Acquisition Level 1 (Notes)

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Acquisition

Stewart

On December 23, 2013, pursuant to a tender offer, we acquired Stewart Enterprises, Inc. (Stewart) for $13.25 per share in cash, resulting in a purchase price of $1.5 billion, which includes the assumption of $331.5 million of Stewart’s debt.

We incurred acquisition costs of $39.7 million of which $28.4 million is included in General and administrative expenses and $11.3 million is included in Interest expense for the year ended December 31, 2013.

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

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

• combining the two companies’ operations provides synergies and related cost savings through the elimination of duplicate home office functions and economies of scale; and

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

The following table summarizes the adjusted fair values of the assets acquired and liabilities assumed as of December 23, 2013:

	(In thousands)
Accounts receivable	$	14,638
Other current assets	197,899
Cemetery property	284,775
Property and equipment, net	340,456
Preneed funeral and cemetery receivables and trust investments	655,010
Finite-lived intangible assets	106,278
Indefinite-lived intangible assets	79,400
Acquired assets held for sale	434,248
Deferred charges and other assets	278,320
Goodwill	578,578
Total assets acquired	2,969,602
Current liabilities	217,220
Long-term debt	270,668
Deferred preneed funeral and cemetery revenues and deferred receipts held in trusts	782,858
Assumed liabilities held for sale	153,637
Deferred income taxes	100,169
Other liabilities	279,577
Total liabilities assumed	1,804,129
Noncontrolling interest	118
Net assets acquired	$	1,165,355

We have not finalized our assessment of the fair values 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.

The gross amount of accounts receivable is $16.9 million, of which $2.3 million is not expected to be collected. Included in Preneed funeral and cemetery receivables and trust investments are receivables under preneed contracts with a fair value of $147.5 million. The gross amount due under the contracts is $165.7 million, of which $18.2 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 as required by the Intangible Assets Topic of the ASC. Of the $578.6 million in goodwill recognized, $260.4 million was allocated to our cemetery segment and $318.2 million was allocated to our funeral segment. As a result of the carryover of Stewart’s tax basis, $3.0 million of this goodwill is deductible for tax purposes. The identified intangible assets are comprised of the following:

	Useful life
	Minimum	Maximum	Fair Value
	(Years)		(In thousands)
Preneed customer relationships related to insurance claims	10	20	$	28,500
Other preneed customer relationships	10	14	44,251
Selling and management agreements	20	40	11,000
Covenants-not-to-compete	5	15	5,480
Operating leases	26	34	7,897
Tradenames	5	5	9,150
Tradenames		Indefinite	77,900
Licenses and permits		Indefinite	1,500
Total intangible assets			$	185,678

Included in our results of operations for the twelve months ended December 31, 2013 is revenue of $11.4 million and net income of $0.8 million for the period from the acquisition date (December 23, 2013) through December 31, 2013. The following unaudited pro forma summary presents financial information as if the acquisition had occurred on January 1, 2012:

	2013		2012
	(In thousands)
	(unaudited)
Revenue	$	2,919,278	$	2,848,451
Net income	$	203,916	$	135,010

Neptune

The Company acquired 70% of the outstanding shares of The Neptune Society, Inc. (Neptune) on June 3, 2011 for $44 million. During 2013, we acquired an additional 20% of the outstanding shares of Neptune increasing our ownership from 70% to 90%. Neptune is the nation's largest direct cremation organization with a network of 30 locations in nine states at the time of our original acquisition. Neptune operates under the brand names Neptune Society, Neptune Cremation Service, and Trident Society. With this acquisition we will expanded our footprint into a sector of the market that will continue to grow and that we do not currently target through our traditional funeral service and cemetery network. We have completed our evaluation of purchase price allocation. As a result of this acquisition, we recognized $37.6 million of intangible assets and $37.3 million of goodwill.