# Carriage Services Inc: Form 10-Q for the period ended Jun 30, 2013

- Company: [Carriage Services Inc](/companies/csv.md) (CIK 1016281)
- Form: 10-Q
- Filed: 2013-08-08
- Accepted by EDGAR: Aug 8, 2013, 20:32 ET
- Period: 2013-06-30
- Accession: 0001016281-13-000089
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1016281/000101628113000089/csv-2013630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1016281/000101628113000089/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2013-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2013-04-01 to 2013-06-30 | $54.2m | us-gaap:SalesRevenueNet |
| Revenue | 6 months, 2013-01-01 to 2013-06-30 | $111.6m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2013-04-01 to 2013-06-30 | $37.2m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2013-01-01 to 2013-06-30 | $75.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2013-04-01 to 2013-06-30 | $16.9m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2013-01-01 to 2013-06-30 | $35.9m | us-gaap:GrossProfit |
| Operating income | 3 months, 2013-04-01 to 2013-06-30 | $9.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2013-01-01 to 2013-06-30 | $21.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2013-04-01 to 2013-06-30 | $3.7m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2013-01-01 to 2013-06-30 | $6.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2013-04-01 to 2013-06-30 | $2.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2013-01-01 to 2013-06-30 | $6.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2013-04-01 to 2013-06-30 | $4.1m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2013-01-01 to 2013-06-30 | $9.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2013-04-01 to 2013-06-30 | $0.23 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2013-01-01 to 2013-06-30 | $0.48 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2013-04-01 to 2013-06-30 | $0.23 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2013-01-01 to 2013-06-30 | $0.52 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2013-04-01 to 2013-06-30 | 18,365,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2013-01-01 to 2013-06-30 | 22,743,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2013-01-01 to 2013-06-30 | $24.0m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 6 months, 2013-01-01 to 2013-06-30 | $4.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2013-01-01 to 2013-06-30 | $906.0k | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2013-01-01 to 2013-06-30 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2013-06-30 | $1.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2013-06-30 | $48.9m | us-gaap:AssetsCurrent |
| Total assets | at 2013-06-30 | $740.1m | us-gaap:Assets |
| Current liabilities | at 2013-06-30 | $65.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2013-06-30 | $594.5m | us-gaap:Liabilities |
| Long-term debt | at 2013-06-30 | $147.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2013-06-30 | −$12.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2013-06-30 | $145.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 49,390 characters.

### OVERVIEW

#### General

We operate two types of businesses: funeral homes, which account for approximately 75% of our revenues, and cemeteries, which account for approximately 25% of our revenues. Funeral homes are principally service businesses that provide funeral services (traditional burial and cremation) and sell related merchandise, such as caskets and urns. Cemeteries are primarily a sales business that sells interment rights (grave sites and mausoleum spaces) and related merchandise, such as markers and outer burial containers. As of June 30, 2013, we operated 166 funeral homes in 26 states and 33 cemeteries in 11 states within the United States. Substantially all administrative activities are conducted in our home office in Houston, Texas.

We have implemented a long-term strategy in our operations designed to improve operating and financial results by growing market share and increasing profitability. We have a decentralized, entrepreneurial and local operating model that includes operating and financial standards developed from our best operations, along with an incentive compensation plan to reward Managing Partners, the business manager, for successfully meeting or exceeding the standards. The model essentially eliminated the use of line-item financial budgets at the location level in favor of the standards. The operating model and its standards, which we refer to as the “Standards Operating Model,” focus on the key drivers of a successful operation, organized around three primary areas - market share, people and operating financial metrics. The model and standards are the measures by which we judge the success of each business. In 2012, we began a five year incentive plan, called “Good to Great,” which rewards the Managing Partners, with a bonus at the end of five years, equal to a ratio of 4 to 6 times their average annual bonus, if they are able to achieve an annual compound growth rate of 2% over a five year period. To date, the Standards Operating Model has driven significant changes in our organization, leadership and operating practices. Most importantly, the Standards Operating Model has allowed us to measure the sustainable revenue growth and earning power of our portfolio businesses. The Standards Operating Model led to the development of our Strategic Acquisition Model, described below under “Acquisitions,” which guides our acquisition and disposition strategy. We expect both models to drive long-term, sustainable increases in market share, revenue, earnings and cash flow. The standards are not designed to produce maximum short-term earnings because we do not believe such performance is sustainable without ultimately stressing the business, which often leads to declining market share, revenues and earnings. Important elements of the Standards Operating Model include:

- *Balanced Operating Model –* We believe a decentralized structure works best in the deathcare 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 –* We believe 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 Operating Model for that business.

#### Funeral and Cemetery Operations

Factors affecting our funeral operating results include: demographic trends relating to 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 selling complementary services and merchandise; controlling salary and merchandise costs; and exercising pricing leverage related to our at-need business to increase average revenue per contract. In simple terms, volume and price are the two variables that affect funeral revenues. The average revenue per contract is influenced by the mix of traditional burial and cremation services because our average cremation service revenue is approximately one-third of the average revenue earned from a traditional burial service. Funeral homes have a relatively fixed cost structure. Thus, small changes in revenues, up or down, normally cause significant changes to our profitability.

Our funeral volumes have increased from 24,510 in 2008 to 28,079 in 2012 (compounded annual increase of 3.5%). Our funeral operating revenue has increased from $124.1 million in 2008 to $144.8 million in 2012 (compounded annual increase of 3.9%). The increases are primarily because of businesses we acquired in the last five years and our ability to increase the average revenue per funeral through expanded service offerings and packages. We experienced an increase of 11.0% in

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volumes and 11.4% in funeral operating revenues in the first six months of 2013 compared to the first six months of 2012, primarily as a result of acquisitions completed during the trailing twelve months.

