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Preneed Activities Level 1 (Notes)
 12 Months Ended
Dec. 31, 2018
Preneed Activities [Abstract]  
Preneed Activities Text Block
3.
Preneed Activities
Preneed receivables, net and trust investments
The components of Preneed receivables, net and trust investments in our Consolidated Balance Sheet were as follows:
 
Years Ended December 31,
 
2018
 
2017
 
(In thousands)
Preneed funeral receivables (1)
$
107,612

 
$
336,925

Preneed cemetery receivables (1)
883,432

 
1,118,146

Preneed receivables from customers
991,044

 
1,455,071

Unearned finance charge
(44,981
)
 
(45,515
)
Allowance for cancellation (1)
(48,380
)
 
(107,749
)
Preneed receivables, net
897,683

 
1,301,807

 
 
 
 
Trust investments, at market
4,585,720

 
4,749,548

Assets associated with business held for sale
—

 
(5,660
)
Insurance-backed fixed income securities and other
265,787

 
265,314

Trust investments
4,851,507

 
5,009,202

Less: Cemetery perpetual care trust investments
(1,477,798
)
 
(1,532,167
)
Preneed trust investments
3,373,709

 
3,477,035

 
 
 
 
Preneed receivables, net and trust investments
$
4,271,392

 
$
4,778,842


(1)
Upon adoption of "Revenue from Contracts with Customers" on January 1, 2018, we reclassified amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts as a reduction in Deferred revenue, net. As a result of this reclassification, we eliminated the allowance for cancellation on these performance obligations.
The table below sets forth certain investment-related activities associated with our trusts:
 
Years Ended December 31,
 
2018
 
2017
 
2016
 
 
 
(In thousands)
 
 
Deposits
$
393,523

 
$
371,234

 
$
321,232

Withdrawals
$
432,822

 
$
415,283

 
$
350,379

Purchases of securities
$
1,540,093

 
$
2,057,348

 
$
1,462,900

Sales of securities
$
1,564,968

 
$
1,999,918

 
$
1,393,728

Realized gains from sales of securities(1)
$
305,595

 
$
256,413

 
$
100,284

Realized losses from sales of securities(1)
$
(77,996
)
 
$
(76,963
)
 
$
(113,806
)

(1)
All realized gains and losses are recognized in Other income (expense), net for our trust investments and are offset by a corresponding reclassification in Other income (expense), net to Deferred receipts held in trust and Care trusts’ corpus
The activity in Preneed receivables, net and trust investments was as follows:
 
Years Ended December 31,
 
2018
 
2017
 
2016
 
 
 
(In thousands)
 
 
Beginning balance - Preneed receivables, net and trust investments
$
4,778,842

 
$
4,305,165

 
$
4,078,464

Net preneed contract sales
1,325,134

 
1,257,288

 
1,159,194

Cash receipts from customers, net of refunds
(1,185,717
)
 
(1,109,380
)
 
(1,030,703
)
Deposits to trust
347,601

 
328,241

 
279,782

Acquisitions of businesses, net
134,729

 
8,153

 
1,477

Net undistributed investment (losses) earnings (1)
(191,611
)
 
384,512

 
145,511

Maturities and distributed earnings
(433,036
)
 
(411,452
)
 
(337,912
)
Change in cancellation allowance
62,131

 
(528
)
 
3,329

Change in amounts due on unfulfilled performance obligations
(546,554
)
 
—

 
—

Effect of foreign currency and other
(20,127
)
 
16,843

 
6,023

Ending balance - Preneed receivables, net and trust investments
$
4,271,392

 
$
4,778,842

 
$
4,305,165

(1)
Includes both realized and unrealized investment (losses) earnings.
The cost and market values associated with trust investments recorded at market value at December 31, 2018 and 2017 are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Fair value represents the value of the underlying securities held by the trusts.
 
 
December 31, 2018
 
Fair Value Hierarchy Level
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Value
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 

 
 

 
 

 
 

U.S. Treasury
2
$
49,187

 
$
153

 
$
(448
)
 
$
48,892

Canadian government
2
56,343

 
23

 
(1,797
)
 
54,569

Corporate
2
19,869

 
13

 
(516
)
 
19,366

Residential mortgage-backed
2
3,611

 
10

 
(50
)
 
3,571

Asset-backed
2
142

 
2

 
(11
)
 
133

Equity securities:
 
 
 
 
 
 
 
 

Preferred stock
2
9,058

 
180

 
(412
)
 
8,826

Common stock:
 
 
 
 
 
 
 
 

