4
—Euro Term Loan	717.7			742.1
Unsecured debt:
—6.25% Dollar Senior Notes due 2026	568.0			—
—6.00% Dollar Senior Notes due 2022	—			568.0
—Other loans	0.2			0.6
Total principal of debt	2,985.0			3,027.1
Deferred issuance costs	(41.8		)	(48.7		)
Accrued interest	15.2			26.6
Total carrying value of debt	2,958.4			3,005.0
Debt, current portion	46.1			51.6
Debt, less current portion	$	2,912.3		$	2,953.4

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets.

Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements.

The principal payments due under our financing agreements over the next five years and thereafter are as follows:

(dollars in millions)	Total
Fiscal year
—2020	$	30.9
—2021	24.7
—2022	24.7
—2023	24.7
—2024	2,312.0
Thereafter	568.0
	$	2,985.0

F-34

Debt issuances and redemptions

On November 22, 2019, we issued and sold $568.0 million of unsecured Dollar Senior Notes, described further below. The proceeds from this debt issuance were used on December 5, 2019 to redeem all $568.0 million of our outstanding 6.00% Dollar Senior Notes, plus interest accrued up to and including the redemption date of $13.2 million. The majority of the costs totaling approximately $8.6 million related to the refinancing transactions have been deferred and will be amortized to interest expense over the remaining term of the related borrowings using the effective interest method.

On January 31, 2018, we redeemed in full our outstanding €235.0 million Euro Senior Notes, plus interest accrued up to and including the redemption date of $0.7 million. The Euro Senior Notes were redeemed at a price of 102.875% and a redemption premium of $8.4 million was therefore paid in addition to the principal of $291.7 million.

On February 8 and February 9, 2018, we redeemed 6.00% Dollar Senior Notes with a principal of $522.0 million and $100.0 million, respectively. Both of these calls were made at a price of 103.0%, incurring redemption premiums of $15.6 million and $3.0 million, respectively. Interest accrued of $2.0 million and $0.4 million, respectively, was also paid on these dates.

The 2018 prepayments, totaling $913.7 million in principal, $27.0 million in redemption premiums and $3.1 million in accrued interest, were funded primarily by the net proceeds from our initial public offering, with the remainder of the funds coming from cash on hand. As a result of these redemptions, the recognition of $15.4 million of deferred financing costs was accelerated and recognized in interest expense in the first three months of 2018.

Dollar and Euro Term Loans

Our secured credit facilities include a Dollar Term Loan credit facility and a Euro Term Loan credit facility that were drawn on July 3, 2014. The maturity date for each of the term loan facilities is March 31, 2024. These term loan facilities bear interest at a floating rate, which for U.S. dollar debt can be either a base rate as defined in the credit agreement plus an applicable margin, or at our option, LIBOR plus an applicable margin. The Euro Term Loan bears interest at EURIBOR subject to a floor of 0%, plus a margin of 3.00%.

On January 29, 2018, the applicable margin on each of the term loans was lowered by 0.25% following the successful completion of our initial public offering. The Dollar Term Loan interest rate is currently LIBOR, subject to a floor of 1.00%, plus a margin of 2.75%, and as of December 28, 2019, borrowings under this facility bore interest at a rate of 4.45% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As of December 28, 2019, the Euro Term Loan bore interest at EURIBOR, which is currently below 0%, subject to a floor of 0%, plus a margin of 3.00%. The Euro Term Loan interest rate is re-set on the last business day of each quarter.

Both term loans are subject to quarterly amortization payments of 0.25%, based on the original principal amount less certain prepayments with the balance payable on maturity. During the year ended December 28, 2019, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $17.3 million and $7.4 million, respectively. During the year ended December 29, 2018, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $13.0 million and $5.8 million, respectively.

Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the agreement, based on the preceding year’s final results. Based on our 2019 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment is required to be made in 2020.

During the periods presented, foreign exchange gains were recognized in respect of the Euro Term Loans as summarized in the table below. As a portion of the facility was designated as a net investment hedge of certain of our Euro investments, a corresponding portion of the foreign exchange gains (losses) were recognized in OCI.

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Gain (loss) recognized in statement of operations	$	17.3		$	43.6		$	(60.2	)
Loss recognized in OCI	(0.2		)	(6.0		)	(36.5		)
Total gain (loss)	$	17.1		$	37.6		$	(96.7	)

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Subsequent to our initial public offering, the above net foreign exchange gains recognized in the other (income) expenses line of the consolidated statement of operations have been substantially offset by net foreign exchange movements on Euro-denominated intercompany loans as part of our overall hedging strategy.

A wholly-owned U.S. subsidiary of Gates Global LLC is the principal obligor under the Term Loans for U.S. federal income tax purposes and makes the payments due on this tranche of debt. As a result, interest received by lenders of this tranche of debt is U.S. source income.

Unsecured Senior Notes

As of December 28, 2019, we had $568.0 million of Dollar Senior Notes outstanding that were issued in November 2019. These notes are scheduled to mature on January 15, 2026 and bear interest at an annual fixed rate of 6.25% with semi-annual interest payments.

On and after January 15, 2022, we may redeem the Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption Price
During the year commencing:
—2022	103.125	%
—2023	101.563	%
—2024 and thereafter	100.000	%

Additionally, net cash proceeds from an equity offering can be utilized at any time prior to January 15, 2022, to redeem up to 40% of the notes at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date.

Upon the occurrence of a change of control or a certain qualifying asset sales, the holders of the notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest.

As noted above, on December 5, 2019, we redeemed all $568.0 million of our 6.00% Dollar Senior Notes due in 2022, and, on January 31, 2018, we redeemed in full all €235.0 million of our outstanding Euro Senior Notes and made partial redemptions of the 6.00% Dollar Senior Notes totaling $622.0 million.

Up to the date of their redemption, foreign exchange losses of $9.2 million were recognized in respect of the Euro Senior Notes. Of these losses, $5.0 million was recognized in OCI for the period during which the facility was designated as a net investment hedge of certain of our Euro investments, and $4.2 million was recognized in the statement of operations.

Revolving credit facility

We also have a secured revolving credit facility, maturing on January 29, 2023, that provides for multi-currency revolving loans up to an aggregate principal amount of $185.0 million, with a letter of credit sub-facility of $20.0 million. The facility matures on January 29, 2023.

As of both December 28, 2019 and December 29, 2018, there were no drawings for cash under the revolving credit facility and there were no letters of credit outstanding.

Debt under the revolving credit facility bears interest at a floating rate, which can be either a base rate as defined in the credit agreement plus an applicable margin or, at our option, LIBOR, plus an applicable margin.

Asset-backed revolver

We have a revolving credit facility backed by certain of our assets in North America. The facility allows for loans of up to a maximum of $325.0 million ($294.6 million as of December 28, 2019, compared with $325.0 million as of December 29, 2018, based on the values of the secured assets on those dates) with a letter of credit sub-facility of $150.0 million within this maximum. The facility matures on January 29, 2023.

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As of both December 28, 2019 and December 29, 2018, there were no drawings for cash under the asset-backed revolver, but there were letters of credit outstanding of $50.1 million and $57.8 million, respectively.

Debt under the facility bears interest at a floating rate, which can be either a base rate as defined in the credit agreement plus an applicable margin or, at our option, LIBOR, plus an applicable margin.

17. Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued compensation	$	47.3	$	75.0
Current portion of lease obligations	19.8		0.1
Derivative financial instruments	60.9		41.7
Payroll and related taxes payable	11.3		13.6
VAT and other taxes payable	11.5		10.9
Warranty reserve	17.7		14.3
Workers’ compensation reserve	10.0		11.1
Other accrued expenses and other liabilities	95.0		96.7
	$	273.5	$	263.4

The above liabilities are presented in Gates’ balance sheet within other current liabilities and other non-current liabilities as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
—Accrued expenses and other current liabilities	$	188.8	$	184.2
—Other non-current liabilities	84.7		79.2
	$	273.5	$	263.4

Changes in warranty reserves (included in accrued expenses and other liabilities) were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Balance at the beginning of the period	$	14.3		$	14.1		$	14.3
Charge for the period	16.5			11.6			12.3
Utilized during the period	(10.9		)	(11.0		)	(13.1		)
Released during the period	(2.2		)	(0.1		)	(0.1		)
Foreign currency translation	—			(0.3		)	0.7
Balance at the end of the period	$	17.7		$	14.3		$	14.1

Warranty reserves

An accrual is made for warranty claims on various products depending on specific market expectations and the type of product. These estimates are established using historical information on the nature, frequency and average cost of warranty claims. The majority of the warranty accruals are expected to be utilized during 2019, with the remainder estimated to be utilized within the next three years.

An accrual is made for the cost of product recalls if management considers it probable that it will be necessary to recall a specific product and the amount can be reasonably estimated.

18. Post-retirement benefits

A. Defined contribution pension plans

Gates provides defined contribution pension benefits in most of the countries in which it operates; in particular, the majority of its employees in the U.S. are entitled to such benefits.

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During Fiscal 2019, the expense recognized by Gates in respect of defined contribution pension plans was $17.9 million, compared with $19.1 million in Fiscal 2018 and $18.6 million in Fiscal 2017.

B. Defined benefit pension plans

Gates operates defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. Generally, the pension benefits provided under these plans are based on pensionable salary and the period of service of the individual employees. Plan assets are held separately from those of Gates in funds that are under the control of trustees. All of the defined benefit pension plans operated by Gates are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees.

Funded status

The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Pension surplus	$	(38.1	)	$	(52.6	)
Accrued expenses and other current liabilities	2.3			2.4
Post-retirement benefit obligations	98.7			102.4
Net unfunded pension obligation	$	62.9		$	52.2
Plans whose projected benefit obligation was in excess of plan assets:
—Aggregate projected benefit obligation	$	391.7		$	378.2
—Aggregate plan assets	$	290.7		$	273.4
Plans whose accumulated benefit obligation was in excess of the plan assets:
—Aggregate accumulated benefit obligation	$	381.6		$	372.3
—Aggregate plan assets	$	286.2		$	273.0

Benefit obligation

Changes in the projected benefit obligation in relation to defined benefit pension plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Benefit obligation at the beginning of the period	$	827.1		$	932.9
Employer service cost	5.5			5.3
Plan participants’ contributions	0.2			0.2
Plan amendments	—			11.4
Interest cost	23.4			23.6
Net actuarial loss (gain)	83.1			(41.1		)
Benefits paid	(51.6		)	(56.5		)
Expenses paid from assets	(2.3		)	(1.8		)
Curtailments and settlements	(3.6		)	(13.4		)
Foreign currency translation	16.3			(33.5		)
Benefit obligation at the end of the period	$	898.1		$	827.1
Accumulated benefit obligation	$	892.4		$	821.3

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Changes in plan assets

Changes in the fair value of the assets held by defined benefit pension plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Plan assets at the beginning of the period	$	774.9		$	893.6
Actual return on plan assets	90.4			(19.7		)
Employer contributions	8.5			8.9
Plan participants’ contributions	0.2			0.2
Curtailments and settlements	(2.3		)	(13.4		)
Benefits paid	(51.6		)	(56.5		)
Expenses paid from assets	(2.3		)	(1.8		)
Foreign currency translation	17.4			(36.4		)
Plan assets at the end of the period	$	835.2		$	774.9

During December 2018, we reflected a plan amendment in respect of certain of our U.K. pension plans. This amendment arose as a result of a recent U.K. High Court ruling in a case unrelated to Gates that has consequences for many U.K. pension plans. The amendment relates to the equalization of benefits in order to address inequalities that arise due to differing guaranteed minimum pension entitlements for men and women. The resulting increase of $11.4 million in the pension liability has been accounted for through OCI as a prior year service cost.

Gates’ desired investment objectives for pension plan assets include maintaining an adequate level of diversification to reduce interest rate and market risk, and to provide adequate liquidity to meet immediate and future benefit payment requirements. Outside the U.S., Gates’ defined benefit pension plans target a mix of growth seeking assets, comprising equities, and income generating assets, comprising government and corporate bonds, that is considered by the trustees to be appropriate in the circumstances. Plan assets are rebalanced periodically to maintain target asset allocations.

Certain benefit obligations outside the U.S. are matched by insurance contracts.

Investments in equities and fixed income securities are held in pooled investment funds that are managed by investment managers on a passive (or “index-tracking”) basis. The trustees ensure that there is no significant concentration of credit risk in any one financial institution.

Plan assets do not include any financial instruments issued by, any property occupied by, or other assets used by Gates.

The fair values of pension plan assets by asset category were as follows:

	As of December 28, 2019								As of December 29, 2018
(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Collective investment trusts:
Equity Securities	$	—	$	102.7	$	—	$	102.7	$	—	$	83.2	$	—	$	83.2
Debt Securities
—Corporate bonds	—		207.9		—		207.9		—		156.5		—		156.5
—Government bonds	—		231.3		—		231.3		—		302.9		—		302.9
Annuities and insurance	—		48.7		235.9		284.6		—		4.0		223.9		227.9
Cash and cash equivalents	8.7		—		—		8.7		4.4		—		—		4.4
Total	$	8.7	$	590.6	$	235.9	$	835.2	$	4.4	$	546.6	$	223.9	$	774.9

Investments in equities and bonds held in pooled investment funds are measured at the bid price quoted by the investment managers, which reflect the quoted prices of the underlying securities. Insurance contracts are measured at their surrender value quoted by the insurers. Cash and cash equivalents largely attract floating interest rates.

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Changes in the fair value of plan assets measured using significant unobservable inputs (level 3) were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Fair value at the beginning of the period	$	224.0		$	248.1
Actual return on plan assets	17.9			(0.3		)
Purchases	1.4			1.7
Sales	(0.9		)	(0.9		)
Impacts of benefits paid	(12.3		)	(10.5		)
Foreign currency translation	5.8			(14.1		)
Fair value at the end of the period	$	235.9		$	224.0

Estimated future contributions and benefit payments

Gates’ funding policy for its defined benefit pension plans is to contribute amounts determined annually on an actuarial basis to provide for current and future benefits in accordance with federal law and other regulations. During Fiscal 2020, Gates expects to contribute approximately $4.3 million to its defined benefit pension plans.

Benefit payments, reflecting expected future service, are expected to be made by Gates’ defined benefit pension plans as follows:

(dollars in millions)
Fiscal year
—2020	$	48.2
—2021	46.8
—2022	48.3
—2023	47.8
—2024	47.6
—2025 through 2029	239.2

Net periodic benefit cost

Components of the net periodic benefit cost for defined benefit pension plans relating to continuing operations were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Employer service cost	$	5.5		$	5.3		$	5.8
Settlements and curtailments	(0.6		)	0.3			(3.8		)
Interest cost	23.4			23.6			30.4
Expected return on plan assets	(27.8		)	(22.6		)	(26.9		)
Amortization of prior net actuarial loss	—			0.1			0.4
Amortization of prior service cost	0.8			0.1			—
Net periodic benefit cost	$	1.3		$	6.8		$	5.9

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Other comprehensive income

Changes in plan assets and benefit obligations of defined benefit pension plans recognized in OCI were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current period net actuarial loss (gain)	$	20.5		$	1.2		$	(20.9	)
Amortization of prior net actuarial loss	—			(0.1		)	(0.4		)
Prior service cost	—			11.4			0.7
Amortization of prior service cost	(0.8		)	(0.1		)	—
(Gain) loss recognized due to settlements and curtailments	(0.8		)	(0.3		)	3.8
Pre-tax changes recognized in OCI other than foreign currency translation	18.9			12.1			(16.8		)
Foreign currency translation	1.0			(0.1		)	(0.9		)
Total pre-tax changes recognized in OCI	$	19.9		$	12.0		$	(17.7	)

Cumulative losses (gains) before tax recognized in OCI in respect of post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Actuarial loss	$	21.2		$	1.5		$	0.7
Prior service costs	11.1			11.9			0.6
Foreign currency translation	(2.9		)	(3.9		)	(3.8		)
Cumulative total	$	29.4		$	9.5		$	(2.5	)

It is estimated that a net $1.0 million loss will be amortized from accumulated other comprehensive loss into net periodic benefit cost during the period from December 29, 2019 through January 2, 2021.

Assumptions

Major assumptions used in determining the benefit obligation and the net periodic benefit cost for defined benefit pension plans are presented in the following table as weighted averages:

	As of December 28, 2019		As of December 29, 2018
Benefit obligation:
—Discount rate	2.261	%	2.932	%
—Rate of salary increase	3.173	%	3.190	%
Net periodic benefit cost:
—Discount rate	2.932	%	2.619	%
—Rate of salary increase	3.190	%	3.178	%
—Expected return on plan assets	3.622	%	2.844	%

In determining the expected return on plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance. Return projections are validated using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns.

C. Other defined benefit plans

Gates provides other post-employment benefits, principally health and life insurance cover, on an unfunded basis to certain of its employees in the U.S. and Canada.

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Funded status

The deficit recognized in respect of other defined benefit plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued expenses and other current liabilities	$	5.4	$	6.5
Post-retirement benefit obligations	52.5		53.5
	$	57.9	$	60.0

Benefit obligation

Changes in the accumulated benefit obligation in relation to other defined benefit plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Benefit obligation at the beginning of the period	$	60.0		$	68.4
Interest cost	2.3			2.2
Actuarial gain	(1.8		)	(4.8		)
Benefits paid	(3.5		)	(4.1		)
Foreign currency translation	0.9			(1.7		)
Benefit obligation at the end of the period	$	57.9		$	60.0
Accumulated benefit obligation	$	57.9		$	60.0

Estimated future contributions and benefit payments

Contributions are made to our other defined benefit plans as and when benefits are paid from the plans. During Fiscal 2020, Gates expects to contribute approximately $5.5 million to its other benefit plans.

Benefit payments, reflecting expected future service, are expected to be made by Gates’ other defined benefit plans as follows:

(dollars in millions)
Fiscal years:
—2020	$	5.5
—2021	5.2
—2022	4.9
—2023	4.6
—2024	4.3
—2025 through 2029	18.3

Net periodic benefit cost

Components of the net periodic benefit cost for other defined benefit plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Interest cost	$	2.3		$	2.2		$	2.7
Amortization of prior net actuarial gain	(0.8		)	(0.4		)	(0.2		)
Amortization of prior service credit	(0.4		)	(0.4		)	(0.1		)
Net periodic benefit cost	$	1.1		$	1.4		$	2.4

The net periodic benefit cost relates entirely to continuing operations.

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Other comprehensive income

Changes in the benefit obligation of other defined benefit plans recognized in OCI were as follows: 

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current period net actuarial gain	$	(1.8	)	$	(4.8	)	$	(3.9	)
Amortization of prior net actuarial gain	0.8			0.4			0.2
Prior service credit	—			—			(4.3		)
Amortization of prior service credit	0.4			0.4			0.1
Pre-tax changes recognized in OCI other than foreign currency translation	(0.6		)	(4.0		)	(7.9		)
Foreign currency translation	(0.2		)	—			—
Total pre-tax changes recognized in OCI	$	(0.8	)	$	(4.0	)	$	(7.9	)

Cumulative gains before tax recognized in OCI in respect of other post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Actuarial gains	$	(17.3	)	$	(16.3	)	$	(11.9	)
Prior service credits	(3.4		)	(3.8		)	(4.2		)
Other adjustments	0.2			0.2			0.2
Foreign currency translation	(0.2		)	—			—
Cumulative total	$	(20.7	)	$	(19.9	)	$	(15.9	)

It is estimated that a $1.4 million gain will be amortized from accumulated other comprehensive income into net periodic benefit cost during the period from December 29, 2019 through January 2, 2021.

Assumptions

Major assumptions used in determining the benefit obligation and the net periodic benefit cost for other defined benefit plans are presented in the following table as weighted averages:

	Benefit obligation				Net periodic benefit cost
	As of December 28, 2019		As of December 29, 2018		As of December 28, 2019		As of December 29, 2018
Discount rate	3.08	%	4.01	%	4.01	%	3.42	%

The initial healthcare cost trend rate as of December 28, 2019, starts at 6.56%, compared with 7.01% as of December 29, 2018, with an ultimate trend rate of 4.93%, compared with 4.94% as of December 29, 2018, beginning in 2023.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percentage point change in the assumed health care cost trend rate as of December 28, 2019 would have the following effects:

(dollars in millions)	1% point increase		1% point decrease
Increase (decrease) in the total of service and interest cost	$	0.1	$	(0.2	)
Increase (decrease) in the benefit obligation	$	2.1	$	(1.8	)

19. Share-based compensation

The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the year ended December 28, 2019, we recognized a charge of $15.0 million, compared with $6.0 million and $5.4 million, respectively, during the years ended December 29, 2018 and December 30, 2017.

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Share-based incentive awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan

Gates has a number of awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018. No new awards have been granted under this plan since 2017. The options are split equally into four tiers, each with specific vesting conditions. Tier I options vest evenly over 5 years from the grant date, subject to the participant’s continuing to provide service to Gates on the vesting date. Tier II, III and IV options vest on achievement of specified investment returns by Blackstone at the time of a defined liquidity event, which is also subject to the participant’s continued provision of service to Gates on the vesting date. The performance conditions associated with Tiers II, III and IV must be achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant.

Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end.

In addition to the above, in 2017, under the same plan, the Company issued 76,293 restricted stock units (“RSUs”). These RSUs vest evenly over three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The awards expire ten years after the date of grant, in December 2027.

Changes in the awards granted under this plan are summarized in the tables below.

Share-based incentive awards issued under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan

In conjunction with the initial public offering in January 2018, Gates adopted a new equity-based compensation plan, which is a market-based long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and RSUs.

The SARs and the majority of the share options issued under this plan vest evenly over either three years or four years from the grant date. The remainder of the options, the premium-priced options, vest evenly over a three year period, starting two years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expire ten years after the date of grant.

The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over either one or three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The PRSUs provide that 50% of the award will generally vest if Gates achieves a certain level of average annual adjusted return on invested capital as defined in the plan (“Adjusted ROIC”) and the remaining 50% of the PRSUs will generally vest if Gates achieves certain relative total shareholder return (“Relative TSR”) goals, in each case, measured over a three year performance period and subject to the participant’s continued employment through the end of the performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% of the target based on actual performance against a pre-established scale.

New awards and movements in existing awards granted under this plan are summarized in the tables below.

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Summary of movements in options outstanding

	For the year ended
	December 28, 2019
	Number of options		Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	4,212,537		$	7.03
—Tier II	4,837,780		$	6.97
—Tier III	4,837,780		$	6.97
—Tier IV	4,837,780		$	10.46
—SARs	724,372		$	8.17
—Share options	582,717		$	17.14
	20,032,966		$	8.16
Granted during the period:
—SARs	71,150		$	16.46
—Share options	1,099,505		$	16.46
—Premium-priced options	796,460		$	19.00
	1,967,115		$	17.49
Forfeited during the period:
—Tier I	(115,685	)	$	6.61
—Tier II	(432,440	)	$	6.58
—Tier III	(432,440	)	$	6.58
—Tier IV	(432,440	)	$	9.88
—SARs	(22,119	)	$	15.43
—Share options	(69,862	)	$	16.86
	(1,504,986	)	$	8.14
Expired during the period:
—SARs	(953	)	$	13.44
—Share options	(1,875	)	$	17.72
	(2,828	)	$	16.28
Exercised during the period:
—Tier I	(270,997	)	$	6.61
	(270,997	)	$	6.61
Outstanding at the end of the period:
—Tier I	3,825,855		$	7.07
—Tier II	4,405,340		$	7.01
—Tier III	4,405,340		$	7.01
—Tier IV	4,405,340		$	10.52
—SARs	772,450		$	8.72
—Share options	1,610,485		$	16.69
—Premium-priced options	796,460		$	19.00
	20,221,270		$	9.09
Exercisable at the end of the period	2,864,411		$	7.37
Vested and expected to vest at the end of the period	6,978,259		$	10.81

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As of December 28, 2019, the aggregate intrinsic value of options that were vested or expected to vest was $29.4 million and these options had a weighted average remaining contractual term of 7.1 years. As of December 28, 2019, the aggregate intrinsic value of options that were exercisable was $18.6 million and these options had a weighted average remaining contractual term of 5.8 years.

As of December 28, 2019, the unrecognized compensation charge relating to the nonvested options other than Tier II, Tier III and Tier IV options, was $9.3 million, which is expected to be recognized over a weighted-average period of 2.4 years. The unrecognized compensation charge relating to the nonvested Tier II, Tier III and Tier IV options was $28.8 million, which will be recognized on occurrence of a liquidity event as described above.

During the year endedDecember 28, 2019, cash of $1.8 million was received in relation to the exercise of vested options, compared with $0.6 million during the year endedDecember 29, 2018. The aggregate intrinsic value of options exercised during the year endedDecember 28, 2019 was $2.1 million, compared with $0.8 million during the year endedDecember 29, 2018.

Summary of movements in RSUs and PRSUs outstanding

	For the year ended
	December 28, 2019
	Number of awards		Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	81,800		$	17.13
	81,800		$	17.13
Granted during the period:
—RSUs	741,936		$	16.19
—PRSUs	248,550		20.07
	990,486		$	17.16
Forfeited during the period:
—RSUs	(54,335	)	$	16.59
	(54,335	)	$	16.59
Vested during the period:
—RSUs	(51,132	)	$	17.00
	(51,132	)	$	17.00
Outstanding at the end of the period:
—RSUs	718,269		$	16.20
—PRSUs	248,550		20.07
	966,819		$	17.19

As of December 28, 2019, the unrecognized compensation charge relating to nonvested RSUs and PRSUs was $9.0 million, which is expected to be recognized over a weighted average period of 2.1 years, subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the year endedDecember 28, 2019 was $0.6 million, compared with $0.4 million during the year endedDecember 29, 2018.

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Valuation of awards granted during the period

The fair value of the options at their grant date was measured using a Black-Scholes valuation model in the case of SARs and share options. RSUs are valued at the share price on the date of grant. The premium-priced options and PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its initial public offering, this volatility has been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:

	For the year ended
	December 28, 2019			December 29, 2018			December 30, 2017
Grant date fair value:
—SARs	$	5.88		$	6.44		$	3.94
—Share options	$	5.88		$	7.44		n/a
—Premium-priced options	$	5.65		n/a			n/a
—RSUs	$	16.19		$	16.97		$	17.23
—PRSUs	$	20.07		n/a			n/a
Inputs to the model:
—Expected volatility - SARs	31.9		%	38.9		%	43.6		%
—Expected volatility - share options	31.9		%	39.6		%	n/a
—Expected volatility - premium-priced options	31.9		%	n/a			n/a
—Expected volatility - PRSUs	32.8		%	n/a			n/a
—Expected volatility - Tiers I-IV options	n/a			n/a			43.6		%
—Expected option life for SARs	6.0			6.3			n/a
—Expected option life for share options	6.0			6.3			n/a
—Expected option life for premium-priced options	7.0			n/a			n/a
—Expected option life for Tier I options	n/a			n/a			6.5
—Expected option life for Tier II-IV options	n/a			n/a			6.0
—Expected option life after liquidity event for Tier II-IV options	n/a			n/a			4.0
—Risk-free interest rate:
SARs	2.51		%	2.89		%	n/a
Share options	2.51		%	2.80		%	n/a
Premium-priced options	2.53		%	n/a			n/a
PRSUs	2.48		%	n/a			n/a
Tier I options	n/a			n/a			2.04		%
Tiers II-IV options	n/a			n/a			1.98		%

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20. Equity

In January 2018, Gates completed an initial public offering of 38,500,000 shares at a price of $19.00 per share. Shortly thereafter, the underwriters of the initial public offering exercised their over-allotment option for a further 5,775,000 shares, also at a price of $19.00 per share. Movements in the Company’s number of shares in issue for the years ended December 28, 2019 and December 29, 2018, respectively, were as follows:

	For the year ended
(number of shares)	December 28, 2019	December 29, 2018
Balance as of the beginning of the fiscal year	289,847,574	245,474,605
Issuance of shares	—	44,275,000
Exercise of share options	270,997	79,014
Vesting of restricted stock units, net of withholding taxes	38,728	18,955
Balance as of the end of the period	290,157,299	289,847,574

The Company has one class of authorized and issued shares, with a par value of $0.01, and each share has equal voting rights.

21. Analysis of accumulated other comprehensive (loss) income

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

(dollars in millions)	Available-for- 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	—			—			141.3			—			141.3			29.5			170.8
Cash flow hedges movements	—			—			—			7.6			7.6			—			7.6
Available-for-sale investment movements	(0.1		)	—			—			—			(0.1		)	(0.1		)	(0.2		)
Post-retirement benefit movements	—			19.7			—			—			19.7			0.5			20.2
Other comprehensive (loss) income	(0.1		)	19.7			141.3			7.6			168.5			29.9			198.4
As of December 30, 2017	(0.3		)	13.2			(742.8		)	(17.5		)	(747.4		)	(25.5		)	(772.9		)
Foreign currency translation	—			—			(107.2		)	—			(107.2		)	(17.9		)	(125.1		)
Cash flow hedges movements	—			—			—			5.6			5.6			—			5.6
Post-retirement benefit movements	—			(5.6		)	—			—			(5.6		)	(0.2		)	(5.8		)
Other comprehensive (loss) income	—			(5.6		)	(107.2		)	5.6			(107.2		)	(18.1		)	(125.3		)
Reclassification to retained earnings on adoption of ASU 2016-01 "Financial Instruments"	0.3			—			—			—			0.3			—			0.3
As of December 29, 2018	—			7.6			(850.0		)	(11.9		)	(854.3		)	(43.6		)	(897.9		)
Foreign currency translation	—			—			37.7			—			37.7			(2.8		)	34.9
Cash flow hedges movements	—			—			—			(24.9		)	(24.9		)	—			(24.9		)
Post-retirement benefit movements	—			(16.9		)	—			—			(16.9		)	0.4			(16.5		)
Other comprehensive (loss) income	—			(16.9		)	37.7			(24.9		)	(4.1		)	(2.4		)	(6.5		)
As of December 28, 2019	$	—		$	(9.3	)	$	(812.3	)	$	(36.8	)	$	(858.4	)	$	(46.0	)	$	(904.4	)

F-48

22. Related party transactions

A. Entities affiliated with Blackstone

In January 2018, Gates and Blackstone Management Partners L.L.C. (“BMP”) and Blackstone Tactical Opportunities Advisors L.L.C., each affiliates of our Sponsor (the “Managers”), entered into a new Transaction and Monitoring Fee Agreement (the “New Monitoring Fee Agreement”). Under this agreement, Gates Industrial Corporation plc and certain of its direct and indirect subsidiaries (collectively the “Monitoring Service Recipients”) engaged the Managers to provide certain monitoring, advisory and consulting services in the following areas:

• advice regarding financings and relationships with lenders and bankers;

• advice regarding the selection, retention and supervision of independent auditors, outside legal counsel, investment bankers and other advisors or consultants;

• advice regarding environmental, social and governance issues pertinent to our affairs;

• advice regarding the strategic direction of our business; and

• such other advice directly related to or ancillary to the above advisory services as we may reasonably request.

In consideration of these oversight services, Gates agreed to pay BMP an annual fee of 1% of a covenant EBITDA measure defined under the agreements governing our senior secured credit facilities. In addition, the Monitoring Service Recipients agreed to reimburse the Managers for any related out-of-pocket expenses incurred by the Managers and their affiliates. During the year ended December 28, 2019, Gates incurred $6.5 million, compared with $8.0 million during Fiscal 2018 and $6.7 million during Fiscal 2017, in respect of these oversight services and out-of-pocket expenses, of which there was no amount owing at December 28, 2019 or December 29, 2018.

The New Monitoring Fee Agreement terminates upon the earlier to occur of (i) the second anniversary of the closing date of the initial public offering of Gates or (ii) the date our Sponsor beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million. Following termination of the New Monitoring Fee Agreement, the Managers will refund us any portion of the monitoring fee previously paid in respect of fiscal quarters that follow the termination date.

In addition, in connection with the initial public offering, we entered into a new Support and Services Agreement with BMP, under which Gates Industrial Corporation plc and certain of its direct and indirect subsidiaries reimburse BMP for customary support services provided by Blackstone’s portfolio operations group to the Company at BMP’s direction. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period and Blackstone’s allocated costs of such personnel. During Fiscal 2019, $0.1 million was paid under this agreement, compared with $0 during Fiscal 2018 and Fiscal 2017. This agreement terminates on the date our Sponsor beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million, or such earlier date as may be chosen by Blackstone.

In connection with our initial public offering in January 2018, Blackstone Advisory Partners L.P., an affiliate of Blackstone, received underwriting fees of $3.2 million. In addition, Blackstone Advisory Partners L.P. served as an initial purchaser of $99.4 million of the 6.25% Dollar Senior Notes issued in November 2019 and received compensation of $1.2 million in connection therewith.

B. Commercial transactions with sponsor portfolio companies

Our Sponsor and its affiliates have ownership interests in a broad range of companies. We have entered and may in the future enter into commercial transactions in the ordinary course of our business with some of these companies, including the sale of goods and services and the purchase of goods and services.

During the periods presented, our Sponsor held an interest in Custom Truck One Source (“Custom Truck”), a single-source provider of specialized truck and heavy equipment solutions in North America. Net sales by Gates to Custom Truck were $0.2 million during Fiscal 2019, compared with $0 during Fiscal 2018 and Fiscal 2017.

In addition, during the period through to November 2, 2017, Blackstone held a controlling interest in Alliance Automotive Group (“Alliance”), a wholesale distributor of automotive parts in France and the U.K. Net sales by Gates to affiliates of Alliance during the portion of Fiscal 2017 in which Blackstone controlled Alliance were $27.2 million.

F-49

C. Equity method investees

Sales to and purchases from equity method investees were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Sales	$	1.4		$	1.6		$	1.8
Purchases	$	(15.4	)	$	(15.2	)	$	(9.8	)

Amounts outstanding in respect of these transactions were payables of $0.2 million as of December 28, 2019, compared with $0.1 million as of December 29, 2018. During the year ended December 28, 2019, we received dividends of $0 from our equity method investees, compared with $0.4 million during Fiscal 2018 and $0.3 million during Fiscal 2017.

D. Non-Gates entities controlled by non-controlling shareholders

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Sales	$	51.3		$	60.6		$	55.2
Purchases	$	(20.5	)	$	(20.7	)	$	(21.7	)

Amounts outstanding in respect of these transactions were as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Receivables	$	4.2		$	0.6
Payables	$	(5.9	)	$	(0.3	)

E. Majority-owned subsidiaries

We finalized an agreement with the non-controlling interest holder in certain of our consolidated, majority-owned subsidiaries, regarding the scope of business of such subsidiaries, which will result in a smaller share of net income allocated to non-controlling interests. This change is retrospectively effective from the beginning of 2019 and includes a one-time adjustment of $15.0 million, which has been recorded in the first quarter of 2019 in the non-controlling interests line in the consolidated statement of operations.

23. Commitments and contingencies

A. Capital and other commitments

As of December 28, 2019, we had entered into contractual commitments for the purchase of property, plant and equipment amounting to $5.3 million, compared with $18.8 million as of December 29, 2018, and for the purchase of non-integral computer software amounting to $1.9 million, compared with $2.5 million as of December 29, 2018. As of December 28, 2019, we had entered into contractual commitments for non-capital items such as raw materials and supplies amounting to $33.7 million, compared with $32.2 million as of December 29, 2018.

B. Performance bonds, letters of credit and bank guarantees

As of December 28, 2019, letters of credit were outstanding against the asset-backed revolving facility amounting to $50.1 million, compared with $57.8 million as of December 29, 2018. We had additional outstanding performance bonds, letters of credit and bank guarantees amounting to $4.1 million as of December 28, 2019, compared with $3.4 million as of December 29, 2018.

F-50

C. Company–owned life insurance policies

Gates is the beneficiary of a number of corporate-owned life insurance policies against which it borrows from the relevant life insurance company. As of December 28, 2019, the surrender value of the policies was $933.8 million, compared with $930.0 million as of December 29, 2018, and the amount outstanding on the related loans was $932.0 million, compared with $928.2 million as of December 29, 2018. For financial reporting purposes, these amounts are offset as a legal right of offset exists and the net receivable of $1.8 million, compared with $1.8 million as of December 29, 2018, is included in other receivables.

D. Contingencies

The Company is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business including those relating to environmental obligations, product liability, intellectual property, commercial and contractual disputes, employment matters and other business matters. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as set forth by GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there are no material amounts accrued. While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect Gates’ financial position, results of operations or cash flows.

E. Allowance for doubtful accounts

Movements in our allowance for doubtful accounts were as follows:

(dollars in millions)	Balance at beginning of year		Charged to net income		Deductions			Foreign currency translation			Balance at end of year
2017	$	3.4	$	3.7	$	(0.8	)	$	0.5		$	6.8
2018	$	6.8	$	1.4	$	(0.5	)	$	(0.3	)	$	7.4
2019	$	7.4	$	2.4	$	(1.3	)	$	0.1		$	8.6

F-51

24. Quarterly financial data (unaudited)

The following table sets forth selected unaudited quarterly financial information for the years ended December 28, 2019 and December 29, 2018. The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report. These quarterly results of operations are not necessarily indicative of our results of operations to be expected for any future period.

(dollars in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2019
Statement of operations data:
Net sales	$	804.9	$	809.9	$	746.6	$	725.7
Gross profit	307.3		301.4		272.4		261.4
Income from continuing operations before income taxes	65.4		64.2		41.9		27.3
Net income	604.8		26.5		37.4		25.4
Net income attributable to shareholders	613.7		21.5		35.5		19.4
Basic earnings per share from continuing operations	2.12		0.07		0.12		0.07
Basic earnings per share from discontinued operations	—		—		—		—
Diluted earnings per share from continuing operations	2.08		0.07		0.12		0.07
Diluted earnings per share from discontinued operations	—		—		—		—
2018
Statement of operations data:
Net sales	$	852.0	$	875.1	$	828.4	$	792.1
Gross profit	335.9		357.5		327.2		310.0
Income from continuing operations before income taxes	41.1		104.4		74.2		83.8
Net income	29.3		92.6		66.7		82.5
Net income attributable to shareholders	24.2		85.6		59.9		75.6
Basic earnings per share from continuing operations	0.09		0.30		0.21		0.26
Basic earnings per share from discontinued operations	—		—		—		—
Diluted earnings per share from continuing operations	0.09		0.29		0.20		0.26
Diluted earnings per share from discontinued operations	—		—		—		—

Earnings per share amounts are computed independently for each of the quarters presented, therefore, the sum of the quarterly earnings per share amounts may not equal the total computed for the year.

F-52

EX-4.1

Exhibit 4.1

DESCRIPTION OF REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF
THE SECURITIES EXCHANGE ACT OF 1934

The following is a brief description of the securities of Gates Industrial Corporation plc (“Gates”) registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This description of the terms of our ordinary shares, par value $0.01 per share, does not purport to be complete and is subject to and qualified in its entirety by reference to the applicable provisions of the Companies Act 2006 (the “Companies Act”) and the full text of the Certificate of Incorporation and Articles of Association of Gates (the “Articles”). As used herein, the term “we,” “us” and “our” to refer to Gates and not to any of its subsidiaries.

Issued Share Capital

Ordinary Shares

Prior to the completion of our initial public offering, the articles of association of Gates were amended by a resolution of our shareholders to include an authorization for our board of directors (generally and unconditionally) to allot shares in Gates and to grant rights to subscribe for or convert any security into shares in Gates up to an aggregate nominal amount of $30.0 million, which would equal 3.0 billion ordinary shares based on the $0.01 par value per share, and to exclude pre-emption rights in respect of such allotments. Such authority was granted for five years. This five year term was renewed when Gates adopted new articles of association at its last annual general meeting held on May 23, 2019 and again when Gates adopted new articles of association at its last general meeting held on October 7, 2019.

Preference Shares

Our Articles do not expressly contemplate the issuance of preference shares. However, our Articles permit the issuance of preference shares, subject to the limit on the authority of our board of directors to allot new shares of the company set forth therein. Our board of directors may authorize the issuance of a new class or classes of shares, including preference shares, with nominal value in any currency and with, or having attached to them, such powers, designations, preferences, voting rights, rights and terms of redemption, and relative participating, optional or other special rights and qualifications, limitations and restrictions attaching thereto as the Board of Directors may determine, including rights to (a) receive dividends (which may include rights to receive preferential or cumulative dividends), (b) distributions made on a winding up of the Company and (c) be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of shares, at such price or prices (subject to the Companies Act) or at such rates of exchange and with such adjustments as may be determined by the Board of Directors. If any preference shares issued by us carried a right to a fixed income, pre-emption rights would not apply to the issue of such shares. English law permits our shareholders, by special resolution or a provision in the Articles, to exclude pre-emption rights for a period of up to five years. Such provisions are included in our Articles.

The possible future issuance of a new class or classes of shares could affect holders of our ordinary shares in a number of ways. Upon conversion into ordinary shares, shares issued with conversion rights could cause dilution of the ownership interests and the voting power of existing holders of our ordinary shares. Issuance of a new class or classes of shares may also affect the number of dividends, if any, paid to such shareholders and may reduce the share of the proceeds they would receive upon the future liquidation, if any, of the Company. In addition, the availability of a new class of shares, including preference shares, could enable the board of directors to issue shares defensively in response to a takeover attempt or to make an attempt to gain control of the Company by means of a merger, tender offer, proxy contest or otherwise more difficult or time-consuming.

1

Key Provisions of Our Articles and English Law Considerations

Directors’ General Authority and Shareholders’ Reserve Power

Subject to the Companies Act and the Articles, the directors are responsible for the management of our business, for which purpose they may exercise all the powers of Gates. The shareholders may, by special resolution, direct the directors to take, or refrain from taking, a specified action or actions. No such special resolution and no alteration of the Articles invalidates anything which the directors have done before the resolution is passed or the Articles are altered (as appropriate).

Directors’ Interests

A director shall be authorized for the purposes of section 175 of the Companies Act to act or continue to act as a director of Gates notwithstanding that at the time of the appointment or subsequently the director also:

(a) holds office as a director of any subsidiary of Gates;

(b) holds any other office, employment or engagement with any subsidiary of Gates;

(c) participates in any scheme, transaction or arrangement for the benefit of the employees or former employees of Gates or any subsidiary of Gates (including any pension fund or retirement, death or disability scheme or other bonus or employee benefit scheme); or

(d) is interested directly or indirectly in any shares or debentures (or any rights to acquire shares or debentures) in Gates or in any subsidiary of Gates.

The directors may authorize any matter proposed to them which would, if not so authorized, involve a breach of duty by a director under section 175 of the Companies Act. The directors may give any such authorization upon such terms as they think fit. The directors may vary or terminate any such authorization at any time. Any such authorization will be effective only if:

(a) any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question or any other director interested in the matter under consideration; and

(b) the matter was agreed to without such directors voting or would have been agreed to if such directors’ votes had not been counted.

A director who is in any way, directly or indirectly, interested in a proposed transaction or arrangement with Gates must declare the nature and extent of his or her interest to the other directors before Gates enters into the transaction or arrangement. A director who is in any way, directly or indirectly, interested in a transaction or arrangement that has been entered into by Gates must declare the nature and extent of his or her interest to the other directors as soon as is reasonably practicable, unless the interest has already been declared. If a declaration proves to be, or becomes, inaccurate or incomplete, a further declaration must be made.

A director need not declare an interest:

(a) if it cannot reasonably be regarded as likely to give rise to a conflict of interest;

(b) if, or to the extent that, the other directors are already aware of it (and for this purpose the other directors are treated as aware of anything of which they ought reasonably to be aware);

(c) if, or to the extent that, it concerns terms of his or her service contract that have been or are to be considered by a board meeting or by a committee of the board appointed for the purpose; or

(d) if the director is not aware of his interest or is not aware of the transaction or arrangement in question (and for this purpose a director is treated as being aware of matters of which he ought reasonably to be aware).

