SERVICE CORP INTERNATIONAL 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk The market risk inherent in our financial instruments and positions includes the price risk associated with the marketable equity and debt securities included in our portfolio of trust investments, the interest rate risk associated with our floating rate debt, and the currency risk associated with our Canadian operations. Our exposure to market risk as discussed below includes forward-looking statements and represents an estimate of possible changes in fair value or future earnings that might occur, assuming hypothetical changes in equity markets, interest rates, and currencies. Our views on market risk are not necessarily indicative of actual results that may occur, and they do not represent the maximum possible gains or losses that may occur. Actual fair value movements related to changes in equity markets, interest rates, and currencies, along with the timing of such movements, may differ from those estimated. Marketable Equity and Debt Securities — Price Risk In connection with our preneed funeral operations and preneed cemetery merchandise and service sales, the related funeral and cemetery trust funds own investments in equity and debt securities and mutual funds, which are sensitive to current market prices. Cost and market values as of December 31, 2022 are presented in Note 3 in Part II, Item 8, Financial Statements and Supplementary Data. Also see " Trust Investments " in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Financial Conditions, Liquidity, and Capital Resources, for discussion of trust investments. Market-Rate Sensitive Instruments — Interest Rate Risk At December 31, 2022 and 2021, approximately 72% and 79%, respectively, of our total debt consisted of fixed rate debt at a weighted average rate of 4.32% and 4.33%, respectively. A hypothetical increase in interest rates by 10% of the rates associated with our floating rate debt would increase our interest expense by $2.9 million. See Notes 6 and 7 in Part II, Item 8. Financial Statements and Supplementary Data, for additional information. Market-Rate Sensitive Instruments — Currency Risk At December 31, 2022 and 2021, our foreign currency exposure was primarily associated with the Canadian dollar. A hypothetical 10% adverse change in the strength of the U.S. dollar relative to our foreign currency instruments would have negatively affected our net income on an annual basis by $5.8 million and $5.7 million for the years ended December 31, 2022 and 2021, respectively. At December 31, 2022, approximately 6% of our stockholders’ equity and debt and 8% of our operating income was denominated in the Canadian dollar. Approximately 6% of our stockholders’ equity and debt and 6% of our operating income was denominated in the Canadian dollar at December 31, 2021. We do not have an investment in foreign operations considered to be in highly inflationary economies. FORM 10-K 35 PART II