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Preneed Cemetery Activities Level 1 (Notes) (Cemetery [Member])
 12 Months Ended
Dec. 31, 2013
Cemetery [Member]
  
Preneed Cemetery Activities Text Block
Preneed Cemetery Activities
Preneed cemetery receivables, net and trust investments
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 Amounts are withdrawn from the trusts when the contract obligations are performed.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 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 for the years ended December 31:
 
2013
 
2012
 
2011
 
 
 
(In thousands)
 
 
Deposits
$
106,185

 
$
98,130

 
$
98,121

Withdrawals
119,576

 
98,738

 
109,382

Purchases of available-for-sale securities
477,772

 
746,761

 
595,683

Sales of available-for-sale securities
498,852

 
700,091

 
525,534

Realized gains from sales of available-for-sale securities
101,337

 
87,665

 
67,167

Realized losses from sales of available-for-sale securities
(14,593
)
 
(29,397
)
 
(46,889
)

The components of Preneed cemetery receivables, net and trust investments in the consolidated balance sheet at December 31 were as follows:
 
2013
 
2012
 
(In thousands)
Trust investments, at market
$
1,553,719

 
$
1,204,084

Cash and cash equivalents
138,459

 
86,923

Assets associated with businesses held for sale
(107,481
)
 
—

Insurance-backed fixed income securities
4

 
9

Trust investments
1,584,701

 
1,291,016

Receivables from customers
800,005

 
614,599

Unearned finance charges
(27,873
)
 
(29,471
)
 
2,356,833

 
1,876,144

Allowance for cancellation
(55,922
)
 
(49,309
)
Preneed cemetery receivables and trust investments
$
2,300,911

 
$
1,826,835


The activity in Preneed cemetery receivables, net and trust investments for the years ended December 31 was as follows:
 
2013
 
2012
 
2011
 
 
 
(In thousands)
 
 
Beginning balance — Preneed cemetery receivables and trust investments
$
1,826,835

 
$
1,595,940

 
$
1,563,893

Net preneed contract sales
562,433

 
501,654

 
468,850

Acquisitions (dispositions) of businesses, net
199,433

 
1,124

 
(5,500
)
Net undistributed investment earnings (losses)(1)
203,499

 
133,351

 
(24,407
)
Cash receipts from customers, net of refunds
(471,710
)
 
(417,965
)
 
(403,524
)
Deposits to trust
106,185

 
98,130

 
98,121

Maturities, deliveries, and associated earnings
(119,576
)
 
(98,738
)
 
(109,382
)
Change in cancellation allowance
3,002

 
(3,481
)
 
(759
)
Effect of foreign currency and other
(9,190
)
 
16,820

 
8,648

Ending balance — Preneed cemetery receivables and trust investments
$
2,300,911

 
$
1,826,835

 
$
1,595,940

_________________________________
(1)
Includes both realized and unrealized investment earnings (losses).
The cost and market values associated with our cemetery merchandise and service trust investments recorded at fair market value at December 31, 2013 and 2012 are detailed below. Cost reflects the investment (net of redemptions) of control holders in common trust funds, mutual funds, and private equity investments. Fair market value represents the value of the underlying securities held by the common trust funds, mutual funds at published values, and the estimated market value of private equity investments.
 
 
December 31, 2013
 
Fair Value Hierarchy Level
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Market
Value
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 

 
 

 
 

 
 

U.S. Treasury
2
$
113,621

 
$
1,714

 
$
(8,876
)
 
$
106,459

Canadian government
2
17,073

 
170

 
(261
)
 
16,982

Corporate
2
48,970

 
5,262

 
(646
)
 
53,586

Residential mortgage-backed
2
408

 
2

 
(2
)
 
408

   Asset-backed
2
3,346

 
—

 
(13
)
 
3,333

Equity securities:
 
 

 
 

 
 

 
 

Preferred stock
2
16,708

 
1,106

 
(123
)
 
17,691

Common stock:
 
 

 
 

 
 

 
 

United States
1
425,246

 
147,258

 
(3,231
)
 
569,273

Canada
1
15,368

 
4,063

 
(935
)
 
18,496

Other international
1
44,184

 
10,079

 
(200
)
 
54,063

Mutual funds:
 
 

 
 

 
 

 
 

Equity
1
327,084

 
49,428

 
(1,704
)
 
374,808

Fixed income
1
338,944

 
5,236

 
(33,649
)
 
310,531

Private equity
3
28,625

 
3,372

 
(5,153
)
 
26,844

Other
3
1,078

 
200

 
(33
)
 
1,245

Trust investments
 
$
1,380,655

 
$
227,890

 
$
(54,826
)
 
