We are exposed to certain financial risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheets. We designate certain of our currency swaps as net investment hedges and designate our interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in other comprehensive income (“OCI”) and reclassified into net income in the same period or periods during which the hedged transaction affects earnings.

The period end fair values of derivative financial instruments were as follows:


	As of March 29, 2025										As of December 28, 2024
(dollars in millions)	Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other non- current liabilities		Net		Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other non- current liabilities		Net
Derivatives designated as hedging instruments:
—Currency swaps	$	14.4	$	—	$	—	$	(68.2)	$	(53.8)	$	16.3	$	1.3	$	—	$	(37.0)	$	(19.4)

—Interest rate swaps	6.8		—		(4.0)		(3.5)		(0.7)		13.4		0.2		(6.2)		(0.3)		7.1

Derivatives not designated as hedging instruments:

—Currency forward contracts	2.4		—		(0.6)		—		1.8		2.1		—		(0.4)		—		1.7
	$	23.6	$	—	$	(4.6)	$	(71.7)	$	(52.7)	$	31.8	$	1.5	$	(6.6)	$	(37.3)	$	(10.6)

We hold cross currency swaps that have been designated as net investment hedges of certain of our European and Chinese operations. In July 2024, we executed a new USD-EUR fixed-to-fixed cross currency swap with a notional principal amount of €277.4 million with a contract term from August 2, 2024 to August 2, 2029. In November 2023, we executed a USD to Chinese Yuan fixed-to-fixed cross currency swap with a notional principal amount of ¥1,784.0 million with a contract term from November 30, 2023 to November 30, 2026. During November 2022, we executed additional cross currency swaps with the notional principal amount of €501.6 million and contract term from November 16, 2022 to November 16, 2027. During March 2022, we extended our cross currency swaps with the notional principal amount of €254.5 million existing at that time, which originally matured in March 2022, to now mature on March 31, 2027. As of both March 29, 2025 and December 28, 2024, the aggregated notional principal amounts of the cross currency swaps were €1,033.5 million and ¥1,784.0 million.

The fair value gain before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:


	Three months ended
(dollars in millions)		March 29, 2025		March 30, 2024
Net fair value (loss) gain recognized in OCI in relation to:

—Designated cross currency swaps		$	(34.6)	$	19.0
Total net fair value (loss) gain		$	(34.6)	$	19.0

During the three months ended March 29, 2025, a net gain of $4.8 million was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges, compared to a net gain of $3.2 million during the three months ended March 30, 2024.

We use interest rate swaps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. As of both March 29, 2025 and December 28, 2024, we held pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $1,255.0 million. Interest rate swaps with a notional amount of $870.0 million run from June 30, 2020 through June 30, 2025, while interest rate swaps with a notional amount of $385.0 million have a contract term from November 16, 2022 to November 16, 2027.

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:


	Three months ended
(dollars in millions)		March 29, 2025		March 30, 2024
Movement recognized in OCI in relation to:
—Fair value (loss) gain on cash flow hedges		$	(3.6)	$	13.6

—Reclassification from OCI to net income		(6.8)		(9.0)
Total movement		$	(10.4)	$	4.6

We do not designate our currency forward contracts, which are used primarily in respect of operational currency exposures related to payables, receivables and material procurement, or the currency swap contracts that are used to manage the currency profile of Gates’ cash, as hedging instruments for the purposes of hedge accounting.

As of March 29, 2025, the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $180.7 million, compared to $147.5 million as of December 28, 2024.

The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:


	Three months ended
(dollars in millions)		March 29, 2025		March 30, 2024
Fair value gains recognized in relation to:
—Currency forward contracts recognized in SG&A		$	1.4	$	2.1

Total		$	1.4	$	2.1