What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-15 compared with 2021-02-16 · 153 added, 236 removed, 1482 unchanged (21% of the section changed)

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Financial Statements:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Statement of Operations for the years ended December 31, 2021, 2020, and 2019

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Acquisitions and Divestiture-Related Activities

Quarterly Financial Data (Unaudited)

Financial Statement Schedule:

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Income before income taxes 1,045,500 662,060 464,432

(Provision for) benefit from income taxes ( 145,923 ) ( 94,661 ) 5,826

Provision for income taxes ( 242,248 ) ( 145,923 ) ( 94,661 )

Net income 803,252 516,137 369,771

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Provision for expected credit losses 11,362 13,558 9,146

Provision for (benefits from) deferred income taxes 7,884 23,030 ( 41,479 )

(Benefit from) provision for deferred income taxes ( 5,837 ) 7,884 23,030

Gains on divestitures and impairment charges, net ( 25,169 ) ( 7,009 ) ( 32,919 )

Gain on sale of investments — — ( 2,636 )

Share-based compensation 14,168 14,103 15,029

Change in assets and liabilities, net of effects from acquisitions and dispositions:

(Increase) decrease in receivables ( 14,518 ) ( 12,711 ) 8,052

Change in assets and liabilities, net of effects from acquisitions and divestitures:

Increase in receivables ( 20,215 ) ( 14,518 ) ( 12,711 )

Increase in other assets ( 54,883 ) ( 35,739 ) ( 23,018 )

Increase (decrease) in payables and other liabilities 122,478 1,788 ( 16,699 )

Increase in payables and other liabilities 53,747 122,478 1,788

Effect of preneed sales production and maturities:

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Proceeds from divestitures and sales of property and equipment 40,696 21,916 77,074

Proceeds from sale of investments — — 2,900

Payments for Company-owned life insurance policies ( 3,982 ) ( 5,352 ) ( 9,026 )

Proceeds from Company-owned life insurance policies and other — 3,519 415

Purchase of corporate land — — ( 14,525 )

Net cash used in investing activities ( 414,932 ) ( 318,371 ) ( 278,511 )

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Effect of foreign currency ( 111 ) 2,788 3,885

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 4,010 ) 35,036 ( 133,017 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 39,945 ( 4,010 ) 35,036

Cash, cash equivalents, and restricted cash at beginning of period 238,610 242,620 207,584

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Balance at December 31, 2018 184,721 ( 3,250 ) 972,710 474,327 13,395 ( 88 ) 1,641,815

Cumulative effect of accounting changes — — — 172,461 ( 229 ) — 172,232

Comprehensive income — — — 369,596 16,469 176 386,241

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Balance at December 31, 2019 $ 185,101 $ ( 3,916 ) $ 1,010,361 $ 601,903 $ 29,864 $ ( 58 ) $ 1,823,255

Cumulative effect of accounting changes — — — 16,989 — — 16,989

Comprehensive income — — — 515,907 9,502 235 525,644

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Balance at December 31, 2020 $ 174,792 $ ( 4,075 ) $ 981,934 $ 560,731 $ 39,366 $ ( 127 ) $ 1,752,621

Cumulative effect of accounting changes — — — 16,989 — — 16,989

Comprehensive income — — — 802,939 848 311 804,098

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Nature of Operations

Service Corporation International (SCI) is a holding company and all operations are conducted by its subsidiaries.

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.

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We sell cemetery property and funeral and cemetery merchandise and services at the time of need and on a preneed basis.

We strive to offer families exceptional service in planning life celebrations and personalized remembrances.

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.

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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.

Cemetery merchandise and services, including memorial markers and bases, outer burial containers, flowers and floral placement, other ancillary merchandise, graveside memorial services, merchandise installation, and interments, are sold at our cemeteries.

Summary of Significant Accounting Policies

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therefore, their interests in these trusts represent a liability to us .

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation with no effect on our previously reported results of operations, consolidated financial position, or cash flows.

Use of Estimates in the Preparation of Financial Statements

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Receivables $ 56,745 $ 22,559 $ 18,545 $ 1,121 $ 98,970

Allowance for doubtful accounts ( 1,899 ) ( 363 ) — — ( 2,262 )

Reserve for credit losses ( 3,752 ) ( 1,933 ) 144 ( 490 ) ( 6,031 )

Receivables, net $ 52,993 $ 20,626 $ 18,689 $ 631 $ 92,939

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Reserve for credit losses ( 3,424 ) ( 5,957 )

Allowance for doubtful accounts — ( 8,374 )

Notes receivable, net $ 5,260 $ 6,432

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During 2020, we increased our reserve for credit losses on trade and miscellaneous receivables as a result of the economic impact of the COVID-19 pandemic (COVID-19).

Due to the ongoing nature of the pandemic, we have maintained these higher reserves in 2021.

Cemetery preneed receivables are collateralized by cemetery property to the extent of the fair value of the property.

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The following table summarizes the activity in our reserve for credit losses by portfolio segment, excluding preneed receivables which are presented in Note 3 , for the year ended December 31, 2021:

January 1, 2020 Provision for Expected Credit Losses Acquisitions

December 31, 2020 Provision for Expected Credit Losses Acquisitions

(Divestitures), net Write

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Depreciation and amortization expense related to property and equipment was $ 159.3 million, $ 155.3 million, and $ 151.0 million for the years ended December 31, 2021, 2020, and 2019, respectively.

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.

These changes in useful life, which were made prospectively, reduced depreciation expense by $ 12.1 million ($ 0.07 per basic and diluted share) in 2019 and $ 4.3 million ($ 0.02 per basic and diluted share) in 2018.

