Supplemental Disclosure Material - Ono

entire organization. These savings have been partially offset by the increased price pressures resulting from the higher CPI
level experienced in the quarter as well as by the introduction of Law 8/2009 on 28 August 2009 which requires Cableuropa
to contribute 1.5% of its television revenues and 0.9% of its telecommunication revenues, to subsidize the sustainability of the
Spanish public broadcasting entity RTVE.
In 2010, our operating expenses decreased by €48 million, or 4.1%, to €1,135 million from €1,183 million in 2009
mainly driven by (i) the new sales strategy with focus on cost-efficient sales channels; (ii) other organizational initiatives; and
(iii) several content contract renegotiations.
Cost of Sales: Cost of sales principally consists of interconnection and backbone network costs for
telecommunications services, internet connectivity costs, the cost of the cable modems we sell, fiber, circuit and duct renting
expenses and programming fees for fiber television programming services. Interconnection costs for telephony services are
generated by calls made by our customers that terminate outside our network. Internet connectivity costs mainly consist of
fees for the bandwidth used for our internet transit outside of Spain. Fiber television programming fees consist primarily of
fees paid to television content owners to distribute their fiber television content and fees paid to distribute movies and soccer
on a pay-per-view basis. In 2011, our cost of sales increased by €7 million, or 2.3%, to €317 million from €310 million in
2010. As a percentage of total revenues, our cost of sales increased to 21.3% in 2011 as compared to 21.1% in the previous
year. In 2010, our cost of sales decreased by €18 million, or 5.5%, to €310 million from €328 million in 2009. As a
percentage of total revenues, our cost of sales decreased to 21.1% in 2010 as compared to 21.7% in the previous year.
Staff Costs: Staff costs consist principally of expenses related to wages and salaries for our employees, employer’s
social security contributions, other employee expenses and severance payments. In 2011, our staff costs decreased by
€2 million, or 1.2%, to €159 million from €161 million in 2010. The decrease in staff costs was driven primarily by the
reduction in our average headcount as a result of the optimization of our organizational structure and processes. In 2010, our
staff costs decreased by €10 million, or 5.8%, to €161 million from €171 million in 2009. The decrease in staff costs was
driven primarily by the reduction in our average headcount as a result of the optimization of our organizational structure and
processes.
Other Operating Expenses: Other operating expenses consist principally of leases, local taxes, professional
services, marketing and selling expenses, network operation and maintenance, information systems, administrative overheads,
billing costs and impairments of trade receivables
The following table sets forth our other operating expenses and the percentage change from period to period for
each of the periods indicated:
For the year ended
December 31, Percentage change
2009 2010 2011 2009/2010 2010/2011
(euro in millions)
Leases and canons ............................................ (54) (51) (49) (5.6)% (3.9)%
Repairs and maintenance ...................................... (64) (62) (58) (3.1)% (6.5)%
Service of independent professionals ............................. (90) (92) (91) 2.2% (1.1)%
Advertising ................................................. (42) (43) (39) 2.4% (9.3)%
Other services ............................................... (40) (36) (34) (10.0)% (5.6)%
Taxes ...................................................... (19) (32) (36) 68.4% 12.5%
Impairment of trade receivables ................................. (34) (26) (17) (23.5)% (34.6)%
Total other operating expenses ................................ (344) (342) (323) (0.6)% (5.6)%
In 2011, other operating expenses decreased by €19 million, or 5.6%, to €323 million from €342 million in 2010.
The stability in other operating expenses was mainly a result of the reduction in impairment of trade receivables of 34.6%, the
reduction in other services of 5.6%, the reduction in advertising of 9.3% and the reduction in repairs and maintenance of 6.5%
which were offset by the increase in taxes of 12.5% that was primarily the result of the RTVE Financing Law, which resulted
in expenses of €13.4 million in 2011. In 2010, other operating expenses decreased by €2 million, or 0.6%, to €342 million
from €344 million in 2009. The stability in other operating expenses was mainly a result of the reduction in impairment of
trade receivables of 23.5%, the reduction in other services of 10.0% and the reduction in leases and canons of 5.6% which
were offset by the increase in taxes of 68.4% that was primarily the result of the RTVE Financing Law, which resulted in
expenses of €10.5 million in 2010.
Work carried out by the company for its assets: We capitalize direct labor costs associated with the development
and construction of our network and installations carried out at our customer premises. In 2011, capitalized costs decreased by
€3 million, or 4.6%, to €62 million from €65 million in 2010. In 2010, capitalized costs increased by €4 million, or 6.6%, to
€65 million from €61 million in 2009. This increase was primarily the result of increased installation activity related to
upgrading equipment for existing customers.
Depreciation and Amortization: Depreciation and amortization expense is principally related to the depreciation
of our network, customer premise equipment and installation costs incurred in connection with the addition of new
subscribers, and to the amortization of intangible assets. In 2011, depreciation, amortization and impairment charges
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