American Home Shield 2010 Annual Report Download - page 44

Table of Contents
part, by lower overhead charges, improved sales labor efficiency and reduced provisions for incentive compensation.
Amortization expense was $161.9 million for the year ended December 31, 2009 compared to $173.6 million for the year ended December 31, 2008. The
decrease is a result of amortization being included in the year ended December 31, 2008 related to finite lived intangible assets recorded in connection with
the Merger which had lives of one year or less and were fully amortized as of July 24, 2008.
Non-operating expense totaled $246.9 million for the year ended December 31, 2009 compared to $357.9 million for the year ended December 31, 2008.
The decrease is a result of a $46.1 million gain on extinguishment of debt, a $47.9 million decrease in interest expense, primarily resulting from decreases in
our weighted-average interest rates and average long-term debt balances, and a $17.1 million increase in interest and net investment income. Interest and net
investment income (loss) was comprised of the following for the years ended December 31, 2009 and 2008:
Year Ended Dec. 31,
(In thousands) 2009 2008
Realized gains(1) $ 7,830 $ 8,277
Impairments of securities(2) (5,854) (16,478)
Deferred compensation trust(3) 1,964 (6,435)
Other(4) 3,139 4,584
Interest and net investment income (loss) $ 7,079 $ (10,052)
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 (loss) 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
income (loss) from continuing operations before income taxes).
Represents interest income on other cash balances.
(1)
(2)
(3)
(4)
The effective tax rate on income (loss) from continuing operations was a benefit of 43.0 percent for the year ended December 31, 2009 compared to a
benefit of 23.9 percent for the year ended December 31, 2008. The effective tax rate for the year ended December 31, 2009 includes a reduction to income tax
expense resulting from a change in the state tax rates used to measure state deferred taxes which more than offset state and Federal tax expense. The effective
tax rate for the year ended December 31, 2008 includes a reduction in income tax benefit resulting from the establishment of a valuation allowance related to
certain deferred tax assets for which the realization in future years is not more likely than not, unfavorable adjustments to liabilities related to federal and state
uncertain tax positions related to prior years, and state tax expense.
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