The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report. 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" above, Part I, Item 1A. "Risk Factors" in our annual report and Part II, Item 1A. "Risk Factors" below. 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 three months endedMarch 28, 2020 , 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 three months endedMarch 28, 2020 , 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 three months endedMarch 28, 2020 , with first-fit automotive sales inNorth 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. 29 -------------------------------------------------------------------------------- Table of Contents 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 withU.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. Impact of COVID-19 Pandemic The first quarter of 2020 marked the beginning of an unprecedented environment for the global economy, as governments, companies and communities implemented strict measures to minimize the spread of the COVID-19 pandemic. We are prioritizing the health and safety of our employees and the communities around the world in which we operate, taking additional protective measures in our plants to safely maintain operational continuity in support of our global customer base. In early February, as our business inChina was being impacted, we mobilized a centralized crisis response team that developed and is tactically engaged in the implementation of our countermeasure actions across our global footprint. We are adhering to local government mandates and guidance provided by health authorities and have proactively implemented quarantine protocols, social distancing policies, working from home arrangements, travel suspensions, frequent and extensive disinfecting of our workspaces, provision of personal protective equipment, and mandatory temperature monitoring at our facilities. We expect to continue to implement these measures and we may take further actions if required or recommended by government authorities or if we determine them to be in the best interests of our employees, customers, and suppliers. Our operations are supported largely by local supply chains. Where necessary, we have taken steps to qualify additional suppliers to ensure we are able to maintain continuity of supply. Although we have not experienced any significant disruptions to date, certain of our suppliers have, or may in the future, temporarily close operations, delay order fulfillment or limit production due to the pandemic. Continued disruptions, shipping delays or insolvency of key vendors in our supply chain could make it difficult or more costly for us to obtain the raw materials or other inputs we need for our operations. Gates employs an in-region, for-region manufacturing strategy, under which local operations primarily support local demand. In those cases where local production supports demand in other regions, contingency plans have been activated as appropriate. In addition to the handful of plants that were temporarily closed by government mandates, we have proactively managed our output to expected demand levels and occasionally suspended production at other plants for short periods of time. We may continue to experience these production disruptions, which could place constraints on our ability to produce our products and meet customer demand. Of these temporary closures in the first quarter, the most significant for us was inGreater China , where we closed all of our production facilities for approximately three weeks. We have since safely returned these plants to more normalized capacity. Our two largest regions ofEurope andNorth America did not begin to see an impact from COVID-19 until late March. With large portions of the economies in these regions having effectively been shut down since the beginning of April, we expect the second quarter to be the most difficult of the year, with core revenue likely to sequentially decline in the range of 15-25% compared with the first quarter. As shelter-in-place requirements ease and there is continued progress in the fight against COVID-19, we expect the second half of the year to improve sequentially from the second quarter. Given the magnitude of the decline we expect to experience in the first half of the year and the different rates of demand recovery we believe we will see across different end markets and geographies, we expect the full year to result in a revenue decline compared with the prior year. Reflecting the progress we made last year in right-sizing the business, we would expect our full-year decremental margin to be an improvement from what we saw in 2019, despite the relatively unexpected and significant decline in revenue as a result of the pandemic. We have strength and flexibility in our liquidity position, which includes committed borrowing headroom of$440.3 million under our lines of credit (none of which are currently expected to be drawn in the foreseeable future), in addition to cash balances of$626.3 million as ofMarch 28, 2020 . Our business also has a demonstrated ability to generate free cash flow even in challenging environments. As a result of the unpredictable and evolving impact of the pandemic and measures being taken around the world to combat its spread, the timing and trajectory of the recovery are unclear at this time, and the adverse impact of the pandemic on Gates' operations may be material. In addition, see Item 1A. "Risk Factors" in Part II of this quarterly report for updates to our risk factors regarding risks associated with the COVID-19 pandemic. 