QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the quarterly period ended |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________ to __________ |
(State or other jurisdiction of incorporation or organization) | (I. R. S. employer identification number) | |||
(Zip code) | ||||
(Address of principal executive offices) | (Registrant’s telephone number, including area code) | |||
None | ||||
(Former name, former address, or former fiscal year, if changed since last report) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
☒ | ☐ | Accelerated filer | ☐ | Non-accelerated filer | Smaller reporting company | Emerging growth company | |||
(Do not check if smaller reporting company) |
Page | |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Revenue: | |||||||||||||||
Property and merchandise revenue | $ | $ | $ | $ | |||||||||||
Service revenue | |||||||||||||||
Other revenue | |||||||||||||||
Total revenue | |||||||||||||||
Costs and expenses: | |||||||||||||||
Cost of property and merchandise | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Cost of service | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Overhead and other expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total costs and expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating profit | |||||||||||||||
General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
(Losses) gains on divestitures and impairment charges, net | ( | ) | ( | ) | |||||||||||
Hurricane recoveries (expenses), net | ( | ) | ( | ) | |||||||||||
Operating income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on early extinguishment of debt, net | ( | ) | ( | ) | ( | ) | |||||||||
Other income, net | |||||||||||||||
Income before income taxes | |||||||||||||||
Provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income | |||||||||||||||
Net income attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||
Basic earnings per share: | |||||||||||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||
Basic weighted average number of shares | |||||||||||||||
Diluted earnings per share: | |||||||||||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||
Diluted weighted average number of shares |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income: | |||||||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | |||||||||||
Total comprehensive income | |||||||||||||||
Total comprehensive income attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total comprehensive income attributable to common stockholders | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
(In thousands, except share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Receivables, net | |||||||
Inventories | |||||||
Other | |||||||
Total current assets | |||||||
Preneed receivables, net and trust investments | |||||||
Cemetery property | |||||||
Property and equipment, net | |||||||
Goodwill | |||||||
Deferred charges and other assets | |||||||
Cemetery perpetual care trust investments | |||||||
Total assets | $ | $ | |||||
LIABILITIES & EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | $ | |||||
Current maturities of long-term debt | |||||||
Income taxes payable | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Deferred revenue, net | |||||||
Deferred tax liability | |||||||
Other liabilities | |||||||
Deferred receipts held in trust | |||||||
Care trusts’ corpus | |||||||
Commitments and contingencies (Note 10) | |||||||
Equity: | |||||||
Common stock, $1 per share par value, 500,000,000 shares authorized, 186,411,295 and 184,720,582 shares issued, respectively, and 182,468,970 and 181,470,582 shares outstanding, respectively | |||||||
Capital in excess of par value | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income | |||||||
Total common stockholders’ equity | |||||||
Noncontrolling interests | ( | ) | ( | ) | |||
Total equity | |||||||
Total liabilities and equity | $ | $ |
Six Months Ended | |||||||
June 30, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Loss on early extinguishment of debt | |||||||
Depreciation and amortization | |||||||
Amortization of intangibles | |||||||
Amortization of cemetery property | |||||||
Amortization of loan costs | |||||||
Provision for doubtful accounts | |||||||
Provision for deferred income taxes | |||||||
Losses (gains) on divestitures and impairment charges, net | ( | ) | |||||
Gain on sale of investments | ( | ) | |||||
Share-based compensation | |||||||
Change in assets and liabilities, net of effects from acquisitions and divestitures: | |||||||
(Increase) decrease in receivables | ( | ) | |||||
Increase in other assets | ( | ) | ( | ) | |||
Decrease in payables and other liabilities | ( | ) | ( | ) | |||
Effect of preneed sales production and maturities: | |||||||
Increase in preneed receivables, net and trust investments | ( | ) | ( | ) | |||
Increase in deferred revenue, net | |||||||
Decrease in deferred receipts held in trust | ( | ) | ( | ) | |||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Acquisitions, net of cash acquired | ( | ) | ( | ) | |||
Proceeds from divestitures and sales of property and equipment | |||||||
Proceeds from sale of investments | |||||||
Payments on Company-owned life insurance policies | ( | ) | ( | ) | |||
Proceeds from Company-owned life insurance policies | |||||||
Other | ( | ) | |||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of long-term debt | |||||||
Debt issuance costs | ( | ) | |||||
Scheduled payments of debt | ( | ) | ( | ) | |||
Early payments of debt | ( | ) | ( | ) | |||
Principal payments on finance leases | ( | ) | ( | ) | |||
Proceeds from exercise of stock options | |||||||
Purchase of Company common stock | ( | ) | ( | ) | |||
Payments of dividends | ( | ) | ( | ) | |||
Bank overdrafts and other | ( | ) | |||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of foreign currency on cash, cash equivalents, and restricted cash | ( | ) | |||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | |||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ |
Common Stock | Treasury Stock | Capital in Excess of Par Value | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||
Dividends declared on common stock ($0.18 per share) | ( | ) | ( | ) | |||||||||||||||||||||||
Employee share-based compensation earned | |||||||||||||||||||||||||||
Stock option exercises | |||||||||||||||||||||||||||
Restricted stock awards, net of forfeitures | ( | ) | |||||||||||||||||||||||||
Purchase of Company common stock | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Other | ( | ) | ( | ) | |||||||||||||||||||||||
Balance at March 31, 2019 | ( | ) | ( | ) | |||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||
Dividends declared on common stock ($0.18 per share) | ( | ) | ( | ) | |||||||||||||||||||||||
Employee share-based compensation earned | |||||||||||||||||||||||||||
Stock option exercises | |||||||||||||||||||||||||||
Purchase of Company common stock | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Other | |||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ |
Common Stock | Treasury Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||
Cumulative effect of accounting changes | ( | ) | |||||||||||||||||||||||||
Comprehensive income | ( | ) | |||||||||||||||||||||||||
Dividends declared on common stock ($0.17 per share) | ( | ) | ( | ) | |||||||||||||||||||||||
Employee share-based compensation earned | |||||||||||||||||||||||||||
Stock option exercises | |||||||||||||||||||||||||||
Restricted stock awards, net of forfeitures | ( | ) | |||||||||||||||||||||||||
Purchase of Company common stock | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Other | ( | ) | ( | ) | |||||||||||||||||||||||
Balance at March 31, 2018 | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||
Comprehensive income | ( | ) | |||||||||||||||||||||||||
Dividends declared on common stock ($0.17 per share) | ( | ) | ( | ) | |||||||||||||||||||||||
Employee share-based compensation earned | |||||||||||||||||||||||||||
Stock option exercises | |||||||||||||||||||||||||||
Restricted stock awards, net of forfeitures | ( | ) | |||||||||||||||||||||||||
Purchase of Company common stock | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Other | |||||||||||||||||||||||||||
Balance at June 30, 2018 | $ | $ | ( | ) | $ | $ | $ | $ | $ |
1. | Nature of Operations |
June 30, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash(1): | |||||||
Included in Other current assets | |||||||
Included in Deferred charges and other assets | |||||||
Total restricted cash | |||||||
Total cash, cash equivalents, and restricted cash | $ | $ |
(1) | Restricted cash in both periods primarily consists of proceeds from divestitures deposited into escrow accounts under IRS code section 1031 and collateralized obligations under certain insurance policies. |
• | a $ |
• | a $ |
• | a $ |
• | a $ |
• | whether a contract is or contains a lease, |
• | lease classification, or |
• | initial direct costs. |
June 30, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Preneed funeral receivables | $ | $ | |||||
Preneed cemetery receivables | |||||||
Preneed receivables from customers | |||||||
Unearned finance charge | ( | ) | ( | ) | |||
Allowance for cancellation | ( | ) | ( | ) | |||
Preneed receivables, net | $ | $ | |||||
Trust investments, at market | $ | $ | |||||
Insurance-backed fixed income securities and other | |||||||
Trust investments | |||||||
Less: Cemetery perpetual care trust investments | ( | ) | ( | ) | |||
Preneed trust investments | $ | $ | |||||
Preneed receivables, net and trust investments | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Deposits | $ | $ | $ | $ | |||||||||||
Withdrawals | $ | $ | $ | $ | |||||||||||
Purchases of securities | $ | $ | $ | $ | |||||||||||
Sales of securities | $ | $ | $ | $ | |||||||||||
Realized gains (1) | $ | $ | $ | $ | |||||||||||
Realized losses (1) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | All realized gains and losses are recognized in Other income, net for our trust investments and are offset by a corresponding reclassification in Other income, net to Deferred receipts held in trust and Care trusts' corpus. |
June 30, 2019 | |||||||||||||||||
Value Hierarchy Level | Cost | Unrealized Gains | Unrealized Losses | Value | |||||||||||||
(In thousands) | |||||||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 2 | $ | $ | $ | ( | ) | $ | ||||||||||
Canadian government | 2 | ( | ) | ||||||||||||||
Corporate | 2 | ( | ) | ||||||||||||||
Residential mortgage-backed | 2 | ( | ) | ||||||||||||||
Asset-backed | 2 | ( | ) | ||||||||||||||
Equity securities: | |||||||||||||||||
Preferred stock | 2 | ( | ) | ||||||||||||||
Common stock: | |||||||||||||||||
United States | 1 | ( | ) | ||||||||||||||
Canada | 1 | ( | ) | ||||||||||||||
Other international | 1 | ( | ) | ||||||||||||||
Mutual funds: | |||||||||||||||||
Equity | 1 | ( | ) | ||||||||||||||
Fixed income | 1 | ( | ) | ||||||||||||||
Other | 3 | ||||||||||||||||
Trust investments, at fair value | ( | ) | |||||||||||||||
Commingled funds | |||||||||||||||||
Fixed income | ( | ) | |||||||||||||||
Equity | |||||||||||||||||
Money market funds | |||||||||||||||||
Private equity | ( | ) | |||||||||||||||
Trust investments, at net asset value | ( | ) | |||||||||||||||
Trust investments, at market | $ | $ | $ | ( | ) | $ |
December 31, 2018 | |||||||||||||||||
Value Hierarchy Level | Cost | Unrealized Gains | Unrealized Losses | Value | |||||||||||||
(In thousands) | |||||||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 2 | $ | $ | $ | ( | ) | $ | ||||||||||
Canadian government | 2 | ( | ) | ||||||||||||||
Corporate | 2 | ( | ) | ||||||||||||||
Residential mortgage-backed | 2 | ( | ) | ||||||||||||||
Asset-backed | 2 | ( | ) | ||||||||||||||
Equity securities: | |||||||||||||||||
Preferred stock | 2 | ( | ) | ||||||||||||||
Common stock: | |||||||||||||||||
United States | 1 | ( | ) | ||||||||||||||
Canada | 1 | ( | ) | ||||||||||||||
Other international | 1 | ( | ) | ||||||||||||||
Mutual funds: | |||||||||||||||||
Equity | 1 | ( | ) | ||||||||||||||
Fixed income | 1 | ( | ) | ||||||||||||||
Other | 3 | ( | ) | ||||||||||||||
Trust investments, at fair value | ( | ) | |||||||||||||||
Commingled funds | |||||||||||||||||
Fixed income | ( | ) | |||||||||||||||
Equity | ( | ) | |||||||||||||||
Money market funds | |||||||||||||||||
Private equity | ( | ) | |||||||||||||||
Trust investments, at net asset value | ( | ) | |||||||||||||||
Trust investments, at market | $ | $ | $ | ( | ) | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Fair value, beginning balance | $ | $ | $ | $ | |||||||||||
Net unrealized (losses) gains included in Other income, net(1) | ( | ) | ( | ) | ( | ) | |||||||||
Purchases | |||||||||||||||
Sales | ( | ) | ( | ) | |||||||||||