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Subject to the provisions of the Companies Act, and provided that either (i) he or she has declared the nature and extent of any direct or indirect interest of his or hers, or (ii) no declaration of interest is required, or (iii) the direct or indirect interest relates to Gates or a subsidiary of Gates, a director notwithstanding his office:

(a) may be a party to, or otherwise be interested in, any transaction or arrangement with Gates or in which Gates is directly or indirectly interested;

(b) may act by himself or herself or through his or her firm in a professional capacity for Gates (otherwise than as auditor), and in any such case on such terms as to remuneration and otherwise as the directors may decide; and

(c) may be a director or other officer of, or employed or engaged by, or a party to any transaction or arrangement with, or otherwise be interested in, any body corporate in which Gates is directly or indirectly interested.

Voting by Directors

Subject to the Companies Act and without prejudice to the obligation of a director to disclose his or her interest, a director may vote at any board meeting or meeting of a committee of directors on any resolution concerning a matter in relation to which he has, directly or indirectly, an interest or duty, subject always to the terms on which any authorization is given. Subject to the foregoing, the relevant director shall be counted in the quorum present at a meeting when any such resolution is under consideration and if such director votes his or her vote shall be counted.

Subject to the paragraph below, if a question arises at a board meeting or meeting of a committee of directors as to the right of any director to participate in the meeting (or part of the meeting) for voting or quorum purposes, the question may, before the conclusion of the meeting, be referred to the chairman whose ruling in relation to any director other than the chairman is to be final and conclusive.

If any question as to the right to participate in the meeting (or part of the meeting) should arise in respect of the chairman, the question is to be decided by a decision of the directors at that meeting, for which purpose the chairman is not to be counted as participating in the meeting (or part of the meeting) for voting or quorum purposes.

Subject to the Articles, the directors may make any rule which they think fit about how they take decisions, and about how such rules are to be recorded or communicated to directors.

Appointment and Removal of Directors

Any person who is willing to act as a director of Gates, and is permitted by law to do so, may be appointed to be a director by ordinary resolution in a general meeting. The holder or holders of more than 50% of the ordinary shares of Gates for the time being in issue may in accordance with the Articles remove a director from office.

Unless and until otherwise decided by Gates by ordinary resolution in a general meeting, the number of directors must not be less than two and is not subject to a maximum number.

Affiliates of The Blackstone Group Inc. (“Blackstone”) shall have the right, but not the obligation, to designate a number of individuals as directors such that, following the election of any directors and taking into account any director continuing to serve as such without the need for re-election, the number of directors designated by Blackstone shall be equal to: (i) if Blackstone, together with the other owners of Omaha Topco Ltd. (“Omaha Topco”), an exempted company incorporated in the Cayman Islands with limited liability and our predecessor for financial reporting purposes, prior to our initial public offering (collectively, our “pre-IPO owners”) and their affiliates collectively beneficially own 50% or more of the ordinary shares, the lowest whole number that is greater than 50% of the total number of directors; (ii) if our pre-IPO owners and their affiliates collectively beneficially own at least 40% (but less than 50%) of the ordinary shares, the lowest whole number that is greater than 40% of the total number of directors comprising our board of directors; (iii) if our pre-IPO owners and their affiliates collectively beneficially own at least 30% (but less than 40%) of the ordinary shares, the lowest whole number that is greater than 30% of the total number of directors; (iv) if our pre-IPO owners and their affiliates collectively beneficially own at least 20% (but less than 30%) of the ordinary shares, the lowest whole number that is greater than 20% of the total number of directors; and (v) if our pre-IPO owners and their affiliates collectively beneficially own at least 5% (but less than 20%) of the ordinary shares, the lowest whole number (such number always being greater than or equal to one) that is greater than 10% of the total number of directors.

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Retirement of Directors

Under the Companies Act, there is no maximum age for directors.

Dividend Rights

Subject to the Companies Act, Gates may by ordinary resolution of the shareholders in a general meeting declare dividends, and the board of directors may decide to pay interim dividends. A dividend must not be declared unless the board of directors has made a recommendation as to its amount. Such a dividend must not exceed the amount recommended by the board of directors. No dividend may be declared or paid unless it is in accordance with shareholders’ respective rights and interests. Unless the shareholders’ ordinary resolution to declare or the board of directors’ decision to pay a dividend, or the terms on which shares are issued, specify otherwise, it must be paid by reference to each shareholder’s holding of shares on the date of the resolution or decision to declare or pay it. If our share capital is divided into different classes, no interim dividend may be paid on shares carrying deferred or non-preferred rights if, at the time of payment, any preferential dividend is in arrears. Subject to the Companies Act, the board of directors may pay at intervals any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. If the directors act in good faith, they do not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on shares with deferred or non-preferred rights. The board of directors may deduct from any dividend payable on or in respect of a share all sums of money presently payable by the shareholder to Gates on any account whatsoever. Subject to the terms of issue of the share in question, we may, by ordinary resolution in a general meeting on the recommendation of the board of directors, decide to pay all or part of a dividend or other distribution payable in respect of a share by transferring non-cash assets of equivalent value (including, without limitation, shares or other securities in any company).

If 12 years have passed from the date on which a dividend or other sum became due for payment and the distribution recipient has not claimed it, the distribution recipient is no longer entitled to that dividend or other sum and it ceases to remain owing by Gates unless the board of directors decides otherwise.

Winding Up

If Gates is wound up, the liquidator may, with the sanction of a special resolution in a general meeting of Gates and any other sanction required by the Companies Act, divide among the shareholders in specie the whole or any part of the assets of Gates and may, for that purpose, value any assets and determine how the division shall be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of shareholders as he or she with the like sanction determines, but no shareholder shall be compelled to accept any assets upon which there is a liability.

Redemption

Subject to the Companies Act, Gates may issue shares which are to be redeemed, or are liable to be redeemed at the option of Gates or the holder, and the directors may determine the terms, conditions and manner of redemption of any such shares. The issued ordinary shares of Gates are neither convertible nor redeemable.

Repurchase of Shares

Subject to the Companies Act, Gates may purchase any of its own shares (including redemption of shares, if any are in issue) with the authority of an ordinary resolution passed in a general meeting. The authority may be general or limited to a specific class of shares authorized to be acquired, the maximum and minimum prices that may be paid for the shares and the date of expiry of the authority (which must not be longer than five years after the resolution is passed). The authorization may be varied or revoked by ordinary resolution. At a general meeting of shareholders on October 7, 2019, our shareholders adopted an ordinary resolution authorizing Gates to purchase its own ordinary shares pursuant to a form of share repurchase contract to be entered into with certain authorized counterparties, with such authority expiring on the fifth anniversary of such general meeting.

Sinking Fund Provisions

There are no sinking fund provisions relating to any shares in the capital of Gates.

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Variation of Rights

Subject to the Companies Act, the rights attached to a class of shares may be varied or abrogated (whether or not Gates is being wound up) either with the consent in writing of the holders of at least three-quarters of the nominal amount of the issued shares of that class (excluding any shares of that class held as treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of the issued shares of that class validly held in accordance with the Articles.

The rights attached to a class of shares are not, unless otherwise expressly provided for in the rights attaching to those shares, deemed to be varied by the creation, allotment or issue of further shares ranking in priority to, pari passu with or subsequent to them or by the purchase or redemption by Gates of its own shares in accordance with the Companies Act.

Allotment of Shares and Pre-Emption

Under section 551 of the Companies Act, the board of directors of Gates may not allot shares, or grant rights to subscribe for or to convert any security into shares, unless they are authorized to do so under the Articles or by an ordinary resolution of the shareholders. The authorization must state the maximum amount of shares that may be allotted under it, and specify the date on which it will expire, which must be not more than five years from the date on which the resolution is passed by virtue of which the authorization is given. Prior to the completion of our initial public offering, the articles of association of Gates were amended by a resolution of our shareholders to include an authorization for our board of directors (generally and unconditionally) to allot shares in Gates and to grant rights to subscribe for or convert any security into shares in Gates up to an aggregate nominal amount of $30.0 million, which would equal 3.0 billion ordinary shares based on the $0.01 par value per share, and to exclude pre-emption rights in respect of such allotments. Such authority was granted for five years. This five-year term was renewed when Gates adopted new articles of association at its last annual general meeting held on May 23, 2019 and again when Gates adopted new articles of association at its last general meeting held on October 7, 2019. We may seek renewal for additional five-year terms more frequently.

Under section 561 of the Companies Act, the board of directors of Gates must not allot shares to a person unless: (a) it has made an offer to each person who holds ordinary shares (on the same or more favorable terms) to allot a proportion of the shares being offered that is as nearly as practicable equal to the proportion in nominal value of the ordinary share capital held by that person; and (b) the period during which any such offer may be accepted has expired or Gates has received notice of the acceptance or refusal of every offer so made. The offer shall be made by notice stating the period (of not less than 14 days) during which it may be accepted and the offer shall not be withdrawn before the end of that period. Under sections 570 and 571 of the Companies Act, the board of directors of Gates may be given power by a special resolution of the shareholders to allot shares as if section 561 of the Companies Act did not apply to the allotment (or applied to the allotment with such modifications as the directors may determine).

Prior to the completion of our initial public offering, the articles of association of Gates were amended by a resolution of our shareholders to include a power of the board of directors to exclude pre-emption rights in respect of the allotment of shares described in the first paragraph of this section (‘Allotment of Shares and Pre-Emption’). Such authority was granted for five years. This five-year term was renewed when Gates adopted new articles of association at its last annual general meeting held on May 23, 2019 and again when Gates adopted new articles of association at its last general meeting held on October 7, 2019. We may seek renewal for additional five-year terms more frequently.

Transfers of Shares

The board of directors may decline to register any transfer of shares in certificated form unless:

(a) the instrument of transfer is in respect of only one class of share;

(b) the instrument of transfer is lodged at the place where our register of shareholders is situated from time to time accompanied by the relevant share certificate(s) or such other evidence as the board of directors may reasonably require to show the right of the transferor to make the transfer or, if the instrument of transfer is executed by some other person on the transferor’s behalf, the authority of that person to do so;

(c) it is fully paid;

(d) it is for a share upon which Gates has no lien; and

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(e) it is duly stamped or duly certificated or otherwise shown to the satisfaction of the board of directors to be exempt from stamp duty (if so required).

The board of directors may also refuse to register an allotment or transfer of shares (whether fully paid or not) in favor of more than four persons jointly.

The board of directors may refuse to register a transfer of a share in uncertificated form to a person who is to hold it thereafter in certificated form in any case where Gates is entitled to refuse (or is excepted from the requirement) under the Uncertificated Securities Regulations or other applicable regulations to register the transfer.

Any holder of depositary receipts representing underlying ordinary shares or holder of book-entry interests in our ordinary shares will not be the holder of record of such shares. Instead, the depository (for example, Cede & Co., as nominee for the Depositary Trust Company (“DTC”)) or other nominee will be the holder of record of such shares. Accordingly, a transfer from a person holding book-entry interests in our ordinary shares to a person who will become the holder of those book-entry interests in such shares through the same depository or other nominee will not be registered in our register of shareholders, as the depository or other nominee will remain the holder of record of such shares.

Share Certificates

Gates shall issue a share certificate to every person whose name is entered in the register of shareholders of Gates in respect of shares in certificated form, except where the Companies Act allows Gates not to issue a certificate.

No right to inspect accounts and other records

No person is entitled to inspect any of our accounting or other records or documents merely by virtue of being a shareholder, except as provided by law or authorized by the board of directors or by an ordinary resolution at a general meeting.

Limitations on the rights to own securities

Under the laws of England and Wales, persons who are neither residents nor nationals of the U.K. may freely own, hold or exercise voting rights of securities of Gates in the same manner and under the same terms as U.K. residents or nationals.

General Meetings

Under the Companies Act, every public company must hold a general meeting as its annual general meeting in each period of six months beginning with the day following the end of its fiscal year. The directors may convene a general meeting whenever they think fit. Following a request by shareholders pursuant to the Companies Act, the board of directors are required to call a general meeting (a) within 21 days from the date on which the directors become subject to the requirement, and (b) to be held on a date not more than 28 days after the date of the notice convening the meeting. At a meeting convened on a requisition by shareholders, no business may be transacted except that stated by the requisition or proposed to the board of directors. An annual general meeting (other than adjourned annual general meetings) shall be called by at least 21 clear days’ written notice. All other general meetings (other than adjourned general meetings) shall be called by at least 14 clear days’ written notice. An annual general meeting may be called by shorter notice if it is so agreed unanimously by all shareholders having a right to attend and vote. A general meeting (other than an annual general meeting) may be called by shorter notice if it is so agreed by a majority in number of the shareholders having a right to attend and vote, being a majority together holding not less than 95% in nominal value of the shares giving that right.

The notice shall specify the date, time and place of the meeting and the general nature of the business to be transacted. If the meeting is convened to consider a special resolution, the text of the resolution and the intention to propose the resolution as a special resolution shall also be specified. The notice of the meeting shall also specify, with reasonable prominence, the shareholders’ rights to appoint one or more proxies under section 324 of the Companies Act. Subject to the Articles and to any restrictions imposed on any shares, the notice shall be given to all shareholders, to all persons entitled to a share in consequence of the death or bankruptcy of a shareholder (if Gates has been notified of their entitlement) and to the directors and auditors of Gates. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register, has duly been given to the person from whom he derives his title. The accidental omission to give notice of a general meeting or to send, supply or make available any document or information relating to a meeting to, or the non receipt of any such notice, document or information by, a person entitled to receive any such notice, document or information shall not invalidate the proceedings at that meeting.

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A person is able to exercise the right to speak at a general meeting when that person is in a position to communicate to all those attending the meeting, during the meeting, any information or opinions which that person has on the business of the meeting. A person is able to exercise the right to vote at a general meeting when:

(a) that person is able to vote, during the meeting, on resolutions put to the vote at the meeting; and

(b) that person’s vote can be taken into account in determining whether or not such resolutions are passed at the same time as the votes of all the other persons attending the meeting.

The board of directors may make whatever arrangements they consider appropriate to enable those attending a general meeting to exercise their rights to speak or vote at it. In determining attendance at a general meeting, it is immaterial whether any two or more shareholders attending it are in the same place as each other. Two or more persons who are not in the same place as each other attend a general meeting if their circumstances are such that if they have (or were to have) rights to speak and vote at that meeting, they are (or would be) able to exercise them.

Voting Rights

A resolution put to the vote of a general meeting must be decided on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is demanded in accordance with the Articles. For so long as any shares are held in a settlement system operated by DTC, any resolution put to the vote at a general meeting must be decided on a poll. Subject to any rights or restrictions attached to any shares, whether or not such rights or restrictions are set out in the Articles, on a vote on a resolution at a general meeting every shareholder present in person or by proxy has on a show of hands one vote and every shareholder present in person or by proxy has on a poll one vote in respect of each share held. In the case of joint holders of a share, only the vote of the first-named holder who votes (and any proxy or corporate representative duly authorized by the relevant shareholder) may be counted. In the case of equality of votes on a show of hands or a poll, the chairman of the meeting shall not be entitled to a casting vote.

No business other than the appointment of the chairman of the meeting is to be transacted at a general meeting if the persons attending it do not constitute a quorum. A quorum shall be present if shareholders who together represent at least the majority of the voting rights of all the shareholders entitled to vote at the relevant meeting are present in person or by proxy.

U.K. City Code on Takeovers and Mergers

The Takeover Panel has confirmed to our representatives that, on the basis of our board of directors, it does not consider the Takeover Code to apply to Gates, although that position is subject to change if our place of central management and control is subsequently found to move to the U.K. If, at the time of a takeover, after the Takeover Panel determines that we have our place of central management and control in the U.K., we could be subject to the Takeover Code, which is issued and administered by the Takeover Panel. The Takeover Code provides a framework within which takeovers of companies subject to it are conducted. In particular, the Takeover Code contains certain rules in respect of mandatory offers. Under Rule 9 of the Takeover Code, if a person:

(a) acquires an interest in our shares that, when taken together with shares in which persons acting in concert with such person are interested, carries 30% or more of the voting rights of our shares; or

(b) who, together with persons acting in concert with such person, is interested in shares that in the aggregate carry not less than 30% and not more than 50% of the voting rights in Gates, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested,

the acquirer, and, depending on the circumstances, its concert parties, would be required (except with the consent of the Takeover Panel) to make a cash offer for our outstanding shares at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the previous 12 months. As noted above, at this time, we do not expect the Takeover Code to apply on the basis that our management and control is outside the U.K. However, the analysis of whether the Takeover Code applies is fact-specific and therefore subject to change.

Disclosure of Shareholder Ownership

There is no provision in the Articles governing the ownership threshold above which shareholder ownership must be disclosed.

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Under section 793 of the Companies Act, Gates may give notice to any person whom Gates knows or has reasonable cause to believe (a) to be interested in the shares of Gates or (b) to have been so interested at any time during the three years immediately preceding the date on which the notice is issued. The notice may require the person (a) to state whether or not it is the case and (b) if it holds, or has during that time held, any such interest, to give such further information as may be required by Gates in accordance with section 793 of the Companies Act. The notice may require the person to give particulars of its present or past interest in our shares and the information required by the notice must be given within such reasonable time as may be specified in the notice. Where a notice is served by the Gates on a person under section 793 of the Companies Act and that person fails to give Gates the information required by the notice within the time specified in it, Gates may apply to the court for an order directing that the shares in question be subject to restrictions.

Exchange Controls

There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or which may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares, other than withholding tax requirements. There is no limitation imposed by U.K. law or the Articles on the right of non-residents to hold or vote shares.

Exclusive Forum

Our Articles provide that, unless, by ordinary resolution, we consent in writing to the selection of an alternative forum, the courts of England and Wales shall have exclusive jurisdiction to determine any dispute brought by a member in that member’s capacity as such, or related to or connected with any derivative claim in respect of a cause of action vested in Gates or seeking relief on behalf of Gates, against Gates and/or the board of directors and/or any of the directors, officers or other employees or shareholders individually, arising out of or in connection with the Articles or (to the maximum extent permitted by applicable law) otherwise. Any person or entity purchasing or otherwise acquiring any interest in our ordinary shares will be deemed to have notice of and consented to the provisions of our Articles, including the exclusive forum provisions in our Articles. However, it is possible that a court could find our forum selection provision to be inapplicable or unenforceable.

Transfer Agent and Registrar

The transfer agent and registrar for our ordinary shares is Computershare Trust Company, N.A.

Listing

Our ordinary shares are listed on the NYSE under the symbol “GTES.”

Depositary Receipts

In connection with the reorganization transactions prior to our initial public offering, Blackstone and the other equity owners of Omaha Topco received depositary receipts, each representing one ordinary share in Gates in consideration for their equity in Omaha Topco, at a ratio of 0.76293 of our ordinary shares for each outstanding share of Omaha Topco. The depositary receipts were issued by Computershare Trust Company, N.A., as depositary (the “Depositary”), and a nominee for the Depositary (the “Depositary Nominee”) is the registered holder of the ordinary shares of Gates issued in exchange for the outstanding shares of Omaha Topco.

The depositary receipts arrangement was established because, as a result of restrictions on transfer on certain of the ordinary shares concerned, those ordinary shares could not be issued directly into DTC at the time of our initial public offering. The use of the Depositary allows for the shares to be held in the Depositary initially and subsequently transferred into DTC without the application of U.K. stamp duty or SDRT, provided certain conditions are met. The depositary receipts are not registered or listed on the NYSE or any other stock exchange, are not eligible for DTC, and no trading market for them has developed. Instead, subject to compliance with applicable securities laws and contractual restrictions on transfer, the pre-IPO owners may request of the Depositary that all or a portion of their depositary receipts be cancelled in order to effectuate a transfer of the ordinary shares underlying such depositary receipts to Cede & Co., as nominee/custodian for DTC, which holds the transferred ordinary shares on its customary terms, in order to settle trades of such ordinary shares (in the public market or otherwise), or to otherwise hold or transfer such shares through and within the systems of DTC.

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Subject to compliance with applicable securities laws and contractual restrictions on transfer, the holders of the depositary receipts are generally entitled to the same rights as a direct holder of our ordinary shares or an investor holding book-entry interests in our ordinary shares through DTC.

A holder of depositary receipts is entitled to withdraw the ordinary shares underlying its depositary receipts from the Depositary upon the surrender of such depositary receipts to the Depositary and the delivery of applicable transfer documentation.

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EX-10.34

Exhibit 10.34

RESTRICTED STOCK UNIT GRANT NOTICE
UNDER THEGATES INDUSTRIAL CORPORATION PLC
2018 OMNIBUS INCENTIVE PLAN
TIME-BASED VESTING AWARD

(Employee)

Gates Industrial Corporation plc (the “Company”), pursuant to its 2018 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “Plan”), hereby grants to the Participant set forth below, the number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement (attached hereto), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant: [Insert Participant Name]

Date of Grant: [Insert Date of Grant]

Number of

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):

• 1/3 of the Restricted Stock Units will vest on [Insert Date];

• 1/3 of the Restricted Stock Units will vest on [Insert Date]; and

• the remaining unvested Restricted Stock Units will vest on [Insert Date];

provided, however, that in the event that (i) prior to a Change in Control, the Participant undergoes a Termination as a result of such Participant’s death or Disability, or (ii) on or following a Change in Control, such Participant undergoes a Termination by the Service Recipient without Cause, by such Participant by reason of Constructive Termination (as defined in the Company’s Executive Change in Control Plan), or as a result of such Participant’s death or Disability, such Participant shall fully vest in such Participant’s Restricted Stock Units to the extent not then vested or previously forfeited or cancelled.

*    *    *

[Signature Page to Restricted Stock Unit Award –Executive Officer)]

GATES INDUSTRIAL CORPORATION PLC

___________________________________

By: Jamey S. Seely

Title: Executive Vice President, General Counsel & Corporate Secretary

[Signature Page to Restricted Stock Unit Award (Executive Officer)]

THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.

PARTICIPANT¹ 

________________________________

^{_____________________________________} 

¹ To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant's signature hereto.

[Signature Page to Restricted Stock Unit Award –Executive Officer)]

TIME-BASED RESTRICTED STOCK UNIT AGREEMENT
UNDER THEGATES INDUSTRIAL CORPORATION PLC
2018 OMNIBUS INCENTIVE PLAN

(Employee)

Pursuant to the Restricted Stock Unit Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Restricted Stock Unit Agreement (this “Restricted Stock Unit Agreement”) and the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “Plan”), Gates Industrial Corporation plc (the “Company”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

1. Grant of Restricted Stock Units. Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant the number of Restricted Stock Units provided in the Grant Notice (with each Restricted Stock Unit representing an unfunded, unsecured right to receive one Ordinary Share). The Company reserves all rights with respect to the granting of additional Restricted Stock Units hereunder and makes no implied promise to grant additional Restricted Stock Units.

2. Vesting. Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest as provided in the Grant Notice.

3. Settlement of Restricted Stock Units. The Company will procure delivery to the Participant as soon as reasonably practicable (and, in any event, within two and one-half months) following the applicable vesting date, either one Ordinary Share or the cash value of one Ordinary Share for each Restricted Stock Unit (as adjusted under the Plan, as applicable, and subject to Section 8 below) which becomes vested hereunder and such vested Restricted Stock Unit shall be cancelled upon such delivery. Notwithstanding anything in this Restricted Stock Unit Agreement to the contrary, the Company shall have no obligation to issue or transfer any Ordinary Shares as contemplated by this Restricted Stock Unit Agreement unless and until such issuance or transfer complies with all relevant provisions of law and the requirements of any stock exchange on which the Ordinary Shares are listed for trading. Such compliance shall include the requirement for the Participant to pay the par value of each Ordinary Share for each Restricted Stock Unit which has become vested hereunder.

4. Treatment of Restricted Stock Units Upon Termination. The provisions of Section 9(c)(ii) of the Plan are incorporated herein by reference and made a part hereof. Unless otherwise provided by the Committee, in the event of a Participant’s Termination for any reason (other than as set forth in the Grant Notice) prior to the time that such Participant’s Restricted Stock Units have vested, (a) all vesting with respect to such Participant’s Restricted Stock Units shall cease and (b) immediately following such Termination, all unvested Restricted Stock Units shall be forfeited to the Company.

5. Participant. Whenever the word “Participant” is used in any provision of this Restricted Stock Unit Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Restricted Stock Units may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

6. Non-Transferability. The Restricted Stock Units may not be assigned, alienated, pledged, attached, sold, or otherwise transferred or encumbered by the Participant, unless such transfer is by will, by the laws of descent and distribution or other applicable law, or specifically required pursuant to a domestic relations order, and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance shall be void and unenforceable against the Company or any other member of the Company Group; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.

7. Rights as Shareholder; Dividend Equivalents. The Participant or a permitted transferee in accordance with Section 13(b) of the Plan shall have no rights as a shareholder with respect to any Ordinary Share underlying a Restricted Stock Unit (including no rights with respect to voting or to receive dividends or dividend equivalents) unless and until the Participant shall have become the holder of record or the beneficial owner of such Ordinary Share, and no adjustment shall be made for dividends or distributions or other rights in respect of such Ordinary Share for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof. The Restricted Stock Units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on Ordinary Shares. Such dividend equivalents will be provided in Ordinary Shares having a Fair Market Value on the date that the Restricted Stock Units are settled equal to the amount of such applicable dividends, and shall be payable at the same time as the Restricted Stock Units are settled in accordance with Section 4 below. In the event that any Restricted Stock Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Restricted Stock Units.

8. Tax Withholding and Payment of Par Value. The provisions of Section 13(d) of the Plan are incorporated herein by reference and made a part hereof. The Participant shall satisfy such Participant’s withholding liability, if any, referred to in Section 13(d) of the Plan by way of a settlement procedure effected by the settlement of the Award in a combination of: (i) Ordinary Shares; and (ii) cash (based on the Fair Market Value of the Ordinary Shares on the day prior to vesting), where the amount of cash is sufficient to pay (A) the par value of each Ordinary Share delivered pursuant to the award, and (B) all applicable required minimum income, employment, and/or other applicable taxes and employee and, if applicable, employer social security contributions that are statutorily required to be withheld with respect to an Award.

9. Notice. Every notice or other communication relating to this Restricted Stock Unit Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

10. No Right to Continued Service. This Restricted Stock Unit Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Service Recipient.

11. Binding Effect. This Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

12. Waiver and Amendments. Except as otherwise set forth in Section 12 of the Plan, any waiver, alteration, amendment or modification of any of the terms of this Restricted Stock Unit Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however, that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

13. Governing Law/Venue. This Restricted Stock Unit Agreement shall be construed and interpreted in accordance with the laws of the State of Colorado, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Restricted Stock Unit Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Restricted Stock Unit Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Colorado.

14. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Restricted Stock Unit Agreement (including the Grant Notice), the Plan shall govern and control.

2

15. Section 409A. It is intended that the Restricted Stock Units granted hereunder shall be exempt from Section 409A of the Code pursuant to the “short-term deferral” rule applicable to such section, as set forth in the regulations or other guidance published by the Internal Revenue Service thereunder.

3

EX-10.35

Exhibit 10.35

OPTION GRANT NOTICE
UNDER THEGATES INDUSTRIAL CORPORATION PLC
2018 OMNIBUS INCENTIVE PLAN

Gates Industrial Corporation plc (the “Company”), pursuant to its 2018 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “Plan”), hereby grants to the Participant set forth below the number of Options (each Option representing the right to purchase one Ordinary Share) set forth below, at an Exercise Price per share as set forth below. The Options are subject to all of the terms and conditions as set forth herein, in the Option Agreement (attached hereto), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant: [Insert Participant Name]

Date of Grant: [Insert Grant Date]

Number of Options: [Insert Number of Options]

Exercise Price: [Insert Exercise Price]

Option Period Expiration Date: [Insert Expiration Date]

Type of Option: Non-qualified Stock Option

Vesting Schedule: Provided that the Participant has not undergone a Termination prior to the time of each applicable vesting date (or event):

• 1/3 of the Options will vest and become exercisable on the first anniversary of the grant date;

• 1/3 of the Options will vest and become exercisable on the second anniversary of the grant date; and

• the remaining unvested Options will vest and become exercisable on the third anniversary of the grant date;

provided, however, that in the event that (i) prior to a Change in Control, the Participant undergoes a Termination as a result of such Participant’s death or Disability, or (ii) on or following a Change in Control, such Participant undergoes a Termination by the Service Recipient without Cause, by such Participant by reason of Constructive Termination (as defined in the Company’s Executive Change in Control Plan), or as a result of such Participant’s death or Disability, such Participant shall fully vest in such Participant’s Options to the extent not then vested or previously forfeited or cancelled.

*    *    *

[Signature Page Option Award]

GATES INDUSTRIAL CORPORATION PLC

___________________________________

By: Jamey S. Seely

Title: Executive Vice President, General Counsel & Corporate Secretary

[Signature Page Option Award – Executive Officer]

THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS OPTION GRANT NOTICE, THE OPTION AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF OPTIONS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS OPTION GRANT NOTICE, THE OPTION AGREEMENT AND THE PLAN.

PARTICIPANT¹ 

______________________________

^{_____________________________________} 

¹ To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant's signature hereto.

[Signature Page Option Award – Executive Officer]

OPTION AGREEMENT
UNDER THEGATES INDUSTRIAL CORPORATION PLC
2018 OMNIBUS INCENTIVE PLAN

Pursuant to the Option Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Option Agreement (this “OptionAgreement”) and the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “Plan”), Gates Industrial Corporation plc (the “Company”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

1. Grant of Option.Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant the number of Options provided in the Grant Notice (with each Option representing the right to purchase one Ordinary Share), at an Exercise Price per share as provided in the Grant Notice. The Company reserves all rights with respect to the granting of additional Options hereunder and makes no implied promise to grant additional Options.

2. Vesting. Subject to the conditions contained herein and in the Plan, the Options shall vest as provided in the Grant Notice.

3. Exercise of Options Following Termination. Unless otherwise provided by the Committee, in the event of: (a) a Participant’s Termination by the Service Recipient for Cause, all outstanding Options granted to such Participant shall immediately terminate and expire; (b) a Participant’s Termination due to death or Disability, each outstanding unvested Option granted to such Participant shall immediately fully vest and become exercisable, and each outstanding vested Option shall remain exercisable for one year thereafter (but in no event beyond the expiration of the Option Period); (c) a Participant’s voluntary Termination (other than by reason of Constructive Termination following a Change in Control), each outstanding unvested Option granted to such Participant shall immediately terminate and expire, and each outstanding vested Option shall remain exercisable until the later of (i) 60 days after the date of Termination, or (ii) if the Termination occurs during or up to seven days before a blackout under the Company’s Securities Trading Policy, then 30 days after such blackout period ends (but in no event beyond the expiration of the Option Period); (d) a Participant’s Termination by the Service Recipient without Cause or by such Participant by reason of Constructive Termination, in each case, following a Change in Control, each outstanding unvested Option granted to such Participant shall immediately fully vest and become exercisable, and each outstanding vested Option shall remain exercisable until the later of (i) 90 days after the date of Termination, or (ii) if the Termination occurs during or up to seven days before a blackout under the Company’s Securities Trading Policy, then 30 days after such blackout period ends (but in no event beyond the expiration of the Option Period); and (e) a Participant’s Termination for any other reason, each outstanding unvested Option granted to such Participant shall immediately terminate and expire, and each outstanding vested Option shall remain exercisable until the later of (i) 90 days after the date of Termination, or (ii) if the Termination occurs during or up to seven days before a blackout under the Company’s Securities Trading Policy, then 30 days after such blackout period ends (but in no event beyond the expiration of the Option Period).

4. Method of Exercising Options. The Options may be exercised by the delivery of notice of the number of Options that are being exercised accompanied by payment in full of the Exercise Price applicable to the Options so exercised. Such notice shall be delivered either (a) in writing to the Company at its principal office or at such other address as may be established by the Committee, to the attention of the Company’s General Counsel; or (b) to a third-party plan administrator as may be arranged for by the Company or the Committee from time to time for purposes of the administration of outstanding Options under the Plan, in the case of either (a) or (b), as communicated to the Participant by the Company from time to time. Payment of the aggregate Exercise Price may be made using any of the methods described in Section 7(d)(i) or (ii) of the Plan.

5. Issuance of Ordinary Shares. Following the exercise of an Option hereunder, as promptly as practicable after receipt of such notification and full payment of such Exercise Price and any required income or other tax withholding amount (as provided in Section 9 hereof), the Company shall issue or transfer, or cause such issuance or transfer, to the Participant the number of Ordinary Shares with respect to which the Options have been so exercised, and shall either (a) deliver, or cause to be delivered, to the Participant a certificate or certificates therefor, registered in the Participant’s name or (b) cause such Ordinary Shares to be credited to the Participant’s account at the third-party plan administrator.

6. Participant. Whenever the word “Participant” is used in any provision of this Option Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Options may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

7. Non-Transferability. The Options are not transferable by the Participant except to Permitted Transferees in accordance with Section 13(b) of the Plan. Except as otherwise provided herein, no assignment or transfer of the Options, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Options shall terminate and become of no further effect.

8. Rights as Shareholder. The Participant or a Permitted Transferee of the Options shall have no rights as a shareholder with respect to any Ordinary Share covered by an Option until the Participant shall have become the holder of record or the beneficial owner of such Ordinary Share, and no adjustment shall be made for dividends or distributions or other rights in respect of such Ordinary Share for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof.

9. Tax Withholding. The provisions of Section 13(d) of the Plan are incorporated herein by reference and made a part hereof.

10. Notice. Every notice or other communication relating to this Option Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

11. No Right to Continued Service. This Option Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Service Recipient.

12. Binding Effect. This Option Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

13. Waiver and Amendments. Except as otherwise set forth in Section 12 of the Plan, any waiver, alteration, amendment or modification of any of the terms of this Option Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however, that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

14. Clawback/Forfeiture. Notwithstanding anything to the contrary contained herein or in the Plan, if the Participant has engaged in or engages in any Detrimental Activity, then the Committee may, in its sole discretion, take actions permitted under the Plan, including: (i) canceling the Options; or (ii) requiring that the Participant forfeit any gain realized on the exercise of the Options or the disposition of any Ordinary Shares received upon exercise of the Options, and repay such gain to the Company. In addition, if the Participant receives any amount in excess of what the Participant should have received under the terms of this Option Agreement for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company. Without limiting the foregoing, all Options shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with applicable law.

2

15. Governing Law/Venue. This Option Agreement shall be construed and interpreted in accordance with the laws of the State of Colorado, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Option Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Option Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Colorado.

16. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Option Agreement (including the Grant Notice), the Plan shall govern and control.

3

EX-10.36

Exhibit 10.36

PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT NOTICE
UNDER THEGATES INDUSTRIAL CORPORATION PLC2018 OMNIBUS INCENTIVE PLAN

Gates Industrial Corporation plc (the “Company”), pursuant to its 2018 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “Plan”), hereby grants to the Participant set forth below the “Maximum Number of Restricted Stock Units” set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Performance-Based Restricted Stock Unit Agreement (attached hereto), the Vesting Schedule attached hereto as Exhibit A, and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant: [Insert Participant Name]

Date of Grant: [Insert Date of Grant]

Performance Period: The three-year period commencing on [Insert Performance Period State Date] and ending on [Insert Performance Period End Date].

Target Number of Restricted Stock

Units: [Insert Target No. of Restricted Stock Units Granted]

Maximum Number of Restricted

Stock Units: [Insert Maximum No. of Restricted Stock Units at Maximum Level of Performance]¹ 

Vesting Schedule: The Restricted Stock Units shall vest at such times and in such amounts as set forth in Exhibit A of the Performance-Based Restricted Stock Unit Agreement.

*    *    *

^{_____________________________________} 

¹Note: The Maximum Number of Restricted Stock Units will equal 200% of the target award.

GATES INDUSTRIAL CORPORATION PLC

________________________________    

By: Jamey S. Seely

Title: Executive Vice President, General Counsel & Corporate Secretary

[Signature Page to Performance-Based Restricted Stock Award]

THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT NOTICE, THE PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT NOTICE, THE PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.

PARTICIPANT² 

________________________________    

^{_____________________________________} 

² To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant's signature hereto.

[Signature Page to Performance-Based Restricted Stock Award]

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
UNDER THEGATES INDUSTRIAL CORPORATION PLC
2018 OMNIBUS INCENTIVE PLAN

Pursuant to the Restricted Stock Unit Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Performance-Based Restricted Stock Unit Agreement (this “Performance-Based Restricted Stock Unit Agreement”) and the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “Plan”), Gates Industrial Corporation plc (the “Company”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

1. Grant of Restricted Stock Units. Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant the number of Restricted Stock Units equal to the “Maximum Number of Restricted Stock Units” provided in the Grant Notice (with each Restricted Stock Unit representing an unfunded, unsecured right to receive one Ordinary Share). The Company reserves all rights with respect to the granting of additional Restricted Stock Units hereunder and makes no implied promise to grant additional Restricted Stock Units.

2. Vesting. Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest and the restrictions on such Restricted Stock Units shall lapse as provided in Exhibit A, attached hereto. With respect to any Restricted Stock Unit, the period of time that such Restricted Stock Unit remains subject to vesting shall be its Restricted Period.

3. Settlement of Restricted Stock Units The Company will procure delivery to the Participant as soon as reasonably practicable (and, in any event, within two and one-half months) following the applicable vesting date, either one Ordinary Share or the cash value of one Ordinary Share for each Restricted Stock Unit (as adjusted under the Plan, as applicable, and subject to Section 8 below) which becomes vested hereunder and such vested Restricted Stock Unit shall be cancelled upon such delivery. Notwithstanding anything in this Restricted Stock Unit Agreement to the contrary, the Company shall have no obligation to issue or transfer any Ordinary Shares as contemplated by this Restricted Stock Unit Agreement unless and until such issuance or transfer complies with all relevant provisions of law and the requirements of any stock exchange on which the Ordinary Shares are listed for trading. Such compliance shall include the requirement for the Participant to pay the par value of each Ordinary Share for each Restricted Stock Unit which has become vested hereunder.

4. Treatment of Restricted Stock Units Upon Termination. Unless otherwise provided in Exhibit A, attached hereto, the provisions of Section 9(c)(ii) of the Plan are incorporated herein by reference and made a part hereof.

5. Participant. Whenever the word “Participant” is used in any provision of this Performance-Based Restricted Stock Unit Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Restricted Stock Units may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

6. Non-Transferability. The Restricted Stock Units may not be assigned, alienated, pledged, attached, sold, or otherwise transferred or encumbered by the Participant, unless such transfer is by will, by the laws of descent and distribution or other applicable law, or specifically required pursuant to a domestic relations order, and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance shall be void and unenforceable against the Company or any other member of the Company Group; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.

7. Rights as Shareholder; Dividend Equivalents. The Participant or a permitted transferee in accordance with Section 13(b) of the Plan shall have no rights as a shareholder with respect to any Ordinary Share underlying a Restricted Stock Unit (including no rights with respect to voting or to receive dividends or dividend equivalents) unless and until the Participant shall have become the holder of record or the beneficial owner of such Ordinary Share, and no adjustment shall be made for dividends or distributions or other rights in respect of such Ordinary Share for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof. The Restricted Stock Units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on Ordinary Shares. Such dividend equivalents will be provided in Ordinary Shares having a Fair Market Value on the date that the Restricted Stock Units are settled equal to the amount of such applicable dividends, and shall be payable at the same time as the Restricted Stock Units are settled in accordance with Section 3 above. In the event that any Restricted Stock Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Restricted Stock Units.

8. Tax Withholding. The provisions of Section 13(d) of the Plan are incorporated herein by reference and made a part hereof.

9. Notice. Every notice or other communication relating to this Performance-Based Restricted Stock Unit Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

10. No Right to Continued Service. This Performance-Based Restricted Stock Unit Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Service Provider.

11. Binding Effect. This Performance-Based Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

12. Waiver and Amendments. Except as otherwise set forth in Section 12 of the Plan, any waiver, alteration, amendment or modification of any of the terms of this Performance-Based Restricted Stock Unit Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however, that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

13. Governing Law/Venue. This Performance-Based Restricted Stock Unit Agreement shall be construed and interpreted in accordance with the laws of the State of Colorado, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Performance-Based Restricted Stock Unit Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Performance-Based Restricted Stock Unit Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Colorado.

14. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Performance-Based Restricted Stock Unit Agreement (including the Grant Notice), the Plan shall govern and control.

Exhibit A

1. Normal Vesting of Restricted Stock Units.

(a)The Total Earned Amount of the Restricted Stock Units, if any, for the Performance Period shall be determined as follows: 50% shall be based on relative TSR and 50% shall be based on relative achievement of Adjusted ROIC, as set forth in Sections 2 and 3 of this Exhibit A.

(b)Subject to Section 2 of this Exhibit A, provided the Participant has not undergone a Termination on or prior to the last day of the Performance Period, a number of Restricted Stock Units equal to the Total Earned Amount (as calculated below) shall vest and the restrictions on such Restricted Stock Units shall lapse on the date on which the Committee certifies the achievement of the applicable performance targets set forth herein (the “Regular Vesting Date”). Any remaining Restricted Stock Units that do not vest in accordance with the preceding sentence shall immediately be forfeited by the Participant and the Participant shall transfer such shares of unvested Restricted Stock to such person (including but not limited to the Trustee) as the Company shall direct for no consideration therefor on the Regular Vesting Date.

(c)Notwithstanding anything in Section 9(c)(ii) of the Plan to the contrary, in the event that the Participant undergoes a Termination as a result of such Participant’s death or Disability prior to the Regular Vesting Date, such Participant shall vest in a number of Restricted Stock Units equal to (i) a fraction, the numerator of which equals the number of elapsed calendar days from the first day of the Performance Period through the date of such Participant’s Termination, and the denominator of which equals the total number of calendar days during the Performance Period, multiplied by (ii) the Total Earned Amount, determined on the Regular Vesting Date. Any remaining shares of unvested Restricted Stock that do not vest in accordance with the preceding sentence shall immediately be forfeited by the Participant and the Participant shall transfer such shares of unvested Restricted Stock to such person (including but not limited to the Trustee) as the Company shall direct for no consideration therefor on the Regular Vesting Date.

2. Calculating Relative TSR and Adjusted ROIC.

(a)Following the last day of the Performance Period, the Committee shall determine relative TSR in its sole discretion and no Restricted Stock Units shall vest, and the restrictions on such Restricted Stock Units shall not lapse, until the Committee determines such relative TSR performance, pursuant to Section 1(b) of this Exhibit A. Relative TSR shall be calculated and the relative comparison, expressed in terms of relative percentile ranking, shall be applied to all of the companies in the S&P 400 Capital Goods Industry Index at the start of the performance period; provided, that (i) only companies in the S&P 400 Capital Goods Industry Index that are publicly traded throughout the entire Performance Period shall be included for purposes of calculating relative TSR and (ii) companies in the S&P 400 Capital Goods Industry Index that are in reorganization under Chapter 11 of the Bankruptcy Code at any time during the Performance Period shall be deemed to be at the bottom of the S&P 400 Capital Goods Industry Index for purposes of calculating relative TSR. If the S&P 400 Capital Goods Industry Index is not in existence at the end of the Performance Period, the Committee will construct a new peer group based on the companies that were last in that index. For purposes of calculating relative TSR, the Company’s TSR performance shall be expressed as a percentage (rounded to the nearest whole percentage), in the value per Ordinary Share during the Performance Period due to the appreciation or depreciation in the price per Ordinary Share.

(b)Following the last day of the Performance Period, the Committee shall determine the Company’s Adjusted ROIC in its sole discretion and no Restricted Stock Units shall vest, and the restrictions on such Restricted Stock Units shall not lapse, until the Committee certifies such relative Adjusted ROIC performance, pursuant to Section 1(b) of this Exhibit A.

3.Calculating Total Earned Amount. The resulting value of the Restricted Stock Units that shall vest, subject to Sections 1(b) and 2 of this Exhibit A based on actual performance of the Company during the Performance Period, as calculated by the tables set forth below in this Section 3 shall be hereinafter referred to as the “Total Earned Amount.”

