The Company is exposed to various market risks including, but not limited to, foreign currency exchange rates and market interest rates. The Company strives to control its exposure to these risks through our normal operating activities and, where appropriate, through the use of derivative financial instruments. Derivative financial instruments are measured at fair value on a recurring basis using various pricing models that incorporate observable market parameters, such as interest rate yield curves and foreign currency rates and are classified as Level 2 within the fair value hierarchy.

For a designated cash flow hedge, the effective portion of the change in the fair value of the derivative financial instrument is recorded in AOCI in the condensed consolidated balance sheets. When the underlying hedged transaction is realized, the gain or loss previously included in AOCI is recorded in earnings and reflected in the condensed consolidated statements of operations on the same line as the gain or loss on the hedged item attributable to the hedged risk. The gain or loss associated with changes in the fair value of derivatives not designated as hedges are recorded immediately in the condensed consolidated statements of operations on the same line as the associated risk. For a designated net investment hedge, the effective portion of the change in the fair value of the derivative financial instrument is recorded as a cumulative translation adjustment in AOCI in the condensed consolidated balance sheets.

The Company is exposed to the risk that adverse changes in foreign currency exchange rates could impact its net investment in non-U.S. subsidiaries. To manage this risk, the Company designates certain qualifying derivative and non-derivative instruments, including cross-currency swaps and foreign currency-denominated debt, as net investment hedges of certain non-U.S. subsidiaries.

The Company has a fixed-rate, cross-currency swap, maturing on December 25, 2024, with a notional value of $60.0 million (€54.8 million). The cross-currency swap is designated as a hedge of the Company's net investment in a euro-based subsidiary. The Company entered into the cross-currency swap to mitigate changes in net assets due to changes in U.S. dollar-euro spot exchange rate.

Hedge effectiveness is assessed at the inception of the hedging relationship and quarterly thereafter, under the spot-to-spot method. The Company recognizes the impact of all other changes in fair value of the derivative, which represents the interest rate differential of the cross-currency swap, through interest expense. For the three months ended November 2, 2024 and October 28, 2023, the Company recorded gains of $0.3 million and $0.4 million, respectively, in interest expense, net in the condensed consolidated statements of operations. For the six months ended November 2, 2024 and October 28, 2023, the Company recorded gains of $0.5 million and $1.1 million, respectively, in interest expense, net in the condensed consolidated statements of operations.

As of November 2, 2024 and April 27, 2024, the Company designated its euro-denominated long-term borrowings of $297.9 million and $294.0 million, respectively, under the Amended Credit Agreement as a net investment hedge of the foreign currency exposure of its investment in its euro-denominated subsidiaries. Due to changes in the value of the euro-denominated long-term borrowings designated as a net investment hedge, in the three months ended November 2, 2024 and October 28, 2023, gains, net of tax, of $0.4 million and $7.5 million, respectively, were recognized within the currency translation section of other comprehensive income (loss). In the six months ended November 2, 2024 and October 28, 2023, a loss, net of tax, of $3.0 million and gain, net of tax, of $7.3 million, respectively, were recognized within the currency translation section of other comprehensive income (loss). Included in AOCI related to this net investment hedge were cumulative gains of $1.2 million and $4.2 million, respectively, as of November 2, 2024 and April 27, 2024.

The Company utilizes interest rate swaps to limit its exposure to market fluctuations on its variable-rate borrowings. The interest rate swaps effectively convert a portion of the Company's variable rate borrowings to a fixed rate based upon a determined notional amount. The Company has an interest rate swap, maturing on October 31, 2027, with a notional value of $143.1 million (€132.0 million). The interest rate swaps are designated as cash flow hedges.

Hedge effectiveness is assessed at the inception of the hedging relationship and quarterly thereafter. The effective portion of the periodic changes in fair value is recognized in AOCI in the condensed consolidated balance sheets. Subsequently, the accumulated gains and losses recorded in AOCI are reclassified to income in the period during which the hedged cash flow impacts earnings, which are expected to be immaterial over the next 12 months. No ineffectiveness was recognized in the three or six months ended November 2, 2024 and October 28, 2023.

The Company uses short-term foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-functional currency balance sheet exposures. These forward contracts are not designated as hedging instruments. Gains and losses on these forward contracts are recognized in other expense, net, along with the foreign currency gains and losses on monetary assets and liabilities, in the condensed consolidated statements of operations.

As of November 2, 2024 and April 27, 2024, the Company held foreign currency forward contracts with a notional value of $128.0 million and $110.9 million, respectively. During the three and six months ended November 2, 2024, the Company recognized a gain of $0.5 million and $0.5 million, respectively, related to foreign currency forward contracts in the condensed consolidated statements of operations. During the three and six months ended October 28, 2023, the Company recognized a loss of $0.8 million and $2.7 million, respectively, related to foreign currency forward contracts in the condensed consolidated statements of operations.

Effect of derivative instruments on comprehensive income (loss)

The pre-tax effects of derivative financial instruments recorded in other comprehensive income (loss) were as follows:


	Three Months Ended						Six Months Ended
	November 2, 2024			October 28, 2023			November 2, 2024			October 28, 2023
(in millions)	(14 Weeks)			(13 Weeks)			(27 Weeks)			(26 Weeks)
Net investment hedges	$	0.1		$	1.1		$	(0.8	)	$	1.2
Interest rate swaps		(1.4	)		(0.4	)		(2.7	)		(2.7	)
Total	$	(1.3	)	$	0.7		$	(3.5	)	$	(1.5	)

The fair value of derivative instruments are classified as Level 2 within the fair value hierarchy and are recorded in the condensed consolidated balance sheets as follows:


		Asset/(Liability)
(in millions)	Financial Statement Caption	November 2, 2024			April 27, 2024
Derivatives designated as hedging instruments:
Net investment hedges	Prepaid expenses and other current assets	$	0.5		$	1.3
Interest rate swaps	Other long-term liabilities	$	(4.8	)	$	(2.1	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other accrued liabilities	$	(0.3	)	$	(0.2	)