ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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For the fiscal year ended, December 31, 2012
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ______________ to _____________
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Delaware
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|
76-0423828
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3040 Post Oak Blvd., Suite 300, Houston, Texas
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|
77056
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(Address of principal executive offices)
|
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(Zip Code)
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(Title of each class)
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(Name of each exchange on which registered)
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Common Stock, $.01 Par Value
|
|
New York Stock Exchange
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-Accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller Reporting Company
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¨
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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ITEM 1.
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BUSINESS.
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•
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demographic trends in terms of population growth and average age, which impact death rates and number of deaths;
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•
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our ability to establish and maintain market share positions supported by strong local heritage and relationships;
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•
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our ability to effectively respond to increasing cremation trends by packaging complimentary services and merchandise;
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•
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our ability to control salary, merchandise and other controllable costs; and
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•
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our ability to exercise pricing leverage related to our at-need business to increase average revenues per contract.
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•
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decentralized management of our local businesses;
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•
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financial and operational standards based upon key drivers of success of our best businesses;
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•
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variable compensation that rewards our managers as if they were owners;
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•
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finding, developing and retaining the best people in our industry; and
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•
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information technology designed to support local businesses and corporate management decisions, measure performance of our businesses against our financial and operational standards, and ensure adherence to established internal control procedures.
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•
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growing market share, creating new heritage, producing consistent, modest revenue growth and sustaining increased earnings and cash flow;
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•
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continuing to improve our operating and financial performance by executing our Standards Operating Model;
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•
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upgrading the leadership in our businesses, as necessary; and searching for well-qualified personnel that we feel will lead and excel within our Standards Operating Model; and
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•
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executing our Strategic Acquisition Model, a disciplined program that will guide our acquisition strategies, to increase the sustainable earning power profile of our portfolio.
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•
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A $130 million term loan, which has a 2017 maturity, of which $127.5 million was outstanding at December 31, 2012;
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•
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a $105 million revolving credit facility, which has a 2017 maturity, of which $44.7 million was outstanding at
December 31, 2012
;
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•
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the $89.8 million convertible junior subordinated 7% debenture with a 2029 maturity; and
|
•
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our common stock.
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•
|
demographic trends in terms of population growth and average age, which impact death rates and number of deaths;
|
•
|
establishing and maintaining leading market share positions supported by strong local heritage and relationships;
|
•
|
effectively responding to increasing cremation trends by packaging complementary services and merchandise;
|
•
|
controlling salary and merchandise costs; and
|
•
|
increasing average revenues per contract.
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ITEM 1A.
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RISK FACTORS.
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2010
|
|
2011
|
|
2012
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|||
Preneed funeral trust funds
|
16.0
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%
|
|
(2.0
|
)%
|
|
14.3
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%
|
Preneed cemetery trust funds
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20.3
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%
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|
(2.7
|
)%
|
|
19.3
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%
|
Perpetual care trust funds
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20.6
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%
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|
(3.3
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)%
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20.1
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%
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS.
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ITEM 2.
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PROPERTIES.
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|
Number of
Funeral Homes
|
|
Number of
Cemeteries
|
||||||||
State
|
Owned
|
|
Leased
(1)
|
|
Owned
|
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Managed
|
||||
California
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26
|
|
|
3
|
|
|
4
|
|
|
—
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|
Connecticut
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7
|
|
|
3
|
|
|
—
|
|
|
—
|
|
Florida
|
7
|
|
|
9
|
|
|
6
|
|
|
3
|
|
Georgia
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Idaho
|
6
|
|
|
1
|
|
|
3
|
|
|
—
|
|
Illinois
|
1
|
|
|
3
|
|
|
1
|
|
|
—
|
|
Kansas
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Kentucky
|
8
|
|
|
3
|
|
|
1
|
|
|
—
|
|
Maryland
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Massachusetts
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Michigan
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Montana
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
Nevada
|
2
|
|
|
—
|
|
|
2
|
|
|
1
|
|
New Jersey
|
4
|
|
|
1
|
|
|
—
|
|
|
—
|
|
New Mexico
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
New York
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
North Carolina
|
2
|
|
|
2
|
|
|
1
|
|
|
—
|
|
Ohio
|
5
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Oklahoma
|
7
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Pennsylvania
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Rhode Island
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Tennessee
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Texas
|
17
|
|
|
1
|
|
|
7
|
|
|
—
|
|
Virginia
|
3
|
|
|
1
|
|
|
1
|
|
|
—
|
|
Washington
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
West Virginia
|
1
|
|
|
1
|
|
|
—
|
|
|
—
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|
Total
|
136
|
|
|
31
|
|
|
29
|
|
|
4
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|
(1)
|
The leases, with respect to these funeral homes, generally have remaining terms ranging from one to nine years, and, generally, we have the right to renew past the initial terms and have a right of first refusal on any proposed sale of the property where these funeral homes are located.
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ITEM 3.
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LEGAL PROCEEDINGS.
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ITEM 4.
|
MINE SAFETY DISCLOSURES.
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
2012
|
High
|
|
Low
|
||||
First Quarter
|
$
|
7.59
|
|
|
$
|
5.40
|
|
Second Quarter
|
$
|
8.59
|
|
|
$
|
6.91
|
|
Third Quarter
|
$
|
10.40
|
|
|
$
|
7.65
|
|
Fourth Quarter
|
$
|
11.99
|
|
|
$
|
9.26
|
|
|
|
|
|
||||
2011
|
High
|
|
Low
|
||||
First Quarter
|
$
|
5.98
|
|
|
$
|
4.62
|
|
Second Quarter
|
$
|
6.57
|
|
|
$
|
5.41
|
|
Third Quarter
|
$
|
6.14
|
|
|
$
|
5.05
|
|
Fourth Quarter
|
$
|
6.30
|
|
|
$
|
5.12
|
|
*
|
$100 invested on December 31, 2007 in stock or index, including reinvestment of dividends.
|
|
12/07
|
|
12/08
|
|
12/09
|
|
12/10
|
|
12/11
|
|
12/12
|
||||||||||||
Carriage Services, Inc.
|
$
|
100.00
|
|
|
$
|
22.84
|
|
|
$
|
44.66
|
|
|
$
|
55.11
|
|
|
$
|
64.49
|
|
|
$
|
138.42
|
|
Russell MicroCap
|
100.00
|
|
|
60.22
|
|
|
76.77
|
|
|
98.95
|
|
|
89.77
|
|
|
107.50
|
|
||||||
Russell 3000
|
100.00
|
|
|
62.69
|
|
|
80.46
|
|
|
94.08
|
|
|
95.05
|
|
|
110.65
|
|
||||||
Peer Group
|
100.00
|
|
|
36.70
|
|
|
63.26
|
|
|
71.98
|
|
|
83.44
|
|
|
107.19
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
|
Year ended December 31,
|
||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
||||||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||||||||
INCOME STATEMENT DATA:
|
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||||||
Funeral
|
$
|
131,878
|
|
|
$
|
128,765
|
|
|
$
|
135,906
|
|
|
$
|
143,144
|
|
|
$
|
154,057
|
|
Cemetery
|
41,895
|
|
|
45,685
|
|
|
45,895
|
|
|
44,534
|
|
|
50,092
|
|
|||||
Total revenues
|
173,773
|
|
|
174,450
|
|
|
181,801
|
|
|
187,678
|
|
|
204,149
|
|
|||||
Gross profit:
|
|
|
|
|
|
|
|
|
|
||||||||||
Funeral
|
37,554
|
|
|
38,563
|
|
|
37,952
|
|
|
41,975
|
|
|
47,482
|
|
|||||
Cemetery
|
5,806
|
|
|
7,651
|
|
|
9,485
|
|
|
10,097
|
|
|
14,393
|
|
|||||
Total gross profit
|
43,360
|
|
|
46,214
|
|
|
47,437
|
|
|
52,072
|
|
|
61,875
|
|
|||||
General and administrative expenses
|
18,101
|
|
|
15,989
|
|
|
16,792
|
|
|
22,745
|
|
|
23,458
|
|
|||||
Operating income
|
25,259
|
|
|
30,225
|
|
|
30,645
|
|
|
29,327
|
|
|
38,417
|
|
|||||
Interest expense
|
(18,260
|
)
|
|
(18,318
|
)
|
|
(18,262
|
)
|
|
(18,104
|
)
|
|
(17,100
|
)
|
|||||
Litigation settlement
|
(3,300
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on repurchase of junior subordinated debentures
|
—
|
|
|
—
|
|
|
317
|
|
|
846
|
|
|
—
|
|
|||||
Loss on early extinguishment of debt and other costs
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
(201
|
)
|
|
(3,031
|
)
|
|||||
Interest and other income
|
229
|
|
|
228
|
|
|
751
|
|
|
51
|
|
|
963
|
|
|||||
Income before income taxes
|
3,928
|
|
|
11,955
|
|
|
13,451
|
|
|
11,919
|
|
|
19,249
|
|
|||||
Provision for income taxes
|
(1,886
|
)
|
|
(4,752
|
)
|
|
(5,370
|
)
|
|
(5,066
|
)
|
|
(7,642
|
)
|
|||||
Net income from continuing operations
|
2,042
|
|
|
7,203
|
|
|
8,081
|
|
|
6,853
|
|
|
11,607
|
|
|||||
Income (loss) from discontinued operations
|
(1,784
|
)
|
|
(155
|
)
|
|
(2
|
)
|
|
125
|
|
|
(204
|
)
|
|||||
Preferred stock dividend
|
10
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|||||
Net income
|
$
|
248
|
|
|
$
|
7,034
|
|
|
$
|
8,065
|
|
|
$
|
6,964
|
|
|
$
|
11,389
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.10
|
|
|
$
|
0.41
|
|
|
$
|
0.46
|
|
|
$
|
0.37
|
|
|
$
|
0.64
|
|
Discontinued operations
|
(0.09
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|||||
Basic earnings per share
|
$
|
0.01
|
|
|
$
|
0.40
|
|
|
$
|
0.46
|
|
|
$
|
0.38
|
|
|
$
|
0.63
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.10
|
|
|
$
|
0.41
|
|
|
$
|
0.45
|
|
|
$
|
0.37
|
|
|
$
|
0.64
|
|
Discontinued operations
|
(0.09
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|||||
Diluted earnings per share
|
$
|
0.01
|
|
|
$
|
0.40
|
|
|
$
|
0.45
|
|
|
$
|
0.38
|
|
|
$
|
0.63
|
|
Dividends declared per share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.075
|
|
|
$
|
0.100
|
|
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
19,054
|
|
|
17,573
|
|
|
17,635
|
|
|
18,359
|
|
|
18,126
|
|
|||||
Diluted
|
19,362
|
|
|
17,749
|
|
|
17,938
|
|
|
18,397
|
|
|
18,226
|
|
|||||
OPERATING AND FINANCIAL DATA:
|
|
|
|
|
|
|
|
|
|
||||||||||
Funeral homes at end of period
|
136
|
|
|
138
|
|
|
147
|
|
|
159
|
|
|
167
|
|
|||||
Cemeteries at end of period
|
32
|
|
|
32
|
|
|
33
|
|
|
33
|
|
|
33
|
|
|||||
Funeral services performed
|
25,531
|
|
|
24,362
|
|
|
25,801
|
|
|
27,663
|
|
|
28,356
|
|
|||||
Preneed funeral contracts sold
|
4,916
|
|
|
5,615
|
|
|
6,485
|
|
|
7,197
|
|
|
6,979
|
|
|||||
Backlog of preneed funeral contracts
|
69,575
|
|
|
72,172
|
|
|
79,842
|
|
|
81,030
|
|
|
81,585
|
|
|||||
Average revenue per funeral contract
|
$
|
5,154
|
|
|
$
|
5,296
|
|
|
$
|
5,266
|
|
|
$
|
5,184
|
|
|
$
|
5,369
|
|
Cremation rate
|
38.2
|
%
|
|
40.4
|
%
|
|
42.9
|
%
|
|
45.0
|
%
|
|
46.0
|
%
|
|||||
Depreciation and amortization
|
$
|
10,368
|
|
|
$
|
10,339
|
|
|
$
|
9,953
|
|
|
$
|
9,585
|
|
|
$
|
10,054
|
|
BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
560,293
|
|
|
$
|
619,298
|
|
|
$
|
671,012
|
|
|
$
|
672,777
|
|
|
$
|
738,085
|
|
Working capital
|
9,100
|
|
|
12,004
|
|
|
2,535
|
|
|
(1,097
|
)
|
|
(9,036
|
)
|
|||||
Long-term debt, net of current maturities
|
132,345
|
|
|
131,898
|
|
|
132,416
|
|
|
135,000
|
|
|
163,541
|
|
|||||
Convertible junior subordinated debenture
|
93,750
|
|
|
93,750
|
|
|
92,858
|
|
|
89,770
|
|
|
89,770
|
|
|||||
Stockholders’ equity
|
103,510
|
|
|
108,222
|
|
|
119,673
|
|
|
126,778
|
|
|
134,818
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
•
|
Balanced Operating Model –
We believe a decentralized structure works best in the death care industry. Successful execution of the Standards Operating Model is highly dependent on strong local leadership, intelligent risk taking, entrepreneurial drive and corporate support aligned with the key drivers of a successful operation organized around three primary areas - market share, people and operating financial metrics.
|
•
|
Incentives Aligned with Standards –
Empowering Managing Partners to do the right things in their operations and local communities, and providing appropriate support with operating and financial practices, will enable long-term growth and sustainable profitability. Each Managing Partner participates in a variable bonus plan whereby he or she earns a percentage of his or her respective business' earnings based upon the actual standards achieved as long as the performance exceeds our minimum standards.
|
•
|
The Right Local Leadership
– Successful execution of our operating model is highly dependent on strong local leadership as defined by our 4E Leadership Model, intelligent risk taking and entrepreneurial empowerment. A Managing Partner’s performance is judged according to achievement of the Standards for that business.
|
•
|
Size of business;
|
•
|
Size of market;
|
•
|
Competitive standing;
|
•
|
Local market demographics;
|
•
|
Strength of brand; and
|
•
|
Barriers to entry.