(a)The total number of Restricted Stock Units that shall vest based on the achievement of relative TSR performance levels shall equal the product of (i) 50% multiplied by (ii) the Target Number of Restricted Stock Units multiplied by (iii) the Applicable Percentage, as determined in the below table, and rounded down to the nearest whole share:

Performance Level	Relative TSR Position	Applicable Percentage
Threshold	25th percentile	50%
Target	50th percentile	100%
Maximum	75th percentile	200%

(a)Performance between the relative TSR positions is interpolated on a straight-line basis and performance rank is rounded to the nearest whole percentile.

(b)Notwithstanding anything to the contrary herein, in the event the Company’s TSR for the Performance Period is negative, then the Applicable Percentage with respect to relative TSR shall not exceed 100%.

(c)The total number of Restricted Stock Units that shall vest based on the achievement of relative Adjusted ROIC levels shall equal the product of (i) 50% multiplied by (ii) the Target Number of Restricted Stock Units multiplied by (iii) the Applicable Percentage, as determined in the below table, and rounded down to the nearest whole share:

Performance Level	Adjusted ROIC	Applicable Percentage
Threshold	15.0%	0%
Target	20.0%	100%
Maximum	25.0%	200%

(a)Performance between the Adjusted ROIC performance levels is interpolated on a straight-line basis.

4. Treatment of Restricted Stock Units Upon a Change in Control.

(a)Notwithstanding Section 1 of this Exhibit A, in the event of a Change in Control during the Participant’s employment and prior to the completion of the Performance Period, the number of Restricted Stock Units that shall equal the Total Earned Amount, as determined on the date of such Change in Control by the Committee in its sole discretion, shall be calculated as follows:

(i)the relative TSR as measured through the date of the Change in Control based on the closing price of an Ordinary Share of the Company on the last trading day immediately prior to the Change in Control (or, in the event the Company’s Ordinary Shares are not publicly traded immediately prior to the Change in Control, based on the value of an Ordinary Share of the Company as determined by the Committee based on the actual or implied price paid in the Change in Control) relative to the performance criteria set forth in this Exhibit A; and

(ii)the Adjusted ROIC measured through the most recently completed fiscal quarter relative to the performance criteria set forth in this Exhibit A;

provided, however, that if a Change in Control occurs within the first six months of a Performance Period, the Total Earned Amount shall equal the Target Number of Restricted Stock Units.

The number of Restricted Stock Units equal to the Total Earned Amount in accordance with the foregoing (the “CIC Earned Restricted Shares”) shall not be prorated based on the number of completed calendar days in the Performance Period. Any Restricted Stock Units that become CIC Earned Restricted Shares shall become vested as to 50% of such CIC Earned Restricted Shares as of the date of the Change in Control, and as to the remaining 50% of the CIC Earned Restricted Shares on the first anniversary of the date of such Change in Control; provided, however, that if Participant undergoes a Termination by the Service Recipient without Cause before such first anniversary, Participant shall fully vest in such remaining 50% immediately prior to Termination.

(a)Notwithstanding the foregoing, in the event of a Change in Control during the Participant’s employment and prior to the completion of the Performance Period, the Participant shall fully vest in such Participant’s Target Number of Restricted Stock Units if the Restricted Stock Units are not continued, converted, assumed, or replaced by the Company, a member of the Company Group or a successor entity thereto.

5. Definitions.

(a)“Adjusted EBITDA” will be as reported in Gates’ external filings with the U.S. Securities and Exchange Commission.

(b)“Adjusted ROIC” shall equal (Adjusted EBITDA-depreciation and amortization³) x (1 – 25% tax rate)) divided by (total assets⁴ – non-restricted cash – accounts payable – goodwill and other intangible assets that arose from the acquisition of Gates by Blackstone in 2014).

(c)“Applicable Percentage” shall mean the “Applicable Percentage” specified with respect to the “Threshold,” “Target” and “Maximum” levels for each Performance Metric, or to the extent that the Company’s actual performance falls between two levels set forth on the tables above, straight-line interpolation (and rounded to the nearest whole percentage point) shall apply between such numbers. In the event that the Company’s actual performance does not meet the “Threshold” requirements for a Performance Metric in the tables above, no award shall be earned with respect to such Performance Metric. In the event that the Company’s performance exceeds the “Maximum” for a Performance Metric, such Performance Metric shall be capped at the “Maximum” amount.

(d)“Beginning Share Price” with respect to any Performance Period shall mean the 20-day trailing average closing price of an Ordinary Share of the Company as of (but excluding) the beginning of a Performance Period (subject to adjustment in accordance with Section 11 of the Plan). All closing prices shall be the principal stock exchange or quotation system closing prices on the date in question.

(e)“Ending Share Price” with respect to any Performance Period shall mean the 20-day trailing average closing price of an Ordinary Share of the Company through (and including) the last day of a Performance Period (plus the value of any dividends declared on any share of such Ordinary Share during the Performance Period, assuming such dividends are reinvested in Ordinary Shares on their respective ex-dividend dates). All closing prices shall be the principal stock exchange or quotation system closing prices on the date in question.

(f)“TSR,” or total shareholder return, shall mean the quotient of (i)(A) Ending Share Price minus (B) Beginning Share Price divided by (ii) Beginning Share Price, in each case with such adjustments as are necessary in the judgment of the Committee to equitably calculate TSR in light of any stock splits, reverse stock splits, stock dividends, and other extraordinary transactions or other changes in the capital structure of the Company.

^{_____________________________________} 

³ Depreciation and amortization deduction excludes the amortization of intangible assets arising from the acquisition of Gates by Blackstone in 2014.

⁴ Total assets excludes both income tax receivable and deferred income tax assets.

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF GATES INDUSTRIAL CORPORATION PLC

Name	Jurisdiction of Organization or Incorporation
Gates Argentina S.A.	Argentina
Gates Australia Pty, Limited	Australia
Gates Engineering & Services Australia Pty Ltd	Australia
Gates E&S Bahrain WLL	Bahrain
Gates Distribution Center NV	Belgium
Gates do Brasil Industria e Comercio Ltda	Brazil
Gates Fleximak Ltd (BVI)	British Virgin Islands
Atlas Hydraulics Inc.	Canada
Gates Canada Inc.	Canada
Gates Industrial Canada Ltd	Canada
Gates Cayman Finance Ltd.	Cayman Islands
Omaha Topco Ltd.	Cayman Islands
Gates Auto Parts (Suzhou) Co., Ltd	China
Gates Fluid Power Technologies (Changzhou) Co., Ltd	China
Gates Trading (Shanghai) Co., Ltd.	China
Gates Unitta Power Transmission (Shanghai) Limited	China
Gates Unitta Power Transmission (Suzhou) Limited	China
Gates Winhere Automotive Pump Products (Yantai) Co. Ltd	China
Gates Hydraulics s.r.o.	Czech Republic
Gates France S.a.r.l.	France
Gates S.A.S.	France
Gates Service Center S.A.S.	France
Gates GmbH	Germany
Gates Holding GmbH	Germany
Gates TPU GmbH	Germany
Gates Tube Fittings GmbH	Germany
Gates India Private Limited	India
Gates Unitta India Company Private Limited	India
PT Gates Industrial Indonesia	Indonesia
Gates Irish Finance UC	Ireland
Tomkins Insurance Limited	Isle of Man
Gates S.r.l.	Italy
Gates Japan KK	Japan
Gates Unitta Asia Company (aka Gates Unitta Asia Kabushikikaisha)	Japan
Gates Korea Company, Limited	Korea
Gates Unitta Korea Co., Ltd.	Korea
Gates Holdings Luxembourg SARL	Luxembourg
Gates Industrial Europe SARL	Luxembourg
Gates Investments SARL	Luxembourg
Gates Luxembourg SARL	Luxembourg
Gates Worldwide Holdings SARL	Luxembourg
Gates Worldwide SARL	Luxembourg
Gates Industrial & Automotive (Malaysia) SDN. BHD.	Malaysia
Gates de Mexico Services, S. de R.L. de C.V.	Mexico
Gates de Mexico, S.A. de C.V.	Mexico

Gates E&S Mexico, S.A. de C.V.	Mexico
Industrias Atlas Hydraulics S. de RL de CV	Mexico
Lerma Hose Plant S.A. de C.V.	Mexico
Servicios IAHS, S de RL de CV	Mexico
Tomkins Poly Belt Mexicana SA de CV	Mexico
Gates Engineering & Services (Muscat) LLC	Oman
Gates Business Services Europe sp. z o.o.	Poland
Gates Polska Sp.  z o.o.	Poland
Gates CIS LLC	Russian Federation
Gates Engineering & Services Closed Joint Stock Company	Saudi Arabia
Gates Engineering & Services PTE Limited	Singapore
Gates Industrial Singapore PTE. LTD.	Singapore
Gates Rubber Company (S) Pte Limited	Singapore
Gates Unitta Asia Trading Company Pte Ltd	Singapore
Gates PT Spain, S.A.	Spain
Gates (Thailand) Co., Ltd.	Thailand
Gates Unitta (Thailand) Co., Ltd	Thailand
Gates Endüstriyel Metal Kauçuk Sanayi ve Ticaret Anonim Şirketi	Turkey
Gates Güç Aktarim Sistemleri Dagitim Sanayi Ve Ticaret Limited Sirketi	Turkey
Gates Hortum Sanayi ve Ticaret Limited Şirketi	Turkey
Rapro Kauçuk ve Plastik Ürünleri İthalat Ihracat Mümessillik Pazarlama Ticaret Limited Şirketi	Turkey
Rapro Kimya Turizm Bilişim Sanayi ve Ticaret Anonim Şirketi	Turkey
Gates E&S Industries LLC	United Arab Emirates
Gates E&S Trading LLC	United Arab Emirates
Gates Engineering & Services Co. LLC	United Arab Emirates
Gates Engineering & Services FZCO	United Arab Emirates
Gates Engineering & Services Hamriyah FZE	United Arab Emirates
Finco Omaha Ltd	United Kingdom
Gates (U.K.) Limited	United Kingdom
Gates Acquisitions Limited	United Kingdom
Gates Auto Parts Holdings China Limited	United Kingdom
Gates Engineering & Services Global Limited	United Kingdom
Gates Engineering & Services UK Holdings Limited	United Kingdom
Gates Engineering & Services UK Limited	United Kingdom
Gates European Holdings Limited	United Kingdom
Gates Finance Limited	United Kingdom
Gates Fluid Power Technologies Investments Ltd	United Kingdom
Gates Holdings Limited	United Kingdom
Gates Industrial Corporation plc	United Kingdom
Gates Industrial Holdco Limited	United Kingdom
Gates Treasury (Brazilian Real) Limited	United Kingdom
Gates Treasury (Canadian Dollar) Company	United Kingdom
Gates Treasury (Dollar) Company	United Kingdom
Gates Treasury (Euro) Company	United Kingdom
Gates UK Finance Limited	United Kingdom
Gates UK Pension Trustees Limited	United Kingdom
Gates Worldwide Limited	United Kingdom
Tomkins BP UK Holdings Limited	United Kingdom
Tomkins Engineering Limited	United Kingdom

Tomkins Investments Limited	United Kingdom
Tomkins Overseas Investments Limited	United Kingdom
Tomkins Pension Trustees Limited	United Kingdom
Trico Products (Dunstable) Pension Trustees Limited	United Kingdom
Broadway Mississippi Development, LLC	Colorado
Gates Development Corporation	Colorado
Gates International Holdings, LLC	Colorado
Gates Nitta Belt Company, LLC	Colorado
Gates Administration Corp.	Delaware
Gates Corporation	Delaware
Gates E&S North America, Inc.	Delaware
Gates TPU, Inc.	Delaware
Gates Global Co.	Delaware
Gates Global LLC	Delaware
Gates Holdings 1 LLC	Delaware
Omaha Acquisition Inc.	Delaware
Philips Holding Corporation	Delaware
Tomkins BP US Holding Corporation	Delaware
Gates Investments, LLC	Delaware
Gates Winhere, LLC	Delaware
Omaha Holdings LLC	Delaware
Atlas Hydraulics Inc.	South Dakota
Du-Tex Properties, LLC	Texas

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-222747 on Form S-8 and Registration Statement No. 333-233051 on Form S-3 of our report dated February 21, 2020, relating to the financial statements of Gates Industrial Corporation plc and the effectiveness of Gates Industrial Corporation plc’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 28, 2019.

/s/ Deloitte & Touche LLP

Denver, Colorado

February 21, 2020

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Ivo Jurek, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 28, 2019 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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:	February 21, 2020
/s/ Ivo Jurek
Ivo Jurek
Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, David M. Wisniewski, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 28, 2019 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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:	February 21, 2020
/s/ David M. Wisniewski
David M. Wisniewski
Chief Financial Officer and Chief Accounting Officer
(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Gates Industrial Corporation plc (the “Company”) for the period ended December 28, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, in his capacity as an officer of the Company and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(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:	February 21, 2020
/s/ David M. Wisniewski
David M. Wisniewski
Chief Financial Officer and Chief Accounting Officer
(Principal Financial and Accounting Officer)
Date:	February 21, 2020

A signed original of this certification required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Segment information (Tables)

12 Months Ended

Dec. 28, 2019

Segment Reporting [Abstract]

Schedule of net sales by operating segment

Adjusted EBITDA by segment was as follows:

	Adjusted EBITDA
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	412.6	$	492.2	$	458.1
Fluid Power	198.4		263.6		211.0
Continuing operations	$	611.0	$	755.8	$	669.1

Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

	Net Sales
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	1,945.7	$	2,098.8	$	2,009.4
Fluid Power	1,141.4		1,248.8		1,032.3
Continuing operations	$	3,087.1	$	3,347.6	$	3,041.7

Schedule of net sales by key geographic regions and markets

The following table summarizes our net sales by key geographic region of origin:

	Net Sales
	For the year ended
	December 28, 2019				December 29, 2018				December 30, 2017
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	580.4	$	590.0	$	606.3	$	671.7	$	582.2	$	565.9
North America,excluding U.S.	165.3		175.9		159.3		185.6		148.2		134.8
United Kingdom (“U.K.”)	43.6		37.3		55.0		39.9		57.2		27.6
EMEA(1), excluding U.K.	509.9		173.6		584.5		172.8		551.3		144.8
East Asia and India	288.6		74.3		311.7		87.5		308.7		78.0
Greater China	288.4		57.8		310.7		59.0		285.6		51.5
South America	69.5		32.5		71.3		32.3		76.2		29.7
Net Sales	$	1,945.7	$	1,141.4	$	2,098.8	$	1,248.8	$	2,009.4	$	1,032.3

⁽¹⁾  Europe, Middle East and Africa (“EMEA”).

The following table summarizes our net sales into emerging and developed markets:

	Net Sales
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Developed	$	2,013.4	$	2,157.4	$	1,964.4
Emerging	1,073.7		1,190.2		1,077.3
Net Sales	$	3,087.1	$	3,347.6	$	3,041.7

Reconciliation of Adjusted EBITDA to net income from continuing operations

Reconciliation of net income from continuing operations to Adjusted EBITDA:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Net income from continuing operations	$	694.7		$	271.7	$	182.0
Income tax (benefit) expense	(495.9		)	31.8		(72.5		)
Income from continuing operations before taxes	198.8			303.5		109.5
Interest expense	157.8			175.9		234.6
Other (income) expenses	(9.8		)	17.4		58.8
Operating income from continuing operations	346.8			496.8		402.9
Depreciation and amortization	222.2			218.5		212.2
Transaction-related expenses (1)	2.6			6.7		18.1
Impairment of intangibles and other assets	0.7			0.6		2.8
Restructuring expenses	6.0			6.4		17.4
Share-based compensation expense	15.0			6.0		5.4
Sponsor fees (included in other operating expenses)	6.5			8.0		6.7
Impact of fair value adjustment on inventory (included in cost of sales)	—			0.3		1.2
Inventory impairments and adjustments (included in cost of sales)	1.2			1.2		2.0
Duplicate expenses incurred on facility relocation	—			5.2		—
Severance-related expenses (included in cost of sales)	4.0			1.7		—
Other primarily severance-related expenses (included in SG&A)	3.4			4.4		—
Other items not directly related to current operations	2.6			—		0.4
Adjusted EBITDA	$	611.0		$	755.8	$	669.1

⁽¹⁾  Transaction-related expenses relate primarily to advisory fees recognized in respect of our initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings.

Schedule of long lived assets by geography

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Property, plant and equipment, net by geographic location
U.S.	$	199.2	$	212.5
Rest of North America	117.3		107.4
U.K.	32.6		33.3
Rest of EMEA	154.4		157.3
East Asia and India	65.6		75.6
Greater China	138.4		149.3
South America	20.4		20.9
	$	727.9	$	756.3

XML

Commitments and contingencies - Narratives (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Long-term Purchase Commitment
Letters of credit outstanding	$ 50.1	$ 57.8
Bonds, letters of credit, and bank guarantees	4.1	3.4
Cash surrender value	933.8	930.0
Underlying loan for life assurance policy	932.0	928.2
Estimated receivable from policy	1.8	1.8
Property, Plant and Equipment
Long-term Purchase Commitment
Remaining minimum amount committed	5.3	18.8
—Capitalized software
Long-term Purchase Commitment
Remaining minimum amount committed	1.9	2.5
Inventories
Long-term Purchase Commitment
Remaining minimum amount committed	$ 33.7	$ 32.2

XML

Related party transactions

12 Months Ended

Dec. 28, 2019

Related Party Transactions [Abstract]

Related party transactions

Related party transactions

A. Entities affiliated with Blackstone

In January 2018, Gates and Blackstone Management Partners L.L.C. (“BMP”) and Blackstone Tactical Opportunities Advisors L.L.C., each affiliates of our Sponsor (the “Managers”), entered into a new Transaction and Monitoring Fee Agreement (the “New Monitoring Fee Agreement”). Under this agreement, Gates Industrial Corporation plc and certain of its direct and indirect subsidiaries (collectively the “Monitoring Service Recipients”) engaged the Managers to provide certain monitoring, advisory and consulting services in the following areas:

• advice regarding financings and relationships with lenders and bankers;

• advice regarding the selection, retention and supervision of independent auditors, outside legal counsel, investment bankers and other advisors or consultants;

• advice regarding environmental, social and governance issues pertinent to our affairs;

• advice regarding the strategic direction of our business; and

• such other advice directly related to or ancillary to the above advisory services as we may reasonably request.

In consideration of these oversight services, Gates agreed to pay BMP an annual fee of 1% of a covenant EBITDA measure defined under the agreements governing our senior secured credit facilities. In addition, the Monitoring Service Recipients agreed to reimburse the Managers for any related out-of-pocket expenses incurred by the Managers and their affiliates. During the year ended December 28, 2019, Gates incurred $6.5 million, compared with $8.0 million during Fiscal 2018 and $6.7 million during Fiscal 2017, in respect of these oversight services and out-of-pocket expenses, of which there was no amount owing at December 28, 2019 or December 29, 2018.

The New Monitoring Fee Agreement terminates upon the earlier to occur of (i) the second anniversary of the closing date of the initial public offering of Gates or (ii) the date our Sponsor beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million. Following termination of the New Monitoring Fee Agreement, the Managers will refund us any portion of the monitoring fee previously paid in respect of fiscal quarters that follow the termination date.

In addition, in connection with the initial public offering, we entered into a new Support and Services Agreement with BMP, under which Gates Industrial Corporation plc and certain of its direct and indirect subsidiaries reimburse BMP for customary support services provided by Blackstone’s portfolio operations group to the Company at BMP’s direction. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period and Blackstone’s allocated costs of such personnel. During Fiscal 2019, $0.1 million was paid under this agreement, compared with $0 during Fiscal 2018 and Fiscal 2017. This agreement terminates on the date our Sponsor beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million, or such earlier date as may be chosen by Blackstone.

In connection with our initial public offering in January 2018, Blackstone Advisory Partners L.P., an affiliate of Blackstone, received underwriting fees of $3.2 million. In addition, Blackstone Advisory Partners L.P. served as an initial purchaser of $99.4 million of the 6.25% Dollar Senior Notes issued in November 2019 and received compensation of $1.2 million in connection therewith.

B. Commercial transactions with sponsor portfolio companies

Our Sponsor and its affiliates have ownership interests in a broad range of companies. We have entered and may in the future enter into commercial transactions in the ordinary course of our business with some of these companies, including the sale of goods and services and the purchase of goods and services.

During the periods presented, our Sponsor held an interest in Custom Truck One Source (“Custom Truck”), a single-source provider of specialized truck and heavy equipment solutions in North America. Net sales by Gates to Custom Truck were $0.2 million during Fiscal 2019, compared with $0 during Fiscal 2018 and Fiscal 2017.

In addition, during the period through to November 2, 2017, Blackstone held a controlling interest in Alliance Automotive Group (“Alliance”), a wholesale distributor of automotive parts in France and the U.K. Net sales by Gates to affiliates of Alliance during the portion of Fiscal 2017 in which Blackstone controlled Alliance were $27.2 million.

C. Equity method investees

Sales to and purchases from equity method investees were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Sales	$	1.4		$	1.6		$	1.8
Purchases	$	(15.4	)	$	(15.2	)	$	(9.8	)

Amounts outstanding in respect of these transactions were payables of $0.2 million as of December 28, 2019, compared with $0.1 million as of December 29, 2018. During the year ended December 28, 2019, we received dividends of $0 from our equity method investees, compared with $0.4 million during Fiscal 2018 and $0.3 million during Fiscal 2017.

D. Non-Gates entities controlled by non-controlling shareholders

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Sales	$	51.3		$	60.6		$	55.2
Purchases	$	(20.5	)	$	(20.7	)	$	(21.7	)

Amounts outstanding in respect of these transactions were as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Receivables	$	4.2		$	0.6
Payables	$	(5.9	)	$	(0.3	)

E. Majority-owned subsidiaries

We finalized an agreement with the non-controlling interest holder in certain of our consolidated, majority-owned subsidiaries, regarding the scope of business of such subsidiaries, which will result in a smaller share of net income allocated to non-controlling interests. This change is retrospectively effective from the beginning of 2019 and includes a one-time adjustment of $15.0 million, which has been recorded in the first quarter of 2019 in the non-controlling interests line in the consolidated statement of operations.

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Inventories (Tables)

12 Months Ended

Dec. 28, 2019

Inventory Disclosure [Abstract]

Schedule of inventories

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Raw materials and supplies	$	118.9	$	152.1
Work in progress	33.6		38.4
Finished goods	322.6		347.1
Total inventories	$	475.1	$	537.6

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Recent accounting pronouncements not yet adopted

12 Months Ended

Dec. 28, 2019

Accounting Policies [Abstract]

Recent accounting pronouncements not yet adopted

Significant accounting policies

A. Basis of presentation

The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated.

The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year:

• ASU 2016-02 “Leases” (Topic 842)

• ASU 2018-10 “Leases” (Topic 842): Codification Improvements to Topic 842, Leases

• ASU 2018-11 “Leases” (Topic 842): Targeted Improvements

• ASU 2019-01 “Leases” (Topic 842): Codification Improvements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee.

We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated.

We applied the following additional practical expedients on transition to Topic 842:

(i) we did not reassess whether or not any expired or existing contracts were or contained leases;

(ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and

(iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842.

On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million, with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “Leases” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842.

The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures:

• ASU 2018-07 “Compensation - Stock Compensation” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

• ASU 2018-16 “Derivatives and Hedging” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

In addition, we adopted ASU 2018-02 “Income Statement - Reporting Comprehensive Income” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences.

B. Accounting periods

The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“Fiscal 2019”), December 29, 2018 (“Fiscal 2018”) and December 30, 2017 (“Fiscal 2017”).

C. Basis of consolidation

The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees.

We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation.

D. Foreign currency transactions and translation

Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million, compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017. We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019, compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017.

On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income.

In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period.

E. Net sales

Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.

Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation.

In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal.

We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price.

In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset.

F. Selling, general and administrative expenses

Shipping and handling costs

Costs of outbound shipping and handling are included in SG&A. During Fiscal 2019, we recognized shipping and handling costs of $145.2 million, compared with $159.9 million in Fiscal 2018 and $147.0 million in Fiscal 2017.

Research and development costs

Research and development costs are charged to net income in the period in which they are incurred. Our research and development expense was $67.9 million in Fiscal 2019, compared with $71.4 million in Fiscal 2018 and $68.6 million in Fiscal 2017. These costs related primarily to product development and also to technology to enhance manufacturing processes.

Advertising costs

Advertising costs are expensed as incurred and included in SG&A. During Fiscal 2019, we recognized advertising costs of $10.2 million, compared with $10.4 million in Fiscal 2018 and $10.4 million in Fiscal 2017.

G. Restructuring expenses

Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6.

Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date.

Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer.

Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability.

H. Business combinations

A business combination is a transaction or other event in which control is obtained of one or more businesses.

Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred.

Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date.

Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income.

I. Goodwill

Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition.

Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019, Fiscal 2018 or Fiscal 2017.

To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit.

J. Other intangible assets

Other intangible assets are stated at cost less accumulated amortization and any recognized impairment.

(i) Assets acquired in business combinations

An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows:

Customer relationships	15 to 17 years
Technology	5 to 7 years

Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment.

(ii) Computer software

Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years.

K. Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred.

Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges:

Buildings and improvements	30 to 40 years
Leasehold improvements	Shorter of lease term or useful life
Machinery, equipment and vehicles	2 to 20 years

L. Impairment of long-lived assets and intangible assets

Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable.

Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value.

M. Inventories

Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory.

Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019, inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018.

N. Financial instruments

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits.

(ii) Restricted cash

Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes. Cash and cash equivalents for the purposes of the consolidated statement of cash flows includes restricted cash of $1.3 million as of December 28, 2019, compared with $1.2 million and $1.6 million as of December 29, 2018 and December 30, 2017, respectively.

(iii) Trade accounts receivable

Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information.

(iv) Debt

Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method.

(v) Accounts payable

Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made.

(vi) Derivative financial instruments

We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI.

(vii) Investments

Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “Financial Instruments” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI.

(viii) Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period.

O. Post-retirement benefits

Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America.

We account for our post-retirement benefit plans in accordance with Topic 715 “Compensation – Retirement Benefits”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees.

For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations.

Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees.

Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs.

P. Share-based compensation

Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity.

We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions.

Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions.

For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital.

For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability.

Q. Income taxes

Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date.

Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions.

Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet.

Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies.

Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner.

R. Use of estimates

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates.

Recent accounting pronouncements not yet adopted

The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted.

• ASU 2016-13 “Financial Instruments” (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected.

The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures.

• ASU 2018-13 “Fair Value Measurement” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “Fair Value Measurement” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods presented, but a few amendments should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. We expect that the adoption of this ASU will not have a significant impact on our financial instrument disclosures, but we are still finalizing our evaluation.

• ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued an ASU to modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. The impact on our consolidated financial statements of adopting this ASU, which will affect our disclosures, is still being evaluated.

• ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software” (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued an ASU to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement). The guidance permits capitalization of costs associated with the implementation of cloud-based software arrangements and aligns the criteria for capitalization with those for purchased or internally-generated computer software intangible assets. Implementation costs meeting the criteria for capitalization would not be classified as intangible assets but would instead be classified as prepaid expenses that are then amortized over the period of the arrangement as an additional expense consistent with the ongoing costs under the cloud computing arrangement.

The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and entities may choose to apply the requirements either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We do not expect any significant impact on our consolidated financial statements on adoption of this ASU.

• ASU 2019-12 “Simplifying the Accounting for Income Taxes” (Topic 740): Income Taxes

In December 2019, the FASB issued an ASU to simplify and reduce the complexity of general principles in Topic 740: Income Taxes. Such simplifications include the elimination of certain exceptions to: 1) the incremental approach for intraperiod tax allocation, 2) the requirement to recognize a deferred income tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) the ability not to recognize a deferred income tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and 4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

The amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The ASU provides for a number of different approaches to applying the changes, depending on the amendment, from full retrospective to modified retrospective to fully prospective. The impact on our consolidated financial statements of adopting this ASU is still being evaluated.

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Income taxes

12 Months Ended

Dec. 28, 2019

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

Provision for income taxes

Gates Industrial Corporation plc is domiciled in the United Kingdom. Income (loss) from continuing operations before taxes and income tax (benefit) expense are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable.

	Income (loss) before income taxes
	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
U.K.	$	(80.6	)	$	(12.8	)	$	1.0
U.S.	0.9			(43.3		)	(63.1		)
Other	278.5			359.6			171.6
Income from continuing operations before income taxes	$	198.8		$	303.5		$	109.5

Income tax (benefit) expense on income from continuing operations analyzed by tax jurisdiction is as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current tax
U.K.	$	7.5		$	0.8		$	2.8
U.S.	21.0			9.0			7.8
Other foreign	124.3			86.9			79.7
Total current tax expense	$	152.8		$	96.7		$	90.3
Deferred income tax
U.K.	$	(4.7	)	$	2.8		$	0.9
U.S.	(49.3		)	(45.3		)	(141.6		)
Other foreign	(594.7		)	(22.4		)	(22.1		)
Total deferred income tax benefit	(648.7		)	(64.9		)	(162.8		)
Income tax (benefit) expense	$	(495.9	)	$	31.8		$	(72.5	)

Reconciliation of the applicable statutory income tax rate to the reported effective income tax rate:

	For the year ended
	December 28, 2019		December 29, 2018		December 30, 2017
U.K. corporation tax rate	19.0	%	19.0	%
U.S. corporation tax rate					35.0	%
Effect of:
—State tax provision, net of Federal benefit	(2.1	%)	(1.5	%)	2.5	%
—Provision for unrecognized income tax benefits	34.0	%	(1.3	%)	2.7	%
—Company Owned Life Insurance	(4.4	%)	(2.8	%)	(12.1	%)
—Tax on international operations(1)	(325.9	%)	(1.1	%)	45.1	%
—Manufacturing incentives(2)	0.5	%	(4.2	%)	(5.8	%)
—Change in valuation allowance(3)	6.6	%	2.9	%	111.7	%
—Deferred income tax rate changes	17.8	%	0.2	%	(146.8	%)
—Currency exchange rate movements	6.5	%	0.1	%	(105.1	%)
—Other permanent differences	(1.4	%)	(0.8	%)	6.6	%
Reported effective income tax rate	(249.4	%)	10.5	%	(66.2	%)

⁽¹⁾  “Tax on international operations” includes U.S. tax on foreign earnings, unremitted earnings of foreign subsidiaries, and effects of differences between statutory and foreign tax rates each of which was reported separately for the years ended December 28, 2019, December 29, 2018 and December 30, 2017. In addition, for the years ended December 28, 2019 and December 29, 2018, it also includes the effects of global funding structures and the Tax Act; and for the year ended December 28, 2019, it also includes $608.6 million for the generation of finite lived net operating losses in Luxembourg.

⁽²⁾  “Manufacturing incentives” for the year ended December 28, 2019 includes an adjustment of $5.0 million for the expiration of manufacturing incentives in the Czech Republic, offset partially by $4.1 million of incentives generated during the year.

⁽³⁾  “Change in valuation allowance” for the year ended December 28, 2019 is comprised primarily of an increase of $608.6 million of additional valuation allowance for finite lived net operating losses generated in Luxembourg, offset partially by a release of $579.0 million of valuation allowance against indefinite lived net operating losses in Luxembourg and by a release of $5.0 million of valuation allowances on manufacturing incentives in the Czech Republic.

Tax Cuts and Jobs Act

On December 22, 2017 the Tax Cuts and Jobs Act (“TCJA”) was enacted into law, which significantly changed U.S. tax law. TJCA among other things lowered the U.S. statutory federal tax rate from 35% to 21%, modified existing interest limitation regulations, and created new provisions for global intangible low-tax income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”) that taxes certain payments between U.S. corporation and their subsidiaries. During 2019, additional proposed and final regulations were released to clarify the provisions modified or created within TCJA. The effects of the final regulations and any proposed regulations that are anticipated to be enacted substantially in similar form were included in our annual results.

Deferred income tax assets (liabilities)

Deferred income tax assets (liabilities) recognized by the Company were as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Deferred income tax assets:
Accounts receivable	$	3.1		$	3.1
Inventories	6.2			6.2
Property, plant and equipment	5.9			5.2
Lease liabilities	37.0			6.2
Accrued expenses	46.8			41.9
Post-retirement benefit obligations	27.8			30.5
Compensation	12.8			15.2
Net operating losses	1,480.3			932.3
Capital losses	130.7			126.3
Credits	138.7			157.1
Interest	120.9			48.5
Other items	11.0			7.2
	$	2,021.2		$	1,379.7
Valuation allowances	(1,200.2		)	(1,191.5		)
Total deferred income tax assets	$	821.0		$	188.2
Deferred income tax liabilities:
Inventories	(22.7		)	(21.6		)
Property, plant and equipment	(51.2		)	(50.9		)
Lease right-of-use assets	(30.1		)	(0.6		)
Intangible assets	(450.7		)	(482.9		)
Post-retirement benefit obligations	(6.8		)	(9.7		)
Undistributed earnings	(40.9		)	(55.9		)
Other items	(0.8		)	(1.0		)
Total deferred income tax liabilities	$	(603.2	)	$	(622.6	)
Net deferred income tax assets (liabilities)	$	217.8		$	(434.4	)

As of December 28, 2019:

• Gates had U.S. federal, U.K. and foreign operating tax losses amounting to $5,918.7 million and U.S. state operating tax losses amounting to $154.0 million. Operating losses of $3,324.0 million can be carried forward indefinitely and $2,748.7 million have expiration dates between 2020 and 2039. We recognized a related deferred income tax asset of $597.7 million after valuation allowance of $882.6 million;

• Gates had U.S. state and U.K. capital tax losses amounting to $768.1 million. Capital losses of $768.0 million can be carried forward indefinitely and $0.1 million expire in 2028. We recognized no related deferred income tax asset after valuation allowance $130.7 million;

• Gates had U.S. federal, Luxembourg, Belgium and U.K. interest expense carried forward amounting to $518.1 million. Interest expense carried forward can be carried forward indefinitely. We recognized a related deferred tax asset of $73.0 million after valuation allowance of $47.9 million;

• Gates had U.S. federal foreign tax credits amounting to $135.5 million, which expire between 2020 and 2027. We recognized no related deferred income tax asset after valuation allowance of$135.5 million; and

• Gates had other tax credits amounting to $3.2 million, of which $0.6 million can be carried forward indefinitely and $2.6 million expire between 2020 and 2029. We recognized a deferred income tax asset of $1.8 million after valuation allowance of $1.4 million.

As of December 28, 2019, income and withholding taxes in the various tax jurisdictions in which Gates operates have not been provided on approximately $1,701.1 million of taxable temporary differences related to the investments in the Company’s subsidiaries. These temporary differences represent the estimated excess of the financial reporting over the tax basis in our investments in those subsidiaries, which are primarily the result of purchase accounting adjustments. These temporary differences are not expected to reverse in the foreseeable future, but could become subject to income and withholding taxes in the various tax jurisdictions in which Gates operates if they were to reverse. The amount of unrecognized deferred income tax liability on these taxable temporary differences has not been determined because the hypothetical calculation is not practicable due to the uncertainty as to how they may reverse. However, Gates has recognized a deferred income tax liability of $40.9 million on taxable temporary differences related to undistributed earnings of the Company’s subsidiaries.

Recoverability of Deferred Income Tax Assets and Liabilities

We recognize deferred income tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under U.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred income tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred income tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed.

Our framework for assessing the recoverability of deferred income tax assets requires us to weigh all available evidence, including:

• taxable income in prior carry back years if carry back is permitted under the relevant tax law;

• future reversal of existing temporary differences;

• tax-planning strategies that are prudent and feasible; and

• future taxable income exclusive of reversing temporary differences and carryforwards.

After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined in Fiscal 2019 that it was more likely than not that deferred income tax assets in Luxembourg, the U.K., and the U.S. totaling $586.2 million were realizable.

Included within the $586.2 million total deferred income tax assets are deferred income tax assets totaling $579.0 million related to €2.1 billion of indefinite lived net operating losses in Luxembourg for which our evaluation of the positive and negative evidence changed during the first quarter of Fiscal 2019 due to the implementation of our European corporate center. Our European corporate center was implemented in Fiscal 2019 to centralize and strengthen regional operations in Europe, which thereafter became centrally managed from Luxembourg.

The positive evidence that existed in favor of releasing the allowance as of December 28, 2019 and ultimately outweighed the negative evidence included the following:

• our profitability in Europe in Fiscal 2018 and prior years and for Fiscal 2019, as well as our expectations regarding the sustainability of these profits;

• the impact of the implementation of our European corporate center, which created an expectation of future income in Luxembourg and, thereby, removed negative evidence that supported maintaining the valuation allowance against our deferred income tax assets as of December 29, 2018; and

• the fact that our net operating loss carryforwards in Luxembourg are indefinite lived.

Further, as a result of additional financing income realized in Fiscal 2019 that created taxable profits in the U.K., combined with our estimate that the financing income is likely to remain as a source of income through 2024, our judgment changed in the first quarter of Fiscal 2019 regarding valuation allowances totaling $6.1 million related to indefinite-lived net operating losses in the U.K.

Finally, as a result of changes in estimates of future taxable profits in the first quarter of Fiscal 2019, our judgment changed regarding the realizability of $1.1 million of U.S. foreign tax credits with related recorded valuation allowances.

As of each reporting date, management considers new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred income tax assets. We will maintain our positions with regard to future realization of deferred income tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred income tax assets may impact materially our consolidated financial statements.

Unrecognized income tax benefits

The following is a reconciliation of the gross beginning and ending amount of unrecognized income tax benefits, excluding interest and penalties:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
At the beginning of the period	$	80.1		$	106.1		$	106.3
Increases for tax positions related to the current period	70.6			0.4			5.5
Increases for tax positions related to prior periods	5.8			0.2			4.6
Decreases for tax positions related to prior periods	(2.1		)	(1.5		)	(2.8		)
Decreases related to settlements	—			—			(0.7		)
Decreases due to lapsed statute of limitations	(8.1		)	(21.0		)	(11.8		)
Foreign currency translation	1.0			(4.1		)	5.0
At the end of the period	$	147.3		$	80.1		$	106.1

Unrecognized income tax benefits represent the difference between the income tax benefits that we are able to recognize for financial reporting purposes and the income tax benefits that we have recognized or expect to recognize in filed tax returns. Such amounts represent a reasonable provision for income taxes ultimately expected to be paid, and may need to be adjusted over time as more information becomes known.

If all unrecognized income tax benefits were recognized, the net impact on the provision for income taxes which would impact the annual effective tax rate would be $122.6 million, including all competent authority offsets.

As of December 28, 2019, December 29, 2018, and December 30, 2017, Gates had accrued $19.6 million, $13.4 million, and $13.9 million, respectively, for the payment of worldwide interest and penalties on unrecognized income tax benefits, which are not included in the table above. Gates recognizes interest and penalties relating to unrecognized income tax benefits in the provision for income tax expense.

We believe that it is reasonably possible that a decrease of up to $4.0 million of unrecognized income tax benefits will occur in the next 12 months as a result of the expiration of the statutes of limitations in multiple jurisdictions. Additionally, we believe it is reasonably possibly that a decrease of $20 to $25 million, of unrecognized tax benefits will occur in the next 12 months as a result of expected settlement of audits in Germany and Canada.

As of December 28, 2019, Gates remains subject to examination in the US for tax years 2015 to 2018 and in other major jurisdictions for tax years 2008 to 2018.