When property or equipment is sold or retired, the cost and related accumulated depreciation are removed from the Consolidated Balance Sheet;

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Lease terms related to real estate generally range from one year to forty years with options to renew at varying terms.

Lease terms related to office and transportation equipment generally range from one year to nine years with options to renew at varying terms.

Lease terms related to office and transportation equipment generally range from one year 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.

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For leases of real estate and non-transportation equipment, which are primarily operating leases, we use our incremental borrowing rate since the rate implicit in these leases cannot be readily determined.

To calculate the incremental borrowing

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rate, we utilize the yield-to-worst of our publicly traded debt securities, adjusted for the appropriate duration on a secured basis.

To calculate the incremental borrowing rate, we utilize the yield-to-worst of our publicly traded debt securities, adjusted for the appropriate duration on a secured basis.

As an accounting policy election, we include reasonably certain renewal periods when determining the rate to use as the incremental borrowing rate for each lease.

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We calculate operating lease expense ratably over the lease term.

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If the carrying amount exceeds the fair value of a reporting unit, an impairment is recognized in an amount equal to the excess, up to the amount of goodwill in the reporting unit.

For our most recent annual impairment test performed in the fourth quarter, we used a 6.75 % discount rate, revenue growth rates ranging from 1.0 % to 3.5 % over a seven-year period, plus a terminal value determined using the constant growth method in projecting our future cash flows.

F or our most recent annual impairment test performed in the fourth quarter, we used a 6.25 % discount rate, revenue growth rates ranging from ( 7.5 )% to 15.4 % over a seven-year period, plus a terminal value determined using the constant growth method in projecting our future cash flows.

Our terminal value was calculated using a long-term revenue growth rate of 1.0 % and 2.4 % for our funeral and cemetery reporting units, respectively.

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Factors that could trigger an interim impairment review include, but are not limited to, significant underperformance relative to historical or projected future operating results and significant negative industry or economic trends.

No interim goodwill impairment reviews were required in 2020 or 2019.

For more information related to goodwill, see Note 4 .

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The discounted cash flow valuation uses projections of future cash flows and includes assumptions concerning future operating performance and economic conditions that may differ from actual future cash flows.

tradenames, based primarily on our research of intellectual property valuation and licensing databases.

For our most recent annual impairment test performed in the fourth quarter, we estimated that the pre-tax savings would range from 2.0 % to 5.0 % ( 4.6 % weighted average using carrying value) of the revenue associated with the trademarks and tradenames, based primarily on our research of intellectual property valuation and licensing databases.

We also assumed a terminal growth rate of 1.0 % and 2.4 % for our funeral and cemetery segments ( 1.5 % weighted average using carrying value), respectively, and discounted the cash flows at a 6.45 % discount rate based on the relative risk of these assets to our overall business.

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Factors that could trigger an interim impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results and significant negative industry or economic trends.

During the first quarter of 2020, we performed an impairment assessment on certain of our tradenames as a result of local market conditions where these businesses reside.

We recorded a $3.0 million impairment charge for certain of these tradenames during the first quarter of 2020.

In determining the fair value of the tradenames, we used the relief from royalty method whereby we determine the fair value of the assets by discounting the cash flows that represent a savings over having to pay a royalty fee for use of the tradenames.

For our first quarter of 2020 test, we estimated that the pre-tax savings would range from 2.0% to 5.0% (4.8% weighted average using carrying value) of the revenue associated with the trademarks and tradenames, based primarily on our research of intellectual property valuation and licensing databases.

We also assumed a terminal growth rate of 1.0% and 2.4% for our funeral and cemetery tradenames (1.4% weighted average using carrying value), respectively, and discounted the cash flows at a 6.95% discount rate based on the relative risk of these assets to the overall business.

No interim intangible impairment reviews were required in 2019.

Certain of our intangible assets associated with prior acquisitions are relieved using specific identification in fulfillment of performance obligations on our contracts with customers.

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These securities are classified as Level 3 investments.

An asset’s or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Fixed income commingled funds, money market funds, and private equity investments are measured at net asset value.

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Foreign Currency Translation

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All assets and liabilities of Canadian subsidiaries are translated into U.S.

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Sales taxes collected are recognized on a net basis in our consolidated financial statements.

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On our atneed contracts, we generally deliver the merchandise and perform the services at the time of need.

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We do not consider preneed receivables to be past due until the merchandise or services are required to be delivered at which time the preneed receivable is paid or reclassified as a trade receivable with payment terms of less than thirty days.

For unfulfilled performance obligations on

cancelable preneed contracts, our Consolidated Balance Sheet reflects the net contract liability, which represents the amount we have collected from customers, in Deferred revenue, net .

For unfulfilled performance obligations on cancelable preneed contracts, our Consolidated Balance Sheet reflects the net contract liability, which represents the amount we have collected from customers, in Deferred revenue, net .

Pursuant to state or provincial law, all or a portion of the proceeds from merchandise or services sold on a preneed basis may be required to be deposited into trust funds.

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The proceeds of the life insurance policies or annuity contracts will be reflected in funeral revenue as we perform these funerals.

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We compute income taxes using the liability method.

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All deferred tax assets and liabilities, along with any related valuation allowances are classified as non-current on our Consolidated Balance Sheet.

Accounting Standards Adopted in 2020

Financial Instruments - Credit Losses

In June 2016, the FASB issued "Financial Instruments - Credit Losses" 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 previous 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.

We adopted the new guidance as of January 1, 2020, applying a modified retrospective approach to credit loss reserves on our atneed, preneed, miscellaneous, and notes receivable and a prospective approach for credit loss reserves on our fixed income investments.

As a result of the adoption, we recorded a $17.0 million increase to Retained earnings , which comprises a $26.4 million and a $5.8 million increase in Preneed receivables, net and trust investments and Deferred tax liability, respectively, and a $2.7 million and a $0.9 million decrease to Receivables, net and Deferred charges and other assets, net, respectively.