|
|
Year Ended December 31,
|
|||||||
|
2010
|
|
2011
|
|
2012
|
|||
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Total gross profit
|
26.1
|
|
|
27.7
|
|
|
30.3
|
|
General and administrative expenses
|
9.2
|
|
|
12.1
|
|
|
11.5
|
|
Operating income
|
16.9
|
|
|
15.6
|
|
|
18.8
|
|
Interest expense
|
10.0
|
|
|
9.6
|
|
|
8.4
|
|
|
Year Ended December 31,
|
|||||||
|
2010
|
|
2011
|
|
2012
|
|||
Funeral homes at beginning of period
|
138
|
|
|
147
|
|
|
159
|
|
Acquisitions
|
10
|
|
|
12
|
|
|
10
|
|
Divestitures or closures of existing funeral homes
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
Funeral homes at end of period
|
147
|
|
|
159
|
|
|
167
|
|
|
|
|
|
|
|
|||
Cemeteries at beginning of period
|
32
|
|
|
33
|
|
|
33
|
|
Acquisitions
|
1
|
|
|
—
|
|
|
1
|
|
Divestitures
|
—
|
|
|
—
|
|
|
(1
|
)
|
Cemeteries at end of period
|
33
|
|
|
33
|
|
|
33
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2011
|
|
2012
|
||||||||||||
(In millions, except diluted EPS)
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
||||||||
Net income from continuing operations, as reported
|
$
|
6.8
|
|
|
$
|
0.37
|
|
|
$
|
11.6
|
|
|
$
|
0.64
|
|
After-tax Special Items:
|
|
|
|
|
|
|
|
||||||||
Withdrawable trust income
|
2.6
|
|
|
0.15
|
|
|
1.2
|
|
|
0.06
|
|
||||
Additional interest and other costs of the Credit Facility
|
0.1
|
|
|
0.01
|
|
|
1.8
|
|
|
0.10
|
|
||||
Acquisition expenses
|
0.7
|
|
|
0.04
|
|
|
0.8
|
|
|
0.04
|
|
||||
Severance costs
|
1.1
|
|
|
0.06
|
|
|
0.5
|
|
|
0.03
|
|
||||
Other professional fees
|
0.1
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||
Non-recurring legal fees / settlements
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.01
|
|
||||
Reduction of litigation reserve
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(0.03
|
)
|
||||
Stock performance based incentive executive compensation
|
0.6
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
||||
Gain on repurchase of convertible junior subordinated debentures
|
(0.5
|
)
|
|
(0.03
|
)
|
|
—
|
|
|
—
|
|
||||
Securities transactions expenses
|
0.3
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||
Non-GAAP net income including Special Items
|
$
|
11.8
|
|
|
$
|
0.65
|
|
|
$
|
15.5
|
|
|
$
|
0.85
|
|
Diluted weighted average shares outstanding (in thousands)
|
|
|
18,397
|
|
|
|
|
18,226
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2011
|
|
2012
|
|
Amount
|
|
Percent
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Same store operating revenue
|
$
|
120,766
|
|
|
$
|
120,576
|
|
|
$
|
(190
|
)
|
|
(0.2
|
)%
|
Acquired operating revenue
|
14,210
|
|
|
25,802
|
|
|
11,592
|
|
|
81.6
|
%
|
|||
Preneed funeral insurance commissions
|
1,811
|
|
|
1,711
|
|
|
(100
|
)
|
|
(5.5
|
)%
|
|||
Preneed funeral trust earnings
|
6,357
|
|
|
5,968
|
|
|
(389
|
)
|
|
(6.1
|
)%
|
|||
Revenues from continuing operations
|
$
|
143,144
|
|
|
$
|
154,057
|
|
|
$
|
10,913
|
|
|
7.6
|
%
|
|
|
|
|
|
|
|
|
|||||||
Operating profit:
|
|
|
|
|
|
|
|
|||||||
Same store operating profit
|
$
|
43,288
|
|
|
$
|
46,231
|
|
|
$
|
2,943
|
|
|
6.8
|
%
|
Acquired operating profit
|
3,681
|
|
|
8,339
|
|
|
4,658
|
|
|
126.5
|
%
|
|||
Preneed funeral insurance commissions
|
435
|
|
|
304
|
|
|
(131
|
)
|
|
(30.1
|
)%
|
|||
Preneed funeral trust earnings
|
6,357
|
|
|
5,968
|
|
|
(389
|
)
|
|
(6.1
|
)%
|
|||
Operating profit from continuing operations
|
$
|
53,761
|
|
|
$
|
60,842
|
|
|
$
|
7,081
|
|
|
13.2
|
%
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2011
|
|
2012
|
|
Amount
|
|
Percent
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Same store operating revenue
|
$
|
38,152
|
|
|
$
|
39,902
|
|
|
$
|
1,750
|
|
|
4.6
|
%
|
Acquired operating revenue
|
—
|
|
|
166
|
|
|
166
|
|
|
n/a
|
|
|||
Cemetery trust earnings
|
5,041
|
|
|
8,506
|
|
|
3,465
|
|
|
68.7
|
%
|
|||
Preneed cemetery finance charges
|
1,341
|
|
|
1,518
|
|
|
177
|
|
|
13.2
|
%
|
|||
Revenues from continuing operations
|
$
|
44,534
|
|
|
$
|
50,092
|
|
|
$
|
5,558
|
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|||||||
Operating Profit:
|
|
|
|
|
|
|
|
|||||||
Same store operating profit
|
$
|
9,525
|
|
|
$
|
10,176
|
|
|
$
|
651
|
|
|
6.8
|
%
|
Acquired operating profit
|
—
|
|
|
(76
|
)
|
|
(76
|
)
|
|
n/a
|
|
|||
Cemetery trust earnings
|
5,041
|
|
|
8,457
|
|
|
3,416
|
|
|
67.8
|
%
|
|||
Preneed cemetery finance charges
|
1,341
|
|
|
1,518
|
|
|
177
|
|
|
13.2
|
%
|
|||
Operating profit from continuing operations
|
$
|
15,907
|
|
|
$
|
20,075
|
|
|
$
|
4,168
|
|
|
26.2
|
%
|
Termination expenses related to a management restructuring
|
$
|
1.7
|
|
Stock-based performance plan that has been discontinued
|
1.1
|
|
|
Acquisition expenses
|
0.6
|
|
|
Debt offering costs
|
0.5
|
|
|
Professional fees related to a cemetery project
|
0.1
|
|
|
Total increase in Special Items
|
$
|
4.0
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2010
|
|
2011
|
||||||||||||
(In millions, except diluted EPS)
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
||||||||
Net income available to common stockholders, as reported
|
$
|
8.1
|
|
|
$
|
0.45
|
|
|
$
|
7.0
|
|
|
$
|
0.38
|
|
After-tax Special Items:
|
|
|
|
|
|
|
|
||||||||
Withdrawable trust income
|
2.1
|
|
|
0.11
|
|
|
2.7
|
|
|
0.15
|
|
||||
Stock performance based incentive executive compensation
|
—
|
|
|
—
|
|
|
0.6
|
|
|
0.03
|
|
||||
Gain on repurchase of convertible junior subordinated debentures
|
(0.2
|
)
|
|
(0.01
|
)
|
|
(0.5
|
)
|
|
(0.03
|
)
|
||||
Securities transactions expenses
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.01
|
|
||||
Losses on early extinguishment of debt
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.01
|
|
||||
Acquisition expenses
|
0.4
|
|
|
0.02
|
|
|
0.7
|
|
|
0.04
|
|
||||
Termination expenses
|
0.1
|
|
|
0.01
|
|
|
1.2
|
|
|
0.06
|
|
||||
Professional fees related to a cemetery project
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.01
|
|
||||
Net gain on disposition of assets
|
(0.3
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
||||
Recovery of legal fees
|
(0.4
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
||||
Non-GAAP net income including Special Items
|
$
|
9.8
|
|
|
$
|
0.54
|
|
|
$
|
12.2
|
|
|
$
|
0.66
|
|
Diluted weighted average shares outstanding (in thousands)
|
|
|
17,938
|
|
|
|
|
18,397
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2010
|
|
2011
|
|
Amount
|
|
Percent
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Same store operating revenue
|
$
|
107,680
|
|
|
$
|
106,679
|
|
|
$
|
(1,001
|
)
|
|
(0.9
|
)%
|
Acquired operating revenue
|
22,063
|
|
|
30,307
|
|
|
8,244
|
|
|
37.4
|
%
|
|||
Preneed funeral insurance commissions
|
2,265
|
|
|
1,811
|
|
|
(454
|
)
|
|
(20.0
|
)%
|
|||
Preneed funeral trust earnings
|
6,117
|
|
|
6,425
|
|
|
308
|
|
|
5.0
|
%
|
|||
Revenues from continuing operations
|
$
|
138,125
|
|
|
$
|
145,222
|
|
|
$
|
7,097
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Operating profit:
|
|
|
|
|
|
|
|
|||||||
Same store operating profit
|
$
|
36,035
|
|
|
$
|
38,152
|
|
|
$
|
2,117
|
|
|
5.9
|
%
|
Acquired operating profit
|
5,123
|
|
|
8,937
|
|
|
3,814
|
|
|
74.4
|
%
|
|||
Preneed funeral insurance commissions
|
876
|
|
|
434
|
|
|
(442
|
)
|
|
(50.5
|
)%
|
|||
Preneed funeral trust earnings
|
6,117
|
|
|
6,425
|
|
|
308
|
|
|
5.0
|
%
|
|||
Operating profit from continuing operations
|
$
|
48,151
|
|
|
$
|
53,948
|
|
|
$
|
5,797
|
|
|
12.0
|
%
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2010
|
|
2011
|
|
Amount
|
|
Percent
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Same store operating revenue
|
$
|
34,211
|
|
|
$
|
32,407
|
|
|
$
|
(1,804
|
)
|
|
(5.3
|
)%
|
Acquired operating revenue
|
6,239
|
|
|
6,574
|
|
|
335
|
|
|
5.4
|
%
|
|||
Cemetery trust earnings
|
4,815
|
|
|
5,073
|
|
|
258
|
|
|
5.4
|
%
|
|||
Preneed cemetery finance charges
|
1,557
|
|
|
1,360
|
|
|
(197
|
)
|
|
(12.6
|
)%
|
|||
Revenues from continuing operations
|
$
|
46,822
|
|
|
$
|
45,414
|
|
|
$
|
(1,408
|
)
|
|
(3.0
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Operating Profit:
|
|
|
|
|
|
|
|
|||||||
Same store operating profit
|
$
|
7,340
|
|
|
$
|
7,603
|
|
|
$
|
263
|
|
|
3.6
|
%
|
Acquired operating profit
|
1,707
|
|
|
1,944
|
|
|
237
|
|
|
13.9
|
%
|
|||
Cemetery trust earnings
|
4,815
|
|
|
5,073
|
|
|
258
|
|
|
5.4
|
%
|
|||
Preneed cemetery finance charges
|
1,557
|
|
|
1,360
|
|
|
(197
|
)
|
|
(12.6
|
)%
|
|||
Operating profit from continuing operations
|
$
|
15,419
|
|
|
$
|
15,980
|
|
|
$
|
561
|
|
|
3.6
|
%
|
Cash at beginning of year
|
$
|
1.1
|
|
Cash flow from continuing operations
|
25.6
|
|
|
Cash provided by discontinuing operations
|
0.7
|
|
|
Cash used for business acquisitions
|
(42.7
|
)
|
|
Borrowings on our Credit Facility and payments on our long-term debt obligations, net
|
40.1
|
|
|
Cash used for dividends of common stock
|
(1.8
|
)
|
|
Cash used for repurchase of common stock
|
(4.5
|
)
|
|
Cash used for loan origination costs and call premium on our Senior Notes
|
(4.9
|
)
|
|
Cash used for maintenance capital expenditures
|
(5.0
|
)
|
|
Cash used for growth capital expenditures – funeral homes
|
(5.5
|
)
|
|
Cash used for growth capital expenditures – cemeteries
|
(2.3
|
)
|
|
Other investing and financing activities, net
|
0.9
|
|
|
Cash at end of year
|
$
|
1.7
|
|
|
|
|
Payments Due By Period
(in millions) |
||||||||||||||||||||||||||
|
Financial Note
Reference
|
|
Total
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
After
5 Years
|
||||||||||||||
Long-term debt obligations
|
13
|
|
$
|
174.6
|
|
|
$
|
11.1
|
|
|
$
|
13.2
|
|
|
$
|
16.6
|
|
|
$
|
20.2
|
|
|
$
|
112.9
|
|
|
$
|
0.6
|
|
Capital lease obligations, including interest
|
15
|
|
7.1
|
|
|
0.4
|
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
4.7
|
|
|||||||
Convertible junior subordinated debenture
(a)
|
14
|
|
89.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89.8
|
|
|||||||
Total contractual obligations
|
|
|
$
|
271.5
|
|
|
$
|
11.5
|
|
|
$
|
13.7
|
|
|
$
|
17.1
|
|
|
$
|
20.7
|
|
|
$
|
113.4
|
|
|
$
|
95.1
|
|
(a)
|
Matures in 2029
|
|
|
|
Payments Due By Period
(in millions) |
||||||||||||||||||||||||||
|
Financial Note
Reference
|
|
Total
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
After
5 Years
|
||||||||||||||
Operating leases
|
15
|
|
$
|
19.4
|
|
|
$
|
4.1
|
|
|
$
|
3.7
|
|
|
$
|
2.8
|
|
|
$
|
2.0
|
|
|
$
|
1.9
|
|
|
$
|
4.9
|
|
Interest payments on long-term debt
|
|
|
133.4
|
|
|
13.0
|
|
|
12.5
|
|
|
12.0
|
|
|
11.3
|
|
|
10.0
|
|
|
74.6
|
|
|||||||
Noncompete agreements
|
15
|
|
6.8
|
|
|
1.4
|
|
|
1.4
|
|
|
1.2
|
|
|
1.0
|
|
|
0.6
|
|
|
1.2
|
|
|||||||
Consulting agreements
|
15
|
|
2.7
|
|
|
1.0
|
|
|
0.7
|
|
|
0.5
|
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|||||||
Executive management compensation agreements
|
15
|
|
4.4
|
|
|
1.7
|
|
|
1.3
|
|
|
1.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||||||
Total contractual cash obligations
|
|
|
$
|
166.7
|
|
|
$
|
21.2
|
|
|
$
|
19.6
|
|
|
$
|
17.7
|
|
|
$
|
14.8
|
|
|
$
|
12.6
|
|
|
$
|
80.8
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
2011
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,137
|
|
|
$
|
1,698
|
|
Accounts receivable, net of allowance for bad debts of $928 in 2011 and $1,177 in 2012
|
16,605
|
|
|
17,812
|
|
||
Assets held for sale
|
—
|
|
|
1,466
|
|
||
Inventories
|
5,102
|
|
|
5,133
|
|
||
Prepaid expenses
|
4,630
|
|
|
5,107
|
|
||
Other current assets
|
3,798
|
|
|
1,923
|
|
||
Total current assets
|
31,272
|
|
|
33,139
|
|
||
Preneed cemetery trust investments
|
66,419
|
|
|
70,960
|
|
||
Preneed funeral trust investments
|
75,812
|
|
|
82,896
|
|
||
Preneed receivables, net of allowance for bad debts of $1,728 in 2011 and $2,059 in 2012
|
22,800
|
|
|
23,222
|
|
||
Receivables from preneed trusts
|
22,487
|
|
|
25,871
|
|
||
Property, plant and equipment, net of accumulated depreciation of $78,100 in 2011 and $84,291 in 2012
|
136,469
|
|
|
152,433
|
|
||
Cemetery property
|
71,620
|
|
|
75,156
|
|
||
Goodwill
|
193,962
|
|
|
218,442
|
|
||
Deferred charges and other non-current assets
|
10,451
|
|
|
9,424
|
|
||
Cemetery perpetual care trust investments
|
41,485
|
|