The percentage of funeral services involving cremations has increased from 38.2% for the year ended 2008 to 46.0% for the year ended 2012, and was 46.8% for the first six months of 2013. On a same store basis, the cremation rate has risen to 45.8% for the first six months of 2013, up from 44.5% for the year ended December 31, 2012, and 43.9% for the comparable six month period in 2012.

Cemetery operating results are affected by the size and success of our sales organization. Approximately 47% of our cemetery revenues for the year ended December 31, 2012 related to preneed sales of interment rights and the delivery of related merchandise and services. For the six months ended June 30, 2013, those preneed sales were approximately 49.4% of cemetery revenues. We believe that changes in the level of consumer confidence (a measure of whether consumers will spend for discretionary items) also affect the amount of our cemetery revenues. Currently, approximately 19% of our cemetery revenues are attributable to investment earnings on trust funds and finance charges on preneed installment contracts. Changes in the capital markets and interest rates affect this component of our cemetery revenues.

Our cemetery financial performance from 2008 through 2012 was characterized by fluctuating operating revenues yet increasing field level profit margins. Cemetery operating revenue increased from $38.0 million in 2008 to $38.3 million in 2012. Our goal is to build stronger teams of sales leaders and counselors in our larger and more strategically located cemeteries in order to focus on growth of our preneed property sales. Additionally, a portion of our capital expenditures in 2013 is designated to expand our cemetery product offerings.

#### Financial Revenue

We market funeral and cemetery services and products on a preneed basis. Preneed funeral or cemetery contracts enable families to establish, in advance, the type of service to be performed, the products to be used and the cost of such products and services. Preneed contracts permit families to eliminate issues of making death care plans at the time of need and allow input from other family members before the death occurs. We guarantee the price and performance of the preneed contracts to the customer.

Preneed funeral contracts are usually paid on an installment basis. The performance of preneed funeral contracts is usually secured by placing the funds collected in trust for the benefit of the customer or by the purchase of a life insurance policy, the proceeds of which will pay for such services at the time of need. Insurance policies, intended to fund preneed funeral contracts, cover the original contract price and generally include an element of growth (earnings) designed to offset future inflationary cost increases. Revenue from preneed funeral contracts, along with accumulated earnings, is not recognized until the time the funeral service is performed. The accumulated earnings from the trust investments and insurance policies are intended to offset the inflation in funeral prices. Additionally, we generally earn a commission from the insurance company from the sale of insurance-funded policies reflected as *Preneed Funeral Commission Income*. The commission income is recognized as revenue when the period of refund expires (generally one year), which helps us defray the costs we incur to originate the preneed contract (primarily commissions we pay to our sales counselors).

Preneed sales of cemetery interment rights are usually financed through interest-bearing installment sales contracts, generally with terms of up to five years with such earnings reflected as *Cemetery Finance Charges*. In substantially all cases, we receive an initial down payment at the time the contract is signed. Occasionally, we offer zero percent interest financing to promote sales as limited-time offers. In most states, regulations require a portion (generally 10%) of the sale amount of cemetery property and memorials to be placed in a perpetual care trust.

We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws. Such trusts include (i) preneed funeral trusts; (ii) preneed cemetery merchandise and service trusts; and (iii) perpetual care trusts. These trusts are typically administered by independent financial institutions selected by us. Investment management and advisory services are provided either by our wholly-owned registered investment advisor (CSV RIA) or independent financial advisors. As of June 30, 2013, CSV RIA provides these services to one institution, which has custody of 75% of our trust assets, for a fee based on the market value of trust assets. Under state trust laws, we are allowed to charge the trust a fee for advising on the investment of the trust assets and these fees are recognized as income as the advisory services are provided. The investment advisors establish an investment policy that gives guidance on asset allocation, investment requirements, investment manager selection and performance monitoring. The investment objectives are focused on generating long-term investment returns without assuming undue risk, while ensuring the management of assets is in compliance with applicable laws.

Preneed funeral trust fund income earned, along with the receipt and recognition of any insurance benefits, are deferred until the service is performed. Applicable state laws generally require us to deposit a specified amount (which varies from state

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to state, generally 50% to 100% of selling price) into a merchandise and service trust fund for preneed cemetery merchandise and service sales. The related trust fund income earned is recognized when the related merchandise and services are delivered. In most states, regulations require a portion (generally 10%) of the sale amount of cemetery property and memorials to be placed in a perpetual care trust. The income from perpetual care trusts provides a portion of the funds necessary to maintain cemetery property and memorials in perpetuity. Perpetual care trust fund income is recognized as earned in *Cemetery revenues.*

#### Acquisitions

Our growth strategy includes the execution of our Strategic Acquisition Model. We use six strategic ranking criteria to assess acquisition candidates and to differentiate the price we are willing to pay under a discounted cash flow methodology. Those criteria are:

- Size of business;
- Size of market;
- Competitive standing;
- Local market demographics;
- Strength of brand; and
- Barriers to entry.

In general terms, should a target business be acceptable per the criteria above, we will then determine the value of the target using a discounted cash flow methodology. During 2012, we acquired seven funeral home businesses and one cemetery business. The consideration paid for the 2012 acquisitions was $42.7 million. We did not acquire any businesses during the first six months of 2013.