The increase in Preneed receivables, net and trust investments is primarily the result of reducing the reserve for receivables that are collateralized by cemetery property down to the amount at which the amortized cost basis of the receivable exceeds the fair value of the property less costs to resell.

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.

We adopted the new standard as of January 1, 2020 and it had no 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 the significant unobservable inputs used in level 3 measurements.

We adopted the new standard as of January 1, 2020 and it had no impact on our consolidated results of operations, consolidated financial position, and cash flows.

Compensation - Retirement Benefits

In August 2018, the FASB amended "Compensation - Retirement Benefits" to modify the disclosure requirements for defined benefit plans.

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.

We have made the required disclosure changes in this Form 10-K.

Adoption had no impact on our consolidated results of operations, consolidated financial position, and cash flows.

In December 2019, the Financial Accounting Standards Board ("FASB") amended "Income Taxes" to eliminate certain exceptions to the general principles of the guidance.

We adopted the amendment on January 1, 2021 with no impact to our consolidated results of operations, consolidated financial position, or cash flows.

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Recently Issued Accounting Standards

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We currently have no hedging relationships.

We are evaluating our contracts and the optional expedients provided by the new standard.

We have completed our evaluation of our contracts and have a population of contracts that reference LIBOR and either have an alternative reference rate or will be renegotiated in 2022.

We do not currently anticipate that use of the optional expedients, if any, will have a material impact on our consolidated results of operations, consolidated financial position, or cash flows.

Business Combinations

In October 2021, the FASB amended guidance to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

Generally, this new guidance will result in the Company recognizing contract assets and contract liabilities consistent with those reported by the acquiree immediately before the acquisition date.

The standard will be effective for all acquisitions after December 31, 2022, although early adoption is permitted.

We are still evaluating the impact of adoption on our consolidated results of operations, consolidated financial position, and cash flows.

Preneed Activities

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Preneed receivables, at amortized cost $ 129,878 $ 959,291 $ 1,089,169

Allowance for cancellation ( 1,452 ) ( 39,690 ) ( 41,142 )

Reserve for credit losses ( 10,940 ) ( 8,264 ) ( 19,204 )

Preneed receivables, net $ 118,938 $ 951,027 $ 1,069,965

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At December 31, 2021, the amortized cost basis of our preneed receivables by year of origination was as follows:

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Total reserve for credit losses on preneed receivables $ ( 19,204 ) $ ( 5,086 ) $ — $ 3,566 $ ( 3 ) $ ( 20,727 )

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The table below sets forth certain investment-related activities associated with our trusts:

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Acquisitions of businesses, net 4,912 19,299 11,751

Net undistributed investment earnings (losses) (1)

Net undistributed investment earnings (1)

448,469 407,770 489,577

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$ 6,015,323 $ 5,345,720 $ 4,789,562

(1) Includes both realized and unrealized investment earnings (losses).

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(1) Includes both realized and unrealized investment earnings.

The cost and fair values associated with trust investments recorded at fair value at December 31, 2021 and 2020 are detailed below.

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Money market funds 408,762 — — 408,762

Private equity 217,953 68,846 ( 10,284 ) 276,515

Alternative investments 292,888 128,197 ( 5,353 ) 415,732

Trust investments, at net asset value 1,594,701 405,261 ( 8,638 ) 1,991,324

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As of December 31, 2021, our unfunded commitment for our private equity investments was $ 163.1 million which, if called, would be funded by the assets of the trusts.

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December 31, 2020

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Money market funds 330,745 — — 330,745

Private equity 176,388 80,283 ( 422 ) 256,249

Alternative investments 217,953 68,846 ( 10,284 ) 276,515

Trust investments, at net asset value 1,489,246 204,024 ( 10,457 ) 1,682,813

Trust investments, at market $ 5,058,921 $ 891,327 $ ( 99,060 ) $ 5,851,188

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The change in our market-based trust investments with significant unobservable inputs (Level 3) is as follows:

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Sales — ( 2 ) ( 1,782 )

Acquisitions, net — — 1,345

Transfers — ( 6,811 ) —

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Deferred revenue, net $ 1,532,749 $ 1,488,909

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The following table summarizes the activity for our contract liabilities, which are reflected in Deferred revenue, net and Deferred receipts held in trust :

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$ 5,761,291 $ 5,306,479 $ 4,790,552

Cumulative effect of accounting changes — — 37,991

Net preneed contract sales 1,314,001 1,089,060 984,575

(Dispositions) acquisitions of businesses, net 19,664 ( 12,741 ) 159,560

Acquisitions (dispositions) of businesses, net 4,707 19,664 ( 12,741 )

Net investment gains (losses) (1)

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$ 1,551,062 $ 328,945 $ 1,880,007 $ 1,535,278 $ 328,945 $ 1,864,223

Increase (decrease) in goodwill related to acquisitions (1)

14,796 — 14,796 7,458 ( 6,003 ) 1,455

Increase in goodwill related to

acquisitions 34,703 1,990 36,693 14,796 — 14,796

Reduction of goodwill related to divestitures (1)

( 2,080 ) ( 28 ) ( 2,108 ) ( 1,175 ) — ( 1,175 )

Effect of foreign currency 490 — 490 2,163 — 2,163

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$ 1,584,175 $ 330,907 $ 1,915,082 $ 1,551,062 $ 328,945 $ 1,880,007

(1) Also includes adjustments within the remeasurement period related to acquisitions.

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(1) Also includes reductions for businesses held for sale.

The components of intangible assets at December 31 were as follows:

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$ 471,715 $ 441,389

As part of our recoverability testing process during 2020, we recognized $ 3.1 million of impairment on tradenames.

