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Preneed Activities Level 1 (Notes) | 12 Months Ended
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Dec. 31, 2017
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 at December 31 were as follows:
| 2017 |  | 2016
| (In thousands)
Preneed funeral receivables | $ | 336,925 |  |  | $ | 312,556 |
Preneed cemetery receivables | 1,118,146 |  |  | 1,038,592 |
Preneed receivables from customers | 1,455,071 |  |  | 1,351,148 |
Unearned finance charge | (45,515 | ) |  | (45,989 | )
Allowance for cancellation | (107,749 | ) |  | (104,740 | )
Preneed receivables, net | 1,301,807 |  |  | 1,200,419 |
Trust investments, at market | 4,749,548 |  |  | 4,240,963 |
Assets associated with business held for sale | (5,660 | ) |  | — |
Insurance-backed fixed income securities and other | 265,314 |  |  | 271,248 |
Trust investments | 5,009,202 |  |  | 4,512,211 |
Less: Cemetery perpetual care trust investments | (1,532,167 | ) |  | (1,407,465 | )
Preneed trust investments | 3,477,035 |  |  | 3,104,746 |
Preneed receivables, net and trust investments | $ | 4,778,842 |  |  | $ | 4,305,165 |
The table below sets forth certain investment-related activities associated with trusts for the years ended December 31:
| 2017 |  | 2016 |  | 2015
|  |  | (In thousands) |  |
Deposits | $ | 371,234 |  |  | $ | 321,232 |  |  | $ | 313,244 |
Withdrawals | $ | 415,283 |  |  | $ | 350,379 |  |  | $ | 364,314 |
Purchases of available-for-sale securities | $ | 2,057,348 |  |  | $ | 1,462,900 |  |  | $ | 1,326,398 |
Sales of available-for-sale securities | $ | 1,999,918 |  |  | $ | 1,393,728 |  |  | $ | 1,261,777 |
Realized gains from sales of available-for-sale securities(1)(2) | $ | 256,413 |  |  | $ | 100,284 |  |  | $ | 100,477 |
Realized losses from sales of available-for-sale securities(1) | $ | (76,963 | ) |  | $ | (113,806 | ) |  | $ | (79,203 | )
(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
(2) | Given the positive performance of the financial markets in 2017 and a significant realignment of certain portions of our trust portfolio, we experienced a substantial increase in our realized gains during the year.
The activity in Preneed receivables, net and trust investments for the years ended December 31 was as follows:
| 2017 |  | 2016 |  | 2015
|  |  | (In thousands) |  |
Beginning balance — Preneed receivables, net and trust investments | $ | 4,305,165 |  |  | $ | 4,078,464 |  |  | $ | 4,149,692 |
Net preneed contract sales | 1,257,288 |  |  | 1,159,194 |  |  | 1,083,424 |
Cash receipts from customers, net of refunds | (1,109,380 | ) |  | (1,030,703 | ) |  | (951,099 | )
Deposits to trust | 328,241 |  |  | 279,782 |  |  | 274,361 |
Acquisitions of businesses, net | 8,153 |  |  | 1,477 |  |  | 5,804 |
Net undistributed investment earnings (losses)(1) | 384,512 |  |  | 145,511 |  |  | (80,699 | )
Maturities and distributed earnings | (411,452 | ) |  | (337,912 | ) |  | (364,367 | )
Change in cancellation allowance | (528 | ) |  | 3,329 |  |  | 741 |
Effect of foreign currency and other | 16,843 |  |  | 6,023 |  |  | (39,393 | )
Ending balance — Preneed receivables net, and trust investments | $ | 4,778,842 |  |  | $ | 4,305,165 |  |  | $ | 4,078,464 |
(1) | Includes both realized and unrealized investment earnings.
The cost and market values associated with trust investments recorded at market value at December 31, 2017 and 2016 are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Market value represents the value of the underlying securities held by the trusts.