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Derivative financial instruments - Gain Loss From Derivative Instruments Not Designated As Hedging Instruments (Details) - Not designated as hedging instrument - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Derivative Instruments, Gain (Loss)
Gain (loss) on derivative, recognized in the income statement	$ 3.6	$ 3.0	$ 2.3
Currency forward contracts | SG&A
Derivative Instruments, Gain (Loss)
Gain (loss) on derivative, recognized in the income statement	3.0	2.4	2.8
Currency swap | Other expense (income)
Derivative Instruments, Gain (Loss)
Gain (loss) on derivative, recognized in the income statement	$ 0.6	$ 0.6	$ (0.5)

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Consolidated Statements of Operations - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Income Statement [Abstract]
Net sales	$ 3,087.1	$ 3,347.6	$ 3,041.7
Cost of sales	1,944.6	2,017.0	1,823.7
Gross profit	1,142.5	1,330.6	1,218.0
Selling, general and administrative expenses	777.3	805.8	777.1
Transaction-related expenses	2.6	6.7	18.1
Impairment of intangibles and other assets	0.7	0.6	2.8
Restructuring expenses	6.0	6.4	17.4
Other operating expenses (income)	9.1	14.3	(0.3)
Operating income from continuing operations	346.8	496.8	402.9
Interest expense	157.8	175.9	234.6
Other (income) expenses	(9.8)	17.4	58.8
Income from continuing operations before taxes	198.8	303.5	109.5
Income tax (benefit) expense	(495.9)	31.8	(72.5)
Net income from continuing operations	694.7	271.7	182.0
Loss (income) on disposal of discontinued operations, net of tax, respectively, of $0, $0 and $0	0.6	0.6	(0.7)
Net income	694.1	271.1	182.7
Less: non-controlling interests	4.0	25.8	31.4
Net income attributable to shareholders	$ 690.1	$ 245.3	$ 151.3
Basic
Earnings per share from continuing operations (in usd per share)	$ 2.38	$ 0.86	$ 0.62
Earnings per share from discontinued operations (in usd per share)	0.00	0.00	0.00
Earnings per share (in usd per share)	2.38	0.86	0.62
Diluted
Earnings per share from continuing operations (in usd per share)	2.37	0.84	0.60
Earnings per share from discontinued operations (in usd per share)	0.00	0.00	0.00
Earnings per share (in usd per share)	$ 2.37	$ 0.84	$ 0.60

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Goodwill (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Cost and carrying amount
Beginning balance	$ 2,045.9	$ 2,085.5
Acquisitions		35.6
Foreign currency translation	14.6	(75.2)
Ending balance	2,060.5	2,045.9
Power Transmission
Cost and carrying amount
Beginning balance	1,374.1	1,430.2
Acquisitions		0.0
Foreign currency translation	3.4	(56.1)
Ending balance	1,377.5	1,374.1
Fluid Power
Cost and carrying amount
Beginning balance	671.8	655.3
Acquisitions		35.6
Foreign currency translation	11.2	(19.1)
Ending balance	$ 683.0	$ 671.8

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Income taxes - Narratives (Details) € in Billions	12 Months Ended
	Dec. 28, 2019 USD ($)	Dec. 28, 2019 EUR (€)	Mar. 30, 2019 USD ($)	Dec. 29, 2018 USD ($)	Dec. 30, 2017 USD ($)
Operating Loss Carryforwards
Change in valuation allowance	$ 608,600,000
Non cash benefit to income tax expense	579,000,000
Expiration of manufacturing incentives	5,000,000
Manufacturing incentives utilized	4,100,000
Operating loss carryforwards, not subject to expiration	3,324,000,000
Operating loss carryforwards, subject to expiration	2,748,700,000
Operating loss carryforwards, valuation allowance	882,600,000
Operating loss carryforward net of valuation allowance	597,700,000
Deferred tax asset, net	821,000,000			$ 188,200,000
Deferred tax asset, valuaton allowance	1,200,200,000			1,191,500,000
Interest expense carryforward	518,100,000
Deferred tax asset, interest expense valuation allowance	47,900,000
Deferred tax interest expense net of valuation allowance	73,000,000
Taxable temporary differences related to investments in subsidiaries	1,701,100,000
Deferred tax liability related to subsidiaries	40,900,000			55,900,000
Net deferred tax asset realizable			$ 586,200,000
Deferred tax asset, foreign	579,000,000
Indefinite lived net operating loss | €		€ 2.1
Unrecognized tax benefit that if recognized would impact tax rate	122,600,000
Accrued taxes interest and penalties	19,600,000			$ 13,400,000	$ 13,900,000
Anticipated decrease in income tax liability from settlement of tax audit	4,000,000
Minimum
Operating Loss Carryforwards
Reasonable decrease in unrecognized tax benefit in the next 12 months	20,000,000
Maximum
Operating Loss Carryforwards
Reasonable decrease in unrecognized tax benefit in the next 12 months	25,000,000
Net Operating Loss
Operating Loss Carryforwards
Change in valuation allowance	6,100,000
Foreign Tax Credits
Operating Loss Carryforwards
Deferred tax asset, net	1,100,000
Luxembourg, United Kingdom, United States
Operating Loss Carryforwards
Deferred tax asset, net	586,200,000
Capital loss carryforward
Operating Loss Carryforwards
Tax credit carryforward	768,100,000
Tax credit carryforward, not subject to expiration	768,000,000
Tax credit carryforward, subject to expiration	100,000
Tax credit carryforward, valuation allowance	130,700,000
Deferred tax asset, net	0
Foreign tax credit carryforward
Operating Loss Carryforwards
Tax credit carryforward	135,500,000
Tax credit carryforward, valuation allowance	135,500,000
Deferred tax asset, net	0
Other tax credits
Operating Loss Carryforwards
Tax credit carryforward	3,200,000
Tax credit carryforward, not subject to expiration	600,000
Tax credit carryforward, subject to expiration	2,600,000
Deferred tax asset, net	1,800,000
Deferred tax asset, valuaton allowance	1,400,000
Domestic And Foreign Authorities
Operating Loss Carryforwards
Operating loss carry forward	5,918,700,000
U.S
Operating Loss Carryforwards
Operating loss carry forward	$ 154,000,000

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Restructuring and other strategic initiatives - Narratives (Details) $ in Millions	12 Months Ended
	Dec. 28, 2019 USD ($)
—Impairment of inventory
Restructuring Cost and Reserve
Consulting expenses	$ 1.6

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Debt - Schedule of long-term debt (Details) - USD ($) $ in Millions	Dec. 28, 2019	Nov. 22, 2019	Dec. 29, 2018	Feb. 08, 2018
Debt Instrument
Total principal of debt	$ 2,985.0		$ 3,027.1
Deferred issuance costs	(41.8)		(48.7)
Accrued interest	15.2		26.6
Total carrying value of debt	2,958.4		3,005.0
Debt, current portion	46.1		51.6
Debt, less current portion	2,912.3		2,953.4
Secured debt: | —Dollar Term Loan
Debt Instrument
Total principal of debt	1,699.1		1,716.4
Secured debt: | —Euro Term Loan
Debt Instrument
Total principal of debt	$ 717.7		$ 742.1
Unsecured debt: | —6.25% Dollar Senior Notes due 2026
Debt Instrument
Stated interest rate on debt (percent)	6.25%
Total principal of debt	$ 568.0	$ 568.0
Unsecured debt: | —6.00% Dollar Senior Notes due 2022
Debt Instrument
Stated interest rate on debt (percent)		6.00%	6.00%	6.00%
Total principal of debt			$ 568.0
Unsecured debt: | —Other loans
Debt Instrument
Total principal of debt	$ 0.2		$ 0.6

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Earnings per share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Earnings Per Share [Abstract]
Net income attributable to shareholders	$ 19.4	$ 35.5	$ 21.5	$ 613.7	$ 75.6	$ 59.9	$ 85.6	$ 24.2	$ 690.1	$ 245.3	$ 151.3
Weighted average number of shares outstanding (in shares)									290,057,360	285,906,693	245,520,533
Dilutive effect of share-based awards (in shares)									1,570,101	5,791,580	4,970,295
Diluted weighted average number of shares outstanding (in shares)									291,627,461	291,698,273	250,490,828
Basic earnings per share (in usd per share)									$ 2.38	$ 0.86	$ 0.62
Diluted earnings per share (in usd per share)									$ 2.37	$ 0.84	$ 0.60
Anti-dilutive shares excluded from diluted income per share calculation (in shares)									3,679,014	932,515	180,538

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Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Current assets
Cash and cash equivalents	$ 635.3	$ 423.4
Trade accounts receivable, net of allowances of $8.6 and $7.4	694.7	742.3
Inventories	475.1	537.6
Taxes receivable	22.1	7.2
Prepaid expenses and other assets	131.4	104.1
Total current assets	1,958.6	1,814.6
Non-current assets
Property, plant and equipment, net	727.9	756.3
Goodwill	2,060.5	2,045.9
Pension surplus	38.1	52.6
Intangible assets, net	1,876.0	1,990.6
Operating lease right-of-use assets	123.0
Taxes receivable	23.0	27.9
Deferred income taxes	587.1	5.1
Other non-current assets	17.1	29.6
Total assets	7,411.3	6,722.6
Current liabilities
Debt, current portion	46.1	51.6
Trade accounts payable	374.7	424.0
Taxes payable	48.5	19.2
Accrued expenses and other current liabilities	188.8	184.2
Total current liabilities	658.1	679.0
Non-current liabilities
Debt, less current portion	2,912.3	2,953.4
Post-retirement benefit obligations	151.2	155.9
Lease liabilities	116.2
Taxes payable	108.8	81.9
Deferred income taxes	369.3	439.5
Other non-current liabilities	84.7	79.2
Total liabilities	4,400.6	4,388.9
Commitments and contingencies (note 23)
Shareholders’ equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 290,157,299 (December 29, 2018: authorized shares: 3,000,000,000; outstanding shares: 289,847,574)	2.9	2.9
—Additional paid-in capital	2,434.5	2,416.9
—Accumulated other comprehensive loss	(858.4)	(854.3)
—Retained earnings	1,072.0	381.9
Total shareholders’ equity	2,651.0	1,947.4
Non-controlling interests	359.7	386.3
Total equity	3,010.7	2,333.7
Total liabilities and equity	$ 7,411.3	$ 6,722.6

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Post-retirement benefits - Effect of one percent change in healthcare assumption (Details) $ in Millions	12 Months Ended
	Dec. 28, 2019 USD ($)
Postemployment Benefits [Abstract]
Effects of one percent increase in service and interest cost	$ 0.1
Effects of one percent decrease in service and interest cost	(0.2)
Effects of one percent increase in defined benefit obligation	2.1
Effects of one percent decrease in defined benefit obligation	$ (1.8)

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Significant accounting policies - Selling, general and administrative expenses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Condensed Income Statements
Selling, general and administrative expenses	$ 777.3	$ 805.8	$ 777.1
Shipping and handling
Condensed Income Statements
Selling, general and administrative expenses	$ 145.2	$ 159.9	$ 147.0

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Post-retirement benefits - Components of net periodic benefit cost (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Pensions
Defined Benefit Plan, Net Periodic Benefit Cost (Credit)
Employer service cost	$ 5.5	$ 5.3	$ 5.8
Settlements and curtailments	(0.6)	0.3	(3.8)
Interest cost	23.4	23.6	30.4
Expected return on plan assets	(27.8)	(22.6)	(26.9)
Amortization of prior net actuarial loss	0.0	0.1	0.4
Amortization of prior service cost	0.8	0.1	0.0
Net periodic benefit cost	1.3	6.8	5.9
Other post-retirement benefits
Defined Benefit Plan, Net Periodic Benefit Cost (Credit)
Interest cost	2.3	2.2	2.7
Amortization of prior net actuarial loss	(0.8)	(0.4)	(0.2)
Amortization of prior service cost	(0.4)	(0.4)	(0.1)
Net periodic benefit cost	$ 1.1	$ 1.4	$ 2.4

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Equity (Tables)

12 Months Ended

Dec. 28, 2019

Equity [Abstract]

Schedule of movement in number of shares in issue

Movements in the Company’s number of shares in issue for the years ended December 28, 2019 and December 29, 2018, respectively, were as follows:

	For the year ended
(number of shares)	December 28, 2019	December 29, 2018
Balance as of the beginning of the fiscal year	289,847,574	245,474,605
Issuance of shares	—	44,275,000
Exercise of share options	270,997	79,014
Vesting of restricted stock units, net of withholding taxes	38,728	18,955
Balance as of the end of the period	290,157,299	289,847,574

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Quarterly financial data (unaudited) (Tables)

12 Months Ended

Dec. 28, 2019

Quarterly Financial Information Disclosure [Abstract]

Schedule of results from quarterly operations

The following table sets forth selected unaudited quarterly financial information for the years ended December 28, 2019 and December 29, 2018. The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report. These quarterly results of operations are not necessarily indicative of our results of operations to be expected for any future period.

(dollars in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2019
Statement of operations data:
Net sales	$	804.9	$	809.9	$	746.6	$	725.7
Gross profit	307.3		301.4		272.4		261.4
Income from continuing operations before income taxes	65.4		64.2		41.9		27.3
Net income	604.8		26.5		37.4		25.4
Net income attributable to shareholders	613.7		21.5		35.5		19.4
Basic earnings per share from continuing operations	2.12		0.07		0.12		0.07
Basic earnings per share from discontinued operations	—		—		—		—
Diluted earnings per share from continuing operations	2.08		0.07		0.12		0.07
Diluted earnings per share from discontinued operations	—		—		—		—
2018
Statement of operations data:
Net sales	$	852.0	$	875.1	$	828.4	$	792.1
Gross profit	335.9		357.5		327.2		310.0
Income from continuing operations before income taxes	41.1		104.4		74.2		83.8
Net income	29.3		92.6		66.7		82.5
Net income attributable to shareholders	24.2		85.6		59.9		75.6
Basic earnings per share from continuing operations	0.09		0.30		0.21		0.26
Basic earnings per share from discontinued operations	—		—		—		—
Diluted earnings per share from continuing operations	0.09		0.29		0.20		0.26
Diluted earnings per share from discontinued operations	—		—		—		—

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Post-retirement benefits - Change in plan assets (Details) - Pensions - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Defined Benefit Plan, Change in Fair Value of Plan Assets
Plan assets at the beginning of the period	$ 774.9	$ 893.6
Actual return on plan assets	90.4	(19.7)
Employer contributions	8.5	8.9
Plan participants’ contributions	0.2	0.2
Curtailments and settlements	(2.3)	(13.4)
Benefits paid	(51.6)	(56.5)
Expenses paid from assets	(2.3)	(1.8)
Foreign currency translation	17.4	(36.4)
Plan assets at the end of the period	$ 835.2	$ 774.9

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Leases - Narratives (Details) lease in Thousands, $ in Millions	12 Months Ended
	Dec. 28, 2019 USD ($) property lease
Lessor, Leases
Number of leases (leases) | lease	1
Number properties (properties) | property	90
Weighted-average remaining lease term — finance leases	8 years 6 months
Finance lease rent free period	10 years
Amortization of right of use assets | $	$ 23.6
real estate
Lessor, Leases
Percentage of total lease liability (percent)	90.00%

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Accrued expenses and other liabilities - Warranty reserves (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
December 28, 2019
Balance as of the beginning of the fiscal year	$ 14.3	$ 14.1	$ 14.3
Charge for the period	16.5	11.6	12.3
Utilized during the period	(10.9)	(11.0)	(13.1)
Released during the period	(2.2)	(0.1)	(0.1)
Foreign currency translation	0.0	(0.3)	0.7
Balance as of the end of the period	$ 17.7	$ 14.3	$ 14.1

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Significant accounting policies - Other Intangibles (Details)	12 Months Ended
	Dec. 28, 2019
Customer relationships | Minimum
Finite-Lived Intangible Assets
Finite-lived intangible asset (useful life)	15 years
Customer relationships | Maximum
Finite-Lived Intangible Assets
Finite-lived intangible asset (useful life)	17 years
Technology | Maximum
Finite-Lived Intangible Assets
Finite-lived intangible asset (useful life)	7 years
Computer software | Minimum
Finite-Lived Intangible Assets
Finite-lived intangible asset (useful life)	2 years
Computer software | Maximum
Finite-Lived Intangible Assets
Finite-lived intangible asset (useful life)	6 years

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Acquisitions - Narrative (Details)		1 Months Ended		12 Months Ended
	Apr. 26, 2018 USD ($) facility	Oct. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)	Dec. 28, 2019 USD ($)	Dec. 29, 2018 USD ($)	Dec. 30, 2017 USD ($)
Business Acquisition
Goodwill and provisional goodwill				$ 2,060,500,000	$ 2,045,900,000	$ 2,085,500,000
Transaction-related expenses				2,600,000	6,700,000	18,100,000
Rapro
Business Acquisition
Purchase price, net of cash acquired	$ 50,900,000
Number of facilities | facility	2
Goodwill and provisional goodwill	$ 34,400,000
Atlas Hydraulics
Business Acquisition
Purchase price, net of cash acquired		$ 74,000,000
Goodwill and provisional goodwill		$ 23,000,000
GTF Engineering and Services UK Limited
Business Acquisition
Purchase price, net of cash acquired			$ 36,700,000
Goodwill and provisional goodwill			$ 22,500,000
Ownership interest acquired (as a percent)			100.00%
Acquisitions For 2018 And 2017
Business Acquisition
Transaction-related expenses				$ 0	$ 1,800,000	$ 3,000,000

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Leases - Maturity Schedule Before Adoption of Lease Guidance (Details) $ in Millions	Dec. 29, 2018 USD ($)
Operating leases
2019	$ 25.0
2020	21.3
2021	18.2
2022	14.4
2023	12.6
2024 and beyond	86.5
Total	178.0
Finance leases
2019	0.3
2020	0.3
2021	0.3
2022	0.3
2023	0.4
2024 and beyond	0.4
Total	2.0
Total
2019	25.3
2020	21.6
2021	18.5
2022	14.7
2023	13.0
2024 and beyond	86.9
Total	$ 180.0

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Debt - Revolving credit facility Narratives (Details) - USD ($)	Dec. 28, 2019	Dec. 29, 2018
Revolving credit facility
Line of Credit Facility
Line of credit carrying value		$ 0
Revolving credit facility | Secured multi-currency facility
Line of Credit Facility
Maximum borrowing capacity of credit facility	$ 185,000,000
Line of credit carrying value	0
Letter of credit sub-facility
Line of Credit Facility
Line of credit carrying value		$ 0
Letter of credit sub-facility | Secured multi-currency facility
Line of Credit Facility
Maximum borrowing capacity of credit facility	20,000,000
Line of credit carrying value	$ 0

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Share-based compensation - Narratives (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense recognized	$ 15.0	$ 6.0	$ 5.4
Proceeds from stock options exercised	1.8	0.6
—Share options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options that were vested or expected to vest	$ 29.4
Contractual term of options that were vested or expect to vest	7 years 1 month 6 days
Aggregate intrinsic value of options exercisable	$ 18.6
Contractual term of options exercisable	5 years 9 months
Unrecognized compensation relating to non-vested awards	$ 9.3
Unrecognized compensation relating to non-vested awards, recognition period (term)	2 years 4 months 24 days
Unrecognized compensation relating to non-vested awards recognizable upon liquidity	$ 28.8
Aggregate intrinsic value of options exercised	$ 2.1	0.8
RSU's and PRSU's
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation relating to non-vested awards, recognition period (term)	2 years 1 month 6 days
Unrecognized compensation relating to non-vested awards other than option	$ 9.0
Aggregate intrinsic value of non options vested	$ 0.6	$ 0.4
Omaha Topco Ltd. Stock Incentive Plan | Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	20.00%
Omaha Topco Ltd. Stock Incentive Plan | Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	20.00%
Omaha Topco Ltd. Stock Incentive Plan | Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	20.00%
Omaha Topco Ltd. Stock Incentive Plan | Tranche Four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	20.00%
Omaha Topco Ltd. Stock Incentive Plan | Tranche Five
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	20.00%
Omaha Topco Ltd. Stock Incentive Plan | —RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Shares granted (shares)			76,293
Term of award			10 years
Omaha Topco Ltd. Stock Incentive Plan | —Tier I | —Share options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			5 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche One | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche One | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Two | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Two | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Three | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Three | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Share options | Tranche Four | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —RSUs | Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares expected to vest upon achievement of average annual adjusted return on invested capital (percentage)	50.00%
Percentage of shares expected to vest upon achievement of certain relative shareholders return (percentage)	50.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Total number of shares expected to vest at term of award arrangement (percentage)	0.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Total number of shares expected to vest at term of award arrangement (percentage)	200.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —PRSUs | Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche One | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche One | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Two | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Two | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Three | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Three | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —SARs | Tranche Four | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Term of award	10 years
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | —Premium-priced options | Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%

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Fair value measurement (Tables)

12 Months Ended

Dec. 28, 2019

Fair Value Disclosures [Abstract]

Schedule of carrying amount and fair value of debt

The carrying amount and fair value of our debt are set out below:

	As of December 28, 2019				As of December 29, 2018
(dollars in millions)	Carrying amount		Fair value		Carrying amount		Fair value
Current	$	46.1	$	45.9	$	51.6	$	50.4
Non-current	2,912.3		2,946.8		2,953.4		2,873.2
	$	2,958.4	$	2,992.7	$	3,005.0	$	2,923.6

Schedule of assets and liabilities measured at fair value on a recurring basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)			Total
As of December 28, 2019
Equity investments	$	1.1	$	—		$	1.1
Derivative assets	$	—	$	5.4		$	5.4
Derivative liabilities	$	—	$	(60.9	)	$	(60.9	)
As of December 29, 2018
Equity investments	$	0.8	$	—		$	0.8
Derivative assets	$	—	$	11.8		$	11.8
Derivative liabilities	$	—	$	(41.7	)	$	(41.7	)

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Goodwill (Tables)

12 Months Ended

Dec. 28, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

(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	—			35.6			35.6
Foreign currency translation	(56.1		)	(19.1		)	(75.2		)
As of December 29, 2018	1,374.1			671.8			2,045.9
Foreign currency translation	3.4			11.2			14.6
As of December 28, 2019	$	1,377.5		$	683.0		$	2,060.5

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Equity - Narrative (Details) - $ / shares	1 Months Ended
	Jan. 31, 2018	Dec. 28, 2019	Dec. 29, 2018
Subsidiary, Sale of Stock
Par value (in usd per share)		$ 0.01	$ 0.01
Initial public offering
Subsidiary, Sale of Stock
Shares sold in offering (in shares)	38,500,000
Offering price (in usd per share)	$ 19
Underwriters option
Subsidiary, Sale of Stock
Shares sold in offering (in shares)	5,775,000
Offering price (in usd per share)	$ 19

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Share-based compensation (Tables)

12 Months Ended

Dec. 28, 2019

Share-based Payment Arrangement [Abstract]

Schedule of stock option activity

Summary of movements in options outstanding

	For the year ended
	December 28, 2019
	Number of options		Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	4,212,537		$	7.03
—Tier II	4,837,780		$	6.97
—Tier III	4,837,780		$	6.97
—Tier IV	4,837,780		$	10.46
—SARs	724,372		$	8.17
—Share options	582,717		$	17.14
	20,032,966		$	8.16
Granted during the period:
—SARs	71,150		$	16.46
—Share options	1,099,505		$	16.46
—Premium-priced options	796,460		$	19.00
	1,967,115		$	17.49
Forfeited during the period:
—Tier I	(115,685	)	$	6.61
—Tier II	(432,440	)	$	6.58
—Tier III	(432,440	)	$	6.58
—Tier IV	(432,440	)	$	9.88
—SARs	(22,119	)	$	15.43
—Share options	(69,862	)	$	16.86
	(1,504,986	)	$	8.14
Expired during the period:
—SARs	(953	)	$	13.44
—Share options	(1,875	)	$	17.72
	(2,828	)	$	16.28
Exercised during the period:
—Tier I	(270,997	)	$	6.61
	(270,997	)	$	6.61
Outstanding at the end of the period:
—Tier I	3,825,855		$	7.07
—Tier II	4,405,340		$	7.01
—Tier III	4,405,340		$	7.01
—Tier IV	4,405,340		$	10.52
—SARs	772,450		$	8.72
—Share options	1,610,485		$	16.69
—Premium-priced options	796,460		$	19.00
	20,221,270		$	9.09
Exercisable at the end of the period	2,864,411		$	7.37
Vested and expected to vest at the end of the period	6,978,259		$	10.81

Schedule of RSU and PRSU activity

Summary of movements in RSUs and PRSUs outstanding

	For the year ended
	December 28, 2019
	Number of awards		Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	81,800		$	17.13
	81,800		$	17.13
Granted during the period:
—RSUs	741,936		$	16.19
—PRSUs	248,550		20.07
	990,486		$	17.16
Forfeited during the period:
—RSUs	(54,335	)	$	16.59
	(54,335	)	$	16.59
Vested during the period:
—RSUs	(51,132	)	$	17.00
	(51,132	)	$	17.00
Outstanding at the end of the period:
—RSUs	718,269		$	16.20
—PRSUs	248,550		20.07
	966,819		$	17.19

Schedule of share based compensation valuation techniques

The premium-priced options and PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its initial public offering, this volatility has been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:

	For the year ended
	December 28, 2019			December 29, 2018			December 30, 2017
Grant date fair value:
—SARs	$	5.88		$	6.44		$	3.94
—Share options	$	5.88		$	7.44		n/a
—Premium-priced options	$	5.65		n/a			n/a
—RSUs	$	16.19		$	16.97		$	17.23
—PRSUs	$	20.07		n/a			n/a
Inputs to the model:
—Expected volatility - SARs	31.9		%	38.9		%	43.6		%
—Expected volatility - share options	31.9		%	39.6		%	n/a
—Expected volatility - premium-priced options	31.9		%	n/a			n/a
—Expected volatility - PRSUs	32.8		%	n/a			n/a
—Expected volatility - Tiers I-IV options	n/a			n/a			43.6		%
—Expected option life for SARs	6.0			6.3			n/a
—Expected option life for share options	6.0			6.3			n/a
—Expected option life for premium-priced options	7.0			n/a			n/a
—Expected option life for Tier I options	n/a			n/a			6.5
—Expected option life for Tier II-IV options	n/a			n/a			6.0
—Expected option life after liquidity event for Tier II-IV options	n/a			n/a			4.0
—Risk-free interest rate:
SARs	2.51		%	2.89		%	n/a
Share options	2.51		%	2.80		%	n/a
Premium-priced options	2.53		%	n/a			n/a
PRSUs	2.48		%	n/a			n/a
Tier I options	n/a			n/a			2.04		%
Tiers II-IV options	n/a			n/a			1.98		%

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Related party transactions - Sales and Purchases with Equity Method Investees (Details) - Equity method investees - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Related Party Transaction
Sales	$ 1.4	$ 1.6	$ 1.8
Purchases	$ (15.4)	$ (15.2)	$ (9.8)

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Share-based compensation

12 Months Ended

Dec. 28, 2019

Share-based Payment Arrangement [Abstract]

Share-based compensation

Share-based compensation

The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the year ended December 28, 2019, we recognized a charge of $15.0 million, compared with $6.0 million and $5.4 million, respectively, during the years ended December 29, 2018 and December 30, 2017.

Share-based incentive awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan

Gates has a number of awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018. No new awards have been granted under this plan since 2017. The options are split equally into four tiers, each with specific vesting conditions. Tier I options vest evenly over 5 years from the grant date, subject to the participant’s continuing to provide service to Gates on the vesting date. Tier II, III and IV options vest on achievement of specified investment returns by Blackstone at the time of a defined liquidity event, which is also subject to the participant’s continued provision of service to Gates on the vesting date. The performance conditions associated with Tiers II, III and IV must be achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant.

Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end.

In addition to the above, in 2017, under the same plan, the Company issued 76,293 restricted stock units (“RSUs”). These RSUs vest evenly over three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The awards expire ten years after the date of grant, in December 2027.

Changes in the awards granted under this plan are summarized in the tables below.

Share-based incentive awards issued under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan

In conjunction with the initial public offering in January 2018, Gates adopted a new equity-based compensation plan, which is a market-based long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and RSUs.

The SARs and the majority of the share options issued under this plan vest evenly over either three years or four years from the grant date. The remainder of the options, the premium-priced options, vest evenly over a three year period, starting two years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expire ten years after the date of grant.

The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over either one or three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The PRSUs provide that 50% of the award will generally vest if Gates achieves a certain level of average annual adjusted return on invested capital as defined in the plan (“Adjusted ROIC”) and the remaining 50% of the PRSUs will generally vest if Gates achieves certain relative total shareholder return (“Relative TSR”) goals, in each case, measured over a three year performance period and subject to the participant’s continued employment through the end of the performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% of the target based on actual performance against a pre-established scale.

New awards and movements in existing awards granted under this plan are summarized in the tables below.

Summary of movements in options outstanding

	For the year ended
	December 28, 2019
	Number of options		Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	4,212,537		$	7.03
—Tier II	4,837,780		$	6.97
—Tier III	4,837,780		$	6.97
—Tier IV	4,837,780		$	10.46
—SARs	724,372		$	8.17
—Share options	582,717		$	17.14
	20,032,966		$	8.16
Granted during the period:
—SARs	71,150		$	16.46
—Share options	1,099,505		$	16.46
—Premium-priced options	796,460		$	19.00
	1,967,115		$	17.49
Forfeited during the period:
—Tier I	(115,685	)	$	6.61
—Tier II	(432,440	)	$	6.58
—Tier III	(432,440	)	$	6.58
—Tier IV	(432,440	)	$	9.88
—SARs	(22,119	)	$	15.43
—Share options	(69,862	)	$	16.86
	(1,504,986	)	$	8.14
Expired during the period:
—SARs	(953	)	$	13.44
—Share options	(1,875	)	$	17.72
	(2,828	)	$	16.28
Exercised during the period:
—Tier I	(270,997	)	$	6.61
	(270,997	)	$	6.61
Outstanding at the end of the period:
—Tier I	3,825,855		$	7.07
—Tier II	4,405,340		$	7.01
—Tier III	4,405,340		$	7.01
—Tier IV	4,405,340		$	10.52
—SARs	772,450		$	8.72
—Share options	1,610,485		$	16.69
—Premium-priced options	796,460		$	19.00
	20,221,270		$	9.09
Exercisable at the end of the period	2,864,411		$	7.37
Vested and expected to vest at the end of the period	6,978,259		$	10.81

As of December 28, 2019, the aggregate intrinsic value of options that were vested or expected to vest was $29.4 million and these options had a weighted average remaining contractual term of 7.1 years. As of December 28, 2019, the aggregate intrinsic value of options that were exercisable was $18.6 million and these options had a weighted average remaining contractual term of 5.8 years.

As of December 28, 2019, the unrecognized compensation charge relating to the nonvested options other than Tier II, Tier III and Tier IV options, was $9.3 million, which is expected to be recognized over a weighted-average period of 2.4 years. The unrecognized compensation charge relating to the nonvested Tier II, Tier III and Tier IV options was $28.8 million, which will be recognized on occurrence of a liquidity event as described above.

During the year endedDecember 28, 2019, cash of $1.8 million was received in relation to the exercise of vested options, compared with $0.6 million during the year endedDecember 29, 2018. The aggregate intrinsic value of options exercised during the year endedDecember 28, 2019 was $2.1 million, compared with $0.8 million during the year endedDecember 29, 2018.

Summary of movements in RSUs and PRSUs outstanding

	For the year ended
	December 28, 2019
	Number of awards		Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	81,800		$	17.13
	81,800		$	17.13
Granted during the period:
—RSUs	741,936		$	16.19
—PRSUs	248,550		20.07
	990,486		$	17.16
Forfeited during the period:
—RSUs	(54,335	)	$	16.59
	(54,335	)	$	16.59
Vested during the period:
—RSUs	(51,132	)	$	17.00
	(51,132	)	$	17.00
Outstanding at the end of the period:
—RSUs	718,269		$	16.20
—PRSUs	248,550		20.07
	966,819		$	17.19

As of December 28, 2019, the unrecognized compensation charge relating to nonvested RSUs and PRSUs was $9.0 million, which is expected to be recognized over a weighted average period of 2.1 years, subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the year endedDecember 28, 2019 was $0.6 million, compared with $0.4 million during the year endedDecember 29, 2018.

Valuation of awards granted during the period

The fair value of the options at their grant date was measured using a Black-Scholes valuation model in the case of SARs and share options. RSUs are valued at the share price on the date of grant. The premium-priced options and PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its initial public offering, this volatility has been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:

	For the year ended
	December 28, 2019			December 29, 2018			December 30, 2017
Grant date fair value:
—SARs	$	5.88		$	6.44		$	3.94
—Share options	$	5.88		$	7.44		n/a
—Premium-priced options	$	5.65		n/a			n/a
—RSUs	$	16.19		$	16.97		$	17.23
—PRSUs	$	20.07		n/a			n/a
Inputs to the model:
—Expected volatility - SARs	31.9		%	38.9		%	43.6		%
—Expected volatility - share options	31.9		%	39.6		%	n/a
—Expected volatility - premium-priced options	31.9		%	n/a			n/a
—Expected volatility - PRSUs	32.8		%	n/a			n/a
—Expected volatility - Tiers I-IV options	n/a			n/a			43.6		%
—Expected option life for SARs	6.0			6.3			n/a
—Expected option life for share options	6.0			6.3			n/a
—Expected option life for premium-priced options	7.0			n/a			n/a
—Expected option life for Tier I options	n/a			n/a			6.5
—Expected option life for Tier II-IV options	n/a			n/a			6.0
—Expected option life after liquidity event for Tier II-IV options	n/a			n/a			4.0
—Risk-free interest rate:
SARs	2.51		%	2.89		%	n/a
Share options	2.51		%	2.80		%	n/a
Premium-priced options	2.53		%	n/a			n/a
PRSUs	2.48		%	n/a			n/a
Tier I options	n/a			n/a			2.04		%
Tiers II-IV options	n/a			n/a			1.98		%

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Goodwill

12 Months Ended

Dec. 28, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

(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	—			35.6			35.6
Foreign currency translation	(56.1		)	(19.1		)	(75.2		)
As of December 29, 2018	1,374.1			671.8			2,045.9
Foreign currency translation	3.4			11.2			14.6
As of December 28, 2019	$	1,377.5		$	683.0		$	2,060.5

As described further in note 4, in April 2018, Gates completed the acquisition of Rapro. Included in the acquisitions line above for Fiscal 2018 is $34.4 million of goodwill arising from the acquisition of Rapro. An additional $1.2 million of goodwill was recognized during the second quarter of 2018 on finalization of the purchase accounting for the Atlas acquisition.

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Fair value measurement

12 Months Ended

Dec. 28, 2019

Fair Value Disclosures [Abstract]

Fair value measurement

Fair value measurement

A. Fair value hierarchy

We account for certain assets and liabilities at fair value. Topic 820 “Fair Value Measurements and Disclosures” establishes the following hierarchy for the inputs that are used in fair value measurement:

• “Level 1” inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

• “Level 2” inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• “Level 3” inputs are not based on observable market data (unobservable inputs).

Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation.

B. Financial instruments not held at fair value

Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values.

The carrying amount and fair value of our debt are set out below:

	As of December 28, 2019				As of December 29, 2018
(dollars in millions)	Carrying amount		Fair value		Carrying amount		Fair value
Current	$	46.1	$	45.9	$	51.6	$	50.4
Non-current	2,912.3		2,946.8		2,953.4		2,873.2
	$	2,958.4	$	2,992.7	$	3,005.0	$	2,923.6

Debt is comprised principally of borrowings under the secured credit facilities and the unsecured senior notes. Loans under the secured credit facilities pay interest at floating rates, subject to a 1% LIBOR floor on the Dollar Term Loan and a 0% EURIBOR floor on the Euro Term Loan. The fair values of the term loans are derived from a market price, discounted for illiquidity. The unsecured senior notes have fixed interest rates, are traded by “Qualified Institutional Buyers” and certain other eligible investors, and their fair value is derived from their quoted market price.

C. Assets and liabilities measured at fair value on a recurring basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)			Total
As of December 28, 2019
Equity investments	$	1.1	$	—		$	1.1
Derivative assets	$	—	$	5.4		$	5.4
Derivative liabilities	$	—	$	(60.9	)	$	(60.9	)
As of December 29, 2018
Equity investments	$	0.8	$	—		$	0.8
Derivative assets	$	—	$	11.8		$	11.8
Derivative liabilities	$	—	$	(41.7	)	$	(41.7	)

Available-for-sale securities represent equity securities that are traded in an active market and therefore are measured using quoted prices in an active market. Derivative assets and liabilities included in Level 2 represent foreign currency exchange forward and swap contracts, and interest rate derivative contracts.

We value our foreign currency exchange derivatives using models consistent with those used by a market participant that maximize the use of market observable inputs including forward prices for currencies.

We value our interest rate derivative contracts using a widely accepted discounted cash flow valuation methodology that reflects the contractual terms of each derivative, including the period to maturity. The methodology derives the fair values of the derivatives using the market standard methodology of netting the discounted future cash payments and the discounted expected receipts. The inputs used in the calculation are based on observable market-based inputs, including interest rate curves, implied volatilities and credit spreads.

We incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

Transfers between levels of the fair value hierarchy

During the periods presented, there were no transfers between Levels 1 and 2, and Gates had no assets or liabilities measured at fair value on a recurring basis using Level 3 inputs.

D. Assets measured at fair value on a non-recurring basis

Gates has non-recurring fair value measurements related to certain assets, including goodwill, intangible assets, and property, plant, and equipment. No significant impairment was recognized during either the year ended December 28, 2019 or the year ended December 29, 2018.

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Leases - Quantitative Disclosures (Details) $ in Millions	12 Months Ended
	Dec. 28, 2019 USD ($)
Lease expenses
Operating lease expenses	$ 30.3
Finance lease amortization expenses	0.3
Short-term lease expenses	4.6
Variable lease expenses	6.9
Sublease income	(0.1)
Total lease expenses	42.0
Right-of-use assets obtained in exchange for new operating lease liabilities	19.7
Right-of-use assets obtained in exchange for new finance lease liabilities	0.9
—Operating cash flows from operating leases	26.3
—Financing cash flows from finance leases	0.4
Cash paid for amounts included in the measurement of lease liabilities:	$ 26.7
Weighted-average remaining lease term — finance leases	8 years 6 months
Weighted-average remaining lease term — operating leases	10 years 1 month
Weighted-average discount rate — finance leases (percent)	2.50%
Weighted-average discount rate — operating leases (percent)	5.40%

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Accrued expenses and other liabilities - Classification (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Payables and Accruals [Abstract]
—Accrued expenses and other current liabilities	$ 188.8	$ 184.2
—Other non-current liabilities	84.7	79.2
Accrued expenses and other liabilities	$ 273.5	$ 263.4

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Significant accounting policies - Property, plant and equipment (Details)	12 Months Ended
	Dec. 28, 2019
Buildings and improvements | Minimum
Property, Plant and Equipment
Fixed assets (useful life)	30 years
Buildings and improvements | Maximum
Property, Plant and Equipment
Fixed assets (useful life)	40 years
Machinery, equipment and vehicles | Minimum
Property, Plant and Equipment
Fixed assets (useful life)	2 years
Machinery, equipment and vehicles | Maximum
Property, Plant and Equipment
Fixed assets (useful life)	20 years

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Segment information - Sales and Adjusted EBITDA by Reporting Segment (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Segment Reporting Information
Net sales	$ 725.7	$ 746.6	$ 809.9	$ 804.9	$ 792.1	$ 828.4	$ 875.1	$ 852.0	$ 3,087.1	$ 3,347.6	$ 3,041.7
Adjusted EBITDA									611.0	755.8	669.1
Power Transmission
Segment Reporting Information
Net sales									1,945.7	2,098.8	2,009.4
Adjusted EBITDA									412.6	492.2	458.1
Fluid Power
Segment Reporting Information
Net sales									1,141.4	1,248.8	1,032.3
Adjusted EBITDA									$ 198.4	$ 263.6	$ 211.0

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Derivative financial instruments - Fair Values of Derivative Instruments (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Derivatives, Fair Value
Derivative liabilities	$ (60.9)	$ (41.7)
Net	(55.5)	(29.9)
Prepaid expenses and other assets
Derivatives, Fair Value
Derivative assets	5.4	10.2
Other non- current assets
Derivatives, Fair Value
Derivative assets	0.0	1.6
Accrued expenses and other current liabilities
Derivatives, Fair Value
Derivative liabilities	(9.6)	(0.7)
Other non- current liabilities
Derivatives, Fair Value
Derivative liabilities	(51.3)	(41.0)
Derivatives designated as hedging instruments: | —Currency swaps
Derivatives, Fair Value
Net	(15.1)	(22.1)
Derivatives designated as hedging instruments: | —Currency swaps | Prepaid expenses and other assets
Derivatives, Fair Value
Derivative assets	4.2	5.4
Derivatives designated as hedging instruments: | —Currency swaps | Other non- current liabilities
Derivatives, Fair Value
Derivative liabilities	(19.3)	(27.5)
Derivatives designated as hedging instruments: | —Interest rate caps
Derivatives, Fair Value
Net	(7.0)	(5.8)
Derivatives designated as hedging instruments: | —Interest rate caps | Prepaid expenses and other assets
Derivatives, Fair Value
Derivative assets		3.5
Derivatives designated as hedging instruments: | —Interest rate caps | Other non- current assets
Derivatives, Fair Value
Derivative assets		1.6
Derivatives designated as hedging instruments: | —Interest rate caps | Accrued expenses and other current liabilities
Derivatives, Fair Value
Derivative liabilities	(4.0)
Derivatives designated as hedging instruments: | —Interest rate caps | Other non- current liabilities
Derivatives, Fair Value
Derivative liabilities	(3.0)	(10.9)
Derivatives designated as hedging instruments: | —Interest rate swaps
Derivatives, Fair Value
Net	(34.3)	(2.9)
Derivatives designated as hedging instruments: | —Interest rate swaps | Accrued expenses and other current liabilities
Derivatives, Fair Value
Derivative liabilities	(5.3)	(0.3)
Derivatives designated as hedging instruments: | —Interest rate swaps | Other non- current liabilities
Derivatives, Fair Value
Derivative liabilities	(29.0)	(2.6)
Derivatives not designated as hedging instruments: | —Currency swaps
Derivatives, Fair Value
Net	(0.1)
Derivatives not designated as hedging instruments: | —Currency swaps | Accrued expenses and other current liabilities
Derivatives, Fair Value
Derivative liabilities	(0.1)
Derivatives not designated as hedging instruments: | —Currency forward contracts
Derivatives, Fair Value
Net	1.0	0.9
Derivatives not designated as hedging instruments: | —Currency forward contracts | Prepaid expenses and other assets
Derivatives, Fair Value
Derivative assets	1.2	1.3
Derivatives not designated as hedging instruments: | —Currency forward contracts | Accrued expenses and other current liabilities
Derivatives, Fair Value
Derivative liabilities	$ (0.2)	$ (0.4)

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Debt - Schedule of redemption prices plus accrued and unpaid interest (Details) - Unsecured debt - Dollar Senior Note redemption price		12 Months Ended
	Feb. 09, 2018	Dec. 28, 2019
Debt Instrument, Redemption
Redemption price (percent)	103.00%
—2022
Debt Instrument, Redemption
Redemption price (percent)		103.125%
—2023
Debt Instrument, Redemption
Redemption price (percent)		101.563%
—2024 and thereafter
Debt Instrument, Redemption
Redemption price (percent)		100.00%

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Post-retirement benefits (Tables)

12 Months Ended

Dec. 28, 2019

Defined Benefit Plans and Other Postretirement Benefit Plans

Schedule of components of net periodic benefit cost for pensions and other post-retirement benefits

The components of the net periodic benefit cost for pensions and other post-retirement benefits were as follows:

	Three months ended December 28, 2019									Three months ended December 29, 2018
(dollars in millions)	Pensions			Other post-retirement benefits			Total			Pensions			Other post-retirement benefits			Total
Reported in operating income:
—Employer service cost	$	1.3		$	—		$	1.3		$	1.3		$	—		$	1.3
Reported outside of operating income:
—Interest cost	5.8			0.6			6.4			5.8			0.6			6.4
—Expected return on plan assets	(7.0		)	—			(7.0		)	(5.6		)	—			(5.6		)
—Net amortization of prior period losses (gains)	0.2			(0.3		)	(0.1		)	—			(0.1		)	(0.1		)
—Settlements and curtailments	—			—			—			0.1			—			0.1
Net periodic benefit cost	$	0.3		$	0.3		$	0.6		$	1.6		$	0.5		$	2.1
Contributions	$	1.9		$	0.8		$	2.7		$	1.7		$	1.2		$	2.9

	Year ended December 28, 2019									Year ended December 29, 2018
(dollars in millions)	Pensions			Other post-retirement benefits			Total			Pensions			Other post-retirement benefits			Total
Reported in operating income:
—Employer service cost	$	4.1		$	—		$	4.1		$	4.0		$	—		$	4.0
Reported outside of operating income:
—Interest cost	17.6			1.7			19.3			17.7			1.7			19.4
—Expected return on plan assets	(20.9		)	—			(20.9		)	(17.0		)	—			(17.0		)
—Net amortization of prior period losses (gains)	0.6			(0.9		)	(0.3		)	0.1			(0.5		)	(0.4		)
—Settlements and curtailments	(0.7		)	—			(0.7		)	0.4			—			0.4
Net periodic benefit cost	$	0.7		$	0.8		$	1.5		$	5.2		$	1.2		$	6.4
Contributions	$	5.3		$	2.8		$	8.1		$	5.7		$	3.2		$	8.9

Schedule of effect of change in assumed health care trend

A one percentage point change in the assumed health care cost trend rate as of December 28, 2019 would have the following effects:

(dollars in millions)	1% point increase		1% point decrease
Increase (decrease) in the total of service and interest cost	$	0.1	$	(0.2	)
Increase (decrease) in the benefit obligation	$	2.1	$	(1.8	)

Pensions

Defined Benefit Plans and Other Postretirement Benefit Plans

Schedule of funded status and balance sheet location

The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Pension surplus	$	(38.1	)	$	(52.6	)
Accrued expenses and other current liabilities	2.3			2.4
Post-retirement benefit obligations	98.7			102.4
Net unfunded pension obligation	$	62.9		$	52.2
Plans whose projected benefit obligation was in excess of plan assets:
—Aggregate projected benefit obligation	$	391.7		$	378.2
—Aggregate plan assets	$	290.7		$	273.4
Plans whose accumulated benefit obligation was in excess of the plan assets:
—Aggregate accumulated benefit obligation	$	381.6		$	372.3
—Aggregate plan assets	$	286.2		$	273.0

Schedule of benefit obligation in excess of fair value of plan assets

The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Pension surplus	$	(38.1	)	$	(52.6	)
Accrued expenses and other current liabilities	2.3			2.4
Post-retirement benefit obligations	98.7			102.4
Net unfunded pension obligation	$	62.9		$	52.2
Plans whose projected benefit obligation was in excess of plan assets:
—Aggregate projected benefit obligation	$	391.7		$	378.2
—Aggregate plan assets	$	290.7		$	273.4
Plans whose accumulated benefit obligation was in excess of the plan assets:
—Aggregate accumulated benefit obligation	$	381.6		$	372.3
—Aggregate plan assets	$	286.2		$	273.0

Schedule of accumulated benefit obligation in excess of fair value of plan assets

The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Pension surplus	$	(38.1	)	$	(52.6	)
Accrued expenses and other current liabilities	2.3			2.4
Post-retirement benefit obligations	98.7			102.4
Net unfunded pension obligation	$	62.9		$	52.2
Plans whose projected benefit obligation was in excess of plan assets:
—Aggregate projected benefit obligation	$	391.7		$	378.2
—Aggregate plan assets	$	290.7		$	273.4
Plans whose accumulated benefit obligation was in excess of the plan assets:
—Aggregate accumulated benefit obligation	$	381.6		$	372.3
—Aggregate plan assets	$	286.2		$	273.0