Amortization expense for intangible assets was $ 20.0 million, $ 22.4 million, and $ 25.6 million for the years ended December 31, 2021, 2020, and 2019, respectively.

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$ 1,045,500 $ 662,060 $ 464,432

Income tax provision (benefit) consisted of the following:

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Income tax provision consisted of the following:

Years Ended December 31,

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Foreign valuation allowance, net of federal income tax benefits ( 4,155 ) ( 566 ) 43

Enactment of U.S.

Tax Act — — ( 16,105 )

Excess tax benefit from share-based compensation ( 12,476 ) ( 9,093 ) ( 13,868 )

Other 787 ( 6,829 ) ( 2,218 )

Provision for (benefit from) income taxes $ 145,923 $ 94,661 $ ( 5,826 )

Provision for income taxes $ 242,248 $ 145,923 $ 94,661

Total consolidated effective tax rate 23.2 % 22.0 % 20.4 %

The lower effective tax rate for the twelve months ended December 31, 2018 was primarily due to the reduction in uncertain tax positions as a result of the expiration of statutes of limitation.

Deferred taxes are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates.

The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:

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Years Ended December 31,

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Non-current deferred tax assets - included in Deferred charges and other assets, net

$ 6,171 $ 535

Non-current deferred tax liabilities - included in Deferred tax liability

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Balance at December 31, 2018 $ 1,348

Additions to tax positions related to prior years 1,348

Reduction to tax positions due to expiration of statutes of limitation ( 79,455 )

Reduction to tax positions related to prior years —

Balance at December 31, 2019 $ 1,348

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We have accrued $ 0.8 million, $ 0.7 million, and $ 0.6 million for the payment of interest, net of tax benefits, and penalties as of December 31, 2021, 2020 and 2019, respectively.

We recorded an increase of interest and penalties of $ 0.1 million, $ 0.1 million and a decrease of $ 10.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

We recorded an increase of interest and penalties of $ 0.1 million for each of the years ended December 31, 2021, 2020 and 2019, respectively.

To the extent interest and penalties are not assessed with respect to uncertain tax positions or the uncertainty of deductions in the future, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

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however, all tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business.

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The federal statutes of limitations have expired for all tax years prior to 2018, and we are not currently under audit by the IRS.

However, pursuant to the 2017 Tax Cuts and Jobs Act, the statute of limitations on the transition tax for the 2017 tax year does not expire until 2024.

Various state jurisdictions are auditing years 2013 through 2020.

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In assessing the usefulness of deferred tax assets, we consider whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

During 2020, we recorded a net $ 5.9 million decrease in our state valuation allowance and a net $0.3 million decrease in our foreign valuation allowance resulting primarily from increased activity in various states and Puerto Rico.

The future realization of net deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

During 2021, we recorded a net $ 17.6 million increase in our state valuation allowance due to state legislative changes and a net $ 4.9 million decrease in our foreign valuation allowance resulting from increased income in Puerto Rico.

The valuation allowances can be affected in future periods by changes to tax laws, changes to statutory tax rates, and changes in estimates of future taxable income .

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8.000% Senior Notes due November 2021 $ — $ 150,000

5.375% Senior Notes due May 2024 — 850,000

7.500% Senior Notes due April 2027 152,710 152,710

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3.375% Senior Notes due August 2030 850,000 850,000

4.000% Senior Notes due May 2031 800,000 —

Term Loan due May 2024 568,750 601,250

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Total long-term debt $ 3,901,304 $ 3,514,182

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Current maturities of debt at December 31, 2020 include amounts due under our term loan, certain senior notes, mortgage notes and other debt, and finance leases within the next year as well as the portion of unamortized premiums and discounts and debt issuance costs expected to be recognized in the next twelve months.

Current maturities of debt at December 31, 2021 include amounts due under our term loan, mortgage notes and other debt, and finance leases within the next year as well as the portion of unamortized debt issuance costs expected to be recognized in the next twelve months.

Our consolidated debt had a weighted average interest rate of 3.70 % and 3.62 % at December 31, 2021 and 2020, respectively.

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2022 $ 65,016

2024 1,038,963

2027 and thereafter 3,101,699

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As of December 31, 2021, we are in compliance with all of our debt covenants.

We issued $ 34.0 million of letters of credit and pay a quarterly fee on the unused commitment, which was 0.15% at December 31, 2020.

At December 31, 2021 we have issued $ 34.0 million of letters of credit and pay a quarterly fee on the unused commitment, which was 0.10 %.

As of December 31, 2021, we have $ 811.0 million in borrowing capacity under the facility.

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Debt Issuances and Additions

During the year ended December 31, 2020, we issued or added $ 1.6 billion of debt including:

• $ 850.0 million unsecured 3.375% Senior Notes due August 2030;

During the year ended December 31, 2021, we issued or added $ 975.0 million of debt including:

• $ 800.0 million unsecured 4.0% Senior Notes due May 2031;

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• $ 175.0 million on our Bank Credit Facility due May 2024.

Newly issued debt was used to pay off our Bank Credit Facility due May 2024, to redeem our 5.375% Senior Notes due May 2024, and for general corporate purposes.

Newly issued debt was used to pay down our Bank Credit Facility due May 2024, to redeem our 8.0% Senior Notes due November 2021, and for general corporate purposes.

These transactions resulted in additional debt issuance costs of $ 13.6 million.

During the year ended December 31, 2019, we issued or added $ 1.1 billion of debt including:

• $ 750.0 million unsecured 5.125% Senior Notes due June 2029;

• $ 55.0 million on our Bank Credit Facility due December 2022;

During the year ended December 31, 2020, we issued or added $ 1,585.0 million of debt including:

• $ 850.0 million unsecured 3.375% Senior Notes due August 2030;

• $ 735.0 million on our Bank Credit Facility due May 2024.