|
46,542
|
|
||
Total assets
|
$
|
672,777
|
|
|
$
|
738,085
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt and capital lease obligations
|
$
|
628
|
|
|
$
|
11,218
|
|
Accounts payable and other liabilities
|
13,874
|
|
|
18,310
|
|
||
Accrued liabilities
|
17,867
|
|
|
12,278
|
|
||
Liabilities associated with assets held for sale
|
—
|
|
|
369
|
|
||
Total current liabilities
|
32,369
|
|
|
42,175
|
|
||
Long-term debt, net of current portion
|
131,900
|
|
|
118,841
|
|
||
Line of credit
|
3,100
|
|
|
44,700
|
|
||
Convertible junior subordinated debenture due in 2029 to an affiliate
|
89,770
|
|
|
89,770
|
|
||
Obligations under capital leases, net of current portion
|
4,155
|
|
|
4,013
|
|
||
Deferred preneed cemetery revenue
|
59,934
|
|
|
63,998
|
|
||
Deferred preneed funeral revenue
|
40,961
|
|
|
39,794
|
|
||
Deferred preneed cemetery receipts held in trust
|
66,419
|
|
|
70,960
|
|
||
Deferred preneed funeral receipts held in trust
|
75,812
|
|
|
82,896
|
|
||
Care trusts’ corpus
|
41,379
|
|
|
45,920
|
|
||
Total liabilities
|
545,799
|
|
|
603,067
|
|
||
Commitments and contingencies:
|
|
|
|
||||
Redeemable Preferred Stock
|
200
|
|
|
200
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value; 80,000,000 shares authorized; 21,663,000 and 22,078,000 issued as of December 31, 2011 and 2012, respectively
|
217
|
|
|
221
|
|
||
Additional paid-in capital
|
201,284
|
|
|
202,462
|
|
||
Accumulated deficit
|
(63,987
|
)
|
|
(52,598
|
)
|
||
Treasury stock, at cost; 3,236,000 and 3,922,000 shares at December 31, 2011 and 2012, respectively
|
(10,736
|
)
|
|
(15,267
|
)
|
||
Total stockholders’ equity
|
126,778
|
|
|
134,818
|
|
||
Total liabilities and stockholders’ equity
|
$
|
672,777
|
|
|
$
|
738,085
|
|
|
Year Ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Funeral
|
$
|
135,906
|
|
|
$
|
143,144
|
|
|
$
|
154,057
|
|
Cemetery
|
45,895
|
|
|
44,534
|
|
|
50,092
|
|
|||
|
181,801
|
|
|
187,678
|
|
|
204,149
|
|
|||
Field costs and expenses:
|
|
|
|
|
|
||||||
Funeral
|
87,767
|
|
|
89,383
|
|
|
93,215
|
|
|||
Cemetery
|
30,497
|
|
|
28,627
|
|
|
30,017
|
|
|||
Depreciation and amortization
|
8,598
|
|
|
8,572
|
|
|
9,090
|
|
|||
Regional and unallocated funeral and cemetery costs
|
7,502
|
|
|
9,024
|
|
|
9,952
|
|
|||
|
134,364
|
|
|
135,606
|
|
|
142,274
|
|
|||
Gross profit
|
47,437
|
|
|
52,072
|
|
|
61,875
|
|
|||
Corporate costs and expenses:
|
|
|
|
|
|
||||||
General, administrative and other
|
15,437
|
|
|
21,732
|
|
|
22,494
|
|
|||
Home office depreciation and amortization
|
1,355
|
|
|
1,013
|
|
|
964
|
|
|||
|
16,792
|
|
|
22,745
|
|
|
23,458
|
|
|||
Operating income
|
30,645
|
|
|
29,327
|
|
|
38,417
|
|
|||
Interest expense
|
(18,262
|
)
|
|
(18,104
|
)
|
|
(17,100
|
)
|
|||
Interest income and other, net
|
751
|
|
|
51
|
|
|
963
|
|
|||
Gain on repurchase of junior subordinated debentures
|
317
|
|
|
846
|
|
|
—
|
|
|||
Loss on early extinguishment of debt and other costs
|
—
|
|
|
(201
|
)
|
|
(3,031
|
)
|
|||
Total interest and other, net
|
(17,194
|
)
|
|
(17,408
|
)
|
|
(19,168
|
)
|
|||
Income from continuing operations before income taxes
|
13,451
|
|
|
11,919
|
|
|
19,249
|
|
|||
Provision for income taxes
|
(5,370
|
)
|
|
(5,066
|
)
|
|
(7,642
|
)
|
|||
Net income from continuing operations
|
8,081
|
|
|
6,853
|
|
|
11,607
|
|
|||
Income (loss) from discontinued operations, net of tax
|
(2
|
)
|
|
125
|
|
|
(204
|
)
|
|||
Net income
|
8,079
|
|
|
6,978
|
|
|
11,403
|
|
|||
Preferred stock dividend
|
14
|
|
|
14
|
|
|
14
|
|
|||
Net income available to common stockholders
|
$
|
8,065
|
|
|
$
|
6,964
|
|
|
$
|
11,389
|
|
|
|
|
|
|
|
||||||
Basic earnings per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.46
|
|
|
$
|
0.37
|
|
|
$
|
0.64
|
|
Discontinued operations
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|||
Basic earnings per common share
|
$
|
0.46
|
|
|
$
|
0.38
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
||||||
Diluted earnings per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.45
|
|
|
$
|
0.37
|
|
|
$
|
0.64
|
|
Discontinued operations
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|||
Diluted earnings per common share
|
$
|
0.45
|
|
|
$
|
0.38
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
||||||
Dividends declared per share:
|
$
|
—
|
|
|
$
|
0.075
|
|
|
$
|
0.100
|
|
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
17,635
|
|
|
18,359
|
|
|
18,126
|
|
|||
Diluted
|
17,938
|
|
|
18,397
|
|
|
18,226
|
|
|
Shares
Outstanding
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Treasury
Stock
|
|
Total
|
|||||||||||
Balance – December 31, 2009
|
17,302
|
|
|
$
|
205
|
|
|
$
|
197,033
|
|
|
$
|
(79,016
|
)
|
|
$
|
(10,000
|
)
|
|
$
|
108,222
|
|
Net Income – 2010
|
—
|
|
|
—
|
|
|
—
|
|
|
8,065
|
|
|
—
|
|
|
8,065
|
|
|||||
Issuance of common stock
|
202
|
|
|
2
|
|
|
1,113
|
|
|
—
|
|
|
—
|
|
|
1,115
|
|
|||||
Exercise of stock options
|
516
|
|
|
5
|
|
|
1,412
|
|
|
—
|
|
|
—
|
|
|
1,417
|
|
|||||
Issuance of restricted common stock
|
250
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cancellation and retirement of restricted common stock
|
(68
|
)
|
|
(1
|
)
|
|
(217
|
)
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
|||||
Amortization of restricted common stock
|
—
|
|
|
—
|
|
|
1,394
|
|
|
—
|
|
|
—
|
|
|
1,394
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
254
|
|
|
—
|
|
|
—
|
|
|
254
|
|
|||||
Acquisition of convertible junior subordinated debentures converted into treasury stock
|
(44
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(576
|
)
|
|
(576
|
)
|
|||||
Balance – December 31, 2010
|
18,158
|
|
|
213
|
|
|
200,987
|
|
|
(70,951
|
)
|
|
(10,576
|
)
|
|
119,673
|
|
|||||
Net Income – 2011
|
—
|
|
|
—
|
|
|
—
|
|
|
6,964
|
|
|
—
|
|
|
6,964
|
|
|||||
Issuance of common stock
|
125
|
|
|
1
|
|
|
521
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|||||
Exercise of stock options
|
173
|
|
|
1
|
|
|
290
|
|
|
—
|
|
|
—
|
|
|
291
|
|
|||||
Issuance of restricted common stock
|
280
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cancellation and retirement of restricted common stock
|
(183
|
)
|
|
(1
|
)
|
|
(426
|
)
|
|
—
|
|
|
—
|
|
|
(427
|
)
|
|||||
Amortization of restricted common stock
|
—
|
|
|
—
|
|
|
1,530
|
|
|
—
|
|
|
—
|
|
|
1,530
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
337
|
|
|
—
|
|
|
—
|
|
|
337
|
|
|||||
Treasury stock acquired
|
(126
|
)
|
|
—
|
|
|
(576
|
)
|
|
—
|
|
|
(160
|
)
|
|
(736
|
)
|
|||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
(1,376
|
)
|
|
—
|
|
|
—
|
|
|
(1,376
|
)
|
|||||
Balance – December 31, 2011
|
18,427
|
|
|
217
|
|
|
201,284
|
|
|
(63,987
|
)
|
|
(10,736
|
)
|
|
126,778
|
|
|||||
Net Income – 2012
|
—
|
|
|
—
|
|
|
—
|
|
|
11,389
|
|
|
—
|
|
|
11,389
|
|
|||||
Issuance of common stock
|
151
|
|
|
1
|
|
|
843
|
|
|
—
|
|
|
—
|
|
|
844
|
|
|||||
Exercise of stock options
|
81
|
|
|
1
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
437
|
|
|||||
Issuance of restricted common stock
|
379
|
|
|
4
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||
Cancellation and retirement of restricted common stock
|
(196
|
)
|
|
(2
|
)
|
|
(432
|
)
|
|
—
|
|
|
—
|
|
|
(434
|
)
|
|||||
Accelerated vesting of restricted common stock and options
|
—
|
|
|
—
|
|
|
281
|
|
|
—
|
|
|
—
|
|
|
281
|
|
|||||
Amortization of restricted common stock
|
—
|
|
|
—
|
|
|
1,370
|
|
|
—
|
|
|
—
|
|
|
1,370
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
—
|
|
|
466
|
|
|||||
Treasury stock acquired
|
(686
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,531
|
)
|
|
(4,531
|
)
|
|||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
(1,804
|
)
|
|
—
|
|
|
—
|
|
|
(1,804
|
)
|
|||||
Balance – December 31, 2012
|
18,156
|
|
|
$
|
221
|
|
|
$
|
202,462
|
|
|
$
|
(52,598
|
)
|
|
$
|
(15,267
|
)
|
|
$
|
134,818
|
|
|
For the years ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
8,079
|
|
|
$
|
6,978
|
|
|
$
|
11,403
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
(Income) loss from discontinued operations
|
2
|
|
|
(125
|
)
|
|
204
|
|
|||
Depreciation and amortization
|
9,953
|
|
|
9,585
|
|
|
10,054
|
|
|||
Amortization of deferred financing costs
|
728
|
|
|
653
|
|
|
685
|
|
|||
Gain on repurchase of convertible junior subordinated debentures
|
(317
|
)
|
|
(846
|
)
|
|
—
|
|
|||
Provision for losses on accounts receivable
|
3,974
|
|
|
2,756
|
|
|
2,555
|
|
|||
Stock-based compensation expense
|
1,759
|
|
|
1,867
|
|
|
2,174
|
|
|||
Deferred income taxes (benefit)
|
2,432
|
|
|
(3,462
|
)
|
|
3,930
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
201
|
|
|
1,323
|
|
|||
Other
|
(153
|
)
|
|
38
|
|
|
252
|
|
|||
Changes in operating assets and liabilities that provided (required) cash:
|
|
|
|
|
|
||||||
Accounts and preneed receivables
|
(4,721
|
)
|
|
(1,933
|
)
|
|
(4,579
|
)
|
|||
Inventories
|
(156
|
)
|
|
(278
|
)
|
|
(20
|
)
|
|||
Prepaid expenses
|
605
|
|
|
(919
|
)
|
|
(477
|
)
|
|||
Other current assets
|
1,384
|
|
|
(312
|
)
|
|
5,831
|
|
|||
Deferred charges and other
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
|||
Preneed funeral and cemetery trust investments
|
(1,345
|
)
|
|
10,956
|
|
|
6,658
|
|
|||
Accounts payable and accrued liabilities
|
2,046
|
|
|
7,003
|
|
|
(7,201
|
)
|
|||
Deferred preneed funeral and cemetery revenue
|
177
|
|
|
10,316
|
|
|
3,720
|
|
|||
Deferred preneed funeral and cemetery receipts held in trust
|
1,212
|
|
|
(11,481
|
)
|
|
(10,850
|
)
|
|||
Net cash provided by continuing operating activities
|
25,659
|
|
|
30,959
|
|
|
25,624
|
|
|||
Net cash provided by discontinuing operating activities
|
20
|
|
|
196
|
|
|
137
|
|
|||
Net cash provided by operating activities
|
25,679
|
|
|
31,155
|
|
|
25,761
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisitions
|
(19,007
|
)
|
|
(18,574
|
)
|
|
(42,709
|
)
|
|||
Net proceeds from sales of assets
|
400
|
|
|
—
|
|
|
—
|
|
|||
Capital expenditures
|
(10,222
|
)
|
|
(10,625
|
)
|
|
(12,857
|
)
|
|||
Net cash used in continuing investing activities
|
(28,829
|
)
|
|
(29,199
|
)
|
|
(55,566
|
)
|
|||
Net cash provided by (used in) discontinuing investing activities
|
(439
|
)
|
|
(19
|
)
|
|
592
|
|
|||
Net cash used in investing activities
|
(29,268
|
)
|
|
(29,218
|
)
|
|
(54,974
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Borrowings under the bank Credit Facility
|
600
|
|
|
2,500
|
|
|
43,307
|
|
|||
Payments on long-term debt and obligations under capital leases
|
(474
|
)
|
|
(625
|
)
|
|
(3,173
|
)
|
|||
Proceeds from the exercise of stock options and employee stock purchase plan
|
1,188
|
|
|
719
|
|
|
896
|
|
|||
Dividends on common stock
|
—
|
|
|
(1,376
|
)
|
|
(1,804
|
)
|
|||
Dividends on redeemable preferred stock
|
(14
|
)
|
|
(14
|
)
|
|
(14
|
)
|
|||
Tax benefit from stock-based compensation
|
571
|
|
|
25
|
|
|
36
|
|
|||
Repurchase of convertible junior subordinated debentures
|
(576
|
)
|
|
(2,241
|
)
|
|
—
|
|
|||
Payment of loan origination costs
|
—
|
|
|
(333
|
)
|
|
(3,236
|
)
|
|||
Payment of call premium associated with the senior note redemption
|
—
|
|
|
—
|
|
|
(1,707
|
)
|
|||
Purchase of treasury stock
|
—
|
|
|
(736
|
)
|
|
(4,531
|
)
|
|||
Other financing costs
|
(43
|
)
|
|
2
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
1,252
|
|
|
(2,079
|
)
|
|
29,774
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(2,337
|
)
|
|
(142
|
)
|
|
561
|
|
|||
Cash and cash equivalents at beginning of year
|
3,616
|
|
|
1,279
|
|
|
1,137
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,279
|
|
|
$
|
1,137
|
|
|
$
|
1,698
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
|
(in thousands)
|
||||||
Land
|
$
|
39,673
|
|
|
$
|
47,780
|
|
Buildings and improvements
|
118,343
|
|
|
127,864
|
|
||
Furniture, equipment and automobiles
|
56,553
|
|
|
61,080
|
|
||
Property, plant and equipment, at cost
|
214,569
|
|
|
236,724
|
|
||
Less: accumulated depreciation
|
(78,100
|
)
|
|
(84,291
|
)
|
||
Property, plant and equipment, net
|
$
|
136,469
|
|
|
$
|
152,433
|
|
•
|
Size of business;
|
•
|
Size of market;
|
•
|
Competitive standing;
|
•
|
Local market demographics;
|
•
|
Strength of brand; and
|
•
|
Barriers to entry.
