UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K
-------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 28, 1997
CARRIAGE SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-11961 76-0423828
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
1300 POST OAK BLVD., SUITE 1500, HOUSTON, TX 77056
(Address of principal executive offices) (Zip Code)
(281) 556-7400
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 28, 1997, Carriage Services, Inc. (the "Company"), through a wholly
owned subsidiary, completed its merger with Barnett-Larkin-Brown Funeral Homes,
Inc. Barnett-Larkin-Brown Funeral Homes, Inc. operates two funeral homes in
Leavenworth, Kansas. The consideration for the merger was 100,000 shares of the
Company's Class A Common Stock which was determined through negotiations between
the Company and representatives of Barnett-Larkin-Brown Funeral Homes, Inc. In
connection with this merger, the Company entered into customary employment,
consulting and non-compete agreements with certain key employees and former
owners of Barnett-Larkin-Brown Funeral Homes, Inc. The merger was accounted for
under the purchase method of accounting for financial reporting purposes.
The Company is not aware of any pre-existing material relationships between
(i) Barnett-Larkin-Brown Funeral Homes, Inc. or any if its shareholders, on the
one hand, and (ii) the Company, any of the Company's affiliates, directors and
officers or any associate of such directors and officers, on the other.
The Company also completed the merger or acquisition of several other
businesses (the "Other Acquisitions") since January 1, 1997. None of the Other
Acquisitions (other than the ones filed on Form 8-K) is believed to be material
to the results of operations or financial position of the Company. However, the
merger with Barnett-Larkin-Brown Funeral Homes, Inc. requires the filing of
financial statements and pro forma financial information pursuant to Rules
3-05(b)(1)(i) and 11-01(c) of Regulation S-X since such business constitutes a
"significant subsidiary" under such Rules.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED
Due to the fact that Barnett-Larkin-Brown Funeral Homes, Inc. was owned
by and accounted for as a part of 21st Century Funeral Company L.C.
during the time April 1, 1995 through October 31, 1996, the audited
financial statements include financial statements of
Barnett-Larkin-Brown Division of 21st Century Funeral Company L.C. as
of and for the periods ended December 31, 1995 and October 31, 1996.
<TABLE>
<CAPTION>
BARNETT-LARKIN-BROWN DIVISION OF 21ST CENTURY FUNERAL COMPANY,
L.C. AND BARNETT-LARKIN-BROWN FUNERAL HOMES, INC. PAGE
<S> <C>
Auditor's Report................................................................ 10
Balance Sheets as of December 31, 1995, October 31, 1996, December 31, 1996
and March 31, 1997............................................................. 11
Statements of Income for the Periods Ended December 31, 1995, October 31, 1996,
December 31, 1996 and March 31, 1997........................................... 13
Statements of Cash Flows for the Periods Ended December 31, 1995, October 31,
1996, December 31, 1996 and March 31, 1997..................................... 14
Notes to Financial Statements................................................... 15
2
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION
As of the date the event occurred, the Registrant was not required to
file an interim consolidated balance sheet pursuant to Regulation S-X.
Likewise, a Pro forma statement of operations associated with an
interim period is not provided herein.
CARRIAGE SERVICES, INC. PAGE
Unaudited Pro Forma Consolidated Balance Sheet - December 31, 1996.............. 6
Unaudited Pro Forma Consolidated Statement of Operations - Year Ended December
31, 1996........................................................................... 7
Notes to Unaudited Pro Forma Consolidated Financial Statements...................... 8
</TABLE>
(C) EXHIBITS
None
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CARRIAGE SERVICES, INC.
Dated: March 20, 1998 By: /s/ THOMAS C. LIVENGOOD
-----------------------
Thomas C. Livengood
Executive Vice President and
Chief Financial Officer
4
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On March 28, 1997, Carriage Services, Inc. (the "Company"), through a wholly
owned subsidiary, completed its merger with Barnett-Larkin-Brown Funeral Homes,
Inc. Barnett-Larkin-Brown Funeral Homes, Inc. operates two funeral homes in
Leavenworth, Kansas. The consideration for the merger was 100,000 shares of the
Company's Class A Common Stock which was determined through negotiations between
the Company and representatives of Barnett-Larkin-Brown Funeral Homes, Inc. In
connection with this merger, the Company entered into customary employment,
consulting and non-compete agreements with certain key employees and former
owners of Barnett-Larkin-Brown Funeral Homes, Inc. The merger will be accounted
for under the purchase method of accounting for financial reporting purposes.
