Forever Network owns and operates eight cemetery/funeral home properties in metropolitan St. Louis and Kansas City, Missouri, Austin, Texas and Los Angeles, California, and maintains sales and administrative offices at each of those sites. Forever Network also operates production facilities for the LifeStory(TM) biography business at each location with central operations in Hollywood, California. Our Internet development operation is based at the Hollywood facility.
that expires in December 2007. Both of the above leases should result in more efficient, updated office space, while resulting in significant annual savings in rent expense. As our operations expand, the leasing of additional space in Austin, Texas and St. Louis, Missouri may be necessary. We currently do not foresee any material difficulties with leasing additional space that may be required in the foreseeable future.
o Forever Oak Hill Cemetery, also located in St. Louis, Missouri, encompasses approximately 55 acres, of which 43 are dedicated for cemetery use. This property includes an office building with approximately 1,100 square feet. A new mausoleum/funeral home facility is in the beginning phases of construction on this site, and will include over 1,000 crypts, over 1,000 cremation niches, and several other unique family memorialization options. It will be situated prominently on the property and in the community and have family suites and family meeting rooms to best serve our customers.
Our life insurance subsidiaries primarily write policies purchased by our affiliate, National Prearranged Services, in connection with National Prearranged Services' sale of prearranged funeral contracts. During 2002 and 2001, we derived revenues primarily from investment income, ceding allowances and premiums on retained business, compared to 2000, during which we derived revenues primarily from direct premiums on insurance policies generated by National Prearranged Services. Looking forward, we expect insurance revenues to remain relatively level.
Our strategy is to increase shareholder value by growing our funeral/cemetery/memorialization and insurance business through: (1) acquisitions and operation of cemetery properties in targeted metropolitan areas; (2) further development and implementation of new LifeStory(TM) programs; (3) growth of our LifeStory(TM) and cemetery business through the increased traffic and brand recognition generated from implementing our marketing and operational systems; and (4) expense allowance receipts on life insurance policies ceded to other companies. Our ability to acquire properties and policies will be dependent upon (among other things) our ability to identify, negotiate and complete transactions of favorable values, arrange necessary financing and integrate and manage the acquisitions after completion, including preserving customer relationships. There can be no assurance that we will successfully execute our strategy.
Cemetery revenues increased approximately $2.2 million, or 29.2%, in the year ended December 31, 2002 compared to 2001. The increase was attributable to more effective marketing and increased sales of certain cemetery and memorialization products and services, as well as the inclusion of revenues from three cemetery
Cost of sales increased approximately $1.2 million, or 54.0%, from $2.1 million in 2001, to $3.3 million in 2002, due primarily to increased cemetery sales and the inclusion of new properties. The increase was also attributable to an adjustment of $731,000 resulting from our periodic analysis of standard costs versus actual costs. Cost of sales as a percentage of revenues increased to 34.3% for the year ended December 31, 2002 from 28.8% for the previous year.
Total assets increased from $14.9 million at December 31, 2001 to $21.4 million at December 31, 2002 due primarily to the inclusion of acquired cemetery properties.
Insurance revenues increased approximately $5.3 million, or 19.8%, in the year ended December 31, 2002 compared to 2001. The increase was attributable to higher premium income, combined with a higher than expected experience rating refund.
Our premium income increased approximately $1.3 million, or 16.4%, in the year ended December 31, 2002 compared to 2001. The increase was primarily attributable to an increase in the number of policies written from more profitable lines of business.
Our net investment income and realized gains was generally unchanged in the year ended December 31, 2002, versus the previous year. The slight decrease was attributable to unfavorable market conditions, which was offset by interest income recognized on our experience rating refund.
Our benefit expenses increased approximately $641,000, or 7.5%, in the year ended December 31, 2002 compared to 2001. This increase was due to higher than expected mortality experiences in the first and fourth quarters on retained business.
Total assets increased $11.9 million from $208.6 million at December 31, 2001 to $220.5 million at December 31, 2002, due primarily to the growth of our insurance policies in force during 2002.
In conjunction with the construction of a new mausoleum at Mount Washington, the Company entered into a guaranty agreement with Commerce Bank, N.A. The guaranty agreement is discussed further in Note 12 to the consolidated financial statements which follow this report.
