What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-13 compared with 2023-02-15 · 123 added, 114 removed, 1566 unchanged (13% of the section changed)

131 unchanged sentences

Inventories 33,597 31,740

Income tax receivable 122,183 7,021

Other 23,010 32,466

64 unchanged sentences

Proceeds from divestitures and sales of property and equipment 25,888 42,093 40,696

Proceeds from sale of investments and other 1,330 — —

Payments for Company-owned life insurance policies ( 8,058 ) ( 1,910 ) ( 3,982 )

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

Proceeds from Company-owned life insurance policies 10,119 — —

Other investing activities ( 6,598 ) 1,330 —

Net cash used in investing activities ( 469,386 ) ( 447,881 ) ( 414,932 )

20 unchanged sentences

Par Value Capital in

Par Value Retained Earnings Accumulated Other

Par Value Retained

Earnings Accumulated Other

Comprehensive

3 unchanged sentences

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

Dividends declared on common stock ($ 0.88 per share)

— — — (146,919) — — ( 146,919 )

Employee share-based compensation earned — — 14,168 — — — 14,168

Stock option exercises 1,642 — 38,035 — — — 39,677

Restricted stock awards, net of forfeitures 163 — (163) — — — —

Employee share-based compensation earned — — 14,103 — — — 14,103

Purchase of Company common stock — (9,438) (55,468) (489,730) — — ( 554,636 )

5 unchanged sentences

Dividends declared on common stock ($ 1.02 per share)

— — — (160,035) — — ( 160,035 )

Employee share-based compensation earned — — 14,709 — — — 14,709

Stock option exercises 1,010 — 27,084 — — — 28,094

Restricted stock awards, net of forfeitures 149 (1) (148) — — — —

Employee share-based compensation earned — — 14,168 — — — 14,168

Purchase of Company common stock — (10,356) (62,834) (587,940) — — ( 661,130 )

5 unchanged sentences

Dividends declared on common stock ($ 1.12 per share)

— — — (167,983) — — ( 167,983 )

Employee share-based compensation earned — — 15,423 — — — 15,423

Stock option exercises 927 — 23,254 — — — 24,181

Restricted stock awards, net of forfeitures 132 1 (133) — — — —

Employee share-based compensation earned — — 14,709 — — — 14,709

Purchase of Company common stock — (8,701) (59,603) (481,264) — — ( 549,568 )

15 unchanged sentences

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 memorial services, merchandise installation, and interments, are sold at our cemeteries.

Cemetery merchandise and services, including cemetery 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

8 unchanged sentences

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

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation with no effect on our consolidated net income or cash flows.

As a result, for the years ended December 31, 2021 and 2020, $ 19.5 million and $ 15.6 million, respectively, of expenses were reclassified from Costs of revenue to Corporate general and administrative expenses .

This reclassification results from strategic changes in how we operate certain centralized functions .

Certain reclassifications have been made to prior period amounts to conform to the current period disclosure presentation with no effect on our consolidated net income or cash flows.

Use of Estimates in the Preparation of Financial Statements

49 unchanged sentences

We do not consider preneed funeral receivables to be past due until the contract converts into an atneed contract at which time the preneed receivable is paid or reclassified as a trade receivable with payment terms of less than thirty days.

Collections are generally managed by the locations or third party agencies acting on behalf of the locations, until a receivable is one hundred eighty days delinquent, at which time trade receivables are fully reserved.

Collections are generally managed by the locations or our in house collection agencies acting on behalf of the locations, until a receivable is one hundred eighty days delinquent, at which time trade receivables are fully reserved.

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, 2023:

45 unchanged sentences

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 eight 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.

We determine whether an arrangement is or contains a lease at the inception of the arrangement based on the unique facts and circumstances present.

9 unchanged sentences

In that case, the lessee is required to use its incremental borrowing rate, which is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term with an amount equal to the lease payments in a similar economic environment.

We use the rate implicit in each lease for vehicles and other transportation equipment, which represents 61% of our total lease liability as of December 31, 2022 and which are substantially all finance leases.

We use the rate implicit in each lease for vehicles and other transportation equipment, which represen ts 59% of our total lease liability as of December 31, 2023 and which are substantially all finance leases.

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.

