XNYS:SCI Service Corp International Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q
R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended June 30, 2012
or
o     
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from                      to                       
Commission file number 1-6402-1
SERVICE CORPORATION INTERNATIONAL
(Exact name of registrant as specified in its charter)
Texas
 
74-1488375
(State or other jurisdiction of incorporation or organization)
 
(I. R. S. employer identification number)
 
 
 
1929 Allen Parkway, Houston, Texas
 
77019
(Address of principal executive offices)
 
(Zip code)
 
 
 
 
713-522-5141
 
(Registrant’s telephone number, including area code)
 
 
 
 
None
 
(Former name, former address, or former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
(Do not check if smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). YES o NO þ
The number of shares outstanding of the registrant’s common stock as of July 25, 2012 was 214,892,986 (net of treasury shares).

 



SERVICE CORPORATION INTERNATIONAL
INDEX
 
 
 
Page
 
 
 
 
 

2


GLOSSARY
The following terms are common to the deathcare industry, are used throughout this report, and have the following meanings:
Atneed — Funeral and cemetery arrangements after a death has occurred.
Burial Vaults — A reinforced container intended to inhibit the subsidence of the earth and house the casket after it is placed in the ground.
Cemetery Perpetual Care or Endowment Care Fund — A trust fund established for the purpose of maintaining cemetery grounds and property into perpetuity.
Cremation — The reduction of human remains to bone fragments by intense heat.
General Agency (GA) Revenues — Commissions we receive from third-party life insurance companies for life insurance policies or annuities sold to preneed customers for the purpose of funding preneed funeral arrangements. The commission rate paid is determined based on the product type sold, the length of payment terms, and the age of the insured/annuitant.
Interment — The burial or final placement of human remains in the ground.
Lawn Crypt — An underground outer burial receptacle constructed of concrete and reinforced steel, which is usually pre-installed in predetermined designated areas.
Marker — A method of identifying a deceased person in a particular burial space, crypt, or niche. Permanent burial markers are usually made of bronze, granite, or stone.
Maturity — When the underlying contracted service is performed or merchandise is delivered, typically at death. This is the point at which preneed contracts are converted to atneed contracts (note — delivery of certain merchandise and services can occur prior to death).
Mausoleum — An above ground structure that is designed to house caskets and cremation urns.
Preneed — Purchase of products and services prior to a death occurring.
Preneed Backlog — Future revenues from unfulfilled preneed funeral and cemetery contractual arrangements.
Production — Sales of preneed funeral and preneed or atneed cemetery contracts.
As used herein, “SCI”, “Company”, “we”, “our”, and “us” refer to Service Corporation International and companies owned directly or indirectly by Service Corporation International, unless the context requires otherwise.

3


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands, except per share amounts)
 
(In thousands, except per share amounts)
Revenues
$
597,372

 
$
576,774

 
$
1,199,878

 
$
1,156,473

Costs and expenses
(469,183
)
 
(461,751
)
 
(944,122
)
 
(915,004
)
Gross profits
128,189

 
115,023

 
255,756

 
241,469

General and administrative expenses
(29,558
)
 
(24,685
)
 
(55,517
)
 
(53,518
)
Gains (losses) on divestitures and impairment charges, net
1,058

 
(9,843
)
 
568

 
(10,263
)
Operating income
99,689

 
80,495

 
200,807

 
177,688

Interest expense
(33,894
)
 
(33,879
)
 
(67,482
)
 
(67,438
)
Losses on early extinguishment of debt, net

 
(1,835
)
 

 
(2,149
)
Other (expense) income, net
(2,221
)
 
46

 
1,684

 
720

Income before income taxes
63,574

 
44,827

 
135,009

 
108,821

Provision for income taxes
(25,935
)
 
(18,089
)
 
(49,055
)
 
(42,154
)
Net income
37,639

 
26,738

 
85,954

 
66,667

Net income attributable to noncontrolling interests
(563
)
 
(645
)
 
(853
)
 
(1,810
)
Net income attributable to common stockholders
$
37,076

 
$
26,093

 
$
85,101

 
$
64,857

Basic earnings per share:
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
0.17

 
$
0.11

 
$
0.39

 
$
0.27

Basic weighted average number of shares
215,898

 
238,498

 
218,015

 
239,131

Diluted earnings per share:

 
 
 
 
 
 