$
1,553,719

 
 
December 31, 2012
 
Fair Value Hierarchy Level
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Market
Value
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 

 
 

 
 

 
 

U.S. Treasury
2
$
99,630

 
$
7,925

 
$
(841
)
 
$
106,714

Canadian government
2
17,562

 
402

 
(83
)
 
17,881

Corporate
2
43,515

 
2,456

 
(775
)
 
45,196

Residential mortgage-backed
2
150

 
4

 
—

 
154

Equity securities:
 
 

 
 

 
 

 
 

Preferred stock:
2
5,840

 
334

 
(196
)
 
5,978

Common stock:
 
 

 
 

 
 

 
 

United States
1
363,190

 
71,613

 
(7,716
)
 
427,087

Canada
1
16,026

 
2,862

 
(846
)
 
18,042

Other international
1
29,889

 
3,687

 
(857
)
 
32,719

Mutual funds:
 
 

 
 

 
 

 
 

Equity
1
279,265

 
19,520

 
(9,921
)
 
288,864

Fixed income
1
251,687

 
10,975

 
(19,350
)
 
243,312

Private equity
3
32,785

 
77

 
(15,175
)
 
17,687

Other
3
407

 
44

 
(1
)
 
450

Trust investments
 
$
1,139,946

 
$
119,899

 
$
(55,761
)
 
$
1,204,084


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 December 31, 2013, private equity instruments are valued based on reported net asset values discounted by 0% to 20% for risk and 0% to 10% for liquidity. As of December 31, 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 Trust Services 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 December 31, 2013, our unfunded commitment for our private equity and other investments was $8.5 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 for the years ended December 31 (in thousands):
 
2013
 
2012
 
2011
 
Private Equity
 
Other
 
Private Equity
 
Other
 
Private Equity
 
Other
Fair market value, beginning balance at January 1,
$
17,687

 
$
450

 
$
15,219

 
$
436

 
$
5,719

 
$
532

Net unrealized gains (losses) included in Accumulated other comprehensive income(1)
15,420

 
1,218

 
100

 
28

 
517

 
(71
)
Net realized losses included in Other income (expense), net(2)
(48
)
 
(5
)
 
(64
)
 
(2
)
 
(95
)
 
(6
)
Contributions
3,430

 
—

 
4,932

 
—

 
10,795

 
—

Distributions and other
(9,645
)
 
(418
)
 
(2,500
)
 
(12
)
 
(1,717
)
 
(19
)
Fair market value, ending balance at December 31,
$
26,844

 
$
1,245

 
$
17,687

 
$
450

 
$
15,219

 
$
436


_________________________________
(1)
All unrealized gains (losses) 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 income (expense), net for our cemetery merchandise and service trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Other income (expense), 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 2014 to 2043. Maturities of fixed income securities (excluding mutual funds) at December 31, 2013 are estimated as follows:
 
Fair Market Value
 
(In thousands)
Due in one year or less
$
27,088

Due in one to five years
63,870

Due in five to ten years
44,942

Thereafter
44,868

 
$
180,768


Earnings from all our cemetery merchandise and service trust investments are recognized in 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 our cemetery merchandise and service trust investments were $39.0 million, $27.7 million, and $20.7 million for the years ended December 31, 2013, 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 income (expense), 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 income (expense), 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 years ended December 31, 2013, 2012, and 2011, we recorded a $1.6 million, a $0.8 million, and a $28.7 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 market values, and the duration of unrealized losses for the years ended December 31, 2013 and 2012, are shown in the following tables:
 
December 31, 2013
 
In Loss Position
Less Than 12 Months
 
In Loss Position
Greater Than 12 Months
 
Total
 
Fair Market
Value
 
Unrealized
Losses
 
Fair Market
Value
 
Unrealized
Losses
 
Fair Market
Value
 
Unrealized
Losses
 
 
 
 
 
(In thousands)
 
 
 
 
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury
$
45,120

 
$
(6,040
)
 
$
25,043

 
$
(2,836
)
 
$
70,163

 
$
(8,876
)
Canadian government
9,424

 
(120
)
 
3,066

 
(141
)
 
12,490

 
(261
)
Corporate
15,050

 
(424
)
 
3,073

 
(222
)
 
18,123

 
(646
)
Residential mortgage-backed
145

 
(2
)
 
2

 
—

 
147

 
(2
)
Asset-backed
3,257

 
(13
)
 
—

 
—

 
3,257

 
(13
)
Equity securities:
 

 
 

 
 

 
 

 
 

 
 

Preferred stock:
5,604

 
(123
)
 
