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Trust Investments

6 Months Ended

Jun. 30, 2023

Preneed Trust Investments [Abstract]

Trust Investments

TRUST INVESTMENTS

Preneed trust investments represent trust fund assets that we are generally permitted to withdraw as the services and merchandise are provided to customers. Preneed funeral and cemetery contracts are secured by payments from customers, less amounts not required by law to be deposited into trust. These earnings are recognized in Other revenue on our Consolidated Statements of Operations, when a service is performed or merchandise is delivered. Trust management fees charged by our wholly-owned registered investment advisory firm (“CSV RIA”) are included as revenue in the period in which they are earned. Our investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk. We do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery.

Cemetery perpetual care trust investments represent a portion of the proceeds from the sale of cemetery property interment rights that we are required by various state laws to deposit 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 in Other revenue.

Changes in the fair value of our trust fund assets (Preneed funeral, cemetery and perpetual care trust investments) are offset by changes in the fair value of our trust fund liabilities (Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus) and reflected in Other, net. There is no impact on earnings until such time the services are performed or the merchandise is delivered, causing the contract to be withdrawn from the trust in accordance with state regulations and the gain or loss is allocated to the contract.

We rely on our trust investments to provide funding for the various contractual obligations that arise upon maturity of the underlying preneed contracts. Because of the long-term relationship between the establishment of trust investments and the required performance of the underlying contractual obligations, the impact of current market conditions that may exist at any given time is not necessarily indicative of our ability to generate profit on our future performance obligations.

Preneed Cemetery Trust Investments

The components of Preneed cemetery trust investments on our Consolidated Balance Sheet are as follows (in thousands):

			December 31, 2022						June 30, 2023
Preneed cemetery trust investments, at market value			$	98,269					$	92,898
Less: allowance for contract cancellation			(3,204)						(3,024)
Preneed cemetery trust investments			$	95,065					$	89,874

The cost and market values associated with preneed cemetery trust investments at June 30, 2023 are detailed below (in thousands):

			Fair Value Hierarchy Level						Cost						Unrealized Gains						Unrealized Losses						Fair Market Value
Cash and money market accounts			1						$	8,330					$	—					$	—					$	8,330
Fixed income securities:
U.S. agency obligations			2						803						—						(65)						738
Foreign debt			2						10,978						1,028						(421)						11,585
Corporate debt			2						14,593						180						(4,625)						10,148
Preferred stock			2						11,553						449						(1,521)						10,481
Certificates of deposit			2						79						—						(9)						70
Common stock			1						38,955						6,335						(7,183)						38,107
Limited partnership fund									3,579						—						(1)						3,578
Mutual funds:
Equity			1						554						—						(52)						502
Fixed income			2						11,379						17						(2,846)						8,550
Trust securities									$	100,803					$	8,009					$	(16,723)					$	92,089
Accrued investment income									$	809																	$	809
Preneed cemetery trust investments																											$	92,898
Market value as a percentage of cost																											91.4%

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

Due in one year or less			$	137
Due in one to five years			9,043
Due in five to ten years			4,782
Thereafter			19,060
Total fixed income securities			$	33,022

The cost and market values associated with preneed cemetery trust investments at December 31, 2022 are detailed below (in thousands):

			Fair Value Hierarchy Level						Cost						Unrealized Gains						Unrealized Losses						Fair Market Value
Cash and money market accounts			1						$	10,434					$	—					$	—					$	10,434
Fixed income securities:
U.S. agency obligations			2						803						—						(72)						731
Foreign debt			2						12,241						910						(644)						12,507
Corporate debt			2						15,066						104						(4,139)						11,031
Preferred stock			2						12,560						436						(1,789)						11,207
Certificate of deposit			2						79						—						(8)						71
Common stock			1						42,929						5,102						(6,228)						41,803
Mutual funds:
Equity			1						362						—						(33)						329
Fixed income			2						12,324						10						(3,310)						9,024
Trust Securities									$	106,798					$	6,562					$	(16,223)					$	97,137
Accrued investment income									$	1,132																	$	1,132
Preneed cemetery trust investments																											$	98,269
Market value as a percentage of cost																											91.0%

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at June 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

			June 30, 2023
			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:
U.S. agency obligations			$	161					$	(25)					$	577					$	(40)					$	738					$	(65)
Foreign debt			2,684						(100)						1,926						(321)						4,610						(421)
Corporate debt			4,560						(3,423)						2,950						(1,202)						7,510						(4,625)
Preferred stock			4,118						(825)						4,151						(696)						8,269						(1,521)
Certificates of deposit			—						—						70						(9)						70						(9)
Total fixed income securities with an unrealized loss			$	11,523					$	(4,373)					$	9,674					$	(2,268)					$	21,197					$	(6,641)

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

			December 31, 2022
			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:
U.S. agency obligations			$	732					$	(72)					$	—					$	—					$	732					$	(72)
Foreign debt			5,394						(308)						744						(336)						6,138						(644)
Corporate debt			8,037						(3,922)						563						(217)						8,600						(4,139)
Preferred stock			7,146						(1,271)						2,517						(518)						9,663						(1,789)
Certificates of deposit			71						(8)						—						—						71						(8)
Total fixed income securities with an unrealized loss			$	21,380					$	(5,581)					$	3,824					$	(1,071)					$	25,204					$	(6,652)

