13. Other (Income) Expense, Net

Other (income) expense, net, consisted of:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
($ in millions)	2011			2010			2011			2010

Interest income	$	(45	)	$	(23	)	$	(137	)	$	(57	)
Interest expense		189			173			557			539
Exchange losses		59			8			102			84
Other, net		(137	)		950			287			429

	$	66		$	1,108		$	809		$	995

Interest income in the third quarter and first nine months of 2011 increased primarily due to higher average investment balances. Other, net (as presented in the table above) for the third quarter and first nine months of 2011 includes a $136 million gain on the disposition of the Company’s interest in the JJMCP joint venture. In addition, Other, net for the first nine months of 2011 reflects a $500 million charge related to the resolution of the arbitration proceeding involving the Company’s rights to market Remicade and Simponi (see Note 4), as well as a $127 million gain on the sale of certain manufacturing facilities and related assets. Other, net for the third quarter and first nine months of 2010 reflects a $950 million charge for the Vioxx Liability Reserve (see Note 9). In addition, Other, net for the first nine months of 2010 also reflects $443 million of income recognized upon AstraZeneca’s asset option exercise and $102 million of income recognized on the settlement of certain disputed royalties.

Exchange losses for the first nine months of 2010 reflect a Venezuelan currency devaluation in the first quarter of 2010 resulting in the recognition of $80 million of exchange losses. Effective January 11, 2010, the Venezuelan government devalued its currency from at BsF 2.15 per U.S. dollar to a two-tiered official exchange rate at (1) “the essentials rate” at BsF 2.60 per U.S. dollar and (2) “the non-essentials rate” at BsF 4.30 per U.S. dollar. In January 2010, the Company was required to remeasure its local currency operations in Venezuela to U.S. dollars as the Venezuelan economy was determined to be hyperinflationary. Throughout 2010, the Company settled its transactions at the essentials rate and therefore remeasured monetary assets and liabilities using the essentials rate. In December 2010, the Venezuelan government announced it would eliminate the essentials rate and, effective January 1, 2011, all transactions would be settled at the official rate of at BsF 4.30 per U.S. dollar. As a result of this announcement, the Company remeasured its December 31, 2010 monetary assets and liabilities at the new official rate.

Interest paid for the nine months ended September 30, 2011 and 2010 was $261 million and $442 million, respectively, which excludes commitment fees. Interest paid for the nine months ended September 30, 2011 is net of $288 million received by the Company from the termination of certain interest rate swap contracts during the period (see Note 5).