Schedule of changes in the projected benefit obligation

Changes in the projected benefit obligation in relation to defined benefit pension plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Benefit obligation at the beginning of the period	$	827.1		$	932.9
Employer service cost	5.5			5.3
Plan participants’ contributions	0.2			0.2
Plan amendments	—			11.4
Interest cost	23.4			23.6
Net actuarial loss (gain)	83.1			(41.1		)
Benefits paid	(51.6		)	(56.5		)
Expenses paid from assets	(2.3		)	(1.8		)
Curtailments and settlements	(3.6		)	(13.4		)
Foreign currency translation	16.3			(33.5		)
Benefit obligation at the end of the period	$	898.1		$	827.1
Accumulated benefit obligation	$	892.4		$	821.3

Schedule of changes in the fair value of the assets

Changes in the fair value of the assets held by defined benefit pension plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Plan assets at the beginning of the period	$	774.9		$	893.6
Actual return on plan assets	90.4			(19.7		)
Employer contributions	8.5			8.9
Plan participants’ contributions	0.2			0.2
Curtailments and settlements	(2.3		)	(13.4		)
Benefits paid	(51.6		)	(56.5		)
Expenses paid from assets	(2.3		)	(1.8		)
Foreign currency translation	17.4			(36.4		)
Plan assets at the end of the period	$	835.2		$	774.9

Schedule of plan asset by category

The fair values of pension plan assets by asset category were as follows:

	As of December 28, 2019								As of December 29, 2018
(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Collective investment trusts:
Equity Securities	$	—	$	102.7	$	—	$	102.7	$	—	$	83.2	$	—	$	83.2
Debt Securities
—Corporate bonds	—		207.9		—		207.9		—		156.5		—		156.5
—Government bonds	—		231.3		—		231.3		—		302.9		—		302.9
Annuities and insurance	—		48.7		235.9		284.6		—		4.0		223.9		227.9
Cash and cash equivalents	8.7		—		—		8.7		4.4		—		—		4.4
Total	$	8.7	$	590.6	$	235.9	$	835.2	$	4.4	$	546.6	$	223.9	$	774.9

Schedule of changes in the fair value of plan assets measured using significant unobservable inputs

Changes in the fair value of plan assets measured using significant unobservable inputs (level 3) were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Fair value at the beginning of the period	$	224.0		$	248.1
Actual return on plan assets	17.9			(0.3		)
Purchases	1.4			1.7
Sales	(0.9		)	(0.9		)
Impacts of benefits paid	(12.3		)	(10.5		)
Foreign currency translation	5.8			(14.1		)
Fair value at the end of the period	$	235.9		$	224.0

Schedule of estimated future payments

Benefit payments, reflecting expected future service, are expected to be made by Gates’ defined benefit pension plans as follows:

(dollars in millions)
Fiscal year
—2020	$	48.2
—2021	46.8
—2022	48.3
—2023	47.8
—2024	47.6
—2025 through 2029	239.2

Schedule of components of net periodic benefit cost for pensions and other post-retirement benefits

Components of the net periodic benefit cost for defined benefit pension plans relating to continuing operations were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Employer service cost	$	5.5		$	5.3		$	5.8
Settlements and curtailments	(0.6		)	0.3			(3.8		)
Interest cost	23.4			23.6			30.4
Expected return on plan assets	(27.8		)	(22.6		)	(26.9		)
Amortization of prior net actuarial loss	—			0.1			0.4
Amortization of prior service cost	0.8			0.1			—
Net periodic benefit cost	$	1.3		$	6.8		$	5.9

Schedule of defined benefit amounts recognized in OCI

Changes in plan assets and benefit obligations of defined benefit pension plans recognized in OCI were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current period net actuarial loss (gain)	$	20.5		$	1.2		$	(20.9	)
Amortization of prior net actuarial loss	—			(0.1		)	(0.4		)
Prior service cost	—			11.4			0.7
Amortization of prior service cost	(0.8		)	(0.1		)	—
(Gain) loss recognized due to settlements and curtailments	(0.8		)	(0.3		)	3.8
Pre-tax changes recognized in OCI other than foreign currency translation	18.9			12.1			(16.8		)
Foreign currency translation	1.0			(0.1		)	(0.9		)
Total pre-tax changes recognized in OCI	$	19.9		$	12.0		$	(17.7	)

Cumulative losses (gains) before tax recognized in OCI in respect of post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Actuarial loss	$	21.2		$	1.5		$	0.7
Prior service costs	11.1			11.9			0.6
Foreign currency translation	(2.9		)	(3.9		)	(3.8		)
Cumulative total	$	29.4		$	9.5		$	(2.5	)

Schedule of major assumptions used

Major assumptions used in determining the benefit obligation and the net periodic benefit cost for defined benefit pension plans are presented in the following table as weighted averages:

	As of December 28, 2019		As of December 29, 2018
Benefit obligation:
—Discount rate	2.261	%	2.932	%
—Rate of salary increase	3.173	%	3.190	%
Net periodic benefit cost:
—Discount rate	2.932	%	2.619	%
—Rate of salary increase	3.190	%	3.178	%
—Expected return on plan assets	3.622	%	2.844	%

Other post-retirement benefits

Defined Benefit Plans and Other Postretirement Benefit Plans

Schedule of funded status and balance sheet location

The deficit recognized in respect of other defined benefit plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued expenses and other current liabilities	$	5.4	$	6.5
Post-retirement benefit obligations	52.5		53.5
	$	57.9	$	60.0

Schedule of changes in the projected benefit obligation

Changes in the accumulated benefit obligation in relation to other defined benefit plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Benefit obligation at the beginning of the period	$	60.0		$	68.4
Interest cost	2.3			2.2
Actuarial gain	(1.8		)	(4.8		)
Benefits paid	(3.5		)	(4.1		)
Foreign currency translation	0.9			(1.7		)
Benefit obligation at the end of the period	$	57.9		$	60.0
Accumulated benefit obligation	$	57.9		$	60.0

Schedule of estimated future payments

Benefit payments, reflecting expected future service, are expected to be made by Gates’ other defined benefit plans as follows:

(dollars in millions)
Fiscal years:
—2020	$	5.5
—2021	5.2
—2022	4.9
—2023	4.6
—2024	4.3
—2025 through 2029	18.3

Schedule of components of net periodic benefit cost for pensions and other post-retirement benefits

Components of the net periodic benefit cost for other defined benefit plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Interest cost	$	2.3		$	2.2		$	2.7
Amortization of prior net actuarial gain	(0.8		)	(0.4		)	(0.2		)
Amortization of prior service credit	(0.4		)	(0.4		)	(0.1		)
Net periodic benefit cost	$	1.1		$	1.4		$	2.4

Schedule of defined benefit amounts recognized in OCI

Changes in the benefit obligation of other defined benefit plans recognized in OCI were as follows: 

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current period net actuarial gain	$	(1.8	)	$	(4.8	)	$	(3.9	)
Amortization of prior net actuarial gain	0.8			0.4			0.2
Prior service credit	—			—			(4.3		)
Amortization of prior service credit	0.4			0.4			0.1
Pre-tax changes recognized in OCI other than foreign currency translation	(0.6		)	(4.0		)	(7.9		)
Foreign currency translation	(0.2		)	—			—
Total pre-tax changes recognized in OCI	$	(0.8	)	$	(4.0	)	$	(7.9	)

Cumulative gains before tax recognized in OCI in respect of other post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Actuarial gains	$	(17.3	)	$	(16.3	)	$	(11.9	)
Prior service credits	(3.4		)	(3.8		)	(4.2		)
Other adjustments	0.2			0.2			0.2
Foreign currency translation	(0.2		)	—			—
Cumulative total	$	(20.7	)	$	(19.9	)	$	(15.9	)

Schedule of major assumptions used

Major assumptions used in determining the benefit obligation and the net periodic benefit cost for other defined benefit plans are presented in the following table as weighted averages:

	Benefit obligation				Net periodic benefit cost
	As of December 28, 2019		As of December 29, 2018		As of December 28, 2019		As of December 29, 2018
Discount rate	3.08	%	4.01	%	4.01	%	3.42	%

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Related party transactions - Transactions with Non-Gates entities (Details) - Non-Gates entities controlled by non-controlling shareholders - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Related Party Transaction
Sales	$ 51.3	$ 60.6	$ 55.2
Purchases	(20.5)	(20.7)	$ (21.7)
Receivables	4.2	0.6
Payables	$ (5.9)	$ (0.3)

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Share-based compensation - Stock Option and SAR Rollforward (Details) - $ / shares	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Number of options
Beginning balance (shares)	20,032,966
Granted (shares)	1,967,115
Forfeited (shares)	(1,504,986)
Expired (shares)	(2,828)
Exercised (shares)	(270,997)	(79,014)
Ending balance (shares)	20,221,270	20,032,966
Weighted average exercise price $
Beginning balance (usd per share)	$ 8.16
Granted (usd per share)	17.49
Forfeited (usd per share)	8.14
Expired (usd per share)	16.28
Exercised (usd per share)	6.61
Ending balance (usd per share)	$ 9.09	$ 8.16
—Share options
Number of options
Beginning balance (shares)	582,717
Granted (shares)	1,099,505
Forfeited (shares)	(69,862)
Expired (shares)	(1,875)
Ending balance (shares)	1,610,485	582,717
Weighted average exercise price $
Beginning balance (usd per share)	$ 17.14
Granted (usd per share)	16.46
Forfeited (usd per share)	16.86
Expired (usd per share)	17.72
Ending balance (usd per share)	$ 16.69	$ 17.14
Exercisable at the end of the period (shares)	2,864,411
Exercisable at the end of the period (usd per share)	$ 7.37
Vested and expected to vest at the end of the period (shares)	6,978,259
Vested and expected to vest at the end of the period (usd per share)	$ 10.81
—Share options | —Tier I
Number of options
Beginning balance (shares)	4,212,537
Forfeited (shares)	(115,685)
Exercised (shares)	(270,997)
Ending balance (shares)	3,825,855	4,212,537
Weighted average exercise price $
Beginning balance (usd per share)	$ 7.03
Forfeited (usd per share)	6.61
Exercised (usd per share)	6.61
Ending balance (usd per share)	$ 7.07	$ 7.03
—Share options | —Tier II
Number of options
Beginning balance (shares)	4,837,780
Forfeited (shares)	(432,440)
Ending balance (shares)	4,405,340	4,837,780
Weighted average exercise price $
Beginning balance (usd per share)	$ 6.97
Forfeited (usd per share)	6.58
Ending balance (usd per share)	$ 7.01	$ 6.97
—Share options | —Tier III
Number of options
Beginning balance (shares)	4,837,780
Forfeited (shares)	(432,440)
Ending balance (shares)	4,405,340	4,837,780
Weighted average exercise price $
Beginning balance (usd per share)	$ 6.97
Forfeited (usd per share)	6.58
Ending balance (usd per share)	$ 7.01	$ 6.97
—Share options | —Tier IV
Number of options
Beginning balance (shares)	4,837,780
Forfeited (shares)	(432,440)
Ending balance (shares)	4,405,340	4,837,780
Weighted average exercise price $
Beginning balance (usd per share)	$ 10.46
Forfeited (usd per share)	9.88
Ending balance (usd per share)	$ 10.52	$ 10.46
—SARs
Number of options
Beginning balance (shares)	724,372
Granted (shares)	71,150
Forfeited (shares)	(22,119)
Expired (shares)	(953)
Ending balance (shares)	772,450	724,372
Weighted average exercise price $
Beginning balance (usd per share)	$ 8.17
Granted (usd per share)	16.46
Forfeited (usd per share)	15.43
Expired (usd per share)	13.44
Ending balance (usd per share)	$ 8.72	$ 8.17
—Premium-priced options
Number of options
Granted (shares)	796,460
Ending balance (shares)	796,460
Weighted average exercise price $
Granted (usd per share)	$ 19.00
Ending balance (usd per share)	$ 19.00

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Derivative financial instruments (Tables)

12 Months Ended

Dec. 28, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair values of derivative financial instruments

The period end fair values of derivative financial instruments were as follows:

	As of December 28, 2019													As of December 29, 2018
(dollars in millions)	Prepaid expenses and other assets		Other non- 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	$	4.2	$	—	$	—		$	(19.3	)	$	(15.1	)	$	5.4	$	—	$	—		$	(27.5	)	$	(22.1	)
—Interest rate caps	—		—		(4.0		)	(3.0		)	(7.0		)	3.5		1.6		—			(10.9		)	(5.8		)
—Interest rate swaps	—		—		(5.3		)	(29.0		)	(34.3		)	—		—		(0.3		)	(2.6		)	(2.9		)
Derivatives not designated as hedging instruments:
—Currency swaps	—		—		(0.1		)	—			(0.1		)	—		—		—			—			—
—Currency forward contracts	1.2		—		(0.2		)	—			1.0			1.3		—		(0.4		)	—			0.9
	$	5.4	$	—	$	(9.6	)	$	(51.3	)	$	(55.5	)	$	10.2	$	1.6	$	(0.7	)	$	(41.0	)	$	(29.9	)

Schedule of derivative effect on OCI

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Movement recognized in OCI in relation to:
—Fair value loss on cash flow hedges	$	(31.7	)	$	(4.5	)	$	(2.0	)
—Deferred premium reclassified from OCI to net income	2.5			5.4			11.6
Total movement	$	(29.2	)	$	0.9		$	9.6

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Net fair value gains (losses) recognized in OCI in relation to:
—Euro-denominated debt	$	(0.2	)	$	(11.0	)	$	(73.3	)
—Designated cross currency swaps	5.7			20.8			(36.1		)
Total net fair value gains (losses)	$	5.5		$	9.8		$	(109.4	)

Schedule of interest rate caps

The periods covered by our interest rate caps and their notional values are as follows:

(in millions)	Notional value
June 30, 2017 to June 30, 2020	$	200.0
June 28, 2019 to June 30, 2020	$	1,000.0
July 1, 2019 to June 30, 2023	€	425.0

Gain recognized from derivative instruments

The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Fair value gains (losses) recognized in relation to:
—Currency forward contracts recognized in SG&A	$	3.0	$	2.4	$	2.8
—Currency swaps recognized in other (income) expenses	0.6		0.6		(0.5		)
Total	$	3.6	$	3.0	$	2.3

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Property, plant and equipment (Tables)

12 Months Ended

Dec. 28, 2019

Property, Plant and Equipment [Abstract]

Property plant, and equipment details

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Cost
Land and buildings	$	318.6		$	313.3
Machinery, equipment and vehicles	819.4			736.0
Assets under construction	49.8			84.3
	1,187.8			1,133.6
Less: Accumulated depreciation and impairment	(459.9		)	(377.3		)
Total	$	727.9		$	756.3

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Equity - Movement in Number of Shares in Issue (Details) - shares	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Increase (Decrease) in Stockholders' Equity
Balance as of the beginning of the period (in shares)	289,847,574	245,474,605
Issuance of shares (in shares)	0	44,275,000
Exercise of share options (in shares)	270,997	79,014
Vesting of restricted stock units, net of witholding taxes (in shares)	38,728	18,955
Balance as of the end of the period (in shares)	290,157,299	289,847,574

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Intangible assets

12 Months Ended

Dec. 28, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets

	As of December 28, 2019							As of December 29, 2018
(dollars in millions)	Cost		Accumulated amortization and impairment			Net		Cost		Accumulated amortization and impairment			Net
Finite-lived:
—Customer relationships	$	2,021.8	$	(656.3	)	$	1,365.5	$	2,017.4	$	(534.8	)	$	1,482.6
—Technology	90.8		(87.8		)	3.0		90.6		(87.0		)	3.6
—Capitalized software	76.1		(38.0		)	38.1		64.2		(29.2		)	35.0
	2,188.7		(782.1		)	1,406.6		2,172.2		(651.0		)	1,521.2
Indefinite-lived:
—Brands and trade names	513.4		(44.0		)	469.4		513.4		(44.0		)	469.4
Total intangible assets	$	2,702.1	$	(826.1	)	$	1,876.0	$	2,685.6	$	(695.0	)	$	1,990.6

During Fiscal 2019 and Fiscal 2018, no significant impairments were recognized, compared with an impairment of $1.0 million recognized in relation to technology and know-how during Fiscal 2017. Refer to note 15.D. for additional detail on assets measured at fair value on a non-recurring basis.

During Fiscal 2019, the amortization expense recognized in respect of intangible assets was $129.9 million, compared with $130.7 million for Fiscal 2018 and $130.9 million for Fiscal 2017. In addition, movements in foreign currency exchange rates resulted in an increase in the net carrying value of total intangible assets of $3.0 million in Fiscal 2019, compared with a decrease of $35.3 million in Fiscal 2018.

The amortization expense for the next five years is estimated to be as follows:

Fiscal year	(dollars in millions)
—2020	$	131.6
—2021	131.1
—2022	129.7
—2023	124.5
—2024	123.5

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Debt

12 Months Ended

Dec. 28, 2019

Debt Disclosure [Abstract]

Debt

Debt

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Secured debt:
—Dollar Term Loan	$	1,699.1		$	1,716.4
—Euro Term Loan	717.7			742.1
Unsecured debt:
—6.25% Dollar Senior Notes due 2026	568.0			—
—6.00% Dollar Senior Notes due 2022	—			568.0
—Other loans	0.2			0.6
Total principal of debt	2,985.0			3,027.1
Deferred issuance costs	(41.8		)	(48.7		)
Accrued interest	15.2			26.6
Total carrying value of debt	2,958.4			3,005.0
Debt, current portion	46.1			51.6
Debt, less current portion	$	2,912.3		$	2,953.4

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets.

Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements.

The principal payments due under our financing agreements over the next five years and thereafter are as follows:

(dollars in millions)	Total
Fiscal year
—2020	$	30.9
—2021	24.7
—2022	24.7
—2023	24.7
—2024	2,312.0
Thereafter	568.0
	$	2,985.0

Debt issuances and redemptions

On November 22, 2019, we issued and sold $568.0 million of unsecured Dollar Senior Notes, described further below. The proceeds from this debt issuance were used on December 5, 2019 to redeem all $568.0 million of our outstanding 6.00% Dollar Senior Notes, plus interest accrued up to and including the redemption date of $13.2 million. The majority of the costs totaling approximately $8.6 million related to the refinancing transactions have been deferred and will be amortized to interest expense over the remaining term of the related borrowings using the effective interest method.

On January 31, 2018, we redeemed in full our outstanding €235.0 million Euro Senior Notes, plus interest accrued up to and including the redemption date of $0.7 million. The Euro Senior Notes were redeemed at a price of 102.875% and a redemption premium of $8.4 million was therefore paid in addition to the principal of $291.7 million.

On February 8 and February 9, 2018, we redeemed 6.00% Dollar Senior Notes with a principal of $522.0 million and $100.0 million, respectively. Both of these calls were made at a price of 103.0%, incurring redemption premiums of $15.6 million and $3.0 million, respectively. Interest accrued of $2.0 million and $0.4 million, respectively, was also paid on these dates.

The 2018 prepayments, totaling $913.7 million in principal, $27.0 million in redemption premiums and $3.1 million in accrued interest, were funded primarily by the net proceeds from our initial public offering, with the remainder of the funds coming from cash on hand. As a result of these redemptions, the recognition of $15.4 million of deferred financing costs was accelerated and recognized in interest expense in the first three months of 2018.

Dollar and Euro Term Loans

Our secured credit facilities include a Dollar Term Loan credit facility and a Euro Term Loan credit facility that were drawn on July 3, 2014. The maturity date for each of the term loan facilities is March 31, 2024. These term loan facilities bear interest at a floating rate, which for U.S. dollar debt can be either a base rate as defined in the credit agreement plus an applicable margin, or at our option, LIBOR plus an applicable margin. The Euro Term Loan bears interest at EURIBOR subject to a floor of 0%, plus a margin of 3.00%.

On January 29, 2018, the applicable margin on each of the term loans was lowered by 0.25% following the successful completion of our initial public offering. The Dollar Term Loan interest rate is currently LIBOR, subject to a floor of 1.00%, plus a margin of 2.75%, and as of December 28, 2019, borrowings under this facility bore interest at a rate of 4.45% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As of December 28, 2019, the Euro Term Loan bore interest at EURIBOR, which is currently below 0%, subject to a floor of 0%, plus a margin of 3.00%. The Euro Term Loan interest rate is re-set on the last business day of each quarter.

Both term loans are subject to quarterly amortization payments of 0.25%, based on the original principal amount less certain prepayments with the balance payable on maturity. During the year ended December 28, 2019, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $17.3 million and $7.4 million, respectively. During the year ended December 29, 2018, we made amortization payments against the Dollar Term Loan and the Euro Term Loan of $13.0 million and $5.8 million, respectively.

Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the agreement, based on the preceding year’s final results. Based on our 2019 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment is required to be made in 2020.

During the periods presented, foreign exchange gains were recognized in respect of the Euro Term Loans as summarized in the table below. As a portion of the facility was designated as a net investment hedge of certain of our Euro investments, a corresponding portion of the foreign exchange gains (losses) were recognized in OCI.

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Gain (loss) recognized in statement of operations	$	17.3		$	43.6		$	(60.2	)
Loss recognized in OCI	(0.2		)	(6.0		)	(36.5		)
Total gain (loss)	$	17.1		$	37.6		$	(96.7	)

Subsequent to our initial public offering, the above net foreign exchange gains recognized in the other (income) expenses line of the consolidated statement of operations have been substantially offset by net foreign exchange movements on Euro-denominated intercompany loans as part of our overall hedging strategy.

A wholly-owned U.S. subsidiary of Gates Global LLC is the principal obligor under the Term Loans for U.S. federal income tax purposes and makes the payments due on this tranche of debt. As a result, interest received by lenders of this tranche of debt is U.S. source income.

Unsecured Senior Notes

As of December 28, 2019, we had $568.0 million of Dollar Senior Notes outstanding that were issued in November 2019. These notes are scheduled to mature on January 15, 2026 and bear interest at an annual fixed rate of 6.25% with semi-annual interest payments.

On and after January 15, 2022, we may redeem the Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption Price
During the year commencing:
—2022	103.125	%
—2023	101.563	%
—2024 and thereafter	100.000	%

Additionally, net cash proceeds from an equity offering can be utilized at any time prior to January 15, 2022, to redeem up to 40% of the notes at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date.

Upon the occurrence of a change of control or a certain qualifying asset sales, the holders of the notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest.

As noted above, on December 5, 2019, we redeemed all $568.0 million of our 6.00% Dollar Senior Notes due in 2022, and, on January 31, 2018, we redeemed in full all €235.0 million of our outstanding Euro Senior Notes and made partial redemptions of the 6.00% Dollar Senior Notes totaling $622.0 million.

Up to the date of their redemption, foreign exchange losses of $9.2 million were recognized in respect of the Euro Senior Notes. Of these losses, $5.0 million was recognized in OCI for the period during which the facility was designated as a net investment hedge of certain of our Euro investments, and $4.2 million was recognized in the statement of operations.

Revolving credit facility

We also have a secured revolving credit facility, maturing on January 29, 2023, that provides for multi-currency revolving loans up to an aggregate principal amount of $185.0 million, with a letter of credit sub-facility of $20.0 million. The facility matures on January 29, 2023.

As of both December 28, 2019 and December 29, 2018, there were no drawings for cash under the revolving credit facility and there were no letters of credit outstanding.

Debt under the revolving credit facility bears interest at a floating rate, which can be either a base rate as defined in the credit agreement plus an applicable margin or, at our option, LIBOR, plus an applicable margin.

Asset-backed revolver

We have a revolving credit facility backed by certain of our assets in North America. The facility allows for loans of up to a maximum of $325.0 million ($294.6 million as of December 28, 2019, compared with $325.0 million as of December 29, 2018, based on the values of the secured assets on those dates) with a letter of credit sub-facility of $150.0 million within this maximum. The facility matures on January 29, 2023.

As of both December 28, 2019 and December 29, 2018, there were no drawings for cash under the asset-backed revolver, but there were letters of credit outstanding of $50.1 million and $57.8 million, respectively.

Debt under the facility bears interest at a floating rate, which can be either a base rate as defined in the credit agreement plus an applicable margin or, at our option, LIBOR, plus an applicable margin.

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Equity

12 Months Ended

Dec. 28, 2019

Equity [Abstract]

Equity

Equity

In January 2018, Gates completed an initial public offering of 38,500,000 shares at a price of $19.00 per share. Shortly thereafter, the underwriters of the initial public offering exercised their over-allotment option for a further 5,775,000 shares, also at a price of $19.00 per share. Movements in the Company’s number of shares in issue for the years ended December 28, 2019 and December 29, 2018, respectively, were as follows:

	For the year ended
(number of shares)	December 28, 2019	December 29, 2018
Balance as of the beginning of the fiscal year	289,847,574	245,474,605
Issuance of shares	—	44,275,000
Exercise of share options	270,997	79,014
Vesting of restricted stock units, net of withholding taxes	38,728	18,955
Balance as of the end of the period	290,157,299	289,847,574

The Company has one class of authorized and issued shares, with a par value of $0.01, and each share has equal voting rights.

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Earnings per share (Tables)

12 Months Ended

Dec. 28, 2019

Earnings Per Share [Abstract]

Schedule of computation of net income per share

The computation of earnings per share is presented below:

	For the year ended
(dollars in millions, except share numbers and per share amounts)	December 28, 2019		December 29, 2018		December 30, 2017
Net income attributable to shareholders	$	690.1	$	245.3	$	151.3
Weighted average number of shares outstanding	290,057,360		285,906,693		245,520,533
Dilutive effect of share-based awards	1,570,101		5,791,580		4,970,295
Diluted weighted average number of shares outstanding	291,627,461		291,698,273		250,490,828
Basic earnings per share	$	2.38	$	0.86	$	0.62
Diluted earnings per share	$	2.37	$	0.84	$	0.60

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Significant accounting policies (Policies)

12 Months Ended

Dec. 28, 2019

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated.

New accounting pronouncements adopted and not yet adopted

The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year:

• ASU 2016-02 “Leases” (Topic 842)

• ASU 2018-10 “Leases” (Topic 842): Codification Improvements to Topic 842, Leases

• ASU 2018-11 “Leases” (Topic 842): Targeted Improvements

• ASU 2019-01 “Leases” (Topic 842): Codification Improvements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee.

We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated.

We applied the following additional practical expedients on transition to Topic 842:

(i) we did not reassess whether or not any expired or existing contracts were or contained leases;

(ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and

(iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842.

On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million, with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “Leases” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842.

The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures:

• ASU 2018-07 “Compensation - Stock Compensation” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

• ASU 2018-16 “Derivatives and Hedging” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

In addition, we adopted ASU 2018-02 “Income Statement - Reporting Comprehensive Income” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences.

Recent accounting pronouncements not yet adopted

The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted.

• ASU 2016-13 “Financial Instruments” (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected.

The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures.

• ASU 2018-13 “Fair Value Measurement” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “Fair Value Measurement” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods presented, but a few amendments should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. We expect that the adoption of this ASU will not have a significant impact on our financial instrument disclosures, but we are still finalizing our evaluation.

• ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued an ASU to modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. The impact on our consolidated financial statements of adopting this ASU, which will affect our disclosures, is still being evaluated.

• ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software” (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued an ASU to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement). The guidance permits capitalization of costs associated with the implementation of cloud-based software arrangements and aligns the criteria for capitalization with those for purchased or internally-generated computer software intangible assets. Implementation costs meeting the criteria for capitalization would not be classified as intangible assets but would instead be classified as prepaid expenses that are then amortized over the period of the arrangement as an additional expense consistent with the ongoing costs under the cloud computing arrangement.

The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and entities may choose to apply the requirements either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We do not expect any significant impact on our consolidated financial statements on adoption of this ASU.

• ASU 2019-12 “Simplifying the Accounting for Income Taxes” (Topic 740): Income Taxes

In December 2019, the FASB issued an ASU to simplify and reduce the complexity of general principles in Topic 740: Income Taxes. Such simplifications include the elimination of certain exceptions to: 1) the incremental approach for intraperiod tax allocation, 2) the requirement to recognize a deferred income tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) the ability not to recognize a deferred income tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and 4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

The amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The ASU provides for a number of different approaches to applying the changes, depending on the amendment, from full retrospective to modified retrospective to fully prospective. The impact on our consolidated financial statements of adopting this ASU is still being evaluated.

Accounting periods

Accounting periods

The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“Fiscal 2019”), December 29, 2018 (“Fiscal 2018”) and December 30, 2017 (“Fiscal 2017”).

Basis of Consolidation

Basis of consolidation

The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees.

We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation.

Foreign currency transactions and translation

Foreign currency transactions and translation

Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million, compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017. We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019, compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017.

On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income.

In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period.

Net sales and Shipping and handling costs

Net sales

Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.

Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation.

In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal.

We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price.

In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset.

F. Selling, general and administrative expenses

Shipping and handling costs

Costs of outbound shipping and handling are included in SG&A.

Research and development costs

Research and development costs

Research and development costs are charged to net income in the period in which they are incurred.

Advertising costs

Advertising costs

Advertising costs are expensed as incurred and included in SG&A.

Restructuring expenses

Restructuring expenses

Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6.

Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date.

Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer.

Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability.

Business combinations

Business combinations

A business combination is a transaction or other event in which control is obtained of one or more businesses.

Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred.

Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date.

Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income.

Goodwill

Goodwill

Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition.

Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019, Fiscal 2018 or Fiscal 2017.

To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit.

Other intangible assets

Other intangible assets

Other intangible assets are stated at cost less accumulated amortization and any recognized impairment.

(i) Assets acquired in business combinations

An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows:

Customer relationships	15 to 17 years
Technology	5 to 7 years

Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment.

(ii) Computer software

Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years.

Property, plant and equipment

Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred.

Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges:

Buildings and improvements	30 to 40 years
Leasehold improvements	Shorter of lease term or useful life
Machinery, equipment and vehicles	2 to 20 years

Impairment or long-lived assets and intangible assets

Impairment of long-lived assets and intangible assets

Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable.

Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value.

Inventory

Inventories

Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory.

Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019, inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018.

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits.

Restricted cash

Restricted cash

Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes.

Trade accounts receivable

Trade accounts receivable

Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information.

Debt

Debt

Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method.

Accounts payable

Accounts payable

Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made.

Derivative financial instruments

Derivative financial instruments

We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI.

Investments

Investments

Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “Financial Instruments” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI.

Fair Value

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period.

Post-retirement benefits

Post-retirement benefits

Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America.

We account for our post-retirement benefit plans in accordance with Topic 715 “Compensation – Retirement Benefits”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees.

For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations.

Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees.

Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs.

Share-based compensation

Share-based compensation

Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity.

We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions.

Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions.

For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital.

For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability.

Income taxes

Income taxes

Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date.

Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions.

Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet.

Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies.

Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner.

Use of estimates

Use of estimates

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates.

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Commitments and contingencies - Allowance for doubtful accounts (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Accounts Receivable, Allowance for Credit Loss
Balance at beginning of year	$ 7.4	$ 6.8	$ 3.4
Charged to net income	2.4	1.4	3.7
Deductions	(1.3)	(0.5)	(0.8)
Foreign currency translation	0.1	(0.3)	0.5
Balance at end of year	$ 8.6	$ 7.4	$ 6.8

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Analysis of accumulated other comprehensive (loss) income

12 Months Ended

Dec. 28, 2019

Equity [Abstract]

Analysis of accumulated other comprehensive (loss) income

Analysis of accumulated other comprehensive (loss) income

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

(dollars in millions)	Available-for- 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	—			—			141.3			—			141.3			29.5			170.8
Cash flow hedges movements	—			—			—			7.6			7.6			—			7.6
Available-for-sale investment movements	(0.1		)	—			—			—			(0.1		)	(0.1		)	(0.2		)
Post-retirement benefit movements	—			19.7			—			—			19.7			0.5			20.2
Other comprehensive (loss) income	(0.1		)	19.7			141.3			7.6			168.5			29.9			198.4
As of December 30, 2017	(0.3		)	13.2			(742.8		)	(17.5		)	(747.4		)	(25.5		)	(772.9		)
Foreign currency translation	—			—			(107.2		)	—			(107.2		)	(17.9		)	(125.1		)
Cash flow hedges movements	—			—			—			5.6			5.6			—			5.6
Post-retirement benefit movements	—			(5.6		)	—			—			(5.6		)	(0.2		)	(5.8		)
Other comprehensive (loss) income	—			(5.6		)	(107.2		)	5.6			(107.2		)	(18.1		)	(125.3		)
Reclassification to retained earnings on adoption of ASU 2016-01 "Financial Instruments"	0.3			—			—			—			0.3			—			0.3
As of December 29, 2018	—			7.6			(850.0		)	(11.9		)	(854.3		)	(43.6		)	(897.9		)
Foreign currency translation	—			—			37.7			—			37.7			(2.8		)	34.9
Cash flow hedges movements	—			—			—			(24.9		)	(24.9		)	—			(24.9		)
Post-retirement benefit movements	—			(16.9		)	—			—			(16.9		)	0.4			(16.5		)
Other comprehensive (loss) income	—			(16.9		)	37.7			(24.9		)	(4.1		)	(2.4		)	(6.5		)
As of December 28, 2019	$	—		$	(9.3	)	$	(812.3	)	$	(36.8	)	$	(858.4	)	$	(46.0	)	$	(904.4	)

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Acquisitions

12 Months Ended

Dec. 28, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

Description and financial effect of acquisitions

On April 26, 2018, Gates completed the acquisition of Rapro for $50.9 million, net of cash acquired. Rapro is a Turkey-based business that engineers, manufactures and sells molded and branched hoses and other products, the majority of which are sold into replacement markets. Rapro operates out of two facilities in Izmir, Turkey, with its products serving heavy-duty, commercial and light-vehicle applications.

Goodwill of $34.4 million arose from this acquisition and related primarily to the expected benefit from the acceleration of our growth strategy within the Fluid Power product line and expansion of our product range and geographic coverage.

In October 2017, we completed the acquisition of Atlas Hydraulics for $74.0 million, net of cash acquired. Atlas Hydraulics is a fully-integrated product engineering, manufacturing, and commercial business headquartered in Ontario, Canada. With locations in Canada, the U.S. and Mexico, the company specializes in the design, manufacture, and supply of hydraulic tube and hose assemblies. The goodwill of $23.0 million arising from the acquisition of Atlas Hydraulics relates primarily to the expansion of our presence in industrial markets through increased manufacturing capacity and geographic reach.

In June 2017, we purchased 100% of GTF Engineering and Services UK Limited, the owner of the majority of the net assets of Techflow Flexibles, for $36.7 million. Techflow Flexibles is a fully integrated engineering, manufacturing and commercial operation based in the U.K. that specializes in high-pressure flexible hoses. The goodwill of $22.5 million arising from the acquisition of Techflow Flexibles relates largely to the expected enhancement to our ability to make and supply long-length and large-diameter hoses, primarily for the oil & gas exploration and production industries.

All of the above acquired businesses are included in the Fluid Power reporting segment and none of the associated goodwill recognized is expected to be deductible for income tax purposes.

During the years ended December 29, 2018 and December 30, 2017, we incurred expenses of $1.8 million and $3.0 million, respectively, related directly to these acquisitions, all of which are included in the transaction-related expenses line in the statement of operations. No expenses related to these acquisitions were incurred during the year ended December 28, 2019.

Pro forma information has not been presented for these acquisitions because it is not material.

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Earnings per share

12 Months Ended

Dec. 28, 2019

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

Basic earnings per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted earnings per share considers the dilutive effect of potential shares, unless the inclusion of the potential shares would have an anti-dilutive effect. The treasury stock method is used to determine the potential dilutive shares resulting from assumed exercises of equity-related instruments.

The computation of earnings per share is presented below:

	For the year ended
(dollars in millions, except share numbers and per share amounts)	December 28, 2019		December 29, 2018		December 30, 2017
Net income attributable to shareholders	$	690.1	$	245.3	$	151.3
Weighted average number of shares outstanding	290,057,360		285,906,693		245,520,533
Dilutive effect of share-based awards	1,570,101		5,791,580		4,970,295
Diluted weighted average number of shares outstanding	291,627,461		291,698,273		250,490,828
Basic earnings per share	$	2.38	$	0.86	$	0.62
Diluted earnings per share	$	2.37	$	0.84	$	0.60

For the years ended December 28, 2019, December 29, 2018 and December 30, 2017, shares totaling 3,679,014, 932,515 and 180,538, respectively, were excluded from the diluted earnings per share calculation because they were anti-dilutive.

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Fair value measurement - Schedule of carrying amount and fair value of debt (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Carrying amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Current	$ 46.1	$ 51.6
Non-current	2,912.3	2,953.4
Fair value of debt	2,958.4	3,005.0
Fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Current	45.9	50.4
Non-current	2,946.8	2,873.2
Fair value of debt	$ 2,992.7	$ 2,923.6

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Property, plant and equipment - Narratives (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Property, Plant and Equipment
Depreciation	$ 92.3	$ 87.8	$ 81.3
Interest costs capitalized	0.0	4.5	0.0
Impairment of fixed assets	0.7	2.7	0.0
Restructuring expenses	7.2	7.3	19.6
Right-of-use assets	2.8
Assets under finance lease		2.2
Facility Closing
Property, Plant and Equipment
Restructuring expenses	$ 1.2	0.4	$ 2.0
Facility Closing | Europe
Property, Plant and Equipment
Restructuring expenses		$ 2.1

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Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Income Statement [Abstract]
Gain on disposal of discontinued operations, tax	$ 0.0	$ 0.0	$ 0.0

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Restructuring and other strategic initiatives - Restructuring Reserve Balance Sheet Impact (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Restructuring Cost and Reserve
Restructuring reserve	$ 2.9	$ 2.6	$ 8.6
Accrued expenses and other current liabilities
Restructuring Cost and Reserve
Restructuring reserve	2.9	2.2
Other non-current liabilities
Restructuring Cost and Reserve
Restructuring reserve	$ 0.0	$ 0.4

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Restructuring and other strategic initiatives - Income Statement Location (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Restructuring Cost and Reserve
Restructuring expenses	$ 7.2	$ 7.3	$ 19.6
—Impairment of fixed assets	0.7	0.0	0.0
Total expenses related to other strategic initiatives	8.1	4.3	0.0
—Other restructuring (benefits) expenses
Restructuring Cost and Reserve
Restructuring expenses	0.0	0.5	0.2
—Impairment of inventory
Restructuring Cost and Reserve
Restructuring expenses	1.2	0.4	2.0
Restructuring expenses:
Restructuring Cost and Reserve
Restructuring expenses	6.0	6.4	17.4
Restructuring expenses: | —Severance
Restructuring Cost and Reserve
Restructuring expenses	4.7	0.5	13.6
Restructuring expenses: | —Professional fees
Restructuring Cost and Reserve
Restructuring expenses	1.6	3.5	3.2
Restructuring expenses: | —Other restructuring (benefits) expenses
Restructuring Cost and Reserve
Restructuring expenses	(0.3)	2.4	0.6
Cost of sales
Restructuring Cost and Reserve
Severance-related expenses (included in cost of sales)	4.0	1.2	0.0
SG&A
Restructuring Cost and Reserve
Severance-related expenses (included in cost of sales)	$ 3.4	$ 3.1	$ 0.0

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Debt - Schedule of principal maturities due (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Fiscal year
—2020	$ 30.9
—2021	24.7
—2022	24.7
—2023	24.7
—2024	2,312.0
Thereafter	568.0
Total carrying value of debt	$ 2,985.0	$ 3,027.1

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Statement of Financial Position [Abstract]
Allowance for receivables	$ 8.6	$ 7.4
Par value (in usd per share)	$ 0.01	$ 0.01
Authorized shares (in shares)	3,000,000,000	3,000,000,000
Outstanding shares (in shares)	290,157,299	289,847,574

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Income taxes - Schedule of unrecognized tax positions (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Reconciliation of Unrecognized Tax Benefits
At the beginning of the period	$ 80.1	$ 106.1	$ 106.3
Increases for tax positions related to the current period	70.6	0.4	5.5
Increases for tax positions related to prior periods	5.8	0.2	4.6
Decreases for tax positions related to prior periods	(2.1)	(1.5)	(2.8)
Decreases related to settlements	0.0	0.0	(0.7)
Decreases due to lapsed statute of limitations	(8.1)	(21.0)	(11.8)
Foreign currency translation		(4.1)
Foreign currency translation	1.0		5.0
At the end of the period	$ 147.3	$ 80.1	$ 106.1

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Post-retirement benefits - Expected future benefit payments (Details) $ in Millions	Dec. 28, 2019 USD ($)
Pensions
Fiscal year
—2020	$ 48.2
—2021	46.8
—2022	48.3
—2023	47.8
—2024	47.6
—2025 through 2029	239.2
Other post-retirement benefits
Fiscal year
—2020	5.5
—2021	5.2
—2022	4.9
—2023	4.6
—2024	4.3
—2025 through 2029	$ 18.3

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Analysis of accumulated other comprehensive (loss) income (Tables)

12 Months Ended

Dec. 28, 2019

Equity [Abstract]

Schedule of accumulated other comprehensive income (loss)

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

(dollars in millions)	Available-for- 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	—			—			141.3			—			141.3			29.5			170.8
Cash flow hedges movements	—			—			—			7.6			7.6			—			7.6
Available-for-sale investment movements	(0.1		)	—			—			—			(0.1		)	(0.1		)	(0.2		)
Post-retirement benefit movements	—			19.7			—			—			19.7			0.5			20.2
Other comprehensive (loss) income	(0.1		)	19.7			141.3			7.6			168.5			29.9			198.4
As of December 30, 2017	(0.3		)	13.2			(742.8		)	(17.5		)	(747.4		)	(25.5		)	(772.9		)
Foreign currency translation	—			—			(107.2		)	—			(107.2		)	(17.9		)	(125.1		)
Cash flow hedges movements	—			—			—			5.6			5.6			—			5.6
Post-retirement benefit movements	—			(5.6		)	—			—			(5.6		)	(0.2		)	(5.8		)
Other comprehensive (loss) income	—			(5.6		)	(107.2		)	5.6			(107.2		)	(18.1		)	(125.3		)
Reclassification to retained earnings on adoption of ASU 2016-01 "Financial Instruments"	0.3			—			—			—			0.3			—			0.3
As of December 29, 2018	—			7.6			(850.0		)	(11.9		)	(854.3		)	(43.6		)	(897.9		)
Foreign currency translation	—			—			37.7			—			37.7			(2.8		)	34.9
Cash flow hedges movements	—			—			—			(24.9		)	(24.9		)	—			(24.9		)
Post-retirement benefit movements	—			(16.9		)	—			—			(16.9		)	0.4			(16.5		)
Other comprehensive (loss) income	—			(16.9		)	37.7			(24.9		)	(4.1		)	(2.4		)	(6.5		)
As of December 28, 2019	$	—		$	(9.3	)	$	(812.3	)	$	(36.8	)	$	(858.4	)	$	(46.0	)	$	(904.4	)

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Background (Details)	12 Months Ended
	Dec. 28, 2019 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	2

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Post-retirement benefits - Schedule of changes in the projected benefit obligation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Pensions
Defined Benefit Plan, Change in Benefit Obligation
Benefit obligation at the beginning of the period	$ 827.1	$ 932.9
Employer service cost	5.5	5.3
Plan participants’ contributions	0.2	0.2
Plan amendments	0.0	11.4
Interest cost	23.4	23.6	$ 30.4
Net actuarial loss (gain)	83.1	(41.1)
Benefits paid	(51.6)	(56.5)
Expenses paid from assets	(2.3)	(1.8)
Curtailments and settlements	(3.6)	(13.4)
Foreign currency translation	16.3	(33.5)
Benefit obligation at the end of the period	898.1	827.1	932.9
Accumulated benefit obligation	892.4	821.3
Other post-retirement benefits
Defined Benefit Plan, Change in Benefit Obligation
Benefit obligation at the beginning of the period	60.0	68.4
Interest cost	2.3	2.2	2.7
Net actuarial loss (gain)	(1.8)	(4.8)
Benefits paid	(3.5)	(4.1)
Foreign currency translation	0.9	(1.7)
Benefit obligation at the end of the period	57.9	60.0	$ 68.4
Accumulated benefit obligation	$ 57.9	$ 60.0