—

 
—

 
5,604

 
(123
)
Common stock:
 

 
 

 
 

 
 

 
 

 
 

United States
46,317

 
(2,648
)
 
3,489

 
(583
)
 
49,806

 
(3,231
)
Canada
1,569

 
(502
)
 
1,935

 
(433
)
 
3,504

 
(935
)
Other international
4,344

 
(124
)
 
702

 
(76
)
 
5,046

 
(200
)
Mutual funds:
 

 
 

 
 

 
 

 
 

 
 

Equity
3,858

 
(54
)
 
14,477

 
(1,650
)
 
18,335

 
(1,704
)
Fixed income
134,669

 
(5,527
)
 
64,009

 
(28,122
)
 
198,678

 
(33,649
)
Private equity
—

 
—

 
6,589

 
(5,153
)
 
6,589

 
(5,153
)
Other
—

 
—

 
282

 
(33
)
 
282

 
(33
)
Total temporarily impaired securities
$
269,357

 
$
(15,577
)
 
$
122,667

 
$
(39,249
)
 
$
392,024

 
$
(54,826
)
 
December 31, 2012
 
In Loss Position
Less Than 12 Months
 
In Loss Position
Greater Than 12 Months
 
Total
 
Fair Market
Value
 
Unrealized
Losses
 
Fair Market
Value
 
Unrealized
Losses
 
Fair Market
Value
 
Unrealized
Losses
 
 
 
 
 
(In thousands)
 
 
 
 
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury
$
28,626

 
$
(841
)
 
$
—

 
$
—

 
$
28,626

 
$
(841
)
Canadian government
5,319

 
(83
)
 
—

 
—

 
5,319

 
(83
)
Corporate
14,060

 
(571
)
 
2,137

 
(204
)
 
16,197

 
(775
)
Equity securities:
 

 
 

 
 

 
 

 
 

 
 

Preferred stock:
1,497

 
(143
)
 
126

 
(53
)
 
1,623

 
(196
)
Common stock:
 

 
 

 
 

 
 

 
 

 
 

United States
82,989

 
(5,624
)
 
11,131

 
(2,092
)
 
94,120

 
(7,716
)
Canada
3,114

 
(461
)
 
1,115

 
(385
)
 
4,229

 
(846
)
Other international
9,056

 
(655
)
 
741

 
(202
)
 
9,797

 
(857
)
Mutual funds:
 

 
 

 
 

 
 

 
 

 
 

Equity
28,132

 
(1,427
)
 
43,172

 
(8,494
)
 
71,304

 
(9,921
)
Fixed income
54,533

 
(2,205
)
 
29,104

 
(17,145
)
 
83,637

 
(19,350
)
Private equity
46

 
(17
)
 
17,136

 
(15,158
)
 
17,182

 
(15,175
)
Other
8

 
—

 
378

 
(1
)
 
386

 
(1
)
Total temporarily impaired securities
$
227,380

 
$
(12,027
)
 
$
105,040

 
$
(43,734
)
 
$
332,420

 
$
(55,761
)

Deferred Preneed Cemetery Revenues
At December 31, 2013 and 2012, Deferred preneed cemetery revenues, net of allowance for cancellation, represent future cemetery revenues, including distributed trust investment earnings associated with unperformed trust-funded preneed cemetery contracts that are not held in trust accounts. Deferred preneed cemetery revenues are recognized in current cemetery revenues when the service is performed or merchandise is delivered. Future cemetery revenues and net trust investment earnings that are held in trust accounts are included in Deferred preneed cemetery receipts held in trust.
The following table summarizes the activity in Deferred preneed cemetery revenues for the years ended December 31:
 
2013
 
2012
 
2011
 
(In thousands)
Beginning balance — Deferred preneed cemetery revenues
$
861,148

 
$
833,303

 
$
813,493

Net preneed and atneed deferred sales
396,264

 
380,887

 
363,523

Acquisitions (dispositions) of businesses, net
119,504

 
1,089

 
(10,861
)
Net investment earnings (losses)(1)
201,941

 
130,012

 
(26,431
)
Recognized deferred preneed revenues
(386,632
)
 
(363,072
)
 
(350,356
)
Change in cancellation allowance
18,358

 
3,968

 
802

Change in deferred preneed cemetery receipts held in trust
(298,337
)
 
(133,612
)
 
37,173

Effect of foreign currency and other
10,909

 
8,573

 
5,960

Ending balance — Deferred preneed cemetery revenues
$
923,155

 
$
861,148

 
$
833,303

_________________________________
(1)
Includes both realized and unrealized investment earnings (losses).