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Preneed Cemetery Activities Level 1 (Notes) (Cemetery [Member])
 6 Months Ended
Jun. 30, 2012
Cemetery [Member]
  
Preneed Cemetery Activities Text Block
Preneed Cemetery Activities
 Preneed cemetery receivables, net and trust investments represent trust investments, including investment earnings, and customer receivables, net of unearned finance charges, for contracts sold in advance of when the property interment rights, merchandise, or services are needed. Our cemetery merchandise and service trusts are variable interest entities as defined in the Consolidation Topic of the ASC. In accordance with this guidance, we have determined that we are the primary beneficiary of these trusts, as we absorb a majority of the losses and returns associated with these trusts. The trust investments detailed in Notes 4 and 6 are also accounted for as variable interest entities. When we receive payments from the customer, we deposit the amount required by law into the trust and reclassify the corresponding amount from Deferred preneed cemetery revenues into Deferred preneed funeral and cemetery receipts held in trust. Amounts are withdrawn from the trusts when the contract obligations are performed. Cash flows from preneed cemetery contracts are presented as operating cash flows in our unaudited condensed consolidated statement of cash flows.
Preneed cemetery receivables, net and trust investments are reduced by the trust investment earnings (realized and unrealized) that we have been allowed to withdraw in certain states prior to maturity. These earnings are recorded in Deferred preneed cemetery revenues until the service is performed or the merchandise is delivered.
The table below sets forth certain investment-related activities associated with our preneed cemetery merchandise and service trusts:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
 
(In thousands)
Deposits
$
25,512

 
$
26,404

 
$
50,707

 
$
50,496

Withdrawals
22,630

 
28,583

 
47,363

 
58,527

Purchases of available-for-sale securities
58,981

 
189,112

 
329,064

 
322,677

Sales of available-for-sale securities
61,270

 
194,996

 
316,687

 
328,551

Realized gains from sales of available-for-sale securities
8,610

 
24,244

 
47,882

 
41,091

Realized losses from sales of available-for-sale securities
(4,296
)
 
(5,615
)
 
(18,066
)
 
(11,236
)

The components of Preneed cemetery receivables, net and trust investments in our unaudited condensed consolidated balance sheet at June 30, 2012 and December 31, 2011 are as follows:
 
June 30, 2012
 
December 31, 2011
 
(In thousands)
Trust investments, at fair value
$
1,112,576

 
$
1,051,464

Cash and cash equivalents
98,252

 
104,554

Insurance-backed fixed income securities
14

 
5

Trust investments
1,210,842

 
1,156,023

Receivables from customers
573,890

 
517,917

Unearned finance charges
(31,714
)
 
(33,766
)
 
1,753,018

 
1,640,174

Allowance for cancellation
(46,643
)
 
(44,234
)
Preneed cemetery receivables, net and trust investments
$
1,706,375

 
$
1,595,940


The cost and fair values associated with our cemetery merchandise and service trust investments recorded at fair value at June 30, 2012 and December 31, 2011 are detailed below. Cost reflects the investment (net of redemptions) of control holders in common trust funds, mutual funds, and private equity investments. Fair value represents the market value of the underlying securities held by the common trust funds, mutual funds at published values, and the estimated fair value of private equity investments.
 
June 30, 2012
 
Fair Value Hierarchy Level
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury
2
 
$
94,871

 
$
7,741

 
$
(1,801
)
 
$
100,811

Canadian government
2
 
16,565

 
426

 
(23
)
 
16,968

Corporate
2
 
44,554

 
1,743

 
(1,133
)
 
45,164

Residential mortgage-backed
2
 
169

 
4

 
—

 
173

Equity securities:
 
 
 
 
 
 
 
 
 
Preferred stock
2
 
4,161

 
123

 
(306
)
 
3,978

Common stock:
 
 
 
 
 
 
 
 
 
United States
1
 
346,318

 
71,597

 
(18,610
)
 
399,305

Canada
1
 
16,448

 
3,554

 
(1,982
)
 
18,020

Other international
1
 
28,225

 
2,467

 
(1,418
)
 
29,274

Mutual funds:
 
 
 
 
 
 
 
 
 
Equity
1
 
240,153

 
3,254

 
(19,714
)
 
223,693

Fixed income
1
 
267,468

 
13,289

 
(21,796
)
 
258,961

Private equity
3
 
33,546

 
53

 
(17,803
)
 
15,796

Other
3
 
302

 
131

 
—

 
433

Trust investments
 
 
$
1,092,780

 
$
104,382

 
$
(84,586
)
 
$
1,112,576


 
December 31, 2011
 
Fair Value Hierarchy Level
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury
2
 
$
51,022

 
$
6,438

 
$
(313
)
 
$
57,147

Canadian government
2
 
16,566

 
381

 
(24
)
 
