OTHER (INCOME) EXPENSE



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2015			2014			2015			2014
Royalty income	$	(10	)	$	(9	)	$	(175	)	$	(18	)
Financing fees and financial instruments	15			19			31			36
Net foreign currency exchange (gains) losses	13			(2		)	29			151
Interest income	(4		)	(13		)	(9		)	(19		)
General and product liability — discontinued products	4			11			9			17
Net gains on asset sales	(1		)	(5		)	(1		)	(3		)
Miscellaneous	—			7			5			12
	$	17		$	8		$	(111	)	$	176

Royalty income in the second quarter of 2015 was $10 million, compared to $9 million in the second quarter of 2014. Royalty income in the first six months of 2015 and 2014 was $175 million and $18 million, respectively. Royalty income is derived primarily from licensing arrangements related to divested businesses. Royalty income in the first six months of 2015 included a one-time pre-tax gain of $155 million on the recognition of deferred income resulting from the termination of a licensing agreement associated with the sale of our former Engineered Products business ("Veyance"). The licensing agreement was terminated following the acquisition of Veyance by Continental AG in January 2015.

Net foreign currency exchange losses in the second quarter of 2015 were $13 million, primarily related to Venezuela, compared to net gains of $2 million in the second quarter of 2014. Net losses in the first six months of 2015 and 2014 were $29 million and $151 million, respectively. Net foreign currency exchange losses in the first six months of 2014 included a net remeasurement loss of $157 million in Venezuela 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 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”) rate, which was 11.4 and 12.8 bolivares fuertes to the U.S. dollar at January 24, 2014 and June 30, 2015, respectively.

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. Therefore, in the first six months of 2014 we recorded a net remeasurement loss of $157 million using the then-applicable SICAD rate. All bolivar-denominated monetary assets and liabilities were remeasured at 12.8 and 12.0 bolivares fuertes to the U.S. dollar at June 30, 2015 and December 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 previously existing subsidy exchange rate of 4.3 bolivares fuertes to the U.S. dollar was eliminated and, accordingly, we derecognized $11 million of previously recognized subsidy receivables as part of the $157 million remeasurement loss in the first six months of 2014.

We also recorded a subsidy receivable at January 24, 2014 of $50 million related to certain U.S. dollar-denominated payables that were 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. In the fourth quarter of 2014, we entered into an agreement with the Venezuelan government to settle $85 million of U.S. dollar-denominated payables at the SICAD rate that we previously had expected to be settled at the official exchange rate for imports of essential goods of 6.3 bolivares fuertes to the U.S. dollar and, accordingly, derecognized the remaining subsidy receivable of $45 million. As of June 30, 2015, we have received payments of $7 million under this agreement. Going forward, subsidies received from the government related to certain U.S. dollar-denominated payables settled at the official exchange rate for imports of essential goods of 6.3 bolivares fuertes to the U.S. dollar will only be recognized in cost of goods sold (“CGS”) upon receipt.

Interest income in the second quarter of 2015 was $4 million, compared to interest income of $13 million in the second quarter of 2014. Interest income in the first six months of 2015 and 2014 was $9 million and $19 million, respectively. Interest income consisted primarily of amounts earned on cash deposits. Interest income in the three and six months ended June 30, 2014 included $9 million earned on the settlement of indirect tax claims in Latin America.

Miscellaneous expense in the six months ended June 30, 2015 included charges of $4 million and in the three and six months ended June 30, 2014 included charges of $10 million and $17 million, respectively, for labor claims related to a previously closed facility in Greece. These claims have been settled and we do not expect any additional charges.

Also included in Other (Income) 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; general and product liability — discontinued products expense which includes charges for claims against us related primarily to asbestos personal injury claims, net of probable insurance recoveries; and net gains and losses on asset sales.