• $ 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 redeem our 5.375% Senior Notes due January 2022, to redeem our 4.5% Senior Notes due November 2020, to fund acquisition activity, and for general corporate purposes.

Newly issued debt was used to pay down our Bank Credit Facility due May 2024, to redeem our 5.375% Senior Notes due May 2024, and for general corporate purposes.

These transactions resulted in additional debt issuance costs of $ 14.5 million.

Debt Extinguishments and Reductions

During the year ended December 31, 2020, we made aggregate debt payments of $ 1.4 billion for scheduled and early extinguishment payments including:

During the year ended December 31, 2021, we made aggregate debt payments of $ 736.0 million for scheduled and early extinguishment payments including:

• $ 545.0 million in aggregate principal of our Bank Credit Facility due May 2024;

• $ 32.5 million in aggregate principal of our Term Loan due May 2024;

• $ 0.8 million in aggregate principal of 7.5% Senior Notes due April 2027 repurchased on the open market;

• $ 850.0 million in aggregate principal of 5.375% Senior Notes due May 2024;

• $150.0 million in aggregate principal of 8.0% Senior Notes due November 2021;

• $ 4.8 million of premiums paid on early extinguishment;

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Certain of the above transactions resulted in the recognition of a loss of $ 5.2 million recorded in Losses on early extinguishment of debt, net in our Consolidated Statement of Operations for the year ended December 31, 2021.

During the year ended December 31, 2019, we made aggregate debt payments of $ 1.2 billion for scheduled and early extinguishment payments including:

• $ 450.0 million in aggregate principal of our Bank Credit Facility due December 2022;

• $ 8.5 million in aggregate principal of our Term Loan due December 2022;

• $ 32.1 million in aggregate principal payments to other members of our Term Loan due December 2022;

During the year ended December 31, 2020, we made aggregate debt payments of $ 1,406.4 million for scheduled and early extinguishment payments including:

• $ 505.0 million in aggregate principal of our Bank Credit Facility due May 2024;

• $ 32.5 million in aggregate principal of our Term Loan due May 2024;

• $ 425.0 million in aggregate principal of 5.375% Senior Notes due January 2022;

• $ 200.0 million in aggregate principal of 4.5% Senior Notes due November 2020;

• $ 46.5 million in aggregate principal of 7.5% Senior Notes due April 2027;

• $ 0.8 million in aggregate principal of 7.5% Senior Notes due April 2027 repurchased on the open market;

• $850.0 million in aggregate principal of 5.375% Senior Notes due May 2024;

• $ 16.1 million of premiums paid on early extinguishment;

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Payments in 2019

Expected c ash interest payments for the five years subsequent to December 31, 2020 and thereafter are as follows (in thousands):

Expected c ash interest payments on our existing long-term debt for the five years subsequent to December 31, 2021 and thereafter are as follows (in thousands):

Payments in 2022

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The carrying values of receivables on preneed funeral and cemetery contracts approximate fair value due to the diverse number of individual contracts with varying terms.

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The fair value of our debt instruments was as follows:

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8.000% Senior Notes due November 2021 $ — $ 159,000

5.375% Senior Notes due May 2024 — 879,606

7.500% Notes due April 2027 181,511 185,639

2 unchanged sentences

3.375% Senior Notes due August 2030 836,825 883,099

4.000% Senior Notes due May 2031 813,552 —

Term Loan due May 2024 568,750 601,250

6 unchanged sentences

An increase (decrease) in the inputs results in a directionally opposite change in the fair value of the instruments.

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Credit Risk Exposure

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Total lease cost $ 53,975 $ 60,118

Supplemental balance sheet information related to leases were as follows:

Supplemental balance sheet information related to leases was as follows:

Lease Type Balance Sheet Classification December 31, 2021 December 31, 2020

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(1) Right-of-use assets are presented net of accumulated amortization.

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The weighted-average life remaining and discount rates of our leases were as follows:

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Weighted-average discount rate 3.9 % 3.1 % 4.3 % 3.3 %

Supplemental cash flow information related to leases were as follows:

December 31, 2020 December 31, 2019

Supplemental cash flow information related to leases was as follows:

Years Ended December 31,

(In thousands)

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Right-of-use assets obtained in exchange for operating lease liabilities $ 7,822 $ 8,812

The right-of-use assets obtained in exchange for lease liabilities shown above exclude the following activities:

In 2020, we acquired funeral home buildings and land that were previously leased.

Right-of-use assets were reduced $ 2.7 million as a result of these acquisitions.

In 2019, we recorded modifications of $ 5.7 million that reduced right-of-use assets and lease liabilities through remeasurement and reassessment of certain leases.

During the years ended December 31, 2021 and 2020, we acquired buildings and land previously leased for our funeral service locations.

These real estate acquisitions, excluded from the table above, reduced right-of-use assets by $ 1.0 million and $ 2.7 million for the years ended December 31, 2021 and 2020, respectively.

We have 59 operating leases where we are the lessor and the non-cancelable term is greater than one year, resulting in $ 4.4 million and $ 3.6 million in lease income for the years ended December 31, 2021 and 2020, respectively.

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The underlying assets of these lease agreements are buildings and land.

We generally do not have sales-type leases, direct financing leases, or lease receivables.

We generally do not have sales-type leases, direct financing leases,

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or lease receivables.

Certain of our agreements include variable rental income based on a percentage of sales over base contractual levels.

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Non lease components are excluded from rental income disclosures.