|  | 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 |
|  | December 31, 2016
| Fair Value Hierarchy Level | Cost |  | Unrealized Gains |  | Unrealized Losses |  | Value
|  |  |  | (In thousands) |  |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | 2 | $ | 145,315 |  |  | $ | 884 |  |  | $ | (838 | ) |  | $ | 145,361 |
Canadian government | 2 | 79,141 |  |  | 409 |  |  | (222 | ) |  | 79,328 |
Corporate | 2 | 18,934 |  |  | 295 |  |  | (227 | ) |  | 19,002 |
Residential mortgage-backed | 2 | 333 |  |  | 1 |  |  | (1 | ) |  | 333 |
Asset-backed | 2 | 448 |  |  | 16 |  |  | (31 | ) |  | 433 |
Equity securities: |  |  |  |  |  |  |  |  |
Preferred stock | 2 | 2,907 |  |  | 83 |  |  | (156 | ) |  | 2,834 |
Common stock: |  |  |  |  |  |  |  |  |
United States | 1 | 1,107,942 |  |  | 151,146 |  |  | (35,542 | ) |  | 1,223,546 |
Canada | 1 | 25,708 |  |  | 10,030 |  |  | (455 | ) |  | 35,283 |
Other international | 1 | 83,238 |  |  | 4,995 |  |  | (10,632 | ) |  | 77,601 |
Mutual funds: |  |  |  |  |  |  |  |  |
Equity | 1 | 688,120 |  |  | 19,962 |  |  | (56,857 | ) |  | 651,225 |
Fixed income | 1 | 875,615 |  |  | 6,203 |  |  | (46,219 | ) |  | 835,599 |
Other | 3 | 4,712 |  |  | 2,468 |  |  | (17 | ) |  | 7,163 |
Trust investments, at fair value |  | 3,032,413 |  |  | 196,492 |  |  | (151,197 | ) |  | 3,077,708 |
Fixed income commingled funds |  | 692,434 |  |  | 8,524 |  |  | (12,234 | ) |  | 688,724 |
Money market funds |  | 304,055 |  |  | — |  |  | — |  |  | 304,055 |
Private equity |  | 175,881 |  |  | 9,812 |  |  | (15,217 | ) |  | 170,476 |
Trust investments, at net asset value |  | 1,172,370 |  |  | 18,336 |  |  | (27,451 | ) |  | 1,163,255 |
Trust investments, at market |  | $ | 4,204,783 |  |  | $ | 214,828 |  |  | $ | (178,648 | ) |  | $ | 4,240,963 |
As of December 31, 2017, our unfunded commitment for our private equity and other investments was $129.4 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 for the years ended December 31:
|  | 2017 |  | 2016 |  | 2015
|  | (In thousands)
Fair value, beginning balance at January 1 |  | $ | 7,163 |  |  | $ | 8,162 |  |  | $ | 6,650 |
Net unrealized gains included in Accumulated other comprehensive income(1) |  | 912 |  |  | 463 |  |  | 152 |
Net realized losses included in Other income (expense), net(2) |  | — |  |  | (212 | ) |  | — |
Purchases |  | 1,945 |  |  | 89 |  |  | 1,360 |
Sales |  | (953 | ) |  | (1,339 | ) |  | — |
Fair value, ending balance at December 31 |  | $ | 9,067 |  |  | $ | 7,163 |  |  | $ | 8,162 |
(1) | All unrealized gains recognized in Accumulated other comprehensive income for our trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Accumulated other comprehensive income to Deferred receipts held in trust.
(2) | All losses recognized in Other income (expense), net for our trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Other income (expense) income, net to Deferred receipts held in trust.
Maturity dates of our fixed income securities range from 2017 to 2040. Maturities of fixed income securities at December 31, 2017 are estimated as follows:
| Fair Value
| (In thousands)
Due in one year or less | $ | 75,831 |
Due in one to five years | 61,283 |
Due in five to ten years | 9,101 |
Thereafter | 361 |
Total estimated maturities of fixed income securities | $ | 146,576 |
Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $112.6 million, $94.4 million, and $98.4 million for the years ended December 31, 2017, 2016, and 2015, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $62.9 million, $67.6 million, and $59.6 million for the years ended December 31, 2017, 2016, and 2015, respectively. We have determined that the unrealized losses in our 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 trust investment unrealized losses, their associated fair values, and the duration of unrealized losses for the years ended December 31, 2017 and 2016, are shown in the following tables:
| 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 | )
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock | 1,106 |  |  | (92 | ) |  | 248 |  |  | (47 | ) |  | 1,354 |  |  | (139 | )
Common stock: |  |  |  |  |  |  |  |  |  |  |  |  |
United States | 184,973 |  |  | (20,561 | ) |  | 18,542 |  |  | (4,178 | ) |  | 203,515 |  |  | (24,739 | )
Canada | 1,307 |  |  | (224 | ) |  | 1,314 |  |  | (298 | ) |  | 2,621 |  |  | (522 | )
Other international | 19,070 |  |  | (2,499 | ) |  | 2,327 |  |  | (335 | ) |  | 21,397 |  |  | (2,834 | )
Mutual funds: |  |  |  |  |  |  |  |  |  |  |  |  |