#### Financial Highlights

Net income from continuing operations for the three months ended June 30, 2013 totaled $3.6 million, equal to $0.20 per diluted share, compared to net income for the three months ended June 30, 2012, which totaled $2.5 million, equal to $0.14 per diluted share. Net income from continuing operations for the six months ended June 30, 2013 totaled $9.0 million, equal to $0.46 per diluted share, compared to $6.4 million for the six months ended June 30, 2012, or $0.35 per diluted share. Total revenue for the three and six months ended June 30, 2013 was $54.2 million and $111.6 million, respectively, an increase of 11.3% and 12.3%, respectively, compared to $48.7 million and $99.4 million, respectively, for the comparable periods in 2012. Our funeral segment experienced increases in revenue and gross profit during the three and six month periods ended June 30, 2013 primarily as a result of our 2012 acquisitions and increased number of contracts from our existing locations. The cemetery segment experienced increases in revenue during the three and six month periods ended June 30, 2013 due to higher preneed property sales, increased volume of at-need contracts and higher trust fund earnings. Gross profit in these segments was higher for the three and six months ended June 30, 2013 primarily as a result of higher revenue as compared to the same period in 2012. We experienced increases in general and administrative expenses due to severance costs, increases in incentive compensation and increases in salaries and benefits for additional support staff at the corporate office.

We also present our financial performance in our "Operating and Financial Metrics Trend Report" ("Trend Report") as reported in our earnings release and discussed on our earnings call for the quarter ending June 30, 2013. This Trend Report is used as a supplemental financial measurement statement by management and investors to compare our current financial performance with our previous results and with the performance of other deathcare companies. The Trend Report is a Non-GAAP statement from continuing operations that also provides insight into underlying trends in our business. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP.

The Non-GAAP financial measures in the Trend Report include “Adjusted Net Income,” “Adjusted Basic Earnings Per Share,” “Adjusted Diluted Earnings Per Share,” “Consolidated EBITDA,” “Adjusted Consolidated EBITDA,” “Free Cash Flow,” “Funeral, Cemetery and Financial EBITDA,” “Total Field EBITDA” and “Special Items.” These financial measurements are defined as similar GAAP items adjusted for Special Items and are reconciled to GAAP in our earnings release and on the Trend Reports posted on our website (www.carriageservices.com). In addition, our presentation of these measures may not be comparable to similarly titled measures in other companies' reports. We are providing below a reconciliation after tax of net income from continuing operations (a GAAP measure) to Non-GAAP net income (a non-GAAP measure). Non-GAAP net income is defined as net income from continuing operations adjusted for Special Items, including Withdrawable trust income, acquisition expenses, severance costs and other items in the table below. The adjustment of Special Items in Non-GAAP income allows management to focus on the evaluation of operating performance as it primarily relates to our operating expenses.

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In certain states, we are allowed to withdraw realized trust earnings prior to delivery from cemetery merchandise and services trusts, which management describes as “Withdrawable trust income.” The Withdrawable trust income, pre-tax, totaled $0.1 million and $0.8 million for the three and six month periods ended June 30, 2012, respectively, and $0.2 million and $0.7 million for the three and six month periods ended June 30, 2013. While the Withdrawable trust income is not recognized as revenue in our Consolidated Statements of Operations, it increases cash flow from operations. The Withdrawable trust income is treated as a special item in our Non-GAAP net income calculation.

*(In millions)*

|  | Three Months Ended June 30, 2012 | 2013 | Six Months Ended June 30, 2012 | 2013 |
| --- | ---: | ---: | ---: | ---: |
| Net income from continuing operations, as reported | $2.5 | $3.6 | $6.4 | $9.0 |
| After-tax special items: |  |  |  |  |
| Withdrawable trust income | — | 0.1 | 0.5 | 0.5 |
| Acquisition expenses | 0.2 | 0.1 | 0.4 | 0.1 |
| Severance costs | — | 0.3 | 0.3 | 0.5 |
| Costs related to credit facility | — | 0.3 | — | 0.3 |
| Other special items | — | 0.2 | 0.1 | 0.2 |
| Non-GAAP net income | $2.7 | $4.6 | $7.7 | $10.6 |

### OVERVIEW OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate estimates and judgments, including those related to revenue recognition, realization of accounts receivable, inventories, goodwill, other intangible assets, property and equipment and deferred tax assets. We base our estimates on historical experience, third party data and assumptions that we believe to be reasonable under the circumstances. The results of these considerations form the basis for making judgments about the amount and timing of revenues and expenses, the carrying value of assets and the recorded amounts of liabilities. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Historical performance should not be viewed as indicative of future performance because there can be no assurance that our results of operations will be consistent from year to year.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is based upon our Consolidated Financial Statements presented herewith, which have been prepared in accordance with accounting principles generally accepted in the United States. Our significant accounting policies are more fully described in Note 1 to our Consolidated Financial Statements included in this Form 10-Q. Our critical accounting policies are those that are both important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgment. These critical accounting policies are discussed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2012. There have been no significant changes to our critical accounting policies since the filing of our Annual Report on Form 10-K for the year ended December 31, 2012.

### RESULTS OF OPERATIONS

The following is a discussion of our results of continuing operations for the three and six month periods ended June 30, 2012 and 2013. The term “same store” or “existing operations” refers to funeral homes and cemeteries acquired prior to January 1, 2008 and owned and operated for the entirety of each period being presented. Funeral homes and cemeteries purchased after December 31, 2007 are referred to as “acquired.” This classification of acquisitions has been important to management and investors in monitoring the results of these businesses and to gauge the leveraging performance contribution that a selective acquisition program can have on total company performance. Depreciation and amortization and regional and unallocated funeral and cemetery costs are not included in operating profit.

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*Funeral Home Segment.* The following tables set forth certain information regarding the revenues and operating profit from the funeral home operations for the three months ended June 30, 2012 compared to the three months ended June 30, 2013.