Future undiscounted lease income from operating leases as of December 31, 2020 were as follows (in thousands):

Future undiscounted lease income from operating leases where we are the lessor were as follows as of December 31, 2021 (in thousands):

2027 and thereafter 19,714

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Commitments and Contingencies

Employment and Management, Consulting, and Non-Competition Agreements

We have entered into employment and management, consulting, and non-competition agreements, generally for five years to ten years , with certain officers and associates and former owners of businesses that we acquired.

At December 31, 2020, the maximum estimated future cash commitments under agreements with remaining commitment terms, and with original terms of more than one year, were as follows:

Employment and Management Consulting Non-Competition Total

(In thousands)

2021 $ 1,941 $ 716 $ 4,532 $ 7,189

2022 1,017 562 3,582 5,161

2023 585 255 2,656 3,496

2024 299 138 2,148 2,585

2025 148 132 1,885 2,165

2026 and thereafter 49 129 3,722 3,900

Total $ 4,039 $ 1,932 $ 18,525 $ 24,496

Insurance Loss Reserves

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Given the nature of this lawsuit, we are unable to reasonably estimate the possible loss or ranges of loss, if any.

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;

in the Civil District Court Parish of New Orleans, Louisiana.

This case was filed as a class action in June 2013 against an SCI 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

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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 .

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Acquisition of California, Inc., a California corporation dba Neptune Society of Northern California, Neptune Management Corp., a California corporation, Trident Society, Inc.

a California corporation, and Does 1 through 100, inclusive, Case No.

RG 19045103 ;

a California corporation, and Does 1 through 100, inclusive,

in the Superior Court of the State of California in and for the County of Alameda.

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Unclaimed Property Audit

We received notices from two third-party auditors representing the unclaimed property departments of certain states regarding certain preneed funeral and cemetery contracts.

The states claim that such contracts are subject to the states’ unclaimed property or escheatment laws and generally assert that all or a portion of the preneed funds are escheatable if the beneficiary and/or purchaser is deceased or presumed deceased and no services or merchandise have been provided.

We have received notices from auditors representing the unclaimed property departments of thirty-nine states regarding certain preneed funeral and cemetery contracts.

The states claim that such contracts are subject to the states’ unclaimed property or escheatment laws and generally assert that all or a portion of the trusted preneed funds are escheatable if the beneficiary and/or purchaser is deceased or presumed deceased and no services or merchandise have been provided.

We received notice that no additional property is due to be reported for the states of Alabama, Kentucky, Nebraska, New Mexico, Oklahoma, Oregon, South Carolina, South Dakota, Texas, and West Virginia.

We consider the unclaimed property audits resolved in those ten states.

We have reserved all of our rights, claims, and defenses.

Given the nature of this matter, we are unable to reasonably estimate the possible loss or ranges of loss, if any.

Other Potential Contingencies

In October 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.

We intend to vigorously defend all of the above matters;

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During 2020, we repurchased 12,043,347 shares of our common stock at an aggregate cost of $ 516.9 million, which is an average cost per share of $ 42.92 .

During August 2020, our Board of Directors increased our share repurchase authorization to $ 500.0 million.

During November 2021, our Board of Directors increased our share repurchase authorization to $ 600.0 million.

After these repurchases and the increase in authorization, the remaining dollar value of shares authorized to be purchased under the share repurchase program was $ 495.0 million at December 31, 2021.

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Subsequent to December 31, 2021, we repurchased 1,606,574 shares for $ 103.1 million at an average cost per share of $ 64.17 .

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Income tax benefit related to share-based compensation included in net income $ 3,537 $ 3,417 $ 3,842

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Stock Options

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At December 31, 2021, unrecognized compensation expense of $ 6.5 million related to restricted share awards is expected to be recognized over a weighted average period of 1.7 years.

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Restricted share units activity was as follows (share units reported in whole numbers):

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At December 31, 2021, there were 530,596 performance units outstanding.

Total compensation expense for these awards was $ 8.6 million, $ 6.1 million, and $ 3.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Total compensation expense for performance units was $ 19.5 million, $ 8.6 million, and $ 6.1 million for the years ended December 31, 2021, 2020, and 2019, respectively.

For the year ended December 31, 2021, cash paid to settle performance units was $ 12.4 million.

The fair value of the liability for these awards is calculated using a Monte Carlo simulation.

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Expected volatility

Fair value of shares-based performance units outstanding

Fair value of share-based performance units outstanding

At December 31, 2021, the unrecognized compensation expense related to performance units of $ 12.5 million is expected to be recognized over a weighted average period of 1.5 years.

1 unchanged sentence

We currently have a supplemental retirement plan for certain current and former key employees (SERP), a supplemental retirement plan for officers and certain key employees (Senior SERP), a retirement plan for certain non-employee directors (Directors’ Plan), a Retirement Plan for Rose Hills ® Trustees, a Rose Hills ® Supplemental Retirement Plan, and a Stewart Supplemental Retirement Plan (collectively, the “Plans”).

All of our Plans have a measurement date of December 31.

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All of our Plans are unfunded and have a measurement date of December 31.

The Plans are frozen;

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Interest cost on projected benefit obligation $ 482 $ 698 $ 956

Recognized net actuarial losses (gains) 1,641 2,886 ( 1,127 )

Recognized net actuarial (gains) losses ( 353 ) 1,641 2,886

Total net periodic benefit cost $ 129 $ 2,339 $ 3,842

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Interest cost 482 698

Actuarial loss 1,641 2,886

Actuarial (gain) loss ( 353 ) 1,641

Benefits paid ( 2,383 ) ( 2,665 )

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Weighted-average discount rate used to determine net periodic benefit cost 2.42 % 2.98 % 4.15 %

We base our discount rate used to compute future benefit obligations using an analysis of expected future benefit payments.

We determine our discount rate used to compute future benefit obligations using an analysis of expected future benefit payments.

