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Restructuring and other strategic initiatives
 6 Months Ended
Jun. 27, 2020
Restructuring and Related Activities [Abstract]  
Restructuring and other strategic initiatives Restructuring and other strategic initiatives
Gates continues to undertake various restructuring and other strategic initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, combine back-office workgroups and relocate certain operations to lower cost locations. Our recently completed manufacturing footprint investments and other productivity improvements in recent years have helped to position us to accelerate and expand upon our previously announced restructuring program, which is primarily intended to optimize our manufacturing and distribution footprint over the mid-term by removing structural fixed costs, and, to a lesser degree, to streamline our selling, general and administrative (“SG&A”) back-office functions.
Overall costs associated with our restructuring and other strategic initiatives have been recognized in the condensed consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.
Three months endedSix months ended
(dollars in millions)
June 27, 2020June 29, 2019June 27, 2020June 29, 2019
Restructuring expenses:
—Severance expenses$13.6  $0.3  $13.8  $2.9  
—Consulting expenses0.7  0.7  0.9  1.3  
—Other restructuring expenses2.9  (0.7) 4.4  (0.6) 
17.2  0.3  19.1  3.6  
Restructuring expenses in asset impairments:
—Impairment of fixed assets3.7  —  3.7  —  
Restructuring expenses in cost of sales:
—Impairment of inventory1.4  0.3  1.4  0.3  
Total restructuring expenses$22.3  $0.6  $24.2  $3.9  
Expenses related to other strategic initiatives:
—Severance expenses included in cost of sales$0.5  $0.5  $0.6  $0.5  
—Severance expenses included in SG&A0.3  1.4  0.8  1.2  
Total expenses related to other strategic initiatives$0.8  $1.9  $1.4  $1.7  
Restructuring and other strategic initiatives undertaken during the three and six months ended June 27, 2020 related primarily to the June 2020 announcement of plans to close a manufacturing facility in Korea, the closure of two North American manufacturing facilities and reductions in workforce, primarily in the U.S., Mexico and Greater China. The closure of the Korean facility, the most significant restructuring activity during the period, resulted in an accrual for severance costs of $12.8 million, an impairment of inventory of $1.4 million (recognized in cost of sales) and an impairment of fixed assets of $3.6 million, included in the asset impairments line in the unaudited condensed consolidated statement of operations. Expenses incurred in connection with our restructuring and other strategic initiatives during the three and six months ended June 29, 2019 related primarily to the closure of one of our facilities in France and a strategic restructuring of part of our Asian business.
Restructuring activities
As indicated above, restructuring expenses, as defined under U.S. GAAP, form a subset of our total expenses related to restructuring and other strategic initiatives. These expenses include the impairment of inventory, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:
Three months endedSix months ended
(dollars in millions)
June 27, 2020June 29, 2019June 27, 2020June 29, 2019
Power Transmission$19.8  $0.3  $20.0  $3.2  
Fluid Power2.5  0.3  4.2  0.7  
Continuing operations$22.3  $0.6  $24.2  $3.9  
The following summarizes the reserve for restructuring expenses for the six months ended June 27, 2020 and June 29, 2019, respectively:
Six months ended
(dollars in millions)
June 27, 2020June 29, 2019
Balance as of the beginning of the period$2.9  $2.6  
Utilized during the period(4.9) (5.0) 
Net charge for the period19.6  3.6  
Released during the period(0.5) —  
Foreign currency translation0.1  —  
Balance as of the end of the period$17.2  $1.2  
Restructuring reserves, which are expected to be utilized in 2020 and 2021, are included in the condensed consolidated balance sheet within the accrued expenses and other current liabilities line.