Net income attributable to common stockholders
$
0.17

 
$
0.11

 
$
0.39

 
$
0.27

Diluted weighted average number of shares
218,906

 
241,435

 
221,058

 
241,589

Dividends declared per share
$
0.06

 
$
0.05

 
$
0.11

 
$
0.10


(See notes to unaudited condensed consolidated financial statements)

4


SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
 
(In thousands)
Net income
$
37,639

 
$
26,738

 
$
85,954

 
$
66,667

Other comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(8,267
)
 
(1,588
)
 
(2,522
)
 
9,920

Total comprehensive income
29,372

 
25,150

 
83,432

 
76,587

Total comprehensive income attributable to noncontrolling interests
(580
)
 
(643
)
 
(855
)
 
(1,814
)
Total comprehensive income attributable to common stockholders
$
28,792

 
$
24,507

 
$
82,577

 
$
74,773


(See notes to unaudited condensed consolidated financial statements)



5


SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
June 30, 2012
 
December 31, 2011
 
(In thousands, except share amounts)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
105,343

 
$
128,569

Receivables, net
91,040

 
103,892

Deferred tax assets
38,161

 
44,316

Inventories, net
25,497

 
25,513

Other
22,618

 
25,803

Total current assets
282,659

 
328,093

Preneed funeral receivables, net and trust investments
1,490,823

 
1,478,865

Preneed cemetery receivables, net and trust investments
1,706,375

 
1,595,940

Cemetery property, at cost
1,493,709

 
1,497,703

Property and equipment, net
1,618,672

 
1,618,361

Goodwill
1,354,259

 
1,361,493

Deferred charges and other assets
421,586

 
430,851

Cemetery perpetual care trust investments
1,057,261

 
1,016,506

Total assets
$
9,425,344

 
$
9,327,812

 
 
 
 
LIABILITIES & EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
334,323

 
$
358,904

Current maturities of long-term debt
30,500

 
23,554

Income taxes
5,772

 
3,150

Total current liabilities
370,595

 
385,608

Long-term debt
1,869,264

 
1,861,116

Deferred preneed funeral revenues
559,566

 
575,546

Deferred preneed cemetery revenues
865,301

 
833,303

Deferred tax liability
432,491

 
405,615

Other liabilities
397,378

 
414,773

Deferred preneed funeral and cemetery receipts held in trust
2,496,896

 
2,424,356

Care trusts’ corpus
1,057,423

 
1,015,300

Commitments and contingencies (Note 15)

 

Equity:
 
 
 
Common stock, $1 per share par value, 500,000,000 shares authorized, 225,865,767 and 224,665,395 shares issued, respectively, and 214,771,352 and 222,955,853 shares outstanding, respectively
214,771

 
222,956

Capital in excess of par value
1,354,236

 
1,430,330

Accumulated deficit
(316,456
)
 
(367,044
)
Accumulated other comprehensive income
103,328

 
105,852

Total common stockholders’ equity
1,355,879

 
1,392,094

Noncontrolling interests
20,551

 
20,101

Total equity
1,376,430

 
1,412,195

Total liabilities and equity
$
9,425,344

 
$
9,327,812

(See notes to unaudited condensed consolidated financial statements)

6


SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

 
Six Months Ended
 
June 30,
 
2012
 
2011
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
85,954

 
$
66,667

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Losses on early extinguishment of debt, net

 
2,149

Depreciation and amortization
59,111

 
58,960

Amortization of intangible assets
12,157

 
12,672

Amortization of cemetery property
21,004

 
17,674

Amortization of loan costs
2,406

 
2,365

Provision for doubtful accounts
5,039

 
4,034

Provision for deferred income taxes
39,933

 
34,633

(Gains) losses on divestitures and impairment charges, net
(568
)
 
10,263

Share-based compensation
4,969

 
4,542

Change in assets and liabilities, net of effects from acquisitions and divestitures:
 
 
 
Decrease in receivables
7,441

 
6,306

Increase in other assets
(7,540
)
 
(3,663
)
Decrease in payables and other liabilities
(27,734
)
 
(17,317
)
Effect of preneed funeral production and maturities:
 
 
 
Decrease in preneed funeral receivables, net and trust investments
23,036

 
32,800

Decrease in deferred preneed funeral revenue
(18,805
)
 
(34,076
)
Decrease in deferred preneed funeral receipts held in trust
(15,693
)
 
(12,679
)
Effect of cemetery production and deliveries:
 
 
 
Increase in preneed cemetery receivables, net and trust investments
(60,056
)
 