16,923

Corporate
2
 
42,803

 
2,033

 
(961
)
 
43,875

Residential mortgage-backed
2
 
167

 
5

 
(2
)
 
170

Equity securities:
 
 
 
 
 
 
 
 
 
Preferred stock
2
 
3,365

 
86

 
(270
)
 
3,181

Common stock:
 
 
 
 
 
 
 
 
 
United States
1
 
408,075

 
71,138

 
(30,454
)
 
448,759

Canada
1
 
18,289

 
2,547

 
(1,780
)
 
19,056

Other international
1
 
30,501

 
1,843

 
(1,536
)
 
30,808

Mutual funds:
 
 
 
 
 
 
 
 
 
Equity
1
 
197,523

 
3,317

 
(24,911
)
 
175,929

Fixed income
1
 
248,529

 
11,670

 
(20,238
)
 
239,961

Private equity
3
 
30,783

 
53

 
(15,617
)
 
15,219

Other
3
 
306

 
130

 
—

 
436

Trust investments
 
 
$
1,047,929

 
$
99,641

 
$
(96,106
)
 
$
1,051,464


Where quoted prices are available in an active market, securities held by the common trust funds and mutual funds are classified as Level 1 investments pursuant to the three-level valuation hierarchy as required by the FVM&D Topic of the ASC.
Where quoted market prices are not available for the specific security, fair values are estimated by using either quoted prices of securities with similar characteristics or an income approach fair value model with observable inputs that include a combination of interest rates, yield curves, credit risks, prepayment speeds, rating, and tax-exempt status. These funds are classified as Level 2 investments pursuant to the three-level valuation hierarchy as required by the FVM&D Topic of the ASC.
The valuation of private equity and other alternative investments requires management judgment due to the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. The fair value of these investments is estimated based on the market value of the underlying real estate and private equity investments. The underlying real estate value is determined using the most recent available appraisals. As of June 30, 2012, private equity instruments are valued based on reported net asset values discounted by 0% to 60% for risk and 0% to 25% for liquidity. A significant increase (decrease) in the discounts results in a directionally opposite change in the fair value of the instruments. Valuation policies and procedures are determined by our Treasury department, which reports to our Chief Financial Officer.  Additionally, valuations are reviewed by our investment committee quarterly. These funds are classified as Level 3 investments pursuant to the three-level valuation hierarchy as required by the FVM&D Topic of the ASC.
As of June 30, 2012, our unfunded commitment for our private equity and other investments was $13.7 million which, if called, would be funded by the assets of the trusts. Our private equity and other investments include several funds that invest in limited partnerships, distressed debt, real estate, and mezzanine financing. These investments can never be redeemed by the funds. Instead, the nature of the investments in this category is that the distributions are received through the liquidation of the underlying assets of the funds. We estimate that the underlying assets will be liquidated over the next 2 to 10 years.
The change in our market-based cemetery merchandise and service trust investments with significant unobservable inputs (Level 3) is as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
Fair value, beginning balance
$
15,378

 
$
10,664

 
$
15,655

 
$
6,251

Net unrealized (losses) gains included in Accumulated other comprehensive income(1)
(132
)
 
2,860

 
(1,477
)
 
6,985

Net realized losses included in Other (expense) income, net(2)
(7
)
 
(57
)
 
(19
)
 
(65
)
Contributions
1,360

 
1,349

 
2,716

 
1,852

Distributions and other
(370
)
 
(142
)
 
(646
)
 
(349
)
Fair value, ending balance
$
16,229

 
$
14,674

 
$
16,229

 
$
14,674


                                                                               
(1)
All unrealized (losses) gains recognized in Accumulated other comprehensive income for our cemetery merchandise and service trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Accumulated other comprehensive income to Deferred preneed funeral and cemetery receipts held in trust. See Note 7 for further information related to our Deferred preneed funeral and cemetery receipts held in trust.
(2)
All losses recognized in Other (expense) income, net for our cemetery merchandise and service trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Other (expense) income, net to Deferred preneed funeral and cemetery receipts held in trust. See Note 7 for further information related to our Deferred preneed funeral and cemetery receipts held in trust.
Maturity dates of our fixed income securities range from 2012 to 2041. Maturities of fixed income securities, excluding mutual funds, at June 30, 2012 are estimated as follows:
 