The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1996 includes the accounts of the Company and Barnett-Larkin-Brown
and reflects the merger as if such merger had occurred on December 31, 1996. The
accompanying Unaudited Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1996 includes the accounts of the Company and reflects
the Barnett-Larkin-Brown merger as if such merger had been completed as of the
beginning of the year. The accompanying Unaudited Pro Forma Consolidated
Financial Statements do not include the pro forma results of other businesses
acquired by the Company since January 1, 1997.
The accompanying Unaudited Pro Forma Consolidated Financial Statements have
been prepared based upon certain assumptions and include adjustments as detailed
in the Notes to Unaudited Consolidated Pro Forma Financial Statements. The
estimated fair market values reflected in the Unaudited Consolidated Financial
Statements are based on preliminary estimates and assumptions and are subject to
revision as more information regarding asset and liability valuations becomes
available. In management's opinion, the preliminary allocation reflected herein
is not expected to be materially different from the final allocation.
The Unaudited Pro Forma Consolidated Statements of Operations do not assume
any additional profitability resulting from the application of the Company's
revenue enhancement measures or cost reduction programs to the historical
results of Barnett-Larkin-Brown Funeral Homes, Inc., nor do they assume
increases in corporate general and administrative expenses which may have
resulted from the Company managing Barnett-Larkin-Brown Funeral Homes, Inc. for
the period presented.
The following Unaudited Pro Forma Consolidated Financial Statements should be
read in conjunction with the Consolidated Financial Statements of the Company
and the related notes thereto as included in the Company's Form 10-K as of
December 31, 1996. Such pro forma information is based on historical data with
respect to the Company and Barnett-Larkin-Brown Funeral Homes, Inc. The pro
forma information is not necessarily indicative of the results that might have
occurred had such transactions actually taken place at the beginning of the
period specified and is not intended to be a projection of future results. The
pro forma information presented herein is provided to comply with the
requirements of the Securities and Exchange Commission. The pro forma
information does not reflect any adjustments to reflect the manner in which the
acquired entity is being or will be operated under the control of the Company.
5
<PAGE>
CARRIAGE SERVICES, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
BARNETT-
CARRIAGE LARKIN PRO FORMA TOTAL
ASSETS SERVICES, INC. BROWN ADJUSTMENTS(1) PRO FORMA
---------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ...... $ 1,712 $ 56 $ (118) $ 1,650
Accounts receivable --
Trade, net of allowance ....... 5,665 185 (185) 5,665
Other ......................... 673 -- -- 673
--------- ------ ---------- -----------
6,338 185 (185) 6,338
Marketable securities .......... 53 -- -- 53
Inventories and other current
assets ........................ 3,297 36 (2) 3,331
--------- ------ ---------- -----------
Total current assets .......... 11,400 277 (305) 11,372
--------- ------ ---------- -----------
PROPERTY, PLANT AND EQUIPMENT, at
cost, net ..................... 46,112 59 486 46,657
CEMETERY PROPERTY, at cost ......... 4,061 -- -- 4,061
NAMES AND REPUTATIONS, net ......... 62,568 -- 887 63,455
DEFERRED CHARGES AND OTHER
NONCURRENT ASSETS ............. 7,167 1 50 7,218
--------- ------ ---------- -----------
$ 131,308 $ 337 $ 1,118 $ 132,763
====== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other ......
