American Home Shield 2010 Annual Report Download - page 42

Table of Contents
The increase in income from continuing operations before income taxes of $170.4 million primarily reflects the net effect of year over year changes in the
following items:
(In thousands)
Non-cash purchase accounting adjustments(1) $ 33,741
Interest expense(2) 47,854
Interest and net investment income(3) 17,131
Restructuring and Merger related charges(4) (14,381)
Non-cash trade name impairment(5) 32,100
Gain on extinguishment of debt(6) 46,106
Management and consulting fees(7) (5,500)
Residual value guarantee charge(8) (5,461)
Long-term incentive plan(9) 6,130
Segment results(10) 12,670
$ 170,390
Consists primarily of decreased amortization of intangible assets of $13.3 million and a $34.1 million increase in
revenue resulting from recording deferred revenue at its fair value in conjunction with purchase accounting, offset, in
part, by increased deferred customer acquisition expense of $14.1 million.
Represents a decrease in interest expense as a result of decreases in our weighted average interest rates and average
long-term debt balances as compared to 2008.
As further described in "Operating and Non-Operating Expenses," represents an increase in interest and net investment
income.
Represents an increase in (i) restructuring charges related to a reorganization of field leadership and a restructuring of
branch operations at TruGreen LawnCare, (ii) restructuring charges related to a branch optimization project at
Terminix, (iii) restructuring charges related to information technology outsourcing at Other Operations and
Headquarters and (iv) Merger related charges.
Represents the difference between non-cash impairment charges of $28.0 million and $60.1 million recorded in the
years ended December 31, 2009 and 2008, respectively, to reduce the carrying value of trade names as a result of the
Company's annual impairment testing of goodwill and indefinite-lived intangible assets. See Note 1 to the Consolidated
Financial Statements for further details.
Represents the gain on extinguishment of debt recorded in the year ended December 31, 2009 related to the completion
of open market purchases of $89.0 million in face value of the Company's Permanent Notes.
Represents the increase in management and consulting fees payable to certain related parties. See Note 10 to the
Consolidated Financial Statements for further information on management and consulting fees.
Represents residual value guarantee charges related to a synthetic lease for operating properties that did not result in
additional cash payments to exit the facility at the end of the lease term in July 2010. In the third quarter of 2009, the
Company determined that it was probable that the fair value of the real properties under operating leases would be
below the total amount funded under the lease facilities at the end of the lease term. The Company's estimate of this
shortfall was $15.9 million, which was
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
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