(26,247
)
Increase in deferred preneed cemetery revenue
25,416

 
24,314

Increase (decrease) in deferred preneed cemetery receipts held in trust
4,032

 
(7,221
)
Other
(1,719
)
 
(646
)
Net cash provided by operating activities
158,383

 
175,530

Cash flows from investing activities:
 
 
 
Capital expenditures
(52,062
)
 
(57,075
)
Acquisitions
(10,550
)
 
(66,182
)
Proceeds from divestitures and sales of property and equipment, net
7,135

 
10,038

Other
(4,514
)
 
4,549

Net cash used in investing activities
(59,991
)
 
(108,670
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
12,907

 

Payments of debt
(829
)
 
(1,545
)
Early extinguishment of debt

 
(28,137
)
Principal payments on capital leases
(12,823
)
 
(11,166
)
Proceeds from exercise of stock options
3,793

 
6,862

Purchase of Company common stock
(104,700
)
 
(55,644
)
Payments of dividends
(21,959
)
 
(21,546
)
Bank overdrafts and other
1,074

 
4,696

Net cash used in financing activities
(122,537
)
 
(106,480
)
Effect of foreign currency on cash and cash equivalents
919

 
1,768

Net decrease in cash and cash equivalents
(23,226
)
 
(37,852
)
Cash and cash equivalents at beginning of period
128,569

 
170,846

Cash and cash equivalents at end of period
$
105,343

 
$
132,994

(See notes to unaudited condensed consolidated financial statements)

7


SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(UNAUDITED)
(In thousands)
 
Common
Stock
 
Treasury Stock
 
Capital in
Excess of
Par Value
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2010
$
242,020

 
$
(985
)
 
$
1,603,112

 
$
(477,459
)
 
$
112,768

 
$
492

 
$
1,479,948

Comprehensive income

 

 

 
64,857

 
9,916

 
1,814

 
76,587

Dividends declared on common stock ($.10 per share)

 

 
(23,788
)
 

 

 

 
(23,788
)
Employee share-based compensation earned

 

 
4,542

 

 

 

 
4,542

Stock option exercises
1,016

 

 
5,846

 

 

 

 
6,862

Restricted stock awards, net of forfeitures
539

 

 
(539
)
 

 

 

 

Purchase of Company common stock

 
(5,455
)
 
(50,189
)
 

 

 

 
(55,644
)
Acquisition

 

 

 

 

 
18,857

 
18,857

Noncontrolling interest payment

 

 

 

 

 
(568
)
 
(568
)
Other
72

 
1

 
680

 

 

 

 
753

Balance at June 30, 2011
$
243,647

 
$
(6,439
)
 
$
1,539,664

 
$
(412,602
)
 
$
122,684

 
$
20,595

 
$
1,507,549

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2011
224,666

 
(1,710
)
 
1,430,330

 
(367,044
)
 
105,852

 
20,101

 
1,412,195

Comprehensive income

 

 

 
85,101

 
(2,524
)
 
855

 
83,432

Dividends declared on common stock ($.11 per share)

 

 
(23,802
)
 

 

 

 
(23,802
)
Employee share-based compensation earned

 

 
4,969

 

 

 

 
4,969

Stock option exercises
635

 

 
3,158

 

 

 

 
3,793

Restricted stock awards, net of forfeitures
483

 

 
(483
)
 

 

 

 

Purchase of Company common stock

 
(9,385
)
 
(60,802
)
 
(34,513
)
 

 

 
(104,700
)
Noncontrolling interest payment

 

 

 

 

 
(405
)
 
(405
)
Other
82

 

 
866

 

 

 

 
948

Balance at June 30, 2012
$
225,866

 
$
(11,095
)
 
$
1,354,236

 
$
(316,456
)
 
$
103,328

 
$
20,551

 
$
1,376,430


(See notes to unaudited condensed consolidated financial statements)


8


SERVICE CORPORATION INTERNATIONAL
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
1. Nature of Operations
We are North America’s largest provider of deathcare products and services, with a network of funeral service locations and cemeteries primarily operating in the United States and Canada. Our operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses.
Funeral service locations provide all professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles and preparation and embalming services. Funeral-related merchandise, including caskets, casket memorialization products, burial vaults, cremation receptacles, cremation memorial products, flowers, and other ancillary products and services, is sold at funeral service locations. Cemeteries provide cemetery property interment rights, including mausoleum spaces, lots, and lawn crypts, and sell cemetery-related merchandise and services, including stone and bronze memorials, markers, merchandise installations, and burial openings and closings. We also sell preneed funeral and cemetery products and services whereby a customer contractually agrees to the terms of certain products and services to be provided in the future.