25 unchanged sentences

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.

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 ( 3.5 )% to 6.0 % over a seven-year period, plus a terminal value determined using the constant growth method in projecting our future cash flows.

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 3.0 % 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 2.8 % for our funeral and cemetery reporting units, respectively.

133 unchanged sentences

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

On August 16, 2022, the Inflation Reduction Act was enacted into U.S.

We do not currently expect that the Inflation Reduction Act will have a material impact on our income taxes.

Recently Issued Accounting Standards

Business Combinations

In October 2021, the Financial Accounting Standards Board ("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.

We have adopted the new guidance and will apply it to customer contracts acquired in business combinations, if any, after January 1, 2022.

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

Accounting Standards Adopted in 2023

Financial Instruments

In March 2022, the FASB amended guidance to require public companies to disclose the vintage year of receivable write-offs during the reporting period.

This new disclosure is required for us beginning with our Form 10-Q for the three months ended March 31, 2023 and we will add the additional disclosures if write-offs during the period are material.

The amended guidance is not expected to have any impact on our consolidated results of operations, consolidated financial position, and cash flows.

In March 2022, the Financial Accounting Standards Board (FASB) amended guidance to require public companies to disclose the vintage year of receivable write-offs during the reporting period.

We adopted the amended guidance in 2023 with no impact on our consolidated results of operations, consolidated financial position, and cash flows.

As receivable write-offs in the twelve months ended December 31, 2023 were immaterial, we have not included the vintage year disclosure in this filing.

We will add the vintage year disclosure in future filings for periods in which receivable write-offs are material, if any.

In March 2023, the FASB amended guidance for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits.

The amended guidance expands the option to use the proportional amortization method from investments in low-income-housing tax credit structures to all tax credit structures that meet certain requirements.

The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received.

The investment amortization and the income tax credits are presented net in the statement of operations as a component of income tax expense.

The new guidance is effective as of January 1, 2024 with early adoption permitted.

We early adopted the guidance effective January 1, 2023.

Recently Issued Accounting Standards

Fair Value Measurements

2 unchanged sentences

The new guidance is effective for us beginning with valuations that occur after January 1, 2024 and is not expected to have any impact on our consolidated results of operations, consolidated financial position, and cash flows.

In March 2023, the FASB amended guidance on determining the useful life of leasehold improvements associated with a lease between related parties under common control.

The amended guidance requires that the leasehold improvements be amortized over the useful life of the improvements to the common control group as a whole.

The new guidance is effective for us on January 1, 2024 and is not expected to have any impact on our consolidated results of operations, consolidated financial position, and cash flows.

In November 2023, the FASB amended the reportable segment guidance by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.

This new guidance also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted.

Adoption should be applied retrospectively to all prior periods presented in the financial statements.

Upon adoption, we will include the additional disclosures in our financial statements and related notes.

In December 2023, the FASB amended guidance that requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The new guidance is effective on a prospective basis for annual periods beginning after December 15, 2024 and early adoption is also permitted.

Upon adoption, we will include the additional disclosures in our financial statements and related notes.

54 Service Corporation International

Preneed Activities

27 unchanged sentences

Preneed receivables, net $ 154,541 $ 1,247,668 $ 1,402,209

52 Service Corporation International

At December 31, 2023, the amortized cost basis of our preneed receivables by year of origination was as follows:

31 unchanged sentences

(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.

56 Service Corporation International

The activity in Preneed receivables, net and trust investments was as follows:

4 unchanged sentences

$ 5,577,499 $ 6,015,323 $ 5,345,720

Cumulative effect of accounting changes — — 26,394

Net preneed contract sales 1,973,012 1,978,266 1,870,972

2 unchanged sentences

Acquisitions of businesses, net 3,394 15,860 4,912

Net undistributed investment (losses) earnings (1)

Net undistributed investment earnings (losses) (1)

527,264 ( 611,057 ) 448,469

6 unchanged sentences

(1) Includes both realized and unrealized investment earnings.

54 Service Corporation International

The cost and fair values associated with trust investments recorded at fair value at December 31, 2023 and 2022 are detailed below.