liabilities ........................ $ 2,192 $ 91 $ (88) $ 2,195
Accrued liabilities ............. 3,033 -- -- 3,033
Current portion of long-term
debt and capital leases ....... 1,086 -- -- 1,086
--------- ------ ---------- -----------
Total current liabilities ..... 6,311 91 (88) 6,314
PRENEED LIABILITIES, net ........... 3,664 -- -- 3,664
LONG-TERM DEBT, net ................ 42,733 -- 3 42,736
OBLIGATIONS UNDER CAPITAL LEASES,
net of current portion ........ 557 -- -- 557
DEFERRED INCOME TAXES .............. 3,749 -- 4 3,753
--------- ------ ---------- -----------
Total liabilities ............. 57,014 91 (81) 57,024
--------- ------ ---------- -----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK ......... 17,251 -- -- 17,251
STOCKHOLDERS' EQUITY:
Class A Common Stock ........... 40 131 (130) 41
Class B Common Stock ........... 45 -- -- 45
Contributed capital ............ 63,966 -- 1,444 65,410
Retained deficit ............... (7,008) -- -- (7,008)
Barnett-Larkin-Brown equity .... -- 115 (115) --
--------- ------ ---------- -----------
Total stockholders' equity .... 57,043 246 1,199 58,488
========= ====== ========= =========
$ 131,308 $ 337 $ 1,118 $ 132,763
========= ====== ========= =========
See the accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CARRIAGE SERVICES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CARRIAGE BARNETT-
SERVICES, LARKIN- PRO FORMA TOTAL
INC. BROWN ADJUSTMENTS PRO FORMA
-------------- ------------- --------------- ------------
<S> <C> <C> <C>
Revenues, net ..................... $ 40,348 $ 829 $ -- $ 41,177
Costs and expenses ................ 33,182 153 22 (2) 33,334
(28)(3)
5 (4)
--------- -------- ---------- -------
33,182 153 (1) 33,334
--------- -------- ---------- -------
Gross profit .................. 7,166 676 1 7,843
General and administrative expenses 2,474 506 -- 2,980
--------- -------- ---------- -------
Operating income .............. 4,692 170 1 4,863
Interest expense, net ............. 4,347 -- -- 4,347
--------- -------- ---------- -------
Income before income taxes and
extraordinary item ........... 345 170 1 515
Provision for income taxes ........ 138 22 52(5) 212
--------- -------- ---------- -------
Income before extraordinary item 207 148 (51) 304
Extraordinary item - loss on early
extinguishment of debt, net of
income tax benefit of $332 ... (498) -- -- (498)
--------- -------- ---------- -------
Net income (loss) .............. (291) 148 (51) (194)
Preferred stock dividend
requirements ...................... 622 -- -- 622
--------- -------- ---------- -------
Net income (loss) attributable
to common stockholders ....... $ (913) $ 148 $ (51) $ (816)
========= ======== ========== =======
(Loss) per share:
(Loss) per common and common
equivalent share before
extraordinary item,
attributable to common
stockholders ................. $ (.09) $ (.06)
Extraordinary item ............. (.10) (.10)
------- --------
Net (loss) per common share .... $ (.19) $ (.16)
======= ========
Weighted average number of common
and common equivalent shares
outstanding (in thousands) ... 4,869 100 (6) 4,969
======= ======== ========
See the accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
</TABLE>
7
<PAGE>
CARRIAGE SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS
The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1996 gives effect to the Barnett-Larkin-Brown merger. The estimated
fair market values reflected herein are based on preliminary estimates and
assumptions and are subject to revision as more information becomes available.
In management's opinion, the preliminary allocation is not expected to be
materially different from the final allocation.
(1) To record the elimination of assets and liabilities not acquired or assumed
by the Company and record the total consideration (including estimated
transaction costs) and the preliminary allocation of total consideration to
the identifiable net assets of the acquired business.
The effect of the Barnett-Larkin-Brown merger on the Consolidated Balance Sheet
at December 31, 1996 was as follows:
1996
--------------
(in thousands)
Current Assets $ 34
Property, Plant and Equipment 545
Deferred Charges and Other Noncurrent Assets 51
Names and Reputations 887
Current Liabilities (5)
Other Liabilities (6)
--------------
1,506
Consideration:
Class A Common Stock issued (1,444)
--------------
Cash used for acquisition $ 62
==============
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS ADJUSTMENTS
The accompanying Unaudited Pro Forma Consolidated Statements of Operations for
the year ended December 31, 1996 give effect to the Barnett-Larkin-Brown merger.
