Forever Bellerive Cemetery, located in St. Louis, Missouri, encompasses approximately 46 acres, with over 15 acres undeveloped for future use. This property includes a new office building with approximately 3,100 square feet and a 1,000 crypt white marble mausoleum/chapel facility. Forever Oak Hill Cemetery, acquired in December 2001, and 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 planned for construction on this site. Hollywood Forever Cemetery, located in Los Angeles, California, is approximately 65 acres, with three community mausoleums totaling about 40,000 square feet. An additional 4,600 crypts of inventory are currently under construction. This facility also includes 7,500 square feet of funeral home, chapel and flower shop, 10,000 square feet of office space, and 6,000 square feet of studio production and editing space for the Forever Memorial Life Story and Internet businesses. Mount Washington Forever Cemetery, located in Kansas City, Missouri, is a combination cemetery/funeral home property with 229 acres, of which 100 are developed for current use, including a garden mausoleum. We are also in the beginning stages of development of a 1,000 crypt white marble mausoleum/chapel and a lake which will be adjacent to it. This property also includes 10,500 square feet of office space and funeral home, which includes a newly finished funeral home addition. Each property also has maintenance facilities on site.
The following historical summary consolidated financial information has been derived from our consolidated financial statements. This selected financial data should be read in conjunction with our accompanying consolidated financial statements and the related notes included herein, and the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Forever Enterprises, Inc., through its subsidiaries, owns and operates combination funeral home and cemetery properties, produces and markets multimedia Life Stories, operates an Internet marketing site and operates life insurance companies that principally issue insurance contracts to fund pre-need funeral contracts. Our life insurance operations are conducted through our wholly owned life insurance subsidiaries.
In connection with our acquisition of Forever Network, Inc. and its subsidiaries on March 9, 2000, we acquired three cemetery/funeral home combination properties located in Los Angeles, California and St. Louis and Kansas City, Missouri, a funeral home located in Kirkwood, Missouri that is leased to Service Corporation International, the Cremation Society of St. Louis, the Cremation Specialists of Los Angeles and Forever Cremation Society of Kansas City. On December 21, 2002, we acquired the operating assets of another cemetery property in St. Louis, Missouri. In addition, Forever Network sells, archives and displays digital interactive Life Stories viewed at Company cemetery/funeral homes and on the Internet at www.forevernetwork.com. Forever Network currently maintains over 6,500 - ---------------------- client Life Stories that are available for viewing on the Internet site. The Forever Network website averaged more than
Our revenues from the cemetery and memorialization business are principally derived from products and services sold in connection with funerals and burials and revenues derived from Life Stories sold at our four properties and our website, www.forevernetwork.com. Larger contributors to cemetery ---------------------- revenues include interment rights (grave, entombment, and inurnment spaces), grave markers and monuments, services related to visitation and burial, burial containers (caskets and burial vaults) and Life Story services. Revenues at newly acquired properties are expected to ramp up to sustainable profitability levels, and to grow at more normal levels within six-twelve months of operations.
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) growth of our Internet and cemetery business through the increased traffic and brand recognition generated from implementing our marketing and operational systems; and (3) 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.
The following table compares selected financial information as of or for the years ended December 31, 2001 and 2000 that has been adjusted to consistently reflect the impact of Staff Accounting Bulletin 101 for both years on the cemetery segment of the business. Included in the table below is a category labeled "Deferred Revenue" which represents revenue associated with cemetery/funeral home properties which cannot be recognized as income in the current year. Deferred revenue represents future streams of income (and to some extent positive cash flow) which will be recognized as services are completed and/or merchandise delivered.
Total assets increased $10.6 million from $198.0 million at December 31, 2000 to $208.6 million at December 31, 2001, due primarily to the growth of our insurance policies in force during 2000.
