Note 6. Other (Income)/Deductions—Net

The following table sets forth details related to amounts recorded in Other deductions––net:

	Three Months Ended						Six Months Ended
(millions of dollars)	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010

Interest income(a)	$	(117	)	$	(85	)	$	(222	)	$	(197	)
Interest expense(a)		404			389			862			911
Net interest expense		287			304			640			714
Royalty-related income		(141	)		(95	)		(312	)		(237	)
Net gain on asset disposals		(14	)		(185	)		(26	)		(230	)
Certain legal matters, net(b)		(14	)		37			487			174
Certain asset impairment charges(c)		320			196			480			232
Other, net		(25	)		18			(29	)		34
Other deductions––net	$	413		$	275		$	1,240		$	687

(a)

Interest income increased in both periods of 2011 due to higher cash balances and higher interest rates earned on investments. Interest expense increased in the second quarter of 2011 due to lower amortization of deferred gains on terminated interest rate swaps. Interest expense decreased in the first six months of 2011 due to lower long- and short-term debt balances and the conversion of some fixed-rate liabilities to floating-rate liabilities.

(b)	In the first six months of 2011, primarily relates to charges for hormone-replacement therapy litigation (see Note 14. Legal Proceedings and Contingencies).

(c)

Substantially all of these asset impairment charges are related to intangible assets, including IPR&D assets, that were acquired as part of our acquisition of Wyeth. In the second quarter of 2011, impairment charges included approximately $200 million of IPR&D assets, primarily related to a single compound for the treatment of certain autoimmune and inflammatory diseases, and approximately $120 million of developed technology rights. In the first six months of 2011, impairment charges included approximately $360 million of IPR&D assets, primarily related to two compounds for the treatment of certain autoimmune and inflammatory diseases, and approximately $120 million of developed technology rights. In the second quarter and first six months of 2010, impairment charges of approximately $200 million related to certain IPR&D assets. The impairment charges are determined by comparing the estimated fair value of the assets as of the date of the impairment to their carrying values as of the same date. The impairment charges for all periods reflect, among other things, the impact of new scientific findings and updated commercial forecasts.