(2) To record adjustment to amortization expense relative to the Company's new
basis in net assets acquired in conjunction with Barnett-Larkin-Brown
merger as if said merger had occurred as of the beginning of each of the
year presented. The amortization expense of $22,000 for the year ended
December 31, 1996 is resultant from the amortization, over a 40 year life,
of the $887,000 in names and reputations recorded in conjunction with the
merger with Barnett-Larkin-Brown.
(3) To record adjustment to depreciation expense of $28,000 for the year ended
December 31, 1996. Pro forma depreciation expense has been recorded based
on the Company's estimate of the useful lives of the acquired assets using
the Company's depreciation methods.
(4) To record amortization expense relative to non-compete agreements of $5,000
for the year ended December 31, 1996. These agreements are amortized over
the term of the agreements.
8
<PAGE>
(5) To record the income tax expense as if the effective rate is 40%. This
adjustment reflects an income tax expense of $52,000 for the year ended
December 31, 1996. The Company's management believes that this is the
effective rate that would be indicative of the Company's normal tax
position assuming the merger was made as of the beginning of the respective
periods presented.
(6) To adjust weighted average shares outstanding to reflect the pro forma
effects of the 100,000 Class A Common Stock shares issued in conjunction
with the Barnett-Larkin-Brown merger as if such shares were issued as of
the beginning of the year presented.
9
<PAGE>
[LOGAN AND SCHMIDT, P.A. LOGO]
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Barnett-Larkin-Brown Funeral Home, Inc.
We have audited the accompanying balance sheets of the
Barnett-Larkin-Brown division of 21st Century Funeral Company, L.C.
as of December 31, 1995 and October 31, 1996 and the related
statements of income and cash flows for the year and ten month
periods then ended, and the balance sheets of Barnett-Larkin-Brown
Funeral Home, Inc. as of December 31, 1996 and March 31, 1997, and
the related statements of income and cash flows for the two and
three month periods then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimate made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
Barnett-Larkin-Brown division of 21st Century Funeral Company, L.C.
as of December 31, 1995 and October 31, 1996 and the results of its
operations for the year and ten month periods then ended, and of
Barnett-Larkin-Brown Funeral Home, Inc., as of December 31, 1996
and March 31, 1997 and the results of its operations for the two
months ended December 31, 1996 and three months ended March 31,
1997 in conformity with generally accepted accounting principles.
/s/ LOGAN & SCHMIDT, P.A.
July 9, 1997
1300 North 78th Street, Suite 100 Kansas City, Kansas 66112-2493
(913) 788-5533 Fax (913) 788-9097
10
<PAGE>
BARNETT-LARKIN-BROWN DIVISION OF
21ST CENTURY FUNERAL COMPANY, L.C.
AND
BARNETT-LARKIN-BROWN FUNERAL HOME, INC.
BALANCE SHEETS
DECEMBER 31, 1995, OCTOBER 31, 1996, DECEMBER 31, 1996
AND MARCH 31, 1997
ASSETS
BARNETT- LARKIN- BROWN
DIVISION OF
21ST CENTURY FUNERAL BARNETT- LARKIN -BROWN
COMPANY. L.C. FUNERAL HOME, INC
----------------- -------------------
December 31, October 31, December 31, March 31,
1995 1996 1996 1997
---- ---- ---- ----
Current Assets:
Cash in Bank ............. $ 5,780 $ 1,429 $ 55,941 $ --
Inventory ................ 32,577 36,096 36,303 36,303
Accounts Receivable ...... 165,184 152,589 195,906 --
Allowance For Uncollectable
Accounts ............... (11,200) (11,200) (11,200)
Reimbursement Receivable . -- 53 -- 1,303
Prepaid Expenses ......... 5,725 -- -- --
--------- --------- --------- ---------
Total Current Assets .. 198,066 178,967 276,950 37,606
Fixed Assets:
Leasehold Improvements ... 103,864 106,297 65,845 65,845
Furniture & Equipment .... 129,658 133,391 191,001 191,001
Vehicles ................. 25,661 49,161 47,170 47,170
Accumulated Depreciation . (84,588) (123,244) (244,923) (260,222)
--------- --------- --------- ---------
Total Fixed Assets .... 174,595 165,605 59,093 43,794
--------- --------- --------- ---------
Other Assets:
Sales Tax Bond ........... -- -- 1,000 --
Profit Sharing Bond ...... -- -- 100 --
--------- --------- --------- ---------
Total Other Assets .... -- -- 1,100 --
--------- --------- --------- ---------
Total Assets .......... $ 372,661 $ 344,572 $ 337,143 $ 81,400
========= ========= ========= =========
See notes to financial statements
11
<PAGE>
LIABILITIES AND EOUITY
BARNETT-LARKIN-BROWN DIVISION
OF 21ST CENTURY FUNERAL BANNETT-LARKIN-BROWN
COMPANY. L.C. FUNERAL HOME. INC.