Acquisitions | |||||||||||||||
Fair value, ending balance | $ | $ | $ | $ |
(1) | All net unrealized gains (losses) recognized in Other income, net for our trust investments are offset by a corresponding reclassification in Other income, net to Deferred receipts held in trust and Care trusts' corpus. |
Fair Value | |||
(In thousands) | |||
Due in one year or less | $ | ||
Due in one to five years | |||
Due in five to ten years | |||
Thereafter | |||
Total estimated maturities of fixed income securities | $ |
June 30, 2019 | |||||||||||||||||||||||
In Loss Position Less Than 12 Months | In Loss Position Greater Than 12 Months | Total | |||||||||||||||||||||
Value | Unrealized Losses | Value | Unrealized Losses | Value | Unrealized Losses | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. Treasury | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Canadian government | ( | ) | ( | ) | |||||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Residential mortgage-backed | ( | ) | ( | ) | |||||||||||||||||||
Asset-backed | ( | ) | ( | ) | |||||||||||||||||||
Total temporarily impaired fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
December 31, 2018 | |||||||||||||||||||||||
In Loss Position Less Than 12 Months | In Loss Position Greater Than 12 Months | Total | |||||||||||||||||||||
Value | Unrealized Losses | Value | Unrealized Losses | Value | Unrealized Losses | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. Treasury | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Canadian government | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Residential mortgage-backed | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Asset-backed | ( | ) | ( | ) | |||||||||||||||||||
Total temporarily impaired fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
June 30, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Deferred revenue | $ | $ | |||||
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts | ( | ) | ( | ) | |||
Deferred revenue, net | $ | $ |
Six Months Ended | |||||||
June 30, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Beginning balance — Deferred revenue, net and Deferred receipts held in trust | $ | $ | |||||
Cumulative effect of accounting changes | |||||||
Net preneed contract sales | |||||||
(Divestitures) acquisitions of businesses, net | ( | ) | |||||
Net investment gains (1) | |||||||
Recognized revenue from backlog (2) | ( | ) | ( | ) | |||
Recognized revenue from current period sales | ( | ) | ( | ) | |||
Change in amounts due on unfulfilled performance obligations | ( | ) | ( | ) | |||
Change in cancellation reserve | ( | ) | |||||
Effect of foreign currency and other | ( | ) | |||||
Ending balance — Deferred revenue, net and Deferred receipts held in trust | $ | $ |
(1) | Includes both realized and unrealized investment earnings. |
(2) | Includes current year trust fund income through the date of performance. |
June 30, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
4.5% Senior Notes due November 2020 | $ | $ | |||||
8.0% Senior Notes due November 2021 | |||||||
5.375% Senior Notes due January 2022 | |||||||
5.375% Senior Notes due May 2024 | |||||||
7.5% Senior Notes due April 2027 | |||||||
4.625% Senior Notes due December 2027 | |||||||
5.125% Senior Notes due June 2029 | |||||||
Term Loan due December 2022 | |||||||
Term Loan due May 2024 | |||||||
Bank Credit Facility due December 2022 | |||||||
Obligations under finance leases | |||||||
Mortgage notes and other debt, maturities through 2050 | |||||||
Unamortized premiums, net | |||||||
Unamortized debt issuance costs | ( | ) | ( | ) | |||
Total debt | |||||||
Less: Current maturities of long-term debt | ( | ) | ( | ) | |||
Total long-term debt | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
4.5% Senior Notes due November 2020 | $ | $ | |||||
8.0% Senior Notes due November 2021 | |||||||
5.375% Senior Notes due January 2022 | |||||||
5.375% Senior Notes due May 2024 | |||||||
7.5% Senior Notes due April 2027 | |||||||
4.625% Senior Notes due December 2027 | |||||||
5.125% Senior Notes due June 2029 | |||||||
Term Loan due December 2022 | |||||||
Term Loan due May 2024 | |||||||
Bank Credit Facility due December 2022 | |||||||
Mortgage notes and other debt, maturities through 2050 | |||||||
Total fair value of debt instruments | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Revenue from customers: | |||||||||||||||
Funeral revenue: | |||||||||||||||
Atneed revenue | $ | $ | $ | $ | |||||||||||
Matured preneed revenue | |||||||||||||||
Core funeral revenue | |||||||||||||||
Non-funeral home revenue | |||||||||||||||
Recognized preneed revenue | |||||||||||||||
Other revenue | |||||||||||||||
Total funeral revenue | |||||||||||||||
Cemetery revenue: | |||||||||||||||
Atneed revenue | |||||||||||||||
Recognized preneed property revenue | |||||||||||||||
Recognized preneed merchandise and service revenue | |||||||||||||||
Core revenue | |||||||||||||||
Other revenue | |||||||||||||||
Total cemetery revenue | |||||||||||||||
Total revenue from customers | $ | $ | $ | $ | |||||||||||
Operating profit: | |||||||||||||||
Funeral operating profit | $ | $ | $ | $ | |||||||||||
Cemetery operating profit | |||||||||||||||
Operating profit from reportable segments | |||||||||||||||
General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
(Losses) gains on divestitures and impairment charges, net | ( | ) | ( | ) | |||||||||||
Hurricane recoveries (expenses), net | ( | ) | ( | ) | |||||||||||
Operating income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on early extinguishment of debt, net | ( | ) | ( | ) | ( | ) | |||||||||
Other income, net | |||||||||||||||
Income before income taxes | $ | $ | $ | $ |
United States | Canada | Total | |||||||||
(In thousands) | |||||||||||
Three Months Ended June 30, | |||||||||||
Revenue from external customers: | |||||||||||
2019 | $ | $ | $ | ||||||||
2018 | $ | $ | $ | ||||||||
Six Months Ended June 30, | |||||||||||
Revenue from external customers: | |||||||||||
2019 | $ | $ | $ | ||||||||
2018 | $ | $ | $ |
Operating | Finance | Total | |||||||||
(In thousands) | |||||||||||
2019 (excluding the six months ended June 30, 2019) | $ | $ | $ | ||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
Thereafter | |||||||||||
Total lease payments | $ | $ | $ | ||||||||
Less: Interest | ( | ) | ( | ) | ( | ) | |||||
Present value of lease liabilities | $ | $ | $ |
Operating | Finance | ||||||
(In thousands) | |||||||
2019 | $ | $ | |||||
2020 | |||||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
2024 and thereafter | |||||||
Total | $ | $ | |||||
Less: Interest on finance leases | ( | ) | |||||
Total principal payable on finance leases | $ |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
(In thousands) | |||||||
Amortization of leased assets | $ | $ | |||||
Interest on lease liabilities | |||||||
Total finance lease cost | |||||||
Operating lease cost | |||||||
Variable lease cost | |||||||
Total lease cost | $ | $ |
Lease Type | Balance Sheet Classification | June 30, 2019 | ||||
(In thousands) | ||||||
Operating lease right-of-use assets (1) | Deferred charges and other assets | $ | ||||
Finance lease right-of-use assets (1) | Property and equipment, net | |||||
Total right-of-use assets (1) | $ | |||||
Operating | Accounts payable and accrued liabilities | $ | ||||
Finance | Current maturities of long-term debt | |||||
Total current lease liabilities | ||||||
Operating | Other liabilities | |||||
Finance | Long-term debt | |||||
Total non-current lease liabilities | ||||||
Total lease liabilities | $ |
(1) | Right-of-use assets are presented net of accumulated amortization. |
Operating | Finance | ||||
Weighted-average remaining lease term (years) | |||||
Weighted-average discount rate | % | % |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
(In thousands) | |||||||
Cash paid for amounts in the measurement of lease liabilities | |||||||
Operating cash flows for operating leases | $ | $ | |||||
Operating cash flows for finance leases | |||||||
Financing cash flows for finance leases | |||||||
Total cash paid for amounts included in the measurement of lease liabilities | $ | $ | |||||
Right-of-use assets obtained in exchange for new finance lease liabilities | $ | $ | |||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ |
2019 (excluding the six months ended June 30, 2019) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total cash receipts | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Amounts attributable to common stockholders: | |||||||||||||||
Net income: | |||||||||||||||
Net income — basic | $ | $ | $ | $ | |||||||||||
After tax interest on convertible debt | |||||||||||||||
Net income — diluted | $ | $ | $ | $ | |||||||||||
Weighted average shares (denominator): | |||||||||||||||
Weighted average shares — basic | |||||||||||||||
Stock options | |||||||||||||||
Restricted stock units | |||||||||||||||
Convertible debt | |||||||||||||||
Weighted average shares — diluted | |||||||||||||||
Net income per share: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
(In thousands) | |||||||||||
Antidilutive options |
Increase in the fair value of preneed receivables, net and trust investments | $ | ( | ) | |
Increase in the fair value of cemetery property | ( | ) | ||
Decrease in the fair value of preneed customer relationship intangible assets | ||||
Increase in the fair value of current liabilities | ||||
Decrease in the fair value of deferred revenue and deferred receipts held in trust | ( | ) | ||
Decrease in the fair value of deferred income taxes | ( | ) | ||
Other | ( | ) | ||
Total adjustment to goodwill | $ | ( | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands) | |||||||||||||||
(Losses) gains on divestitures, net | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Impairment losses | ( | ) | ( | ) | ( | ) | |||||||||
(Losses) gains on divestitures and impairment charges, net | $ | ( | ) | $ | $ | ( | ) | $ |
Per Credit Agreement | Actual | ||
Leverage ratio | 4.75 (Max) | 3.89 | |
Interest coverage ratio | 3.00 (Min) | 4.83 |
• | a $22.4 million increase in vendor and other payments, |
• | a $21.1 million increase in employee compensation, |
• | a $18.7 million increase in cash tax recurring payments, |
• | a $11.8 million increase in net trust deposits, and |
• | a $8.2 million increase in cash interest paid, partially offset by |
• | a $31.0 million increase in cash receipts from customers, and |
• | a $10.7 million increase in General Agency (GA) and other receipts. |
• | a $9.8 million increase in capital expenditures primarily due to improvements at existing funeral homes, |
• | a $6.9 million decrease in cash receipts from divestitures and asset sales, and |
• | a $2.9 million decrease in proceeds from sale of other investments. |
• | a $102.4 million decrease in proceeds from the issuance of debt, net of payments, and |
• | a $3.5 million increase in payments of dividends. |
June 30, 2019 | December 31, 2018 | ||||||
(In millions) | |||||||
Preneed funeral | $ | 91.9 | $ | 106.9 | |||
Preneed cemetery: | |||||||
Merchandise and services | 143.6 | 137.9 | |||||
Pre-construction | 16.4 | 15.4 | |||||
Bonds supporting preneed obligations | 251.9 | 260.2 | |||||
Bonds supporting preneed business permits | 4.7 | 4.2 | |||||
Other bonds | 18.8 | 18.9 | |||||
Total surety bonds outstanding | $ | 275.4 | $ | 283.3 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In millions) | |||||||||||||||
Preneed insurance-funded: | |||||||||||||||
Sales production (1) | $ | 149.5 | $ | 148.1 | $ | 285.6 | $ | 274.7 | |||||||
Sales production (number of contracts) (1) | 26,215 | 25,232 | 50,127 | 46,821 | |||||||||||
General agency revenue | $ | 34.2 | $ | 36.1 | $ | 70.2 | $ | 67.6 | |||||||
Maturities | $ | 84.2 | $ | 82.7 | $ | 175.3 | $ | 179.1 | |||||||
Maturities (number of contracts) | 14,365 | 14,020 | 29,978 | 30,251 |
(1) | Amounts are not included in our unaudited Condensed Consolidated Balance Sheet. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In millions) | |||||||||||||||
Funeral: | |||||||||||||||
Preneed trust-funded (including bonded): | |||||||||||||||
Sales production | $ | 102.9 | $ | 92.3 | $ | 196.1 | $ | 185.0 | |||||||
Sales production (number of contracts) | 28,257 | 25,123 | 53,349 | 50,996 | |||||||||||
Maturities | $ | 72.4 | $ | 70.5 | $ | 145.5 | $ | 147.6 | |||||||
Maturities (number of contracts) | 18,140 | 17,182 | 36,843 | 36,843 | |||||||||||
Cemetery: | |||||||||||||||
Sales production: | |||||||||||||||
Preneed | $ | 240.5 | $ | 245.6 | $ | 457.2 | $ | 447.1 | |||||||
Atneed | 83.5 | 79.9 | 165.5 | 165.0 | |||||||||||
Total sales production | $ | 324.0 | $ | 325.5 | $ | 622.7 | $ | 612.1 | |||||||
Sales production deferred to backlog: | |||||||||||||||
