Report on ONO Midco, SAU and its subsidiaries as of December 31 ...
Report on ONO Midco, SAU and its subsidiaries as of December 31 ...
Report on ONO Midco, SAU and its subsidiaries as of December 31 ...
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The following table sets forth our other operating expenses <strong>and</strong> the percentage change from period to period for each <strong>of</strong><br />
the periods indicated:<br />
% change<br />
Data in € milli<strong>on</strong> 2009 2010 2011 09/10 10/11<br />
Le<strong>as</strong>es <strong>and</strong> can<strong>on</strong>s 54 51 49 (5.6%) (2.9%)<br />
Repairs <strong>and</strong> maintenance 64 62 58 (3.1%) (6.2%)<br />
Service <strong>of</strong> independent pr<strong>of</strong>essi<strong>on</strong>als 90 92 91 2.2% (0.8%)<br />
Advertising 42 43 39 2.4% (9.8%)<br />
Other services 40 36 34 (10.0%) (8.1%)<br />
Taxes 19 32 36 68.4% 10.4%<br />
Impairment <strong>of</strong> trade receivables 34 26 17 (23.5%) (<strong>31</strong>.8%)<br />
Total other operating expenses 344 342 324 (0.6%) (5.3%)<br />
In 2011, other operating expenses decre<strong>as</strong>ed by €18 milli<strong>on</strong>, or 5.3%, to €324 milli<strong>on</strong> from €342 milli<strong>on</strong> in 2010. The<br />
stability in other operating expenses w<strong>as</strong> mainly a result <strong>of</strong> the reducti<strong>on</strong> in impairment <strong>of</strong> trade receivables <strong>of</strong> <strong>31</strong>.8%, the<br />
reducti<strong>on</strong> in other services <strong>of</strong> 8.1%, the reducti<strong>on</strong> in advertising <strong>of</strong> 9.8% <strong>and</strong> the reducti<strong>on</strong> in le<strong>as</strong>es <strong>and</strong> can<strong>on</strong>s <strong>of</strong> 6.2% which<br />
were <strong>of</strong>fset by the incre<strong>as</strong>e in taxes <strong>of</strong> 10.4% that w<strong>as</strong> primarily the result <strong>of</strong> the RTVE Financing Law, which resulted in<br />
expenses <strong>of</strong> €13.4 milli<strong>on</strong> in 2011. In 2010, other operating expenses decre<strong>as</strong>ed by €2 milli<strong>on</strong>, or 0.6%, to €342 milli<strong>on</strong> from<br />
€344 milli<strong>on</strong> in 2009. The stability in other operating expenses w<strong>as</strong> mainly a result <strong>of</strong> the reducti<strong>on</strong> in impairment <strong>of</strong> trade<br />
receivables <strong>of</strong> 23.5%, the reducti<strong>on</strong> in other services <strong>of</strong> 10.0% <strong>and</strong> the reducti<strong>on</strong> in le<strong>as</strong>es <strong>and</strong> can<strong>on</strong>s <strong>of</strong> 5.6% which were <strong>of</strong>fset<br />
by the incre<strong>as</strong>e in taxes <strong>of</strong> 68.4% that w<strong>as</strong> primarily the result <strong>of</strong> the RTVE Financing Law, which resulted in expenses <strong>of</strong><br />
€10.5 milli<strong>on</strong> in 2010.<br />
Capitalized Costs: We capitalize direct labor costs <strong>as</strong>sociated with the development <strong>and</strong> c<strong>on</strong>structi<strong>on</strong> <strong>of</strong> our network<br />
<strong>and</strong> installati<strong>on</strong>s carried out at our customer premises. In 2011, capitalized costs decre<strong>as</strong>ed by €3 milli<strong>on</strong>, or 4.6%, to €62 milli<strong>on</strong><br />
from €65 milli<strong>on</strong> in 2010. In 2010, capitalized costs incre<strong>as</strong>ed by €4 milli<strong>on</strong>, or 6.6%, to €65 milli<strong>on</strong> from €61 milli<strong>on</strong> in 2009.<br />
