CEMETERY PERPETUAL CARE TRUST INVESTMENTS

Care trusts’ corpus on our Consolidated Balance Sheets represent the corpus of those trusts plus undistributed income. The components of Care trusts’ corpus as of December 31, 2013 and March 31, 2014 were as follows (in thousands):



	December 31, 2013			March 31, 2014
Trust assets, at fair value	$	42,342		$	43,529
Obligations due to (from) trust	(449		)	37
Care trusts’ corpus	$	41,893		$	43,566

The income from these perpetual care trusts provides funds necessary to maintain cemetery property and memorials in perpetuity. This trust fund income is recognized, as earned, in Cemetery revenues. Trust management fees charged by our wholly-owned registered investment advisor are included in revenue in the period in which they are earned.

Where quoted prices are available in an active market, investments held by the trusts are classified as Level 1 investments pursuant to the three-level valuation hierarchy. Our Level 1 investments include cash and common stock. Where quoted market prices are not available for the specific security, then fair values are estimated by using quoted prices of similar securities in active markets or other inputs other than quoted prices that can corroborate observable market data. These investments are foreign debt, corporate debt, preferred stocks and mortgage backed securities, all of which are classified within Level 2 of the valuation hierarchy. We review and update our fair value hierarchy classifications quarterly. There were no transfers between Levels 1 and 2 for the three months ended March 31, 2014. There are no Level 3 investments in the cemetery perpetual care trust investment portfolio. See Note 11 for further information of the fair value measurement and the three-level valuation hierarchy.

The following table reflects the cost and fair market values associated with the trust investments held in perpetual care trust funds at March 31, 2014 (in thousands):



	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses			Fair Market Value
Cash and money market accounts	1	$	602	$	—	$	—		$	602
Fixed income securities:
Foreign debt	2	2,378		149		(3		)	2,524
Corporate debt	2	18,641		323		(839		)	18,125
Preferred stock	2	11,244		376		(86		)	11,534
Mortgage back securities	2	1		—		—			1
Common stock	1	8,478		2,052		(414		)	10,116
Trust securities		$	41,344	$	2,900	$	(1,342	)	$	42,902
Accrued investment income		$	627						$	627
Cemetery perpetual care trust investments									$	43,529
Fair market value as a percentage of cost									103.8		%

The estimated maturities of the fixed income securities included above are as follows (in thousands):



Due in one year or less	$	—
Due in one to five years	3,871
Due in five to ten years	5,969
Thereafter	22,344
	$	32,184

The following table reflects the cost and fair market values associated with the trust investments held in perpetual care trust funds at December 31, 2013 (in thousands):



	Fair Value Hierarchy Level	Cost			Unrealized Gains		Unrealized Losses			Fair Market Value
Cash and money market accounts	1	$	973		$	—	$	—		$	973
Fixed income securities:
Foreign debt	2	2,062			87		(2		)	2,147
Corporate debt	2	19,773			236		(691		)	19,318
Preferred stock	2	10,668			110		(165		)	10,613
Common stock	1	7,539			1,417		(178		)	8,778
Trust securities		$	41,015	41,015,000	$	1,850	$	(1,036	)	$	41,829
Accrued investment income		$	513							$	513
Cemetery perpetual care investments										$	42,342
Market value as a percentage of cost										102.0		%

We are required by various state laws to pay a portion of the proceeds from the sale of cemetery property interment rights into perpetual care trust funds. We determine whether or not the assets in the cemetery perpetual care trusts have an other-than-temporary impairment on a security-by-security basis. This assessment is made based upon a number of criteria including the length of time a security has been in a loss position, changes in market conditions and concerns related to the specific issuer. If a loss is considered to be other-than-temporary, the cost basis of the security is adjusted downward to its fair market value. Any reduction in the cost basis due to an other-than-temporary impairment is also recorded as a reduction to Care trusts’ corpus.

We have determined that the unrealized losses in our perpetual care 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. At March 31, 2014, we had corporate debt and equity investments within our perpetual care trust investments that had tax lots in loss positions for more than one year. Based on our analyses of these securities, the companies’ businesses and current market conditions, we determined that these investment losses were temporary in nature. Our perpetual care trust investment unrealized losses, their associated fair market values, and the duration of unrealized losses for the periods ended March 31, 2014 and December 31, 2013, respectively, are shown in the following tables (in thousands):



	March 31, 2014
	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
Fixed income securities:
Foreign debt	$	261	$	(3	)	$	—	$	—		$	261	$	(3	)
Corporate debt	3,630		(362		)	1,732		(477		)	5,362		(839		)
Preferred stock	2,995		(86		)	—		—			2,995		(86		)
Common stock	2,019		(403		)	69		(11		)	2,088		(414		)
Total temporary impaired securities	$	8,905	$	(854	)	$	1,801	$	(488	)	$	10,706	$	(1,342	)



	December 31, 2013
	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
Fixed income securities:
Foreign debt	$	478	$	(2	)	$	—	$	—		$	478	$	(2	)
Corporate debt	6,948		(332		)	462		(359		)	7,410		(691		)
Preferred stock	5,811		(165		)	—		—			5,811		(165		)
Common stock	716		(114		)	470		(64		)	1,186		(178		)
Total temporary impaired securities	$	13,953	$	(613	)	$	932	$	(423	)	$	14,885	$	(1,036	)

Perpetual care trust investment security transactions recorded in Interest expense in our Consolidated Statements of Operations for the three months ended March 31, 2013 and 2014 were as follows (in thousands):



	For the Three Months Ended March 31,
	2013			2014
Undistributable realized gains	$	24		$	417
Undistributable realized losses	(295		)	(149		)
Increase (decrease) in Care trusts’ corpus	271			(268		)
Total	$	—		$	—

Perpetual care trust investment security transactions recorded in Cemetery revenues for the three months ended March 31, 2013 and 2014 were as follows (in thousands):



	For the Three Months Ended March 31,
	2013		2014
Investment income	$	1,411	$	1,281
Realized gains (losses), net	398		(242		)
Total	$	1,809	$	1,039

Purchases and sales of investments in the perpetual care trusts were as follows (in thousands):



	For the Three Months Ended March 31,
	2013			2014
Purchases	$	(2,587	)	$	(4,935	)
Sales	3,121			5,181