#### Three months ended June 30, 2012 compared to three months ended June 30, 2013 (dollars in thousands):

| Revenues: | Three Months Ended June 30, 2012 | 2013 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Same store operating revenue | $28,867 | $29,369 | $502 | 1.7% |
| Acquired operating revenue | 5,930 | 8,694 | 2,764 | 46.6% |
| Preneed funeral insurance commissions | 450 | 481 | 31 | 6.9% |
| Preneed funeral trust earnings | 1,364 | 2,235 | 871 | 63.9% |
| Total | $36,611 | $40,779 | $4,168 | 11.4% |
| Operating profit: |  |  |  |  |
| Same store operating profit | $10,322 | $11,276 | $954 | 9.2% |
| Acquired operating profit | 1,776 | 2,549 | 773 | 43.5% |
| Preneed funeral insurance commissions | 101 | 162 | 61 | 60.4% |
| Preneed funeral trust earnings | 1,364 | 2,221 | 857 | 62.8% |
| Total | $13,563 | $16,208 | $2,645 | 19.5% |

Funeral home same store operating revenues for the three months ended June 30, 2013 increased $0.5 million, or 1.7%, when compared to the three months ended June 30, 2012, as we experienced a 3.1% increase in the number of contracts, while the average revenue per contract decreased 1.1%, or $64 per contract, to $5,512 for those existing operations. The average revenue per contract includes the impact of the funeral trust fund earnings recognized at the time that we provide the services pursuant to the preneed contract. Excluding funeral trust earnings, the average revenue per contract decreased 1.3% to $5,271. The number of traditional burial contracts remained flat while the average revenue per burial contract increased slightly to $8,324. The cremation rate for the same store businesses increased from 43.2% to 46.2%. The average revenue per same store cremation contract decreased 2.0% to $3,059 and the number of cremation contracts increased 10.1%. Cremations with services declined from 35.3% of total cremation contracts in the second quarter of 2012 to 33.2% in the second quarter of 2013. The average revenue for “other” contracts, which are charges for merchandise or services for which we do not perform a funeral service and which make up approximately 6.6% of the total number of contracts, increased 18.9% to $2,572.

Same store operating profit for the three months ended June 30, 2013 increased $1.0 million, or 9.2%, from the comparable three months of 2012, and as a percentage of funeral same store operating revenue, increased to 38.4% from 35.8%. The increase in profit is primarily the result of the increase in revenue and better merchandise gross profit margins while keeping most other funeral costs flat.

Funeral home acquired revenues for the three months ended June 30, 2013 increased $2.8 million, or 46.6%, when compared to the three months ended June 30, 2012, as we experienced a 31.1% increase in the number of contracts, and an increase of 12.3%, to $5,130, in the average revenue per contract for those acquired operations. Excluding funeral trust earnings, the average revenue per contract increased 11.8% to $5,035. The number of traditional burial contracts increased 37.7% and the average revenue per burial contract increased 10.7% to $8,059. The cremation rate for the acquired businesses was 50.8% for the second quarter of 2013, down 80 basis points from the prior-year period. The average revenue per cremation contract increased 7.9% to $3,145 for the second quarter of 2013 and the number of cremation contracts increased 29.0% compared to the same period of 2012. The reason for the large increase in the average revenue per contract for acquired operations and the decline in the cremation rate is because the businesses acquired during 2012 serve primarily traditional burial families.

Acquired operating profit for the three months ended June 30, 2013 increased $0.8 million from the comparable three months of 2012 and, as a percentage of revenue from acquired businesses, was 29.3% for the second quarter of 2013 compared to 29.9% for the second quarter of 2012. As these acquired businesses transition into our Standards Operating Model, we expect to see operating profit margins rise toward those on a same store basis.

The two categories of financial revenue (insurance commissions and trust earnings on matured preneed contracts) on a combined basis increased 49.7% in revenue and 62.7% in operating profit as compared to the three months ended June 30,

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2012 as a result of higher earnings on trust contracts. Trust earnings also include trust management fees charged by our wholly-owned registered investment advisor based on the fair market value of the trust assets.

#### Six months ended June 30, 2012 compared to six months ended June 30, 2013 (dollars in thousands):

| Revenues: | Six Months Ended June 30, 2012 | 2013 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Same store operating revenue | $60,383 | $62,540 | $2,157 | 3.6% |
| Acquired operating revenue | 12,324 | 18,448 | 6,124 | 49.7% |
| Preneed funeral insurance commissions | 901 | 989 | 88 | 9.8% |
| Preneed funeral trust earnings | 3,037 | 3,960 | 923 | 30.4% |
| Total | $76,645 | $85,937 | $9,292 | 12.1% |
| Operating profit: |  |  |  |  |
| Same store operating profit | $23,154 | $24,825 | $1,671 | 7.2% |
| Acquired operating profit | 4,246 | 5,914 | 1,668 | 39.3% |
| Preneed funeral insurance commissions | 201 | 272 | 71 | 35.3% |
| Preneed funeral trust earnings | 3,037 | 3,931 | 894 | 29.4% |
| Total | $30,638 | $34,942 | $4,304 | 14.0% |

Funeral home same store operating revenues for the six months ended June 30, 2013 increased $2.2 million, or 3.6%, when compared to the six months ended June 30, 2012, as we experienced a 5.1% increase in the number of contracts, while the average revenue per contract decreased 1.7%, or $93 per contract, to $5,491 for those existing operations. The average revenue per contract includes the impact of the funeral trust fund earnings recognized at the time that we provide the services pursuant to the preneed contract. Excluding funeral trust earnings, the average revenue per contract decreased 1.4% to $5,254. The number of traditional burial contracts increased 2.7% while the average revenue per burial contract decreased 0.6% to $8,300. The cremation rate for the same store businesses increased from 43.9% to 45.8%. The average revenue per same store cremation contract decreased 2.4% to $3,054, and the number of cremation contracts increased 9.8%. Cremations with services declined from 36.1% of total cremation contracts in the six months ended June 30, 2012 to 33.5% in the six months ended June 30, 2013. The average revenue for “other” contracts, which are charges for merchandise or services for which we do not perform a funeral service and which make up approximately 6.8% of the total number of contracts, increased 10.6% to $2,336.

