American Home Shield 2011 Annual Report Download - page 37

Table of Contents
The Company reported selling and administrative expenses of $896.0 million for the year ended December 31, 2010 compared to $830.7 million for the
year ended December 31, 2009. As a percentage of revenue, these costs increased to 28.6 percent for the year ended December 31, 2010 from 27.9 percent for
the year ended December 31, 2009. Key executive transition charges of $5.5 million were incurred in 2010, which negatively impacted the change in selling
and administrative expenses as of percentage of revenue by 18 bps. The remaining 52 bps decline as a percentage of revenue primarily reflects an increase in
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 and incentive compensation expense.
Amortization expense was $91.4 million for the year ended December 31, 2011, $136.0 million for the year ended December 31, 2010 and
$158.8 million for the year ended December 31, 2009. The decrease in 2011 and 2010 is a result of certain finite lived intangible assets recorded in connection
with the Merger being fully amortized.
Non-operating expense totaled $263.7 million for the year ended December 31, 2011, $278.3 million for the year ended December 31, 2010 and
$246.9 million for the year ended December 31, 2009. The decrease in 2011 compared to 2010 is primarily due to a $13.8 million decrease in interest expense
as a result of a decrease in our weighted-average interest rate. The increase in 2010 compared to 2009 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 rate 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, 2011, 2010 and 2009:
Year Ended Dec. 31,
(In thousands) 2011 2010 2009
Realized gains(1) $ 9,972 $ 6,418 $ 7,830
Impairments of securities(2) (195) (174) (5,854)
Deferred compensation trust(3) (49) 1,200 1,964
Other(4) 1,158 1,914 3,139
Interest and net investment income $ 10,886 $ 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 (loss) 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 income from
continuing operations before income taxes).
Represents interest income on other cash balances.
(1)
(2)
(3)
(4)
The effective tax rate on income from continuing operations was a provision of 39.3 percent for the year ended December 31, 2011 compared to a
provision of 38.6 percent for the year ended December 31, 2010 and a benefit of 300.6 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 taxing authorities and the
lapsing of statutes of limitations. The effective tax rate for the year ended December 31, 2009 includes a tax
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