|
Acquisition Date
|
Type of Business
|
|
Market
|
|
Assets
Acquired
(Excluding
Goodwill)
|
|
Goodwill
Recorded
|
|
Liabilities
and Debt
Assumed
|
February, 2012
|
One Funeral Home
|
|
Downington, PA
|
|
$1.1
|
|
$3.6
|
|
$—
|
March, 2012
|
One Funeral Home
|
|
Griffin, GA
|
|
$4.3
|
|
$2.8
|
|
(0.2)
|
June, 2012
|
Two Funeral Homes, One Cemetery
|
|
Lawton, OK
|
|
$4.7
|
|
$0.6
|
|
(0.4)
|
September, 2012
|
One Funeral Home
|
|
Katy, TX
|
|
$0.9
|
|
$5.2
|
|
(0.1)
|
December, 2012
|
Two Funeral Homes
|
|
High Point, NC
|
|
$4.0
|
|
$7.8
|
|
—
|
December, 2012
|
One Funeral Home
|
|
Baytown TX
|
|
$1.4
|
|
$1.0
|
|
—
|
December, 2012
|
One Funeral Home
|
|
Norman, OK
|
|
$1.6
|
|
$4.7
|
|
(0.3)
|
Net current assets
|
$
|
412
|
|
Property, plant & equipment
|
17,644
|
|
|
Goodwill
|
25,683
|
|
|
Preneed funeral trust investments
|
1,170
|
|
|
Cemetery perpetual care investments
|
478
|
|
|
Accrued liabilities
|
(131
|
)
|
|
Note payable
|
(560
|
)
|
|
Care trusts corpus
|
(478
|
)
|
|
Deferred preneed cemetery revenue
|
(339
|
)
|
|
Deferred preneed funeral receipts held in trust
|
(1,170
|
)
|
|
Cash paid
|
$
|
42,709
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
Goodwill at beginning of year
|
$
|
183,324
|
|
|
$
|
193,962
|
|
Acquisitions
|
10,638
|
|
|
25,683
|
|
||
Impairments and changes in previous estimates
|
—
|
|
|
(1,118
|
)
|
||
Reclassification of assets held for sale
|
—
|
|
|
(85
|
)
|
||
Goodwill at the end of the year
|
193,962
|
|
|
218,442
|
|
|
|
December 31, 2012
|
||
Assets:
|
|
|
||
Current assets
|
|
$
|
238
|
|
Property, plant and equipment, net
|
|
797
|
|
|
Goodwill
|
|
85
|
|
|
Other assets
|
|
346
|
|
|
Total
|
|
$
|
1,466
|
|
|
|
|
||
Liabilities:
|
|
|
||
Current liabilities
|
|
$
|
75
|
|
Deferred preneed funeral revenue
|
|
294
|
|
|
Total
|
|
$
|
369
|
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2012
|
||||
Revenues
|
$
|
2,948
|
|
|
$
|
1,776
|
|
Operating income
|
217
|
|
|
152
|
|
||
Net gain and (impairment) on disposition
|
—
|
|
|
(490
|
)
|
||
Provision (benefit) for income taxes
|
92
|
|
|
(134
|
)
|
||
Income (loss) from discontinued operations
|
$
|
125
|
|
|
$
|
(204
|
)
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
Preneed cemetery trust investments, at market value
|
$
|
68,557
|
|
|
$
|
73,126
|
|
Less: allowance for contract cancellation
|
(2,138
|
)
|
|
(2,166
|
)
|
||
Preneed cemetery trust investments, net
|
$
|
66,419
|
|
|
$
|
70,960
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Market
|
||||||||
Cash and money market accounts
|
$
|
758
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
758
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Foreign
|
2,008
|
|
|
450
|
|
|
—
|
|
|
2,458
|
|
||||
Corporate debt
|
38,299
|
|
|
863
|
|
|
(507
|
)
|
|
38,655
|
|
||||
Preferred stock
|
22,362
|
|
|
824
|
|
|
(294
|
)
|
|
22,892
|
|
||||
Mortgage backed securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Common stock
|
8,759
|
|
|
34
|
|
|
(1,526
|
)
|
|
7,267
|
|
||||
Trust securities
|
$
|
72,187
|
|
|
$
|
2,171
|
|
|
$
|
(2,327
|
)
|
|
$
|
72,031
|
|
Accrued investment income
|
$
|
1,095
|
|
|
|
|
|
|
$
|
1,095
|
|
||||
Preneed cemetery trust investments
|
|
|
|
|
|
|
$
|
73,126
|
|
||||||
Market value as a percentage of cost
|
|
|
|
|
|
|
99.8
|
%
|
Due in one year or less
|
$
|
—
|
|
Due in one to five years
|
5,289
|
|
|
Due in five to ten years
|
22,191
|
|
|
Thereafter
|
36,526
|
|
|
Total fixed income securities
|
$
|
64,006
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Market
|
||||||||
Cash and money market accounts
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,234
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt
|
53,227
|
|
|
1,085
|
|
|
(1,548
|
)
|
|
52,764
|
|
||||
Mortgage backed securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Common stock
|
13,002
|
|
|
102
|
|
|
(3,646
|
)
|
|
9,458
|
|
||||
Mutual funds:
|
|
|
|
|
|
|
|
||||||||
Equity
|
3,808
|
|
|
250
|
|
|
(30
|
)
|
|
4,028
|
|
||||
Trust securities
|
$
|
71,272
|
|
|
$
|
1,437
|
|
|
$
|
(5,224
|
)
|
|
$
|
67,485
|
|
Accrued investment income
|
$
|
1,072
|
|
|
|
|
|
|
$
|
1,072
|
|
||||
Preneed cemetery trust investments
|
|
|
|
|
|
|
$
|
68,557
|
|
||||||
Market value as a percentage of cost
|
|
|
|
|
|
|
94.7
|
%
|
|
December 31, 2012
|
||||||||||||||||||||||
|
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
|
11,363
|
|
|
(325
|
)
|
|
622
|
|
|
(182
|
)
|
|
11,985
|
|
|
(507
|
)
|
||||||
Preferred stock
|
1,040
|
|
|
(54
|
)
|
|
2,284
|
|
|
(240
|
)
|
|
3,324
|
|
|
(294
|
)
|
||||||
Common stock
|
5,088
|
|
|
(934
|
)
|
|
957
|
|
|
(592
|
)
|
|
6,045
|
|
|
(1,526
|
)
|
||||||
Total temporary impaired securities
|
$
|
17,491
|
|
|
$
|
(1,313
|
)
|
|
$
|
3,863
|
|
|
$
|
(1,014
|
)
|
|
$
|
21,354
|
|
|
$
|
(2,327
|
)
|
|
December 31, 2011
|
||||||||||||||||||||||
|
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
|
27,276
|
|
|
(1,366
|
)
|
|
603
|
|
|
(182
|
)
|
|
27,879
|
|
|
(1,548
|
)
|
||||||
Common stock
|
8,208
|
|
|
(3,370
|
)
|
|
423
|
|
|
(276
|
)
|
|
8,631
|
|
|
(3,646
|
)
|
||||||
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity
|
—
|
|
|
—
|
|
|
302
|
|
|
(30
|
)
|
|
302
|
|
|
(30
|
)
|
||||||
Total temporary impaired securities
|
$
|
35,484
|
|
|
$
|
(4,736
|
)
|
|
$
|
1,328
|
|
|
$
|
(488
|
)
|
|
$
|
36,812
|
|
|
$
|
(5,224
|
)
|
|
Year ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Investment income
|
$
|
3,434
|
|
|
$
|
3,471
|
|
|
$
|
4,038
|
|
Realized gains
|
12,563
|
|
|
14,041
|
|
|
10,497
|
|
|||
Realized losses
|
(821
|
)
|
|
(4,453
|
)
|
|
(3,574
|
)
|
|||
Expenses and taxes
|
(586
|
)
|
|
(1,239
|
)
|
|
(2,769
|
)
|
|||
Decrease in deferred preneed cemetery receipts held in trust
|
(14,590
|
)
|
|
(11,820
|
)
|
|
(8,192
|
)
|
|||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Purchases
|
$
|
(56,431
|
)
|
|
$
|
(111,550
|
)
|
|
$
|
(126,043
|
)
|
Sales
|
54,055
|
|
|
121,217
|
|
|
125,897
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
Preneed funeral trust investments, at market value
|
$
|
78,227
|
|
|
$
|
85,415
|
|
Less: allowance for contract cancellation
|
(2,415
|
)
|
|
(2,519
|
)
|
||
Preneed funeral trust investments, net
|
$
|
75,812
|
|
|
$
|
82,896
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Market
|
||||||||
Cash and money market accounts
|
$
|
13,448
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,448
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury debt
|
3,001
|
|
|
75
|
|
|
—
|
|
|
3,076
|
|
||||
U.S agency obligations
|
142
|
|
|
4
|
|
|
—
|
|
|
146
|
|
||||
Foreign
|
1,217
|
|
|
273
|
|
|
—
|
|
|
1,490
|
|
||||
Corporate debt
|
25,060
|
|
|
661
|
|
|
(331
|
)
|
|
25,390
|
|
||||
Preferred stock
|
15,228
|
|
|
715
|
|
|
(193
|
)
|
|
15,750
|
|
||||
Common stock
|
5,770
|
|
|
27
|
|
|
(996
|
)
|
|
4,801
|
|
||||
Mutual funds:
|
|
|
|
|
|
|
|
||||||||
Equity
|
11,843
|
|
|
487
|
|
|
(78
|
)
|
|
12,252
|
|
||||
Fixed income
|
6,105
|
|
|
181
|
|
|
(40
|
)
|
|
6,246
|
|
||||
Other investments
|
2,143
|
|
|
—
|
|
|
(15
|
)
|
|
2,128
|
|
||||
Trust securities
|
$
|
83,957
|
|
|
$
|
2,423
|
|
|
$
|
(1,653
|
)
|
|
$
|
84,727
|
|
Accrued investment income
|
$
|
688
|
|
|
|
|
|
|
$
|
688
|
|
||||
Preneed funeral trust investments
|
|
|
|
|
|
|
$
|
85,415
|
|
||||||
Market value as a percentage of cost
|
|
|
|
|
|
|
100.9
|
%
|
Due in one year or less
|
$
|
645
|
|
Due in one to five years
|
5,153
|
|
|
Due in five to ten years
|
15,502
|
|
|
Thereafter
|
24,552
|
|
|
Total fixed income securities
|
$
|
45,852
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Market
|
||||||||
Cash and money market accounts
|
$
|
12,318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,318
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury debt
|
5,421
|
|
|
125
|
|
|
(24
|
)
|
|
5,522
|
|
||||
Mortgage backed securities
|
439
|
|
|
12
|
|
|
(1
|
)
|
|
450
|
|
||||
Corporate debt
|
36,430
|
|
|
992
|
|
|
(869
|
)
|
|
36,553
|
|
||||
Common stock
|
10,007
|
|
|
74
|
|
|
(2,557
|
)
|
|
7,524
|
|
||||
Mutual funds:
|
|
|
|
|
|
|
|
||||||||
Equity
|
9,291
|
|
|
42
|
|
|
(967
|
)
|
|
8,366
|
|
||||
Fixed income
|
4,361
|
|
|
172
|
|
|
(31
|
)
|
|
4,502
|
|
||||
Other investments
|
$
|
2,221
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
2,205
|
|
Trust securities
|
$
|
80,488
|
|
|
$
|
1,417
|
|
|
$
|
(4,465
|
)
|
|
$
|
77,440
|
|
Accrued investment income
|
$
|
787
|
|
|
|
|
|
|
$
|
787
|
|
||||
Preneed funeral trust investments
|
|
|
|
|
|
|
$
|
78,227
|
|
||||||
Market value as a percentage of cost
|
|
|
|
|
|
|
96.2
|
%
|
|
December 31, 2012
|
||||||||||||||||||||||
|
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
|
7,419
|
|
|
(212
|
)
|
|
406
|
|
|
(119
|
)
|
|
7,825
|
|
|
(331
|
)
|
||||||
Preferred stock
|
685
|
|
|
(35
|
)
|
|
1,504
|
|
|
(158
|
)
|
|
2,189
|
|
|
(193
|
)
|
||||||
Common stock
|
3,323
|
|
|
(609
|
)
|
|
625
|
|
|
(387
|
)
|
|
3,948
|
|
|
(996
|
)
|
||||||
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity
|
1,613
|
|
|
(25
|
)
|
|
632
|
|
|
(53
|
)
|
|
2,245
|
|
|
(78
|
)
|
||||||
Fixed income
|
3,085
|
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
3,085
|
|
|
(40
|
)
|
||||||
Other investments
|
—
|
|
|
—
|
|
|
30
|
|
|
(15
|
)
|
|
30
|
|
|
(15
|
)
|
||||||
Total temporary impaired securities
|
$
|
16,125
|
|
|
$
|
(921
|
)
|
|
$
|
3,197
|
|
|
$
|
(732
|
)
|
|
$
|
19,322
|
|
|
$
|
(1,653
|
)
|
|
December 31, 2011
|
||||||||||||||||||||||
|
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
|
1,473
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
1,473
|
|
|
(24
|
)
|
||||||
Mortgage backed securities
|
—
|
|
|
—
|
|
|
134
|
|
|
(1
|
)
|
|
134
|
|
|
(1
|
)
|
||||||
Corporate debt
|
15,330
|
|
|
(767
|
)
|
|
339
|
|
|
(102
|
)
|
|
15,669
|
|
|
(869
|
)
|
||||||
Common stock
|
5,755
|
|
|
(2,363
|
)
|
|
296
|
|
|
(194
|
)
|
|
6,051
|
|
|
(2,557
|
)
|
||||||
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity
|
6,406
|
|
|
(645
|
)
|
|
1,348
|
|
|
(322
|
)
|
|
7,754
|
|
|
(967
|
)
|
||||||
Fixed income
|
1,619
|
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
1,619
|
|
|
(31
|
)
|
||||||
Other investments
|
—
|
|
|
—
|
|
|
38
|
|
|
(16
|
)
|
|
38
|
|
|
(16
|
)
|
||||||
Total temporary impaired securities
|
$
|
30,583
|
|
|
$
|
(3,830
|
)
|
|
$
|
2,155
|
|
|
$
|
(635
|
)
|
|
$
|
32,738
|
|
|
$
|
(4,465
|
)
|
|
Year ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Investment income
|
$
|
3,410
|
|
|
$
|
2,934
|
|
|
$
|
3,952
|
|
Realized gains
|
11,023
|
|
|
10,772
|
|
|
4,406
|
|
|||
Realized losses
|
(532
|
)
|
|
(3,223
|
)
|
|
(2,536
|
)
|
|||
Expenses and taxes
|
(873
|
)
|
|
(1,224
|
)
|
|
(1,550
|
)
|
|||
Decrease in deferred preneed funeral receipts held in trust
|
(13,028
|
)
|
|
(9,259
|
)
|
|
(4,272
|
)
|
|||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Purchases
|
$
|
(11,800
|
)
|
|
$
|
(89,969
|
)
|
|
$
|
(72,424
|
)
|
Sales
|
8,321
|
|
|
86,846
|
|
|
72,639
|
|
|
As of December 31,
|
||||||
|
2011
|
|
2012
|
||||
Beginning balance
|
$
|
1,488
|
|
|
$
|
1,352
|
|
Write-offs and cancellations
|
(1,551
|
)
|
|
(826
|
)
|
||
Recoveries
|
—
|
|
|
—
|
|
||
Provision
|
1,415
|
|
|
1,377
|
|
||
Ending balance
|
$
|
1,352
|
|
|
$
|
1,903
|
|
|
31-60
Past Due
|
|
61-90
Past Due
|
|
91-120
Past Due
|
|
>120
Past Due
|
|
Total Past
Due
|
|
Current
|
|
Total Financing
Receivables
|
||||||||||||||
Recognized revenue
|
$
|
560
|
|
|
$
|
949
|
|
|
$
|
109
|
|
|
$
|
660
|
|
|
$
|
2,278
|
|
|
$
|
18,689
|
|
|
$
|
20,967
|
|
Deferred revenue
|
251
|
|
|
406
|
|
|
54
|
|
|
245
|
|
|
956
|
|
|
7,968
|
|
|
8,924
|
|
|||||||
Total contracts
|
$
|
811
|
|
|
$
|
1,355
|
|
|
$
|
163
|
|
|
$
|
905
|
|
|
$
|
3,234
|
|
|
$
|
26,657
|
|
|
$
|
29,891
|
|
|
31-60
Past Due
|
|
61-90
Past Due
|
|
91-120
Past Due
|
|
>120
Past Due
|
|
Total Past
Due
|
|
Current
|
|
Total Financing
Receivables
|
||||||||||||||
Recognized revenue
|
$
|
832
|
|
|
$
|
437
|
|
|
$
|
242
|
|
|
$
|
455
|
|
|
$
|
1,966
|
|
|
$
|
17,587
|
|
|
$
|
19,553
|
|
Deferred revenue
|
349
|
|
|
177
|
|
|
100
|
|
|
187
|
|
|
813
|
|
|
7,212
|
|
|
8,025
|
|
|||||||
Total contracts
|
$
|
1,181
|
|
|
$
|
614
|
|
|
$
|
342
|
|
|