This incre<strong>as</strong>e w<strong>as</strong> primarily the result <strong>of</strong> incre<strong>as</strong>ed installati<strong>on</strong> activity related to upgrading equipment for existing customers.<br />
Depreciati<strong>on</strong>, Amortizati<strong>on</strong> & Impairment Charges: Depreciati<strong>on</strong> <strong>and</strong> amortizati<strong>on</strong> expense is principally related to the<br />
depreciati<strong>on</strong> <strong>of</strong> our network, customer premise equipment <strong>and</strong> installati<strong>on</strong> costs incurred in c<strong>on</strong>necti<strong>on</strong> with the additi<strong>on</strong> <strong>of</strong> new<br />
subscribers, <strong>and</strong> to the amortizati<strong>on</strong> <strong>of</strong> intangible <strong>as</strong>sets. In 2011, depreciati<strong>on</strong>, amortizati<strong>on</strong> <strong>and</strong> impairment charges decre<strong>as</strong>ed by<br />
€6 milli<strong>on</strong>, or 1.6%, to €379 milli<strong>on</strong> from €385 milli<strong>on</strong> in 2010. The decre<strong>as</strong>e w<strong>as</strong> mainly due to the cancellati<strong>on</strong> <strong>of</strong> network<br />
expansi<strong>on</strong> activities since mid-2008 until 2009. In 2010, depreciati<strong>on</strong>, amortizati<strong>on</strong> <strong>and</strong> impairment charges decre<strong>as</strong>ed by<br />
€5 milli<strong>on</strong>, or 1.3%, to €385 milli<strong>on</strong> from €390 milli<strong>on</strong> in 2009. The decre<strong>as</strong>e w<strong>as</strong> mainly due to the cancellati<strong>on</strong> <strong>of</strong> network<br />
expansi<strong>on</strong> activities since mid-2008 until 2009.<br />
Reversal <strong>of</strong> Provisi<strong>on</strong>: In 2011, we reversed provisi<strong>on</strong>s in the amount <strong>of</strong> €9 milli<strong>on</strong>. In prior years we had recognized<br />
certain provisi<strong>on</strong>s in c<strong>on</strong>necti<strong>on</strong> with c<strong>on</strong>tributi<strong>on</strong>s to the Nati<strong>on</strong>al Universal Service Fund. In c<strong>on</strong>necti<strong>on</strong> with a review <strong>of</strong> such<br />
provisi<strong>on</strong>s following a CMT decisi<strong>on</strong>, we reversed a porti<strong>on</strong> <strong>of</strong> the provisi<strong>on</strong>s.<br />
Impairment <strong>and</strong> Gains or Losses <strong>on</strong> Disposal <strong>of</strong> Fixed Assets: In 2011, we incre<strong>as</strong>ed the recogniti<strong>on</strong> <strong>of</strong> impairments to<br />
€10 milli<strong>on</strong> from €2 milli<strong>on</strong> in 2010.<br />
Operating Pr<strong>of</strong>it<br />
We calculate operating pr<strong>of</strong>it <strong>as</strong> revenues minus operating expenses. Our operating pr<strong>of</strong>it incre<strong>as</strong>ed by €<strong>31</strong> milli<strong>on</strong>, or<br />
9.2%, to €368 milli<strong>on</strong> in 2011 from €337 milli<strong>on</strong> in 2010 <strong>and</strong> by €7 milli<strong>on</strong>, or 2.1%, to €337 milli<strong>on</strong> in 2010 from €330 milli<strong>on</strong><br />
in 2009. Our operating pr<strong>of</strong>it margin w<strong>as</strong> 21.8% in 2009, 22.9% in 2010 <strong>and</strong> 24.8% in 2011. The incre<strong>as</strong>es in our operating pr<strong>of</strong>it<br />
<strong>and</strong> operating pr<strong>of</strong>it margin are the result <strong>of</strong> the factors discussed above.<br />
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