The reasonableness of our discount rate is verified by comparing the rate to the rate earned on high-quality fixed income investments, such as the Moody’s Aa index, plus 50 basis points.

1 unchanged sentence

As all Plans are frozen, the assumed rate of compensation increase is zero .

The following benefit payments are expected to be paid in the next ten years related to our Plans (in thousands):

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The following benefit payments are expected to be paid over the next ten years related to our Plans (in thousands):

Years 2027 through 2031 7,632

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The amount of our matched contributions in 2021, 2020, and 2019 was $ 46.0 million, $ 39.8 million, and $ 39.7 million, respectively.

78 Service Corporation International

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 operations are both product-based and geography-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.

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Income before income taxes $ 1,045,500 $ 662,060 $ 464,432

Other reportable segment information for the year ended December 31 were as follows:

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Other reportable segment information as of and for the year ended December 31 were as follows:

Reportable Segments

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Capital expenditures $ 112,090 $ 125,365 $ 2,502 $ 239,957

Our geographic area information for the year ended December 31 were as follows:

Our geographic area information as of and for the year ended December 31 were as follows:

United States Canada Total

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Operating income $ 795,461 $ 47,309 $ 842,770

Gains (losses) on divestitures and impairment charges, net $ 33,200 $ ( 281 ) $ 32,919

Gains on divestitures and impairment charges, net $ 6,935 $ 74 $ 7,009

Long-lived assets $ 6,633,470 $ 339,594 $ 6,973,064

5 unchanged sentences

Operating income $ 628,204 $ 38,409 $ 666,613

Gains on divestitures and impairment charges, net $ 8,419 $ 7,514 $ 15,933

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Gains (losses) on divestitures and impairment charges, net $ 33,200 $ ( 281 ) $ 32,919

Supplementary Information

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Deferred tax assets 6,171 535

Notes receivable, net of allowances of $5,957 and $8,374, respectively

Notes receivable, net of reserves of $3,424 and $5,957, respectively

Cash surrender value of insurance policies 225,857 202,120

3 unchanged sentences

$ 1,169,813 $ 1,080,053

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Years Ended December 31,

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Net change in capital expenditure accrual $ 3,201 $ ( 6,417 ) $ 4,435

Options exercised by attestation $ 323 $ — $ —

Shares repurchased $ ( 323 ) $ — $ —

Earnings Per Share

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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 stock that shared in our earnings.

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A reconciliation of the numerators and denominators of basic and diluted EPS is presented below:

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Amounts attributable to common stockholders:

Income from continuing operations per share:

Net income per share:

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Antidilutive options — 1,614 678

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Acquisitions and Divestiture-Related Activities

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.

Included in our results of operations for the twelve months ended December 31, 2018 is revenue of $ 17.9 million and net income of $ 1.7 million for the period from the acquisition date (June 8, 2018) through December 31, 2018.

The following unaudited pro forma summary presents financial information as if the acquisition had occurred on January 1, 2018:

In December 2021, we acquired twenty-one funeral homes and one cemetery in two states as part of two acquisitions (the "Ohio and California Businesses") for $ 94.8 million in cash.

This amount includes the use of $ 6.1 million in IRS Section 1031 exchange funds.

The primary reasons for the acquisitions and the principal factors that contributed to the recognition of goodwill in these acquisitions were:

• the acquisitions enhance our network footprint, enabling us to serve a number of new, complementary areas;

• the acquisitions of the preneed backlog of deferred revenues enhance our long-term stability.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in the acquisitions (in thousands):

Other current assets $ 140

Cemetery property 2,918

Property and equipment, net 36,768

Preneed receivables, net and trust investments 7,732

Finite-lived intangible assets 3,900

Indefinite-lived intangible assets 24,734

Deferred charges and other assets 128

Cemetery perpetual care trust investments 1,484

Goodwill 29,683

Total assets acquired 107,487

Current liabilities 660

Deferred revenue and deferred receipts held in trust 7,204

Care trusts' corpus 1,484

Other liabilities 3,336

Total liabilities assumed 12,684

Net assets acquired $ 94,803

The purchase accounting is preliminary because we have not finalized our assessment of the fair value because there has been insufficient time between the acquisition date and the issuance of these financial statements to complete our review and final determination of fair value.

Goodwill, land, and certain identifiable intangible assets recorded in the acquisitions are not subject to amortization;

however, the goodwill and intangible assets will be tested periodically for impairment.

Of the $ 29.7 million in goodwill recognized, all of which is deductible for tax purposes, $ 1.5 million was allocated to our cemetery segment and $ 28.2 million was allocated to our funeral segment.

The identified intangible assets comprise the following:

Useful Life Fair Value

(Years) (In thousands)

Preneed customer relationships to insurance claims 10 $ 3,900

Tradenames Indefinite 24,734

Total intangible assets $ 28,634

We incurred acquisition costs of $ 0.3 million, which is included in Corporate general and administrative expenses in our Consolidated Statement of Operations.

The Ohio and California Businesses contributed revenue of $ 1.1 million and net income of $ 0.3 million from acquisition through December 31, 2021.

The following unaudited pro forma summary presents financial information as if the acquisition of the Ohio and California Businesses had occurred on January 1, 2020 and the acquisition costs of $ 0.3 million were included in 2020:

(In thousands)

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Net income $ 807,040 $ 517,933

Excluding the June 2018 acquisition described above, we spent $ 116.2 million, $ 107.0 million, and $62.8 million for real estate, funeral service locations, and cemeteries for the three years ended December 31, 2020, 2019, and 2018, respectively.

These amounts include the use of $ 55.1 million, $ 13.6 million, and $ 5.9 million in 1031 exchange funds for the three years ended December 31, 2020, 2019, and 2018, respectively.