$
|
642
|
|
|
$
|
2,779
|
|
|
$
|
24,799
|
|
|
$
|
27,578
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
|
(in thousands)
|
||||||
Preneed trust funds, at cost
|
$
|
23,182
|
|
|
$
|
26,671
|
|
Less: allowance for contract cancellation
|
(695
|
)
|
|
(800
|
)
|
||
Receivables from preneed trusts, net
|
$
|
22,487
|
|
|
$
|
25,871
|
|
|
Historical
Cost Basis
|
|
Fair Value
|
||||
|
(in thousands)
|
||||||
As of December 31, 2012
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,476
|
|
|
$
|
3,476
|
|
Fixed income investments
|
17,516
|
|
|
17,826
|
|
||
Mutual funds and common stocks
|
5,653
|
|
|
6,070
|
|
||
Annuities
|
26
|
|
|
26
|
|
||
Total
|
$
|
26,671
|
|
|
$
|
27,398
|
|
|
Historical
Cost Basis
|
|
Fair Value
|
||||
|
(in thousands)
|
||||||
As of December 31, 2011
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,450
|
|
|
$
|
3,450
|
|
Fixed income investments
|
15,106
|
|
|
15,231
|
|
||
Mutual funds and common stocks
|
4,587
|
|
|
4,842
|
|
||
Annuities
|
39
|
|
|
39
|
|
||
Total
|
$
|
23,182
|
|
|
$
|
23,562
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
Trust assets, at market value
|
$
|
41,485
|
|
|
$
|
46,542
|
|
Obligations due from (to) trust
|
(106
|
)
|
|
(622
|
)
|
||
Care trusts’ corpus
|
$
|
41,379
|
|
|
$
|
45,920
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Market
|
||||||||
Cash and money market accounts
|
$
|
545
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
545
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Foreign
|
1,267
|
|
|
284
|
|
|
—
|
|
|
1,551
|
|
||||
Corporate debt
|
24,324
|
|
|
556
|
|
|
(323
|
)
|
|
24,557
|
|
||||
Preferred stock
|
14,225
|
|
|
525
|
|
|
(187
|
)
|
|
14,563
|
|
||||
Mortgage backed securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Common stock
|
5,563
|
|
|
22
|
|
|
(969
|
)
|
|
4,616
|
|
||||
Trust securities
|
$
|
45,925
|
|
|
$
|
1,387
|
|
|
$
|
(1,479
|
)
|
|
$
|
45,833
|
|
Accrued investment income
|
$
|
709
|
|
|
|
|
|
|
$
|
709
|
|
||||
Cemetery perpetual care investments
|
|
|
|
|
|
|
$
|
46,542
|
|
||||||
Market value as a percentage of cost
|
|
|
|
|
|
|
99.8
|
%
|
Due in one year or less
|
$
|
—
|
|
Due in one to five years
|
3,367
|
|
|
Due in five to ten years
|
14,080
|
|
|
Thereafter
|
23,225
|
|
|
Total fixed income securities
|
$
|
40,672
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Market
|
||||||||
Cash and money market accounts
|
$
|
210
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
210
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt
|
34,900
|
|
|
709
|
|
|
(1,083
|
)
|
|
34,526
|
|
||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Common stock
|
8,333
|
|
|
63
|
|
|
(2,350
|
)
|
|
6,046
|
|
||||
Trust securities
|
$
|
43,444
|
|
|
$
|
772
|
|
|
$
|
(3,433
|
)
|
|
$
|
40,783
|
|
Accrued investment income
|
$
|
702
|
|
|
|
|
|
|
$
|
702
|
|
||||
Cemetery perpetual care investments
|
|
|
|
|
|
|
$
|
41,485
|
|
||||||
Market value as a percentage of cost
|
|
|
|
|
|
|
93.9
|
%
|
|
December 31, 2012
|
||||||||||||||||||||||
|
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
|
7,236
|
|
|
(207
|
)
|
|
396
|
|
|
(116
|
)
|
|
7,632
|
|
|
(323
|
)
|
||||||
Preferred stock
|
664
|
|
|
(34
|
)
|
|
1,459
|
|
|
(153
|
)
|
|
2,123
|
|
|
(187
|
)
|
||||||
Common stock
|
3,231
|
|
|
(593
|
)
|
|
608
|
|
|
(376
|
)
|
|
3,839
|
|
|
(969
|
)
|
||||||
Total temporary impaired securities
|
$
|
11,131
|
|
|
$
|
(834
|
)
|
|
$
|
2,463
|
|
|
$
|
(645
|
)
|
|
$
|
13,594
|
|
|
$
|
(1,479
|
)
|
|
December 31, 2011
|
||||||||||||||||||||||
|
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
|
19,076
|
|
|
(955
|
)
|
|
422
|
|
|
(128
|
)
|
|
19,498
|
|
|
(1,083
|
)
|
||||||
Common stock
|
5,290
|
|
|
(2,172
|
)
|
|
272
|
|
|
(178
|
)
|
|
5,562
|
|
|
(2,350
|
)
|
||||||
Total temporary impaired securities
|
$
|
24,366
|
|
|
$
|
(3,127
|
)
|
|
$
|
694
|
|
|
$
|
(306
|
)
|
|
$
|
25,060
|
|
|
$
|
(3,433
|
)
|
|
Year ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Undistributable realized gains
|
$
|
5,774
|
|
|
$
|
7,111
|
|
|
$
|
5,664
|
|
Undistributable realized losses
|
(780
|
)
|
|
(2,347
|
)
|
|
(1,707
|
)
|
|||
Decrease in Care trusts’ corpus
|
(4,994
|
)
|
|
(4,764
|
)
|
|
(3,957
|
)
|
|||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Investment income
|
$
|
2,124
|
|
|
$
|
2,563
|
|
|
$
|
5,612
|
|
Realized gains, net
|
2,132
|
|
|
1,085
|
|
|
1,200
|
|
|||
Total
|
$
|
4,256
|
|
|
$
|
3,648
|
|
|
$
|
6,812
|
|
•
|
Level 1—Fair value of securities based on unadjusted quoted prices for identical assets or liabilities in active markets. Our investments classified as Level 1 securities include common stock, certain fixed income securities, and equity mutual funds;
|
•
|
Level 2—Fair value of securities estimated based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation. These inputs include interest rates, yield curves, credit risk, prepayment speeds, rating and tax-exempt status. Our investments classified as Level 2 securities include certain fixed income securities and fixed income mutual funds; and
|
•
|
Level 3—Unobservable inputs based upon the reporting entity’s internally developed assumptions, which market participants would use in pricing the asset or liability. As of
December 31, 2012
, we did not have any assets that had fair values determined by Level 3 inputs and no liabilities measured at fair value.
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
December 31, 2012
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
U.S. treasury debt
|
$
|
3,076
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,076
|
|
U.S. agency obligations
|
146
|
|
|
—
|
|
|
—
|
|
|
146
|
|
||||
Foreign debt
|
—
|
|
|
5,499
|
|
|
—
|
|
|
5,499
|
|
||||
Preferred stock
|
—
|
|
|
53,205
|
|
|
—
|
|
|
53,205
|
|
||||
Mortgage-backed securities
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Corporate debt
|
—
|
|
|
88,602
|
|
|
—
|
|
|
88,602
|
|
||||
Common stock
|
16,684
|
|
|
—
|
|
|
—
|
|
|
16,684
|
|
||||
Mutual funds:
|
|
|
|
|
|
|
|
||||||||
Equity
|
|
|
|
|
|
|
|
||||||||
U.S. large cap
|
6,686
|
|
|
—
|
|
|
—
|
|
|
6,686
|
|
||||
U.S. mid cap
|
1,049
|
|
|
—
|
|
|
—
|
|
|
1,049
|
|
||||
U.S. small cap
|
1,150
|
|
|
—
|
|
|
—
|
|
|
1,150
|
|
||||
International
|
2,503
|
|
|
—
|
|
|
—
|
|
|
2,503
|
|
||||
U.S. REIT
|
864
|
|
|
—
|
|
|
—
|
|
|
864
|
|
||||
Fixed income
|
|
|
|
|
|
|
|
||||||||
U.S. investment grade
|
—
|
|
|
3,607
|
|
|
—
|
|
|
3,607
|
|
||||
U.S. high yield
|
—
|
|
|
2,639
|
|
|
—
|
|
|
2,639
|
|
||||
Other
|
|
|
|
|
|
|
|
||||||||
Insurance
|
—
|
|
|
2,099
|
|
|
—
|
|
|
2,099
|
|
||||
Other
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
||||
Total assets
|
$
|
32,158
|
|
|
$
|
155,682
|
|
|
$
|
—
|
|
|
$
|
187,840
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
Prepaid agreements not to compete, net of accumulated amortization of $4,779 and $4,877, respectively
|
$
|
425
|
|
|
$
|
326
|
|
Deferred loan costs, net of accumulated amortization of $3,161 and $199, respectively
|
1,700
|
|
|
3,041
|
|
||
Deferred income tax asset
|
3,955
|
|
|
2,220
|
|
||
Convertible junior subordinated debenture origination costs, net of accumulated amortization of $1,698 and $1,811, respectively
|
2,345
|
|
|
2,232
|
|
||
Other
|
2,026
|
|
|
1,605
|
|
||
Deferred charges and other non-current assets
|
$
|
10,451
|
|
|
$
|
9,424
|
|
|
December 31, 2011
|
|
December 31, 2012
|
||||
Revolving credit facility, secured, floating rate
|
$
|
3,100
|
|
|
$
|
44,700
|
|
Senior Notes
|
130,000
|
|
|
—
|
|
||
Term loan, secured, floating rate
|
—
|
|
|
127,500
|
|
||
Acquisition debt
|
140
|
|
|
294
|
|
||
Other
|
2,257
|
|
|
2,133
|
|
||
Less: current portion
|
(497
|
)
|
|
(11,086
|
)
|
||
Total long-term debt
|
$
|
135,000
|
|
|
$
|
163,541
|
|
14.
|
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES PAYABLE TO AFFILIATE AND COMPANY OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED SECURITIES OF CARRIAGE SERVICES CAPITAL TRUST
|
|
Future Minimum Lease
Payments
|
||||||
|
Operating
Leases
|
|
Capital
Leases
|
||||
|
(in thousands)
|
||||||
Years ending December 31,
|
|
|
|
||||
2013
|
$
|
4,138
|
|
|
$
|
439
|
|
2014
|
3,742
|
|
|
466
|
|
||
2015
|
2,794
|
|
|
504
|
|
||
2016
|
2,009
|
|
|
505
|
|
||
2017
|
1,842
|
|
|
494
|
|
||
Thereafter
|
4,929
|
|
|
4,664
|
|
||
Total future minimum lease payments
|
$
|
19,454
|
|
|
$
|
7,072
|
|
Less: amount representing interest (rates ranging from 7% to 11.5%)
|
|
|
(2,928
|
)
|
|||
Less: current portion of obligations under capital leases
|
|
|
(131
|
)
|
|||
Long-term obligations under capital leases
|
|
|
$
|
4,013
|
|
|
Year Ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Current:
|
|
|
|
|
|
||||||
U. S. federal
|
$
|
1,915
|
|
|
$
|
7,506
|
|
|
$
|
3,757
|
|
State
|
1,023
|
|
|
1,022
|
|
|
(45
|
)
|
|||
Total current provision
|
2,938
|
|
|
8,528
|
|
|
3,712
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U. S. federal
|
2,236
|
|
|
(3,414
|
)
|
|
4,370
|
|
|||
State
|
196
|
|
|
(48
|
)
|
|
(440
|
)
|
|||
Total deferred provision
|
2,432
|
|
|
(3,462
|
)
|
|
3,930
|
|
|||
Total income tax provision
|
$
|
5,370
|
|
|
$
|
5,066
|
|
|
$
|
7,642
|
|
|
Year Ended December 31,
|
|
|||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
|||||||||
Federal statutory rate
|
$
|
4,574
|
|
|
34.0
|
|
%
|
$
|
4,058
|
|
|
34.0
|
|
%
|
$
|
6,547
|
|
|
34.0
|
|
%
|
Effect of state income taxes, net of federal benefit
|
858
|
|
|
6.4
|
|
|
704
|
|
|
5.9
|
|
|
689
|
|
|
3.6
|
|
|
|||
Effect of non-deductible expenses and other, net
|
136
|
|
|
1.1
|
|
|
514
|
|
|
4.3
|
|
|
1,424
|
|
|
7.4
|
|
|
|||
Change in valuation allowance
|
(198
|
)
|
|
(1.5
|
)
|
|
(210
|
)
|
|
(1.7
|
)
|
|
(1,018
|
)
|
|
(5.3
|
)
|
|
|||
Total
|
$
|
5,370
|
|
|
40.0
|
|
%
|
$
|
5,066
|
|
|
42.5
|
|
%
|
$
|
7,642
|
|
|
39.7
|
|
%
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2012
|
||||
Deferred income tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
2,474
|
|
|
$
|
3,787
|
|
State tax credit carryforwards
|
91
|
|
|
83
|
|
||
State bonus depreciation
|
267
|
|
|
155
|
|
||
Accrued liabilities and other
|
3,075
|
|
|
1,252
|
|
||
Amortization of non-compete agreements
|
336
|
|
|
471
|
|
||
Preneed liabilities, net
|
33,301
|
|
|
32,452
|
|
||
Total deferred income tax assets
|
39,544
|
|
|
38,200
|
|
||
Less valuation allowance
|
(1,335
|
)
|
|
(317
|
)
|
||
Total deferred income tax assets
|
$
|
38,209
|
|
|
$
|
37,883
|
|
Deferred income tax liabilities:
|
|
|
|
||||
Amortization and depreciation
|
$
|
(30,753
|
)
|
|
$
|
(34,125
|
)
|
Other
|
(426
|
)
|
|
(318
|
)
|
||
Total deferred income tax liabilities
|
(31,179
|
)
|
|
(34,443
|
)
|
||
Total net deferred tax assets
|
$
|
7,030
|
|
|
$
|
3,440
|
|
Current deferred tax asset
|
$
|
3,075
|
|
|
$
|
1,220
|
|
Non-current deferred tax asset
|
3,955
|
|
|
2,220
|
|
||
Total net deferred tax assets
|
$
|
7,030
|
|
|
$
|
3,440
|
|
|
Year Ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Unrecognized tax benefit at beginning of year
|
$
|
6,863
|
|
|
$
|
7,396
|
|
|
$
|
7,617
|
|
Reductions based on tax positions related to the prior year
|
—
|
|
|
—
|
|
|
(259
|
)
|
|||
Additions based on tax positions related to the current year
|
562
|
|
|
253
|
|
|
389
|
|
|||
Reductions as a result of a lapse of the applicable statute of limitations
|
(29
|
)
|
|
(32
|
)
|
|
—
|
|
|||
Unrecognized tax benefit at end of year
|
$
|
7,396
|
|
|
$
|
7,617
|
|
|
$
|
7,747
|
|
|
Shares
Reserved
|
|
Shares
Available to
Issue
|
|
Options
Outstanding
|
|||
1995 plan
|
—
|
|
|
—
|
|
|
6
|
|
1996 plan
|
—
|
|
|
—
|
|
|
2
|
|
Directors’ plan
|
—
|
|
|
—
|
|
|
—
|
|
Amended and restated 2006 plan
|
5,000
|
|
|
1,083
|
|
|
304
|
|
Total
|
5,000
|
|
|
1,083
|
|
|
312
|
|
|
2010
|
|
2011
|
|
2012
|
|||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
1.7
|
%
|
Expected volatility
|
50.50
|
%
|
|
60.09
|
%
|
|
60.09
|
%
|
Risk-free interest rate
|
3.52
|
%
|
|
1.25
|
%
|
|
1.25
|
%
|
Expected life (years)
|
5
|
|
|
3
|
|
|
3
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|||||||||||||||
|
Shares
|
|
Wtd. Avg.
Ex. Price
|
|
Shares
|
|
Wtd. Avg.
Ex. Price
|
|
Shares
|
|
Wtd. Avg.