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Post-retirement benefits - Schedule of major assumptions used (Details)	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Pensions
Benefit obligation
Discount rate (percentage)	2.261%	2.932%
Rate of salary increase (percentage)	3.173%	3.19%
Net periodic benefit cost
Discount rate (percentage)	2.932%	2.619%
Rate of salary increase (percentage)	3.19%	3.178%
Expected return on plan assets (percentage)	3.622%	2.844%
Other post-retirement benefits
Benefit obligation
Discount rate (percentage)	3.08%	4.01%
Net periodic benefit cost
Discount rate (percentage)	4.01%	3.42%

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Significant accounting policies - Research and development costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Accounting Policies [Abstract]
Research and development costs	$ 67.9	$ 71.4	$ 68.6

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Share-based compensation - Fair value and valuation assumptions (Details) - $ / shares	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
—SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assumed fair value exercise price (usd per share)	$ 5.88	$ 6.44	$ 3.94
Expected volatility (percentage)	31.90%	38.90%	43.60%
Expected option life (years)	6 years	6 years 3 months 18 days
Risk-free interest rate (percentage)	2.51%	2.89%
—Share options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assumed fair value exercise price (usd per share)	$ 5.88	$ 7.44
Expected volatility (percentage)	31.90%	39.60%	43.60%
Expected option life (years)	6 years	6 years 3 months 18 days
Risk-free interest rate (percentage)	2.51%	2.80%
—Share options | —Tier I
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option life (years)			6 years 6 months
—Share options | - Tier II-IV
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option life (years)			6 years
Risk-free interest rate (percentage)			2.04%
—Share options | - Liquidity Event Tier II-IV
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option life (years)			4 years
Risk-free interest rate (percentage)			1.98%
—Premium-priced options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assumed fair value exercise price (usd per share)	$ 5.65
Expected volatility (percentage)	31.90%
Expected option life (years)	7 years
Risk-free interest rate (percentage)	2.53%
—RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assumed fair value exercise price (usd per share)	$ 16.19	$ 16.97	$ 17.23
—PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assumed fair value exercise price (usd per share)	$ 20.07
Expected volatility (percentage)	32.80%
Risk-free interest rate (percentage)	2.48%

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Debt (Tables)

12 Months Ended

Dec. 28, 2019

Debt Disclosure [Abstract]

Schedule of long-term debt

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Secured debt:
—Dollar Term Loan	$	1,699.1		$	1,716.4
—Euro Term Loan	717.7			742.1
Unsecured debt:
—6.25% Dollar Senior Notes due 2026	568.0			—
—6.00% Dollar Senior Notes due 2022	—			568.0
—Other loans	0.2			0.6
Total principal of debt	2,985.0			3,027.1
Deferred issuance costs	(41.8		)	(48.7		)
Accrued interest	15.2			26.6
Total carrying value of debt	2,958.4			3,005.0
Debt, current portion	46.1			51.6
Debt, less current portion	$	2,912.3		$	2,953.4

Schedule of princpal maturities due

The principal payments due under our financing agreements over the next five years and thereafter are as follows:

(dollars in millions)	Total
Fiscal year
—2020	$	30.9
—2021	24.7
—2022	24.7
—2023	24.7
—2024	2,312.0
Thereafter	568.0
	$	2,985.0

Foreign exchange gains (losses)

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Gain (loss) recognized in statement of operations	$	17.3		$	43.6		$	(60.2	)
Loss recognized in OCI	(0.2		)	(6.0		)	(36.5		)
Total gain (loss)	$	17.1		$	37.6		$	(96.7	)

Schedule of redemption prices plus accrued and unpaid interest

On and after January 15, 2022, we may redeem the Dollar Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption Price
During the year commencing:
—2022	103.125	%
—2023	101.563	%
—2024 and thereafter	100.000	%

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Intangible assets (Tables)

12 Months Ended

Dec. 28, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of finite-lived intangible assets

	As of December 28, 2019							As of December 29, 2018
(dollars in millions)	Cost		Accumulated amortization and impairment			Net		Cost		Accumulated amortization and impairment			Net
Finite-lived:
—Customer relationships	$	2,021.8	$	(656.3	)	$	1,365.5	$	2,017.4	$	(534.8	)	$	1,482.6
—Technology	90.8		(87.8		)	3.0		90.6		(87.0		)	3.6
—Capitalized software	76.1		(38.0		)	38.1		64.2		(29.2		)	35.0
	2,188.7		(782.1		)	1,406.6		2,172.2		(651.0		)	1,521.2
Indefinite-lived:
—Brands and trade names	513.4		(44.0		)	469.4		513.4		(44.0		)	469.4
Total intangible assets	$	2,702.1	$	(826.1	)	$	1,876.0	$	2,685.6	$	(695.0	)	$	1,990.6

Schedule of indefinite-lived intangible assets

	As of December 28, 2019							As of December 29, 2018
(dollars in millions)	Cost		Accumulated amortization and impairment			Net		Cost		Accumulated amortization and impairment			Net
Finite-lived:
—Customer relationships	$	2,021.8	$	(656.3	)	$	1,365.5	$	2,017.4	$	(534.8	)	$	1,482.6
—Technology	90.8		(87.8		)	3.0		90.6		(87.0		)	3.6
—Capitalized software	76.1		(38.0		)	38.1		64.2		(29.2		)	35.0
	2,188.7		(782.1		)	1,406.6		2,172.2		(651.0		)	1,521.2
Indefinite-lived:
—Brands and trade names	513.4		(44.0		)	469.4		513.4		(44.0		)	469.4
Total intangible assets	$	2,702.1	$	(826.1	)	$	1,876.0	$	2,685.6	$	(695.0	)	$	1,990.6

Schedule of future amortization of finite-lived intangible assets

The amortization expense for the next five years is estimated to be as follows:

Fiscal year	(dollars in millions)
—2020	$	131.6
—2021	131.1
—2022	129.7
—2023	124.5
—2024	123.5

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Related party transactions - Narrative (Details) - USD ($)		1 Months Ended	3 Months Ended								12 Months Ended
	Nov. 22, 2019	Jan. 31, 2018	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017	Jul. 03, 2014
Related Party Transaction
Net sales			$ 725,700,000	$ 746,600,000	$ 809,900,000	$ 804,900,000	$ 792,100,000	$ 828,400,000	$ 875,100,000	$ 852,000,000	$ 3,087,100,000	$ 3,347,600,000	$ 3,041,700,000
Dividends received from equity method investees											$ 0	400,000	300,000
Effects of change in ownership interest						$ 15,000,000
Unsecured debt | —6.25% Dollar Senior Notes due 2026
Related Party Transaction
Stated interest rate on debt (percent)			6.25%								6.25%
Sponsor | Former transaction and monitoring fee agreement
Related Party Transaction
Related party transaction, fee as a percentage of EBITDA														1.00%
Related party transaction, expenses incurred											$ 6,500,000	8,000,000	6,700,000
Sponsor | New monitoring fee agreement
Related Party Transaction
Related party transaction, ownership percentage threshold which terminates milestone payment		5.00%
Related party transaction, fair value of equity threshold which terminates milestone payment		$ 25,000,000
Sponsor | Support and services agreement
Related Party Transaction
Related party transaction, expenses incurred											100,000	0	0
Related party transaction, ownership percentage threshold which terminates milestone payment		5.00%
Related party transaction, fair value of equity threshold which terminates milestone payment		$ 25,000,000
Sponsor | Underwriting fees
Related Party Transaction
Related party transaction, expenses incurred		$ 3,200,000
Sponsor | Issuance Of 6.25% Dollar Senior Notes | Unsecured debt | —6.25% Dollar Senior Notes due 2026
Related Party Transaction
Related party, amount of transaction	$ 99,400,000
Stated interest rate on debt (percent)	6.25%
Compensation expense for debt issued	$ 1,200,000
Sponsor | Commercial Transactions With Sponsor Portfolio Companies
Related Party Transaction
Net sales											200,000	0	0
Affiliated entity of majority shareholder
Related Party Transaction
Sales													27,200,000
Equity method investees
Related Party Transaction
Sales											1,400,000	1,600,000	$ 1,800,000
Payables to related parties			$ 200,000				$ 100,000				$ 200,000	$ 100,000

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Post-retirement benefits - Narratives (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Defined Benefit Plans and Other Postretirement Benefit Plans
Initial health care cost trend (percentage)	6.56%	7.01%
Ultimate health care cost trend (percentage)	4.93%	4.94%
Pensions
Defined Benefit Plans and Other Postretirement Benefit Plans
Defined contribution expense	$ 17.9	$ 19.1	$ 18.6
Prior service cost (credit)	0.0	(11.4)	(0.7)
Expected future employer contributions in current fiscal year	4.3
Estimated future amortization gain (loss) from AOCI to net periodic benefit cost	1.0
Other post-retirement benefits
Defined Benefit Plans and Other Postretirement Benefit Plans
Prior service cost (credit)	0.0	$ 0.0	$ 4.3
Expected future employer contributions in current fiscal year	5.5
Estimated future amortization gain (loss) from AOCI to net periodic benefit cost	$ 1.4

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Derivative financial instruments - Net Investment Hedging Instruments in OCI (Details) - Net investment hedges - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Derivative Instruments, Gain (Loss)
Total net fair value gains (losses)	$ 5.5	$ 9.8	$ (109.4)
—Interest rate caps
Derivative Instruments, Gain (Loss)
Total net fair value gains (losses)	(0.2)	(11.0)	(73.3)
—Currency swaps
Derivative Instruments, Gain (Loss)
Total net fair value gains (losses)	$ 5.7	$ 20.8	$ (36.1)

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Segment information - Reconciliation of Adjusted EBITDA to Net Income (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Segment Reporting Information
Net income from continuing operations									$ 694.7	$ 271.7	$ 182.0
Income tax (benefit) expense									(495.9)	31.8	(72.5)
Income from continuing operations before taxes	$ 27.3	$ 41.9	$ 64.2	$ 65.4	$ 83.8	$ 74.2	$ 104.4	$ 41.1	198.8	303.5	109.5
Interest expense									157.8	175.9	234.6
Other (income) expenses									(9.8)	17.4	58.8
Operating income from continuing operations									346.8	496.8	402.9
Depreciation and amortization									222.2	218.5	212.2
Transaction-related expenses									2.6	6.7	18.1
Impairment of intangibles and other assets									0.7	0.6	2.8
Restructuring expenses									6.0	6.4	17.4
Share-based compensation expense									15.0	6.0	5.4
Sponsor fees (included in other operating expenses)									6.5	8.0	6.7
Impact of fair value adjustment on inventory (included in cost of sales)									0.0	0.3	1.2
Inventory impairments and adjustments (included in cost of sales)									1.2	1.2	2.0
Duplicate expenses incurred on facility relocation									0.0	5.2	0.0
Other items not directly related to current operations									2.6	0.0	0.4
Adjusted EBITDA									611.0	755.8	669.1
Cost of sales
Segment Reporting Information
Severance-related expenses (included in cost of sales)									4.0	1.7	0.0
SG&A
Segment Reporting Information
Other primarily severance-related expenses (included in SG&A)									$ 3.4	$ 4.4	$ 0.0

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Debt - Asset-backed revolver Narratives (Details) - USD ($)	Dec. 28, 2019	Dec. 29, 2018
Revolving credit facility
Line of Credit Facility
Line of credit carrying value		$ 0
Revolving credit facility | Asset-backed revolver
Line of Credit Facility
Maximum borrowing capacity of credit facility	$ 325,000,000
Current borrowing capacity of credit facility	294,600,000	325,000,000
Line of credit carrying value	0	0
Letter of credit sub-facility
Line of Credit Facility
Line of credit carrying value		0
Letter of credit sub-facility | Asset-backed revolver
Line of Credit Facility
Maximum borrowing capacity of credit facility	150,000,000
Line of credit carrying value	$ 50,100,000	$ 57,800,000

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Intangible assets - Schedule of future amortization of finite-lived intangible assets (Details) $ in Millions	Dec. 28, 2019 USD ($)
Fiscal year
—2020	$ 131.6
—2021	131.1
—2022	129.7
—2023	124.5
—2024	$ 123.5

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Significant accounting policies - Goodwill (Details) - USD ($)	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Accounting Policies [Abstract]
Goodwill impairment loss	$ 0	$ 0	$ 0

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Significant accounting policies - Restricted cash (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Accounting Policies [Abstract]
Restricted cash	$ 1.3	$ 1.2	$ 1.6

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Debt - Foreign exchange gains and losses (Details) - Secured debt - Euro Term Loan - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Debt Instrument
Gain (loss) recognized in statement of operations	$ 17.3	$ 43.6	$ (60.2)
Loss recognized in OCI	(0.2)	(6.0)	(36.5)
Total gain (loss)	$ 17.1	$ 37.6	$ (96.7)

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Leases - Balance Sheet Location (Details) $ in Millions	Dec. 28, 2019 USD ($)
Operating leases
Operating lease right-of-use assets	$ 123.0
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”)	19.5
Long-term lease liabilities	114.8
Operating Lease, Liability	134.3
Finance leases
Right-of-use assets	2.8
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”)	0.3
Long-term lease liabilities	1.4
Total lease liabilities	$ 1.7

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Derivative financial instruments

12 Months Ended

Dec. 28, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative financial instruments

Derivative financial instruments

We are exposed to certain risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize derivative instruments as either assets or liabilities in the consolidated balance sheet. We designate certain of our currency swaps as net investment hedges and designate our interest rate caps and interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in OCI and reclassified into net income in the same period or periods during which the hedged transaction affects earnings.

Derivative instruments that have not been designated in an effective hedging relationship are considered economic hedges, and their change in fair value is recognized in net income in each period.

The period end fair values of derivative financial instruments were as follows:

	As of December 28, 2019													As of December 29, 2018
(dollars in millions)	Prepaid expenses and other assets		Other non- 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	$	4.2	$	—	$	—		$	(19.3	)	$	(15.1	)	$	5.4	$	—	$	—		$	(27.5	)	$	(22.1	)
—Interest rate caps	—		—		(4.0		)	(3.0		)	(7.0		)	3.5		1.6		—			(10.9		)	(5.8		)
—Interest rate swaps	—		—		(5.3		)	(29.0		)	(34.3		)	—		—		(0.3		)	(2.6		)	(2.9		)
Derivatives not designated as hedging instruments:
—Currency swaps	—		—		(0.1		)	—			(0.1		)	—		—		—			—			—
—Currency forward contracts	1.2		—		(0.2		)	—			1.0			1.3		—		(0.4		)	—			0.9
	$	5.4	$	—	$	(9.6	)	$	(51.3	)	$	(55.5	)	$	10.2	$	1.6	$	(0.7	)	$	(41.0	)	$	(29.9	)

A. Instruments designated as net investment hedges

We hold cross currency swaps that have been designated as net investment hedges of certain of our European operations. As of December 28, 2019 and December 29, 2018, the notional principal amount of these contracts was $270.0 million. During July 2019, we extended the maturity of these contracts from March 2020 to March 2022. In addition, as of December 28, 2019, we have designated €147.0 million of our Euro-denominated debt as a net investment hedge of certain of our European operations, compared with €30.6 million designated as such as of December 29, 2018.

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Net fair value gains (losses) recognized in OCI in relation to:
—Euro-denominated debt	$	(0.2	)	$	(11.0	)	$	(73.3	)
—Designated cross currency swaps	5.7			20.8			(36.1		)
Total net fair value gains (losses)	$	5.5		$	9.8		$	(109.4	)

During the year endedDecember 28, 2019, a net gain of $7.8 million was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges, compared with a net gain of $2.5 million during the year ended December 29, 2018.

B. Instruments designated as cash flow hedges

We use interest rate swaps and interest rate caps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. As of December 28, 2019 and December 29, 2018, we held three pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $870.0 million, which run from June 30, 2020 through June 30, 2023. Our interest rate caps involve the receipt of variable rate payments from a counterparty if interest rates rise above the strike rate on the contract in exchange for a premium. As of December 28, 2019 and December 29, 2018, the notional amount of the interest rate cap contracts outstanding was $1.7 billion and $2.7 billion, respectively.

The periods covered by our interest rate caps and their notional values are as follows:

(in millions)	Notional value
June 30, 2017 to June 30, 2020	$	200.0
June 28, 2019 to June 30, 2020	$	1,000.0
July 1, 2019 to June 30, 2023	€	425.0

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Movement recognized in OCI in relation to:
—Fair value loss on cash flow hedges	$	(31.7	)	$	(4.5	)	$	(2.0	)
—Deferred premium reclassified from OCI to net income	2.5			5.4			11.6
Total movement	$	(29.2	)	$	0.9		$	9.6

As of December 28, 2019, we expect to reclassify an estimated $10.4 million in OCI, net of taxes, to earnings within the next twelve months associated with cash flow hedges along with the earnings effects of the related forecasted transactions.

C. Derivative instruments not designated as hedging instruments

We do not designate our currency forward contracts, which are used primarily in respect of operational currency exposures related to payables, receivables and material procurement, or the currency swap contracts that are used to manage the currency profile of Gates’ cash as hedging instruments for the purposes of hedge accounting.

As of December 28, 2019, the notional principal amount of outstanding currency swaps that are used to manage the currency profile of Gates’ cash was $16.7 million, compared with $0 as of December 29, 2018.

As of December 28, 2019, the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $82.5 million, compared with $108.0 million as of December 29, 2018.

The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Fair value gains (losses) recognized in relation to:
—Currency forward contracts recognized in SG&A	$	3.0	$	2.4	$	2.8
—Currency swaps recognized in other (income) expenses	0.6		0.6		(0.5		)
Total	$	3.6	$	3.0	$	2.3

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Post-retirement benefits

12 Months Ended

Dec. 28, 2019

Postemployment Benefits [Abstract]

Post-retirement benefits

Post-retirement benefits

A. Defined contribution pension plans

Gates provides defined contribution pension benefits in most of the countries in which it operates; in particular, the majority of its employees in the U.S. are entitled to such benefits.

During Fiscal 2019, the expense recognized by Gates in respect of defined contribution pension plans was $17.9 million, compared with $19.1 million in Fiscal 2018 and $18.6 million in Fiscal 2017.

B. Defined benefit pension plans

Gates operates defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. Generally, the pension benefits provided under these plans are based on pensionable salary and the period of service of the individual employees. Plan assets are held separately from those of Gates in funds that are under the control of trustees. All of the defined benefit pension plans operated by Gates are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees.

Funded status

The net deficit recognized in respect of defined benefit pension plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Pension surplus	$	(38.1	)	$	(52.6	)
Accrued expenses and other current liabilities	2.3			2.4
Post-retirement benefit obligations	98.7			102.4
Net unfunded pension obligation	$	62.9		$	52.2
Plans whose projected benefit obligation was in excess of plan assets:
—Aggregate projected benefit obligation	$	391.7		$	378.2
—Aggregate plan assets	$	290.7		$	273.4
Plans whose accumulated benefit obligation was in excess of the plan assets:
—Aggregate accumulated benefit obligation	$	381.6		$	372.3
—Aggregate plan assets	$	286.2		$	273.0

Benefit obligation

Changes in the projected benefit obligation in relation to defined benefit pension plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Benefit obligation at the beginning of the period	$	827.1		$	932.9
Employer service cost	5.5			5.3
Plan participants’ contributions	0.2			0.2
Plan amendments	—			11.4
Interest cost	23.4			23.6
Net actuarial loss (gain)	83.1			(41.1		)
Benefits paid	(51.6		)	(56.5		)
Expenses paid from assets	(2.3		)	(1.8		)
Curtailments and settlements	(3.6		)	(13.4		)
Foreign currency translation	16.3			(33.5		)
Benefit obligation at the end of the period	$	898.1		$	827.1
Accumulated benefit obligation	$	892.4		$	821.3

Changes in plan assets

Changes in the fair value of the assets held by defined benefit pension plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Plan assets at the beginning of the period	$	774.9		$	893.6
Actual return on plan assets	90.4			(19.7		)
Employer contributions	8.5			8.9
Plan participants’ contributions	0.2			0.2
Curtailments and settlements	(2.3		)	(13.4		)
Benefits paid	(51.6		)	(56.5		)
Expenses paid from assets	(2.3		)	(1.8		)
Foreign currency translation	17.4			(36.4		)
Plan assets at the end of the period	$	835.2		$	774.9

During December 2018, we reflected a plan amendment in respect of certain of our U.K. pension plans. This amendment arose as a result of a recent U.K. High Court ruling in a case unrelated to Gates that has consequences for many U.K. pension plans. The amendment relates to the equalization of benefits in order to address inequalities that arise due to differing guaranteed minimum pension entitlements for men and women. The resulting increase of $11.4 million in the pension liability has been accounted for through OCI as a prior year service cost.

Gates’ desired investment objectives for pension plan assets include maintaining an adequate level of diversification to reduce interest rate and market risk, and to provide adequate liquidity to meet immediate and future benefit payment requirements. Outside the U.S., Gates’ defined benefit pension plans target a mix of growth seeking assets, comprising equities, and income generating assets, comprising government and corporate bonds, that is considered by the trustees to be appropriate in the circumstances. Plan assets are rebalanced periodically to maintain target asset allocations.

Certain benefit obligations outside the U.S. are matched by insurance contracts.

Investments in equities and fixed income securities are held in pooled investment funds that are managed by investment managers on a passive (or “index-tracking”) basis. The trustees ensure that there is no significant concentration of credit risk in any one financial institution.

Plan assets do not include any financial instruments issued by, any property occupied by, or other assets used by Gates.

The fair values of pension plan assets by asset category were as follows:

	As of December 28, 2019								As of December 29, 2018
(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Collective investment trusts:
Equity Securities	$	—	$	102.7	$	—	$	102.7	$	—	$	83.2	$	—	$	83.2
Debt Securities
—Corporate bonds	—		207.9		—		207.9		—		156.5		—		156.5
—Government bonds	—		231.3		—		231.3		—		302.9		—		302.9
Annuities and insurance	—		48.7		235.9		284.6		—		4.0		223.9		227.9
Cash and cash equivalents	8.7		—		—		8.7		4.4		—		—		4.4
Total	$	8.7	$	590.6	$	235.9	$	835.2	$	4.4	$	546.6	$	223.9	$	774.9

Investments in equities and bonds held in pooled investment funds are measured at the bid price quoted by the investment managers, which reflect the quoted prices of the underlying securities. Insurance contracts are measured at their surrender value quoted by the insurers. Cash and cash equivalents largely attract floating interest rates.

Changes in the fair value of plan assets measured using significant unobservable inputs (level 3) were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Fair value at the beginning of the period	$	224.0		$	248.1
Actual return on plan assets	17.9			(0.3		)
Purchases	1.4			1.7
Sales	(0.9		)	(0.9		)
Impacts of benefits paid	(12.3		)	(10.5		)
Foreign currency translation	5.8			(14.1		)
Fair value at the end of the period	$	235.9		$	224.0

Estimated future contributions and benefit payments

Gates’ funding policy for its defined benefit pension plans is to contribute amounts determined annually on an actuarial basis to provide for current and future benefits in accordance with federal law and other regulations. During Fiscal 2020, Gates expects to contribute approximately $4.3 million to its defined benefit pension plans.

Benefit payments, reflecting expected future service, are expected to be made by Gates’ defined benefit pension plans as follows:

(dollars in millions)
Fiscal year
—2020	$	48.2
—2021	46.8
—2022	48.3
—2023	47.8
—2024	47.6
—2025 through 2029	239.2

Net periodic benefit cost

Components of the net periodic benefit cost for defined benefit pension plans relating to continuing operations were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Employer service cost	$	5.5		$	5.3		$	5.8
Settlements and curtailments	(0.6		)	0.3			(3.8		)
Interest cost	23.4			23.6			30.4
Expected return on plan assets	(27.8		)	(22.6		)	(26.9		)
Amortization of prior net actuarial loss	—			0.1			0.4
Amortization of prior service cost	0.8			0.1			—
Net periodic benefit cost	$	1.3		$	6.8		$	5.9

Other comprehensive income

Changes in plan assets and benefit obligations of defined benefit pension plans recognized in OCI were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current period net actuarial loss (gain)	$	20.5		$	1.2		$	(20.9	)
Amortization of prior net actuarial loss	—			(0.1		)	(0.4		)
Prior service cost	—			11.4			0.7
Amortization of prior service cost	(0.8		)	(0.1		)	—
(Gain) loss recognized due to settlements and curtailments	(0.8		)	(0.3		)	3.8
Pre-tax changes recognized in OCI other than foreign currency translation	18.9			12.1			(16.8		)
Foreign currency translation	1.0			(0.1		)	(0.9		)
Total pre-tax changes recognized in OCI	$	19.9		$	12.0		$	(17.7	)

Cumulative losses (gains) before tax recognized in OCI in respect of post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Actuarial loss	$	21.2		$	1.5		$	0.7
Prior service costs	11.1			11.9			0.6
Foreign currency translation	(2.9		)	(3.9		)	(3.8		)
Cumulative total	$	29.4		$	9.5		$	(2.5	)

It is estimated that a net $1.0 million loss will be amortized from accumulated other comprehensive loss into net periodic benefit cost during the period from December 29, 2019 through January 2, 2021.

Assumptions

Major assumptions used in determining the benefit obligation and the net periodic benefit cost for defined benefit pension plans are presented in the following table as weighted averages:

	As of December 28, 2019		As of December 29, 2018
Benefit obligation:
—Discount rate	2.261	%	2.932	%
—Rate of salary increase	3.173	%	3.190	%
Net periodic benefit cost:
—Discount rate	2.932	%	2.619	%
—Rate of salary increase	3.190	%	3.178	%
—Expected return on plan assets	3.622	%	2.844	%

In determining the expected return on plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance. Return projections are validated using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns.

C. Other defined benefit plans

Gates provides other post-employment benefits, principally health and life insurance cover, on an unfunded basis to certain of its employees in the U.S. and Canada.

Funded status

The deficit recognized in respect of other defined benefit plans is presented in the balance sheet as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued expenses and other current liabilities	$	5.4	$	6.5
Post-retirement benefit obligations	52.5		53.5
	$	57.9	$	60.0

Benefit obligation

Changes in the accumulated benefit obligation in relation to other defined benefit plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Benefit obligation at the beginning of the period	$	60.0		$	68.4
Interest cost	2.3			2.2
Actuarial gain	(1.8		)	(4.8		)
Benefits paid	(3.5		)	(4.1		)
Foreign currency translation	0.9			(1.7		)
Benefit obligation at the end of the period	$	57.9		$	60.0
Accumulated benefit obligation	$	57.9		$	60.0

Estimated future contributions and benefit payments

Contributions are made to our other defined benefit plans as and when benefits are paid from the plans. During Fiscal 2020, Gates expects to contribute approximately $5.5 million to its other benefit plans.

Benefit payments, reflecting expected future service, are expected to be made by Gates’ other defined benefit plans as follows:

(dollars in millions)
Fiscal years:
—2020	$	5.5
—2021	5.2
—2022	4.9
—2023	4.6
—2024	4.3
—2025 through 2029	18.3

Net periodic benefit cost

Components of the net periodic benefit cost for other defined benefit plans were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Interest cost	$	2.3		$	2.2		$	2.7
Amortization of prior net actuarial gain	(0.8		)	(0.4		)	(0.2		)
Amortization of prior service credit	(0.4		)	(0.4		)	(0.1		)
Net periodic benefit cost	$	1.1		$	1.4		$	2.4

The net periodic benefit cost relates entirely to continuing operations.

Other comprehensive income

Changes in the benefit obligation of other defined benefit plans recognized in OCI were as follows: 

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current period net actuarial gain	$	(1.8	)	$	(4.8	)	$	(3.9	)
Amortization of prior net actuarial gain	0.8			0.4			0.2
Prior service credit	—			—			(4.3		)
Amortization of prior service credit	0.4			0.4			0.1
Pre-tax changes recognized in OCI other than foreign currency translation	(0.6		)	(4.0		)	(7.9		)
Foreign currency translation	(0.2		)	—			—
Total pre-tax changes recognized in OCI	$	(0.8	)	$	(4.0	)	$	(7.9	)

Cumulative gains before tax recognized in OCI in respect of other post-retirement benefits that had not yet been recognized as a component of the net periodic benefit cost were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Actuarial gains	$	(17.3	)	$	(16.3	)	$	(11.9	)
Prior service credits	(3.4		)	(3.8		)	(4.2		)
Other adjustments	0.2			0.2			0.2
Foreign currency translation	(0.2		)	—			—
Cumulative total	$	(20.7	)	$	(19.9	)	$	(15.9	)

It is estimated that a $1.4 million gain will be amortized from accumulated other comprehensive income into net periodic benefit cost during the period from December 29, 2019 through January 2, 2021.

Assumptions

Major assumptions used in determining the benefit obligation and the net periodic benefit cost for other defined benefit plans are presented in the following table as weighted averages:

	Benefit obligation				Net periodic benefit cost
	As of December 28, 2019		As of December 29, 2018		As of December 28, 2019		As of December 29, 2018
Discount rate	3.08	%	4.01	%	4.01	%	3.42	%

The initial healthcare cost trend rate as of December 28, 2019, starts at 6.56%, compared with 7.01% as of December 29, 2018, with an ultimate trend rate of 4.93%, compared with 4.94% as of December 29, 2018, beginning in 2023.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percentage point change in the assumed health care cost trend rate as of December 28, 2019 would have the following effects:

(dollars in millions)	1% point increase		1% point decrease
Increase (decrease) in the total of service and interest cost	$	0.1	$	(0.2	)
Increase (decrease) in the benefit obligation	$	2.1	$	(1.8	)

Post-retirement benefits

Gates provides defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. All of the defined benefit pension plans are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees.

Gates also provides other post-retirement benefits, principally health and life insurance coverage, on an unfunded basis to certain of its employees in the U.S. and Canada.

Net periodic benefit cost

The components of the net periodic benefit cost for pensions and other post-retirement benefits were as follows:

	Three months ended December 28, 2019									Three months ended December 29, 2018
(dollars in millions)	Pensions			Other post-retirement benefits			Total			Pensions			Other post-retirement benefits			Total
Reported in operating income:
—Employer service cost	$	1.3		$	—		$	1.3		$	1.3		$	—		$	1.3
Reported outside of operating income:
—Interest cost	5.8			0.6			6.4			5.8			0.6			6.4
—Expected return on plan assets	(7.0		)	—			(7.0		)	(5.6		)	—			(5.6		)
—Net amortization of prior period losses (gains)	0.2			(0.3		)	(0.1		)	—			(0.1		)	(0.1		)
—Settlements and curtailments	—			—			—			0.1			—			0.1
Net periodic benefit cost	$	0.3		$	0.3		$	0.6		$	1.6		$	0.5		$	2.1
Contributions	$	1.9		$	0.8		$	2.7		$	1.7		$	1.2		$	2.9

	Year ended December 28, 2019									Year ended December 29, 2018
(dollars in millions)	Pensions			Other post-retirement benefits			Total			Pensions			Other post-retirement benefits			Total
Reported in operating income:
—Employer service cost	$	4.1		$	—		$	4.1		$	4.0		$	—		$	4.0
Reported outside of operating income:
—Interest cost	17.6			1.7			19.3			17.7			1.7			19.4
—Expected return on plan assets	(20.9		)	—			(20.9		)	(17.0		)	—			(17.0		)
—Net amortization of prior period losses (gains)	0.6			(0.9		)	(0.3		)	0.1			(0.5		)	(0.4		)
—Settlements and curtailments	(0.7		)	—			(0.7		)	0.4			—			0.4
Net periodic benefit cost	$	0.7		$	0.8		$	1.5		$	5.2		$	1.2		$	6.4
Contributions	$	5.3		$	2.8		$	8.1		$	5.7		$	3.2		$	8.9

The components of the above net periodic benefit cost for pensions and other post-retirement benefits that are reported outside of operating income are all included in the other (income) expenses line in the consolidated statement of operations.

For 2019 as a whole, we expect to contribute approximately $4.6 million to our defined benefit pension plans and approximately $6.7 million to our other post-retirement benefit plans.

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Property, plant and equipment

12 Months Ended

Dec. 28, 2019

Property, Plant and Equipment [Abstract]

Property, plant and equipment

Property, plant and equipment

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Cost
Land and buildings	$	318.6		$	313.3
Machinery, equipment and vehicles	819.4			736.0
Assets under construction	49.8			84.3
	1,187.8			1,133.6
Less: Accumulated depreciation and impairment	(459.9		)	(377.3		)
Total	$	727.9		$	756.3

During Fiscal 2019, the depreciation expense in relation to the above assets was $92.3 million, compared with $87.8 million during Fiscal 2018 and $81.3 million during Fiscal 2017. During Fiscal 2019, no interest was capitalized to property, plant and equipment in relation to the construction of qualifying assets, compared with $4.5 million during Fiscal 2018. No interest was capitalized during Fiscal 2017.

During Fiscal 2019, an impairment of property, plant and equipment of $0.7 million was recognized, compared to $2.7 million in Fiscal 2018, which included $2.1 million reported in restructuring expenses in relation to the planned closure of a facility in Europe. No significant impairments were recognized in relation to property, plant and equipment during Fiscal 2017.

Property, plant and equipment includes assets held under finance leases with a carrying amount of $2.8 million as of December 28, 2019, compared with $2.2 million as of December 29, 2018.

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and are secured by liens on substantially all of their assets, including property, plant and equipment.

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Significant accounting policies

12 Months Ended

Dec. 28, 2019

Accounting Policies [Abstract]

Significant accounting policies

Significant accounting policies

A. Basis of presentation

The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated.

The accounting policies used in preparing these consolidated financial statements and related notes are the same as those applied in the prior period, except for the adoption of the following new Accounting Standard Updates (each, an “ASU”) at the beginning of our 2019 fiscal year:

• ASU 2016-02 “Leases” (Topic 842)

• ASU 2018-10 “Leases” (Topic 842): Codification Improvements to Topic 842, Leases

• ASU 2018-11 “Leases” (Topic 842): Targeted Improvements

• ASU 2019-01 “Leases” (Topic 842): Codification Improvements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU which introduces a lessee model that has brought most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease.” This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee.

We have adopted Topic 842 using the practical expedient permitted by ASU 2018-11, and, consequently, comparative information in these consolidated financial statements has not been restated.

We applied the following additional practical expedients on transition to Topic 842:

(i) we did not reassess whether or not any expired or existing contracts were or contained leases;

(ii) we did not reassess the lease classification for any expired or existing leases (i.e., all existing leases that were classified as operating leases continued to be classified as such under Topic 842, and all existing leases that were classified as capital leases continued to be classified as finance leases); and

(iii) we did not reassess any initial direct costs for leases existing on the date of adoption of Topic 842.

On transition, we recognized a right-of-use asset of $126.0 million and a lease liability of $132.9 million, with the difference relating primarily to reclassifying deferred rent liabilities that existed under Topic 840 “Leases” into the new right-of-use asset. Note 13 sets out disclosures related to Topic 842.

The following ASUs that were also adopted on the first day of the 2019 fiscal year did not have a significant impact on our results, financial position or disclosures:

• ASU 2018-07 “Compensation - Stock Compensation” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

• ASU 2018-16 “Derivatives and Hedging” (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

In addition, we adopted ASU 2018-02 “Income Statement - Reporting Comprehensive Income” (Topic 220): Reclassification of Certain Tax Effects from Accumulated OCI; however, we have not adopted the policy election outlined therein regarding the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The remaining stranded tax effects in accumulated other comprehensive income will be released upon recognition of the related deferred tax basis differences.

B. Accounting periods

The Company prepares its annual consolidated financial statements as of the Saturday nearest December 31. Accordingly, the consolidated balance sheets are presented as of December 28, 2019 and December 29, 2018 and the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented for the years ended December 28, 2019 (“Fiscal 2019”), December 29, 2018 (“Fiscal 2018”) and December 30, 2017 (“Fiscal 2017”).

C. Basis of consolidation

The consolidated financial statements include the results of operations, cash flows and assets and liabilities of Gates and its majority-owned subsidiaries, and our share of the results of our equity method investees.

We consolidate entities in which we have a controlling interest or when we are considered the primary beneficiary of a variable interest entity. The consolidated financial statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the non-controlling parties’ ownership interest is presented as a non-controlling interest. Intercompany transactions and balances, and any unrealized profits or losses arising from intercompany transactions, are eliminated on consolidation.

D. Foreign currency transactions and translation

Transactions denominated in currencies other than the entity’s functional currency (foreign currencies) are translated into the entity’s functional currency at the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on the reporting date. Exchange differences arising from changes in exchange rates are recognized in net income for the period. The net foreign currency transaction loss included in operating income from continuing operations during Fiscal 2019 was $1.7 million, compared with a loss of $4.0 million in Fiscal 2018 and a loss of $7.6 million in Fiscal 2017. We also recognized net financing-related foreign currency transaction gains within other (income) expenses of $0.8 million during Fiscal 2019, compared with a gain of $8.7 million in Fiscal 2018 and a loss of $57.4 million in Fiscal 2017.

On consolidation, the results of operations of entities whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period and their assets and liabilities are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Currency translation differences are recognized within other comprehensive income (“OCI”) as a separate component of accumulated OCI. In the event that a foreign operation is sold, or substantially liquidated, the cumulative currency translation differences that are attributable to the operation are reclassified to net income.

In the statement of cash flows, the cash flows of operations whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rate for the period.

E. Net sales

Gates derives its net sales primarily from the sale of a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.

Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply the five-step model under Topic 606 (“Revenue from Contracts with Customers”) to all contracts. The five steps are: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a performance obligation.

In the substantial majority of our agreements with customers, we consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transaction prices often include variable consideration, usually in the form of discounts and rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the consideration that is not probable of significant reversal.

We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price.

In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, we consider if there is a present right to payment, legal title and physical possession has been transferred, whether the risks and rewards of ownership have transferred to the customer, and if the customer accepts the asset.

F. Selling, general and administrative expenses

Shipping and handling costs

Costs of outbound shipping and handling are included in SG&A. During Fiscal 2019, we recognized shipping and handling costs of $145.2 million, compared with $159.9 million in Fiscal 2018 and $147.0 million in Fiscal 2017.

Research and development costs

Research and development costs are charged to net income in the period in which they are incurred. Our research and development expense was $67.9 million in Fiscal 2019, compared with $71.4 million in Fiscal 2018 and $68.6 million in Fiscal 2017. These costs related primarily to product development and also to technology to enhance manufacturing processes.

Advertising costs

Advertising costs are expensed as incurred and included in SG&A. During Fiscal 2019, we recognized advertising costs of $10.2 million, compared with $10.4 million in Fiscal 2018 and $10.4 million in Fiscal 2017.

G. Restructuring expenses

Restructuring expenses are incurred in major projects undertaken to rationalize and improve our cost competitiveness. Restructuring expenses incurred during the periods presented are analyzed in note 6.

Liabilities in respect of termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement are recognized over the future service period when those employees are required to render services to the entity beyond the minimum retention period. If employees are not required to render service until they are terminated or if they will not be retained to render service beyond 60 days or a longer legal notification period, the liability is recognized on the communication date.

Termination benefits that are covered by a contract or an ongoing benefit arrangement are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Benefits that are offered for a short period of time in exchange for voluntary termination are recognized when the employees accept the offer.

Restructuring expenses other than termination benefits and lease exit costs are recognized only when the Company has incurred a related liability.

H. Business combinations

A business combination is a transaction or other event in which control is obtained of one or more businesses.

Consideration transferred in a business combination is measured at the aggregate of the fair values of the assets acquired, liabilities assumed, debt issued and equity instruments issued in exchange for control over the acquired business. Acquisition-related costs are recognized in net income in the period in which they are incurred.

Identifiable assets and liabilities of the acquired business, as well as any non-controlling interests in the acquired business, are measured at their fair value at the acquisition date.

Goodwill arising in a business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and, in a business combination achieved in stages, the fair value at the acquisition date of the previously held equity interest in the acquired business, over the net identifiable assets and liabilities of the acquired business at the acquisition date. If the net identifiable assets and liabilities of the acquired business exceed the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquired business and the fair value at the acquisition date of any previously held equity interest, that excess is recognized as a gain in net income.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. If, within a maximum of one year after the acquisition date, new information is obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date, adjustments are made to the amounts recognized, or new assets and liabilities recognized with a corresponding adjustment to goodwill. Otherwise, any adjustments to the provisional amounts are recognized in net income.

I. Goodwill

Goodwill arising in a business combination is allocated to the reporting unit that is expected to benefit from the synergies of the acquisition.

Where goodwill is attributable to more than one reporting unit, the goodwill is determined by allocating the purchase consideration in proportion to their respective business enterprise values and comparing the allocated purchase consideration with the fair value of the identifiable assets and liabilities of the reporting unit. Goodwill is not amortized but is tested for impairment on the first day of the fourth quarter or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable and is carried at cost less any recognized impairment. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2019, Fiscal 2018 or Fiscal 2017.

To identify a potential impairment of goodwill, the fair value of the reporting unit to which the goodwill is allocated is compared with its carrying amount, including goodwill. We calculate fair values using a weighted blend of income and market approaches. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the fair value is lower than the carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill allocated to that reporting unit.

J. Other intangible assets

Other intangible assets are stated at cost less accumulated amortization and any recognized impairment.

(i) Assets acquired in business combinations

An acquired intangible asset with a finite useful life is amortized on a straight-line basis so as to charge its cost, which represents its fair value at the date of acquisition, to net income over the Company’s expectation of its useful life, as follows:

Customer relationships	15 to 17 years
Technology	5 to 7 years

Acquired brands and trade names are considered to have an indefinite useful life and are not amortized but are tested at least annually for impairment and are carried at cost less any recognized impairment.

(ii) Computer software

Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset. Computer software is amortized on a straight-line basis over its estimated useful life, which ranges from 2 to 6 years.

K. Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and any recognized impairment losses. Major improvements are capitalized. Expenditures for repairs and maintenance that do not significantly extend the useful life of the asset are expensed as incurred.

Land and assets under construction are not depreciated. Depreciation of property, plant and equipment, other than land and assets under construction, is generally expensed on a straight-line basis over their estimated useful lives. The Company’s estimated useful lives of items of property, plant and equipment are generally in the following ranges:

Buildings and improvements	30 to 40 years
Leasehold improvements	Shorter of lease term or useful life
Machinery, equipment and vehicles	2 to 20 years

L. Impairment of long-lived assets and intangible assets

Long-lived assets and intangible assets to be held and used, except intangible assets with indefinite useful lives, are reviewed for impairment when events or circumstances indicate that the carrying amount of the asset or asset group may not be recoverable.

Intangible assets with indefinite useful lives are tested at least annually for impairment or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. A long-lived asset, or finite lived intangible asset or asset group is considered to be impaired when the undiscounted expected future cash flows from the asset or asset group are less than its carrying amount. In that event, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. Fair value is estimated as the present value of the expected future cash flows from the asset or asset group discounted at a rate commensurate with the risk involved. An impairment loss for an asset group is allocated to the long-lived and intangible assets of the group on a pro rata basis using the relative carrying amounts of those assets, with the limitation that the carrying amount of an individual asset is not reduced below its fair value.

M. Inventories

Inventories are stated at the lower of cost or net realizable value. A valuation adjustment is made to inventory for any excess, obsolete or slow moving items based on management’s review of on-hand inventories compared with historical and estimated future sales and usage profiles. Any consequent write down of inventory results in a new cost basis for inventory.

Cost represents the expenditure incurred in bringing inventories to their existing location and condition, which may include the cost of raw materials, direct labor costs, other direct costs and related production overheads. Cost is generally determined on a first in, first out (“FIFO”) basis, but the cost of certain inventories is determined on a last in, first out (“LIFO”) basis. As of December 28, 2019, inventories whose cost was determined on a LIFO basis represented 32.5% of the total carrying amount of inventories compared with 31.6% as of December 29, 2018.