2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
Our unaudited condensed consolidated financial statements include the accounts of Service Corporation International (SCI) and all subsidiaries in which we hold a controlling financial interest. Our financial statements also include the accounts of the funeral merchandise and service trusts, cemetery merchandise and service trusts, and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair statement of our results for these periods. Our unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2011, unless otherwise disclosed herein, and should be read in conjunction therewith. The accompanying year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period.
Use of Estimates in the Preparation of Financial Statements
The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in our Annual Report on Form 10-K for the year ended December 31, 2011. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. As a result, actual results could differ from these estimates.
Preneed Funeral and Cemetery Receivables
We sell preneed funeral and cemetery contracts whereby the customer enters into arrangements for future merchandise and services prior to the time of need. As these contracts are prior to the delivery of the related goods and services, the preneed funeral and cemetery receivables are offset by a comparable deferred revenue amount. These receivables generally have an interest component for which interest income is recorded when the interest amount is considered collectible and realizable, which typically coincides with cash payment. We do not accrue interest on financing receivables that are not paid in accordance with the contractual payment date given the nature of our goods and services, the nature of our contracts with customers, and the timing of the delivery of our services. We do not consider receivables to be past due until the service or goods are required to be delivered at which time the preneed receivable is paid or reclassified as a trade receivable with payment terms of less than 30 days. As the preneed funeral and cemetery receivables are offset by comparable deferred revenue amounts, we have no risk of loss related to these receivables.
If a preneed contract is canceled prior to delivery, state or provincial law determines the amount of the refund owed to the customer, if any, including the amount of the attributed investment earnings. Upon cancellation, we receive the amount of principal deposited to the trust and previously undistributed net investment earnings and, where required, issue a refund to the customer. We retain excess funds, if any, and recognize the attributed investment earnings (net of any investment earnings payable to the customer) as revenue in the consolidated statement of operations. In certain jurisdictions, we may be obligated to fund any shortfall if the amount deposited by the customers exceed the funds in trust. Based on our historical experience, we have provided an allowance for cancellation of these receivables, which is recorded as a reduction in receivables with a corresponding offset to deferred revenue.
Fair Value Measurements
In May 2011, the Financial Accounting Standards Board (FASB) amended the Fair Value Measurements and Disclosure (FVM&D) Topic of the Accounting Standards Codification (ASC) to expand disclosures about items marked to fair value that are categorized within Level 3 of the fair value hierarchy to include qualitative explanations of the valuation methodology used, sensitivity analysis of the inputs into the valuation, and quantitative information about those inputs. The amendment also requires that items that are not measured at fair value but for which the fair value is disclosed also disclose the level in the fair value hierarchy in which those items were categorized. We adopted the amended guidance in the first quarter of 2012 and the appropriate disclosures are contained in Notes 4, 5, and 6.
Comprehensive Income
In June 2011, the FASB amended the Comprehensive Income Topic of the ASC to require the disclosure of the components of other comprehensive income, which we previously disclosed elsewhere in our filings, be shown as either part of one statement of comprehensive income or as a separate statement of comprehensive income immediately following the income statement. We adopted the amended guidance in the first quarter of 2012 and a separate Statement of Comprehensive Income is included herein.

3. Recently Issued Accounting Standards
Goodwill Testing
In September 2011, the FASB amended the Intangibles - Goodwill and Other Topic of the ASC that allows us to make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, after assessing the relevant information, we determine it is more likely than not that the fair value is more than the carrying amount, no additional analysis is necessary. If we determine it is more likely than not that the fair value is less than the carrying amount, then we are required to proceed to the quantitative approach. The amended guidance is effective for us in our annual test in the fourth quarter of 2012, and adoption is not expected to impact our consolidated financial condition or results of operations.

4. Preneed Funeral Activities
Preneed funeral receivables, net and trust investments represent trust investments, including investment earnings, and customer receivables, net of unearned finance charges, related to unperformed, price-guaranteed preneed funeral contracts. Our funeral 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. Our cemetery trust investments detailed in Notes 5 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 funeral revenues into Deferred preneed funeral and cemetery receipts held in trust. Amounts are withdrawn from the trusts after the contract obligations are performed. Cash flows from preneed funeral contracts are presented as operating cash flows in our unaudited condensed consolidated statement of cash flows.
 Preneed funeral 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 funeral revenues until the service is performed or the merchandise is delivered.
The table below sets forth certain investment-related activities associated with our preneed funeral merchandise and service trusts:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
 