Corporate revenues increased approximately $5.4 million, or 383%, from $1.4 million for the year ended December 31, 2001 to $6.8 million for the year ended December 31, 2002, due primarily to revenues associated with the NPS Management Agreement (see Note 13 to the consolidated financial statements), which is included in "Management fee income" on our consolidated statements of operations.
Cemetery revenues increased approximately $1.2 million, or 18.3%, in the year ended December 31, 2001 compared to 2000. The increase was largely attributable to more effective marketing and increased sales of certain cemetery and memorialization products and services. The increase also was due to the positive effect of deferred revenue being recognized on installment contracts as they were paid in full and merchandise delivered.
Cost of sales increased approximately $343,000, or 18.9%, from $1.8 million in 2000, to $2.1 million in 2001, due primarily to increased cemetery sales. Cost of sales as a percentage of revenues increased slightly to 28.8% for the year ended December 31, 2001 compared to 28.7% for the previous year.
Our income before income taxes increased approximately $2.0 million in the year ended December 31, 2001 compared to 2000. The operating income/(loss) as a percentage of revenues improved from a loss of 26.8% in 2000 to income of 4.4% in 2001. This was due to increased revenues and operating cost containment.
Our premium income decreased approximately $29.2 million, or 79.0%, in the year ended December 31, 2001 compared to 2000. The decrease was primarily attributable to reinsurance of significant blocks of our life insurance policies. It was also impacted by a shift in the relative proportions of policies sold from single premium policies to limited pay business.
Our net investment income and realized gains decreased approximately $3.0 million, or 45.1%, in the year ended December 31, 2001 versus the previous year. The decrease was attributable to lower holdings of invested assets due to reinsurance transactions.
We have invested significant capital to develop and enhance our LifeStory(TM) business and Internet site capabilities at our website www.forevernetwork.com. The LifeStory(TM) program is an important part of our cemetery/funeral home business as well as a central feature to our brand strategy, and is currently contributing to profitability at the cemetery locations and through individual programs. The Forever Network website is currently averaging more than 75,000 hits (visits) per day.
On September 27, 2002, we entered into a letter of intent to purchase a single-location cemetery property located in the Southwest United States. The purchase price and working capital, if agreeable terms are secured, are expected to be funded largely through owner financing with the balance being funded through additional debt arrangements with an outside lender and additional equity financing. We are currently performing our due diligence investigation. If due diligence proves favorable, execution of a definitive agreement and closing are expected to occur during the second quarter of 2003.
Changes in our consolidated balance sheet between December 31, 2002 and December 31, 2001, reflect growth through operations, changes in the fair value of actively managed fixed maturity and equity securities, changes in the investment portfolio mix and changes in our insurance business strategy.
Due premiums increased $1.8 million from $6.3 million at December 31, 2001 to $8.1 million at December 31, 2002 due to increases in the amount of in-force life insurance policies.
Due from reinsurer increased approximately $13.7 million due to an increase in funds withheld in relation to the blocks of business ceded to Employers Reassurance Corp., Hannover Life Reassurance Company of America and North America Life Insurance Company.
Assets with a fair value of approximately $5.8 million at December 31, 2002 were on deposit with various state regulatory authorities.
Total cash and investments decreased approximately $1.6 million from $101.1 million at December 31, 2001 to $99.5 million at December 31, 2002, primarily due to investments sold before year end 2002.
Accounts receivable increased approximately $2.1 million from $5.6 million at December 31, 2001 to $7.7 million at December 31, 2002 due to increased cemetery/funeral home sales and the acquisition of new cemetery properties.
Future policy benefits increased approximately $10.6 million from $147.7 million at December 31, 2001 to $158.3 million at December 31, 2002. This increase was due to the growth of our reinsured business.
In July 2001, the FASB issued SFAS No. 141, Business Combinations. SFAS No. 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. We have determined that the adoption of SFAS No. 141 has not had a significant impact on our financial statements.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which was effective for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. SFAS No. 144 establishes a single accounting model for long-lived assets to be disposed of by sale. We have determined that the adoption of SFAS No. 144 has not had a significant impact on our financial statements.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123, which provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 is effective for fiscal years beginning after December 15, 2003. We do not believe that the adoption of SFAS No. 148 will have a significant impact on our financial statements since we currently use the fair value based method of accounting for stock-based employee compensation.