American Home Shield 2010 Annual Report Download - page 103

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 18. Stock-Based Compensation (Continued)
During the years ended December 31, 2010, 2009 and 2008, the Company recognized stock-based compensation expense of $9.4 million ($5.7 million,
net of tax), $8.1 million ($5.0 million, net of tax) and $7.0 million ($5.3 million, net of tax), respectively. As of December 31, 2010, there was $16.9 million
of total unrecognized compensation cost related to non-vested stock options and RSUs granted by Holdings under the MSIP. These remaining costs are
expected to be recognized over a weighted-average period of 2.1 years.
In September 2010, ServiceMaster announced the retirement of its CEO with a targeted retirement date of December 31, 2010, or such later date as a
successor CEO is appointed. On September 8, 2010, in connection with the CEO's retirement announcement, Holdings extended the option period on the
CEO's vested standalone options to three years following his departure date. This extension of the option period is considered a stock option modification
resulting in additional stock compensation expense of $0.5 million, which was recorded in the year ended December 31, 2010.
Note 19. Fair Value of Financial Instruments
The period end carrying amounts of receivables, accounts payable and accrued liabilities approximate fair value because of the short maturity of these
instruments. The period end carrying amounts of long-term notes receivable approximate fair value as the effective interest rates for these instruments are
comparable to market rates at period end. The period end carrying amounts of current and long-term marketable securities also approximate fair value, with
unrealized gains and losses reported net-of-tax as a component of accumulated comprehensive income (loss), or, for certain unrealized losses, reported in
interest and net investment income in the Consolidated Statements of Operations if the decline in value is other than temporary. The carrying amount of total
debt was $3,948.5 million and $3,974.9 million and the estimated fair value was $3,957.7 million and $3,716.5 million at December 31, 2010 and 2009,
respectively. The fair values of the Company's financial instruments reflect the amounts that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (exit price). The fair value estimates presented in this report are based on
information available to the Company as of December 31, 2010 and 2009.
The Company has estimated the fair value of its financial instruments measured at fair value on a recurring basis using the market and income
approaches. For investments in marketable securities, deferred compensation trust assets and derivative contracts, which are carried at their fair values, the
Company's fair value estimates incorporate quoted market prices, other observable inputs (for example, forward interest rates) and unobservable inputs (for
example, forward commodity prices) at the balance sheet date.
Interest rate swap contracts are valued using forward interest rate curves obtained from third party market data providers. The fair value of each contract
is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined
by comparing the contract interest rate to the expected forward interest rate as of each settlement date and applying the difference between the two rates to the
notional amount of debt in the interest rate swap contracts.
Fuel swap contracts are valued using forward fuel price curves obtained from third party market data providers. The fair value of each contract is the sum
of expected future settlements between contract counterparties, discounted to present value. The expected future settlements are determined by comparing the
contract fuel price to the expected forward fuel price as of each
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