Acquisitions

In June 2018, we acquired fifteen funeral homes and seven cemeteries in four states (the “acquired businesses”) for $82.2 million in cash. Additionally, we paid $49.8 million of the acquired businesses existing debt in conjunction with the closing of the acquisition.

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


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


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

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in the acquisition (in thousands):



Other current assets	$	3,321
Cemetery property	28,683
Property and equipment, net	25,717
Preneed receivables, net and trust investments	102,534
Finite-lived intangible assets	42,799
Indefinite-lived intangible assets	18,000
Deferred charges and other assets	1,717
Cemetery perpetual care trust investments	52,747
Goodwill	46,080
Total assets acquired	321,598
Current liabilities	4,591
Deferred revenue and deferred receipts held in trust	120,522
Deferred income taxes	11,730
Care trusts' corpus	52,747
Total liabilities assumed	189,590
Net assets acquired	$	132,008

The purchase accounting is preliminary as we have not finalized our assessment of the fair value as there has been insufficient time between the acquisition date and the issuance of these financial statements to complete our review and final determination of fair value.

Included in preneed receivables, net and trust investments are receivables under preneed contracts with a fair value of $3.8 million. The gross amount due under the contracts is $4.3 million, of which $0.5 million is not expected to be collected.

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. Of the $46.1 million in goodwill recognized, $26.6 million was allocated to our cemetery segment and $19.5 million was allocated to our funeral segment. $26.4 million of this goodwill is deductible for tax purposes. The identified intangible assets comprise the following:



	Useful life
	Minimum	Maximum	Fair Value
	(Years)		(In thousands)

Other preneed customer relationships	10	20	$	19,775
Selling and management agreements	89	89	13,176
Operating leases	89	89	2,848
Tradenames	89	89	7,000
Tradenames		Indefinite	18,000
Total intangible assets			$	60,799

We incurred acquisition costs of $2.3 million, which are included in General and administrative expenses. The acquired businesses contributed revenue of $17.9 million and net income of $1.7 million for the period from June 8, 2018 through December 31, 2018.

The following unaudited pro forma summary presents financial information as if the acquisition had occurred on January 1, 2017:



	2018		2017
	(In thousands)
	(unaudited)
Revenue	$	32,434	$	29,193
Net income	$	4,669	$	2,531

Excluding the June 2018 acquisition described above, we spent $62.8 million, $76.2 million, and $72.9 million for several smaller, tuck-in acquisitions for the three years ended December 31, 2018, 2017, and 2016, respectively. These amounts include the use of $5.9 million, $26.2 million, and $3.7 million in 1031 exchange funds for the three years ended December 31, 2018, 2017, and 2016, respectively.

Wilson Financial Group

For the years ended December 31, 2017 and 2016, we spent $4.6 million and $1.9 million, respectively, to acquire the remaining 22% of common stock of our consolidated subsidiary, Wilson Financial Group, Inc.

Divestiture-Related Activities

As divestitures occur in the normal course of business, gains or losses on the sale of such locations are recognized in the income statement line item Gains (losses) on divestitures and impairment charges, net, which consist of the following:



	Years Ended December 31,
	2018			2017			2016
	(In thousands)
Gains on divestitures, net	$	20,340		$	29,053		$	7,829
Impairment losses	(4,407		)	(22,038		)	(34,648		)
Gains (losses) on divestitures and impairment charges, net	$	15,933		$	7,015		$	(26,819	)

During 2016, we incurred $31.2 million million of impairment charges related to the divestiture of certain funeral homes in Los Angeles, California.