American Home Shield 2010 Annual Report Download - page 30

Table of Contents
Terminix; and increased contract claims costs at American Home Shield. These increased costs were offset, in part, by reduced fertilizer costs at TruGreen
LawnCare and reduced fuel and health care costs.
The Company reported selling and administrative expenses of $918.7 million for the year ended December 31, 2010 compared to $852.8 million for the
year ended December 31, 2009. As a percentage of revenue, these costs increased to 27.3 percent for the year ended December 31, 2010 from 26.3 percent for
the year ended December 31, 2009. This percentage increase primarily reflects increased investments in sales and marketing, increased costs related to on-
going initiatives at TruGreen LawnCare, increased spending in the Company's headquarters functions to enhance capabilities in our centers of excellence and
on initiatives designed to improve the performance of our operating segments, increased provisions for incentive compensation and key executive separation
charges of $6.2 million related to the retirement of our CEO on March 31, 2011 and the resignation of the President of TruGreen LandCare in 2010.
Amortization expense was $139.1 million for the year ended December 31, 2010 compared to $161.9 million for the year ended December 31, 2009. The
decrease is a result of certain finite lived intangible assets being fully amortized as of July 24, 2010.
Non-operating expense totaled $278.4 million for the year ended December 31, 2010 compared to $246.9 million for the year ended December 31, 2009.
The increase includes the impact of a $46.1 million gain on extinguishment of debt recorded in the year ended December 31, 2009, which did not recur in
2010, offset, in part, by a $12.4 million decrease in interest expense, primarily resulting from decreases in our weighted-average interest rates and average
long-term debt balances, and a $2.3 million increase in interest and net investment income. Interest and net investment income was comprised of the
following for the years ended December 31, 2010 and 2009:
Year Ended Dec. 31,
(In thousands) 2010 2009
Realized gains(1) $ 6,418 $ 7,830
Impairments of securities(2) (174) (5,854)
Deferred compensation trust(3) 1,200 1,964
Other(4) 1,914 3,139
Interest and net investment income $ 9,358 $ 7,079
Represents the net investment gains and the interest and dividend income realized on the American Home Shield
investment portfolio.
Represents other than temporary declines in the value of certain investments in the American Home Shield investment
portfolio.
Represents investment income resulting from a change in the market value of investments within an employee deferred
compensation trust (for which there is a corresponding and offsetting change in compensation expense within (loss)
income from continuing operations before income taxes).
Represents interest income on other cash balances.
(1)
(2)
(3)
(4)
The effective tax rate on (loss) income from continuing operations was a benefit of 31.4 percent for the year ended December 31, 2010 compared to a
benefit of 43.0 percent for the year ended December 31, 2009. The effective tax rate for the year ended December 31, 2010 includes a reduction to income tax
expense resulting from the resolution of examinations by state taxing
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