United States
1
1,236,513

 
149,233

 
(138,141
)
 
1,247,605

Canada
1
34,821

 
9,082

 
(3,026
)
 
40,877

Other international
1
77,676

 
6,057

 
(10,275
)
 
73,458

Mutual funds:
 
 
 
 
 
 
 
 

Equity
1
760,887

 
7,104

 
(151,853
)
 
616,138

Fixed income
1
1,180,325

 
800

 
(89,179
)
 
1,091,946

Other
3
6,548

 
3,210

 
(3
)
 
9,755

Trust investments, at fair value
 
3,434,980

 
175,867

 
(395,711
)
 
3,215,136

Commingled funds
 
 
 
 
 
 
 
 
Fixed income
 
419,206

 
2,419

 
(18,981
)
 
402,644

Equity
 
205,789

 
19,567

 
(11,723
)
 
213,633

Money market funds
 
466,429

 
—

 
—

 
466,429

Private equity
 
215,618

 
72,897

 
(637
)
 
287,878

Trust investments, at net asset value
 
1,307,042

 
94,883

 
(31,341
)
 
1,370,584

Trust investments, at market
 
$
4,742,022

 
$
270,750

 
$
(427,052
)
 
$
4,585,720


 
 
December 31, 2017
 
Fair Value Hierarchy Level
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Value
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 

 
 

 
 

 
 

U.S. Treasury
2
$
48,805

 
$
14

 
$
(117
)
 
$
48,702

Canadian government
2
81,500

 
160

 
(1,089
)
 
80,571

Corporate
2
13,540

 
327

 
(170
)
 
13,697

Residential mortgage-backed
2
3,279

 
16

 
(14
)
 
3,281

Asset-backed
2
320

 
15

 
(10
)
 
325

Equity securities:
 
 
 
 
 
 
 
 

Preferred stock
2
7,834

 
385

 
(139
)
 
8,080

Common stock:
 
 
 
 
 
 
 
 

United States
1
1,161,015

 
266,822

 
(24,739
)
 
1,403,098

Canada
1
30,762

 
12,545

 
(522
)
 
42,785

Other international
1
63,510

 
13,174

 
(2,834
)
 
73,850

Mutual funds:
 
 
 
 
 
 
 
 

Equity
1
613,934

 
59,100

 
(4,312
)
 
668,722

Fixed income
1
1,230,196

 
11,897

 
(23,943
)
 
1,218,150

Other
3
5,953

 
3,114

 
—

 
9,067

Trust investments, at fair value
 
3,260,648

 
367,569

 
(57,889
)
 
3,570,328

Commingled funds
 
 
 
 
 
 
 
 
Fixed income
 
454,242

 
235

 
(5,860
)
 
448,617

Equity
 
214,000

 
12,826

 
—

 
226,826

Money market funds
 
287,435

 
—

 
—

 
287,435

Private equity
 
166,860

 
51,631

 
(2,149
)
 
216,342

Trust investments, at net asset value
 
1,122,537

 
64,692

 
(8,009
)
 
1,179,220

Trust investments, at market
 
$
4,383,185

 
$
432,261

 
$
(65,898
)
 
$
4,749,548


As of December 31, 2018, our unfunded commitment for our private equity investments was $113 million which, if called, would be funded by the assets of the trusts.
The change in our market-based trust investments with significant unobservable inputs (Level 3) is as follows:
 
 
Years Ended December 31,
 
 
2018
 
2017
 
2016
 
 
(In thousands)
Fair value, beginning balance at January 1
 
$
9,067

 
$
7,163

 
$
8,162

Net realized and unrealized (losses) gains included in Other income (expense), net(1)
 
(697
)
 
912

 
251

Purchases
 
66

 
1,945

 
89

Sales
 
(26
)
 
(953
)
 
(1,339
)
Acquisitions, net
 
1,345

 
—

 
—

Fair value, ending balance at December 31
 
$
9,755

 
$
9,067

 
$
7,163


(1)
All net realized and unrealized (losses) gains recognized in Other income (expense), net for our trust investments are offset by a corresponding reclassification in Other income (expense), net to Deferred receipts held in trust and Care trusts' corpus.
Maturity dates of our fixed income securities range from 2019 to 2077. Maturities of fixed income securities (excluding mutual funds) at December 31, 2018 are estimated as follows:
 