30 -------------------------------------------------------------------------------- Table of Contents Despite this highly uncertain environment, our experience inChina and subsequently has helped frame our response to this crisis and our focus in 2020 will continue to be on: •safely supporting our employees, customers and the communities in which we operate; •actively managing what we can control in terms of our supply chains and operations; •managing our compressible spending to the prevailing demand conditions by tightly controlling discretionary spending; and •funding our key growth initiatives to enhance our differentiation in the market and allow us to emerge from this downturn in an even stronger competitive position. Results for the three months endedMarch 28, 2020 compared with the results for the three months endedMarch 30, 2019 Summary Gates Performance Three months ended (dollars in millions) March 28, 2020 March 30, 2019 Net sales$ 710.1 $ 804.9 Cost of sales 454.3 497.6 Gross profit 255.8 307.3 Selling, general and administrative expenses 193.4 200.5 Transaction-related (income) expenses (0.2) 0.4 Restructuring expenses 1.9 3.3 Other operating expenses 2.3 2.9 Operating income from continuing operations 58.4 100.2 Interest expense 36.7 38.1 Other income (2.1) (3.3) Income from continuing operations before taxes 23.8 65.4 Income tax benefit (16.1) (539.7) Net income from continuing operations$ 39.9 $ 605.1 Adjusted EBITDA(1)$ 120.8 $ 165.5 Adjusted EBITDA margin 17.0 % 20.6 % (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 three months endedMarch 28, 2020 were$710.1 million , down by 11.8%, or$94.8 million , compared with net sales during the prior year period of$804.9 million . Please see "-Analysis by Operating Segment" for a discussion of changes in net sales for each of our segments. Our net sales for the three months endedMarch 28, 2020 were adversely impacted by movements in average currency exchange rates of$13.7 million compared with the prior year period, due principally to the strengthening of theU.S. dollar against a number of currencies, including the Euro and the Brazilian Real. Excluding this impact, core sales decreased by$81.1 million , or 10.1%, during the three months endedMarch 28, 2020 compared with the prior year period. This decrease was due primarily to lower volumes. 31 -------------------------------------------------------------------------------- Table of Contents Core sales in ourPower Transmission and Fluid Power businesses declined by 9.8% and 10.6%, respectively, for the three months endedMarch 28, 2020 . These declines came from sales to both our industrial and automotive customers, and in almost every region, due to slowing demand driven by the impact of the COVID-19 pandemic. These declines were primarily concentrated in sales to first-fit customers, which declined globally by 14.9% during the three months endedMarch 28, 2020 compared with the prior year period, while sales into the replacement channels declined by 7.0% during the same period. During the three months endedMarch 28, 2020 , sales inNorth America were down by 9.2%, driven by an 18.3% decrease in sales to industrial first-fit customers, while overall sales inGreater China were lower by 30.1%, primarily the result of a 44.5% decline in automotive first-fit sales. Industrial sales were particularly weak in the construction and general industrial end markets, which declined globally by 15.3% and 11.0%, respectively, during the three months endedMarch 28, 2020 compared with the prior year period, primarily inNorth America .Greater China sales into the automotive end market were down by 38.9% during the three months endedMarch 28, 2020 compared with the prior year period, primarily due to the impact of approximately three weeks of production shutdown as a result of the measures taken in response to the COVID-19 pandemic. Automotive end market sales in EMEA were 3.7% higher during the three months endedMarch 28, 2020 compared with the prior year period, but declines in sales into the construction and general industrial end markets in EMEA more than offset this growth. Cost of sales Cost of sales for the three months endedMarch 28, 2020 was$454.3 million , a decrease of 8.7%, or$43.3 million , compared with$497.6 million for the prior year period. The decrease was driven primarily by lower volumes of$39.4 million and favorable movements in average currency exchange rates of$9.2 million . These decreases were offset primarily by$12.9 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 the current demand levels. Gross profit As a result of the factors described above, gross profit for the three months endedMarch 28, 2020 was$255.8 million , down 16.8% from$307.3 million for the prior year period. Our gross profit margin accordingly dropped by 220 basis points to 36.0% for the three months endedMarch 28, 2020 , down from 38.2% for the prior year period. Selling, general and administrative expenses SG&A expenses for the three months endedMarch 