Preneed | $ | 102.3 | $ | 120.2 | $ | 196.2 | $ | 217.4 | |||||||
Atneed | 61.5 | 59.4 | 122.3 | 122.7 | |||||||||||
Total sales production deferred to backlog | $ | 163.8 | $ | 179.6 | $ | 318.5 | $ | 340.1 | |||||||
Revenue recognized from backlog: | |||||||||||||||
Preneed | $ | 74.3 | $ | 81.2 | $ | 137.5 | $ | 138.2 | |||||||
Atneed | 59.4 | 59.5 | 119.0 | 120.4 | |||||||||||
Total revenue recognized from backlog | $ | 133.7 | $ | 140.7 | $ | 256.5 | $ | 258.6 |
June 30, 2019 | December 31, 2018 | ||||||||||||||
Fair Value | Cost | Fair Value | Cost | ||||||||||||
(In billions) | |||||||||||||||
Deferred revenue, net | $ | 1.44 | $ | 1.44 | $ | 1.42 | $ | 1.42 | |||||||
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts | 0.58 | 0.58 | 0.57 | 0.57 | |||||||||||
Deferred receipts held in trust | 3.69 | 3.49 | 3.37 | 3.47 | |||||||||||
Allowance for cancellation | (0.27 | ) | (0.25 | ) | (0.24 | ) | (0.25 | ) | |||||||
Backlog of trust-funded deferred revenue, net of estimated allowance for cancellation | $ | 5.44 | $ | 5.26 | $ | 5.12 | $ | 5.21 | |||||||
Backlog of insurance-funded deferred revenue(1) | 6.16 | 6.16 | 5.97 | 5.97 | |||||||||||
Total backlog of deferred revenue | $ | 11.60 | $ | 11.42 | $ | 11.09 | $ | 11.18 | |||||||
Preneed receivables, net and trust investments | $ | 4.61 | $ | 4.41 | $ | 4.27 | $ | 4.37 | |||||||
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts | 0.58 | 0.58 | 0.57 | 0.57 | |||||||||||
Allowance for cancellation on trust investments | (0.27 | ) | (0.25 | ) | (0.24 | ) | (0.25 | ) | |||||||
Assets associated with backlog of trust-funded deferred revenue, net of estimated allowance for cancellation | $ | 4.92 | $ | 4.74 | $ | 4.60 | $ | 4.69 | |||||||
Insurance policies associated with insurance-funded deferred revenue(1) | 6.16 | 6.16 | 5.97 | 5.97 | |||||||||||
Total assets associated with backlog of preneed deferred revenue | $ | 11.08 | $ | 10.90 | $ | 10.57 | $ | 10.66 |
(1) | Amounts are not included in our unaudited Condensed Consolidated Balance Sheet. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(In millions) | |||||||
Pre-tax (losses) gains from divestitures and impairment, net | $ | (11.8 | ) | $ | 6.9 | ||
Pre-tax loss from the early extinguishment of debt | $ | (7.6 | ) | $ | — | ||
Pre-tax legal settlement | $ | 1.6 | $ | — | |||
Tax effect from above items | $ | 4.2 | $ | (2.2 | ) | ||
Change in certain tax reserves | $ | (1.2 | ) | $ | 16.1 |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(Dollars in millions, except average revenue per service) | |||||||
Consolidated funeral revenue | $ | 479.0 | $ | 468.6 | |||
Less: Revenue associated with acquisitions/new construction | 9.2 | 2.6 | |||||
Less: Revenue associated with divestitures | 0.3 | 1.7 | |||||
Comparable (1) funeral revenue | 469.5 | 464.3 | |||||
Less: Comparable recognized preneed revenue | 39.1 | 33.8 | |||||
Less: Comparable general agency and other revenue | 31.6 | 33.9 | |||||
Adjusted comparable funeral revenue | $ | 398.8 | $ | 396.6 | |||
Comparable services performed | 76,439 | 74,913 | |||||
Comparable average revenue per service(2) | $ | 5,217 | $ | 5,294 | |||
Consolidated funeral operating profit | $ | 90.6 | $ | 90.4 | |||
Less: Operating loss associated with acquisitions/new construction | (0.6 | ) | 0.1 | ||||
Less: Operating loss associated with divestitures | (0.2 | ) | (1.5 | ) | |||
Comparable funeral operating profit | $ | 91.4 | $ | 91.8 |
(1) | We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2018 and ending June 30, 2019. |
(2) | We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding recognized preneed revenue, general agency revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of services performed during the period. Recognized preneed revenue are preneed sales of merchandise that are delivered at the time of sale, including memorial merchandise and travel protection, net and are excluded from our calculation of comparable average revenue per service because the associated service has not yet been performed. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(In millions) | |||||||
Consolidated cemetery revenue | $ | 333.6 | $ | 327.4 | |||
Less: Revenue associated with acquisitions/new construction | 5.3 | 1.3 | |||||
Less: Revenue associated with divestitures | 0.3 | 0.5 | |||||
Comparable (1) cemetery revenue | $ | 328.0 | $ | 325.6 | |||
Consolidated cemetery operating profit | $ | 100.6 | $ | 97.7 | |||
Less: Operating profit associated with acquisitions/new construction | 0.9 | 0.3 | |||||
Less: Operating profit associated with divestitures | 0.1 | 0.1 | |||||
Comparable cemetery operating profit | $ | 99.6 | $ | 97.3 |
(1) | We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2018 and ending June 30, 2019. |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(In millions) | |||||||
Pre-tax (losses) gains from divestitures and impairment charges, net | $ | (13.7 | ) | $ | 7.3 | ||
Pre-tax losses from the early extinguishment of debt, net | $ | (7.6 | ) | $ | (10.1 | ) | |
Pre-tax legal settlements | $ | (6.4 | ) | $ | — | ||
Tax benefit from above items | $ | 6.8 | $ | (0.6 | ) | ||
Change in certain tax reserves and other | $ | (1.2 | ) | $ | 17.3 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(Dollars in millions, except average revenue per service) | |||||||
Consolidated funeral revenue | $ | 971.8 | $ | 983.0 | |||
Less: revenue associated with acquisitions/new construction | 17.7 | 2.9 | |||||
Less: revenue associated with divestitures | 1.1 | 4.2 | |||||
Comparable (1) funeral revenue | 953.0 | 975.9 | |||||
Less: comparable recognized preneed revenue | 69.9 | 66.3 | |||||
Less: comparable general agency and other revenue | 64.7 | 62.1 | |||||
Adjusted comparable funeral revenue | $ | 818.4 | $ | 847.5 | |||
Comparable services performed | 157,460 | 160,796 | |||||
Comparable average revenue per service(2) | $ | 5,198 | $ | 5,271 | |||
Consolidated funeral operating profit | $ | 196.0 | $ | 210.9 | |||
Less: operating profit (loss) associated with acquisitions/new construction | 0.1 | (0.2 | ) | ||||
Less: operating loss associated with divestitures | (0.6 | ) | (2.4 | ) | |||
Comparable funeral operating profit | $ | 196.5 | $ | 213.5 |
(1) | We define comparable (or same store) operations as those funeral service locations owned by us for the entire period beginning January 1, 2018 and ending June 30, 2019. |
(2) | We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding recognized preneed revenue, general agency revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of services performed during the period. Recognized preneed revenue are preneed sales of merchandise that are delivered at the time of sale, including memorial merchandise and travel protection, net and are excluded from our calculation of comparable average revenue per service because the associated service has not yet been performed. |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(In millions) | |||||||
Consolidated cemetery revenue | $ | 639.0 | $ | 607.6 | |||
Less: revenue associated with acquisitions | 9.8 | 1.4 | |||||
Less: revenue associated with divestitures | 0.6 | 1.0 | |||||
Comparable (1) cemetery revenue | $ | 628.6 | $ | 605.2 | |||
Consolidated cemetery operating profit | $ | 187.0 | $ | 173.0 | |||
Less: operating profit associated with acquisitions | 0.8 | 0.4 | |||||
Less: operating profit associated with divestitures | 0.2 | — | |||||
Comparable cemetery operating profit | $ | 186.0 | $ | 172.6 |
(1) | We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2018 and ending June 30, 2019. |
• | Our affiliated funeral and cemetery trust funds own investments in securities, which are affected by market conditions that are beyond our control. |
• | We may be required to replenish our affiliated funeral and cemetery trust funds to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow. |
• | Our ability to execute our strategic plan depends on many factors, some of which are beyond our control. |
• | Our credit agreements contain covenants that may prevent us from engaging in certain transactions. |
• | If we lost the ability to use surety bonding to support our preneed funeral and preneed cemetery activities, we may be required to make material cash payments to fund certain trust funds. |
• | The funeral and cemetery industry is competitive. |
• | Increasing death benefits related to preneed contracts funded through life insurance or annuity contracts may not cover future increases in the cost of providing a price-guaranteed service. |
• | The financial condition of third-party insurance companies that fund our preneed contracts may impact our future revenue. |
• | Unfavorable results of litigation could have a material adverse impact on our financial statements. |
• | Unfavorable publicity could affect our reputation and business. |
• | If the number of deaths in our markets decline, our cash flows and revenue may decrease. |
• | If we are not able to respond effectively to changing consumer preferences, our market share, revenue, cash flows, and/or profitability could decrease. |
• | The continuing upward trend in the number of cremations performed in North America could result in lower revenue, operating profit, and cash flows. |
• | Our funeral home and cemetery businesses are high fixed-cost businesses. |
• | Regulation and compliance could have a material adverse impact on our financial results. |
• | Cemetery burial practice claims could have a material adverse impact on our financial results. |
• | We use a combination of insurance, self-insurance, and large deductibles in managing our exposure to certain inherent risks; therefore, we could be exposed to unexpected costs that could negatively affect our financial performance. |
• | A number of years may elapse before particular tax matters, for which we have established accruals, are audited and finally resolved. |
• | Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows. |
• | Declines in overall economic conditions beyond our control could reduce future potential earnings and cash flows and could result in future impairments to goodwill and/or other intangible assets. |
• | Any failure to maintain the security of the information relating to our customers, their loved ones, our associates, and our vendors could damage our reputation, could cause us to incur substantial additional costs and to become subject to litigation, and could adversely affect our operating results, financial condition, or cash flow. |
• | Our Canadian business exposes us to operational, economic, and currency risks. |
• | Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and may prevent us from fulfilling our obligations under our indebtedness. |
• | A failure of key information technology systems or processes could disrupt and adversely affect our business. |
• | Failure to maintain effective internal control over financial reporting could adversely affect our results of operations, investor confidence, and our stock price. |
• | The application of unclaimed property laws by certain states to our preneed funeral and cemetery backlog could have a material adverse impact on our liquidity, cash flows, and our financial results. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs | Dollar value of shares that may yet be purchased under the program | ||||||||||
April 1, 2019 - April 30, 2019 | 12,486 | $ | 39.91 | 12,486 | $ | 180,167,864 | ||||||||
May 1, 2019 - May 31, 2019 | 104,539 | $ | 42.99 | 104,539 | $ | 175,673,783 | ||||||||
June 1, 2019 - June 30, 2019 | 220,403 | $ | 45.36 | 220,403 | $ | 165,676,767 | ||||||||
337,428 | 337,428 |
— | |||||
— | |||||
— | |||||
— | |||||
— | |||||
— | |||||
— | |||||
101 | — | Interactive data file. |
July 30, 2019 | SERVICE CORPORATION INTERNATIONAL | |
By: | /s/ Tammy Moore | |
Tammy Moore | ||
Vice President and Corporate Controller (Principal Accounting Officer) |
(1) | any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have “beneficial ownership” of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Issuer; |
(2) | individuals who on the Issue Date constituted the board of directors (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of the Issuer was approved by a vote of at least a majority of the directors of the Issuer then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors then in office; |
(3) | the Issuer is liquidated or dissolved or adopts a plan of liquidation or dissolution; or |
(4) | the merger or consolidation of the Issuer with or into another Person or the merger of another Person with or into the Issuer, or the sale of all or substantially all the assets of the Issuer (determined on a consolidated basis) to another Person, other than a transaction following which (i) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Issuer immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (ii) in the case of a sale of assets transaction, each transferee becomes an obligor in respect of the Notes and a subsidiary of the transferor of such assets. |
