Restructuring and other strategic initiatives

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

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



	Three months ended					Nine months ended
(dollars in millions)	September 28, 2019			September 29, 2018		September 28, 2019			September 29, 2018
Restructuring expenses:
—Severance	$	0.4		$	0.1	$	3.3		$	—
—Professional fees	0.1			0.8		1.4			3.0
—Other restructuring (benefits) expenses	(0.2		)	0.3		(0.8		)	0.2
	0.3			1.2		3.9			3.2
Restructuring expenses in cost of sales:
—Impairment of inventory	1.0			—		1.3			—
Total restructuring expenses	$	1.3		$	1.2	$	5.2		$	3.2

Expenses related to other strategic initiatives:
—Severance costs included in cost of sales	$	2.5		$	—	$	3.0		$	—
—Severance costs included in SG&A	1.8			0.9		3.0			0.3
—Impairment of fixed assets	0.7			—		0.7			—
Total expenses related to other strategic initiatives	$	5.0		$	0.9	$	6.7		$	0.3

Restructuring and other strategic initiatives undertaken during the three months ended September 28, 2019 related primarily to reductions in force, particularly in the U.S. and Asia, and impacts from facility closures and consolidations, primarily the impairment of inventory and fixed assets. Expenses incurred during the prior year period in connection with our restructuring and other strategic initiatives related primarily to the reorganization of our European corporate center and a strategic restructuring of part of our Asian business.

Restructuring and other strategic initiatives undertaken during the nine months ended September 28, 2019 related primarily to reductions in force, across all regions and impairments of inventory and fixed assets related to facility closures in countries including France, the U.S., Turkey and Australia. An additional $1.4 million of professional fees were incurred during the current period, relating primarily to the closure of one of our facilities in France, the reorganization of our European corporate center, and a strategic restructuring of part of our Asian business. Expenses incurred during the prior year period in connection with our restructuring and other strategic initiatives also related primarily to the items described above.

Restructuring activities

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



	Three months ended				Nine months ended
(dollars in millions)	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Power Transmission	$	0.3	$	0.9	$	3.5	$	2.1
Fluid Power	1.0		0.3		1.7		1.1
Continuing operations	$	1.3	$	1.2	$	5.2	$	3.2

The following summarizes the reserve for restructuring expenses for the nine month periods ended September 28, 2019 and September 29, 2018, respectively:



	Nine months ended
(dollars in millions)	September 28, 2019			September 29, 2018
Balance as of the beginning of the period	$	2.6		$	8.6
Utilized during the period	(4.0		)	(8.3		)
Net charge for the period	3.9			3.5
Released during the period	—			(0.3		)
Foreign currency translation	(0.1		)	0.1
Balance as of the end of the period	$	2.4		$	3.6

Restructuring reserves, the majority of which are expected to be utilized during the remainder of 2019 and in 2020, are included in the condensed consolidated balance sheet as follows:



(dollars in millions)	As of September 28, 2019		As of September 29, 2018
Accrued expenses and other current liabilities	$	2.4	$	3.4
Other non-current liabilities	—		0.2
	$	2.4	$	3.6