Segment information A. Background Topic 280  Segment Reporting  requires segment information provided in the consolidated financial statements to reflect the information that is provided to the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (CEO) of Gates serves as the chief operating decision maker. The segment information provided in these consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. These decisions are based on net sales and Adjusted EBITDA (defined below). Certain amounts relating to prior periods have been reclassified in this footnote to conform to the current year presentation. B. Operating Segments Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power. C. 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 finance costs, 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 included primarily:  non-cash charges in relation to share-based compensation;  transaction-related expenses incurred in relation to business combinations and major corporate transactions, including acquisition integration activities;  the effect on cost of sales of fair value adjustments to the carrying amount of inventory acquired in business combinations;  impairments, comprising impairments of goodwill and significant impairments or write downs of other assets;  restructuring 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. D. Disaggregated net sales, Adjusted EBITDA and segment assets  continuing operations The following table summarizes our net sales by segment: For the year ended (dollars in millions) December 29, 2018 December 30, 2017 December 31, 2016 Power Transmission $ 2,098.8 $ 2,009.4 $ 1,862.1 Fluid Power 1,248.8 1,032.3 884.9 Continuing operations $ 3,347.6 $ 3,041.7 $ 2,747.0 The following table summarizes our net sales by key geographic region: For the year ended (dollars in millions) December 29, 2018 December 30, 2017 December 31, 2016 U.S. $ 1,278.0 $ 1,148.1 $ 1,057.6 Rest of North America 344.9 283.0 261.6 U.K. 94.9 84.8 72.7 Rest of EMEA 757.3 696.1 630.8 East Asia and India 399.2 386.7 365.4 Greater China 369.7 337.1 268.7 South America 103.6 105.9 90.2 Net Sales $ 3,347.6 $ 3,041.7 $ 2,747.0 The following table summarizes our net sales by emerging and developed markets: For the year ended (dollars in millions) December 29, 2018 December 30, 2017 December 31, 2016 Developed $ 2,157.4 $ 1,964.4 $ 1,801.5 Emerging 1,190.2 1,077.3 945.5 Net Sales $ 3,347.6 $ 3,041.7 $ 2,747.0 The following table summarizes Adjusted EBITDA by segment: For the year ended (dollars in millions) December 29, 2018 December 30, 2017 December 31, 2016 Power Transmission $ 492.2 $ 458.1 $ 408.5 Fluid Power 263.6 211.0 186.4 Continuing operations $ 755.8 $ 669.1 $ 594.9 Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included above. Reconciliation of net income from continuing operations to Adjusted EBITDA: For the year ended (dollars in millions) December 29, 2018 December 30, 2017 December 31, 2016 Net income from continuing operations $ 271.7 $ 182.0 $ 71.9 Income tax expense (benefit) 31.8 (72.5 ) 21.1 Income from continuing operations before taxes 303.5 109.5 93.0 Interest expense 175.9 234.6 216.3 Other expenses (income) 17.4 58.8 (4.0 ) Operating income from continuing operations 496.8 402.9 305.3 Depreciation and amortization 218.5 212.2 240.8 Transaction-related expenses (1) 6.7 18.1 0.4 Impairment of intangibles and other assets 0.6 2.8 3.2 Restructuring expenses 6.4 17.4 11.4 Share-based compensation 6.0 5.4 4.2 Sponsor fees (included in other operating expenses) 8.0 6.7 6.1 Impact of fair value adjustment on inventory (included in cost of sales) (2) 0.3 1.2  Inventory adjustments (included in cost of sales) (3) 1.2 2.0 21.7 Acquisition-related costs (included in cost of sales)  0.7  Benefit from sale of inventory impaired in a prior period (4)   (1.0 ) Duplicate expenses incurred on facility relocation 5.2   Severance-related expenses (included in cost of sales) 1.7   Other adjustments (included in SG&amp;A) 4.4 (0.3 ) 2.8 Adjusted EBITDA $ 755.8 $ 669.1 $ 594.9 (1) Transaction-related costs relate primarily to advisory costs recognized in respect of the initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings. (2) As part of the accounting for business combinations, the inventory acquired in a business combination is fair valued as of the date of the acquisition. This uplifted inventory value is then expensed through cost of sales as the inventory is sold. We add back to operating income from continuing operations in arriving at Adjusted EBITDA this excess value of inventory over its historical carrying amount. (3) These adjustments include, in Fiscal 2018, an inventory impairment related to a restructuring activity in Malaysia and, in Fiscal 2017, the impairment of inventory in Singapore related to an earlier restructuring activity. During Fiscal 2016 , Gates changed its accounting convention to expense maintenance, repair and operations assets below a nominal value threshold and also revised its methods for estimating the write down for excess or obsolete raw materials and work in progress. These changes, comprising $17.7 million of this line item, were made to bring consistency to our global inventory management. (4) This benefit relates to inventory sold during the second quarter of 2016 that had been previously impaired as part of a restructuring initiative. The initial impairment was excluded from Adjusted EBITDA when it was recognized in an earlier period. For consistency, the recovery in the value of the inventory through its sale has therefore also been excluded from Adjusted EBITDA, to the extent of the original impairment recognized on the inventory sold. 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. E. Selected geographic information (dollars in millions) As of December 29, 2018 As of December 30, 2017 Property, plant and equipment, net by geographic location U.S. $ 212.5 $ 198.9 Rest of North America 107.4 79.4 U.K. 33.3 35.7 Rest of EMEA 157.3 120.1 East Asia and India 75.6 86.5 Greater China 149.3 141.8 South America 20.9 23.8 $ 756.3 $ 686.2 F. Information about major customers Gates has a significant concentration of sales in the U.S., which accounted for 39.2% of Gates net sales by destination from continuing operations during Fiscal 2018 , compared with 38.5% during Fiscal 2017 and 38.5% during Fiscal 2016 . During Fiscal 2018 , 2017 and 2016 , no single customer accounted for more than 10% of Gates net sales. Two customers of our North America businesses accounted for 17.2% and 10.7% , respectively, of our total trade accounts receivable balance as of December 29, 2018 , compared with 14.9% and 10.8% , respectively, as of December 30, 2017 . These concentrations are due to the extended payment terms common in the industry in which they operate.