------------- ------------------
December 31, October 31, December 31, March 31,
1995 1996 1996 1997
-------- -------- -------- ------------
Current Liabilities:
Accounts Payable ............... $ 17,912 $ -- $ 18,551 $ --
Payroll Withholding
Payable ....................... -- 4,463 --
Sales Tax Payable .............. 1,552 -- 3,115 --
Income Taxes Payable ........... -- 16,700 --
Accrued Property Taxes ......... -- 12,028 -- --
Payable to 21st Century
Funeral Company1 L.C .......... -- -- 48,532 --
-------- -------- -------- ------------
Total Current
Liabilities .............. 19,464 12,028 91.361 --
-------- -------- -------- ------------
Stockholders' And Members' Equity:
Members' Equity ................ 214,099 280,917 -- --
Stock .......................... -- -- 131,001 131,001
Retained Earnings .............. -- -- 18,269 114,780
Net Income (Loss) .............. 139,098 51,627 96,492 (27,882)
Dividends Paid ................. -- -- -- (136,499)
-------- -------- -------- ------------
Total Equity ................ 353,197 332,544 245,782 81,400
-------- -------- -------- ------------
Total Liabilities
And Equity ............... $372,661 $344,572 $337,143 $ 81,400
======== ======== ======== ============
12
<PAGE>
BARNETT-LARKIN-BROWN DIVISION OF 21ST CENTURY
FUNERAL COMPANY, L.C.
AND
BARNETT-LARKIN-BROWN FUNERAL HOME INC.
STATEMENTS OF INCOME
FOR THE PERIODS ENDED DECEMBER 31, 1995, OCTOBER 31, 1996,
DECEMBER 31, 1996 AND MARCH 31, 1997
<TABLE>
<CAPTION>
BARNETT-LARKIN-BROWN DIVISION OF
21ST CENTURY FUNERAL BARNETT-LARKIN- BROWN
COMPANY. L.C. FUNERAL HOME. INC.
------------- ------------------
Ten Month Two Month Three Month
Year Ended Period Ended Period Ended Period Ended
December 31, October 31, December 31, March 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales .................................. $ 796,842 $ 661,023 $168,297 $ 219,489
Cost of Sales:
Caskets and Vaults .................. 138,729 116,395 25,860 39,830
Other Funeral Costs ................. 22,455 9,931 1,232 12,059
--------- --------- -------- ---------
Total Cost of Sales ................. 161,184 126,326 27,092 51,889
--------- --------- -------- ---------
Gross Profit .................. 635,658 534,697 141,205 167,600
Operating Expenses:
Personnel Expense ................... 171,928 176,183 36,926 89,236
Vehicle Expenses .................... 48,873 40,904 13,155 15,102
Facility Expenses ................... 133,522 123,538 25,853 35,621
Advertising Expenses ................ 20,362 20,230 3,409 1,397
Business Services ................... 27,132 37,769 5,306 71,144
Overhead Expense Allocation ......... 81,220 85,154 -- --
--------- --------- -------- ---------
Total Operating Expenses .......... 483.037 483,778 84,649 212,500
--------- --------- -------- ---------
Income (Loss) From
Operations .................... 152,621 50,919 56,556 (44,900)
Other Income (Expenses):
Other Income ........................ 6,314 7,312 2,718 7,343
Bad Debt Expense .................... (17,988) (4,646) 592 (268)
Gain (Loss) on Sale of Assets........ (1,849) (1,958) 58,126 --
Interest Expense .................... -- -- -- (2,157)
--------- --------- -------- ---------
Total Other Income (Exp) .......... (13.523) 708 61,436 4,918
--------- --------- -------- ---------
Net Income (Loss) Before
Income Taxes ........................ 139,098 51,627 117,992 (39,982)
--------- --------- -------- ---------
Federal and State
Taxes on Earnings ................... -- -- 21,500 (12,100)
--------- --------- -------- ---------
Net Income ............................. $ 139,098 $ 51,627 $ 96,492 $ (27,882)
========= ========= ======== =========
</TABLE>
See notes to financial statements
13
<PAGE>
BARNETT-LARKIN-BROWN DIVISION OF 21ST CENTURY
FUNERAL COMPANY, L.C.