(1) | that a Change of Control has occurred and that such Holder has the right to require the Issuer to purchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date); |
(2) | the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization, in each case after giving effect to such Change of Control); |
(3) | the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and |
(4) | the instructions, as determined by the Issuer, consistent with this Section 8.03, that a Holder must follow in order to have its Notes purchased. |
By: /s/ Eric D. Tanzberger Name: | Eric D. Tanzberger Title: Senior Vice President and Chief Financial Officer |
By: /s/ Karen Yu Name: | Karen Yu Title: Vice President |
By: /s/ Mary Jo Wagener Name: | Mary Jo Wagener Title: Vice President |
By | Name: |
By | Authorized Signatory |
1. | Interest |
2. | Method of Payment |
3. | Paying Agent and Registrar |
4. | Indenture |
5. | Optional Redemption |
Period | Redemption Price | |
2024 | 102.563 | % |
2025 | 101.708 | % |
2026 | 100.854 | % |
2027 and thereafter | 100.000 | % |
6. | Put Provisions |
7. | Denominations; Transfer; Exchange |
8. | Persons Deemed Owners |
9. | Unclaimed Money |
10. | Discharge and Defeasance |
11. | Amendment; Waiver |
12. | Defaults and Remedies |
13. | Trustee Dealings with the Issuer |
14. | No Recourse Against Others |
15. | Authentication |
16. | Abbreviations |
17. | CUSIP Numbers |
18. | Governing Law |
Dated: | Your Signature: | |
(Sign exactly as your name appears on the other side of this Security.) |
Signature Guarantee: |
(Signature must be guaranteed) |
Date of Exchange | Amount of decrease in Principal amount of this Global Security | Amount of increase in Principal amount of this Global Security | Principal amount of this Global Security following such decrease or increase) | Signature of authorized officer of Trustee or Securities Custodian |
1. | Section 3.3(a) of the Plan is amended to read as follows (bold/underline showing additions): |
2. | In all other respects, the terms of this Plan are hereby ratified and confirmed. |
1. | I have reviewed this quarterly report on Form 10-Q of Service Corporation International, a Texas corporation (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 30, 2019 | /s/ Thomas L. Ryan |
Thomas L. Ryan President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Service Corporation International, a Texas corporation (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 30, 2019 | /s/ Eric D. Tanzberger |
Eric D. Tanzberger | ||
Chief Financial Officer (Principal Financial Officer) |
(1) | the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Service Corporation International. |
Dated: | July 30, 2019 | /s/ Thomas L. Ryan |
Thomas L. Ryan President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |
(1) | the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Service Corporation International. |
Dated: | July 30, 2019 | /s/ Eric D. Tanzberger |
Eric D. Tanzberger | ||
Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jul. 26, 2019 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SERVICE CORPORATION INTERNATIONAL | |
Entity Central Index Key | 0000089089 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 182,360,782 | |
Entity Current Reporting Status | Yes |
Cover Page Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jul. 26, 2019 |
|
Document Information [Line Items] | ||
Document Type | 10-Q | |
Entity Common Stock, Shares Outstanding | 182,360,782 | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-6402-1 | |
Entity Registrant Name | SERVICE CORPORATION INTERNATIONAL | |
Entity Incorporation, State or Country Code | TX | |
Entity Tax Identification Number | 74-1488375 | |
Entity Address, Address Line One | 1929 Allen Parkway | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77019 | |
City Area Code | (713) | |
Local Phone Number | 522-5141 | |
Title of 12(b) Security | Common Stock ($1 par value) | |
Trading Symbol | SCI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
Unaudited Condensed Consolidated Statement of Operations Statement - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Product Information [Line Items] | ||||
Document Period End Date | Jun. 30, 2019 | |||
Revenue from External Customers | $ 812,572 | $ 796,092 | $ 1,610,784 | $ 1,590,574 |
Costs and Expenses | (621,426) | (607,965) | (1,227,804) | (1,206,685) |
Operating profit | 191,146 | 188,127 | 382,980 | 383,889 |
General and administrative expenses | (29,370) | (31,136) | (71,900) | (65,920) |
(Losses) gains on divestitures and impairment charges, net | (11,823) | 6,865 | (13,701) | 7,347 |
Hurricane Expenses, Net of Insurance Proceeds | 152 | (1,902) | (296) | 330 |
Operating income | 150,105 | 161,954 | 297,083 | 325,646 |
Interest expense | (47,317) | (44,519) | (94,707) | (88,095) |
Loss on early extinguishment of debt, net | (7,579) | 0 | (7,579) | (10,131) |
Other income, net | 874 | 1,880 | 1,594 | 2,264 |
Income before income taxes | 96,083 | 119,315 | 196,391 | 229,684 |
Provision for income taxes | (23,570) | (16,034) | (44,665) | (44,355) |
Net Income | 72,513 | 103,281 | 151,726 | 185,329 |
Net (income) loss attributable to noncontrolling interests | (184) | (42) | (74) | (102) |
Net income attributable to common stockholders | $ 72,329 | $ 103,239 | $ 151,652 | $ 185,227 |
Basic earnings per share: | ||||
Net income attributable to common stockholders, basic | $ 0.40 | $ 0.57 | $ 0.83 | $ 1.01 |
Basic weighted average number of shares | 182,369 | 182,637 | 182,048 | 183,877 |
Diluted earnings per share: | ||||
Net income attributable to common stockholders, diluted | $ 0.39 | $ 0.55 | $ 0.82 | $ 0.98 |
Diluted weighted average number of shares | 185,690 | 187,188 | 185,517 | 188,547 |
Dividends declared per share | $ 0.18 | $ 0.17 | $ 0.18 | $ 0.17 |
Product [Member] | ||||
Product Information [Line Items] | ||||
Revenue from External Customers | $ 415,492 | $ 397,600 | $ 796,701 | $ 765,814 |
Costs and Expenses | (213,635) | (209,925) | (411,529) | (397,648) |
Service [Member] | ||||
Product Information [Line Items] | ||||
Revenue from External Customers | 339,090 | 334,450 | 694,461 | 712,548 |
Costs and Expenses | (193,378) | (188,293) | (384,191) | (379,141) |
Product and Service, Other [Member] | ||||
Product Information [Line Items] | ||||
Revenue from External Customers | 57,990 | 64,042 | 119,622 | 112,212 |
Costs and Expenses | $ (214,413) | $ (209,747) | $ (432,084) | $ (429,896) |
Unaudited Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Unaudited Condensed Consolidated Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 72,513 | $ 103,281 | $ 151,726 | $ 185,329 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 6,998 | (5,909) | 14,399 | (15,501) |
Total comprehensive income | 79,511 | 97,372 | 166,125 | 169,828 |
Total comprehensive income attributable to noncontrolling interests | (36) | (41) | (76) | (98) |
Total comprehensive income attributable to common stockholders | $ 79,475 | $ 97,331 | $ 166,049 | $ 169,730 |
Unaudited Condensed Consolidated Balance Sheet (Parenthetical) - $ / shares |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Stockholders' Equity: | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 186,411,295 | 184,720,582 |
Common stock, shares outstanding | 182,468,970 | 181,470,582 |
Unaudited Condensed Consolidated Statement of Equity Statement - USD ($) $ in Thousands |
Total |
Common Stock |
Treasury Stock |
Capital in Excess of Par Value |
Retained Earnings [Member] |
Accumulated Other Comprehensive Income (Loss) |
Noncontrolling Interest |
---|---|---|---|---|---|---|---|
Stockholders' Equity [Roll Forward] | |||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 172,232 | $ 0 | $ 0 | $ 0 | $ 172,461 | $ (229) | $ 0 |
Balance at beginning of period at Dec. 31, 2017 | 1,409,437 | 191,936 | (5,321) | 970,468 | 210,364 | 41,943 | 47 |
Stockholders' Equity [Roll Forward] | |||||||
Comprehensive income | 72,456 | 0 | 0 | 0 | 81,988 | (9,589) | 57 |
Balance at end of period at Jun. 30, 2018 | 1,476,397 | 192,625 | (11,387) | 954,128 | 314,669 | 26,217 | 145 |
Balance at beginning of period at Dec. 31, 2017 | 1,409,437 | 191,936 | (5,321) | 970,468 | 210,364 | 41,943 | 47 |
Stockholders' Equity [Roll Forward] | |||||||
Dividends declared on common stock | 31,348 | 0 | 0 | 0 | 31,348 | 0 | 0 |
Employee share-based compensation earned | 3,699 | 0 | 0 | 3,699 | 0 | 0 | 0 |
Stock option exercises | (4,989) | (282) | 0 | (4,707) | 0 | 0 | 0 |
Restricted stock awards, net of forfeitures | 0 | 163 | 0 | (163) | 0 | 0 | 0 |
Purchase of Company common stock | (118,797) | 0 | (3,095) | (16,101) | (99,601) | 0 | 0 |
Other | (819) | 47 | 0 | (866) | 0 | 0 | 0 |
Balance at end of period at Dec. 31, 2018 | 1,641,815 | 184,721 | (3,250) | 972,710 | 474,327 | 13,395 | (88) |
Balance at beginning of period at Mar. 31, 2018 | 1,511,849 | 192,428 | (8,416) | 961,744 | 333,864 | 32,125 | 104 |
Stockholders' Equity [Roll Forward] | |||||||
Comprehensive income | 97,372 | 0 | 0 | 0 | 103,239 | (5,908) | 41 |
Dividends declared on common stock | 30,893 | 0 | 0 | 0 | 30,893 | 0 | 0 |
Employee share-based compensation earned | 3,845 | 0 | 0 | 3,845 | 0 | 0 | 0 |
Stock option exercises | (2,313) | (129) | 0 | (2,184) | 0 | 0 | 0 |
Restricted stock awards, net of forfeitures | 0 | 15 | 0 | (15) | 0 | 0 | 0 |
Purchase of Company common stock | (110,069) | 0 | (2,971) | (15,557) | (91,541) | 0 | 0 |
Other | 1,980 | 53 | 0 | 1,927 | 0 | 0 | 0 |
Balance at end of period at Jun. 30, 2018 | 1,476,397 | 192,625 | (11,387) | 954,128 | 314,669 | 26,217 | 145 |
Balance at beginning of period at Dec. 31, 2018 | 1,641,815 | 184,721 | (3,250) | 972,710 | 474,327 | 13,395 | (88) |
Stockholders' Equity [Roll Forward] | |||||||
Comprehensive income | 86,614 | 0 | 0 | 0 | 79,323 | 7,251 | 40 |
Dividends declared on common stock | 32,820 | 0 | 0 | 0 | 32,820 | 0 | 0 |
Employee share-based compensation earned | 4,568 | 0 | 0 | 4,568 | 0 | 0 | 0 |
Stock option exercises | (15,962) | (950) | 0 | (15,012) | 0 | 0 | 0 |
Restricted stock awards, net of forfeitures | 0 | 126 | 0 | (126) | 0 | 0 | 0 |
Purchase of Company common stock | (14,542) | 0 | (355) | (1,935) | (12,252) | 0 | 0 |
Other | (1,192) | 59 | 0 | (1,251) | 0 | 0 | 0 |
Balance at end of period at Mar. 31, 2019 | 1,700,405 | 185,856 | (3,605) | 988,978 | 508,578 | 20,646 | (48) |
Stockholders' Equity [Roll Forward] | |||||||
Comprehensive income | 79,511 | 0 | 0 | 0 | 72,329 | 7,146 | 36 |
Dividends declared on common stock | 32,871 | 0 | 0 | 0 | 32,871 | 0 | 0 |
Employee share-based compensation earned | 3,445 | 0 | 0 | 3,445 | 0 | 0 | 0 |
Stock option exercises | (7,139) | (513) | 0 | (6,626) | 0 | 0 | 0 |
Purchase of Company common stock | (15,032) | 0 | (337) | (1,832) | (12,863) | 0 | 0 |
Other | 1,619 | 42 | 0 | 1,577 | 0 | 0 | 0 |
Balance at end of period at Jun. 30, 2019 | $ 1,744,216 | $ 186,411 | $ (3,942) | $ 998,794 | $ 535,173 | $ 27,792 | $ (12) |
Unaudited Condensed Consolidated Statement of Equity (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Dividends declared per share | $ 0.18 | $ 0.17 | $ 0.18 | $ 0.17 |
Nature of Operations (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Nature of Operations [Abstract] | |
Nature of Operations | We are North America’s largest provider of deathcare products and services, with a network of funeral service locations and cemeteries operating in the United States and Canada. Our funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and other related businesses, which enable us to serve a wide array of customer needs. We sell cemetery property and funeral and cemetery merchandise and services at the time of need and on a preneed basis. Funeral service locations provide all professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles, arranging and directing services, removal, preparation, embalming, cremations, memorialization, travel protection, and catering. Funeral merchandise, including burial caskets and related accessories, urns and other cremation receptacles, outer burial containers, flowers, online and video tributes, stationery products, casket and cremation memorialization products, and other ancillary merchandise, is sold at funeral service locations. Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, niches, and other cremation memorialization and interment options. Cemetery merchandise and services, including memorial markers and bases, outer burial containers, flowers and floral placement, other ancillary merchandise, graveside services, merchandise installation, and interments, are sold at our cemeteries.