Same store operating profit for the six months ended June 30, 2013 increased $1.7 million, or 7.2%, from the comparable period of 2012, and as a percentage of funeral same store operating revenue, increased to 39.7% from 38.3%. The increase in operating profit is primarily the result of the increase in revenue, offset in part, by increases in salaries and benefits and increases in insurance fees and property taxes.

Funeral home acquired revenues for the six months ended June 30, 2013 increased $6.1 million, or 49.7%, when compared to the six months ended June 30, 2012, as we experienced a 35.5% increase in the number of contracts, and an increase of 10.8%, to $5,072, in the average revenue per contract for those acquired operations. Excluding funeral trust earnings, the average revenue per contract increased 10.4% to $4,983. The number of traditional burial contracts increased 52.4% and the average revenue per burial contract increased 6.6% to $7,843. The cremation rate for the acquired businesses was 49.9% for the six months ended June 30, 2013, down 270 basis points from the prior-year period. The average revenue per cremation contract increased 2.9% to $3,098 for the six months ended June 30, 2013, and the number of cremation contracts increased 28.6%, compared to the same period of 2012. The reason for the large increase in the average revenue per contract for acquired operations and the significant decline in the cremation rate is because the businesses acquired during 2012 serve primarily traditional burial families.

Acquired operating profit for the six months ended June 30, 2013 increased $1.7 million, or 39.3%, from the comparable six months of 2012 and, as a percentage of revenue from acquired businesses, was 32.1% for the six months ended June 30, 2013 compared to 34.5% for the six months ended June 30, 2012. As these acquired businesses transition into our Standards Operating Model, we expect to see operating profit margins rise toward those on a same store basis.

The two categories of financial revenue (insurance commissions and trust earnings on matured preneed contracts) on a combined basis increased 25.7% in revenue and 29.8% in operating profit as compared to the six months ended June 30, 2012

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as a result of higher earnings on trust contracts. Trust earnings also include trust management fees charged by our wholly-owned registered investment advisor based on the fair market value of the trust assets.

*Cemetery Segment.* The following tables set forth certain information regarding the revenues and operating profit from the cemetery operations for the three months ended June 30, 2012 compared to the three months ended June 30, 2013.

#### Three months ended June 30, 2012 compared to three months ended June 30, 2013 (dollars in thousands):

| Revenues: | Three Months Ended June 30, 2012 | 2013 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Same store operating revenue | $9,978 | $10,826 | $848 | 8.5% |
| Acquired operating revenue | — | 74 | 74 | n/a |
| Cemetery trust earnings | 1,626 | 2,087 | 461 | 28.4% |
| Preneed cemetery finance charges | 462 | 388 | (74) | (16.0)% |
| Total | $12,066 | $13,375 | $1,309 | 10.8% |
| Operating profit: |  |  |  |  |
| Same store operating profit | $2,705 | $3,328 | $623 | 23.0% |
| Acquired operating loss | (9) | (19) | (10) | n/a |
| Cemetery trust earnings | 1,626 | 2,041 | 415 | 25.5% |
| Preneed cemetery finance charges | 462 | 388 | (74) | (16.0)% |
| Total | $4,784 | $5,738 | $954 | 19.9% |

Cemetery same store operating revenues for the three months ended June 30, 2013 increased $0.8 million, or 8.5%, compared to the three months ended June 30, 2012. The increase in operating revenue was primarily attributable to preneed property sales which increased $1.0 million, or 21.9%. We experienced a 29.1% increase in the number of interment rights (property) sold, yet a 7.0% decrease in the average price per interment compared to the second quarter of 2012. The percentage of those interment rights sold that we were able to recognize as revenue, because we received at least 10% of the sales price from the customer, increased from 91.4% to 94.3%. Same store at-need revenue increased $0.1 million, or 3.2%, as at-need contracts increased 1.6% while revenue from deliveries of preneed merchandise and services declined $0.2 million, or 14.7%.

Cemetery same store operating profit for the three months ended June 30, 2013 increased $0.6 million, or 23.0%. As a percentage of revenues, cemetery same store operating profit increased from 27.1% to 30.7%. The increase in operating profit is primarily a result of the increase in revenue and lower bad debt expense.

We acquired one cemetery in the second quarter of 2012 which primarily operates as an at-need business. This is the only cemetery business in this category.

The two categories of financial revenue consist of trust earnings and finance charges on preneed receivables. Total trust earnings for the three months ended June 30, 2013 increased 28.4%, when compared to the three months ended June 30, 2012. Earnings from perpetual care trust funds totaled $1.6 million for the three months ended June 30, 2013 compared to $1.3 million for the three months ended June 30, 2012, an increase of $0.3 million, or 19.5%. Trust earnings recognized upon the delivery of merchandise and service contracts decreased 5.8% from the same period in 2012. Trust earnings also include trust management fees charged by the company’s wholly-owned registered investment advisor based on the fair market value of the trust assets. Finance charges on the preneed contracts decreased 16.0% due primarily to a decrease in the average interest rate for new contracts.