(In thousands)
Deposits
$
21,921

 
$
18,913

 
$
44,099

 
$
36,229

Withdrawals
24,179

 
29,187

 
55,091

 
52,945

Purchases of available-for-sale securities
83,211

 
163,234

 
271,270

 
246,991

Sales of available-for-sale securities
86,897

 
224,805

 
271,799

 
334,512

Realized gains from sales of available-for-sale securities
9,754

 
25,388

 
35,765

 
38,265

Realized losses from sales of available-for-sale securities
(4,412
)
 
(7,595
)
 
(14,160
)
 
(11,629
)

9


The components of Preneed funeral 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
$
927,647

 
$
892,685

Cash and cash equivalents
90,125

 
101,111

Insurance-backed fixed income securities
271,573

 
277,650

Trust investments
1,289,345

 
1,271,446

Receivables from customers
243,978

 
246,601

Unearned finance charge
(8,403
)
 
(5,425
)
 
1,524,920

 
1,512,622

Allowance for cancellation
(34,097
)
 
(33,757
)
Preneed funeral receivables, net and trust investments
$
1,490,823

 
$
1,478,865

The cost and fair values associated with our funeral 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 (including debt as well as the estimated fair value related to the contract holder’s equity in majority-owned real estate investments).
 
June 30, 2012
 
Fair Value Hierarchy Level
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury
2
 
$
100,936

 
$
5,216

 
$
(1,593
)
 
$
104,559

Canadian government
2
 
111,163

 
661

 
(24
)
 
111,800

Corporate
2
 
52,932

 
1,816

 
(831
)
 
53,917

Residential mortgage-backed
2
 
3,440

 
67

 
(4
)
 
3,503

Asset-backed
2
 
127

 
4

 

 
131

Equity securities:
 
 
 
 
 
 
 
 
 
Preferred stock
2
 
2,573

 
87

 
(166
)
 
2,494

Common stock:
 
 
 
 
 
 
 
 
 
United States
1
 
220,714

 
37,656

 
(12,957
)
 
245,413

Canada
1
 
23,450

 
1,799

 
(2,237
)
 
23,012

Other international
1
 
17,198

 
1,231

 
(955
)
 
17,474

Mutual funds:
 
 
 
 
 
 
 
 
 
Equity
1
 
148,209

 
3,396

 
(14,893
)
 
136,712

Fixed income
1
 
217,660

 
6,360

 
(12,656
)
 
211,364

Private equity
3
 
37,641

 
213

 
(21,495
)
 
16,359

Other
3
 
476

 
433

 

 
909

Trust investments
 
 
$
936,519

 
$
58,939

 
$
(67,811
)
 
$
927,647



10


 
December 31, 2011
 
Fair Value Hierarchy Level
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury
2
 
$
77,299

 
$
4,565

 
$
(373
)
 
$
81,491

Canadian government
2
 
114,586

 
838

 
(109
)
 
115,315

Corporate
2
 
49,210

 
1,849

 
(770
)
 
50,289

Residential mortgage-backed
2
 
3,292

 
71

 
(34
)
 
3,329

Asset-backed
2
 
126

 
6

 

 
132

Equity securities:
 
 
 
 
 
 
 
 
 
Preferred stock
2
 
2,041

 
50

 
(153
)
 
1,938

Common stock:
 
 
 
 
 
 
 
 
 
United States
1
 
258,738

 
40,992

 
(22,715
)
 
277,015

Canada
1
 
23,986

 
2,511

 
(1,771
)
 
24,726

Other international
1
 
18,954

 
1,045

 
(1,296
)
 
18,703

Mutual funds:
 
 
 
 
 
 
 
 
 
Equity
1
 
134,383

 
2,384

 
(18,982
)
 
117,785

Fixed income
1
 
193,134

 
5,044

 
(13,114
)
 
185,064

Private equity
3
 
35,017

 
218

 
(19,249
)
 
15,986

Other
3
 
484

 
428

 

 
912

Trust investments
 
 
$
911,250

 
$
60,001

 
$
(78,566
)
 
$
892,685

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 $13.0 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 funeral merchandise and service trust investments with significant unobservable inputs (Level 3) is as follows (in thousands):

11


 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
Fair value, beginning balance
$
16,603

 
$
25,370

 
$
16,898

 
$
21,359

Net unrealized (losses) gains included in Accumulated other comprehensive income(1)
(284
)
 
2,894

 
(1,584
)
 