Equity | 32,348 |  |  | (1,193 | ) |  | 21,140 |  |  | (3,119 | ) |  | 53,488 |  |  | (4,312 | )
Fixed income | 225,766 |  |  | (1,402 | ) |  | 294,980 |  |  | (22,541 | ) |  | 520,746 |  |  | (23,943 | )
Trust investments, at fair value | 519,834 |  |  | (26,768 | ) |  | 349,705 |  |  | (31,121 | ) |  | 869,539 |  |  | (57,889 | )
Commingled funds |  |  |  |  |  |  |  |  |  |  |
Fixed income | 215,295 |  |  | (988 | ) |  | 181,358 |  |  | (4,872 | ) |  | 396,653 |  |  | (5,860 | )
Private equity | — |  |  | — |  |  | 11,752 |  |  | (2,149 | ) |  | 11,752 |  |  | (2,149 | )
Trust investments, at net asset value | 215,295 |  |  | (988 | ) |  | 193,110 |  |  | (7,021 | ) |  | 408,405 |  |  | (8,009 | )
Total temporarily impaired securities | $ | 735,129 |  |  | $ | (27,756 | ) |  | $ | 542,815 |  |  | $ | (38,142 | ) |  | $ | 1,277,944 |  |  | $ | (65,898 | )
| December 31, 2016
| 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 | $ | 41,409 |  |  | $ | (838 | ) |  | $ | — |  |  | $ | — |  |  | $ | 41,409 |  |  | $ | (838 | )
Canadian government | 2,913 |  |  | (31 | ) |  | 3,344 |  |  | (191 | ) |  | 6,257 |  |  | (222 | )
Corporate | 2,107 |  |  | (22 | ) |  | 6,162 |  |  | (205 | ) |  | 8,269 |  |  | (227 | )
Residential mortgage-backed | 303 |  |  | (1 | ) |  | — |  |  | — |  |  | 303 |  |  | (1 | )
Asset backed | 28 |  |  | (22 | ) |  | 156 |  |  | (9 | ) |  | 184 |  |  | (31 | )
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock | 971 |  |  | (53 | ) |  | 515 |  |  | (103 | ) |  | 1,486 |  |  | (156 | )
Common stock: |  |  |  |  |  |  |  |  |  |  |  |  |
United States | 271,433 |  |  | (23,168 | ) |  | 50,923 |  |  | (12,374 | ) |  | 322,356 |  |  | (35,542 | )
Canada | 3,318 |  |  | (383 | ) |  | 1,078 |  |  | (72 | ) |  | 4,396 |  |  | (455 | )
Other international | 19,274 |  |  | (4,139 | ) |  | 24,525 |  |  | (6,493 | ) |  | 43,799 |  |  | (10,632 | )
Mutual funds: |  |  |  |  |  |  |  |  |  |  |  |  |
Equity | 234,714 |  |  | (9,825 | ) |  | 276,504 |  |  | (47,032 | ) |  | 511,218 |  |  | (56,857 | )
Fixed income | 323,917 |  |  | (5,941 | ) |  | 425,614 |  |  | (40,278 | ) |  | 749,531 |  |  | (46,219 | )
Other | 26 |  |  | (2 | ) |  | 1,160 |  |  | (15 | ) |  | 1,186 |  |  | (17 | )
Trust investments, at fair value | 900,413 |  |  | (44,425 | ) |  | 789,981 |  |  | (106,772 | ) |  | 1,690,394 |  |  | (151,197 | )
Fixed income commingled funds | 473,550 |  |  | (11,714 | ) |  | 20,587 |  |  | (520 | ) |  | 494,137 |  |  | (12,234 | )
Private equity | 22,677 |  |  | (750 | ) |  | 73,100 |  |  | (14,467 | ) |  | 95,777 |  |  | (15,217 | )
Trust investments, at net asset value | 496,227 |  |  | (12,464 | ) |  | 93,687 |  |  | (14,987 | ) |  | 589,914 |  |  | (27,451 | )
Total temporarily impaired securities | $ | 1,396,640 |  |  | $ | (56,889 | ) |  | $ | 883,668 |  |  | $ | (121,759 | ) |  | $ | 2,280,308 |  |  | $ | (178,648 | )
Deferred revenue At December 31, 2017 and 2016, Deferred revenue, net of allowance for cancellation, 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 following table summarizes the activity in Deferred revenue for the years ended December 31:
| 2017 |  | 2016 |  | 2015
| (In thousands)
Beginning balance — Deferred revenue | $ | 1,731,417 |  |  | $ | 1,677,898 |  |  | $ | 1,602,545 |
Net preneed contract sales | 900,037 |  |  | 847,848 |  |  | 794,527 |
Acquisitions (divestitures) of businesses, net | 10,488 |  |  | 193 |  |  | (538 | )
Net investment earnings (losses)(1) | 381,436 |  |  | 146,103 |  |  | (80,014 | )
Recognized deferred revenue | (876,857 | ) |  | (823,319 | ) |  | (780,423 | )
Change in cancellation allowance | (165 | ) |  | 5,396 |  |  | 3,627 |
Change in deferred receipts held in trust | (361,499 | ) |  | (124,923 | ) |  | 142,401 |
Effect of foreign currency and other | 4,919 |  |  | 2,221 |  |  | (4,227 | )
Ending balance — Deferred revenue | $ | 1,789,776 |  |  | $ | 1,731,417 |  |  | $ | 1,677,898 |
(1) | Includes both realized and unrealized investment earnings.

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- Definition Preneed Activities. + References No definition available. + Details
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- Definition This note represents disclosures relating to preneed activity and major accounts which also include: (1) fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments; (2) variable interest entities; and (3)all other required (as defined) and desired information. + References No definition available. + Details
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