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Summary of Significant Accounting Policies (Notes) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation Our consolidated financial statements include the accounts of Service Corporation International (SCI) and all subsidiaries in which we hold a controlling financial interest. Intercompany balances and transactions have been eliminated in consolidation. Our consolidated financial statements also include the accounts of the merchandise and service trusts and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary. We have retained the specialized industry accounting principles when consolidating the trusts. Our trusts are variable interest entities, for which we have determined that we are the primary beneficiary as we absorb a majority of the losses and returns associated with these trusts. Although we consolidate the trusts, it does not change the legal relationships among the trusts, us, or our customers. The customers are the legal beneficiaries of these trusts; therefore, their interests in these trusts represent a liability to us. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair statement of our results for these periods. Our unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018, unless otherwise disclosed herein, and should be read in conjunction therewith. The accompanying year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. Use of Estimates in the Preparation of Financial Statements The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in our Annual Report on Form 10-K for the year ended December 31, 2018. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates. Leases We have operating and finance leases. Our operating leases primarily include funeral service real estate and office equipment for funeral service locations, cemetery locations, and administrative offices. Our finance leases primarily include transportation equipment but also include real estate and office equipment. Lease terms related to real estate generally range from one to forty years with options to renew at varying terms. Lease terms related to office and transportation equipment generally range from one to eight years with options to renew at varying terms. We determine whether an arrangement is or contains a lease at the inception of the arrangement based on the unique facts and circumstances present. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Leases with a term greater than one year are recognized on the balance sheet as ROU assets and lease liabilities. We have elected not to recognize on the balance sheet leases with terms of one year or less. Lease liabilities and their corresponding ROU assets are recorded at commencement date based on the present value of lease payments over the expected lease term. For transportation equipment, we use the rate implicit in each lease to calculate the present value. For real estate and non-transportation equipment leases, the interest rate implicit in lease contracts is typically not readily determinable. Therefore, we use the appropriate collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of future payments for real estate and non-transportation equipment leases. Certain adjustments to the ROU asset may be required for items such as initial direct costs paid or incentives received. We calculate operating lease expense ratably over the lease term plus any reasonably assured renewal periods. We consider reasonably assured renewal options and fixed escalation provisions in our calculation. Generally, our leases do not include options to terminate the lease prior to the contractual lease expiration date, but future renewal periods are generally cancelable. The majority of our contractually available renewal periods for leases of buildings and land are considered reasonably certain of being exercised. This determination is made by our real estate team based on facts and circumstances surrounding each property. Leases with a term of 12 months or less are not recorded on the balance sheet. The majority of our lease arrangements contain options to (i) purchase the property at fair value on the exercise date, (ii) purchase the property for a value determined at the inception of the lease, or (iii) renew the lease for the fair rental value at the end of the primary lease term. The depreciable life of assets and leasehold improvements are generally limited by the expected lease term. Certain of our lease agreements include variable rental payments based on a percentage of sales over base contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We generally do not have sublease arrangements, sale-leaseback arrangements, or leveraged leases. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For leases commencing before January 1, 2019, we have elected the practical expedient to not separate lease and non-lease components on certain equipment leases, such as copiers where the cost-per-copy maintenance charges are included in the lease charge. On these leases, we have elected to account for the lease and non-lease components as a single component. For leases commencing on or after January 1, 2019, we account for the maintenance charges (non-lease components) separate from the lease components. Cash, Cash Equivalents, and Restricted Cash The components of cash, cash equivalents, and restricted cash at June 30, 2019 and December 31, 2018 are as follows:
Property and equipment, net During the fourth quarter of 2018, based on a review of our historical usage patterns for similar assets, we increased our estimate of the remaining useful life of certain building improvements and equipment by one to three years. For the three and six months ended June 30, 2019, these changes in useful life, which were made prospectively, reduced depreciation expense by $4.1 million ($0.02 per basic and diluted share) and $8.0 million ($0.04 per basic and diluted share). Accounting Standards Adopted in 2019 Leases In February 2016 and in January, July, and December 2018, the Financial Accounting Standards Board (FASB) issued and amended new guidance on "Leases" to increase transparency and comparability among organizations. Under the new guidance, we are required to recognize right-of-use (ROU) lease assets and liabilities on our balance sheet and disclose key information about leasing arrangements. In addition, the new guidance offers specific accounting considerations for lessees, lessors, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We adopted the new guidance on January 1, 2019 using the modified retrospective transition method. As a result of the adoption, we recorded:
The modified retrospective transition method includes a number of optional practical expedients and accounting policy elections: 1.We elected a package of practical expedients to not reassess:
2.We did not elect a practical expedient to use hindsight when determining lease term. 3.We elected the short-term lease recognition exemption. 4.The remaining practical expedients do not apply or do not have a material impact. We established a project team to implement the new guidance. We implemented a new enterprise-wide lease management system in the form of a pre-configured software-as-a-service cloud-based application to support the adoption and ongoing lease requirements under the new guidance. This system serves as a lease database to manage our lease inventory centrally and ensure completeness of our lease inventory. The system also produces accounting entries and financial reporting disclosures required under the new guidance and provides lease activity business intelligence reporting. We thoroughly tested the new system to ensure it produces accurate data to prepare the required accounting entries and disclosures under the new guidance upon adoption and on an ongoing basis. We evaluated and implemented additional changes to our processes and internal controls to facilitate adoption on January 1, 2019 and to meet the standard’s ongoing reporting and disclosure requirements. Our current operating lease portfolio is primarily composed of real estate and equipment. As a result of the adoption, we recognized ROU assets and lease liabilities related to substantially all operating lease arrangements. The adoption of "Leases" did not have an impact on our consolidated results of operations or cash flows. We made the required enhanced lease-related disclosures above and in Note 9 of this Form 10-Q. Internal Use Software In August 2018, the FASB amended "Internal Use Software" to align the requirements for capitalizing implementation costs incurred in a hosting arrangement for software-as-a-service with the requirements for capitalizing those costs in a hosting arrangement that includes a software license. Costs for implementation activities in the application development stage are capitalized, depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed. Any capitalized costs are amortized over the term of the hosting arrangement. Cash payments for the implementation costs, whether capitalized or not, are presented as operating outflows as that is consistent with the presentation of the fees in the hosting arrangement. We adopted the new guidance on a prospective basis to implementation costs incurred after January 1, 2019 with an immaterial impact on our consolidated results of operations and consolidated financial position and no impact on cash flows. Recently Issued Accounting Standards Financial Instruments In June 2016, the FASB amended "Financial Instruments" to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. We are still evaluating the impact of the new standard on our consolidated results of operations, consolidated financial position, and cash flows. Goodwill In January 2017, the FASB amended "Goodwill" to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for us on January 1, 2020, and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Fair Value Measurements In August 2018, the FASB amended "Fair Value Measurements" to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for us with our quarterly filing for the period ended March 31, 2020 and we will make the required disclosure changes in that filing. Adoption will not have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Retirement Plans In August 2018, the FASB amended "Retirement Plans" to modify the disclosure requirements for defined benefit plans. For us, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for us with our annual filing for the year ended December 31, 2020 and we will make the required disclosure changes in that filing. Adoption will not have an impact on our consolidated results of operations, consolidated financial position, and cash flows.
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Preneed Activities (Notes) |
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Preneed Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preneed Activities | 3. Preneed Activities Preneed receivables, net and trust investments The components of Preneed receivables, net and trust investments in our unaudited Condensed Consolidated Balance Sheet at June 30, 2019 and December 31, 2018 are as follows:
The table below sets forth certain investment-related activities associated with our trusts:
The costs and values associated with trust investments recorded at fair value at June 30, 2019 and December 31, 2018 are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Fair value represents the value of the underlying securities held by the trusts.
As of June 30, 2019, our unfunded commitment for our private equity and other investments was $141.9 million which, if called, would be funded by the assets of the trusts. The change in our market-based trust investments with significant unobservable inputs (Level 3) is as follows:
Maturity dates of our fixed income securities range from 2019 to 2040. Maturities of fixed income securities (excluding mutual funds) at June 30, 2019 are estimated as follows:
Recognized trust fund income (realized and unrealized) related to these trust investments was $47.1 million and $52.2 million for the three months ended June 30, 2019 and 2018, respectively. Recognized trust fund income (realized and unrealized) related to these trust investments was $95.1 million and $97.1 million for the six months ended June 30, 2019 and 2018, respectively. We have determined that the unrealized losses in our fixed income investments are considered temporary in nature, as the unrealized losses were due to temporary fluctuations in interest rates. We believe that none of the securities are other-than-temporarily impaired based on our analysis of the investments. Our analysis included a review of the portfolio holdings and discussions with the individual money managers as to the credit ratings and the severity and duration of the unrealized losses. Our fixed income investment unrealized losses, their associated values, and the duration of unrealized losses as of June 30, 2019 and December 31, 2018, respectively, are shown in the following tables:
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Income Taxes (Notes) |
6 Months Ended |
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Jun. 30, 2019 | |
Income Taxes [Abstract] | |
Income Tax Disclosure | Income Taxes Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items, which are recorded in the period in which they occur. Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitation, and increases or decreases in valuation allowances on deferred tax assets. Our effective tax rate was 24.5% and 13.4% for the three months ended June 30, 2019 and 2018, respectively. Our effective tax rate was 22.7% and 19.3% for the six months ended June 30, 2019 and 2018, respectively. The higher effective tax rate for the three and six months ended June 30, 2019 was primarily due to favorable adjustments allowed under SAB 118 in the prior year, partially offset with the higher excess tax benefits from increased exercises of stock options in 2019. Unrecognized Tax Benefits As of June 30, 2019, the total amount of our unrecognized tax benefits was $1.4 million, and the total amount of our accrued interest was $0.6 million. The federal statutes of limitations have expired for all tax years prior to 2015, and we are not currently under audit by the IRS. Various state jurisdictions are auditing years 2009 through 2017. There are currently no federal or provincial audits in Canada; however, years subsequent to 2014 remain open and could be subject to examination. It is reasonably possible that the amount of unrecognized tax benefits may change within the next twelve months. However, given the number of years that remain subject to examination and the number of matters being examined, an estimate of the range of the possible increase or decrease cannot be made.