Fair Value
 
(In thousands)
Due in one year or less
$
11,074

Due in one to five years
54,182

Due in five to ten years
48,161

Thereafter
49,699

 
$
163,116


Earnings from all our cemetery merchandise and service trust investments are recognized in current cemetery revenues when a service is performed or merchandise is delivered. Fees charged by our wholly-owned registered investment advisor are also included in current revenues in the period in which they are earned. In addition, we are entitled to retain, in certain jurisdictions, a portion of collected customer payments when a customer cancels a preneed contract; these amounts are also recognized in current revenues. Recognized earnings (realized and unrealized) related to these trust investments were $5.8 million and $5.1 million for the three months ended June 30, 2012 and 2011, respectively. Recognized earnings (realized and unrealized) related to these trust investments were $13.3 million and $11.1 million for the six months ended June 30, 2012 and 2011, respectively.
We assess our trust investments for other-than-temporary declines in fair value on a quarterly basis. Impairment charges resulting from this assessment are recognized as investment losses in Other (expense) income, net and a decrease to Preneed cemetery receivables, net and trust investments. These investment losses, if any, are offset by the corresponding reclassification in Other (expense) income, net, which reduces Deferred preneed cemetery receipts held in trust. See Note 7 for further information related to our Deferred preneed cemetery receipts held in trust. For the three months ended June 30, 2012 and 2011, we recorded a $0.3 million and a $0.2 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain investments, respectively. For the six months ended June 30, 2012 and 2011, we recorded a $0.6 million and a $1.2 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain investments.
We have determined that the remaining unrealized losses in our cemetery merchandise and service trust investments are considered temporary in nature, as the unrealized losses were due to temporary fluctuations in interest rates and equity prices. The investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk. We believe that none of the securities are other-than-temporarily impaired based on our analysis of the investments. Our analysis included a review of the portfolio holdings and discussions with the individual money managers as to the sector exposures, credit ratings, and the severity and duration of the unrealized losses. Our cemetery merchandise and service trust investment unrealized losses, their associated fair values and the duration of unrealized losses as of June 30, 2012 are shown in the following tables:
 
June 30, 2012
 
In Loss Position
Less Than 12 Months
 
In Loss Position
Greater Than 12 Months
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
 
 
 
 
(In thousands)
 
 
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
42,821

 
$
(1,554
)
 
$
2,261

 
$
(247
)
 
$
45,082

 
$
(1,801
)
Canadian government
3,525

 
(23
)
 
—

 
—

 
3,525

 
(23
)
Corporate
20,662

 
(868
)
 
1,738

 
(265
)
 
22,400

 
(1,133
)
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
1,941

 
(245
)
 
121

 
(61
)
 
2,062

 
(306
)
Common stock:
 
 
 
 
 
 
 
 
 
 
 
United States
88,067

 
(12,420
)
 
15,799

 
(6,190
)
 
103,866

 
(18,610
)
Canada
5,432

 
(888
)
 
1,211

 
(1,094
)
 
6,643

 
(1,982
)
Other international
8,840

 
(849
)
 
2,509

 
(569
)
 
11,349

 
(1,418
)
Mutual funds:
 
 
 
 
 
 
 
 
 
 
 
Equity
133,077

 
(7,032
)
 
35,735

 
(12,682
)
 
168,812

 
(19,714
)
Fixed income
76,727

 
(7,352
)
 
11,827

 
(14,444
)
 
88,554

 
(21,796
)
Private equity
3

 
(1
)
 
15,252

 
(17,802
)
 
15,255

 
(17,803
)
Total temporarily impaired securities
$
381,095

 
$
(31,232
)
 
$
86,453

 
$
(53,354
)
 
$
467,548

 
$
(84,586
)


 
December 31, 2011
 
In Loss Position
Less Than 12 Months
 
In Loss Position
Greater Than 12 Months
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
 
 
 
 
(In thousands)
 
 
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
1,736

 
$
(51
)
 
$
3,038

 
$
(262
)
 
$
4,774

 
$
(313
)
Canadian government
4,024

 
(24
)
 
—

 
—

 
4,024

 
(24
)
Corporate
15,044

 
(850
)
 
1,747

 
(111
)
 
16,791

 
(961
)
Residential mortgage-backed
2

 
(1
)
 
15

 
(1
)
 
17

 
(2
)
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
1,583

 
(270
)
 
—

 
—

 
1,583

 
(270
)
Common stock:
 
 
 
 
 
 
 
 
 
 
 
United States
123,849

 
(26,401
)
 
17,085

 
(4,053
)
 
140,934

 
(30,454
)
Canada
7,694

 
(1,260
)
 
366

 
(520
)
 
8,060

 
(1,780
)
Other international
8,654

 
(629
)
 
3,772

 
(907
)
 
12,426

 
(1,536
)
Mutual funds:
 
 
 
 
 
 
 
 
 
 
 
Equity
115,725

 
(11,222
)
 
36,398

 
(13,689
)
 
152,123

 
(24,911
)
Fixed income
48,950

 
(7,686
)
 
9,367

 
(12,552
)
 
58,317

 
(20,238
)
Private equity
466

 
(254
)
 
14,213

 
(15,363
)
 
14,679

 
(15,617
)
Total temporarily impaired securities
$
327,727

 
$
(48,648
)
 
$
86,001

 
$
(47,458
)
 
$
413,728

 
$
(96,106
)