48 unchanged sentences

Fixed income 1 1,135,815 1,231 ( 166,286 ) 970,760

Other 3 187 1 — 188

Trust investments, at fair value 4,013,319 371,897 ( 521,853 ) 3,863,363

38 unchanged sentences

Acquisitions (dispositions) of businesses, net 5,961 10,824 4,707

Net investment (losses) gains (1)

Net investment gains (losses) (1)

527,894 ( 618,760 ) 443,088

47 unchanged sentences

$ 485,109 $ 481,010

As part of our recoverability testing process during 2023, we reported $2.6 million of impairment on tradenames.

Amortization expense for intangible assets was $ 18.7 million, $ 18.4 million, and $ 20.0 million for the years ended December 31, 2023, 2022, and 2021, respectively.

3 unchanged sentences

federal income taxes (determined on a consolidated return basis), foreign income taxes, and state income taxes.

On August 16, 2022, the Inflation Reduction Act was enacted into U.S.

We do not currently expect that the Inflation Reduction Act will have a material impact on our income taxes.

We actively participate in tax credit equity investments for projects eligible to receive renewable energy credits.

These investments, accounted for under the equity method, are recorded in Deferred charges and other assets, net of reserves on our Consolidated Balance Sheet.

Upon realization, tax credits associated with these investments are recognized as a reduction of tax expense.

This reduction is offset by amortization of the investment in proportion to the tax benefits received during the period under the proportional amortization method.

During 2023, we recognized investment tax credits totaling $ 11.6 million and amortized the equity investment by $ 11.5 million to reflect the realization of these benefits.

This amortization is reflected within the Provision for income taxes in the Consolidated Statement of Operations.

60 Service Corporation International

Income before income taxes was composed of the following components:

6 unchanged sentences

$ 708,606 $ 755,628 $ 1,045,500

58 Service Corporation International

Income tax provision consisted of the following:

28 unchanged sentences

The 2023 consolidated effective tax rate was 24.1 %, compared to 25.1 % in 2022.

The lower effective tax rate in 2021 was primarily due to non-taxable gains on the cash surrender value of certain life insurance policies and the release of a Puerto Rican valuation allowance.

The lower effective tax rate in 2023 was primarily due to non-taxable gains on the cash surrender value of certain life insurance policies.

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.

6 unchanged sentences

Intangibles ( 207,727 ) ( 204,010 )

Deferred revenue on preneed funeral and cemetery contracts ( 80,178 ) —

Other ( 5,746 ) ( 5,313 )

14 unchanged sentences

Net deferred income tax liability $ ( 630,786 ) $ ( 439,130 )

As of December 31, 2022, foreign withholding taxes have not been provided on the estimated $ 212.6 million of undistributed earnings and profits (E&P) of our foreign subsidiaries as we intend to permanently reinvest these foreign E&P in those businesses outside the U.S.

As of December 31, 2023, foreign withholding taxes have not been provided on the estimated $ 247.6 million of undistributed earnings and profits (E&P) of our foreign subsidiaries as we intend to permanently reinvest these foreign E&P in the respective businesses outside the U.S.

However, if we were to repatriate such foreign E&P, the foreign withholding tax liability is estimated to be $ 12.8 million.

Additionally, if we were to repatriate E&P in excess of our previously taxed income under the Tax Cuts and Jobs Act of 2017, such excess repatriation may cause us to incur an additional U.S.

federal income tax of approximately $ 7.7 million related to the Company’s hybrid debt accounting between Canada and the United States.

federal income tax of approximately $ 7.7 million related to our hybrid debt structure between Canada and the United States that was eliminated in 2022.

The following table summarizes the activity related to our gross unrecognized tax benefits from January 1, 2021 to December 31, 2023 (in thousands):

10 unchanged sentences

W e include potential accrued interest and penalties related to unrecognized tax benefits within our income tax provision account.

We have accrued $ 0.9 million, $ 0.8 million, and $ 0.7 million for the payment of interest, net of tax benefits, and penalties as of December 31, 2022, 2021 and 2020, respectively.

We recorded an increase of interest and penalties of $ 0.1 million for each of the years ended December 31, 2022, 2021 and 2020, respectively.

To the extent interest and penalties are

We have accrued $ 1.0 million, $ 0.9 million, and $ 0.8 million for the payment of interest, net of tax benefits, and

62 Service Corporation International

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.

penalties as of December 31, 2023, 2022 and 2021, respectively.