AND
BARNETT-LARKIN-BROWN FUNERAL HOME INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED DECEMBER 31, 1995, OCTOBER 31, 1996,
DECEMBER 31, 1996 AND MARCH 31, 1997
<TABLE>
<CAPTION>
BARNETT-LARKIN-BROWN DIVISION
OF 21ST CERTURY FUNERAL BARNETT-LARKIN-BROWN
COMPANY. L.C. FUNERAL HOME. INC.
------------- ------------------
TEN MONTH TWO MONTH THREE MONTH
YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, OCTOBER 31, DECEMBER 31, MARCH 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) ............................. $ 139,098 $ 51,627 $ 96,492 $(27,882)
ADJUSTMENT TO RECONCILE NET
INCOME (LOSS) TO CASH PROVIDED
(UCED) BY OPERATING ACTIVITIES
DEPRECIATION .............................. 34,599 31,782 10,199 15,299
(INCREASE) IN INVENTORY ................... (2,711) (3,519) (207) --
(INCREASE) DECREASE IN RECEIVABLES......... (20,859) 12,542 (43,264) 183,402
DECREASE IN PREPAID EXPENSES .............. (2,067) 5,725 -- --
(INCREA5E) DECREASE IN BONDS .............. -- -- (1,100) 1,100
INCREASE (DECREASE) IN ACCTS. PAYABLE 17,912 (17,912) 18,551 (18,551)
INCREASE (DECREASE) IN TAXES PAYABLE ...... 47 10,476 7,578 (7,578)
INCREASE (DECREASE) IN PAYABLE TO
21ST CENTURY ............................ -- -- 48,532 (48,532)
(GAIN)/LOSS ON SALE OF ASSETS ............. 1,849 1,958 (58,126) --
INCREASE (DECREASE) IN INCOME
TAXES PAYABLE ............................ -- -- 16,700 (16,700)
--------- -------- --------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES .............................. 167,868 92,679 95,355 80,558
--------- -------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES;
PROCEEDS FROM DISPOSITION OF EOUIPOENT ...... 4,750 -- -- --
ACOUISITION OF FIXED ASSETS ................. (9,663) (33,017) -- --
DIVIDENDS PAID .............................. -- -- -- (136,499)
ACQUISITION OF NET ASSETS ................... -- -- (48,532) --
PAYMENTS TO PARENT COMPANY .................. (148,010) (64,013) -- --
--------- -------- --------- --------
NET CASH USED IN INVESTING
ACTIVITIES ............................. (152,923) (97,030) (48,532) (136,499)
--------- -------- --------- --------
CASH PI,O,WS FROM PINANCIUG ACTIVITIES ........ -- -- -- --
INCREASE (DECREASE) IN CASH ................... 14,945 (4,351) 46,823 (55,941)
CASH, BEGINNING OF PERIOD ..................... (9,165) 5,780 9,118 55,941
--------- -------- --------- --------
CASH, END OF PERIOD ........................... $ 5,780 $ 1,429 $ 55,941 $ --
========= ======== ========= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
BARNETT-LARKIN-BROWN DIVISION OF
21st CENTURY FUNERAL COMPANY, L.C.