28, 2020 were$193.4 million compared with$200.5 million for the prior year period. This decrease of$7.1 million was driven primarily by favorable legal settlements of$4.5 million as well as lower outbound freight due to lower volumes, and travel cost savings due to measures put in place in response to the COVID-19 pandemic. Transaction-related (income) expenses Transaction-related income for the three months endedMarch 28, 2020 was$0.2 million compared with an expense of$0.4 million for the prior year period. The net income for the three months endedMarch 28, 2020 related primarily to discounts on professional services in relation to a terminated acquisition project. The transaction-related expenses incurred in the prior year period related primarily to corporate transactions. Restructuring expenses As described further under the "Business Trends" section of this report, we are accelerating and expanding 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. Restructuring expenses of$1.9 million were recognized during the three months endedMarch 28, 2020 , related primarily to the closure of two North American manufacturing facilities and reductions in workforce, primarily in theU.S. andAsia . Restructuring expenses of$3.3 million were recognized during the prior year period, relating primarily to the closure of one of our facilities inFrance and a strategic restructuring of part of our Asian business. 32 -------------------------------------------------------------------------------- Table of Contents Interest expense Our interest expense was as follows: Three months ended (dollars in millions) March 28, 2020 March 30, 2019 Debt: Dollar Term Loan$ 18.8 $ 20.7 Euro Term Loan 5.75.6 Dollar Senior Notes 8.8 8.6 33.3 34.9 Amortization of deferred issuance costs 2.4 2.5 Other interest expense 1.0 0.7$ 36.7 $ 38.1 Details of our long-term debt are presented in note 12 to the condensed consolidated financial statements included elsewhere in this report. Interest on debt for the three months endedMarch 28, 2020 decreased when compared with the equivalent prior year period due primarily to the lower interest rates applicable on the floating rate Dollar Term Loan. Other income Our other income were as follows: Three months ended (dollars in millions) March 28, 2020 March 30, 2019 Interest income on bank deposits$ (2.0) $ (1.1) Foreign currency loss (gain) on net debt and hedging instruments 0.3 (0.9) Net adjustments related to post-retirement benefits (0.5) (1.3) Other 0.1 -$ (2.1) $ (3.3) Other income for the three months endedMarch 28, 2020 was$2.1 million , compared with an expense of$3.3 million in the prior year period. This change was driven primarily by the impact on our net debt of movements in the Euro relative to theU.S. dollar. Lower expected returns on plan assets based on the most recent actuarial valuations also drove some of the decrease in other income during the three months endedMarch 28, 2020 compared with the prior year period, but this was offset by higher interest income on bank deposits due to the higher average cash balance on hand. Income tax expense We compute the year-to-date income tax provision by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust for discrete tax items in the period in which they occur. For the three months endedMarch 28, 2020 , we had an income tax benefit of$16.1 million on pre-tax income of$23.8 million , which resulted in an effective tax rate of (67.6)%, compared with an income tax benefit of$539.7 million on pre-tax income of$65.4 million , which resulted in an effective tax rate of (825.2)% for the three months endedMarch 30, 2019 . The increase in the effective tax rate for the three months endedMarch 28, 2020 compared with the prior year period was due primarily to the recognition in the prior year of a discrete benefit of$617.3 million related to the release of valuation allowances, mainly related to Luxembourg net operating losses, partially offset by a discrete expense of$66.1 million related primarily to unrecognized tax benefits from the European business reorganization. The current year rate is driven mainly by discrete tax benefits of$24.7 million , related to the reversal of unrecognized tax benefits, net of settlement amounts, arising from the resolution of audits inCanada andGermany and$3.2 million from law changes inIndia with respect to the taxation of dividends. These current period benefits were offset partially by$6.3 million of discrete expenses arising from the enactment in theU.S. of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). 33 -------------------------------------------------------------------------------- Table of Contents Deferred Tax Assets and Liabilities We recognize deferred tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities underU.