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#### Six months ended June 30, 2012 compared to six months ended June 30, 2013 (dollars in thousands):

| Revenues: | Six Months Ended June 30, 2012 | 2013 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Same store operating revenue | $18,948 | $20,516 | $1,568 | 8.3% |
| Acquired operating revenue | — | 143 | 143 | n/a |
| Cemetery trust earnings | 2,946 | 4,281 | 1,335 | 45.3% |
| Preneed cemetery finance charges | 820 | 698 | (122) | (14.9)% |
| Total | $22,714 | $25,638 | $2,924 | 12.9% |
| Operating profit: |  |  |  |  |
| Same store operating profit | $4,879 | $6,347 | $1,468 | 30.1% |
| Acquired operating loss | (9) | (45) | (36) | n/a |
| Cemetery trust earnings | 2,946 | 4,186 | 1,240 | 42.1% |
| Preneed cemetery finance charges | 820 | 698 | (122) | (14.9)% |
| Total | $8,636 | $11,186 | $2,550 | 29.5% |

Cemetery same store operating revenues for the six months ended June 30, 2013 increased $1.6 million, or 8.3%, compared to the six months ended June 30, 2012. The increase in operating revenue was primarily attributable to preneed property sales which increased $1.4 million, or 15.9%. We experienced a 12.6% increase in the number of interment rights (property) sold and a 1.5% increase in the average price per interment compared to the six months ended June 30, 2012. The percentage of those interment rights sold that we were able to recognize as revenue, because we received at least 10% of the sales price from the customer, increased from 92.0% to 93.3%. Same store at-need revenue increased $0.6 million, or 7.9%, as at-need contracts increased 3.9% while revenue from deliveries of preneed merchandise and services declined $0.2 million, or 9.0%.

Cemetery same store operating profit for the six months ended June 30, 2013 increased $1.5 million, or 30.1%. As a percentage of revenues, cemetery same store operating profit increased from 25.7% to 30.9%. The increase in operating profit is primarily a result of the increase in revenue and lower bad debt expense.

We acquired one cemetery in the second quarter of 2012 which primarily operates as an at-need business. This is the only cemetery business in this category.

The two categories of financial revenue consist of trust earnings and finance charges on preneed receivables. Total trust earnings for the six months ended June 30, 2013 increased 45.3%, when compared to the six months ended June 30, 2012. Earnings from perpetual care trust funds totaled approximately $3.2 million for the six months ended June 30, 2013, compared to $2.3 million for the six months ended June 30, 2012, an increase of $0.9 million, or 35.9%. Trust earnings recognized upon the delivery of merchandise and service contracts increased 8.9% from the same period in 2012. Trust earnings also include trust management fees charged by the company’s wholly-owned registered investment advisor based on the fair market value of the trust assets. Finance charges on the preneed contracts decreased 14.9% due primarily to a decrease in the average interest rate for new contracts.

*General and Administrative.* General and administrative expenses totaled $7.1 million for the three months ended June 30, 2013, an increase of $2.2 million, or 45.9%, compared to the three months ended June 30, 2012, primarily due to $1.1 million of additional costs for upgrading our organizational overhead structure and talent in our corporate office, termination and consulting costs of approximately $0.8 million which were not incurred in the prior year period and an increase in stock-based compensation expense of approximately $0.2 million. General and administrative expenses totaled $13.4 million for the six months ended June 30, 2013, an increase of $3.3 million, or 32.3%, compared to the six months ended June 30, 2012, primarily due to $2.3 million of additional costs for upgrading our organizational overhead structure and talent in our corporate office, an increase in incentive and stock-based compensation costs of approximately $0.7 million and termination and consulting costs of approximately $0.5 million that were not incurred in the prior year period, offset in part, by a decrease in acquisition related expenses of $0.5 million that were incurred in the prior year period.

*Interest Expense, Net of Other Income.* Interest expense, net of other income was $4.5 million and $3.7 million for the three months ended June 30, 2012 and 2013, respectively, and $9.1 million and $6.3 million for the six months ended June 30, 2012 and 2013, respectively. These decreases were due to lower interest rates on our Credit Facility.

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*Income Taxes.* We recorded income taxes at the estimated effective rate of 39.7% for the year ended December 31, 2012 and 38.0% for the first six months of 2013 before discrete items. Discrete items added an additional $0.6 million or 3.8% of our pre-tax book income from continuing operations for the six months ended June 30, 2013 for a total stated rate of 41.8%. These discrete items are prior period adjustments primarily related to balance sheet adjustments in deferred taxes and valuation allowances. We have approximately $40.2 million of state net operating loss carry forwards that will expire between 2014 and 2033, if not utilized. Based on management's assessment of the various state net operating losses, it has been determined that it is more likely than not that we will not be able to realize the tax benefits of certain portions of the state losses. Accordingly, a valuation allowance has been established and is reviewed every quarter related to the deferred tax asset for the state operating losses. At June 30, 2013, the valuation allowance totaled $0.3 million.

### LIQUIDITY AND CAPITAL RESOURCES

#### Overview

Our primary sources of liquidity and capital resources are internally generated cash flows from operating activities and availability under our Credit Facility (as defined below). We generate cash in our operations primarily from at-need sales and delivery of preneed sales. We also generate cash from earnings on our cemetery perpetual care trusts. We believe that existing cash balances, future cash flows from operations and borrowings under our Credit Facility (as defined below) will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments, dividend payments and acquisitions for the foreseeable future. Based on our recent operating results, current cash position, anticipated future cash flows and sources of financing that we expect to have available, we do not anticipate any significant liquidity constraints in the foreseeable future. However, if our capital expenditures or acquisition plans for 2013 change, we may need to access the capital markets to obtain additional funding. Further, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected. Please read Part I, Item IA “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012.