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Debt (Notes) |
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Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure | Debt Debt as of June 30, 2019 and December 31, 2018 was as follows:
Current maturities of debt at June 30, 2019 include amounts due within the next year under our Term Loan, mortgage notes and other debt and finance leases, and our 5.375% Senior Notes due January 2022, which we redeemed in July 2019. Our consolidated debt had a weighted average interest rate of 4.94% and 4.99% at June 30, 2019 and December 31, 2018, respectively. Approximately 77% and 66% of our total debt had a fixed interest rate at June 30, 2019 and December 31, 2018, respectively. During the six months ended June 30, 2019 and 2018, we paid $97.3 million and $89.1 million in cash interest, respectively. Bank Credit Agreement In May 2019, we entered into a new $1.7 billion bank credit agreement due May 2024 with a syndicate of banks. The $1.7 billion bank credit agreement comprises a $1.0 billion Bank Credit Facility and a $0.7 billion Term Loan, both due May 2024, including a sublimit of $100.0 million for letters of credit. We accounted for this transaction as a modification of the agreement. Through modifying the Term Loan, we received $49.3 million in proceeds from certain members of the syndicate of banks and paid $32.1 million in principal payments to other members, netting to a $17.2 million increase in our outstanding Term Loan balance. As of June 30, 2019, we have no outstanding borrowings under our Bank Credit Facility due May 2024, $650.0 million of outstanding borrowings under our Term Loan due May 2024, and $32.9 million of letters of credit issued. The bank credit agreement provides us with flexibility for working capital, if needed, and is guaranteed by a majority of our domestic subsidiaries. The subsidiary guaranty is a guaranty of payment of the outstanding amount of the total lending commitment, including letters of credit. The bank credit agreement contains certain financial covenants, including a minimum interest coverage ratio, a maximum leverage ratio, and certain dividend and share repurchase restrictions. As of June 30, 2019, we were in compliance with all of our debt covenants. We pay a quarterly fee on the unused commitment, which was 0.20% at June 30, 2019. As of June 30, 2019, we have $967.1 million in borrowing capacity under the Bank Credit Facility. Debt Issuances and Additions During the six months ended June 30, 2019, we issued $854.3 million of debt including: •$750.0 million unsecured 5.125% Senior Notes due June 2029 •$55.0 million on our Bank Credit Facility •$49.3 million in additional proceeds from certain members of the syndicate of banks in our Bank Credit Facility Newly issued debt was used to pay off our Bank Credit Facility due December 2022, to partially redeem our 5.375% Senior Notes due January 2022, to fund acquisition activity, and for general corporate purposes. These transactions resulted in additional debt issuance costs of $15.5 million. During the six months ended June 30, 2018, we drew a total of $370.0 million on our Bank Credit Facility to fund the redemption of our 7.625% Senior Notes due October 2018, to make required principal payments on our Term Loan due December 2022, to fund acquisition activity, and for general corporate purposes. Debt Extinguishments and Reductions During the six months ended June 30, 2019, we made aggregate debt payments of $836.8 million for scheduled and early extinguishment payments including: •$450.0 million in aggregate principal of our Bank Credit Facility; •$40.5 million in aggregate principal payments to other members of our Term Loan; •$326.1 million in aggregate principal 5.375% Senior Notes due January 2022; •$15.7 million in aggregate principal of 7.5% Senior Notes due April 2027; •$4.3 million of premiums paid on early extinguishment; and •$0.2 million in other debt. Certain of the above transactions resulted in the recognition of a loss of $7.6 million recorded in Losses on early extinguishment of debt in our Consolidated Statement of Operations for the six months ended June 30, 2019. During the six months ended June 30, 2018, we made aggregate debt payments of $268.2 million for scheduled and early extinguishment payments including: •$250.0 million in aggregate principal of our 7.625% Senior Notes due October 2018; •$9.6 million in call premium for redemption of the 7.625% Senior Notes due October 2018; •$8.4 million in aggregate principal of our Term Loan; and •$0.2 million in other debt.
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Credit Risk and Fair Value of Financial Instruments (Notes) |
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Credit Risk and Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Risk and Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair Value Estimates The fair value estimates of the following financial instruments have been determined using available market information and appropriate valuation methodologies. The carrying values of cash and cash equivalents, trade receivables, and trade payables approximate the fair values of those instruments due to the short-term nature of the instruments. The fair value of receivables on preneed contracts are impracticable to estimate because of the lack of a trading market and the diverse number of individual contracts with varying terms. The fair value of our debt instruments at June 30, 2019 and December 31, 2018 was as follows:
The fair value of our long-term, fixed-rate loans was estimated using market prices for those loans, and therefore they are classified within Level 2 of the fair value measurements hierarchy. The Term Loan, Bank Credit Facility agreement, and the mortgage notes and other debt are classified within Level 3 of the fair value measurements hierarchy. The fair value of these instruments has been estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. An increase (decrease) in the inputs results in a directionally opposite change in the fair value of the instruments.
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Equity (Notes) |
6 Months Ended |
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Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure | Equity Share Repurchases Subject to market conditions, normal trading restrictions, and limitations in our debt covenants, we may make purchases in the open market or through privately negotiated transactions under our stock repurchase program. During the six months ended June 30, 2019, we repurchased 692,325 shares of common stock at an aggregate cost of $29.6 million, which is an average cost per share of $42.72. After these repurchases, the remaining dollar value of shares authorized to be purchased under our share repurchase program was approximately $165.7 million at June 30, 2019. Subsequent to June 30, 2019, we repurchased 142,492 shares of common stock at an aggregate cost of $6.7 million, which is an average cost per share of $46.78. After these subsequent repurchases, the remaining dollar value of shares authorized to be repurchased under our repurchase program is $159.0 million.
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Segment Reporting (Notes) |
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Segment Reporting Disclosure [Text Block] | Segment Reporting Our operations are both product-based and geographically-based, and the reportable operating segments presented below include our funeral and cemetery operations. Our geographic areas include the United States and Canada, where we conduct both funeral and cemetery operations. Our reportable segment, including disaggregated revenue, information is as follows:
Our geographic area information is as follows:
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Leases (Notes) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases of Lessee Disclosure [Text Block] | Leases Our leases principally relate to funeral service real estate and office, maintenance, and transportation equipment. The majority of our lease arrangements contain options to (i) purchase the property at fair value on the exercise date, (ii) purchase the property for a value determined at the inception of the lease, or (iii) renew the lease for the fair rental value at the end of the primary lease term. Future lease payments for non-cancelable operating and finance leases as of June 30, 2019 was as follows:
As of December 31, 2018, we disclosed the following future lease payments for non-cancelable operating and finance leases exceeding one year:
The components of lease cost for the three and six months ended June 30, 2019 were as follows:
Supplemental balance sheet information as of June 30, 2019 related to leases was as follows:
The weighted-average life remaining and discount rates of our leases as of June 30, 2019 were as follows:
Supplemental cash flow information related to leases for the three and six months ended June 30, 2019 were as follows:
We have 64 operating leases where we are the lessor and the non-cancelable term is greater than one year, resulting in $0.7 million and $1.4 million in lease income for the three and six months ended June 30, 2019. We lease office space and excess land, and we are party to cellular agreements and land easements. We generally do not have sales-type leases, direct financing leases, or lease receivables. The adoption of ASC 842 did not have an impact on our accounting for lessor leases. Future undiscounted lease income from operating leases as of June 30, 2019 were as follows (in thousands):
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Commitments and Contingencies (Notes) |
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Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingencies Insurance Loss Reserves We purchase comprehensive general liability, morticians’ and cemetery professional liability, automobile liability, and workers’ compensation insurance coverage, all of which are structured with high deductibles. The high-deductible insurance program means we are primarily self-insured for claims and associated costs and losses covered by these policies. As of June 30, 2019 and December 31, 2018, we have self-insurance reserves of $80.3 million and $80.1 million, respectively. Litigation and Regulatory Matters We are a party to various litigation and regulatory matters, investigations, and proceedings. Some of the more frequent routine litigations incidental to our business are based on burial practices claims and employment-related matters, including discrimination, harassment, and wage and hour laws and regulations. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies, and the likelihood of an unfavorable outcome. We intend to vigorously defend ourselves in the matters described herein; however, if we determine that an unfavorable outcome is probable and can be reasonably estimated, we establish the necessary accruals. We hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome of certain of these matters. We accrue such insurance recoveries when they become probable of being paid and can be reasonably estimated. Wage and Hour Claims. We are named as a defendant in various lawsuits alleging violations of federal and state laws regulating wage and hour pay, including but not limited to the Samborsky, Fredeen, Horton, Quismundo, and Kallweit lawsuits described below. Given the nature of these lawsuits, except for those lawsuits where a settlement is referenced, we are unable to reasonably estimate the possible loss or ranges of loss, if any. Charles Samborsky, et al, individually and on behalf of those persons similarly situated, v. SCI California Funeral Services, Inc., et al ; Case No. BC544180; in the Superior Court of the State of California for the County of Los Angeles, Central District-Central Civil West Courthouse. This lawsuit was filed in April 2014 against an SCI subsidiary and purports to have been brought on behalf of employees who worked as family service counselors in California since April 2010. The plaintiffs allege causes of action for various violations of state laws regulating wage and hour pay. In addition, this lawsuit also asserts claims under the California Private Attorney General Act (PAGA) provisions on behalf of other similarly situated California persons. The plaintiffs seek unpaid wages, compensatory and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. The claims have been sent to arbitration. In July 2017, the arbitrator entered an award rejecting the plaintiffs' claims, ruling that they did not sue the correct party. Plaintiffs continue to assert claims under PAGA that are not subject to arbitration. Adrian Mercedes Vasquez, an individual and on behalf of others similarly situated, v. California Cemetery and Funeral Services, LLC, et al; Case No. BC58837; in the Superior Court of the State of California for the County of Los Angeles. This lawsuit was filed in July 2015 against SCI subsidiaries and purports to be brought on behalf of the defendants' current and former non-exempt California employees during the four years preceding the filing of the complaint. The plaintiff alleges numerous causes of action for alleged wage and hour pay violations. The plaintiff seeks unpaid wages, compensatory and punitive damages, civil penalties, attorneys’ fees and costs, interest, and injunctive relief. The claims were ordered to arbitration, and the arbitrator has determined that the claims would proceed as a bilateral arbitration. On May 24, 2019, the arbitrator issued an opinion rejecting plaintiff’s claims in their entirety. In addition, the plaintiff filed an unfair labor practice charge against defendants with the National Labor Relations Board alleging that by enforcing a mandatory arbitration provision, defendants allegedly violated the National Labor Relations Act. That action is currently pending. Lisa Fredeen, an aggrieved employee and on behalf of other aggrieved employees v. California Cemetery and Funeral Services, LLC, et al; Case No. BC706930; in the Superior Court of the State of California for the County of Los Angeles. This lawsuit was filed on May 18, 2018, by the same law firm that filed the Vasquez case described above against SCI subsidiaries, asserting claims for violations of the California Labor Code and PAGA, based on alleged facts similar to those alleged in the Vasquez suit. The plaintiff seeks civil penalties, interest, and attorneys’ fees. Nicole Romano, individually and on behalf of all others similarly situated v. SCI Direct, Inc., et al; Case No. BC656654; in the Superior Court of California for the County of Los Angeles. This lawsuit was filed in April 2017 against SCI subsidiaries and purports to have been brought on behalf of persons who worked as independent sales representatives in the U.S. during the four years preceding the filing of the complaint. In addition, this lawsuit also asserts claims under PAGA provisions on behalf of other similarly situated California persons. The plaintiff alleges numerous causes of action for alleged wage and hour pay violations, including misclassifying the independent sales representatives as independent contractors instead of employees. The plaintiff seeks unpaid wages, compensatory and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. The parties reached a settlement of this lawsuit and the Doyle lawsuit referenced below in November 2018. The settlement agreement is subject to court approval. The financial terms of the settlement call for SCI Direct to pay a total of $2.5 million in relation to both the Romano and Doyle lawsuits. On May 21, 2019, the Court granted the parties' Motion for Preliminary Approval of Class Action Settlement. James Doyle, individually and on behalf of all others similarly situated v. SCI Direct, Inc., et al; Case No. 2:18-cv-05859 in the United States District Court Central District of California, removed from Case No. BC705666; in the Superior Court of California for the County of Los Angeles. This lawsuit was filed in May 2018, against an SCI subsidiary, by the same attorneys who filed the Romano case described above, and alleges causes of action and seeks damages and relief similar to those in the Romano case. The parties reached a settlement of this lawsuit and the Romano lawsuit referenced above in November 2018. On December 26, 2019, this matter was