FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS Income Effect of Derivative Financial Instruments Fair Value Hedges . We use derivatives to reduce the risk of changes in the fair value of debt. We have designated certain receive-fixed, pay-float interest rate and cross-currency interest rate swaps as fair value hedges of fixed-rate debt. The risk being hedged is the risk of changes in the fair value of the hedged debt attributable to changes in the benchmark interest rate and foreign exchange. We report the change in fair value of the hedged debt related to the change in benchmark interest rate in  Debt  and  Interest expense . We report the change in fair value of the hedged debt and hedging instrument related to foreign currency in  Other income, net . Net interest settlements and accruals, and fair value changes on hedging instruments due to the benchmark interest rate change are reported in  Interest expense . The cash flows associated with fair value hedges are reported in  Net cash provided by / (used in) operating activities  on our statements of cash flows. When a fair value hedge is de-designated, or when the derivative is terminated before maturity, the fair value adjustment to the hedged debt continues to be reported as part of the carrying value of the debt and is recognized in  Interest expense  over its remaining life. Derivatives Not Designated as Hedging Instruments.  We report net interest settlements and accruals and changes in the fair value of interest rate swaps not designated as hedging instruments in  Other income, net . Foreign currency revaluation on accrued interest along with gains and losses on foreign exchange contracts and cross-currency interest rate swaps are reported in  Other income, net.  Cash flows associated with non-designated or de-designated derivatives are reported in  Net cash provided by / (used in) investing activities  on our statements of cash flows. NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES  (Continued) The gains / (losses), by hedge designation, reported in income for the years ended December 31 were as follows (in millions): (a) Reflects forward contracts between Ford Credit and an affiliated company. 88 2018 2019 2020 Fair value hedges Interest rate contracts Net interest settlements and accruals on hedging instruments $ 10  $ (16) $ 290  Fair value changes on hedging instruments (155) 706  986  Fair value changes on hedged debt 153  (694) (985) Cross-currency interest rate swap contracts Net interest settlements and accruals on hedging instruments —  —  (2) Fair value changes on hedging instruments —  —  38  Fair value changes on hedged debt —  —  (37) Derivatives not designated as hedging instruments Interest rate contracts (84) (13) (100) Foreign currency exchange contracts (a) 163  52  (82) Cross-currency interest rate swap contracts (244) (229) 486  Total $ (157) $ (194) $ 594 