OTHER EXPENSE
|
| | | | | | | |
| Three Months Ended |
| March 31, |
(In millions) (Income) Expense | 2013 | | 2012 |
Net foreign currency exchange losses | $ | 123 |
| | $ | 11 |
|
Financing fees and financial instruments | 13 |
| | 95 |
|
Royalty income | (10 | ) | | (9 | ) |
Interest income | (5 | ) | | (4 | ) |
General and product liability — discontinued products | 3 |
| | 2 |
|
Net losses (gains) on asset sales | 2 |
| | (4 | ) |
Miscellaneous | — |
| | 1 |
|
| $ | 126 |
| | $ | 92 |
|
Net foreign currency exchange losses were $123 million in the first quarter of 2013, compared to $11 million in the first quarter of 2012. Losses in 2013 included a net loss of $115 million resulting from the devaluation of the Venezuelan bolivar fuerte against the U.S. dollar. 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. Foreign currency exchange also reflects net gains and losses resulting from the effect of exchange rate changes on various foreign currency transactions worldwide.
The $115 million remeasurement loss on bolivar-denominated net monetary assets and liabilities, including deferred taxes, was primarily related to cash deposits in Venezuela that were remeasured at the official exchange rate of 6.3 bolivares fuertes per U.S. dollar. We also recorded a one-time subsidy receivable of $13 million related to certain U.S. dollar-denominated payables that are expected to be settled at the official subsidy exchange rate of 4.3 bolivares fuertes per U.S. dollar applicable to certain import purchases prior to the devaluation date. A portion of this subsidy will reduce cost of goods sold in future periods when the related inventory is sold.
Financing fees were $13 million in the first three months of 2013, compared to $95 million in the first three months of 2012. Financing fees in the first three months of 2012 included $86 million related to the redemption of $650 million in aggregate principal amount of our outstanding 10.5% senior notes due 2016, of which $59 million related to cash premiums paid on the redemption and $27 million related to the write-off of deferred financing fees and unamortized discount. Financing fees and financial instruments also include the amortization of deferred financing fees, commitment fees and other charges incurred in connection with financing transactions.
Royalty income is derived primarily from licensing arrangements related to divested businesses. Interest income consists primarily of amounts earned on cash deposits.
General and product liability — discontinued products includes charges for claims against us related primarily to asbestos personal injury claims, net of probable insurance recoveries.