Ex. Price
|
|||||||||
Outstanding at beginning of period
|
787
|
|
|
$
|
2.71
|
|
|
445
|
|
|
$
|
4.74
|
|
|
321
|
|
|
$
|
5.17
|
|
Granted
|
211
|
|
|
$
|
4.78
|
|
|
211
|
|
|
$
|
5.69
|
|
|
96
|
|
|
$
|
5.94
|
|
Exercised
|
(516
|
)
|
|
$
|
1.56
|
|
|
(173
|
)
|
|
$
|
5.56
|
|
|
(81
|
)
|
|
$
|
4.90
|
|
Canceled or expired
|
(37
|
)
|
|
$
|
4.79
|
|
|
(162
|
)
|
|
$
|
5.24
|
|
|
(24
|
)
|
|
$
|
5.94
|
|
Outstanding at end of year
|
445
|
|
|
$
|
4.74
|
|
|
321
|
|
|
$
|
5.17
|
|
|
312
|
|
|
$
|
5.41
|
|
Exercisable at end of year
|
253
|
|
|
$
|
4.71
|
|
|
106
|
|
|
$
|
4.75
|
|
|
145
|
|
|
$
|
5.13
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Actual
Ranges of
Exercise Prices
150% increment
|
Number Outstanding at 12/31/12
|
|
Weighted-Average
Remaining
Contractual Life
|
|
Weighted-Average
Exercise Price
|
|
Number Exercisable at 12/31/12
|
|
Weighted-Average
Exercise Price
|
||||||
$3.12-4.78
|
8
|
|
|
0.77
|
|
$
|
4.46
|
|
|
8
|
|
|
$
|
4.46
|
|
$4.78-4.78
|
104
|
|
|
7.38
|
|
$
|
4.78
|
|
|
77
|
|
|
$
|
4.78
|
|
$4.79-5.70
|
3
|
|
|
8.61
|
|
$
|
5.21
|
|
|
—
|
|
|
—
|
|
|
$5.70-5.70
|
124
|
|
|
8.17
|
|
$
|
5.70
|
|
|
60
|
|
|
$
|
5.70
|
|
$5.94-5.94
|
73
|
|
|
9.18
|
|
$
|
5.94
|
|
|
—
|
|
|
$
|
—
|
|
$3.12-5.94
|
312
|
|
|
7.95
|
|
$
|
5.41
|
|
|
145
|
|
|
$
|
5.13
|
|
Unvested stock awards
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Unvested at January 1, 2012
|
491
|
|
|
$
|
5.38
|
|
Awards
|
383
|
|
|
6.04
|
|
|
Vestings
|
(266
|
)
|
|
4.72
|
|
|
Cancellations
|
(43
|
)
|
|
5.58
|
|
|
Unvested at December 31, 2012
|
565
|
|
|
$
|
5.81
|
|
|
Year Ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Net income
|
$
|
8,079
|
|
|
$
|
6,978
|
|
|
$
|
11,403
|
|
Net income allocated to non-vested share awards
|
(302
|
)
|
|
(307
|
)
|
|
(361
|
)
|
|||
Preferred stock dividend
|
(14
|
)
|
|
(14
|
)
|
|
(14
|
)
|
|||
Undistributed earnings available to common stockholders
|
$
|
7,763
|
|
|
$
|
6,657
|
|
|
$
|
11,028
|
|
Income (loss) from discontinued operations
|
(2
|
)
|
|
125
|
|
|
(204
|
)
|
|||
Undistributed earnings from continuing operations available to common stockholders
|
7,765
|
|
|
6,532
|
|
|
11,232
|
|
|||
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding for basic EPS computation
|
17,635
|
|
|
18,359
|
|
|
18,126
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options
|
303
|
|
|
38
|
|
|
100
|
|
|||
Weighted average number of common and common equivalent shares outstanding for diluted EPS computation
|
17,938
|
|
|
18,397
|
|
|
18,226
|
|
|||
Basic earnings per common share:
|
|
|
|
|
|
||||||
Undistributed earnings
|
$
|
0.44
|
|
|
$
|
0.35
|
|
|
$
|
0.62
|
|
Allocation of earnings to non-vested share awards
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|||
Basic earnings per share from continuing operations
|
0.46
|
|
|
0.37
|
|
|
0.64
|
|
|||
Discontinued operations
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|||
Basic earnings per common share
|
$
|
0.46
|
|
|
$
|
0.38
|
|
|
$
|
0.63
|
|
Diluted earnings per common share:
|
|
|
|
|
|
||||||
Undistributed earnings
|
$
|
0.43
|
|
|
$
|
0.35
|
|
|
$
|
0.62
|
|
Allocation of earnings to non-vested share awards
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|||
Diluted earnings per share from continuing operations
|
0.45
|
|
|
0.37
|
|
|
0.64
|
|
|||
Discontinued operations
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|||
Diluted earnings per common share
|
$
|
0.45
|
|
|
$
|
0.38
|
|
|
$
|
0.63
|
|
|
Funeral
|
|
Cemetery
|
|
Corporate
|
|
Consolidated
|
||||||||
|
(in thousands, except number of operating locations)
|
||||||||||||||
External revenues from continuing operations:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
154,057
|
|
|
$
|
50,092
|
|
|
$
|
—
|
|
|
$
|
204,149
|
|
2011
|
143,144
|
|
|
44,534
|
|
|
—
|
|
|
187,678
|
|
||||
2010
|
135,906
|
|
|
45,895
|
|
|
—
|
|
|
181,801
|
|
||||
Income (loss) from continuing operations before income taxes:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
46,467
|
|
|
$
|
14,031
|
|
|
$
|
(41,249
|
)
|
|
$
|
19,249
|
|
2011
|
41,646
|
|
|
10,031
|
|
|
(39,758
|
)
|
|
11,919
|
|
||||
2010
|
37,657
|
|
|
9,407
|
|
|
(33,613
|
)
|
|
13,451
|
|
||||
Total assets:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
481,356
|
|
|
$
|
237,897
|
|
|
$
|
18,832
|
|
|
$
|
738,085
|
|
2011
|
423,714
|
|
|
226,177
|
|
|
22,886
|
|
|
672,777
|
|
||||
2010
|
409,329
|
|
|
242,461
|
|
|
19,222
|
|
|
671,012
|
|
||||
Long-lived assets:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
355,807
|
|
|
$
|
87,687
|
|
|
$
|
5,056
|
|
|
$
|
448,550
|
|
2011
|
305,540
|
|
|
91,430
|
|
|
7,185
|
|
|
404,155
|
|
||||
2010
|
286,868
|
|
|
90,611
|
|
|
7,183
|
|
|
384,662
|
|
||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
5,974
|
|
|
$
|
3,116
|
|
|
$
|
964
|
|
|
$
|
10,054
|
|
2011
|
5,719
|
|
|
2,853
|
|
|
1,013
|
|
|
9,585
|
|
||||
2010
|
5,338
|
|
|
3,260
|
|
|
1,355
|
|
|
9,953
|
|
||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
8,225
|
|
|
$
|
3,401
|
|
|
$
|
1,231
|
|
|
$
|
12,857
|
|
2011
|
5,939
|
|
|
3,673
|
|
|
1,013
|
|
|
10,625
|
|
||||
2010
|
6,028
|
|
|
3,448
|
|
|
746
|
|
|
10,222
|
|
||||
Number of operating locations at year end:
|
|
|
|
|
|
|
|
||||||||
2012
|
167
|
|
|
33
|
|
|
—
|
|
|
200
|
|
||||
2011
|
159
|
|
|
33
|
|
|
—
|
|
|
192
|
|
||||
2010
|
147
|
|
|
33
|
|
|
—
|
|
|
180
|
|
||||
Interest expense:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
320
|
|
|
$
|
49
|
|
|
$
|
16,731
|
|
|
$
|
17,100
|
|
2011
|
343
|
|
|
66
|
|
|
17,695
|
|
|
18,104
|
|
||||
2010
|
312
|
|
|
76
|
|
|
17,874
|
|
|
18,262
|
|
||||
Income tax expense (benefit) from continuing operations:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
18,447
|
|
|
$
|
5,570
|
|
|
$
|
(16,375
|
)
|
|
$
|
7,642
|
|
2011
|
17,700
|
|
|
4,263
|
|
|
(16,897
|
)
|
|
5,066
|
|
||||
2010
|
15,033
|
|
|
3,755
|
|
|
(13,418
|
)
|
|
5,370
|
|
|
Year Ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Goods
|
|
|
|
|
|
||||||
Funeral
|
$
|
54,484
|
|
|
$
|
56,723
|
|
|
$
|
61,166
|
|
Cemetery
|
30,201
|
|
|
28,407
|
|
|
29,902
|
|
|||
Total goods
|
$
|
84,685
|
|
|
$
|
85,130
|
|
|
$
|
91,068
|
|
Services
|
|
|
|
|
|
||||||
Funeral
|
$
|
73,113
|
|
|
$
|
78,253
|
|
|
$
|
85,212
|
|
Cemetery
|
9,355
|
|
|
9,745
|
|
|
10,166
|
|
|||
Total services
|
$
|
82,468
|
|
|
$
|
87,998
|
|
|
$
|
95,378
|
|
Financial revenue
|
|
|
|
|
|
||||||
Preneed funeral commission income
|
$
|
2,266
|
|
|
$
|
1,811
|
|
|
$
|
1,711
|
|
Preneed funeral trust earnings
|
6,043
|
|
|
6,357
|
|
|
5,968
|
|
|||
Cemetery trust earnings
|
4,804
|
|
|
5,041
|
|
|
8,506
|
|
|||
Cemetery finance charges
|
1,535
|
|
|
1,341
|
|
|
1,518
|
|
|||
Total financial revenue
|
$
|
14,648
|
|
|
$
|
14,550
|
|
|
$
|
17,703
|
|
Total revenues
|
$
|
181,801
|
|
|
$
|
187,678
|
|
|
$
|
204,149
|
|
|
|
|
|
|
|
||||||
Cost of revenues:
|
|
|
|
|
|
||||||
Goods
|
|
|
|
|
|
||||||
Funeral
|
$
|
46,614
|
|
|
$
|
46,947
|
|
|
$
|
49,402
|
|
Cemetery
|
24,059
|
|
|
22,113
|
|
|
23,111
|
|
|||
Total goods
|
$
|
70,673
|
|
|
$
|
69,060
|
|
|
$
|
72,513
|
|
Services
|
|
|
|
|
|
||||||
Funeral
|
$
|
39,769
|
|
|
$
|
41,061
|
|
|
$
|
42,406
|
|
Cemetery
|
6,438
|
|
|
6,514
|
|
|
6,857
|
|
|||
Total services
|
$
|
46,207
|
|
|
$
|
47,575
|
|
|
$
|
49,263
|
|
Financial expenses
|
|
|
|
|
|
||||||
Preneed funeral commissions
|
$
|
1,384
|
|
|
$
|
1,375
|
|
|
$
|
1,392
|
|
Trust administration fees
|
—
|
|
|
—
|
|
|
64
|
|
|||
Total financial expenses
|
$
|
1,384
|
|
|
$
|
1,375
|
|
|
$
|
1,456
|
|
Total cost of revenues
|
$
|
118,264
|
|
|
$
|
118,010
|
|
|
$
|
123,232
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
51,774
|
|
|
$
|
49,675
|
|
|
$
|
49,399
|
|
|
$
|
53,301
|
|
Gross profit
|
16,847
|
|
|
14,284
|
|
|
13,865
|
|
|
16,879
|
|
||||
Net income from continuing operations
|
$
|
4,160
|
|
|
$
|
2,662
|
|
|
$
|
496
|
|
|
$
|
4,289
|
|
Net income (loss) from discontinued operations
|
298
|
|
|
2
|
|
|
111
|
|
|
(615
|
)
|
||||
Preferred stock dividend
|
(3
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Net income available to common shareholders
|
$
|
4,455
|
|
|
$
|
2,660
|
|
|
$
|
604
|
|
|
$
|
3,670
|
|
Basic earnings per common share:
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.21
|
|
Diluted earnings per common share:
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
||||||||
2011
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
50,108
|
|
|
$
|
47,130
|
|
|
$
|
43,298
|
|
|
$
|
47,142
|
|
Gross profit
|
15,032
|
|
|
13,466
|
|
|
10,547
|
|
|
13,027
|
|
||||
Net income from continuing operations
|
$
|
3,263
|
|
|
$
|
2,556
|
|
|
$
|
739
|
|
|
$
|
295
|
|
Net income from discontinued operations
|
12
|
|
|
45
|
|
|
53
|
|
|
15
|
|
||||
Preferred stock dividend
|
(4
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(2
|
)
|
||||
Net income available to common shareholders
|
$
|
3,271
|
|
|
$
|
2,598
|
|
|
$
|
787
|
|
|
$
|
308
|
|
Basic earnings per common share:
|
$
|
0.18
|
|
|
$
|
0.14
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
Diluted earnings per common share:
|
$
|
0.18
|
|
|
$
|
0.14
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
Year Ended December 31,
|
||||||||||
|
2010
|
|
2011
|
|
2012
|
||||||
Cash paid for interest and financing costs
|
$
|
17,818
|
|
|
$
|
17,690
|
|
|
$
|
21,518
|
|
Cash paid for taxes
|
393
|
|
|
743
|
|
|
416
|
|
|||
Fair value of stock, stock options and performance awards issued to directors, officers, and certain other employees
|
1,129
|
|
|
1,591
|
|
|
4,631
|
|
|||
Restricted common stock withheld for payroll taxes
|
131
|
|
|
415
|
|
|
421
|
|
|||
Net (deposits) withdrawals in preneed funeral trusts
|
148
|
|
|
(1,383
|
)
|
|
4,341
|
|
|||
Net (deposits) withdrawals in preneed cemetery trusts
|
(1,848
|
)
|
|
11,031
|
|
|
2,482
|
|
|||
Net withdrawals in perpetual care trusts
|
674
|
|
|
1,521
|
|
|
3,513
|
|
|||
Net decrease in preneed funeral receivables
|
376
|
|
|
317
|
|
|
399
|
|
|||
Net (increase) decrease in preneed cemetery receivables
|
(696
|
)
|
|
1,548
|
|
|
(821
|
)
|
|||
Net deposits of receivables from preneed trusts
|
(343
|
)
|
|
(251
|
)
|
|
(3,677
|
)
|
|||
Net change in preneed funeral receivables increasing (decreasing) deferred revenue
|
(872
|
)
|
|
1,034
|
|
|
(874
|
)
|
|||
Net change in preneed cemetery receivables increasing deferred revenue
|
1,040
|
|
|
9,282
|
|
|
4,594
|
|
|||
Net deposits (withdrawals) into (from) preneed funeral trust accounts increasing (decreasing) deferred preneed funeral receipts
|
(148
|
)
|
|
1,383
|
|
|
(4,341
|
)
|
|||
Net deposits (withdrawals) into (from) preneed cemetery trust accounts increasing (decreasing) deferred cemetery receipts
|
1,848
|
|
|
(11,031
|
)
|
|
(2,482
|
)
|
|||
Net withdrawals from perpetual care trust accounts decreasing care trusts’ corpus
|
(488
|
)
|
|
(1,833
|
)
|
|
(4,028
|
)
|
Description
|
Balance at
beginning
of year
|
|
Charged to
costs and
expenses
|
|
Deduction
|
|
Balance at end
of year
|
||||||||
Year ended December 31, 2010:
|
|
|
|
|
|
|
|
||||||||
Allowance for bad debts, current portion
|
$
|
751
|
|
|
$
|
3,942
|
|
|
$
|
3,714
|
|
|
$
|
979
|
|
Allowance for preneed bad debts, contract cancellations and receivables from preneed trusts, non-current portion
|
$
|
1,160
|
|
|
$
|
2,648
|
|
|
$
|
2,570
|
|
|
$
|
1,236
|
|
Employee severance accruals
|
$
|
—
|
|
|
$
|
237
|
|
|
$
|
—
|
|
|
$
|
237
|
|
Litigation reserves
|
$
|
1,059
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
1,053
|
|
Valuation allowance of the deferred tax asset
|
$
|
1,743
|
|
|
$
|
—
|
|
|
$
|
198
|
|
|
$
|
1,545
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2011:
|
|
|
|
|
|
|
|
||||||||
Allowance for bad debts, current portion
|
$
|
979
|
|
|
$
|
1,226
|
|
|
$
|
1,277
|
|
|
$
|
928
|
|
Allowance for receivables from preneed funeral and cemetery trusts and contract cancellations, non-current portion
|
$
|
1,236
|
|
|
$
|
2,335
|
|
|
$
|
1,843
|
|
|
$
|
1,728
|
|
Employee severance accruals
|
$
|
237
|
|
|
$
|
1,935
|
|
|
$
|
2,015
|
|
|
$
|
157
|
|
Litigation reserves
|
$
|
1,053
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
1,026
|
|
Valuation allowance of the deferred tax asset
|
$
|
1,545
|
|
|
$
|
—
|
|
|
$
|
210
|
|
|
$
|
1,335
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2012:
|
|
|
|
|
|
|
|
||||||||
Allowance for bad debts, current portion
|
$
|
928
|
|
|
$
|
1,614
|
|
|
$
|
1,365
|
|
|
$
|
1,177
|
|
Allowance for receivables from preneed funeral and cemetery trusts and contract cancellations, non-current portion
|
$
|
1,728
|
|
|
$
|
903
|
|
|
$
|
572
|
|
|
$
|
2,059
|
|
Employee severance accruals
|
$
|
157
|
|
|
$
|
486
|
|
|
$
|
485
|
|
|
$
|
158
|
|
Litigation reserves
|
$
|
1,026
|
|
|
$
|
—
|
|
|
$
|
918
|
|
|
$
|
108
|
|
Valuation allowance of the deferred tax asset
|
$
|
1,335
|
|
|
$
|
—
|
|
|
$
|
1,018
|
|
|
$
|
317
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
/s/ Melvin C. Payne
|
Melvin C. Payne
|
Chairman of the Board and Chief Executive Officer
|
/s/ Cliff Haigler
|
Cliff Haigler
|
Principal Accounting Officer
|
ITEM 9B.