N. Financial instruments

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits available on demand and other short-term, highly liquid investments with maturities on acquisition of 90 days or less. We have cash concentrations in certain large, highly-rated global financial institutions. Management closely monitors the credit quality of the institutions in which it holds deposits.

(ii) Restricted cash

Restricted cash, which is included in the prepaid expenses and other assets line in the consolidated balance sheet, includes cash given as collateral under letters of credit for insurance and regulatory purposes. Cash and cash equivalents for the purposes of the consolidated statement of cash flows includes restricted cash of $1.3 million as of December 28, 2019, compared with $1.2 million and $1.6 million as of December 29, 2018 and December 30, 2017, respectively.

(iii) Trade accounts receivable

Trade accounts receivable represent the amount of sales of goods to customers, net of discounts and rebates, for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information.

(iv) Debt

Debt is initially measured at its principal amount, net of directly attributable transaction costs, if any, and is subsequently measured at amortized cost using the effective interest rate method.

(v) Accounts payable

Accounts payable represents the amount of invoices received from suppliers for purchases of goods and services and the amount of goods received but not invoiced, for which payment has not been made.

(vi) Derivative financial instruments

We use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize all derivative financial instruments as either assets or liabilities at fair value on the balance sheet date. The accounting for the change in the fair value is recognized in net income based on the nature of the items being hedged unless the financial instrument has been designated in an effective cash flow or net investment hedging relationship, in which case the change in fair value is recognized in OCI.

(vii) Investments

Equity investments are measured at fair value. Subsequent to the adoption of ASU 2016-01 “Financial Instruments” at the beginning of Fiscal 2018, changes in the fair value of equity investments are recognized in net income. Prior to this, changes in their fair values were recognized in OCI.

(viii) Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities that are held at fair value, or for which fair values are presented in these consolidated financial statements, have been categorized into one of three levels to reflect the degree to which observable inputs are used in determining the fair values. Where a change in the determination of the fair value of a financial asset or liability results in a transfer between the levels of the fair value hierarchy, we recognize that transfer at the end of the reporting period.

O. Post-retirement benefits

Post-retirement benefits comprise pension benefits provided to employees and other benefits, mainly healthcare, provided to certain employees in North America.

We account for our post-retirement benefit plans in accordance with Topic 715 “Compensation – Retirement Benefits”, which is based on the principle that the cost of providing these benefits is recognized in net income over the service periods of the participating employees.

For defined benefit plans, the net obligation or surplus arising from providing the benefits is recognized as a liability or an asset determined by actuarial valuations of each of the plans that are carried out annually by independent qualified actuaries as of the year end balance sheet date. Benefit obligations are measured using the projected unit credit method. Plan assets (if any) are measured at fair value. We recognize the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components of the net periodic benefit cost (which include the interest cost, the expected return on plan assets, gains or losses on settlements and curtailments, the amortization of prior year service cost or credit and prior year actuarial gains and losses) are included in the other (expenses) income line, outside of operating income from continuing operations.

Actuarial gains and losses represent differences between the expected and actual returns on the plan assets, gains and losses on the plan liabilities and the effect of changes in actuarial assumptions. We use the “corridor approach” whereby, to the extent that cumulative actuarial gains and losses exceed 10% of the greater of the market related value of the plan assets and the projected benefit obligation at the beginning of the fiscal year, they are reclassified from accumulated other comprehensive income to net income over the average remaining service periods of participating employees.

Gains and losses on settlements and curtailments are recognized in net income in the period in which the curtailment or settlement occurs.

P. Share-based compensation

Share-based compensation has historically been provided to certain of our employees under share option, bonus and other share award plans. All share-award plans are equity settled, except for certain awards issued in the form of stock appreciation rights to employees in China, where local regulations necessitate a cash-settled award. These awards are therefore accounted for as liabilities rather than equity.

We recognize compensation expense based on the fair value of the awards, measured using either the share price on the date of grant, a Black-Scholes option-pricing model or a Monte-Carlo valuation model, depending on the nature of the award. Fair value is determined at the date of grant and reflects market and performance conditions and all non-vesting conditions.

Generally, the compensation expense for each separately vesting portion of the award is recognized on a straight-line basis over the vesting period for that portion of the award. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions or performance conditions.

For equity awards, fair value is not subsequently remeasured unless the conditions on which the award was granted are modified. An amount corresponding to the compensation expense for equity awards is recognized in equity as additional paid in capital.

For liability awards, the fair value is remeasured each period and the change in fair value is recognized in net income for the period with a corresponding change in the outstanding liability.

Q. Income taxes

Current tax is the amount of tax payable or receivable in respect of the taxable income for the period. Taxable income differs from financial reporting income because it excludes items of income or expense recognized for financial reporting purposes that are either not taxable or deductible for tax purposes or are taxable or deductible in other periods. Current tax is calculated using tax rates that have been enacted at the balance sheet date.

Management assesses unrecognized tax benefits based upon an evaluation of the facts, circumstances and information available at the balance sheet date. Provision is made for unrecognized tax benefits to the extent that the amounts previously taken or expected to be taken in tax returns exceeds the tax benefits that are recognized in the consolidated financial statements in respect of the tax positions. A tax benefit is recognized in the consolidated financial statements only if management considers that it is more likely than not that the tax position will be sustained on examination by the relevant tax authority solely on the technical merits of the position and is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement assuming that the tax authority has full knowledge of all relevant information. Provisions for unrecognized tax benefits are reviewed regularly and are adjusted to reflect events such as the expiration of limitation periods for assessing tax, guidance given by the tax authorities and court decisions.

Interest and penalties relating to unrecognized tax benefits are accrued in accordance with the applicable tax legislation on any excess of the tax benefit claimed or expected to be claimed in a tax return and the tax benefit recognized in the consolidated financial statements. Interest and penalties are recognized as a component of income tax benefit (expense) in the consolidated statement of operations and accrued interest and penalties are included under the related taxes payable line in the consolidated balance sheet.

Deferred tax assets and liabilities are recognized based on the expected future tax consequences of the difference between the financial statement carrying amount and the respective tax basis. Deferred taxes are measured on the enacted rates expected to apply to taxable income at the time the difference is anticipated to reverse. Deferred tax assets are reduced through the establishment of a valuation allowance if it is more likely than not that the deferred tax asset will not be realized taking into account the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies.

Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis or to remit such amounts in a tax free manner.

R. Use of estimates

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for rebates, post-retirement benefits, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, share-based compensation, product warranties and income taxes. Estimates and assumptions used are based on factors such as historical experience, the observance of trends in the industries in which we operate and information available from our customers and other outside sources. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes could differ from those assumptions and estimates.

Recent accounting pronouncements not yet adopted

The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted.

• ASU 2016-13 “Financial Instruments” (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for financial assets. The financial asset must be measured at the net amount expected to be collected.

The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We currently do not expect that adoption of this ASU will have a significant impact on our consolidated financial statements, but it may affect certain disclosures.

• ASU 2018-13 “Fair Value Measurement” (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued an ASU to modify the disclosure requirements on fair value measurements in Topic 820 “Fair Value Measurement” including the consideration of costs and benefits. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Most of the amendments should be applied retrospectively to all periods presented, but a few amendments should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. We expect that the adoption of this ASU will not have a significant impact on our financial instrument disclosures, but we are still finalizing our evaluation.

• ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued an ASU to modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The amendments remove certain disclosures, clarify other disclosure requirements, and add new disclosure requirements that have been identified as relevant.

The amendments are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. The impact on our consolidated financial statements of adopting this ASU, which will affect our disclosures, is still being evaluated.

• ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software” (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued an ASU to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement). The guidance permits capitalization of costs associated with the implementation of cloud-based software arrangements and aligns the criteria for capitalization with those for purchased or internally-generated computer software intangible assets. Implementation costs meeting the criteria for capitalization would not be classified as intangible assets but would instead be classified as prepaid expenses that are then amortized over the period of the arrangement as an additional expense consistent with the ongoing costs under the cloud computing arrangement.

The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and entities may choose to apply the requirements either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We do not expect any significant impact on our consolidated financial statements on adoption of this ASU.

• ASU 2019-12 “Simplifying the Accounting for Income Taxes” (Topic 740): Income Taxes

In December 2019, the FASB issued an ASU to simplify and reduce the complexity of general principles in Topic 740: Income Taxes. Such simplifications include the elimination of certain exceptions to: 1) the incremental approach for intraperiod tax allocation, 2) the requirement to recognize a deferred income tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) the ability not to recognize a deferred income tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and 4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

The amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The ASU provides for a number of different approaches to applying the changes, depending on the amendment, from full retrospective to modified retrospective to fully prospective. The impact on our consolidated financial statements of adopting this ASU is still being evaluated.

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Restructuring and other strategic initiatives

12 Months Ended

Dec. 28, 2019

Restructuring and Related Activities [Abstract]

Restructuring and other strategic initiatives

Restructuring and other strategic initiatives

Gates continues to undertake various restructuring and other strategic initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, combine back-office workgroups and relocate certain operations to lower cost locations. Our recently completed manufacturing footprint investments and other productivity improvements in recent years have helped to position us to accelerate and expand upon our previously announced restructuring program, which is primarily intended to optimize our manufacturing and distribution footprint over the mid-term by removing structural fixed costs, and, to a lesser degree, to streamline our SG&A back-office functions.

Overall costs associated with our restructuring and other strategic initiatives have been recognized in the consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Restructuring expenses:
—Severance	$	4.7		$	0.5	$	13.6
—Professional fees	1.6			3.5		3.2
—Other restructuring (benefits) expenses	(0.3		)	2.4		0.6
	6.0			6.4		17.4
Restructuring expenses in cost of sales:
—Impairment of inventory	1.2			0.4		2.0
—Other restructuring expenses	—			0.5		0.2
Total restructuring expenses	$	7.2		$	7.3	$	19.6
Expenses related to other strategic initiatives:
—Severance costs included in cost of sales	$	4.0		$	1.2	$	—
—Severance costs included in SG&A	3.4			3.1		—
—Impairment of fixed assets	0.7			—		—
Total expenses related to other strategic initiatives	$	8.1		$	4.3	$	—

Restructuring and other strategic initiatives undertaken during the year ended December 28, 2019 related primarily to reductions in workforce, across all regions and impairments of inventory and fixed assets related to facility closures in countries including France, the U.S., Turkey and Australia. An additional $1.6 million of professional fees were incurred during Fiscal 2019, relating primarily to the closure of one of our facilities in France, the implementation of our European corporate center, and a strategic restructuring of part of our Asian business. Expenses incurred during the prior year in connection with our restructuring and other strategic initiatives also related primarily to the items described above.

Restructuring activities

As indicated above, restructuring expenses, as defined under U.S. GAAP, form a subset of our total expenses related to restructuring and other strategic initiatives. These expenses include the impairment of inventory, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	3.5	$	2.8	$	11.1
Fluid Power	3.7		4.5		8.5
Continuing operations	$	7.2	$	7.3	$	19.6

The following summarizes the reserve for restructuring expenses for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Balance as of the beginning of the period	$	2.6		$	8.6
Utilized during the period	(5.7		)	(13.5		)
Net charge for the period	6.1			8.0
Released during the period	(0.1		)	(0.7		)
Foreign currency translation	—			0.2
Balance as of the end of the period	$	2.9		$	2.6

Restructuring reserves, which are expected to be utilized in 2020, are included in the consolidated balance sheet as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued expenses and other current liabilities	$	2.9	$	2.2
Other non-current liabilities	—		0.4
	$	2.9	$	2.6

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Restructuring and other strategic initiatives (Tables)

12 Months Ended

Dec. 28, 2019

Restructuring and Related Activities [Abstract]

Schedule of restructuring costs

These expenses include the impairment of inventory, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:

	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	3.5	$	2.8	$	11.1
Fluid Power	3.7		4.5		8.5
Continuing operations	$	7.2	$	7.3	$	19.6

Overall costs associated with our restructuring and other strategic initiatives have been recognized in the consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Restructuring expenses:
—Severance	$	4.7		$	0.5	$	13.6
—Professional fees	1.6			3.5		3.2
—Other restructuring (benefits) expenses	(0.3		)	2.4		0.6
	6.0			6.4		17.4
Restructuring expenses in cost of sales:
—Impairment of inventory	1.2			0.4		2.0
—Other restructuring expenses	—			0.5		0.2
Total restructuring expenses	$	7.2		$	7.3	$	19.6
Expenses related to other strategic initiatives:
—Severance costs included in cost of sales	$	4.0		$	1.2	$	—
—Severance costs included in SG&A	3.4			3.1		—
—Impairment of fixed assets	0.7			—		—
Total expenses related to other strategic initiatives	$	8.1		$	4.3	$	—

Schedule of restructuring reserves activity

The following summarizes the reserve for restructuring expenses for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018
Balance as of the beginning of the period	$	2.6		$	8.6
Utilized during the period	(5.7		)	(13.5		)
Net charge for the period	6.1			8.0
Released during the period	(0.1		)	(0.7		)
Foreign currency translation	—			0.2
Balance as of the end of the period	$	2.9		$	2.6

Restructuring reserves, which are expected to be utilized in 2020, are included in the consolidated balance sheet as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued expenses and other current liabilities	$	2.9	$	2.2
Other non-current liabilities	—		0.4
	$	2.9	$	2.6

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Commitments and contingencies

12 Months Ended

Dec. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

A. Capital and other commitments

As of December 28, 2019, we had entered into contractual commitments for the purchase of property, plant and equipment amounting to $5.3 million, compared with $18.8 million as of December 29, 2018, and for the purchase of non-integral computer software amounting to $1.9 million, compared with $2.5 million as of December 29, 2018. As of December 28, 2019, we had entered into contractual commitments for non-capital items such as raw materials and supplies amounting to $33.7 million, compared with $32.2 million as of December 29, 2018.

B. Performance bonds, letters of credit and bank guarantees

As of December 28, 2019, letters of credit were outstanding against the asset-backed revolving facility amounting to $50.1 million, compared with $57.8 million as of December 29, 2018. We had additional outstanding performance bonds, letters of credit and bank guarantees amounting to $4.1 million as of December 28, 2019, compared with $3.4 million as of December 29, 2018.

C. Company–owned life insurance policies

Gates is the beneficiary of a number of corporate-owned life insurance policies against which it borrows from the relevant life insurance company. As of December 28, 2019, the surrender value of the policies was $933.8 million, compared with $930.0 million as of December 29, 2018, and the amount outstanding on the related loans was $932.0 million, compared with $928.2 million as of December 29, 2018. For financial reporting purposes, these amounts are offset as a legal right of offset exists and the net receivable of $1.8 million, compared with $1.8 million as of December 29, 2018, is included in other receivables.

D. Contingencies

The Company is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business including those relating to environmental obligations, product liability, intellectual property, commercial and contractual disputes, employment matters and other business matters. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as set forth by GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there are no material amounts accrued. While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect Gates’ financial position, results of operations or cash flows.

E. Allowance for doubtful accounts

Movements in our allowance for doubtful accounts were as follows:

(dollars in millions)	Balance at beginning of year		Charged to net income		Deductions			Foreign currency translation			Balance at end of year
2017	$	3.4	$	3.7	$	(0.8	)	$	0.5		$	6.8
2018	$	6.8	$	1.4	$	(0.5	)	$	(0.3	)	$	7.4
2019	$	7.4	$	2.4	$	(1.3	)	$	0.1		$	8.6

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Post-retirement benefits - Effects of pension plan recognized in OCI (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Pensions
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax
Current period net actuarial loss (gain)	$ 20.5	$ 1.2	$ (20.9)
Amortization of prior net actuarial loss	0.0	(0.1)	(0.4)
Prior service cost (credit)	0.0	11.4	0.7
Amortization of prior service cost (credit)	(0.8)	(0.1)	0.0
(Gain) loss recognized due to settlements and curtailments	(0.8)	(0.3)	3.8
Pre-tax changes recognized in OCI other than foreign currency translation	18.9	12.1	(16.8)
Foreign currency translation	1.0	(0.1)	(0.9)
Total pre-tax changes recognized in OCI	19.9	12.0	(17.7)
Other post-retirement benefits
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax
Current period net actuarial loss (gain)	(1.8)	(4.8)	(3.9)
Amortization of prior net actuarial loss	0.8	0.4	0.2
Prior service cost (credit)	0.0	0.0	(4.3)
Amortization of prior service cost (credit)	0.4	0.4	0.1
Pre-tax changes recognized in OCI other than foreign currency translation	(0.6)	(4.0)	(7.9)
Foreign currency translation	(0.2)	0.0	0.0
Total pre-tax changes recognized in OCI	$ (0.8)	$ (4.0)	$ (7.9)

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Commitments and contingencies (Tables)

12 Months Ended

Dec. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

Allowance for doubtful accounts

Movements in our allowance for doubtful accounts were as follows:

(dollars in millions)	Balance at beginning of year		Charged to net income		Deductions			Foreign currency translation			Balance at end of year
2017	$	3.4	$	3.7	$	(0.8	)	$	0.5		$	6.8
2018	$	6.8	$	1.4	$	(0.5	)	$	(0.3	)	$	7.4
2019	$	7.4	$	2.4	$	(1.3	)	$	0.1		$	8.6

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Significant accounting policies - Foreign currency transaction and translation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle
Foreign currency transaction gain (loss)	$ 16.8	$ 45.5	$ (57.4)
Operating income (loss)
New Accounting Pronouncements or Change in Accounting Principle
Foreign currency transaction gain (loss)	(1.7)	(4.0)	(7.6)
Other income (expenses)
New Accounting Pronouncements or Change in Accounting Principle
Foreign currency transaction gain (loss)	$ 0.8	$ 8.7	$ (57.4)

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Post-retirement benefits - Plan asset by asset category (Details) - Pensions - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	$ 835.2	$ 774.9	$ 893.6
Total	835.2	774.9
Quoted prices in active markets (Level 1)
Defined Benefit Plans and Other Postretirement Benefit Plans
Total	8.7	4.4
Significant observable inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans
Total	590.6	546.6
Significant unobservable inputs (Level 3)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	235.9	224.0	$ 248.1
Total	235.9	223.9
Equity Securities
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	102.7	83.2
Equity Securities | Quoted prices in active markets (Level 1)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
Equity Securities | Significant observable inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	102.7	83.2
Equity Securities | Significant unobservable inputs (Level 3)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
—Corporate bonds
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	207.9	156.5
—Corporate bonds | Quoted prices in active markets (Level 1)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
—Corporate bonds | Significant observable inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	207.9	156.5
—Corporate bonds | Significant unobservable inputs (Level 3)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
—Government bonds
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	231.3	302.9
—Government bonds | Quoted prices in active markets (Level 1)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
—Government bonds | Significant observable inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	231.3	302.9
—Government bonds | Significant unobservable inputs (Level 3)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
Annuities and insurance
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	284.6	227.9
Annuities and insurance | Quoted prices in active markets (Level 1)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
Annuities and insurance | Significant observable inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	48.7	4.0
Annuities and insurance | Significant unobservable inputs (Level 3)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	235.9	223.9
Cash and cash equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	8.7	4.4
Cash and cash equivalents | Quoted prices in active markets (Level 1)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	8.7	4.4
Cash and cash equivalents | Significant observable inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	0.0	0.0
Cash and cash equivalents | Significant unobservable inputs (Level 3)
Defined Benefit Plans and Other Postretirement Benefit Plans
Plan asset	$ 0.0	$ 0.0

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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Feb. 17, 2020	Jun. 29, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	Gates Industrial Corp plc
Entity Central Index Key	0001718512
Current Fiscal Year End Date	--12-28
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 28, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q4
Amendment Flag	false
Entity Common Stock, Shares Outstanding		290,465,572
Entity Current Reporting Status	Yes
Entity Public Float			$ 526.2
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	false

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Inventories (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Inventory Disclosure [Abstract]
Raw materials and supplies	$ 118.9	$ 152.1
Work in progress	33.6	38.4
Finished goods	322.6	347.1
Total inventories	$ 475.1	$ 537.6

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Derivative financial instruments - OCI Movement (Details) - Interest Rate Contract - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Movement recognized in OCI in relation to:
—Fair value loss on cash flow hedges	$ (31.7)
—Fair value loss on cash flow hedges		$ (4.5)	$ (2.0)
—Deferred premium reclassified from OCI to net income	2.5
—Deferred premium reclassified from OCI to net income		5.4	11.6
Total movement	$ (29.2)
Total movement		$ 0.9	$ 9.6

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Restructuring and other strategic initiatives - Restructuring Costs by Segment (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Restructuring Cost and Reserve
Restructuring expenses	$ 7.2	$ 7.3	$ 19.6
Power Transmission
Restructuring Cost and Reserve
Restructuring expenses	3.5	2.8	11.1
Fluid Power
Restructuring Cost and Reserve
Restructuring expenses	$ 3.7	$ 4.5	$ 8.5

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Segment information - Long lived assets by geography (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	$ 727.9	$ 756.3
U.S.
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	199.2	212.5
Rest of North America
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	117.3	107.4
U.K.
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	32.6	33.3
Rest of EMEA
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	154.4	157.3
East Asia and India
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	65.6	75.6
Greater China
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	138.4	149.3
South America
Revenues from External Customers and Long-Lived Assets
Long-Lived Assets	$ 20.4	$ 20.9

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Income taxes - Schedule of effective income tax rate reconciliation (Details)	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Effective Income Tax Rate Reconciliation, Percent
Corporation tax rate	19.00%	19.00%	35.00%
Effect of:
—State tax provision, net of Federal benefit	(2.10%)	(1.50%)	2.50%
—Provision for unrecognized income tax benefits	34.00%	(1.30%)	2.70%
—Company Owned Life Insurance	(4.40%)	(2.80%)	(12.10%)
—Tax on international operations	(325.90%)	(1.10%)	45.10%
—Manufacturing incentives	0.50%	(4.20%)	(5.80%)
—Change in valuation allowance	6.60%	2.90%	111.70%
—Deferred income tax rate changes	17.80%	0.20%	(146.80%)
—Currency exchange rate movements	6.50%	0.10%	(105.10%)
—Other permanent differences	(1.40%)	(0.80%)	6.60%
Reported effective income tax rate	(249.40%)	10.50%	(66.20%)

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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Foreign currency translation:
Net translation gain on foreign operations, tax benefit (expense)	$ (0.8)	$ (1.2)	$ 15.0
Loss on net investment hedges, tax benefit	0.0	0.0	0.0
Cash flow hedges (Interest rate derivatives):
Gain (loss) arising in the period, tax benefit	4.5
Gain (loss) arising in the period, tax benefit		0.0	0.0
Reclassification to net income, tax benefit	(0.2)
Reclassification to net income, tax benefit		4.7	(2.0)
Available-for-sale investments:
Unrealized loss, expense	0.0	0.0	0.1
Post-retirement benefits:
Actuarial loss, tax (expense) benefit	2.8	2.2	(5.4)
Reclassification of actuarial gain to net income, tax benefit	$ (0.2)	$ 0.1	$ 0.0

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Fair value measurement - Schedule of assets and liabilities measured at fair value on a recurring basis (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ (60.9)	$ (41.7)
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity investments	1.1	0.8
Derivative assets	5.4	11.8
Derivative liabilities	(60.9)	(41.7)
Fair Value, Measurements, Recurring | Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity investments	1.1	0.8
Derivative assets	0.0	0.0
Derivative liabilities	0.0	0.0
Fair Value, Measurements, Recurring | Significant observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity investments	0.0	0.0
Derivative assets	5.4	11.8
Derivative liabilities	$ (60.9)	$ (41.7)

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Income taxes - Income from continuing operations (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Income Tax Examination
Income from continuing operations before taxes	$ 27.3	$ 41.9	$ 64.2	$ 65.4	$ 83.8	$ 74.2	$ 104.4	$ 41.1	$ 198.8	$ 303.5	$ 109.5
U.K.
Income Tax Examination
Income from domestic operations									(80.6)	(12.8)	1.0
U.S.
Income Tax Examination
Income from foreign operations									0.9	(43.3)	(63.1)
Other
Income Tax Examination
Income from foreign operations									$ 278.5	$ 359.6	$ 171.6

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Goodwill - Narratives (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 29, 2018
Goodwill
Goodwill acquired		$ 35.6
Fluid Power
Goodwill
Goodwill acquired		35.6
Fluid Power | Rapro
Goodwill
Goodwill acquired		$ 34.4
Fluid Power | Atlas Hydraulics
Goodwill
Goodwill acquired	$ 1.2

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Debt - Dollar and Euro Term Loans Narratives (Details) - Secured debt - USD ($) $ in Millions		12 Months Ended
	Jan. 29, 2018	Dec. 28, 2019	Dec. 29, 2018
Euro Term Loan
Debt Instrument
Decrease in applicable variable interest rate margin	0.25%
Interest rate during period on debt		0.00%
Quarterly amortization payment rate		0.25%
Quarterly amortization payment on debt		$ 7.4	$ 5.8
Euro Term Loan | LIBOR
Debt Instrument
Variable interest rate on debt		3.00%
Euro Term Loan | LIBOR | Minimum
Debt Instrument
Variable interest rate on debt		0.00%
Dollar Term Loan
Debt Instrument
Decrease in applicable variable interest rate margin	0.25%
Interest rate during period on debt		4.45%
Quarterly amortization payment rate		0.25%
Quarterly amortization payment on debt		$ 17.3	$ 13.0
Dollar Term Loan | LIBOR
Debt Instrument
Variable interest rate on debt		2.75%
Dollar Term Loan | LIBOR | Minimum
Debt Instrument
Variable interest rate on debt		1.00%

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Consolidated Statements of Shareholders’ Equity - USD ($) $ in Millions	Total	Share capital	Additional paid-in capital	Accumulated other comprehensive loss	Retained earnings	Total shareholders’ equity	Non- controlling interests
Beginning Balance at Dec. 31, 2016	$ 1,068.4	$ 2.5	$ 1,619.0	$ (915.9)	$ (14.3)	$ 691.3	$ 377.1
Increase (Decrease) in Stockholders' Equity
Net income (loss)	182.7				151.3	151.3	31.4
Other comprehensive (loss) income	198.4			168.5		168.5	29.9
Comprehensive (loss) income for the period	381.1			168.5	151.3	319.8	61.3
—Issuance of shares	0.6		0.6			0.6
—Repurchase of shares	(1.6)		(1.5)		(0.1)	(1.6)
—Share-based compensation	4.5		4.5			4.5
—Dividends paid to non-controlling interests	(24.6)						(24.6)
Ending Balance at Dec. 30, 2017	1,428.4	2.5	1,622.6	(747.4)	136.9	1,014.6	413.8
Increase (Decrease) in Stockholders' Equity
Net income (loss)	271.1				245.3	245.3	25.8
Other comprehensive (loss) income	(125.3)			(106.9)	(0.3)	(107.2)	(18.1)
Comprehensive (loss) income for the period	145.8			(106.9)	245.0	138.1	7.7
—Issuance of shares	841.7	0.4	841.3			841.7
—Cost of shares issued	(53.0)		(53.0)			(53.0)
—Share-based compensation	6.0		6.0			6.0
—Dividends paid to non-controlling interests	(35.2)						(35.2)
Ending Balance at Dec. 29, 2018	2,333.7	2.9	2,416.9	(854.3)	381.9	1,947.4	386.3
Increase (Decrease) in Stockholders' Equity
Net income (loss)	694.1				690.1	690.1	4.0
Other comprehensive (loss) income	(6.5)			(4.1)		(4.1)	(2.4)
Comprehensive (loss) income for the period	687.6			(4.1)	690.1	686.0	1.6
—Issuance of shares	1.8		1.8			1.8
—Share-based compensation	14.6		14.6			14.6
—Change in ownership of a controlled subsidiary	0.0		1.2			1.2	(1.2)
—Shares issued by a subsidiary to a non-controlling interest	1.8						1.8
—Dividends paid to non-controlling interests	(28.8)						(28.8)
Ending Balance at Dec. 28, 2019	$ 3,010.7	$ 2.9	$ 2,434.5	$ (858.4)	$ 1,072.0	$ 2,651.0	$ 359.7

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Background

12 Months Ended

Dec. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background

Background

Gates Industrial Corporation plc (the “Company”) is a public limited company that was incorporated under the laws of England and Wales on September 25, 2017. Prior to the completion of the initial public offering of the Company’s shares in January 2018, the Company undertook certain reorganization transactions such that Gates Industrial Corporation plc now owns indirectly all of the equity interests in Omaha Topco Limited (“Omaha Topco”), and has become the holding company of the Gates business. The previous owners of Omaha Topco were various investment funds managed by affiliates of The Blackstone Group Inc. (together, “Blackstone” or our “Sponsor”), and Gates management equity holders. Gates Industrial Corporation plc had no significant business transactions or activities prior to the date of the reorganization transactions, and as a result, the historical financial information reflects that of Omaha Topco.

In these consolidated financial statements and related notes, all references to the “Gates”, “we”, “us”, “our” refer, unless the context requires otherwise, to the Company and its subsidiaries.

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Gates is comprised of two operating segments: Power Transmission and Fluid Power.

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Segment information

12 Months Ended

Dec. 28, 2019

Segment Reporting [Abstract]

Segment information

Segment information

A. Background

The segment information provided in these consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based on net sales and Adjusted EBITDA (defined below).

B. Operating segments and segment assets

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.

Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power.

Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset base measure.

C. Segment net sales and disaggregated net sales

Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

	Net Sales
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	1,945.7	$	2,098.8	$	2,009.4
Fluid Power	1,141.4		1,248.8		1,032.3
Continuing operations	$	3,087.1	$	3,347.6	$	3,041.7

Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reporting segments, the CEO also reviews net sales information disaggregated by region, including between emerging and developed markets.

The following table summarizes our net sales by key geographic region of origin:

	Net Sales
	For the year ended
	December 28, 2019				December 29, 2018				December 30, 2017
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	580.4	$	590.0	$	606.3	$	671.7	$	582.2	$	565.9
North America,excluding U.S.	165.3		175.9		159.3		185.6		148.2		134.8
United Kingdom (“U.K.”)	43.6		37.3		55.0		39.9		57.2		27.6
EMEA(1), excluding U.K.	509.9		173.6		584.5		172.8		551.3		144.8
East Asia and India	288.6		74.3		311.7		87.5		308.7		78.0
Greater China	288.4		57.8		310.7		59.0		285.6		51.5
South America	69.5		32.5		71.3		32.3		76.2		29.7
Net Sales	$	1,945.7	$	1,141.4	$	2,098.8	$	1,248.8	$	2,009.4	$	1,032.3

⁽¹⁾  Europe, Middle East and Africa (“EMEA”).

The following table summarizes our net sales into emerging and developed markets:

	Net Sales
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Developed	$	2,013.4	$	2,157.4	$	1,964.4
Emerging	1,073.7		1,190.2		1,077.3
Net Sales	$	3,087.1	$	3,347.6	$	3,041.7

D. Measure of segment profit or loss

The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures.

“EBITDA” represents net income for the period before net interest and other (income) expenses, income taxes, depreciation and amortization derived from financial information prepared in accordance with U.S. GAAP.

Adjusted EBITDA represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

• the non-cash charges in relation to share-based compensation;

• transaction-related expenses incurred in relation to business combinations and major corporate transactions, including acquisition integration activities;

• impairments, comprising impairments of goodwill and significant impairments or write downs of other assets;

• restructuring expenses, including severance-related expenses;

• the net gain or loss on disposals and on the exit of businesses; and

• fees paid to our private equity sponsor for monitoring, advisory and consulting services.

Adjusted EBITDA by segment was as follows:

	Adjusted EBITDA
	For the year ended
(dollars in millions)	December 28, 2019		December 29, 2018		December 30, 2017
Power Transmission	$	412.6	$	492.2	$	458.1
Fluid Power	198.4		263.6		211.0
Continuing operations	$	611.0	$	755.8	$	669.1

Reconciliation of net income from continuing operations to Adjusted EBITDA:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018		December 30, 2017
Net income from continuing operations	$	694.7		$	271.7	$	182.0
Income tax (benefit) expense	(495.9		)	31.8		(72.5		)
Income from continuing operations before taxes	198.8			303.5		109.5
Interest expense	157.8			175.9		234.6
Other (income) expenses	(9.8		)	17.4		58.8
Operating income from continuing operations	346.8			496.8		402.9
Depreciation and amortization	222.2			218.5		212.2
Transaction-related expenses (1)	2.6			6.7		18.1
Impairment of intangibles and other assets	0.7			0.6		2.8
Restructuring expenses	6.0			6.4		17.4
Share-based compensation expense	15.0			6.0		5.4
Sponsor fees (included in other operating expenses)	6.5			8.0		6.7
Impact of fair value adjustment on inventory (included in cost of sales)	—			0.3		1.2
Inventory impairments and adjustments (included in cost of sales)	1.2			1.2		2.0
Duplicate expenses incurred on facility relocation	—			5.2		—
Severance-related expenses (included in cost of sales)	4.0			1.7		—
Other primarily severance-related expenses (included in SG&A)	3.4			4.4		—
Other items not directly related to current operations	2.6			—		0.4
Adjusted EBITDA	$	611.0		$	755.8	$	669.1

⁽¹⁾  Transaction-related expenses relate primarily to advisory fees recognized in respect of our initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings.

E. Selected geographic information

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Property, plant and equipment, net by geographic location
U.S.	$	199.2	$	212.5
Rest of North America	117.3		107.4
U.K.	32.6		33.3
Rest of EMEA	154.4		157.3
East Asia and India	65.6		75.6
Greater China	138.4		149.3
South America	20.4		20.9
	$	727.9	$	756.3

F. Information about major customers

Gates has a significant concentration of sales in the U.S., which accounted for 43.2% of Gates’ net sales by destination from continuing operations during Fiscal 2019, compared with 39.2% during Fiscal 2018 and 38.5% during Fiscal 2017. During Fiscal 2019, Fiscal 2018 and Fiscal 2017, no single customer accounted for more than 10% of Gates’ net sales. Two customers of our North America businesses accounted for 18.9% and 11.3%, respectively, of our total trade accounts receivable balance as of December 28, 2019, compared with 17.2% and 10.7%, respectively, as of December 29, 2018. These concentrations are due to the extended payment terms common in the industry in which they operate.

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Inventories

12 Months Ended

Dec. 28, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Raw materials and supplies	$	118.9	$	152.1
Work in progress	33.6		38.4
Finished goods	322.6		347.1
Total inventories	$	475.1	$	537.6

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Income taxes (Tables)

12 Months Ended

Dec. 28, 2019

Income Tax Disclosure [Abstract]

Schedule of income from continuing operations before taxes

Gates Industrial Corporation plc is domiciled in the United Kingdom. Income (loss) from continuing operations before taxes and income tax (benefit) expense are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable.

	Income (loss) before income taxes
	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
U.K.	$	(80.6	)	$	(12.8	)	$	1.0
U.S.	0.9			(43.3		)	(63.1		)
Other	278.5			359.6			171.6
Income from continuing operations before income taxes	$	198.8		$	303.5		$	109.5

Income tax expense (benefit) on income from continuing operations analyzed by tax jurisdiction

Income tax (benefit) expense on income from continuing operations analyzed by tax jurisdiction is as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Current tax
U.K.	$	7.5		$	0.8		$	2.8
U.S.	21.0			9.0			7.8
Other foreign	124.3			86.9			79.7
Total current tax expense	$	152.8		$	96.7		$	90.3
Deferred income tax
U.K.	$	(4.7	)	$	2.8		$	0.9
U.S.	(49.3		)	(45.3		)	(141.6		)
Other foreign	(594.7		)	(22.4		)	(22.1		)
Total deferred income tax benefit	(648.7		)	(64.9		)	(162.8		)
Income tax (benefit) expense	$	(495.9	)	$	31.8		$	(72.5	)

Schedule of effective income tax rate reconciliation

Reconciliation of the applicable statutory income tax rate to the reported effective income tax rate:

	For the year ended
	December 28, 2019		December 29, 2018		December 30, 2017
U.K. corporation tax rate	19.0	%	19.0	%
U.S. corporation tax rate					35.0	%
Effect of:
—State tax provision, net of Federal benefit	(2.1	%)	(1.5	%)	2.5	%
—Provision for unrecognized income tax benefits	34.0	%	(1.3	%)	2.7	%
—Company Owned Life Insurance	(4.4	%)	(2.8	%)	(12.1	%)
—Tax on international operations(1)	(325.9	%)	(1.1	%)	45.1	%
—Manufacturing incentives(2)	0.5	%	(4.2	%)	(5.8	%)
—Change in valuation allowance(3)	6.6	%	2.9	%	111.7	%
—Deferred income tax rate changes	17.8	%	0.2	%	(146.8	%)
—Currency exchange rate movements	6.5	%	0.1	%	(105.1	%)
—Other permanent differences	(1.4	%)	(0.8	%)	6.6	%
Reported effective income tax rate	(249.4	%)	10.5	%	(66.2	%)

⁽¹⁾  “Tax on international operations” includes U.S. tax on foreign earnings, unremitted earnings of foreign subsidiaries, and effects of differences between statutory and foreign tax rates each of which was reported separately for the years ended December 28, 2019, December 29, 2018 and December 30, 2017. In addition, for the years ended December 28, 2019 and December 29, 2018, it also includes the effects of global funding structures and the Tax Act; and for the year ended December 28, 2019, it also includes $608.6 million for the generation of finite lived net operating losses in Luxembourg.

⁽²⁾  “Manufacturing incentives” for the year ended December 28, 2019 includes an adjustment of $5.0 million for the expiration of manufacturing incentives in the Czech Republic, offset partially by $4.1 million of incentives generated during the year.

⁽³⁾  “Change in valuation allowance” for the year ended December 28, 2019 is comprised primarily of an increase of $608.6 million of additional valuation allowance for finite lived net operating losses generated in Luxembourg, offset partially by a release of $579.0 million of valuation allowance against indefinite lived net operating losses in Luxembourg and by a release of $5.0 million of valuation allowances on manufacturing incentives in the Czech Republic.

Schedule of deferred tax assets (liabilities)

Deferred income tax assets (liabilities) recognized by the Company were as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Deferred income tax assets:
Accounts receivable	$	3.1		$	3.1
Inventories	6.2			6.2
Property, plant and equipment	5.9			5.2
Lease liabilities	37.0			6.2
Accrued expenses	46.8			41.9
Post-retirement benefit obligations	27.8			30.5
Compensation	12.8			15.2
Net operating losses	1,480.3			932.3
Capital losses	130.7			126.3
Credits	138.7			157.1
Interest	120.9			48.5
Other items	11.0			7.2
	$	2,021.2		$	1,379.7
Valuation allowances	(1,200.2		)	(1,191.5		)
Total deferred income tax assets	$	821.0		$	188.2
Deferred income tax liabilities:
Inventories	(22.7		)	(21.6		)
Property, plant and equipment	(51.2		)	(50.9		)
Lease right-of-use assets	(30.1		)	(0.6		)
Intangible assets	(450.7		)	(482.9		)
Post-retirement benefit obligations	(6.8		)	(9.7		)
Undistributed earnings	(40.9		)	(55.9		)
Other items	(0.8		)	(1.0		)
Total deferred income tax liabilities	$	(603.2	)	$	(622.6	)
Net deferred income tax assets (liabilities)	$	217.8		$	(434.4	)

Schedule of unrecognized tax positions

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
At the beginning of the period	$	80.1		$	106.1		$	106.3
Increases for tax positions related to the current period	70.6			0.4			5.5
Increases for tax positions related to prior periods	5.8			0.2			4.6
Decreases for tax positions related to prior periods	(2.1		)	(1.5		)	(2.8		)
Decreases related to settlements	—			—			(0.7		)
Decreases due to lapsed statute of limitations	(8.1		)	(21.0		)	(11.8		)
Foreign currency translation	1.0			(4.1		)	5.0
At the end of the period	$	147.3		$	80.1		$	106.1

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Quarterly financial data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 725.7	$ 746.6	$ 809.9	$ 804.9	$ 792.1	$ 828.4	$ 875.1	$ 852.0	$ 3,087.1	$ 3,347.6	$ 3,041.7
Gross profit	261.4	272.4	301.4	307.3	310.0	327.2	357.5	335.9	1,142.5	1,330.6	1,218.0
Income from continuing operations before income taxes	27.3	41.9	64.2	65.4	83.8	74.2	104.4	41.1	198.8	303.5	109.5
Net income	25.4	37.4	26.5	604.8	82.5	66.7	92.6	29.3	694.1	271.1	182.7
Net income attributable to shareholders	$ 19.4	$ 35.5	$ 21.5	$ 613.7	$ 75.6	$ 59.9	$ 85.6	$ 24.2	$ 690.1	$ 245.3	$ 151.3
Basic earnings per share from continuing operations (in usd per share)	$ 0.07	$ 0.12	$ 0.07	$ 2.12	$ 0.26	$ 0.21	$ 0.30	$ 0.09	$ 2.38	$ 0.86	$ 0.62
Basic earnings per share from discontinued operations (in usd per share)	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Diluted earnings per share from continuing operations (in usd per share)	0.07	0.12	0.07	2.08	0.26	0.20	0.29	0.09	2.37	0.84	0.60
Diluted earnings per share from discontinued operations (in usd per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00

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Quarterly financial data (unaudited)

12 Months Ended

Dec. 28, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly financial data (unaudited)

Quarterly financial data (unaudited)

The following table sets forth selected unaudited quarterly financial information for the years ended December 28, 2019 and December 29, 2018. The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report. These quarterly results of operations are not necessarily indicative of our results of operations to be expected for any future period.

(dollars in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2019
Statement of operations data:
Net sales	$	804.9	$	809.9	$	746.6	$	725.7
Gross profit	307.3		301.4		272.4		261.4
Income from continuing operations before income taxes	65.4		64.2		41.9		27.3
Net income	604.8		26.5		37.4		25.4
Net income attributable to shareholders	613.7		21.5		35.5		19.4
Basic earnings per share from continuing operations	2.12		0.07		0.12		0.07
Basic earnings per share from discontinued operations	—		—		—		—
Diluted earnings per share from continuing operations	2.08		0.07		0.12		0.07
Diluted earnings per share from discontinued operations	—		—		—		—
2018
Statement of operations data:
Net sales	$	852.0	$	875.1	$	828.4	$	792.1
Gross profit	335.9		357.5		327.2		310.0
Income from continuing operations before income taxes	41.1		104.4		74.2		83.8
Net income	29.3		92.6		66.7		82.5
Net income attributable to shareholders	24.2		85.6		59.9		75.6
Basic earnings per share from continuing operations	0.09		0.30		0.21		0.26
Basic earnings per share from discontinued operations	—		—		—		—
Diluted earnings per share from continuing operations	0.09		0.29		0.20		0.26
Diluted earnings per share from discontinued operations	—		—		—		—

Earnings per share amounts are computed independently for each of the quarters presented, therefore, the sum of the quarterly earnings per share amounts may not equal the total computed for the year.

