Risk Management

Foreign Currency Risk

As of April 1, 2017, the Company had outstanding foreign exchange contracts with notional amounts totaling $692 million, compared to $717 million outstanding at December 31, 2016. The Company does not believe these financial instruments should subject it to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset gains and losses on the underlying assets, liabilities and transactions.

The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of April 1, 2017, and the corresponding positions as of December 31, 2016:



	Notional Amount
Net Buy (Sell) by Currency	April 1, 2017			December 31, 2016
British Pound	$	172		$	246
Euro	158			122
Chinese Renminbi	(120		)	(108		)
Brazilian Real	(54		)	(56		)
Australian Dollar	(42		)	(51		)

During the three months ended April 1, 2017, the Company entered into forward contracts to sell £50 million, expiring in December 2017. The forward contracts have been designated as a net investment hedge which is in place to partially hedge the Company's British Pound foreign currency exposure on its net investment in Airwave Solutions Limited for the purpose of future cash repatriations. The gains and losses on the Company's net investment in pound-denominated foreign operations, driven by changes in foreign exchange rates, are economically offset by movements in the fair values of the forward contracts designated as net investment hedges. Any changes in fair value of the net investment hedges are reflected as a component of Accumulated other comprehensive loss. As of April 1, 2017, the fair value of the derivative contract was de minimus.

Interest Rate Risk

One of the Company’s European subsidiaries has Euro-denominated loans. The interest on the Euro-denominated loans is variable. The Company has interest rate swap agreements in place which change the characteristics of interest rate payments from variable to maximum fixed-rate payments. The interest rate swaps are not designated as a hedge. As such, changes in the fair value of the interest rate swaps are included in Other income (expense) in the Company’s condensed consolidated statements of operations. The fair value of the interest rate swaps liability was de minimus at both April 1, 2017 and December 31, 2016.

Counterparty Risk

The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of April 1, 2017, all of the counterparties have investment grade credit ratings. As of April 1, 2017, the Company had $2 million of exposure to aggregate net credit risk with all counterparties.

The following tables summarize the fair values and locations in the condensed consolidated balance sheets of all derivative financial instruments held by the Company as of April 1, 2017 and December 31, 2016:



	Fair Values of Derivative Instruments
	Assets			Liabilities
April 1, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	2	Other current assets	$	3	Accrued liabilities



	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2016	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	9	Other current assets	$	32	Accrued liabilities

The fair value of derivatives designated as hedging instruments at April 1, 2017 was de minimus.

The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated statements of operations for the three months ended April 1, 2017 and April 2, 2016:



	Three Months Ended				Statements of Operations Location
Loss on Derivative Instruments	April 1, 2017		April 2, 2016		Statements of Operations Location
Foreign exchange contracts	(7	)	(12	)	Other income (expense)