OTHER EXPENSE



	Three Months Ended
	March 31,
(In millions)	2014			2013
Net foreign currency exchange (gains) losses	$	153		$	123
Financing fees and financial instruments	14			13
Royalty income	(9		)	(10		)
Interest income	(6		)	(5		)
General and product liability — discontinued products	6			3
Net (gains) losses on asset sales	2			2
Miscellaneous	8			—
	$	168		$	126

Net foreign currency exchange losses in the first three months of 2014 were $153 million, compared to net losses of $123 million in the first three months of 2013. Net losses in the first quarter of 2014 and 2013 included net remeasurement losses of $157 million and $115 million, respectively, resulting from the devaluation of the Venezuelan bolivar fuerte against the U.S. dollar. Foreign currency exchange also reflects net gains and losses resulting from the effect of exchange rate changes on various foreign currency transactions worldwide.

Effective February 13, 2013, Venezuela's official exchange rate changed from 4.3 to 6.3 bolivares fuertes to the U.S. dollar for substantially all goods. In the first quarter of 2013, we recorded a $115 million remeasurement loss on bolivar-denominated net monetary assets and liabilities, including deferred taxes, primarily related to cash deposits in Venezuela. We also recorded a subsidy receivable of $13 million related to certain U.S. dollar-denominated payables that were expected to be settled at the then-official subsidy exchange rate of 4.3 bolivares fuertes per U.S. dollar applicable to certain import purchases prior to the devaluation date. We received $2 million of this subsidy through December 31, 2013.

Effective January 24, 2014, Venezuela’s exchange rate applicable to the settlement of certain transactions, including payments of dividends and royalties, changed to an auction-based floating rate, the Complementary System of Foreign Currency Administration (“SICAD I”) rate, which was 11.4 and 10.7 bolivares fuertes to the U.S. dollar at January 24, 2014 and March 31, 2014, respectively. The official exchange rate for imports of essential goods, such as certain raw materials needed for the production of tires, remained at 6.3 bolivares fuertes to the U.S. dollar; however, the subsidy exchange rate of 4.3 bolivares fuertes to the U.S. dollar was eliminated and, accordingly, we derecognized the remaining $11 million subsidy receivable as part of the $157 million remeasurement loss.

We are required to remeasure our bolivar-denominated monetary assets and liabilities at the rate expected to be available for future dividend remittances by our Venezuelan subsidiary. We expect that future remittances of dividends by our Venezuelan subsidiary will be transacted at the SICAD I rate and, therefore, we recorded a remeasurement loss of $157 million using the SICAD I rate of 11.4 bolivares fuertes to the U.S. dollar as of January 24, 2014. We also recorded a subsidy receivable at that date of $50 million related to certain U.S. dollar-denominated payables that are expected to be settled at the official exchange rate of 6.3 bolivares fuertes to the U.S. dollar for essential goods, based on ongoing approvals for importation of such goods. At March 31, 2014, the subsidy receivable was $45 million. A portion of this subsidy will reduce cost of goods sold in periods when the related inventory is sold. The SICAD I rate has fluctuated since January 24, 2014 and was 10.7 bolivares fuertes to the U.S. dollar at March 31, 2014 and, accordingly, the foreign currency exchange gain resulting from the decrease in the SICAD I rate was also recorded in foreign currency exchange. All bolivar-denominated monetary assets and liabilities were remeasured at 10.7 and 6.3 bolivares fuertes to the U.S. dollar at March 31, 2014 and December 31, 2013, respectively.

Miscellaneous expense in the first three months of 2014 primarily consists of charges of $7 million for labor claims related to a previously closed facility in EMEA. Also included in Other Expense are financing fees and financial instruments expense consisting of the amortization of deferred financing fees, commitment fees and charges incurred in connection with financing transactions; royalty income derived primarily from licensing arrangements related to divested businesses; interest income consisting primarily of amounts earned on cash deposits; and general and product liability — discontinued products which includes charges for claims against us related primarily to asbestos personal injury claims, net of probable insurance recoveries.