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Post-retirement benefits - Cumulative losses (gains) not recognized in net period pension plan (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Pensions
Defined Benefit Plans and Other Postretirement Benefit Plans
Actuarial loss	$ 21.2	$ 1.5	$ 0.7
Prior service costs	11.1	11.9	0.6
Foreign currency translation	(2.9)	(3.9)	(3.8)
Cumulative total	29.4	9.5	(2.5)
Other post-retirement benefits
Defined Benefit Plans and Other Postretirement Benefit Plans
Actuarial loss	(17.3)	(16.3)	(11.9)
Prior service costs	(3.4)	(3.8)	(4.2)
Other adjustments	0.2	0.2	0.2
Foreign currency translation	(0.2)	0.0	0.0
Cumulative total	$ (20.7)	$ (19.9)	$ (15.9)

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Related party transactions (Tables)

12 Months Ended

Dec. 28, 2019

Related Party Transactions [Abstract]

Schedule of related party transactions

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Sales	$	51.3		$	60.6		$	55.2
Purchases	$	(20.5	)	$	(20.7	)	$	(21.7	)

Amounts outstanding in respect of these transactions were as follows:

(dollars in millions)	As of December 28, 2019			As of December 29, 2018
Receivables	$	4.2		$	0.6
Payables	$	(5.9	)	$	(0.3	)

Sales to and purchases from equity method investees were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Sales	$	1.4		$	1.6		$	1.8
Purchases	$	(15.4	)	$	(15.2	)	$	(9.8	)

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Significant accounting policies - Accounting policies (Details) - USD ($) $ in Millions	Dec. 28, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle
Operating lease right-of-use assets	$ 123.0
Operating lease liability	$ 134.3
ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle
Operating lease right-of-use assets		$ 126.0
Operating lease liability		$ 132.9

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Post-retirement benefits - Changes in the fair value of plan assets measured using significant unobservable inputs (Details) - Pensions - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward]
Plan assets at the beginning of the period	$ 774.9	$ 893.6
Plan assets at the end of the period	835.2	774.9
Significant unobservable inputs (Level 3)
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward]
Plan assets at the beginning of the period	224.0	248.1
Actual return on plan assets	17.9	(0.3)
Purchases	1.4	1.7
Sales	(0.9)	(0.9)
Impacts of benefits paid	(12.3)	(10.5)
Foreign currency translation	5.8	(14.1)
Plan assets at the end of the period	$ 235.9	$ 224.0

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Income taxes - Income tax expense (benefit) on income from continuing operations analyzed (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Current tax
U.S.	$ 21.0	$ 9.0	$ 7.8
Total current tax expense	152.8	96.7	90.3
Deferred income tax
U.S.	(49.3)	(45.3)	(141.6)
Total deferred tax benefit	(648.7)	(64.9)	(162.8)
Income tax expense (benefit)	(495.9)	31.8	(72.5)
U.K.
Current tax
Current tax, foreign	7.5	0.8	2.8
Deferred income tax
Deferred tax, foreign	(4.7)	2.8	0.9
Other foreign
Current tax
Current tax, foreign	124.3	86.9	79.7
Deferred income tax
Deferred tax, foreign	$ (594.7)	$ (22.4)	$ (22.1)

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Intangible assets - Finite-Lived and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Finite-Lived Intangible Assets
Finite-lived, cost	$ 2,188.7	$ 2,172.2
Finite-lived, accumulated amortization	(782.1)	(651.0)
Finite-lived, net	1,406.6	1,521.2
Indefinite-lived, cost	513.4	513.4
Indefinite-lived, accumulated impairment	(44.0)	(44.0)
Indefinite-lived, net	469.4	469.4
Cost	2,702.1	2,685.6
Accumulated amortization and impairment	(826.1)	(695.0)
Net	1,876.0	1,990.6
—Customer relationships
Finite-Lived Intangible Assets
Finite-lived, cost	2,021.8	2,017.4
Finite-lived, accumulated amortization	(656.3)	(534.8)
Finite-lived, net	1,365.5	1,482.6
—Technology
Finite-Lived Intangible Assets
Finite-lived, cost	90.8	90.6
Finite-lived, accumulated amortization	(87.8)	(87.0)
Finite-lived, net	3.0	3.6
—Capitalized software
Finite-Lived Intangible Assets
Finite-lived, cost	76.1	64.2
Finite-lived, accumulated amortization	(38.0)	(29.2)
Finite-lived, net	$ 38.1	$ 35.0

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Debt - Debt issuances and redemptions Narratives (Details) € in Millions, $ in Millions						3 Months Ended	12 Months Ended
	Dec. 05, 2019 USD ($)	Feb. 09, 2018 USD ($)	Feb. 08, 2018 USD ($)	Jan. 31, 2018 USD ($)	Jan. 31, 2018 EUR (€)	Mar. 31, 2018 USD ($)	Dec. 28, 2019 USD ($)	Dec. 29, 2018 USD ($)	Dec. 30, 2017 USD ($)	Nov. 22, 2019 USD ($)
Debt Instrument
Principal amount of debt outstanding							$ 2,985.0	$ 3,027.1
Premium paid on redemption of debt							0.0	27.0	$ 0.0
Unsecured debt
Debt Instrument
Repayments of debt								913.7
Payments of accrued interest								3.1
Premium paid on redemption of debt								27.0
Accelerated recognition of deferred financing costs						$ 15.4
Unsecured debt | —6.25% Dollar Senior Notes due 2026
Debt Instrument
Principal amount of debt outstanding							$ 568.0			$ 568.0
Stated interest rate on debt (percent)							6.25%
Redemption price (percent)		103.00%
Unsecured debt | —6.00% Dollar Senior Notes due 2022
Debt Instrument
Principal amount of debt outstanding								$ 568.0
Repayments of debt	$ 568.0	$ 100.0	$ 522.0	$ 622.0
Stated interest rate on debt (percent)			6.00%					6.00%		6.00%
Payments of accrued interest	13.2	0.4	$ 2.0
Capitalized debt financing costs	$ 8.6
Redemption price (percent)			103.00%
Premium paid on redemption of debt		$ 3.0	$ 15.6
Unsecured debt | Euro Senior Notes
Debt Instrument
Repayments of debt				291.7	€ 235.0
Payments of accrued interest				$ 0.7
Redemption price (percent)				102.875%	102.875%
Premium paid on redemption of debt				$ 8.4

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Cash flows from operating activities
Net income (loss)	$ 694.1	$ 271.1	$ 182.7
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	222.2	218.5	212.2
Non-cash currency transaction (gain) loss on debt and hedging instruments	(16.8)	(45.5)	57.4
Premium paid on redemption of long-term debt	0.0	27.0	0.0
Other net non-cash financing costs	27.4	65.6	47.6
Share-based compensation expense	15.0	6.0	5.4
Decrease in post-employment benefit obligations, net	(9.4)	(4.6)	(7.4)
Deferred income taxes	(648.4)	(64.9)	(162.8)
Other operating activities	6.0	4.8	5.5
Changes in operating assets and liabilities, net of effects of acquisitions:
—Decrease (increase) in accounts receivable	41.8	(49.6)	(24.6)
—Decrease (increase) in inventories	65.1	(96.1)	(45.4)
—(Decrease) increase in accounts payable	(48.2)	42.1	49.9
—(Increase) decrease in prepaid expenses and other assets	(2.6)	(27.5)	2.3
—Increase (decrease) in taxes payable	46.2	(15.3)	6.5
—Decrease in other liabilities	(43.5)	(18.1)	(9.4)
Net cash provided by operations	348.9	313.5	319.9
Cash flows from investing activities
Purchases of property, plant and equipment	(72.1)	(166.1)	(101.1)
Purchases of intangible assets	(11.0)	(16.6)	(10.0)
Cash paid under corporate-owned life insurance policies	(10.7)	(10.3)	(9.5)
Cash received under corporate-owned life insurance policies	12.0	2.9	3.1
Purchase of businesses, net of cash acquired	0.0	(50.9)	(110.7)
Other investing activities	3.8	(2.6)	1.2
Net cash used in investing activities	(78.0)	(243.6)	(227.0)
Cash flows from financing activities
Issuance of shares, net of underwriting costs	1.8	799.7	0.6
Other offering costs	0.0	(8.6)	(2.3)
Buy-back of shares	0.0	0.0	(1.6)
Proceeds from long-term debt	568.0	0.0	644.7
Payments of long-term debt	(593.1)	(933.5)	(676.9)
Premium paid on redemption of long-term debt	0.0	(27.0)	0.0
Debt issuance costs paid	(8.3)	0.0	(18.8)
Dividends paid to non-controlling interests	(28.8)	(35.2)	(24.6)
Other financing activities	1.1	5.7	3.6
Net cash used in financing activities	(59.3)	(198.9)	(75.3)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	0.4	(12.4)	19.6
Net increase (decrease) in cash and cash equivalents and restricted cash	212.0	(141.4)	37.2
Cash and cash equivalents and restricted cash at the beginning of the period	424.6	566.0	528.8
Cash and cash equivalents and restricted cash at the end of the period	636.6	424.6	566.0
Supplemental schedule of cash flow information
Interest paid, net of amount capitalized	150.8	157.9	198.0
Income taxes paid, net	108.8	114.0	84.8
Accrued capital expenditures	$ 1.8	$ 1.0	$ 1.7

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Property, plant and equipment (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Property, Plant and Equipment
Property, plant and equipment, gross	$ 1,187.8
Less: Accumulated depreciation and impairment	(459.9)
Total	727.9	$ 756.3
Property, plant and equipment, gross		1,133.6
Less: Accumulated depreciation and impairment		(377.3)
Total		756.3
Land and buildings
Property, Plant and Equipment
Property, plant and equipment, gross	318.6
Property, plant and equipment, gross		313.3
Machinery, equipment and vehicles
Property, Plant and Equipment
Property, plant and equipment, gross	819.4
Property, plant and equipment, gross		736.0
Assets under construction
Property, Plant and Equipment
Property, plant and equipment, gross	$ 49.8
Property, plant and equipment, gross		$ 84.3

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Derivative financial instruments - Interest Rate Caps (Details) - Dec. 28, 2019 € in Millions, $ in Millions	USD ($)	EUR (€)
June 30, 2017 to June 30, 2020
Derivative
Notional amount of derivative contracts	$ 200.0
June 28, 2019 to June 30, 2020
Derivative
Notional amount of derivative contracts	$ 1,000.0
July 1, 2019 to June 30, 2023
Derivative
Notional amount of derivative contracts | €		€ 425.0

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Restructuring and other strategic initiatives - Restructuring Reserve Activity (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018
Restructuring reserves
Balance as of the beginning of the period	$ 2.6	$ 8.6
Utilized during the period	(5.7)	(13.5)
Net charge for the period	6.1	8.0
Released during the period	(0.1)	(0.7)
Foreign currency translation	0.0	0.2
Balance as of the end of the period	$ 2.9	$ 2.6

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Segment information - Narratives (Details)	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
U.S. | Geographic concentration risk | Revenue
Segment Reporting Information
Concentration risk (percent)	43.20%	39.20%	38.50%
Major customer one | North America | Customer concentration risk | Accounts receivable
Segment Reporting Information
Concentration risk (percent)	18.90%	17.20%
Major customer two | North America | Customer concentration risk | Accounts receivable
Segment Reporting Information
Concentration risk (percent)	11.30%	10.70%

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Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Net income	$ 694.1	$ 271.1	$ 182.7
Foreign currency translation:
—Net translation gain (loss) on foreign operations, net of tax (expense) benefit, respectively, of ($0.8), ($1.2), and $15.0	29.4	(134.9)	280.2
—Gain (loss) on net investment hedges, net of tax expense, respectively, of $0, $0 and $0	5.5	9.8	(109.4)
Total foreign currency translation movements	34.9	(125.1)	170.8
Cash flow hedges (Interest rate derivatives):
—Loss arising in the period, net of tax benefit, respectively, of $4.5, $0 and $0	(27.2)
—Loss arising in the period, net of tax benefit, respectively, of $4.5, $0 and $0		(4.5)	(2.0)
—Reclassification to net income, net of tax (expense) benefit, respectively, of ($0.2), $4.7 and ($2.0)	2.3
—Reclassification to net income, net of tax (expense) benefit, respectively, of ($0.2), $4.7 and ($2.0)		10.1	9.6
Total cash flow hedges movements	(24.9)
Total cash flow hedges movements		5.6	7.6
Available-for-sale investments:
—Net unrealized loss, net of tax benefit, respectively, of $0, $0 and $0.1	0.0	0.0	(0.2)
Total available-for-sale investments:	0.0	0.0	(0.2)
Post-retirement benefits:
—Current year actuarial movements, net of tax benefit (expense), respectively, of $2.8, $2.2 and ($5.4)	(16.7)	(5.3)	20.2
—Reclassification of prior year actuarial movements to net income, net of tax (expense) benefit, respectively, of ($0.2), $0.1 and $0	0.2	(0.5)	0.0
Total post-retirement benefit movements	(16.5)	(5.8)	20.2
Other comprehensive (loss) income	(6.5)	(125.3)	198.4
Comprehensive income for the period	687.6	145.8	381.1
Comprehensive income attributable to shareholders:
Comprehensive income attributable to parent	686.0	138.1	319.8
Comprehensive income attributable to non-controlling interests	1.6	7.7	61.3
—Income arising from continuing operations
Comprehensive income attributable to shareholders:
Comprehensive income attributable to parent	686.6	138.7	319.1
—(Loss) income arising from discontinued operations
Comprehensive income attributable to shareholders:
Comprehensive income attributable to parent	$ (0.6)	$ (0.6)	$ 0.7

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Income taxes - Schedule of deferred tax assets (liabilities) (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Deferred income tax assets:
Accounts receivable	$ 3.1	$ 3.1
Inventories	6.2	6.2
Property, plant and equipment	5.9	5.2
Lease liabilities	37.0	6.2
Accrued expenses	46.8	41.9
Post-retirement benefit obligations	27.8	30.5
Compensation	12.8	15.2
Net operating losses	1,480.3	932.3
Capital losses	130.7	126.3
Credits	138.7	157.1
Interest	120.9	48.5
Other items	11.0	7.2
Deferred tax assets, gross	2,021.2	1,379.7
Valuation allowances	(1,200.2)	(1,191.5)
Total deferred income tax assets	821.0	188.2
Deferred income tax liabilities:
Inventories	(22.7)	(21.6)
Property, plant and equipment	(51.2)	(50.9)
Lease right-of-use assets	(30.1)	(0.6)
Intangible assets	(450.7)	(482.9)
Post-retirement benefit obligations	(6.8)	(9.7)
Undistributed earnings	(40.9)	(55.9)
Other items	(0.8)	(1.0)
Total deferred income tax liabilities	(603.2)	(622.6)
Net deferred income tax assets (liabilities)	$ 217.8
Net deferred income tax assets (liabilities)		$ (434.4)

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Fair value measurement - Narrative (Details)	12 Months Ended
	Dec. 28, 2019
Secured credit facilities | Secured debt | LIBOR
Debt Instrument
Variable rate floor	1.00%
Euro Term Loan | Secured debt | LIBOR
Debt Instrument
Variable rate floor	3.00%
Euro Term Loan | Term loan | EURIBOR
Debt Instrument
Variable rate floor	0.00%

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Share-based compensation - RSU and PRSU Rollforward (Details)	12 Months Ended
	Dec. 28, 2019 $ / shares shares
Number of awards
Granted (shares) | shares	990,486
Forfeited (shares) | shares	(54,335)
Vested (shares) | shares	(51,132)
Ending balance (shares) | shares	966,819
Weighted average grant date fair value $
Granted (usd per share) | $ / shares	$ 17.16
Expired (usd per share) | $ / shares	16.59
Vested (usd per share) | $ / shares	17.00
Ending balance (usd per share) | $ / shares	$ 17.19
—RSUs
Number of awards
Beginning balance (shares) | shares	81,800
Granted (shares) | shares	741,936
Forfeited (shares) | shares	(54,335)
Vested (shares) | shares	(51,132)
Ending balance (shares) | shares	718,269
Weighted average grant date fair value $
Beginning balance (usd per share) | $ / shares	$ 17.13
Granted (usd per share) | $ / shares	16.19
Expired (usd per share) | $ / shares	16.59
Vested (usd per share) | $ / shares	17.00
Ending balance (usd per share) | $ / shares	$ 16.20
—PRSUs
Number of awards
Granted (shares) | shares	248,550
Ending balance (shares) | shares	248,550
Weighted average grant date fair value $
Granted (usd per share) | $ / shares	$ 20.07
Ending balance (usd per share) | $ / shares	$ 20.07

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Accrued expenses and other liabilities (Tables)

12 Months Ended

Dec. 28, 2019

Payables and Accruals [Abstract]

Schedule of accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued compensation	$	47.3	$	75.0
Current portion of lease obligations	19.8		0.1
Derivative financial instruments	60.9		41.7
Payroll and related taxes payable	11.3		13.6
VAT and other taxes payable	11.5		10.9
Warranty reserve	17.7		14.3
Workers’ compensation reserve	10.0		11.1
Other accrued expenses and other liabilities	95.0		96.7
	$	273.5	$	263.4

Schedule of other non-current liabilities

The above liabilities are presented in Gates’ balance sheet within other current liabilities and other non-current liabilities as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
—Accrued expenses and other current liabilities	$	188.8	$	184.2
—Other non-current liabilities	84.7		79.2
	$	273.5	$	263.4

Schedule of warranty liabilities

Changes in warranty reserves (included in accrued expenses and other liabilities) were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Balance at the beginning of the period	$	14.3		$	14.1		$	14.3
Charge for the period	16.5			11.6			12.3
Utilized during the period	(10.9		)	(11.0		)	(13.1		)
Released during the period	(2.2		)	(0.1		)	(0.1		)
Foreign currency translation	—			(0.3		)	0.7
Balance at the end of the period	$	17.7		$	14.3		$	14.1

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Leases (Tables)

12 Months Ended

Dec. 28, 2019

Leases [Abstract]

Lease cost and quantitative disclosures

(dollars in millions)	For the year ended December 28, 2019
Lease expenses
Operating lease expenses	$	30.3
Finance lease amortization expenses	0.3
Short-term lease expenses	4.6
Variable lease expenses	6.9
Sublease income	(0.1		)
Total lease expenses	$	42.0
Other information
Right-of-use assets obtained in exchange for new operating lease liabilities	$	19.7
Right-of-use assets obtained in exchange for new finance lease liabilities	$	0.9
Cash paid for amounts included in the measurement of lease liabilities:
—Operating cash flows from operating leases	$	26.3
—Financing cash flows from finance leases	0.4
	$	26.7
Weighted-average remaining lease term — finance leases	8.5 years
Weighted-average remaining lease term — operating leases	10.1 years
Weighted-average discount rate — finance leases	2.5		%
Weighted-average discount rate — operating leases	5.4		%

Operating lease - Maturity analysis of liability

Maturity analysis of liabilities

(dollars in millions)	Operating leases			Finance leases (1)
Next 12 months	$	25.5		$	0.6
Year 2	21.6			0.5
Year 3	18.2			0.5
Year 4	15.0			0.2
Year 5	13.4			—
Year 6 and beyond	84.5			—
Total lease payments	178.2			1.8
Interest	(43.9		)	(0.1		)
Total present value of lease liabilities	$	134.3		$	1.7

⁽¹⁾  Although our finance leases have a weighted average remaining lease term of 8.5 years, the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022.

Finance lease - Maturity analysis of liability

Maturity analysis of liabilities

(dollars in millions)	Operating leases			Finance leases (1)
Next 12 months	$	25.5		$	0.6
Year 2	21.6			0.5
Year 3	18.2			0.5
Year 4	15.0			0.2
Year 5	13.4			—
Year 6 and beyond	84.5			—
Total lease payments	178.2			1.8
Interest	(43.9		)	(0.1		)
Total present value of lease liabilities	$	134.3		$	1.7

⁽¹⁾  Although our finance leases have a weighted average remaining lease term of 8.5 years, the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022.

Balance Sheet Location

Balance sheet presentation of leases as of December 28, 2019

(dollars in millions)	Operating leases		Finance leases
Right-of-use assets	$	123.0	$	2.8
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”)	$	19.5	$	0.3
Long-term lease liabilities	114.8		1.4
Total lease liabilities	$	134.3	$	1.7

Contractual obligation future payments

Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows:

(dollars in millions)	Operating leases		Finance leases		Total
Fiscal year
2019	$	25.0	$	0.3	$	25.3
2020	21.3		0.3		21.6
2021	18.2		0.3		18.5
2022	14.4		0.3		14.7
2023	12.6		0.4		13.0
2024 and beyond	86.5		0.4		86.9
Total	$	178.0	$	2.0	$	180.0

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Analysis of accumulated other comprehensive (loss) income (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017	Jan. 01, 2018
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	$ 2,333.7	$ 1,428.4	$ 1,068.4
Other comprehensive (loss) income	(6.5)	(125.3)	198.4
As of December 29, 2018				$ 0.3
Ending Balance	3,010.7	2,333.7	1,428.4
Accumulated OCI attributable to shareholders
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	(854.3)	(747.4)	(915.9)
Other comprehensive (loss) income, net of tax, attributable to parent	(4.1)	(107.2)	168.5
Other comprehensive (loss) income	(4.1)	(106.9)	168.5
As of December 29, 2018				0.3
Ending Balance	(858.4)	(854.3)	(747.4)
Available-for- sale investments
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	0.0	(0.3)	(0.2)
Other comprehensive (loss) income, net of tax, attributable to parent	0.0		(0.1)
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest			(0.1)
Other comprehensive (loss) income			(0.2)
As of December 29, 2018				$ 0.3
Ending Balance	0.0	0.0	(0.3)
Post- retirement benefit
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	7.6	13.2	(6.5)
Other comprehensive (loss) income, net of tax, attributable to parent	(16.9)	(5.6)	19.7
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest	0.4	(0.2)	0.5
Other comprehensive (loss) income	(16.5)	(5.8)	20.2
Ending Balance	(9.3)	7.6	13.2
Cumulative translation adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	(850.0)	(742.8)	(884.1)
Other comprehensive (loss) income, net of tax, attributable to parent	37.7	(107.2)	141.3
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest	(2.8)	(17.9)	29.5
Other comprehensive (loss) income	34.9	(125.1)	170.8
Ending Balance	(812.3)	(850.0)	(742.8)
Cash flow hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance		(17.5)	(25.1)
Other comprehensive (loss) income, net of tax, attributable to parent		5.6	7.6
Ending Balance			(17.5)
Cash flow hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	(11.9)
Other comprehensive (loss) income, net of tax, attributable to parent	(24.9)	5.6
Ending Balance	(36.8)	(11.9)
Non- controlling interests
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	(43.6)	(25.5)	(55.4)
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest	(2.4)	(18.1)	29.9
Ending Balance	(46.0)	(43.6)	(25.5)
Accumulated OCI
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning Balance	(897.9)	(772.9)	(971.3)
Other comprehensive (loss) income			198.4
Ending Balance	$ (904.4)	$ (897.9)	$ (772.9)

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Accrued expenses and other liabilities - Accrued expenses and other liabilities (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Accrued compensation	$ 47.3	$ 75.0
Current portion of lease obligations	19.8	0.1
Derivative financial instruments	60.9	41.7
Payroll and related taxes payable	11.3	13.6
VAT and other taxes payable	11.5	10.9
Warranty reserve	17.7	14.3	$ 14.1	$ 14.3
Workers’ compensation reserve	10.0	11.1
Other accrued expenses and other liabilities	95.0	96.7
Accrued expenses and other liabilities	$ 273.5	$ 263.4

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Intangible assets - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment of Intangible Assets (Excluding Goodwill)	$ 0	$ 0	$ 1,000,000
Amortization expense	129,900,000	130,700,000	$ 130,900,000
Intangible assets, foreign currency translation gain (loss)	$ 3,000,000	$ (35,300,000)

XML

Significant accounting policies - Advertising costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Accounting Policies [Abstract]
Advertising cost	$ 10.2	$ 10.4	$ 10.4

XML

Significant accounting policies - inventory (Details)	Dec. 28, 2019	Dec. 29, 2018
Accounting Policies [Abstract]
Percentage of LIFO inventory	32.50%	31.60%

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Debt - Unsecured Senior Notes Narratives (Details) € in Millions, $ in Millions						8 Months Ended	12 Months Ended
	Dec. 05, 2019 USD ($)	Feb. 09, 2018 USD ($)	Feb. 08, 2018 USD ($)	Jan. 31, 2018 USD ($)	Jan. 31, 2018 EUR (€)	Sep. 28, 2019 USD ($)	Dec. 28, 2019 USD ($)	Dec. 29, 2018 USD ($)	Nov. 22, 2019 USD ($)
Debt Instrument
Principal amount of debt outstanding							$ 2,985.0	$ 3,027.1
Unsecured debt
Debt Instrument
Redemption price in the event of change in control (percent)							101.00%
Redemption price in the event of sale (percent)							100.00%
Repayments of debt								913.7
Unsecured debt | Prior to Jan 15, 2022
Debt Instrument
Percentage of total debt redeemable (percent)							40.00%
Redemption price (percent)							106.25%
Unsecured debt | —6.25% Dollar Senior Notes due 2026
Debt Instrument
Principal amount of debt outstanding							$ 568.0		$ 568.0
Stated interest rate on debt (percent)							6.25%
Redemption price (percent)		103.00%
Unsecured debt | —6.00% Dollar Senior Notes due 2022
Debt Instrument
Principal amount of debt outstanding								$ 568.0
Stated interest rate on debt (percent)			6.00%					6.00%	6.00%
Redemption price (percent)			103.00%
Repayments of debt	$ 568.0	$ 100.0	$ 522.0	$ 622.0
Unsecured debt | Euro Senior Notes
Debt Instrument
Redemption price (percent)				102.875%	102.875%
Repayments of debt				$ 291.7	€ 235.0
Foreign exchange loss						$ 9.2
Loss recognized in OCI						5.0
Loss recognized in statement of operations						$ 4.2

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Leases - Minimum Future Payments (Details) $ in Millions	Dec. 28, 2019 USD ($)
Operating leases
Next 12 months	$ 25.5
Year 2	21.6
Year 3	18.2
Year 4	15.0
Year 5	13.4
Year 6 and beyond	84.5
Total lease payments	178.2
Interest	(43.9)
Total present value of lease liabilities	134.3
Finance leases
Next 12 months	0.6
Year 2	0.5
Year 3	0.5
Year 4	0.2
Year 5	0.0
Year 6 and beyond	0.0
Total lease payments	1.8
Interest	(0.1)
Total present value of lease liabilities	$ 1.7

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Post-retirement benefits - Funded status (Details) - USD ($) $ in Millions	Dec. 28, 2019	Dec. 29, 2018
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position
Post-retirement benefit obligations	$ 151.2	$ 155.9
Pensions
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position
Pension surplus	(38.1)	(52.6)
Accrued expenses and other current liabilities	2.3	2.4
Post-retirement benefit obligations	98.7	102.4
Net unfunded pension obligation	62.9	52.2
Defined Benefit Plan, Pension Plan with Project Benefit Obligation in Excess of Plan Assets [Abstract]
—Aggregate projected benefit obligation	391.7	378.2
—Aggregate plan assets	290.7	273.4
Plans whose accumulated benefit obligation was in excess of the plan assets:
—Aggregate accumulated benefit obligation	381.6	372.3
—Aggregate plan assets	286.2	273.0
Other post-retirement benefits
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position
Accrued expenses and other current liabilities	5.4	6.5
Post-retirement benefit obligations	52.5	53.5
Net unfunded pension obligation	$ 57.9	$ 60.0

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Derivative financial instruments - Narratives (Details)	12 Months Ended
	Dec. 28, 2019 USD ($) instrument	Dec. 29, 2018 USD ($) instrument	Dec. 30, 2017 USD ($)	Dec. 28, 2019 EUR (€) instrument	Dec. 29, 2018 EUR (€) instrument
Derivative
Amount of OCI related to interest rate hedge expected to be reclassified to earnings in the next 12 months	$ 10,400,000
Interest rate swaps due June 30, 2020 through June 30, 2023
Derivative
Notional amount of derivative contracts	$ 870,000,000	$ 870,000,000.0
Number of derivative instruments (instruments) | instrument	3	3		3	3
Interest rate cap
Derivative
Notional amount of derivative contracts	$ 1,700,000,000	$ 2,700,000,000
Not designated as hedging instrument
Derivative
Gain (loss) on derivative, recognized in the income statement	3,600,000	3,000,000	$ 2,300,000
Not designated as hedging instrument | —Currency swaps
Derivative
Notional amount of derivative contracts	270,000,000	270,000,000.0
Not designated as hedging instrument | Currency forward contracts
Derivative
Notional amount of derivative contracts	16,700,000	0
Not designated as hedging instrument | Forward contracts
Derivative
Notional amount of derivative contracts	82,500,000	108,000,000
Derivatives designated as hedging instruments: | Euro Term Loan | Secured debt | Net investment hedges
Derivative
Debt instrument principal amount | €				€ 147,000,000	€ 30,600,000
Derivatives designated as hedging instruments: | —Currency swaps | Net investment hedges | Interest Expense
Derivative
Gain (loss) on derivative, recognized in the income statement	$ 7,800,000	$ 2,500,000

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Segment information - Net Sales by Geographic Regions and Markets (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 28, 2019	Sep. 28, 2019	Jun. 29, 2019	Mar. 30, 2019	Dec. 29, 2018	Sep. 29, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 28, 2019	Dec. 29, 2018	Dec. 30, 2017
Revenues from External Customers and Long-Lived Assets
Net sales	$ 725.7	$ 746.6	$ 809.9	$ 804.9	$ 792.1	$ 828.4	$ 875.1	$ 852.0	$ 3,087.1	$ 3,347.6	$ 3,041.7
Developed
Revenues from External Customers and Long-Lived Assets
Net sales									2,013.4	2,157.4	1,964.4
Emerging
Revenues from External Customers and Long-Lived Assets
Net sales									1,073.7	1,190.2	1,077.3
Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales									1,945.7	2,098.8	2,009.4
Power Transmission | U.S.
Revenues from External Customers and Long-Lived Assets
Net sales									580.4	606.3	582.2
Power Transmission | North America, excluding the U.S.
Revenues from External Customers and Long-Lived Assets
Net sales									165.3	159.3	148.2
Power Transmission | United Kingdom (“U.K.”)
Revenues from External Customers and Long-Lived Assets
Net sales									43.6	55.0	57.2
Power Transmission | EMEA, excluding U.K.
Revenues from External Customers and Long-Lived Assets
Net sales									509.9	584.5	551.3
Power Transmission | East Asia and India
Revenues from External Customers and Long-Lived Assets
Net sales									288.6	311.7	308.7
Power Transmission | Greater China
Revenues from External Customers and Long-Lived Assets
Net sales									288.4	310.7	285.6
Power Transmission | South America
Revenues from External Customers and Long-Lived Assets
Net sales									69.5	71.3	76.2
Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales									1,141.4	1,248.8	1,032.3
Fluid Power | U.S.
Revenues from External Customers and Long-Lived Assets
Net sales									590.0	671.7	565.9
Fluid Power | North America, excluding the U.S.
Revenues from External Customers and Long-Lived Assets
Net sales									175.9	185.6	134.8
Fluid Power | United Kingdom (“U.K.”)
Revenues from External Customers and Long-Lived Assets
Net sales									37.3	39.9	27.6
Fluid Power | EMEA, excluding U.K.
Revenues from External Customers and Long-Lived Assets
Net sales									173.6	172.8	144.8
Fluid Power | East Asia and India
Revenues from External Customers and Long-Lived Assets
Net sales									74.3	87.5	78.0
Fluid Power | Greater China
Revenues from External Customers and Long-Lived Assets
Net sales									57.8	59.0	51.5
Fluid Power | South America
Revenues from External Customers and Long-Lived Assets
Net sales									$ 32.5	$ 32.3	$ 29.7

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Leases

12 Months Ended

Dec. 28, 2019

Leases [Abstract]

Leases

Leases

A. Overview

As discussed in note 2, at the beginning of our 2019 fiscal year, we adopted new lease accounting guidance under Topic 842 “Leases”, which brings most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases, although certain short-term leases are exempted from the standard.

Under Topic 842, we evaluate our contracts and supply arrangements and conclude that they contain a lease at inception where (i) a tangible asset is explicitly or implicitly identified in the contract, (ii) we use the same asset identified over the course of the agreement, (iii) we obtain substantially all of the economic benefits from the use of the underlying asset, and (iv) we direct how and for what purpose the asset is used during the term of the contract. Leases are typically recognized on the balance sheet at their commencement date. However, if we take legal possession and have control over the asset before the commencement date, we would recognize the lease on the balance sheet at the earlier date.

Gates has over 1,000 leases covering a wide variety of tangible assets that are used in our operations across the world. The value of our global leases is concentrated in approximately 90 real estate leases, which accounted for approximately 90% of the lease liability under non-cancellable leases as of December 28, 2019. The remaining leases are predominantly comprised of equipment and vehicle leases.

Options to extend or terminate leases

In determining the lease term, we consider various economic factors, including real estate strategies, the nature, length and underlying terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these factors, where a contract has a renewal option, we generally assume with reasonable certainty that we will renew real estate leases and will not renew equipment, vehicles or any other leases.

Variable payments

We sometimes make payments under our lease agreements that are excluded from the measurement of our right-of-use assets and lease liabilities and are recognized instead as variable payments in the period in which the obligation for those payments is incurred. These costs include common area maintenance, insurance, taxes, utility costs, etc. A number of our leases, particularly real estate leases, include base rent escalation clauses. The majority of these are based on the change in a local consumer price or similar index. Payments that vary based on an index or rate are included in the measurement of our right-of-use assets and lease liabilities at the rate as of the commencement date with any subsequent changes to those payments being recognized as variable payments in the period in which they occur.

Residual value guarantees, restrictions or covenants, and leases that have not yet commenced

Gates does not have any significant leases containing residual value guarantees, restrictions or covenants. Additionally, as of December 28, 2019, there were no significant new leases that have not yet commenced.

B. Significant assumptions and judgments

Discount rate

The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily available. As most of our leases do not have a readily determinable implicit rate, we discount the future minimum lease payments using an incremental borrowing rate which represents the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We determine this rate at a country or lower level and take into account factors including currency, country risk premium, industry risk and adjustments for collateralized debt. Appropriate yield curves are used to derive different debt tenors to approximate the applicable lease term.

The discount rate is reassessed when there is a remeasurement of the lease liability, which happens predominantly when there is a contract modification and that modification does not result in a separate contract.

Elections and practical expedients

The following practical expedients have been adopted as part of our accounting policy on leases:

(i) we will not separate the lease component from the non-lease component for all asset classes. We have therefore not allocated consideration in a contract between lease and non-lease components; and

(ii) we recognize the payments on short-term leases (leases with terms at inception of 12 months or fewer) in net income on a straight-line basis over the lease term. No amount is recognized on the balance sheet with respect to these leases.

C. Quantitative disclosures

(dollars in millions)	For the year ended December 28, 2019
Lease expenses
Operating lease expenses	$	30.3
Finance lease amortization expenses	0.3
Short-term lease expenses	4.6
Variable lease expenses	6.9
Sublease income	(0.1		)
Total lease expenses	$	42.0
Other information
Right-of-use assets obtained in exchange for new operating lease liabilities	$	19.7
Right-of-use assets obtained in exchange for new finance lease liabilities	$	0.9
Cash paid for amounts included in the measurement of lease liabilities:
—Operating cash flows from operating leases	$	26.3
—Financing cash flows from finance leases	0.4
	$	26.7
Weighted-average remaining lease term — finance leases	8.5 years
Weighted-average remaining lease term — operating leases	10.1 years
Weighted-average discount rate — finance leases	2.5		%
Weighted-average discount rate — operating leases	5.4		%

Maturity analysis of liabilities

(dollars in millions)	Operating leases			Finance leases (1)
Next 12 months	$	25.5		$	0.6
Year 2	21.6			0.5
Year 3	18.2			0.5
Year 4	15.0			0.2
Year 5	13.4			—
Year 6 and beyond	84.5			—
Total lease payments	178.2			1.8
Interest	(43.9		)	(0.1		)
Total present value of lease liabilities	$	134.3		$	1.7

⁽¹⁾  Although our finance leases have a weighted average remaining lease term of 8.5 years, the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022.

Balance sheet presentation of leases as of December 28, 2019

(dollars in millions)	Operating leases		Finance leases
Right-of-use assets	$	123.0	$	2.8
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”)	$	19.5	$	0.3
Long-term lease liabilities	114.8		1.4
Total lease liabilities	$	134.3	$	1.7

Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the consolidated balance sheet. The amortization of right-of-use operating assets during the year ended December 28, 2019 was $23.6 million. This is included in the change in prepaid expenses and other assets line in the consolidated statement of cash flows.

Topic 840 Disclosures

Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows:

(dollars in millions)	Operating leases		Finance leases		Total
Fiscal year
2019	$	25.0	$	0.3	$	25.3
2020	21.3		0.3		21.6
2021	18.2		0.3		18.5
2022	14.4		0.3		14.7
2023	12.6		0.4		13.0
2024 and beyond	86.5		0.4		86.9
Total	$	178.0	$	2.0	$	180.0

Leases

Leases

A. Overview

As discussed in note 2, at the beginning of our 2019 fiscal year, we adopted new lease accounting guidance under Topic 842 “Leases”, which brings most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right-of-use asset” for all leases, although certain short-term leases are exempted from the standard.

Under Topic 842, we evaluate our contracts and supply arrangements and conclude that they contain a lease at inception where (i) a tangible asset is explicitly or implicitly identified in the contract, (ii) we use the same asset identified over the course of the agreement, (iii) we obtain substantially all of the economic benefits from the use of the underlying asset, and (iv) we direct how and for what purpose the asset is used during the term of the contract. Leases are typically recognized on the balance sheet at their commencement date. However, if we take legal possession and have control over the asset before the commencement date, we would recognize the lease on the balance sheet at the earlier date.

Gates has over 1,000 leases covering a wide variety of tangible assets that are used in our operations across the world. The value of our global leases is concentrated in approximately 90 real estate leases, which accounted for approximately 90% of the lease liability under non-cancellable leases as of December 28, 2019. The remaining leases are predominantly comprised of equipment and vehicle leases.

Options to extend or terminate leases

In determining the lease term, we consider various economic factors, including real estate strategies, the nature, length and underlying terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these factors, where a contract has a renewal option, we generally assume with reasonable certainty that we will renew real estate leases and will not renew equipment, vehicles or any other leases.

Variable payments

We sometimes make payments under our lease agreements that are excluded from the measurement of our right-of-use assets and lease liabilities and are recognized instead as variable payments in the period in which the obligation for those payments is incurred. These costs include common area maintenance, insurance, taxes, utility costs, etc. A number of our leases, particularly real estate leases, include base rent escalation clauses. The majority of these are based on the change in a local consumer price or similar index. Payments that vary based on an index or rate are included in the measurement of our right-of-use assets and lease liabilities at the rate as of the commencement date with any subsequent changes to those payments being recognized as variable payments in the period in which they occur.

Residual value guarantees, restrictions or covenants, and leases that have not yet commenced

Gates does not have any significant leases containing residual value guarantees, restrictions or covenants. Additionally, as of December 28, 2019, there were no significant new leases that have not yet commenced.

B. Significant assumptions and judgments

Discount rate

The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily available. As most of our leases do not have a readily determinable implicit rate, we discount the future minimum lease payments using an incremental borrowing rate which represents the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We determine this rate at a country or lower level and take into account factors including currency, country risk premium, industry risk and adjustments for collateralized debt. Appropriate yield curves are used to derive different debt tenors to approximate the applicable lease term.

The discount rate is reassessed when there is a remeasurement of the lease liability, which happens predominantly when there is a contract modification and that modification does not result in a separate contract.

Elections and practical expedients

The following practical expedients have been adopted as part of our accounting policy on leases:

(i) we will not separate the lease component from the non-lease component for all asset classes. We have therefore not allocated consideration in a contract between lease and non-lease components; and

(ii) we recognize the payments on short-term leases (leases with terms at inception of 12 months or fewer) in net income on a straight-line basis over the lease term. No amount is recognized on the balance sheet with respect to these leases.

C. Quantitative disclosures

(dollars in millions)	For the year ended December 28, 2019
Lease expenses
Operating lease expenses	$	30.3
Finance lease amortization expenses	0.3
Short-term lease expenses	4.6
Variable lease expenses	6.9
Sublease income	(0.1		)
Total lease expenses	$	42.0
Other information
Right-of-use assets obtained in exchange for new operating lease liabilities	$	19.7
Right-of-use assets obtained in exchange for new finance lease liabilities	$	0.9
Cash paid for amounts included in the measurement of lease liabilities:
—Operating cash flows from operating leases	$	26.3
—Financing cash flows from finance leases	0.4
	$	26.7
Weighted-average remaining lease term — finance leases	8.5 years
Weighted-average remaining lease term — operating leases	10.1 years
Weighted-average discount rate — finance leases	2.5		%
Weighted-average discount rate — operating leases	5.4		%

Maturity analysis of liabilities

(dollars in millions)	Operating leases			Finance leases (1)
Next 12 months	$	25.5		$	0.6
Year 2	21.6			0.5
Year 3	18.2			0.5
Year 4	15.0			0.2
Year 5	13.4			—
Year 6 and beyond	84.5			—
Total lease payments	178.2			1.8
Interest	(43.9		)	(0.1		)
Total present value of lease liabilities	$	134.3		$	1.7

⁽¹⁾  Although our finance leases have a weighted average remaining lease term of 8.5 years, the primary lease includes a ten year rent-free period at the end of the contract such that there will be no lease payments made beyond December 2022.

Balance sheet presentation of leases as of December 28, 2019

(dollars in millions)	Operating leases		Finance leases
Right-of-use assets	$	123.0	$	2.8
Short-term lease liabilities (included in “Accrued expenses and other current liabilities”)	$	19.5	$	0.3
Long-term lease liabilities	114.8		1.4
Total lease liabilities	$	134.3	$	1.7

Right-of-use assets arising under finance leases are presented in the property, plant and equipment, net line item in the consolidated balance sheet. The amortization of right-of-use operating assets during the year ended December 28, 2019 was $23.6 million. This is included in the change in prepaid expenses and other assets line in the consolidated statement of cash flows.

Topic 840 Disclosures

Future minimum lease payments under operating and finance leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2018 were as follows:

(dollars in millions)	Operating leases		Finance leases		Total
Fiscal year
2019	$	25.0	$	0.3	$	25.3
2020	21.3		0.3		21.6
2021	18.2		0.3		18.5
2022	14.4		0.3		14.7
2023	12.6		0.4		13.0
2024 and beyond	86.5		0.4		86.9
Total	$	178.0	$	2.0	$	180.0

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Accrued expenses and other liabilities

12 Months Ended

Dec. 28, 2019

Payables and Accruals [Abstract]

Accrued expenses and other liabilities

Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
Accrued compensation	$	47.3	$	75.0
Current portion of lease obligations	19.8		0.1
Derivative financial instruments	60.9		41.7
Payroll and related taxes payable	11.3		13.6
VAT and other taxes payable	11.5		10.9
Warranty reserve	17.7		14.3
Workers’ compensation reserve	10.0		11.1
Other accrued expenses and other liabilities	95.0		96.7
	$	273.5	$	263.4

The above liabilities are presented in Gates’ balance sheet within other current liabilities and other non-current liabilities as follows:

(dollars in millions)	As of December 28, 2019		As of December 29, 2018
—Accrued expenses and other current liabilities	$	188.8	$	184.2
—Other non-current liabilities	84.7		79.2
	$	273.5	$	263.4

Changes in warranty reserves (included in accrued expenses and other liabilities) were as follows:

	For the year ended
(dollars in millions)	December 28, 2019			December 29, 2018			December 30, 2017
Balance at the beginning of the period	$	14.3		$	14.1		$	14.3
Charge for the period	16.5			11.6			12.3
Utilized during the period	(10.9		)	(11.0		)	(13.1		)
Released during the period	(2.2		)	(0.1		)	(0.1		)
Foreign currency translation	—			(0.3		)	0.7
Balance at the end of the period	$	17.7		$	14.3		$	14.1

Warranty reserves

An accrual is made for warranty claims on various products depending on specific market expectations and the type of product. These estimates are established using historical information on the nature, frequency and average cost of warranty claims. The majority of the warranty accruals are expected to be utilized during 2019, with the remainder estimated to be utilized within the next three years.

An accrual is made for the cost of product recalls if management considers it probable that it will be necessary to recall a specific product and the amount can be reasonably estimated.