Charter 2012 Annual Report Download - page 55

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43
Costs to service customers include residential and commercial costs related to field operations, network operations and customer
care including labor, reconnects, maintenance, billing, occupancy and vehicle costs. The increase in costs to service customers
for the year ended December 31, 2012 was primarily the result of increased preventive maintenance levels and higher service
labor.
The increase in marketing costs for the year ended December 31, 2012 was the result of increased media investment and commercial
marketing as well as a $7 million favorable adjustment in the second quarter of 2011 related to expenses previously accrued on
2010 marketing campaigns.
The increases in other expense are attributable to the following (dollars in millions):
2012 compared
to 2011 2011 compared
to 2010
Commercial sales expense $ 20 $ 41
Advertising sales expense 15 5
Stock compensation expense 15 9
Administrative labor 10 (1)
Bad debt and collections (18)(23)
Other 7 3
$ 49 $ 34
Commercial and advertising sales expenses increased in 2012 compared to 2011 and 2011 compared to 2010 primarily related to
growth in these businesses. The decreases in bad debt and collections expense in both periods are primarily due to decreases in
write-offs. We cannot assure you that this trend will continue.
Depreciation and amortization. Depreciation and amortization expense increased by $121 million and $68 million in 2012 and
2011, respectively, which primarily represents depreciation on more recent capital expenditures, offset by certain assets becoming
fully depreciated and a decrease in the amortization of customer relationships.
Other operating expenses, net. The changes in other operating expenses, net are attributable to the following (dollars in millions):
2012 compared
to 2011 2011 compared
to 2010
Increases in gain on sales of assets $ (1) $ (13)
Increases (decreases) in special charges, net 9 (5)
$ 8 $ (18)
The increase in special charges in 2012 as compared to 2011 is a result of an increase in severance charges as part of our corporate
office relocation and settlements. For more information, see Note 14 to the accompanying consolidated financial statements
contained in “Item 8. Financial Statements and Supplementary Data.”
Interest expense, net. Net interest expense decreased by $56 million in 2012 from 2011 and increased by $86 million in 2011
from 2010. Net interest expense decreased in 2012 compared to 2011 primarily as a result of a decrease in our weighted average
interest rate from 7.3% for the year ended December 31, 2011 to 6.5% for the year ended December 31, 2012 offset by an increase
in our weighted average debt outstanding from $12.6 billion for the year ended December 31, 2011 to $13.0 billion for the year
ended December 31, 2012. Net interest expense increased in 2011 compared to 2010 primarily as a result of an increase in our
weighted average interest rate from 6.2% for the year ended December 31, 2010 to 7.3% for the year ended December 31, 2011
offset by a decrease in our weighted average debt outstanding from $12.8 billion for the year ended December 31, 2010 to $12.6
billion for the year ended December 31, 2011.