Risk Management

Foreign Currency Risk

As of June 30, 2018, the Company had outstanding foreign exchange contracts with notional amounts totaling $681 million, compared to $507 million outstanding at December 31, 2017. 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 June 30, 2018, and the corresponding positions as of December 31, 2017:



	Notional Amount
Net Buy (Sell) by Currency	June 30, 2018			December 31, 2017
Euro	$	245		$	149
British Pound	162			72
Chinese Renminbi	(68		)	(73		)
Australian Dollar	(66		)	(64		)
Brazilian Real	(39		)	(45		)

As of the six months ended June 30, 2018, the Company had entered into forward contracts to sell £25 million, expiring in September 2018. 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. The gains and losses on the Company's net investment in British 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 June 30, 2018, the fair value of the derivative contracts was a $2 million liability.

Interest Rate Risk

Certain of the Company's subsidiaries have variable interest loans denominated in the Euro and Chilean Peso. 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 hedges. 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 was de minimus at June 30, 2018 and December 31, 2017.

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 June 30, 2018, all of the counterparties have investment grade credit ratings. As of June 30, 2018, the Company had $4 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 June 30, 2018 and December 31, 2017:



	Fair Values of Derivative Instruments
	Assets			Liabilities
June 30, 2018	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	2	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	4	Other current assets	$	6	Accrued liabilities
Total derivatives	$	4		$	8



	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	3	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	5	Other current assets	$	2	Accrued liabilities
Total derivatives	$	5		$	5

The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months ended June 30, 2018 and July 1, 2017:



	Three Months Ended					Six Months Ended					Balance Sheet Location
Loss on Derivative Instruments	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017			Balance Sheet Location
Foreign exchange contracts	$	5	$	(2	)	$	2	$	(2	)	Other comprehensive income (loss)

The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months ended June 30, 2018 and July 1, 2017:



	Three Months Ended					Six Months Ended					Statements of Operations Location
Gain (loss) on Derivative Instruments	June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017		Statements of Operations Location
Foreign exchange contracts	$	(19	)	$	18	$	(23	)	$	11	Other income (expense)