Fair Value
 
(In thousands)
Due in one year or less
$
62,374

Due in one to five years
53,512

Due in five to ten years
9,698

Thereafter
947

Total estimated maturities of fixed income securities
$
126,531


Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $121.7 million, $112.6 million, and $94.4 million for the years ended December 31, 2018, 2017, and 2016, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $74.7 million, $62.9 million, and $67.6 million for the years ended December 31, 2018, 2017, and 2016, respectively.
We have determined that the unrealized losses in our fixed income trust investments are considered temporary in nature, as the unrealized losses were due to temporary fluctuations in interest rates. 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 credit ratings and the severity and duration of the unrealized losses. Our fixed income investment unrealized losses, their associated fair values, and the duration of unrealized losses for the years ended December 31, 2018 and 2017, are shown in the following tables:
 
December 31, 2018
 
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
$
6,899

 
$
(226
)
 
$
16,374

 
$
(222
)
 
$
23,273

 
$
(448
)
Canadian government
2,254

 
(9
)
 
25,330

 
(1,788
)
 
27,584

 
(1,797
)
Corporate
11,579

 
(206
)
 
6,563

 
(310
)
 
18,142

 
(516
)
Residential mortgage-backed
351

 
(4
)
 
3,010

 
(46
)
 
3,361

 
(50
)
Asset-backed
—

 
—

 
79

 
(11
)
 
79

 
(11
)
Total fixed income temporarily impaired securities
$
21,083

 
$
(445
)
 
$
51,356

 
$
(2,377
)
 
$
72,439

 
$
(2,822
)

 
December 31, 2017
 
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
$
29,014

 
$
(115
)
 
$
106

 
$
(2
)
 
$
29,120

 
$
(117
)
Canadian government
20,947

 
(639
)
 
6,370

 
(450
)
 
27,317

 
(1,089
)
Corporate
2,423

 
(31
)
 
4,453

 
(139
)
 
6,876

 
(170
)
Residential mortgage-backed
2,880

 
(12
)
 
151

 
(2
)
 
3,031

 
(14
)
Asset-backed
—

 
—

 
74

 
(10
)
 
74

 
(10
)
Total fixed income temporarily impaired securities
$
55,264

 
$
(797
)
 
$
11,154

 
$
(603
)
 
$
66,418

 
$
(1,400
)

Deferred revenue, net
At December 31, 2018 and 2017, Deferred revenue, net represents future revenue, including distributed trust investment earnings associated with unperformed trust-funded preneed contracts that are not held in trust accounts. Future revenue and net trust investment earnings that are held in trust accounts are included in Deferred receipts held in trust.

The components of Deferred revenue, net in our Consolidated Balance Sheet were as follows:
 
Years Ended December 31,
 
2018
 
2017
 
(In thousands)
Deferred revenue
$
1,989,232

 
$
1,789,776

Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts (1)
(570,418
)
 
—

Deferred revenue, net
$
1,418,814

 
$
1,789,776

(1)
Prior to adoption of "Revenue from Contracts with Customers" on January 1, 2018, amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts were included in Preneed receivables, net and trust investments.
The following table summarizes the activity for our contract liabilities, which are reflected in Deferred revenue, net and Deferred receipts held in trust for the year ended December 31, 2018 (in thousands):
Beginning balance — Deferred revenue, net and Deferred receipts held in trust
$
5,265,206

Cumulative effect of accounting changes
37,991

Net preneed contract sales
977,378

Acquisitions of businesses, net
159,560

Net investment losses(1)
(195,051
)
Recognized revenue from backlog (2)
(381,041
)
Recognized revenue from current period sales
(572,428
)
Change in amounts due on unfulfilled performance obligations
(546,554
)
Change in cancellation reserve
65,817

Effect of foreign currency and other
(20,326
)
Ending balance — Deferred revenue, net and Deferred receipts held in trust
$
4,790,552

(1)
Includes both realized and unrealized investment losses.
(2)
Includes current year trust fund income through the date of performance.
The following table summarizes the activity in Deferred revenue, net:
 
Years Ended December 31,
 
2017
 
2016
 
(In thousands)
Beginning balance — Deferred revenue, net
$
1,731,417

 
$
1,677,898

Net preneed contract sales
900,037

 
847,848

Acquisitions of businesses, net
10,488

 
193

Net investment earnings (1)
381,436

 
146,103

Recognized revenue
(876,857
)
 
(823,319
)
Change in cancellation allowance
(165
)
 
5,396

Change in deferred receipts held in trust
(361,499
)
 
(124,923
)
Effect of foreign currency and other
4,919

 
2,221

Ending balance — Deferred revenue, net
$
1,789,776

 
$
1,731,417

(1)
Includes both realized and unrealized investment earnings.