12. Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency exchange rate risk. The Company has entered into certain financial derivative instruments to manage this risk.

The derivative financial instruments the Company has entered into are forward exchange contracts which have terms of less than a year to economically hedge foreign currency exchange rate risk on recognized nonfunctional currency monetary accounts. The purpose of the Company’s foreign currency economic hedging activities is to economically hedge the Company’s risk from changes in the fair value of non-functional currency denominated monetary accounts.

The Company records all derivative financial instruments at their fair value in its consolidated balance sheets. None of the derivative financial instruments that the Company holds are designated as either a fair value hedge or cash flow hedge and the gain or loss on the derivative instrument is recorded in earnings. The Company has determined that the fair value of its derivative financial instruments are computed using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability) in the fair value hierarchy as the fair value is based on publicly available foreign exchange rates at each financial reporting date.

The table below provides data about the fair value of the derivative instruments that are recorded in the consolidated balance sheets (in millions):

	December 31, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts⁽¹⁾	$	—	$	—	$	1	$	—

⁽¹⁾

Included in other current liabilities and other current assets in the consolidated balance sheets. The total notional amount of the forward foreign exchange contracts was approximately $37 million and $76 million at December 31, 2017 and 2016, respectively.

The table below provides the gains and (losses) recognized in other income in the accompanying consolidated statements of operations related to the Company’s derivative instruments (in millions):

	December 31,
	2017		2016		2015
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	$	1	$	12	$	(4	)

As of December 31, 2017, the Company’s financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when the Company’s financial instruments are in net liability positions. The Company does not use derivative financial instruments for trading or speculative purposes.