Our post-SAB 101 impact equity in the earnings (losses) of Mount Washington Forever for the year ended December 31, 2001 was not recognized in consolidated earnings because our net equity investment in Mount Washington remains in a deficit position. We first acquired an interest in Mount Washington Forever in November 1999, and, therefore, had no share in its earnings prior to that time. Forever Enterprises, Inc. currently has a 50% interest in Mount Washington Forever and is responsible for all aspects of the cemetery's marketing and operations. The results of Mount Washington Forever are summarized in the table below.
Operating losses decreased approximately $808,000, or 25.2%, from a loss of $3.2 million for the year ended December 31, 2000 to a loss of $2.4 million in 2001 due primarily to management fees allocated to an affiliated entity.
Our loss before income taxes remained constant at $1.1 million in 2000 and 1999. The operating loss as a percentage of revenues, however, improved from (38.7%) in 1999 to (14.0%) in 2000. This was due to increased revenues and operating cost containment combined with the growth of the revenues.
Our post-SAB 101 impact equity in the earnings (losses) of Mount Washington Forever for the year ended December 31, 2000 was limited to our investment of $49,506. We first acquired an interest in Mount Washington Forever in November 1999, and, therefore, had no share in its earnings prior to that time. Forever Enterprises, Inc. currently has a 50% interest in Mount Washington Forever and is responsible for all aspects of the cemetery's marketing and operations. The results of Mount Washington Forever are summarized in the table below.
Certain outstanding lines of credit of our company expire in the first and second quarters of 2002. Currently, we believe that we will be able to renew such lines of credit on terms favorable to us. However, in the event we are unable to renew such lines of credit, we would be required to seek other sources of funding to satisfy our obligations. There can be no assurance that such other sources of funding will be available or available on terms favorable to our company.
We have invested significant capital to develop and enhance our Life Story and Internet business and our website www.forevernetwork.com. The Life Story ---------------------- program is an important part of our cemetery/funeral home business as well as our brand strategy, and is currently contributing to profitability at the cemetery locations. Margins on the Life Story products and services are high and overhead relatively low. The Forever Network website averaged more than 13,000 hits (visits) per day during the year ended December 31, 2001.
Our cash requirements for 2002 and in the future will depend upon mortality experience, acquisitions, timing of expansion plans and capital expenditures. Our insurance subsidiaries generally generate sufficient cash receipts from premium collections and investment income to satisfy their obligations. We believe that the diversity of the investment portfolio of our insurance subsidiaries provides sufficient liquidity to meet their operating cash requirements. We believe that anticipated revenue from operations should be adequate for the working capital requirements of our existing businesses over the next twelve months.
In February 2002, we acquired an online interactive memorial product and concept, together with all technology and intellectual property associated with the product, along with all contract rights to the distribution and marketing agreement by and between Matthews International Corporation and Heavenly Door Corporation for a cash price of $250,000 financed over 10 years.
Policyholder loans increased approximately $160,000 from $1.7 million at December 31, 2000 to $1.8 million at December 31, 2001 due to the accrual of interest on such loans.
Due premiums increased $180,000 from $6.1 million at December 31, 2000 to $6.3 million at December 31, 2001 due to increases in the amount of in-force life insurance policies.
Assets with a fair value of approximately $7.8 million at December 31, 2001 were on deposit with various state regulatory authorities.
Deferred policy acquisition costs decreased approximately $164,000 from $1.4 million at December 31, 2000 to $1.2 million at December 31, 2001, due to decreases in in-force policies and amortization of existing policies.
Deferred pre-need revenues increased approximately $900,000 from $4.7 million at December 31, 2000 to $5.6 million at December 31, 2001 due to increased sales of deferred revenue items offset by items being recognized in current year revenue.
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 do not believe that the adoption of SFAS No. 141 will have a significant impact on our financial statements.
In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets, which is effective January 1, 2002. SFAS No. 142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. SFAS No. 142 requires a company to complete a transitional goodwill impairment test six months from the date of adoption. We are currently assessing, but have not determined, the impact of SFAS No. 142 on our financial position and results of operations.