|
OTHER INFORMATION.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
Plan Category
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
|
||||
Equity compensation plans approved by security holders
|
312,300
|
|
|
$
|
5.41
|
|
|
1,083,074
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
312,300
|
|
|
$
|
5.41
|
|
|
1,083,074
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
Page
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation, as amended, of the Company. Incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 1996.
|
|
|
|
3.2
|
|
Certificate of Amendment dated May 7, 1997. Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended September 30, 1997.
|
|
|
|
3.3
|
|
Certificate of Amendment dated May 7, 2002. Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2002.
|
|
|
|
3.4
|
|
Amended and Restated Certificate of Designations of Mandatorily Redeemable Convertible Preferred Stock, Series A. Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K/A filed April 22, 2008.
|
|
|
|
3.5
|
|
Amended and Restated Bylaws of the Company. Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-05545).
|
|
|
|
3.6
|
|
Amendments to the Bylaws of the Company effective December 18, 2000. Incorporated by reference to Exhibit 3.9 to the Company’s Annual Report on Form 10-K for its year ended December 31, 2001.
|
|
|
|
3.7
|
|
Amendments to the Bylaws of the Company effective May 20, 2008. Incorporated by reference to Exhibit to the Company’s current report on Form 8-K filed May 28, 2008.
|
|
|
|
4.1
|
|
Certificate of Trust of Carriage Services Capital Trust. Incorporated by reference to Exhibit 4.6 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.2
|
|
Amended and Restated Declaration of Trust of Carriage Services Capital Trust, dated June 3, 1999 among the Company, Wilmington Trust Company, Wilmington Trust Company, and Mark W. Duffey, Thomas C. Livengood and Terry E. Sanford. Incorporated by reference to Exhibit 4.7 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.3
|
|
Indenture for the Convertible Junior Subordinated Debentures due 2029 dated June 3, 1999 between the Company and Wilmington Trust Company. Incorporated by reference to Exhibit 4.8 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.4
|
|
Form of Carriage Services Capital Trust 7% Convertible Preferred Securities. Incorporated by reference to Exhibit 4.10 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.5
|
|
Form of the Company’s Convertible Junior Subordinated Debentures due 2029. Incorporated by reference to Exhibit 4.11 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.6
|
|
Preferred Securities Guarantee dated June 3, 1999 between the Company and Wilmington Trust Company. Incorporated by reference to Exhibit 4.12 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.7
|
|
Common Securities Guarantee, dated June 3, 1999 by Carriage Services, Inc. as Guarantor. Incorporated by reference to Exhibit 4.13 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.8
|
|
Amendment No. 1 to Amended and Restated Declaration of Trust of Carriage Services Capital Trust. Incorporated by reference to Exhibit 4.14 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.9
|
|
Indenture dated as of January 27, 2005 between Carriage Services, Inc., the Guarantors named therein, as Guarantors, and Wells Fargo Bank, National Association, as trustee. Incorporated herein by reference to Exhibit 4.1 to the Company’s current report on Form 8-K dated January 27, 2005.
|
|
|
|
4.10
|
|
First Supplemental Indenture dated as of August 2, 2007 among Cloverdale Park, Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
4.11
|
|
Second Supplemental Indenture dated as of December 13, 2007 among Cataudella Funeral Home, Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
4.12
|
|
Third Supplemental Indenture dated as of May 7, 2012 among Carriage Merger V, Inc., Carriage Merger VI, Inc., Carriage Merger VII, Inc., Carriage Merger VIII, Inc., Carriage Merger IX, Inc., and Carriage Merger X, Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
10.1
|
|
Credit Agreement dated August 11, 2011, among Carriage Services, Inc., as the Borrower, and Wells Fargo Bank, N.A. (“Wells Fargo”) as the Administrative Agent and Sole Lender. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 16, 2011.
|
|
|
|
10.2
|
|
Credit Agreement dated August 30, 2012, among Carriage Services, Inc. as the Borrower, and Wells Fargo Bank, N.A. as the Administrative Agent and Sole Lender. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 4, 2012
|
|
|
|
*10.3
|
|
First Amendment to Credit Agreement dated November 29, 2012.
|
|
|
|
*10.4
|
|
Second Amendment to Credit Agreement dated February 14, 2013.
|
|
|
|
10.5
|
|
Second Amended and Restated 1996 Director’s Stock Option Plan. Incorporated by reference to Exhibit 99.1 to the Company’s 2000 Schedule 14A. †
|
|
|
|
10.6
|
|
Indemnity Agreement with Melvin C. Payne dated December 18, 2000. Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2000. †
|
|
|
|
10.7
|
|
Indemnity Agreement with George J. Klug dated May 13, 2003. Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2003. †
|
|
|
|
10.8
|
|
Contingent Asset Sale Agreement dated November 22, 2006 among Carriage Cemetery Services, Inc. and SCI Funeral Services, Inc. Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.9
|
|
Asset Purchase Agreement dated December 15, 2006 among Carriage Cemetery Services, Inc. and Seaside Cemetery, Inc. Incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.10
|
|
Amendment No. 1 to the Contingent Asset Sale Agreement dated January 22, 2007 among Carriage Cemetery Services, Inc. and Alderwoods Group (California), Inc. Incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.11
|
|
Amendment No. 2 to the Contingent Asset Sale Agreement dated February 26, 2007 among Carriage Cemetery Services, Inc. and Alderwoods Group (California), Inc. Incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for its Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.12
|
|
Second Amended and Restated 2006 Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
10.13
|
|
Stock Purchase agreement as of June 12, 2007 among Carriage Cemetery Services of Idaho, Inc., buyer, and Timothy T. Gibson, seller, for 100 percent of the issued and outstanding capital stock of Cloverdale Park, Inc. Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2007.
|
|
|
|
10.14
|
|
Asset Purchase Agreement dated October 10, 2007 among Carriage Funeral Services of California, Inc. and Thaddeus M. Luyben, Sr. and Thaddeus Enterprises. Incorporated by reference to Exhibit 10.26 on Form 10-K for its fiscal year ended December 31, 2007.
|
|
|
|
10.15
|
|
Carriage Services, Inc. 2007 Employee Stock Purchase Plan. Incorporated by reference to Appendix A to the Proxy Statement relating to Carriage’s 2007 annual meeting of stockholders, as filed with the Commission on April 20, 2007, Commission File No. 001-11961.
|
|
|
|
10.16
|
|
Second Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and Melvin C. Payne incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.17
|
|
First Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and L. William Heiligbrodt incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.18
|
|
Second Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and Terry E. Sanford incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.19
|
|
Second Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and George J. Klug incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.20
|
|
Separation agreement with Jay D. Dodds dated November 3, 2011. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 7, 2011. †
|
|
|
|
10.21
|
|
Separation agreement with J. Bradley Green dated November 3, 2011. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 7, 2011. †
|
|
|
|
*10.22
|
|
Separation agreement with Terry E. Sanford dated August 2, 2012.
|
|
|
|
10.23
|
|
Form of Employee Performance-Based Stock Award Agreement. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 7, 2012.
|
|
|
|
10.24
|
|
Form of Director Performance-Based Stock Award Agreement. Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
10.25
|
|
Director Compensation Policy dated March 5, 2012. Incorporated by reference to exhibit 10.24 to the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2011.
|
|
|
|
*12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
14
|
|
Code of Business Conduct and Ethics. Carriage’s Code of Business Conduct and Ethics is available on the website
www.carriageservices.com
.
|
|
|
|
*21.1
|
|
Subsidiaries of the Company.
|
|
|
|
*23.1
|
|
Consent of KPMG LLP.
|
|
|
|
*31.1
|
|
Certification of Periodic Financial Reports by Melvin C. Payne in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*31.2
|
|
Certification of Periodic Financial Reports by Cliff Haigler in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32
|
|
Certification of Periodic Financial Reports by Melvin C. Payne and Cliff Haigler in satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350.
|
|
|
|
*101
|
|
Interactive Data Files.
|
(*)
|
Filed herewith.
|
(**)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability.
|
(†)
|
Management contract or compensatory plan or arrangement.
|
CARRIAGE SERVICES, INC.
|
||
|
|
|
By:
|
|
/s/ Melvin C. Payne
|
|
|
Melvin C. Payne
Chairman of the Board and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Melvin C. Payne
|
|
Chairman of the Board, Chief Executive
|
|
|
Melvin C. Payne
|
|
Officer and Director (Principal Executive Officer)
|
|
March 18, 2013
|
|
|
|
||
/s/ Cliff Haigler
|
|
Principal Accounting Officer
|
|
March 18, 2013
|
Cliff Haigler
|
|
|
|
|
|
|
|
||
/s/ L. William Heiligbrodt
|
|
Vice Chairman of the Board, Executive
|
|
March 18, 2013
|
L. William Heiligbrodt
|
|
Vice President, Secretary and Director
|
|
|
|
|
|
||
/s/ David J. DeCarlo
|
|
Director
|
|
March 18, 2013
|
David J. DeCarlo
|
|
|
|
|
|
|
|
||
/s/ Donald D. Patteson Jr .
|
|
Director
|
|
March 18, 2013
|
Donald D. Patteson Jr.
|
|
|
|
|
|
|
|
||
/s/ Richard W. Scott
|
|
Director
|
|
March 18, 2013
|
Richard W. Scott
|
|
|
|
|
|
|
|
||
/s/ Barry K. Fingerhut
|
|
Director
|
|
March 18, 2013
|
Barry K. Fingerhut
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation, as amended, of the Company. Incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 1996.
|
|
|
|
3.2
|
|
Certificate of Amendment dated May 7, 1997. Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended September 30, 1997.
|
|
|
|
3.3
|
|
Certificate of Amendment dated May 7, 2002. Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2002.
|
|
|
|
3.4
|
|
Amended and Restated Certificate of Designations of Mandatorily Redeemable Convertible Preferred Stock, Series A. Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K/A filed April 22, 2008.
|
|
|
|
3.5
|
|
Amended and Restated Bylaws of the Company. Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-05545).
|
|
|
|
3.6
|
|
Amendments to the Bylaws of the Company effective December 18, 2000. Incorporated by reference to Exhibit 3.9 to the Company’s Annual Report on Form 10-K for its year ended December 31, 2001.
|
|
|
|
3.7
|
|
Amendments to the Bylaws of the Company effective May 20, 2008. Incorporated by reference to Exhibit to the Company’s current report on Form 8-K filed May 28, 2008.
|
|
|
|
4.1
|
|
Certificate of Trust of Carriage Services Capital Trust. Incorporated by reference to Exhibit 4.6 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.2
|
|
Amended and Restated Declaration of Trust of Carriage Services Capital Trust, dated June 3, 1999 among the Company, Wilmington Trust Company, Wilmington Trust Company, and Mark W. Duffey, Thomas C. Livengood and Terry E. Sanford. Incorporated by reference to Exhibit 4.7 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.3
|
|
Indenture for the Convertible Junior Subordinated Debentures due 2029 dated June 3, 1999 between the Company and Wilmington Trust Company. Incorporated by reference to Exhibit 4.8 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.4
|
|
Form of Carriage Services Capital Trust 7% Convertible Preferred Securities. Incorporated by reference to Exhibit 4.10 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.5
|
|
Form of the Company’s Convertible Junior Subordinated Debentures due 2029. Incorporated by reference to Exhibit 4.11 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.6
|
|
Preferred Securities Guarantee dated June 3, 1999 between the Company and Wilmington Trust Company. Incorporated by reference to Exhibit 4.12 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.7
|
|
Common Securities Guarantee, dated June 3, 1999 by Carriage Services, Inc. as Guarantor. Incorporated by reference to Exhibit 4.13 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.8
|
|
Amendment No. 1 to Amended and Restated Declaration of Trust of Carriage Services Capital Trust. Incorporated by reference to Exhibit 4.14 to the Company’s Form S-3 Registration Statement No. 333-84141.
|
|
|
|
4.9
|
|
Indenture dated as of January 27, 2005 between Carriage Services, Inc., the Guarantors named therein, as Guarantors, and Wells Fargo Bank, National Association, as trustee. Incorporated herein by reference to Exhibit 4.1 to the Company’s current report on Form 8-K dated January 27, 2005.
|
|
|
|
4.10
|
|
First Supplemental Indenture dated as of August 2, 2007 among Cloverdale Park, Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
4.11
|
|
Second Supplemental Indenture dated as of December 13, 2007 among Cataudella Funeral Home, Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
4.12
|
|
Third Supplemental Indenture dated as of May 7, 2012 among Carriage Merger V, Inc., Carriage Merger VI, Inc., Carriage Merger VII, Inc., Carriage Merger VIII, Inc., Carriage Merger IX, Inc., and Carriage Merger X, Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
10.1
|
|
Credit Agreement dated August 11, 2011, among Carriage Services, Inc., as the Borrower, and Wells Fargo Bank, N.A. (“Wells Fargo”) as the Administrative Agent and Sole Lender. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 16, 2011.
|
|
|
|
10.2
|
|
Credit Agreement dated August 30, 2012, among Carriage Services, Inc. as the Borrower, and Wells Fargo Bank, N.A. as the Administrative Agent and Sole Lender. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 4, 2012
|
|
|
|
*10.3
|
|
First Amendment to Credit Agreement dated November 29, 2012.
|
|
|
|
*10.4
|
|
Second Amendment to Credit Agreement dated February 13, 2013.
|
|
|
|
10.5
|
|
Second Amended and Restated 1996 Director’s Stock Option Plan. Incorporated by reference to Exhibit 99.1 to the Company’s 2000 Schedule 14A. †
|
|
|
|
10.6
|
|
Indemnity Agreement with Melvin C. Payne dated December 18, 2000. Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2000. †
|
|
|
|
10.7
|
|
Indemnity Agreement with George J. Klug dated May 13, 2003. Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2003. †
|
|
|
|
10.8
|
|
Contingent Asset Sale Agreement dated November 22, 2006 among Carriage Cemetery Services, Inc. and SCI Funeral Services, Inc. Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.9
|
|
Asset Purchase Agreement dated December 15, 2006 among Carriage Cemetery Services, Inc. and Seaside Cemetery, Inc. Incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.10
|
|
Amendment No. 1 to the Contingent Asset Sale Agreement dated January 22, 2007 among Carriage Cemetery Services, Inc. and Alderwoods Group (California), Inc. Incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.11
|
|
Amendment No. 2 to the Contingent Asset Sale Agreement dated February 26, 2007 among Carriage Cemetery Services, Inc. and Alderwoods Group (California), Inc. Incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for its Annual Report on Form 10-K for its fiscal year ended December 31, 2006.