AND
BARNETT-LARKIN-BROWN FUNERAL HOME, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995,
THE TEN MONTH PERIOD ENDED OCTOBER 31,1996,
THE TWO MONTH PERIOD ENDED DECEMBER 31,1996, AND
THE THREE MONTH PERIOD ENDED MARCH 31,1997
ORGANIZATION / NATURE OF OPERATIONS:
Barnett-Larkin-Brown consists of two funeral homes in Leavertworth, KS. It
performs personal and professional services related to funerals at its funeral
homes. During the period from January 1, 1995 thru October 31, 1996, it was
owned by and operated as a division of 21st Century Funeral Company, L.C.
Effective Novern~ 1,1996, the division was demerged from 21st Century Funeral
Company, L.C. and operated as a separate independent Corporation. The real
estate (land and buildings) used by the Funeral Homes was owned by the
shareholders and leased to the business.
Effective March 28, 1997, assets and liabilities including cash, receivables,
and all accounts payable were transfereed to the stockholders as a dividend, and
the shareholders sold the stock of Barnett-Larkin-Brown Funeral Home, Inc. to
Carriage Funeral Holdings, Inc.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUES-Revenue is recognized upon performance of funeral services and sale of
related funeral mechandise.
INVENTORIES-Inventories are stated at cost determined by using the first-in,
first-out (FIFO) method.
FIXED ASSETS-for the period from January 1, 1995 thru October 31, 1996, fixed
assets were recorded at their estimated fair market values as of March 31, 1993
(the date that they were contributed by Barrtett-Larkin-Brown Funeral Home, Inc.
to 21st Century Funeral Company, LC. in exchange for a members interest in the
Limlted Liability Company). Depreciation on those assets was computed on a 5-10
year straight line method through October 31, 1996 when the demerger occurred
and the assets were transferred back to Barnett-Larkin-Brown Funeral Home, Inc.
Fixed assets acquired after March 31, 1993 are recorded at their cost and
depreciation is computed on a 5-10 year straight-line method.
On October 31,1996 fixed assets and other assets were transferred from 21st
Century Funeral Company, L.C. to Barnett-Larkin-Brown Funeral Home, Inc. in
exchange for the members interest in the Limited Liability Company. Fixed assets
which Barrett-Larkin-Brown Funeral Home, Inc. owned prior to the merger on March
31, 1993 were recorded at their original cost and depreciation computed on a
5-10 year straight-line method from their original acquisition date. Assets
which had been acquired after the merger in 1993 were recorded at their cost to
21st Century Funeral Company, L.C. and the associated depreciation was recorded
on the books of Barrett-Larkin-Brown Funeral Home, Inc.
Major additions and improvements are capitalized while minor replacements,
maintenance and repairs which do not improve or extend the life of the related
are charged to operations as incurred.
Depreciation expense included in operating expenses for the reported
accounting periods is:
December 31, 1995 $34,599
October 31, 1996 31,782
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December 3l, 1996 10,199
March 31, 1997 15,299
INCOME TAXES-during the period January 1, 1995 thru October 31, 1996 the Company
was a division of 21st Century Funeral Company, L.C. (A limited liability
company). Limited liabillty companies do not pay income taxes as they are
treated like partnerships and items of income and expense are passed through to
its shareholders. Accordingly, no provision for income taxes has been reflected
in the accompanying financial statements for this period.
Barnett-Larkin-Brown Funeral Home, Inc. is a corporation organized under
subchapter C of the Internal Revenue Code. Federal and State income taxes are
accrued and reflected in the financial statements for the period from November
1, 1996 thru March 31, 1997 at applicable statutory rates.
OPERATING LEASES:
21st Century Funeral Company, L.C. and later Barnett-Larkin-Brown Funeral Home,
Inc. lease the facilities utilized by the two funeral homes from the
shareholders of Barnett-Larkin-Brown Funeral Home, Inc. The lease expires on
March 31, 2003 and requires monthly payments of $6,250. This lease was cancelled
effective March 31, 1997 when the stock of Barnett-Larkin-Brown Funeral Home,
Inc. and the facilities were sold to Carriage Funeral Holdings, Inc.
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