#### Cash Flows

We began 2013 with $1.7 million in cash and other liquid investments and ended the second quarter with $1.5 million in cash and $34.6 million drawn on our revolving credit facility.

The following table sets forth the elements of cash flow for the six months ended June 30, 2012 and June 30, 2013 (in millions):

|  | Six Months Ended June 30, 2012 | 2013 |
| --- | ---: | ---: |
| Cash at January 1st | $1.1 | $1.7 |
| Cash flow from operating activities | 13.4 | 24.0 |
| Acquisitions and new construction | (16.7) | (6.0) |
| Proceeds from the sale of businesses | — | 2.7 |
| Borrowings (payments) on our Credit Facility | 14.2 | (15.1) |
| Maintenance capital expenditures | (2.3) | (3.0) |
| Dividends on common stock | (0.9) | (0.9) |
| Repurchase of common stock | (4.5) | — |
| Growth capital expenditures | (3.4) | (1.5) |
| Other financing costs | 0.1 | (0.4) |
| Cash at June 30th | $1.0 | $1.5 |

For the six months ended June 30, 2013 cash provided by operating activities was $24.0 million as compared to $13.4 million for the six months ended June 30, 2012. The increase was due to an increase in revenue and cash earned on delivered contracts.

Our investing activities resulted in a net cash outflow of $7.8 million for the six months ended June 30, 2013 compared to a net cash outflow of $22.4 million for the six months ended June 30, 2012. The decrease in cash outflows from investing activities was due to payments for acquisitions of approximately $16.7 million that occurred in the six months ended June 30, 2012. We did not have any acquisitions in the comparable period of 2013. We acquired land for approximately $0.3 million and $6.0 million during the first six months of 2012 and 2013, respectively, for funeral home expansion projects.

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For the six months ended June 30, 2013, capital expenditures totaled $4.5 million compared to $5.7 million for the six months ended June 30, 2012.

Our financing activities resulted in net cash outflow of $16.4 million for the six months ended June 30, 2013 compared to a net cash inflow of $8.9 million for the six months ended June 30, 2012. The decrease in cash flows from financing activities is primarily due to scheduled payments under our Credit Facility during the first six months of 2013. During the six months ended June 30, 2013, we repaid $15.1 million under the Credit Facility whereas we borrowed $14.2 million under our Credit Facility in the six months ended June 30, 2012. The cash flows from financing activities during the first six months of 2012 was partially offset by the purchase of $4.5 million in treasury stock, which did not occur during the first six months of 2013.

#### Dividends

Our Board declared a quarterly dividend of $0.025 per share, totaling $454,000, which was paid on June 3, 2013 to record holders of our common stock as of May 16, 2013. For the six months ending June 30, 2013, we had paid approximately $906,000 in dividends. We have a dividend reinvestment program so that stockholders may elect to reinvest their dividends into additional shares of our common stock.

#### Debt Obligations

As of June 30, 2013, we had a $255 million Credit Facility with Bank of America, N.A. as the Administrative Agent comprised of a $125 million revolving credit facility and a $130 million term loan. The Credit Facility also contains an accordion provision to borrow up to an additional $40 million in revolving loans, subject to certain conditions. The Credit Facility is set to mature on September 30, 2017 and is collateralized by all personal property and funeral home real property in certain states. As of June 30, 2013, $34.6 million was drawn under the revolving credit facility and $122.5 million was outstanding under the term loan. No letters of credit were issued and outstanding under the Credit Facility at June 30, 2013. Under the Credit Facility, outstanding borrowings bear interest at either a prime rate or a LIBOR rate, plus an applicable margin based upon the Company's leverage ratio. At June 30, 2013, the prime rate margin was equivalent to 2.00% and the LIBOR margin was 3.00%. The weighted average interest rate on the Credit Facility for the three and six months ended June 30, 2013 was approximately 3.3% and 3.5%, respectively.

On April 24, 2013, the Company entered into the Third Amendment, which increased the revolving credit commitments under the Credit Facility from $105 million to $125 million and decreased the interest rate margin. The Third Amendment decreases the applicable margin for the Company's outstanding borrowings (for both prime rate and LIBOR base rates) by 50 basis points at each leverage ratio threshold. During the second quarter of 2013, in connection with this Third Amendment, we recorded a pretax charge of approximately $0.4 million to write-off the unamortized loan costs.

The Third Amendment also contains amendments which (a) allow the Company to issue subordinated debt or convertible subordinated debt in an amount not to exceed $100 million, (b) provide the Company with the ability to repurchase up to $15 million worth of stock-based employee awards, and (c) allow for the Company to refinance its existing convertible junior subordinated debentures with the proceeds of certain issuances of subordinated debt or convertible subordinated debt.

The outstanding principal of long-term debt and capital lease obligations at June 30, 2013 totaled $163.3 million and consisted of $122.5 million under our term loan, $34.6 million outstanding under our revolving credit facility and $6.2 million in acquisition indebtedness and capital lease obligations.

A total of $89.8 million was outstanding at June 30, 2013 under the convertible junior subordinated debentures. Amounts outstanding under the debentures are payable to our affiliate trust, Carriage Services Capital Trust (the “Trust”), bear interest at 7.0% and mature in 2029. Substantially all the assets of the Trust consist of the convertible junior subordinated debentures. In 1999, the Trust issued 1.875 million shares of 7% convertible preferred securities, termed “TIDES.” The rights under the debentures are functionally equivalent to those of the TIDES.

