Financial Instruments

We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We enter into limited types of derivative contracts to manage foreign currency exposures that we hedge. Our primary foreign currency market exposures include the Philippine Peso, Indian Rupee and Mexican Peso. The fair market values of all our derivative contracts change with fluctuations in interest rates or currency exchange rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

We do not believe there is significant risk of loss in the event of non-performance by the counterparty associated with our derivative instruments because these transactions are executed with a major financial institution. Further, our policy is to deal only with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties.

Summary of Foreign Exchange Hedging Positions

At December 31, 2018 and 2017, we had outstanding forward exchange with gross notional values of $167 million and $160 million, respectively. At December 31, 2018, approximately 65% of these contracts mature within three months, 14% in three to six months, 17% in six to twelve months and 4% in greater than 12 months.

The following is a summary of the primary hedging positions and corresponding fair values:



	December 31, 2018				December 31, 2017
(in millions)	Gross Notional Value		Fair Value Asset (Liability)⁽¹⁾		Gross Notional Value		Fair Value Asset (Liability)⁽¹⁾
Currencies Hedged (Buy/Sell)
Philippine Peso/U.S. Dollar	$	53	$	—	$	62	$	—
Indian Rupee/U.S. Dollar	69		2		68		1
Mexican Peso/U.S. Dollar	8		—		9		—
All Other	37		—		21		—
Total Foreign Exchange Hedging	$	167	$	2	$	160	$	1

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(1)	Represents the net receivable (payable) amount included in the Consolidated Balance Sheet.