Preneed cemetery trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Investment income			$	571					$	689					$	1,062					$	1,279
Realized gains			6,870						728						8,893						2,001
Realized losses			(2,320)						(269)						(2,383)						(1,146)
Unrealized gains (losses), net			(15,977)						3,439						(9,100)						(8,714)
Expenses and taxes			(507)						(316)						(871)						(622)
Net change in deferred preneed cemetery receipts held in trust			11,363						(4,271)						2,399						7,202
			$	—					$	—					$	—					$	—

Purchases and sales of investments in the preneed cemetery trusts are as follows (in thousands):

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Purchases			$	(309)					$	(2,784)					$	(1,624)					$	(9,138)
Sales			461						2,817						661						5,862

Preneed Funeral Trust Investments

Preneed funeral trust investments represent trust fund assets that we are permitted to withdraw as services and merchandise are provided to customers. Preneed funeral contracts are secured by payments from customers, less retained amounts not required to be deposited into trust.

The components of Preneed funeral trust investments on our Consolidated Balance Sheet are as follows (in thousands):

			December 31, 2022						June 30, 2023
Preneed funeral trust investments, at market value			$	107,995					$	106,713
Less: allowance for contract cancellation			(3,442)						(3,396)
Preneed funeral trust investments			$	104,553					$	103,317

The cost and market values associated with preneed funeral trust investments at June 30, 2023 are detailed below (in thousands):

			Fair Value Hierarchy Level						Cost						Unrealized Gains						Unrealized Losses						Fair Market Value
Cash and money market accounts			1						$	26,018					$	—					$	—					$	26,018
Fixed income securities:
U.S treasury debt			1						485						—						(42)						443
Foreign debt			2						10,433						992						(385)						11,040
Corporate debt			2						13,219						166						(4,161)						9,224
Preferred stock			2						10,537						428						(1,443)						9,522
Common stock			1						35,390						6,071						(6,319)						35,142
Limited partnership fund									3,453						—						(1)						3,452
Mutual funds:
Equity			1						409						—						(48)						361
Fixed income			2						9,714						16						(2,479)						7,251
Other investments			2						3,521						—						—						3,521
Trust securities									$	113,179					$	7,673					$	(14,878)					$	105,974
Accrued investment income									$	739																	$	739
Preneed funeral trust investments																											$	106,713
Market value as a percentage of cost																											93.6%

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

Due in one year or less			$	79
Due in one to five years			8,062
Due in five to ten years			4,443
Thereafter			17,645
Total fixed income securities			$	30,229

The cost and market values associated with preneed funeral trust investments at December 31, 2022 are detailed below (in thousands):

			Fair Value Hierarchy Level						Cost						Unrealized Gains						Unrealized Losses						Fair Market Value
Cash and money market accounts			1						$	29,641					$	—					$	—					$	29,641
Fixed income securities:
U.S. treasury debt			1						484						—						(45)						439
Foreign debt			2						10,851						818						(555)						11,114
Corporate debt			2						12,735						89						(3,443)						9,381
Preferred stock			2						10,730						391						(1,564)						9,557
Common stock			1						36,478						4,485						(5,187)						35,776
Mutual funds:
Equity			1						326						—						(30)						296
Fixed income			2						9,907						9						(2,691)						7,225
Other investments			2						3,592						—						—						3,592
Trust securities									$	114,744					$	5,792					$	(13,515)					$	107,021
Accrued investment income									$	974																	$	974
Preneed funeral trust investments																											$	107,995
Market value as a percentage of cost																											93.3%

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at June 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

			June 30, 2023
			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:
U.S. treasury debt			$	—					$	—					$	443					$	(42)					$	443					$	(42)
Foreign debt			2,538						(79)						1,774						(306)						4,312						(385)
Corporate debt			4,090						(3,227)						2,648						(934)						6,738						(4,161)
Preferred stock			4,080						(830)						3,523						(613)						7,603						(1,443)
Total fixed income securities with an unrealized loss			$	10,708					$	(4,136)					$	8,388					$	(1,895)					$	19,096					$	(6,031)

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

			December 31, 2022
			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:
U.S. treasury debt			$	439					$	(45)					$	—					$	—					$	439					$	(45)
Foreign debt			4,766						(274)						626						(281)						5,392						(555)
Corporate debt			6,742						(3,248)						506						(195)						7,248						(3,443)
Preferred stock			5,908						(1,099)						2,261						(465)						8,169						(1,564)
Total fixed income securities with an unrealized loss			$	17,855					$	(4,666)					$	3,393					$	(941)					$	21,248					$	(5,607)

Preneed funeral trust investment security transactions recorded in Other, net on the Consolidated Statements of Operations are as follows (in thousands):