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed. Our framework for assessing the recoverability of deferred tax assets requires us to weigh all available evidence, including: •taxable income in prior carry back years if carry back is permitted under the relevant tax law; •future reversal of existing temporary differences; •tax-planning strategies that are prudent and feasible; and •future taxable income exclusive of reversing temporary differences and carryforwards. As of each reporting date, management considers new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred tax assets. We will maintain our positions with regard to future realization of deferred tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred tax assets may impact materially our financial statements. Significant Events OnMarch 27, 2020 , the CARES Act was enacted and signed into law in theU.S. in response to the COVID-19 pandemic. One of the provisions of this law is an increase to the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income for the 2019 and 2020 tax years. This modification significantly increases the current deductible interest expense of the Company for both years, which will result in a cash benefit while increasing our effective tax rate through requirements to allocate and apportion interest expense for certain other tax purposes, including in determining our global intangible low-taxed income inclusion, deduction for foreign derived intangible income, and the utilization of foreign tax credits. Adjusted EBITDA Adjusted EBITDA for the three months endedMarch 28, 2020 was$120.8 million , a decrease of 27.0% or$44.7 million , compared with Adjusted EBITDA of$165.5 million for the prior year period. Adjusted EBITDA margin was 17.0% for the three months endedMarch 28, 2020 , a 360 basis point decrease from the prior year period margin of 20.6%. The decrease in Adjusted EBITDA was driven primarily by reduced gross profit of$51.5 million , which was the result of lower sales of$94.8 million , as well as the impact of lower fixed cost absorption on cost of sales as described above. Partially offsetting this decrease were lower SG&A expenses as noted above. For a reconciliation of net income to Adjusted EBITDA for each of the periods presented and the calculation of the Adjusted EBITDA margin, see "-Non-GAAP Measures." Analysis by Operating Segment Power Transmission (62.1% of Gates' net sales for the three months endedMarch 28, 2020 ) Three months ended (dollars in millions) March 28, 2020 March 30, 2019 Period over Period Change Net sales$ 441.2 $ 499.5 (11.7 %) Adjusted EBITDA$ 79.5 $ 109.9 (27.7 %) Adjusted EBITDA margin 18.0 % 22.0 % 34
-------------------------------------------------------------------------------- Table of Contents Net sales in Power Transmission for the three months endedMarch 28, 2020 were$441.2 million , a decrease of 11.7%, or$58.3 million , when compared with the prior year period net sales of$499.5 million . Excluding the adverse impact of movements in average currency exchange rates of$9.5 million , core sales decreased by 9.8%, or$48.8 million , compared with the prior year period. The majority of this decrease was due to lower sales volumes. Power Transmission's core sales decline was driven by lower sales to automotive first-fit and industrial replacement customers, which declined by 15.3% and 13.9%, respectively, during the three months endedMarch 28, 2020 compared with the prior year period. These declines were due primarily to weak demand inGreater China resulting from a combination of market softness and widespread shutdowns resulting from measures put in place in response to the COVID-19 pandemic. Sales to automotive replacement customers declined by 10.3% and 40.6% inNorth America andGreater China , respectively, during the three months endedMarch 28, 2020 compared with the prior year period, but this was offset partially by strong growth of 12.6% in EMEA. Industrial sales declined across all end markets during the three months endedMarch 28, 2020 compared with the prior year period, predominantly in the construction and general industrial end markets, driven by weakness inNorth America andGreater China . Our Power Transmission Adjusted EBITDA for the three months endedMarch 28, 2020 was$79.5 million , a decrease of 27.7% or$30.4 million , compared with the prior year period Adjusted EBITDA of$109.9 million . The decrease in Adjusted EBITDA was driven by lower volumes and lower manufacturing performance resulting in decreases in Adjusted EBITDA of$25.9 million and$6.3 million , respectively. Adjusted EBITDA margin for the three months endedMarch 28, 2020 was 18.0%, a 400 basis point decline from the prior year period Adjusted EBITDA margin of 22.0%, driven by the impacts described above.Fluid Power (37.9% of Gates' net sales for the three months endedMarch 28, 2020 ) Three months ended (dollars in millions) March 28, 2020 March 30, 2019 Period over Period Change Net sales$ 268.9 $ 305.4 (12.0 %) Adjusted EBITDA$ 41.3 $ 55.6 (25.7 %) Adjusted EBITDA margin 15.4 % 18.2 % Net sales inFluid Power for the three months endedMarch 28, 2020 were$268.9 million , a decrease of 12.0%, or$36.5 million , compared with net sales during the prior year period of$305.4 million . Excluding the adverse impact of movements in average currency exchange rates of$4.2 million , core sales decreased by 10.6%, or$32.3 million , compared with the prior year period. This decrease was due primarily to lower volumes. The core sales decline in the three months endedMarch 28, 2020 was driven almost exclusively by lower sales to industrial first-fit customers, which declined by 19.6% compared with the prior year period. Industrial sales into the construction and general industrial end markets were particularly weak, declining by 14.2% and 