consolidated into the Romano lawsuit. The settlement agreement, noted above, is subject to court approval. The financial terms of the settlement call for SCI Direct to pay a total of $2.5 million collectively for the Romano and Doyle lawsuits. Felicia Horton, an individual and on behalf of other aggrieved employees v. SCI Direct, Inc., et al; Case No. 37-2016-00039356-CU-OE-CTL; in the Superior Court of California for the County of San Diego. This lawsuit was filed in November 2016, against SCI subsidiaries, on behalf of the plaintiff who worked as an independent sales representative of our subsidiary in California. In addition, this lawsuit asserts claims under PAGA on behalf of other similarly situated California persons. The lawsuit alleges causes of action and seeks damages and relief similar to those in the Romano case described above. The attorneys in the Horton case have also filed an additional lawsuit, against SCI subsidiaries, alleging individual and PAGA claims similar to those alleged in the Horton case. The additional individual and PAGA claim lawsuits are styled Jandy Quismundo v. SCI Direct, Inc., et al; Case No. 37-2017-00031825-CU-OE-CTL; in the Superior Court of California for the County of San Diego, and Jaime Kallweit v. SCI Direct, Inc., et al; Case No. 37-2017-00037186-CU-OE-CTL; in the Superior Court for the State of California for the County of San Diego. Sandra Dorian v. SCI Direct, Inc., et al; Case No 37-2018-0061985-CU-OE-CTL; in the Superior Court of California for the County of San Diego, and Holly Karpiak v. SCI Direct, Inc., et al; Case No. 37-2019-00031328-CU-OE-CTL, in the Superior Court of California for the County of San Diego. In addition to the wage and hour and PAGA claims described above, Horton alleges claims for sexual harassment and wrongful discharge. After a trial, the judge issued a preliminary statement of decision on April 19, 2019, awarding approximately $0.3 million related to the aforementioned claims above. Claims Regarding Acquisition of Stewart Enterprises. We are involved in the following lawsuit. Karen Moulton, Individually and on behalf of all others similarly situated v. Stewart Enterprises, Inc., Service Corporation International and others ; Case No. 2013-5636; in the Civil District Court Parish of New Orleans, Louisiana. This case was filed as a class action in June 2013 against SCI and our subsidiary in connection with SCI's acquisition of Stewart Enterprises, Inc. The plaintiffs allege that SCI aided and abetted breaches of fiduciary duties by Stewart Enterprises and its board of directors in negotiating the combination of Stewart Enterprises with a subsidiary of SCI. The plaintiffs seek damages concerning the combination. We filed exceptions to the plaintiffs’ complaint that were granted in June 2014. Thus, subject to appeals, SCI will no longer be party to the suit. The case has continued against our subsidiary Stewart Enterprises and its former individual directors. However, in October 2016, the court entered a judgment dismissing all of plaintiffs’ claims. Plaintiffs have appealed the dismissal. Given the nature of this lawsuit, we are unable to reasonably estimate the possible loss or ranges of loss, if any. Operational Claims. We are named a defendant in various lawsuits alleging operational claims, including but not limited to the Bernstein and Hood lawsuits described below. Caroline Bernstein, on behalf of herself and Marla Urofsky on behalf of Rhea Schwartz, and both on behalf of all others similarly situated v. SCI Pennsylvania Funeral Services, Inc. and Service Corporation International, Case No. 2:17-cv-04960-GAM; in the United States District Court Eastern District of Pennsylvania. This case was filed in November 2017 as a purported national or alternatively as a Pennsylvania class action regarding our Forest Hills/Shalom Memorial Park in Huntingdon Valley, Pennsylvania and our Roosevelt Memorial Park Cemetery in Trevose, Pennsylvania. Plaintiffs allege wrongful burial and sales practices. Plaintiffs seek compensatory, consequential and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. Given the nature of this lawsuit, we are unable to reasonably estimate the possible loss or ranges of loss, if any. Shelley T. Hood v. Pine Crest Funeral Home and Cemetery A/K/A Pine Crest Funeral Home, Service Corporation International, and others; Case No. 02-CV-2017-900635.00; in the Circuit Court of Mobile County, Alabama. This case was filed in March 2017. Plaintiff alleges she contracted with Pine Crest Funeral Home to cremate her mother’s remains on March 25, 2011. Plaintiff further alleges that the cremated remains could not be located when she contacted Pine Crest Funeral Home to take possession of the cremated remains in October 2015. Plaintiff sought compensatory and punitive damages. The plaintiff was awarded compensatory and punitive damages after a jury trial. This matter has settled for a confidential, non-material amount. Unclaimed Property Audit. We are involved in the following matter. We received notices from a third party auditor representing unclaimed property departments of certain states regarding preneed funeral and cemetery contracts that were not funded by the purchase and assignment of the proceeds of insurance policies. The auditor claims that we are subject to the laws of those states concerning escheatment of unclaimed funds. The auditor seeks escheatment of funds from the portion of such contracts for which it claims that we will probably not be required to provide services or merchandise in the future. No actual audits have commenced at this time. Given the nature of this lawsuit, we are unable to reasonably estimate the possible loss or ranges of loss, if any. Other Potential Contingencies In October of 2018, we received a letter from the Illinois Office of the Comptroller claiming that our subsidiary improperly withdrew a total of $13.6 million from perpetual care trusts covering 24 of our cemeteries in Illinois. We believe these withdrawals were entirely proper for the ongoing care of those cemeteries under Illinois law. In July of 2019, we received a letter from the State of California, Department of Justice alleging that the allocation of prices among certain of our cremation service contracts and cremation merchandise contracts violates section 7735 of the Business and Professions Code and that provisions of these same contracts constitute false advertising and deceptive sales practices in violation of California consumer protection laws. The State of California, Department of Justice has requested various injunctive terms, monetary relief of $15.0 million and modified refunds for certain California consumers. We believe our contracts comply with applicable laws. We intend to vigorously defend all of the above matters; however, an adverse decision in one or more of such matters could have a material effect on us, our financial condition, results of operations, and cash flows.
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Earnings Per Share (Notes) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | 11. Earnings Per Share Basic earnings per common share (EPS) excludes dilution and is computed by dividing Net income attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other obligations to issue common stock were exercised or converted into common stock or resulted in the issuance of common shares that then shared in our earnings. A reconciliation of the numerators and denominators of the basic and diluted EPS computations is presented below:
The computation of diluted EPS excludes outstanding stock options and restricted share units in certain periods in which the inclusion of such equity awards would be anti-dilutive in the periods presented. Total equity awards not included in the computation of dilutive EPS are as follows (in shares):
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Acquisition and Divestiture-Related Activities (Notes) |
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Business Combination Disclosure [Text Block] | Acquisitions and Divestiture-Related Activities Acquisitions In June 2018, we acquired fifteen funeral homes and seven cemeteries in four states (the “acquired businesses”) for $82.2 million in cash. Additionally, we paid $49.8 million of the acquired businesses existing debt in conjunction with the closing of the acquisition. We have completed our purchase price allocation. During 2019, we made the following adjustments to our estimates of the fair value of assets and liabilities (in thousands):
Excluding the June 2018 acquisition described above, we spent $32.8 million and $35.6 million for several smaller, tuck-in acquisitions for the six months ended June 30, 2019 and 2018, respectively.
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Disposal Groups, Including Discontinued Operations, Disclosure | Divestiture-Related Activities As divestitures occur in the normal course of business, gains or losses on the sale of such assets are recognized in the income statement line item (Losses) gains on divestitures and impairment charges, net, which consist of the following:
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Summary of Significant Accounting Policies (Policies) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Fair Value of Financial Instruments, Policy | The fair value of our long-term, fixed-rate loans was estimated using market prices for those loans, and therefore they are classified within Level 2 of the fair value measurements hierarchy. The Term Loan, Bank Credit Facility agreement, and the mortgage notes and other debt are classified within Level 3 of the fair value measurements hierarchy. The fair value of these instruments has been estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements.
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Consolidation, Policy | Principles of Consolidation and Basis of Presentation Our consolidated financial statements include the accounts of Service Corporation International (SCI) and all subsidiaries in which we hold a controlling financial interest. Intercompany balances and transactions have been eliminated in consolidation. Our consolidated financial statements also include the accounts of the merchandise and service trusts and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary. We have retained the specialized industry accounting principles when consolidating the trusts. Our trusts are variable interest entities, for which we have determined that we are the primary beneficiary as we absorb a majority of the losses and returns associated with these trusts. Although we consolidate the trusts, it does not change the legal relationships among the trusts, us, or our customers. The customers are the legal beneficiaries of these trusts; therefore, their interests in these trusts represent a liability to us. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair statement of our results for these periods. Our unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018, unless otherwise disclosed herein, and should be read in conjunction therewith. The accompanying year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period.
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Use of Estimates, Policy | Use of Estimates in the Preparation of Financial Statements The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in our Annual Report on Form 10-K for the year ended December 31, 2018. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates.
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New Accounting Pronouncements, Policy [Policy Text Block] | Accounting Standards Adopted in 2019 Leases In February 2016 and in January, July, and December 2018, the Financial Accounting Standards Board (FASB) issued and amended new guidance on "Leases" to increase transparency and comparability among organizations. Under the new guidance, we are required to recognize right-of-use (ROU) lease assets and liabilities on our balance sheet and disclose key information about leasing arrangements. In addition, the new guidance offers specific accounting considerations for lessees, lessors, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We adopted the new guidance on January 1, 2019 using the modified retrospective transition method. As a result of the adoption, we recorded:
The modified retrospective transition method includes a number of optional practical expedients and accounting policy elections: 1.We elected a package of practical expedients to not reassess:
2.We did not elect a practical expedient to use hindsight when determining lease term. 3.We elected the short-term lease recognition exemption. 4.The remaining practical expedients do not apply or do not have a material impact. We established a project team to implement the new guidance. We implemented a new enterprise-wide lease management system in the form of a pre-configured software-as-a-service cloud-based application to support the adoption and ongoing lease requirements under the new guidance. This system serves as a lease database to manage our lease inventory centrally and ensure completeness of our lease inventory. The system also produces accounting entries and financial reporting disclosures required under the new guidance and provides lease activity business intelligence reporting. We thoroughly tested the new system to ensure it produces accurate data to prepare the required accounting entries and disclosures under the new guidance upon adoption and on an ongoing basis. We evaluated and implemented additional changes to our processes and internal controls to facilitate adoption on January 1, 2019 and to meet the standard’s ongoing reporting and disclosure requirements. Our current operating lease portfolio is primarily composed of real estate and equipment. As a result of the adoption, we recognized ROU assets and lease liabilities related to substantially all operating lease arrangements. The adoption of "Leases" did not have an impact on our consolidated results of operations or cash flows. We made the required enhanced lease-related disclosures above and in Note 9 of this Form 10-Q. Internal Use Software In August 2018, the FASB amended "Internal Use Software" to align the requirements for capitalizing implementation costs incurred in a hosting arrangement for software-as-a-service with the requirements for capitalizing those costs in a hosting arrangement that includes a software license. Costs for implementation activities in the application development stage are capitalized, depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed. Any capitalized costs are amortized over the term of the hosting arrangement. Cash payments for the implementation costs, whether capitalized or not, are presented as operating outflows as that is consistent with the presentation of the fees in the hosting arrangement. We adopted the new guidance on a prospective basis to implementation costs incurred after January 1, 2019 with an immaterial impact on our consolidated results of operations and consolidated financial position and no impact on cash flows. Recently Issued Accounting Standards Financial Instruments In June 2016, the FASB amended "Financial Instruments" to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. We are still evaluating the impact of the new standard on our consolidated results of operations, consolidated financial position, and cash flows. Goodwill In January 2017, the FASB amended "Goodwill" to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for us on January 1, 2020, and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Fair Value Measurements In August 2018, the FASB amended "Fair Value Measurements" to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for us with our quarterly filing for the period ended March 31, 2020 and we will make the required disclosure changes in that filing. Adoption will not have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Retirement Plans In August 2018, the FASB amended "Retirement Plans" to modify the disclosure requirements for defined benefit plans. For us, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for us with our annual filing for the year ended December 31, 2020 and we will make the required disclosure changes in that filing. Adoption will not have an impact on our consolidated results of operations, consolidated financial position, and cash flows.
