Acquisition Level 1 (Notes)

9 Months Ended

Sep. 30, 2011

Acquisition [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

Keystone

In March 2010, pursuant to a tender offer, we acquired Keystone North America, Inc. (Keystone) for C$8.07 per share in cash, resulting in a purchase price of $288.9 million, which included the refinancing of $80.7 million of Keystone’s debt.

The primary reasons for the merger and the principal factors that contributed to the recognition of goodwill in this acquisition were:

• the acquisition of Keystone enhances our network footprint, enabling us to serve a number of new, complementary areas;

• combining the two companies’ operations provides synergies and related cost savings through the elimination of duplicate home office functions and economies of scale; and

• the acquisition of Keystone’s preneed backlog of deferred revenues enhances our long-term stability.

The following table summarizes the adjusted fair values of the assets acquired and liabilities assumed as of March 26, 2010, for various purchase price allocation adjustments made subsequent to our first quarter results:

	(In thousands)
Accounts receivable	$	6,131
Other current assets	20,200
Cemetery property	19,949
Property and equipment, net	105,888
Preneed funeral and cemetery receivables and trust investments	66,395
Finite-lived intangible assets	34,312
Indefinite-lived intangible assets	33,700
Deferred charges and other assets	6,533
Goodwill	108,643
Total assets acquired	401,751
Current liabilities	11,719
Long-term debt	2,548
Deferred preneed funeral and cemetery revenues and deferred receipts held in trusts	69,336
Deferred tax liability	20,939
Other liabilities	8,347
Total liabilities assumed	112,889
Net assets acquired	$	288,862

The gross amount of accounts receivable is $8.2 million, of which $2.1 million is not expected to be collected. Included in preneed funeral and cemetery receivables and trust investments are receivables under preneed contracts with a fair value of $5.2 million. The gross amount due under the contracts is $5.5 million, of which $0.3 million is not expected to be collected.

We have finalized our assessment of the fair values. Goodwill, land, and certain identifiable intangible assets recorded in the acquisition are not subject to amortization; however, the goodwill and intangible assets will be tested periodically for impairment as required by the Intangible Assets Topic of the ASC. Of the $108.6 million in goodwill recognized, $4.3 million was allocated to our cemetery segment and $104.3 million was allocated to our funeral segment. As a result of the carryover of Keystone’s tax basis, $26.0 million of this goodwill is deductible for tax purposes. The identified intangible assets are comprised of the following:

	Useful life
	Minimum		Maximum	Fair Value
	(Years)			(In thousands)
Preneed customer relationships related to insurance claims			10	$	15,200
Preneed deferred revenue	10	-	14	1,740
Covenants-not-to-compete	5	-	15	13,332
Operating leases	5	-	15	440
Tradenames			5	3,600
Tradenames			Indefinite	33,200
Licenses and permits			Indefinite	500
Total intangible assets				$	68,012

The unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2011 includes the results of operations of Keystone. The following unaudited pro forma information presents information as if the merger occurred on January 1, 2010:

	Nine Months Ended
	2010
	(In thousands)
Revenue	$	1,648,953
Net income	$	93,201

Neptune

The Company acquired 70% of the outstanding shares of The Neptune Society, Inc. (Neptune) on June 3, 2011 for $44 million. Neptune is the nation's largest direct cremation organization with a network of 30 locations in nine states. Neptune operates under the brand names Neptune Society, Neptune Cremation Service, and Trident Society. With this acquisition we will be expanding the footprint into a sector of the market that will continue to grow and that we do not currently target through our traditional funeral service and cemetery network. We have not completed our purchase price allocation as we are still reviewing the underlying accounting records.