We recorded an increase of interest and penalties of $ 0.1 million for each of the years ended December 31, 2023, 2022 and 2021, 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.

We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions.

17 unchanged sentences

Total loss carryforwards $ — $ 2,462,701 $ 7,396 $ 2,470,097

I n addition to the above loss carryforwards, we have $2.5 million of foreign alternative minimum tax credits that can be carried forward indefinitely.

In addition to the above loss carryforwards, we have $2.2 million of foreign alternative minimum tax credits that can be carried forward indefinitely.

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 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 2022, we recorded a net $ 1.8 million decrease in our valuation allowance primarily due to state legislative changes.

During 2023, we recorded a net $ 10.1 million decrease in our valuation allowance primarily driven by utilization and expiration of state net operating losses, along with legislative changes in certain states.

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 .

13 unchanged sentences

Term Loan due May 2024 — 536,250

Term Loan due January 2028 658,125 —

Bank Credit Facility due May 2024 — 570,000

Bank Credit Facility due January 2028 790,000 —

Obligations under finance leases 132,039 120,837

16 unchanged sentences

Total debt maturities $ 4,712,496

64 Service Corporation International

Bank Credit Agreement

In January 2023, we amended our $1.650 billion credit agreement due May 2024 to enter into a new $2.175 billion bank credit agreement due January 2028 with a syndicate of banks.

The $2.175 billion bank credit agreement comprises a $ 1.5 billion Bank Credit Facility, including a sublimit of $100.0 million for letters of credit and a $ 675.0 million Term Loan, both due January 2028.

As a result of the new agreement, at closing, there was a net $138.8 million increase in our outstanding Term Loan balance and a $155.0 million decrease in our outstanding Bank Credit Facility balance.

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.

The bank credit agreement contains a maximum leverage ratio financial covenant and certain dividend and share repurchase restrictions.

As of December 31, 2023, we are in compliance with all of our debt covenants.

2 unchanged sentences

As of December 31, 2022, we issued $ 33.5 million of letters of credit.

62 Service Corporation International

Subsequent to December 31, 2023, we decreased our outstanding borrowings by $40.0 million to $750.0 million under our Bank Credit Facility due January 2028.

Debt Issuances and Additions

During the year ended December 31, 2023, we issued or added $ 957.4 million of debt including:

• $ 284.1 million in proceeds from certain banks in our Term Loan;

• $ 600.0 million on our Bank Credit Facility due January 2028;

• $ 44.3 million in proceeds from certain banks in our Bank Credit Facility;

• $ 10.0 million on our Bank Credit Facility due May 2024;

• $ 19.0 million in other debt.

The debt proceeds were used primarily for general corporate purposes.

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;

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

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.

Net proceeds from newly issued debt during the year ended December 31, 2023 were used to pay down our Bank Credit Facility due May 2024, our Term Loan due May 2024, and for general corporate purposes.

These transactions resulted in additional debt issuance costs of $7.5 million.

During the year ended December 31, 2022, we drew $ 465.0 million on our Bank Credit Facility due May 2024 and issued $ 19.0 million in other debt primarily for general corporate purposes.

Debt Extinguishments and Reductions

During the year ended December 31, 2023, we made aggregate debt payments of $ 603.2 million for scheduled and early extinguishment payments including:

• $ 50.0 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;

• $ 14.4 million in aggregate principal of 7.5% Senior Notes due April 2027 repurchased on the open market;

• $ 235.0 million in aggregate principal of our Bank Credit Facility due January 2028;

• $ 199.3 million in aggregate principal payments to certain banks in our Bank Credit Facility due May 2024;

• $ 145.3 million in aggregate principal payments to certain banks in our Term Loan due May 2024;

• $ 16.9 million in aggregate principal of our Term Loan due January 2028;

• $ 0.9 million in aggregate principal of our 7.5% Senior Notes due April 2027 repurchased in the open market;

• $ 0.5 million of premiums paid on early extinguishment;

4 unchanged sentences

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

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

• $ 14.4 million in aggregate principal of 7.5% Senior Notes due April 2027 repurchased on the open market;

• $ 1.2 million of premiums paid on early extinguishment;

17 unchanged sentences

Total expected cash interest payments $ 1,235,060

Subsequent Event

In January 2023, we entered into a new bank credit agreement that consists of a $ 675.0 million Term Loan due January 2028 and a Bank Credit Facility due January 2028 providing for borrowings of up to $ 1.5 billion.