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Lessee, Leases [Policy Text Block] | Leases We have operating and finance leases. Our operating leases primarily include funeral service real estate and office equipment for funeral service locations, cemetery locations, and administrative offices. Our finance leases primarily include transportation equipment but also include real estate and office equipment. Lease terms related to real estate generally range from one to forty years with options to renew at varying terms. Lease terms related to office and transportation equipment generally range from one to eight years with options to renew at varying terms. We determine whether an arrangement is or contains a lease at the inception of the arrangement based on the unique facts and circumstances present. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Leases with a term greater than one year are recognized on the balance sheet as ROU assets and lease liabilities. We have elected not to recognize on the balance sheet leases with terms of one year or less. Lease liabilities and their corresponding ROU assets are recorded at commencement date based on the present value of lease payments over the expected lease term. For transportation equipment, we use the rate implicit in each lease to calculate the present value. For real estate and non-transportation equipment leases, the interest rate implicit in lease contracts is typically not readily determinable. Therefore, we use the appropriate collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of future payments for real estate and non-transportation equipment leases. Certain adjustments to the ROU asset may be required for items such as initial direct costs paid or incentives received. We calculate operating lease expense ratably over the lease term plus any reasonably assured renewal periods. We consider reasonably assured renewal options and fixed escalation provisions in our calculation. Generally, our leases do not include options to terminate the lease prior to the contractual lease expiration date, but future renewal periods are generally cancelable. The majority of our contractually available renewal periods for leases of buildings and land are considered reasonably certain of being exercised. This determination is made by our real estate team based on facts and circumstances surrounding each property. Leases with a term of 12 months or less are not recorded on the balance sheet. The majority of our lease arrangements contain options to (i) purchase the property at fair value on the exercise date, (ii) purchase the property for a value determined at the inception of the lease, or (iii) renew the lease for the fair rental value at the end of the primary lease term. The depreciable life of assets and leasehold improvements are generally limited by the expected lease term. Certain of our lease agreements include variable rental payments based on a percentage of sales over base contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We generally do not have sublease arrangements, sale-leaseback arrangements, or leveraged leases. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For leases commencing before January 1, 2019, we have elected the practical expedient to not separate lease and non-lease components on certain equipment leases, such as copiers where the cost-per-copy maintenance charges are included in the lease charge. On these leases, we have elected to account for the lease and non-lease components as a single component. For leases commencing on or after January 1, 2019, we account for the maintenance charges (non-lease components) separate from the lease components.
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and equipment, net During the fourth quarter of 2018, based on a review of our historical usage patterns for similar assets, we increased our estimate of the remaining useful life of certain building improvements and equipment by one to three years. For the three and six months ended June 30, 2019, these changes in useful life, which were made prospectively, reduced depreciation expense by $4.1 million ($0.02 per basic and diluted share) and $8.0 million ($0.04 per basic and diluted share).
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Summary of Significant Accounting Policies (Tables) |
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Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] |
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Preneed Activities (Tables) |
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Schedule of Available-for-sale Securities Reconciliation |
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Investments Classified by Contractual Maturity Date |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation |
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Schedule of Unrealized Loss on Investments |
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Debt (Tables) |
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Schedule of Debt | Debt as of June 30, 2019 and December 31, 2018 was as follows:
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Credit Risk and Fair Value of Financial Instruments (Tables) |
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Credit Risk and Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Measurement Inputs, Disclosure | The fair value of our debt instruments at June 30, 2019 and December 31, 2018 was as follows:
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Equity (Tables) |
6 Months Ended |
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Jun. 30, 2019 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) |
Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Our reportable segment, including disaggregated revenue, information is as follows:
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Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block] | Our geographic area information is as follows:
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity [Table Text Block] |
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Lessor, Operating Lease, Payments to be Received, Maturity [Table Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] |
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted |
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] |
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Acquisition and Divestiture-Related Activities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Divestiture-Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) on Divestitures and Impairment Charges |
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Summary of Significant Accounting Policies Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other | $ 42,603 | $ 42,603 | $ 33,607 |
Document Period End Date | Jun. 30, 2019 | ||
Impact From Change in Depreciable Lives | $ 4,100 | $ 8,000 | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Basic Earnings Per Share | $ 0.02 | $ 0.04 | |
Accounting Standards Update 2016-02 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other | $ 700 | $ 700 | |
Accounts Payable and Accrued Liabilities | 2,700 | 2,700 | |
Other Assets | 62,600 | 62,600 | |
Other Liabilities | 53,200 | 53,200 | |
Accrued Liabilities | $ 9,400 | $ 9,400 |
Summary of Significant Accounting Policies Supplemental Cash Flow Disclosure (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 243,684 | $ 198,850 | ||
Current restricted cash | 5,716 | 7,007 | ||
Restricted Cash and Cash Equivalents, Noncurrent | 1,745 | 1,727 | ||
Restricted Cash and Cash Equivalents | 7,461 | 8,734 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 251,145 | $ 207,584 | $ 170,973 | $ 340,601 |
Preneed Activities Investment Related Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Investment related activities [Line Items] | ||||
Document Period End Date | Jun. 30, 2019 | |||
Deposits | $ 112,905 | $ 106,843 | $ 213,357 | $ 200,112 |
Withdrawals | 116,680 | 114,524 | 224,036 | 221,293 |
Purchases of available-for-sale securities | 240,376 | 407,859 | 689,534 | 1,007,748 |
Sales of available-for-sale securities | 240,599 | 419,357 | 562,390 | 1,035,357 |
Realized gains on investments | 54,756 | 87,840 | 98,281 | 146,146 |
Realized losses on investments | $ (16,251) | $ (17,552) | $ (48,882) | $ (29,852) |
Preneed Activities Long-term Receivable and Investment (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Long-term receivable and investment components [Line Items] | ||
Document Period End Date | Jun. 30, 2019 | |
Receivables from customers | $ 1,016,974 | $ 991,044 |
Unearned finance charges | (50,402) | (44,981) |
Allowance for cancellation | (50,520) | (48,380) |
Preneed Receivables | 916,052 | 897,683 |
Trust investments, at market | 5,058,591 | 4,585,720 |
Insurance-backed fixed income securities | 263,589 | 265,787 |
Trust investments | 5,322,180 | 4,851,507 |
Cemetery perpetual care trust investments | (1,624,709) | (1,477,798) |
Preneed trust investments | 3,697,471 | 3,373,709 |
Preneed receivables, net and trust investments, excluding allowance for cancellation | 4,613,523 | 4,271,392 |
Funeral | ||
Long-term receivable and investment components [Line Items] | ||
Receivables from customers | 120,424 | 107,612 |
Cemetery | ||
Long-term receivable and investment components [Line Items] | ||
Receivables from customers | $ 896,550 | $ 883,432 |
Preneed Activities Level 3 Activities (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair market value, beginning balance | $ 7,108 | $ 8,533 | $ 9,755 | $ 9,067 |
Net unrealized (losses) gains included in Accumulated other comprehensive income | (322) | 264 | (1,464) | (270) |
Payments to Acquire Other Investments | 5 | 7 | 5 | 7 |
Proceeds from Sale of Other Investments | (203) | 0 | (1,708) | 0 |
Fair market value, ending balance | 6,588 | 20,194 | 6,588 | 20,194 |
AcquisitionRelatedInvestmentsFairvalueofLevel3 | $ 0 | $ 11,390 | $ 0 | $ 11,390 |
Preneed Activities Investments Classified by Contractual Maturity Date (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Investments Classified By Contractual Maturity Date [Line Items] | |
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value | $ 53,448 |
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value | 52,187 |
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value | 9,253 |
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after 10 Years, Fair Value | 113 |
Available-for-sale Securities, Debt Maturities, Total, Fair Value | $ 115,001 |
Preneed Activities Preneed Activities, Textuals (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Preneed Activities [Abstract] | ||||
Unfunded Commitments | $ 141.9 | $ 141.9 | ||
Investment Earnings, Net | $ 47.1 | $ 52.2 | $ 95.1 | $ 97.1 |
Preneed Activities Deferred Preneed Revenues [Roll Forward] (Details) - USD ($) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Preneed Activities Deferred Preneed Revenues (Details) [Abstract] | ||||
Deferred revenue and deferred receipts held in trust | $ 5,137,919 | $ 5,020,979 | $ 4,790,552 | $ 5,265,206 |
Net Preneed Deferred Sales | 496,842 | 505,146 | ||
Deferred Revenue Acquisitions (dispositions) of businesses, net | (29,665) | 148,048 | ||
Deferred Investment Earnings, Net | 327,819 | 20,720 | ||
Recognized deferred preneed revenues | (212,912) | (212,195) | ||
Recognized deferred revenues, current period sales | (241,589) | (242,438) | ||
Change in amounts due for unfulfilled performance obligations | (3,770) | (551,092) | ||
Deferred Revenue Change in Cancellation Allowance | (206) | 62,147 | ||
Effect of foreign currency and other on deferred revenue | $ 10,848 | $ (12,554) | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | $ 0 | $ 37,991 |
Preneed Activities Deferred Revenue (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Deferred Revenue [Abstract] | |||
Document Period End Date | Jun. 30, 2019 | ||
Deferred revenue, Gross | $ 2,020,663 | $ 1,989,232 | |
Cumulative amounts due for unfulfilled performance obligations | (576,099) | (570,418) | |
Change in amounts due for unfulfilled performance obligations | (3,770) | $ (551,092) | |
Deferred Revenue | $ 1,444,564 | $ 1,418,814 |
Income Taxes Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Taxes [Abstract] | ||||
Effective Income Tax Rate, Continuing Operations | 24.50% | 13.40% | 22.70% | 19.30% |
Unrecognized Tax Benefits | $ 1.4 | $ 1.4 | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 0.6 | $ 0.6 |
Equity Narratives (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 6 Months Ended |
---|---|---|
Jul. 26, 2019 |
Jun. 30, 2019 |
|
Treasury Stock Acquired, Average Cost Per Share | $ 42.72 | |
Treasury Stock, Value, Acquired, Par Value Method | $ 29.6 | |
Treasury Stock, Shares, Acquired | 692,325 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 165.7 | |
Subsequent Event [Member] | ||
Treasury Stock Acquired, Average Cost Per Share | $ 46.78 | |
Treasury Stock, Value, Acquired, Par Value Method | $ 6.7 | |
Treasury Stock, Shares, Acquired | 142,492 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 159.0 |
Leases Lease Balance Sheet Classification (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Leases Balance Sheet Classificiation [Abstract] | |
Operating Lease, Right-of-Use Asset | $ 62,383 |
Finance Lease, Right-of-Use Asset | 190,889 |
Leases Right of Use Asset | 253,272 |
Operating Lease, Liability, Current | 8,472 |
Finance Lease, Liability, Current | 39,940 |
Leases Total Current Liability | 48,412 |
Operating Lease, Liability, Noncurrent | 56,135 |
Finance Lease, Liability, Noncurrent | 157,290 |
Leases Total NonCurrent Liability | 213,425 |
Leases, Total Liability | $ 261,837 |
Leases Supplemental Information Related to Leases Table Text Block (Details) |
Jun. 30, 2019
Rate
|
---|---|
Supplemental Information Leases [Abstract] | |
Operating Lease, Weighted Average Remaining Lease Term | 12 years 2 months 12 days |
Operating Lease, Weighted Average Discount Rate, Percent | 4.70% |
Finance Lease, Weighted Average Remaining Lease Term | 5 years 2 months 12 days |
Finance Lease, Weighted Average Discount Rate, Percent | 3.50% |
Leases Leases Cash Flow (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Finance Lease, Right-of-Use Asset, Amortization | $ 3,074 | $ 6,268 |
Lease, Cost | 15,295 | 31,656 |
Leases Cash Flow [Abstract] | ||
Operating Lease, Payments | 3,124 | 6,217 |
Finance Lease, Interest Payment on Liability | 1,773 | 3,721 |
Finance Lease, Principal Payments | 11,163 | 21,820 |
Total Lease Payments | 16,060 | 31,758 |
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability | 15,308 | 34,474 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 2,125 | $ 6,365 |
Commitments and Contingencies (Details) $ in Millions |
1 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Jul. 26, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Self Insurance Reserve | $ (80.3) | $ (80.1) | |
Litigation Settlement, Expense | 2.5 | ||
Loss Contingency, Damages Awarded, Value | $ 0.3 | ||
Loss Contingency, Damages Sought, Value | $ 13.6 | ||
Number of Stores | 24 | ||
Subsequent Event [Member] | |||
Loss Contingency, Damages Sought, Value | $ 15.0 |
Acquisition and Divestiture-Related Activities Divestiture (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Divestiture-Related Activities [Abstract] | ||||
(Losses) gains on divestitures, net | $ (9,643) | $ 6,865 | $ (9,097) | $ 8,141 |
Impairment losses | (2,180) | 0 | (4,604) | (794) |
(Losses) gains on divestitures and impairment charges, net | $ (11,823) | $ 6,865 | $ (13,701) | $ 7,347 |
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