Operating expenses, excluding goodwill and long-lived asset impairment, in the three months ended June 30, 2012, increased 10.9% to $20.2 million from $18.2 million in the three months ended June 30, 2011. Cost of services and products decreased 1.0% to $10.6 million in the quarter ended June 30, 2012, from $10.8 million in the quarter ended June 30, 2011. Shoreham added $0.4 million which was more than offset by reduced RLEC expenses, long distance costs and overhead expenses. Selling, general and administrative expenses increased 24.5% to $3.6 million in the three months ended June 30, 2012, from $2.9 million in the three months ended June 30, 2011. Shoreham added $0.1 million. Severance costs, restructuring and related legal expenses and the write-off of shelf registration deferred charges accounted for $0.6 million. Depreciation and amortization for second quarter 2012 increased 30.5% to $5.9 million from $4.5 million in second quarter 2011. Shoreham accounted for an increase of $0.2 million. Amortization of intangible assets associated with the Country Road acquisition increased $1.2 million, reflecting the shorter remaining life of the Time Warner Cable contract. Impairment of goodwill and long-lived assets increased expense by $144.0 million and $8.6 million in second quarter 2012. There were no comparable expenses in second quarter 2011. The non-renewal of the Time Warner Cable contract and the projected impact of the FCC’s Inter-Carrier Compensation order will materially reduce revenue and net income in the next several years. Following the appropriate Financial Accounting Standards Board guidelines, the amounts were written down to their fair value levels. These charges do not have an effect on cash.
Interest expense decreased 8.8% to 5.7 million in the three months ended June 30, 2012, from $6.2 million in the quarter ended June 30, 2011. The decrease in interest expense was primarily driven by the lower effective interest rate on the outstanding balance on our long-term notes payable upon the expiration of our interest rate swaps in first quarter 2012.