Excluding the December 2021 acquisitions described above, we spent $ 26.3 million, $ 64.2 million, and $ 55.6 million, net of cash acquired, for several business acquisitions, and $ 26.6 million, $ 52.1 million, and $ 51.4 million, net of cash acquired, for several real estate acquisitions for the three years ended December 31, 2021, 2020, and 2019, respectively.

These amounts include the use of $ 10.9 million, $ 55.1 million, and $ 13.6 million in IRS Section 1031 exchange funds for the three years ended December 31, 2021, 2020, and 2019, respectively.

Divestiture-Related Activities

As divestitures occur in the normal course of business, gains or losses on the sale of such locations are recognized in the Condensed Consolidated Statement of Operations line item Gains on divestitures and impairment charges, net , which consist of the following:

As divestitures occur in the normal course of business, gains or losses on the sale of such locations are recognized in the Consolidated Statement of Operations line item Gains on divestitures and impairment charges, net , which consist of the following:

Years Ended December 31,

4 unchanged sentences

Gains on divestitures and impairment charges, net $ 25,169 $ 7,009 $ 32,919

Quarterly Financial Data (Unaudited)

Quarterly financial data for 2020 and 2019 is as follows:

Quarter Second

Quarter Third

Quarter Fourth

(In thousands, except per share amounts)

Revenue $ 802,965 $ 820,035 $ 918,241 $ 970,268

Costs of revenue $ ( 623,921 ) $ ( 601,268 ) $ ( 654,585 ) $ ( 654,908 )

Gross profit $ 179,044 $ 218,767 $ 263,656 $ 315,360

Operating income $ 151,776 $ 182,335 $ 223,213 $ 285,446

Income before income taxes (1)

$ 106,039 $ 141,723 $ 164,843 $ 249,455

Provision for income taxes $ ( 24,038 ) $ ( 36,170 ) $ ( 37,351 ) $ ( 48,364 )

Net income $ 82,001 $ 105,553 $ 127,492 $ 201,091

Net loss (income) attributable to noncontrolling interests $ ( 60 ) $ ( 45 ) $ ( 77 ) $ ( 48 )

Net income attributable to common stockholders $ 81,941 $ 105,508 $ 127,415 $ 201,043

Net income attributable to common stockholders per share (2) :

Basic — EPS $ 0.45 $ 0.59 $ 0.72 $ 1.17

Diluted — EPS $ 0.45 $ 0.59 $ 0.72 $ 1.15

Revenue $ 798,212 $ 812,572 $ 769,241 $ 850,760

Costs of revenue $ ( 606,378 ) $ ( 621,426 ) $ ( 609,509 ) $ ( 632,892 )

Gross profit $ 191,834 $ 191,146 $ 159,732 $ 217,868

Operating income $ 146,978 $ 150,105 $ 128,585 $ 240,945

Income before income taxes (1)

$ 100,308 $ 96,083 $ 72,869 $ 195,172

(Provision for) benefit from income taxes $ ( 21,095 ) $ ( 23,570 ) $ ( 1,997 ) $ ( 47,999 )

Net income $ 79,213 $ 72,513 $ 70,872 $ 147,173

Net income attributable to noncontrolling interests $ 110 $ ( 184 ) $ ( 80 ) $ ( 21 )

Net income attributable to common stockholders $ 79,323 $ 72,329 $ 70,792 $ 147,152

Net income attributable to common stockholders per share (2) :

Basic — EPS $ 0.44 $ 0.40 $ 0.39 $ 0.81

Diluted — EPS $ 0.43 $ 0.39 $ 0.38 $ 0.79

(1) Includes Gains (losses) on divestitures and impairment charges, ne t, as described in Note 16 .

(2) Net income per share is computed independently for each of the quarters presented.

Therefore, the sum of the quarters’ net income per share may not equal the total computed for the year.

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Year Ended December 31, 2021 $ 6,031 $ 6,393 $ ( 6,086 ) $ 6,338

Allowance For Doubtful Accounts:

Year Ended December 31, 2020 $ — $ 5,756 $ 275 $ 6,031

Allowance For Doubtful Accounts:

Year Ended December 31, 2020 $ 2,230 $ — $ ( 2,230 ) $ —

3 unchanged sentences

Year Ended December 31, 2021 $ 6,902 $ ( 117 ) $ ( 2,208 ) $ 4,577

Allowance For Doubtful Accounts:

Year Ended December 31, 2020 $ — $ 88 $ 6,814 $ 6,902

Allowance For Doubtful Accounts:

Year Ended December 31, 2020 $ 8,374 $ — $ ( 8,374 ) $ —

3 unchanged sentences

Year Ended December 31, 2021 $ 19,204 $ 5,086 $ ( 3,563 ) $ 20,727

Asset Allowance For Cancellation:

Year Ended December 31, 2020 $ — $ 7,739 $ 11,465 $ 19,204

Year Ended December 31, 2019 $ 48,380 $ 1,617 $ 5,343 $ 55,340

Year Ended December 31, 2018 $ 107,749 $ ( 69 ) $ ( 59,300 ) $ 48,380

Deferred Revenue

Revenue Allowance For Cancellation:

Year Ended December 31, 2020 $ — $ — $ — $ —

Asset Allowance For Cancellation:

Year Ended December 31, 2020 $ 55,340 $ — $ ( 55,340 ) $ —

4 unchanged sentences

Year Ended December 31, 2019 $ 120,931 $ ( 6,604 ) $ 4 $ 114,331

(1) Upon adoption of "Revenue from Contracts with Customers" on January 1, 2018, we reclassified amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts as a reduction in Deferred revenue, net .

As a result of this reclassification, we eliminated the allowance for cancellation on these performance obligations.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data