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Investment income			$	481					$	577					$	847					$	1,063
Realized gains			6,147						703						7,890						1,943
Realized losses			(2,088)						(260)						(2,146)						(1,097)
Unrealized gains (losses), net			(13,927)						3,380						(7,400)						(7,205)
Expenses and taxes			(322)						(202)						(537)						(394)
Net change in deferred preneed funeral receipts held in trust			9,709						(4,198)						1,346						5,690
			$	—					$	—					$	—					$	—

Purchases and sales of investments in the preneed funeral trusts are as follows (in thousands):

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Purchases			$	—					$	(2,687)					$	(590)					$	(8,750)
Sales			30						2,742						530						5,685

Cemetery Perpetual Care Trust Investments

Care trusts’ corpus on our Consolidated Balance Sheet represents the corpus of those trusts plus undistributed income. The components of Care trusts’ corpus are as follows (in thousands):

			December 31, 2022						June 30, 2023
Cemetery perpetual care trust investments, at market value			$	66,307					$	78,363
Obligations due from trust			(812)						(774)
Care trusts’ corpus			$	65,495					$	77,589

The following table reflects the cost and market values associated with the trust investments held in cemetery perpetual care trust funds at June 30, 2023 (in thousands):

			Fair Value Hierarchy Level						Cost						Unrealized Gains						Unrealized Losses						Fair Market Value
Cash and money market accounts			1						$	6,001					$	—					$	—					$	6,001
Fixed income securities:
Foreign debt			2						9,753						853						(404)						10,202
Corporate debt			2						12,561						208						(4,054)						8,715
Preferred stock			2						10,990						384						(1,359)						10,015
Common stock			1						32,130						5,361						(5,874)						31,617
Limited partnership fund									2,969						—						(1)						2,968
Mutual funds:
Equity			1						458						—						(45)						413
Fixed income			2						10,119						15						(2,411)						7,723
Trust securities									$	84,981					$	6,821					$	(14,148)					$	77,654
Accrued investment income									$	709																	$	709
Cemetery perpetual care investments																											$	78,363
Market value as a percentage of cost																											91.4%

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

Due in one year or less			$	—
Due in one to five years			6,963
Due in five to ten years			4,183
Thereafter			17,786
Total fixed income securities			$	28,932

The following table reflects the cost and market values associated with the trust investments held in cemetery perpetual care trust funds at December 31, 2022 (in thousands):

			Fair Value Hierarchy Level						Cost						Unrealized Gains						Unrealized Losses						Fair Market Value
Cash and money market accounts			1						$	5,326					$	—					$	—					$	5,326
Fixed income securities:
Foreign debt			2						8,746						600						(470)						8,876
Corporate debt			2						10,540						118						(2,961)						7,697
Preferred stock			2						9,831						287						(1,374)						8,744
Common stock			1						28,625						3,443						(4,297)						27,771
Mutual funds:
Equity			1						345						2						(22)						325
Fixed income			2						9,046						26						(2,310)						6,762
Trust securities									$	72,459					$	4,476					$	(11,434)					$	65,501
Accrued investment income									$	806																	$	806
Cemetery perpetual care investments																											$	66,307
Market value as a percentage of cost																											90.4%

The following table summarizes our fixed income securities (excluding mutual funds) within our cemetery perpetual care trust investment in an unrealized loss position at June 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

			June 30, 2023
			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			$	2,502					$	(84)					$	1,916					$	(320)					$	4,418					$	(404)
Corporate debt			3,516						(2,774)						2,699						(1,280)						6,215						(4,054)
Preferred stock			3,369						(681)						4,108						(678)						7,477						(1,359)
Total fixed income securities with an unrealized loss			$	9,387					$	(3,539)					$	8,723					$	(2,278)					$	18,110					$	(5,817)

The following table summarizes our fixed income securities (excluding mutual funds) within our perpetual care trust investment in an unrealized loss position at December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

			December 31, 2022
			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			$	4,123					$	(218)					$	554					$	(252)					$	4,677					$	(470)
Corporate debt			5,413						(2,818)						371						(143)						5,784						(2,961)
Preferred stock			6,066						(1,032)						1,659						(342)						7,725						(1,374)
Total fixed income securities with an unrealized loss			$	15,602					$	(4,068)					$	2,584					$	(737)					$	18,186					$	(4,805)

Cemetery perpetual care trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Realized gains			$	994					$	671					$	1,244					$	831
Realized losses			(281)						(293)						(289)						(470)
Unrealized gains (losses), net			(10,844)						1,746						(6,116)						(7,327)
Net change in care trusts’ corpus			10,131						(2,124)						5,161						6,966
Total			$	—					$	—					$	—					$	—

Cemetery perpetual care trust investment security transactions recorded in Other revenue are as follows (in thousands):

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Investment income			$	2,776					$	2,881					$	5,538					$	6,078
Realized losses, net			(258)						(18)						(604)						(474)
Total			$	2,518					$	2,863					$	4,934					$	5,604

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

			Three months ended June 30,												Six months ended June 30,
			2022						2023						2022						2023
Purchases			$	(280)					$	(2,310)					$	(411)					$	(6,711)
Sales			441						8,694						441						10,904

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- Definition

PRENEED TRUST INVESTMENTS

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- Definition

This note represents disclosures relating to preneed funeral and cemetery 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.

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