The convertible junior subordinated debentures payable to the affiliated Trust, and the TIDES, each contain a provision for the deferral of interest payments and distributions for up to 20 consecutive quarters. During any period in which distribution payments are deferred, distributions will continue to accumulate at the 7% annual rate. Also, the deferred distributions themselves accumulate distributions at the annual rate of 7%. During any deferral period, we are prohibited from paying dividends on common stock or repurchasing common stock, subject to limited exceptions. We currently expect to continue paying the distributions as due.

We were in compliance with the covenants contained in the Credit Facility as of June 30, 2013. Key ratios that we must comply with include a Total Debt to EBITDA ratio that as of the last day of each quarter must not be greater than 3.75 to 1.00 through June 30, 2014 and no more than 3.50 to 1.00 thereafter and a fixed charge coverage ratio that must not be less than 1.20 to 1.00. As of June 30, 2013, the leverage ratio was 2.77 to 1.00 and the fixed charge coverage ratio was 2.28 to 1.00. The

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leverage ratio decline to below 3.00 to 1.00 at June 30, 2013 automatically triggered a 50 basis point rate on all our outstanding senior debt.

In May 2012, our Board approved an increase to the share repurchase program authorizing the Company to purchase an additional $3.0 million of our common stock up to an aggregate of $8.0 million. As of June 30, 2013, we have spent a total of $5.3 million buying back our common stock under this plan. There were no repurchases under this plan in the six months ended June 30, 2013.

We intend to use cash on hand and borrowing under our Credit Facility primarily to acquire funeral home and cemetery businesses and for internal growth projects, such as cemetery inventory development and funeral home expansion projects. We have the ability to draw on our revolving credit facility, subject to customary terms and conditions of the credit agreement. We believe that existing cash balances, future cash flows from operations and the borrowing under our Credit Facility described above will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments, dividends and acquisitions for the foreseeable future.

### SEASONALITY

Our business can be affected by seasonal fluctuations in the death rate. Generally, the death rate is higher during the winter months because the incidences of death from influenza and pneumonia are higher during this period than other periods of the year.

## Market risk

As filed, 4,079 characters.

In the ordinary course of business, we are typically exposed to a variety of market risks. Currently, these are primarily related to interest rate risk and changes in the values of securities associated with the preneed and perpetual care trusts. Management is actively involved in monitoring exposure to market risk and developing and utilizing appropriate risk management techniques when appropriate and when available for a reasonable price. We are not exposed to any other significant market risks.

The following quantitative and qualitative information is provided about financial instruments to which we are a party at June 30, 2013 and from which we may incur future gains or losses from changes in market conditions. We do not enter into derivative or other financial instruments for speculative or trading purposes.

Hypothetical changes in interest rates and the values of securities associated with the preneed and perpetual care trusts chosen for the following estimated sensitivity analysis are considered to be reasonable near-term changes generally based on consideration of past fluctuations for each risk category. However, since it is not possible to accurately predict future changes in interest rates, these hypothetical changes may not necessarily be an indicator of probable future fluctuations.

The following information about our market-sensitive financial instruments constitutes a “forward-looking statement.”

In connection with our preneed funeral operations and preneed cemetery merchandise and service sales, the related funeral and cemetery trust funds own investments in equity and debt securities and mutual funds, which are sensitive to current market prices. Cost and market values of such investments as of June 30, 2013 are presented in Item I, Notes to the Consolidated Financial Statements, Notes 6, 8 and 10 to our Consolidated Financial Statements in this Form 10-Q. See also Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. The sensitivity of the fixed income securities is such that a 0.25% change in interest rates causes an approximate 1.49% change in the value of the fixed income securities.

We monitor current and forecasted interest rate risk in the ordinary course of business and seek to maintain optimal financial flexibility, quality and solvency. As of June 30, 2013, we had $34.6 million outstanding under our $125 million revolving credit facility and $122.5 million outstanding on our term loan. Any further borrowings or voluntary prepayments against the revolving credit facility or any change in the floating rate would cause a change in interest expense. We have the option to pay interest under the Credit Facility at either prime rate or LIBOR rate plus a margin. At June 30, 2013, the prime rate margin was equivalent to 2.00% and the LIBOR margin was 3.00%. Assuming the outstanding balance remains unchanged, a change of 100 basis points in our borrowing rate would result in a change in income before taxes of $1.6 million. We have not entered into interest rate hedging arrangements in the past. Management continually evaluates the cost and potential benefits of interest rate hedging arrangements.

The convertible junior subordinated debentures, payable to the Trust, pay interest at the fixed rate of 7% and are carried on our Consolidated Balance Sheet at a cost of approximately $89.8 million. The estimated fair value of these securities is

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estimated to be approximately $88.0 million at June 30, 2013, based on available broker quotes of the corresponding preferred securities issued by the Trust.

Increases in market interest rates may cause the value of these debt instruments to decrease but such changes will not affect our interest costs. The remainder of our long-term debt and leases consist of non-interest bearing notes and fixed rate instruments that do not trade in a market and do not have a quoted market value. Any increase in market interest rates causes the fair value of those liabilities to decrease.

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## Controls and procedures

As filed, 1,485 characters.

### Management’s Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive and financial officers, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that such information is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that our disclosure controls and procedures were effective as of June 30, 2013 (the end of the period covered by this Form 10-Q) at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

During the six months ended June 30, 2013, there was no change in our system of internal control over financial reporting (defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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## Risk factors

As filed, 748 characters.

There have been no material changes in our risk factors as previously disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2012. Readers should carefully consider the factors discussed in Part 1, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2012 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Filed Aug 8, 2013.
Source: SEC EDGAR, the filing index for accession 0001016281-13-000089. Last ingested by Listed: Nov 5, 2026, 19:16 ET. No prices; not investment advice.