6,756

Net realized losses included in Other (expense) income, net(2)
(6
)
 
(52
)
 
(16
)
 
(59
)
Sales

 

 
(9
)
 
(186
)
Contributions
1,281

 
1,296

 
2,559

 
1,782

Distributions and other
(326
)
 
(477
)
 
(580
)
 
(621
)
Fair value, ending balance
$
17,268

 
$
29,031

 
$
17,268

 
$
29,031

                                                                               
(1)
All unrealized (losses) gains recognized in Accumulated other comprehensive income for our funeral 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 funeral 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 2053. 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
$
129,175

Due in one to five years
57,429

Due in five to ten years
51,367

Thereafter
35,939

 
$
273,910

Earnings from all our funeral merchandise and service trust investments are recognized in funeral 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 $9.3 million and $9.1 million for the three months ended June 30, 2012 and 2011, respectively. Recognized earnings (realized and unrealized) related to these trust investments were $19.2 million and $18.7 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 funeral 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 funeral receipts held in trust. See Note 7 for further information related to our Deferred preneed funeral receipts held in trust. For the three months ended June 30, 2012 and 2011, we recorded a $0.2 million and a $0.1 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 $3.3 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 funeral 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 funeral merchandise and service trust investment unrealized losses, their associated fair values, and the duration of unrealized losses as of June 30, 2012 and December 31, 2011, respectively, are shown in the following tables:

12


 
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
$
30,024

 
$
(1,338
)
 
$
7,699

 
$
(255
)
 
$
37,723

 
$
(1,593
)
Canadian government
6,136

 
(24
)
 

 

 
6,136

 
(24
)
Corporate
13,763

 
(633
)
 
2,847

 
(198
)
 
16,610

 
(831
)
Residential mortgage-backed
975

 
(4
)
 

 

 
975

 
(4
)
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
1,244

 
(110
)
 
173

 
(56
)
 
1,417

 
(166
)
Common stock:
 
 
 
 
 
 
 
 
 
 
 
United States
67,570

 
(8,532
)
 
11,478

 
(4,425
)
 
79,048

 
(12,957
)
Canada
11,400

 
(1,855
)
 
729

 
(382
)
 
12,129

 
(2,237
)
Other international
5,817

 
(510
)
 
1,926

 
(445
)
 
7,743

 
(955
)
Mutual funds:
 
 
 
 
 
 
 
 
 
 
 
Equity
87,835

 
(5,810
)
 
22,221

 
(9,083
)
 
110,056

 
(14,893
)
Fixed income
84,624

 
(4,955
)
 
11,372

 
(7,701
)
 
95,996

 
(12,656
)
Private equity
636

 
(2,079
)
 
15,343

 
(19,416
)
 
15,979

 
(21,495
)
Total temporarily impaired securities
$
310,024

 
$
(25,850
)
 
$
73,788

 
$
(41,961
)
 
$
383,812

 
$
(67,811
)

 
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
$
6,977

 
$
(90
)
 
$
8,709

 
$
(283
)
 
$
15,686

 
$
(373
)
Canadian government
9,597

 
(109
)
 

 

 
9,597

 
(109
)
Corporate
17,328

 
(692
)
 
662

 
(78
)
 
17,990

 
(770
)
Residential mortgage-backed
600

 
(4
)
 
295

 
(30
)
 
895

 
(34
)
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
1,244

 
(153
)
 

 

 
1,244

 
(153
)
Common stock:
 
 
 
 
 
 
 
 

 
 
United States
84,450

 
(18,120
)
 
14,924

 
(4,595
)
 
99,374

 
(22,715
)
Canada
8,448

 
(1,491
)
 
513

 
(280
)
 
8,961

 
(1,771
)
Other international
7,263

 
(615
)
 
2,403

 
(681
)
 
9,666

 
(1,296
)
Mutual funds:
 
 
 
 
 
 
 
 
 
 
 
Equity
76,559

 
(9,173
)
 
26,053

 
(9,809
)
 
102,612

 
(18,982
)
Fixed income
68,378

 
(5,500
)
 
9,314

 
(7,614
)
 
77,692

 
(13,114
)
Private equity
1,977

 
(3,499
)
 
13,502

 
(15,750
)
 
15,479

 
(19,249
)
Total temporarily impaired securities
$
282,821

 
$
(39,446
)
 
$
76,375

 
$
(39,120
)
 
$
359,196

 
$
(78,566
)

5. 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

13


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.

14


 
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

15


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

16


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</