|
|
|
|
10.12
|
|
Second Amended and Restated 2006 Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
10.13
|
|
Stock Purchase agreement as of June 12, 2007 among Carriage Cemetery Services of Idaho, Inc., buyer, and Timothy T. Gibson, seller, for 100 percent of the issued and outstanding capital stock of Cloverdale Park, Inc. Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2007.
|
|
|
|
10.14
|
|
Asset Purchase Agreement dated October 10, 2007 among Carriage Funeral Services of California, Inc. and Thaddeus M. Luyben, Sr. and Thaddeus Enterprises. Incorporated by reference to Exhibit 10.26 on Form 10-K for its fiscal year ended December 31, 2007.
|
|
|
|
10.15
|
|
Carriage Services, Inc. 2007 Employee Stock Purchase Plan. Incorporated by reference to Appendix A to the Proxy Statement relating to Carriage’s 2007 annual meeting of stockholders, as filed with the Commission on April 20, 2007, Commission File No. 001-11961.
|
|
|
10.16
|
|
Second Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and Melvin C. Payne incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.17
|
|
First Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and L. William Heiligbrodt incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.18
|
|
Second Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and Terry E. Sanford incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.19
|
|
Second Amended and Restated Employment Agreement dated March 14, 2012 between Carriage Services, Inc. and George J. Klug incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed March 20, 2012. †
|
|
|
|
10.20
|
|
Separation agreement with Jay D. Dodds dated November 3, 2011. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 7, 2011. †
|
|
|
|
10.21
|
|
Separation agreement with J. Bradley Green dated November 3, 2011. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 7, 2011. †
|
|
|
|
*10.22
|
|
Separation agreement with Terry E. Sanford dated August 2, 2012.
|
|
|
|
10.23
|
|
Form of Employee Performance-Based Stock Award Agreement. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 7, 2012.
|
|
|
|
10.24
|
|
Form of Director Performance-Based Stock Award Agreement. Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2012.
|
|
|
|
10.25
|
|
Director Compensation Policy dated March 5, 2012. Incorporated by reference to exhibit 10.24 to the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2011.
|
|
|
|
*12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
14
|
|
Code of Business Conduct and Ethics. Carriage’s Code of Business Conduct and Ethics is available on the website
www.carriageservices.com
.
|
|
|
|
*21.1
|
|
Subsidiaries of the Company.
|
|
|
|
*23.1
|
|
Consent of KPMG LLP.
|
|
|
|
*31.1
|
|
Certification of Periodic Financial Reports by Melvin C. Payne in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*31.2
|
|
Certification of Periodic Financial Reports by Cliff Haigler in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32
|
|
Certification of Periodic Financial Reports by Melvin C. Payne and Cliff Haigler in satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350.
|
|
|
|
*101
|
|
Interactive Data Files.
|
(*)
|
Filed herewith.
|
(**)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability.
|
(†)
|
Management contract or compensatory plan or arrangement.
|
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
|
1.
|
By the date which is 45 days after the First Amendment Effective Date, execute and deliver to the Administrative Agent:
|
(a)
|
Mortgages covering the properties referred to in clauses (a) and (d) through (h) of the definition of “
Real Property Collateral
” set forth in
Section 1.01
of the Credit Agreement, and, to the extent required by the Administrative Agent, landlord’s waivers for the leased properties listed on
Schedule 5.08(d)(i)
, each duly executed by the appropriate Loan Party, together with, in each case to the extent required by the Administrative Agent and in form and substance satisfactory to the Administrative Agent:
|
(i)
|
evidence that counterparts of the Mortgages have been duly executed, acknowledged and delivered and are in form suitable for filing or recording in all filing or recording offices that the Administrative Agent may deem necessary or desirable in order to create a valid first and subsisting Lien on the property described therein in favor of the Administrative Agent for the benefit of the Secured Creditors and that all filing, documentary, stamp, intangible and recording taxes and fees have been paid,
|
(ii)
|
loan or mortgage title reports or title searches, flood certificates and tax affidavits with respect to the Real Property Collateral owned or leased by the Borrower or each applicable Domestic Subsidiary, and
|
(iii)
|
evidence that all other action that the Administrative Agent may deem necessary or desirable in order to create valid first and subsisting Liens on the property described in the Mortgages has been taken.
|
By:
|
Name:
Title
|
I.
|
Section 7.01- Liens.
|
A.
|
Debt on acquired Property: $_____________
|
B.
|
Purchase money Liens and surety bond deposits: $_____________
|
C.
|
Total permitted Secured Debt (Lines I.A.
+
I.B.): $_____________
|
D.
|
10% of Borrower's Net Worth: $_____________
|
II.
|
Section 7.02- Investments.
|
A.
|
Investments made pursuant to Section 7.02(g): $_____________
|
B.
|
Investments permitted pursuant to Section 7.02(g): $3,500,000
|
C.
|
Investments in Unrestricted Subsidiaries pursuant to Section 7.02(j): $_____________
|
D.
|
Investments permitted pursuant to Section 7.02(j): $5,000,000
|
III.
|
Section 7.03- Debt.
|
A.
|
Trade Payables more than 90 days past due not being contested in good $____________ faith with GAAP reserves:
|
B.
|
Aggregate amount of permitted trade payables described in Line III.B.: $200,000
|
C.
|
Amount of other Debt outstanding pursuant to Section 7.0l(j): $_____________
|
D.
|
5% of Borrower's Net Worth: $_____________
|
IV.
|
Section 7.05- Dispositions.
|
A.
|
Net Cash Proceeds from Dispositions pursuant to Section 7.05(d) $____________ pending reinvestment:
|
B.
|
Aggregate amount of permitted Net Cash Proceeds described in: $2,000,000
|
V.
|
Section 7.06 -Restricted Payments.
|
A.
|
Equity Interest purchases pursuant to Section 7.06(a)(ii)(A): $_____________
|
B.
|
Aggregate amount of permitted Equity Interest purchases described in: $5,000,000
|
VI.
|
Section 7.11 (a)- Maximum Leverage Ratio.
|
A.
|
Total Debt at Statement Date:
|
•
|
Debt of the Borrower and its Subsidiaries at Statement Date: $_____________
|
(2)
|
Trust Notes of the Borrower and its Subsidiaries at Statement Date: $_____________
|
(3)
|
Total Debt (Lines VI.A.I- 2): $_____________
|
A.
|
EBITDA for four consecutive fiscal quarters ending on the Statement Date ("Subject Period"):
|
(1)
|
Net Income for the Subject Period: $____________
|
(2)
|
To the extent deducted in calculating Net Income, Interest Expense $____________
|
(3)
|
To the extent deducted in calculating Net Income, the provision for $____________ federal, state, local and foreign income taxes payable by the
|
(4)
|
To the extent deducted in calculating Net Income, depreciation and $_____________
|
(5)
|
To the extent deducted in calculating Net Income, other expenses $____________
|
(6)
|
To the extent deducted in calculating Net Income, costs and $____________
|
(7)
|
To the extent deducted in calculating Net Income, non-recurring $____________
|
(8)
|
Withdrawable trust income received by the Borrower and its $____________
|
(9)
|
EBITDA of any Acquisition calculated on a historic basis for such $____________
|
(10)
|
For any period of calculation including Fiscal Quarter ending $____________
|
(11)
|
Non-cash items increasing Net income for the Subject Period: $____________
|
C.
|
Leverage Ratio (Line VI.A. +Line VI.B.l3): ______to______
|
|
|
|
|
Maximum
|
|
|
Period
|
|
|
Leverage Ratio
|
|
Closing Date through June 29, 2014
|
|
|
3.75 to 1.00
|
||
2014 June 30, 2014 and thereafter
|
|
|
3.50 to 1.00
|
VI.
|
Section 7.11(b)- Minimum Fixed Charge Coverage Ratio.
|
A.
|
EBITDA for the Subject Period (Line VI.B.13. above): $_____________
|
B.
|
Maintenance Capital Expenditures for the Subject Period: $_____________
|
C.
|
Cash taxes paid during the Subject Period: $_____________
|
D.
|
Cash tax refunds received during the Subject Period: $_____________
|
E.
|
Dividends paid in cash during the Subject Period: $_____________
|
F.
|
Cash Interest Expense during the Subject Period: $_____________
|
G.
|
Scheduled and required principal payments during the Subject Period in $_____________
|
H.
|
Scheduled and required payments made by the Borrower in respect of $_____________
|
I.
|
Fixed Charge Coverage Ratio (Lines VII.A.- VII.B.- VII.C. + VII.D. - ____ to 1.00 VII.E.) / (Lines VII.F. +VII.G. + VII.H):
|
VII.
|
Section 6.12(d)- Field Level EBITDA
|
A.
|
Funeral Field Level EBITDA for the Subject Period: $_____________
|
B.
|
Line VIII.A x .75: $_____________
|
C.
|
EBITDA generated by Mortgaged Property and related operations for the $_____________
|
(b)
|
Section 7.05(e) of the Credit Agreement is hereby amended to read as follows:
|
5.
|
REFERENCE TO THE CREDIT AGREEMENT.
|
5.
|
Release of Liability for Claims.
|
Grant Date
|
Number of Shares of Common Stock Underlying Unexercised Options
|
Option Exercise Price
|
Option Expiration Date
|
5/18/2010
|
35,498
|
$4.78
|
8/12/2013
|
2/28/2011
|
35,419
|
$5.70
|
8/12/2013
|
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
|||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
$
|
17,606
|
|
|
$
|
17,731
|
|
|
$
|
17,534
|
|
|
$
|
17,596
|
|
|
$
|
19,446
|
|
Amortization of capitalized expenses related to debt
|
|
725
|
|
|
767
|
|
|
728
|
|
|
709
|
|
|
685
|
|
|||||
Rental expense factor
|
|
1,278
|
|
|
1,284
|
|
|
1,602
|
|
|
1,864
|
|
|
1,965
|
|
|||||
Total fixed charges before capitalized interest
|
|
19,609
|
|
|
19,782
|
|
|
19,864
|
|
|
20,169
|
|
|
22,096
|
|
|||||
Capitalized interest
|
|
56
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total fixed charges
|
|
$
|
19,665
|
|
|
$
|
19,782
|
|
|
$
|
19,864
|
|
|
$
|
20,169
|
|
|
$
|
22,096
|
|
Earnings available for fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings before income taxes
|
|
$
|
3,529
|
|
|
$
|
11,845
|
|
|
$
|
13,447
|
|
|
$
|
12,138
|
|
|
$
|
19,249
|
|
Add fixed charges before capitalized interest
|
|
19,609
|
|
|
19,782
|
|
|
19,864
|
|
|
20,169
|
|
|
22,096
|
|
|||||
Total earnings available for fixed charges
|
|
$
|
23,138
|
|
|
$
|
31,627
|
|
|
$
|
33,311
|
|
|
$
|
32,307
|
|
|
$
|
41,345
|
|
Ratio of earnings to fixed charges
(1)
|
|
1.18
|
|
|
1.60
|
|
|
1.68
|
|
|
1.60
|
|
|
1.87
|
|
(1)
|
For purposes of computing the ratios of earnings to fixed charges: (i) earnings consist of income from continuing operations before provision for income taxes plus fixed charges (excluding capitalized interest) and (ii) “fixed charges” consist of interest expensed and capitalized, amortization of debt discount and expense relating to indebtedness and the portion of rental expense representative of the interest factor attributable to leases for rental property.
|
|
|
|
NAME
|
|
JURISDICTION OF
INCORPORATION
|
Carriage Services, Inc.
|
|
Delaware
|
Carriage Funeral Holdings, Inc.
|
|
Delaware
|
CFS Funeral Services, Inc.
|
|
Delaware
|
Carriage Holding Company, Inc.
|
|
Delaware
|
Carriage Funeral Services of Michigan, Inc.
|
|
Michigan
|
Carriage Funeral Services of Kentucky, Inc.
|
|
Kentucky
|
Carriage Funeral Services of California, Inc.
|
|
California
|
Carriage Cemetery Services of Idaho, Inc.
|
|
Idaho
|
Wilson & Kratzer Mortuaries
|
|
California
|
Rolling Hills Memorial Park
|
|
California
|
Carriage Services of Connecticut, Inc.
|
|
Connecticut
|
CSI Funeral Services of Massachusetts, Inc.
|
|
Massachusetts
|
CHC Insurance Agency of Ohio, Inc.
|
|
Ohio
|
Barnett, Demrow & Ernst, Inc.
|
|
Kentucky
|
Carriage Services of New Mexico, Inc.
|
|
New Mexico
|
Forastiere Family Funeral Services, Inc.
|
|
Massachusetts
|
Carriage Cemetery Services, Inc.
|
|
Texas
|
Carriage Services of Oklahoma, LLC
|
|
Oklahoma
|
Carriage Services of Nevada, Inc.
|
|
Nevada
|
Hubbard Funeral Home, Inc.
|
|
Maryland
|
Carriage Services Capital Trust
|
|
Delaware
|
Carriage Team California (Cemetery), LLC
|
|
Delaware
|
Carriage Team California (Funeral), LLC
|
|
Delaware
|
Carriage Team Florida (Cemetery), LLC
|
|
Delaware
|
Carriage Team Florida (Funeral), LLC
|
|
Delaware
|
Carriage Services of Ohio, LLC
|
|
Delaware
|
Carriage Team Kansas, LLC
|
|
Delaware
|
Carriage Municipal Cemetery Services of Nevada, Inc.
|
|
Nevada
|
Carriage Cemetery Services of California, Inc.
|
|
California
|
Carriage Insurance Agency of Massachusetts, Inc.
|
|
Massachusetts
|
Carriage Internet Strategies, Inc.
|
|
Delaware
|
Carriage Investments, Inc.
|
|
Delaware
|
Carriage Management, L.P.
|
|
Texas
|
Cochrane’s Chapel of the Roses, Inc.
|
|
California
|
Horizon Cremation Society, Inc.
|
|
California
|
Carriage Life Events, Inc.
|
|
Delaware
|
Carriage Pennsylvania Holdings, Inc.
|
|
Delaware
|
Carriage Funeral Management, Inc.
|
|
Delaware
|
Carriage Florida Holdings, Inc.
|
|
Delaware
|
Aria Cremation Services, LLC
|
|
Delaware
|
Cloverdale Park, Inc.
|
|
Idaho
|
Cataudella Funeral Home, Inc.
|
|
Massachusetts
|
Carriage Services Investment Advisors, Inc.
|
|
Delaware
|
Carriage Merger VI, Inc.
|
|
Delaware
|
Carriage Merger VII, Inc.
|
|
Delaware
|
Carriage Merger VIII, Inc.
|
|
Delaware
|
Carriage Merger IX, Inc.
|
|
Delaware
|
Carriage Merger X, Inc.
|
|
Delaware
|
1.
|
I have reviewed this annual report on Form 10-K of Carriage Services, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; |
b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles; |
c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated:
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March 18, 2013
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/s/ Melvin C. Payne
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Melvin C. Payne
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|
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Chairman of the Board and
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|
|
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Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Carriage Services, Inc. (the “registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; |
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles; |
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated:
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March 18, 2013
|
|
/s/ Cliff Haigler
|
|
|
|
Cliff Haigler
|
|
|
|
Principal Accounting Officer
|
|
|
|
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated:
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March 18, 2013
|
|
/s/ Melvin C. Payne
|
|
|
|
Melvin C. Payne
|
|
|
|
Chairman of the Board and
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Cliff Haigler
|
|
|
|
Cliff Haigler
|
|
|
|
Principal Accounting Officer
|