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 June 30, 2014 were as follows (in thousands):



	December 31, 2013			June 30, 2014
Trust assets, at fair value	$	42,342		$	52,812
Obligations due from trust	(449		)	(508		)
Care trusts’ corpus	$	41,893		$	52,304

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. The income earned from these perpetual care trusts offsets maintenance expenses for cemetery property and memorials. 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 and preferred stocks, 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 June 30, 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 June 30, 2014 (in thousands):



	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses			Fair Market Value
Cash and money market accounts	1	$	1,229	$	—	$	—		$	1,229
Fixed income securities:
Foreign debt	2	3,288		154		—			3,442
Corporate debt	2	20,811		627		(627		)	20,811
Preferred stock	2	12,513		631		(59		)	13,085
Common stock	1	10,637		3,251		(175		)	13,713
Trust securities		$	48,478	$	4,663	$	(861	)	$	52,280
Accrued investment income		$	532						$	532
Cemetery perpetual care trust investments									$	52,812
Fair market value as a percentage of cost									107.8		%

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	4,501
Due in five to ten years	5,959
Thereafter	26,878
	$	37,338

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	$	1,850	$	(1,036	)	$	41,829
Accrued investment income		$	513						$	513
Cemetery perpetual care investments									$	42,342
Fair market value as a percentage of cost									102.0		%

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. During the three months ended June 30, 2014, we recorded a $0.1 million impairment charge for other-than temporary declines in fair value related to unrealized losses on certain investments. At June 30, 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 June 30, 2014 and December 31, 2013 are shown in the following tables (in thousands):



	June 30, 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:
Corporate debt	$	3,639	$	(269	)	$	1,375	$	(358	)	$	5,014	$	(627	)
Preferred stock	1,164		(11		)	2,292		(48		)	3,456		(59		)
Common stock	2,152		(151		)	71		(24		)	2,223		(175		)
Total temporary impaired securities	$	6,955	$	(431	)	$	3,738	$	(430	)	$	10,693	$	(861	)



	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 on our Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2014 were as follows (in thousands):



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2014			2013			2014
Realized gains	$	1,063		$	897		$	1,087		$	1,314
Realized losses	(103		)	(543		)	(398		)	(692		)
Decrease in care trusts’ corpus	(960		)	(354		)	(689		)	(622		)
Total	$	—		$	—		$	—		$	—

Perpetual care trust investment security transactions recorded in Cemetery revenues for the three and six months ended June 30, 2013 and 2014 were as follows (in thousands):



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2014		2013		2014
Investment income	$	1,234	$	1,300	$	2,469	$	2,580
Realized gains, net	334		391		683		150
Total	$	1,568	$	1,691	$	3,152	$	2,730

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



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2014			2013			2014
Purchases	$	(7,252	)	$	(9,200	)	$	(9,838	)	$	(14,135	)
Sales	$	8,674		$	9,842		$	11,795		$	15,022