Operating expenses in the three months ended December 31, 2011, increased 3.1% to $19.8 million from $19.2 million in the three months ended December 31, 2010. Cost of services and products increased 13.3% to $11.2 million in the three months ended December 31, 2011, from $9.9 million in the three months ended December 31, 2010. The one-time benefits of the settlement of the FairPoint bankruptcy and carrier claims in 2010; Shoreham costs of service of $0.3 million; increases in cable programming and internet capacity of $0.2 million; and other operational costs of $0.2 million were partially offset by lower toll costs on $0.3 million. Selling, general and administrative expenses increased 6.0% to $3.5 million in the three months ended December 31, 2011, from $3.3 million in the three months ended December 31, 2010. The increase reflects the Shoreham expense (including acquisition expenses) of $0.3 million and benefits from carrier settlements in 2010 of $0.4 million more than offset by lower management expenses of $0.5 million. Depreciation and amortization for fourth quarter 2011 decreased 15.4% to $5.1 million from $6.0 million in the fourth quarter 2010. An increase for the acquisition of Shoreham of $0.2 million was offset by a decrease of $0.3 million in the amortization of intangible assets associated with the Country Road acquisition, including a covenant not to compete and contract and customer base intangible assets. The remaining decrease of $0.8 million reflected lower depreciation of plant assets in our regulated properties.
Interest expense decreased 1.2% to $6.2 million in the quarter ended December 31, 2011, from $6.3 million a year ago. The decrease in interest expense was driven by a lower outstanding balance on our senior long-term notes payable.Change in Fair Value of Derivatives As a requirement of the existing senior debt, the Company has two interest rate swap agreements intended to hedge changes in interest rates on its senior debt. The swap agreements do not qualify for hedge accounting under the technical requirements of Accounting Standards Codification 815. Changes in value for the two swaps are reflected in change in the fair value of derivatives on the income statement and have no impact on cash. Over the life of the swaps, the change in value will be zero, with no cumulative impact on net income, Adjusted EBITDA or operations. The value of the swaps increased $0.6 million in fourth quarter 2011 compared to an increase of $0.5 million in the same period of 2010.