14.9%, respectively, during the three months endedMarch 28, 2020 , compared with the prior year period. This was driven primarily byNorth America , but construction end markets in EMEA were also weak, declining by 18.1% during the three months endedMarch 28, 2020 , compared with the prior year period. Adjusted EBITDA for the three months endedMarch 28, 2020 was$41.3 million , a decrease of 25.7%, or$14.3 million , compared with the prior year period Adjusted EBITDA of$55.6 million . The decrease in Adjusted EBITDA was driven primarily lower volumes of$20.4 million and manufacturing performance impacts of$6.6 million driven by lower fixed cost absorption on lower volumes and some excess variable costs. These impacts were offset partially by a$5.2 million benefit from favorable, inflation-mitigating pricing actions and a$5.4 million benefit from lower SG&A expenses. The Adjusted EBITDA margin consequently decreased by 280 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. 35 -------------------------------------------------------------------------------- Table of Contents 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 forU.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. While we have seen a decline in our business in the first quarter of 2020, and the duration and extent of the impacts of the COVID-19 pandemic on our business are difficult to predict, we do not currently anticipate any material long-term deterioration in our overall liquidity position in the foreseeable future. Further, we do not have any meaningful debt maturities until 2024 and we do not currently expect to need to draw down under our committed lines of credit in the foreseeable future. We therefore believe that as ofMarch 28, 2020 , we have adequate liquidity and capital resources for the next twelve months. Cash Flow Three months endedMarch 28, 2020 compared with the three months endedMarch 30, 2019 Cash provided by operations was$31.1 million during the three months endedMarch 28, 2020 compared with cash used in operations of$47.7 million during the prior year. This increase was driven primarily by an increase of$19.5 million in accounts payable during the current year period, compared with a decrease of$25.8 million in the prior year period, largely due to timing in both periods. Interest paid was lower at$25.5 million during the three months endedMarch 28, 2020 , compared with$51.4 million in the prior year period, due primarily to the timing of quarterly interest payments on the term loans as well as the absence of the usual biannual January interest payment on the Dollar Senior Notes as a result of the refinancing completed inNovember 2019 . Net income taxes paid were also lower, with$18.5 million paid during the three months endedMarch 28, 2020 compared with$33.0 million in the prior year period, largely a function of the lower operational performance. Net cash used in investing activities during the three months endedMarch 28, 2020 was$24.6 million , compared with$31.7 million in the prior year. This decrease was driven by lower capital expenditures, which decreased by$8.0 million from$22.9 million in the three months endedMarch 30, 2019 to$14.9 million in the three months endedMarch 28, 2020 . Net cash used in financing activities was$2.9 million during the three months endedMarch 28, 2020 , compared with$13.1 million in the prior year. This decrease was driven primarily by an additional quarterly amortization payment on our term loans in the prior year period due to the timing of our fiscal year end. In addition, dividend payments of$1.8 million were made to non-controlling shareholders of certain majority-owned subsidiaries in the prior year period with no similar payments in the current period. 36 -------------------------------------------------------------------------------- Table of Contents Indebtedness Our long-term debt, consisting principally of two term loans andU.S. dollar denominated unsecured notes, was as follows: Carrying amount Principal amount As of As of As of As of (dollars in millions) March 28,2020 December 28, 2019 March 28,2020 December 28, 2019 Debt: -Secured Term Loans (U.S. dollar and Euro denominated)$ 2,384.4 $
2,395.0
572.2 563.2 568.0 568.0 Other debt 0.2 0.2 0.1 0.2$ 2,956.8 $ 2,958.4 $ 2,972.4 $ 2,985.0 Details of our long-term debt are presented in note 12 to the condensed consolidated financial statements included elsewhere in this quarterly report. 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 onJuly 3, 2014 . These facilities mature onMarch 31, 2024 . These term loan facilities bear interest at a floating rate. As ofMarch 28, 2020 , 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 4.35% per annum. The Dollar Term Loan interest rate is re-set on the last business day of each month. As ofMarch 28, 2020 , 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 three months endedMarch 28, 2020 , we made amortization payments against the Dollar Term Loan and the Euro Term Loan of$4.3 million and$1.8 million , respectively. During the three months endedMarch 30, 2019 , we made amortization payments against the Dollar Term Loan and the Euro Term Loan of$8.7 million and$3.6 million , respectively. 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").
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