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Acquisitions and Divestiture-Related Activities (Notes) | 9 Months Ended
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Sep. 30, 2018
Divestiture-Related Activities [Abstract] |
Acquisition Divestiture Related Activity | Divestiture-Related Activities 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 acquisition 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):
| (in thousands)
Other current assets | $ | 2,881 |
Cemetery property | 28,683 |
Property and equipment, net | 25,717 |
Preneed receivables, net and trust investments | 102,720 |
Finite-lived intangible assets | 47,017 |
Indefinite-lived intangible assets | 18,000 |
Deferred charges and other assets | 1,717 |
Cemetery perpetual care trust investments | 53,027 |
Goodwill | 27,416 |
Total assets acquired | 307,178 |
Current liabilities | 4,205 |
Deferred revenue and deferred receipts held in trust | 112,874 |
Deferred income taxes | 5,064 |
Care trusts' corpus | 53,027 |
Total liabilities assumed | 175,170 |
Net assets acquired | $ | 132,008 |
The purchase accounting adjustments are 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 $27.4 million in goodwill recognized, $15.3 million was allocated to our cemetery segment and $12.1 million was allocated to our funeral segment. Additionally, $15.7 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 |  | $ | 23,993 |
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 |  |  |  |  | $ | 65,017 |
We incurred acquisition costs of $2.2 million, which are included in General and administrative expenses. The acquired businesses contributed revenue of $10.4 million and net income of $1.1 million for the period from June 8, 2018 through September 30, 2018. Proforma summary results for the twelve months ended December 31, 2017 and the nine months ended September 30, 2018 have not been provided as it is impracticable to do so given the extent of integration activities to date. Divestiture-Related Activities As divestitures occur in the normal course of business, gains or losses on the sale of such assets are recognized in the income statement line item Gains (losses) on divestitures and impairment charges, net, which consist of the following:
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (In thousands)
Gains (losses) on divestitures, net | $ | 8,058 |  |  | $ | (62 | ) |  | $ | 16,199 |  |  | $ | 22,611 |
Impairment losses | (88 | ) |  | (81 | ) |  | (882 | ) |  | (17,066 | )
Gains (losses) on divestitures and impairment charges, net | $ | 7,970 |  |  | $ | (143 | ) |  | $ | 15,317 |  |  | $ | 5,545 |

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