Proceeds from this new bank credit agreement were used to settle our existing Term Loan due May 2024 and Bank Credit Facility due May 2024.

The new bank credit agreement provides us with flexibility for working capital and other general corporate purposes, 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 maximum leverage ratio and certain dividend and share repurchase restrictions.

Currently, we have issued $ 33.5 million of letters of credit on the Bank Credit Facility due January 2028 and we have $ 1.0 billion in borrowing capacity under the facility.

Credit Risk and Fair Value of Financial Instruments

12 unchanged sentences

Term Loan due May 2024 — 536,250

Term Loan due January 2028 658,125 —

Bank Credit Facility due May 2024 — 570,000

Bank Credit Facility due January 2028 790,000 —

Mortgage notes and other debt, maturities through 2050 79,426 63,168

Total fair value of debt instruments $ 4,385,434 $ 3,921,833

66 Service Corporation International

The fair values of our long-term, fixed rate loans were estimated using market prices for those loans, and therefore they are classified within Level 2 of the fair value measurements hierarchy.

2 unchanged sentences

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

64 Service Corporation International

Credit Risk Exposure

68 unchanged sentences

Right-of-use assets obtained in exchange for operating lease liabilities $ 9,519 $ 5,028 $ 7,822

During the years ended December 31, 2022 and 2021, 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 $ 0.1 million and $ 1.0 million for the years ended December 31, 2022 and 2021, respectively.

We have 80 operating leases where we are the lessor and the non-cancelable term is greater than one year, resulting in $ 4.0 million and $ 4.3 million in lease income for the years ended December 31, 2023 and 2022, respectively.

3 unchanged sentences

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

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

66 Service Corporation International

contractual levels.

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

Renewal options that can be cancelled by the lessees are not included in our disclosure of future lease income, which includes only the non-cancelable terms and fixed escalation provisions.

1 unchanged sentence

Non-lease components are excluded from rental income disclosures.

68 Service Corporation International

Future undiscounted lease income from operating leases where we are the lessor were as follows as of December 31, 2023 (in thousands):

4 unchanged sentences

Buildings and improvements are depreciated over a period ranging from ten years to forty years.

For these properties, we recorded depreciation expense of $ 0.7 million for each of the years ended December 31, 2022 and 2021 and $ 0.5 million for the year ended December 31, 2020.

For these properties, we recorded depreciation expense of $ 0.4 million for the year ended December 31, 2023 and $ 0.7 million for each of the years ended December 31, 2022 and 2021.

As of December 31, 2023, our Consolidated Balance Sheet includes Land of $ 33.9 million, and Buildings and improvements of $ 12.6 million, net of $ 2.3 million accumulated depreciation, related to these properties.

10 unchanged sentences

however, if we determine that an unfavorable outcome is probable and can be reasonably estimated, or if we determine an amount for which we would be willing to settle the matter to avoid further costs and risk, 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 hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome 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 Fredeen lawsuit described below.

Lisa Fredeen, an aggrieved employee and on behalf of other aggrieved employees v.

California Cemetery and Funeral Services, LLC, et al;

in the Superior Court of the State of California for the County of Los Angeles.

This lawsuit was filed against SCI subsidiaries on May 18, 2018 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.

This lawsuit asserts numerous claims for alleged wage and hour pay violations under the California Labor Code and the California Private Attorneys General Act.

The plaintiff seeks unpaid wages, compensatory and punitive damages, civil penalties, attorneys’ fees and costs, and interest.

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 State of California and Taylor lawsuits described below.

We are named as a defendant in various lawsuits alleging operational claims, including but not limited to the State of California and Taylor lawsuits described below.

The People of the State of California v.

8 unchanged sentences

a California Corporation, and Trident Society, Inc.

Xavier Becerra, Attorney

General of the State of California, and Does 1-50, Case No.

Xavier Becerra, Attorney General of the State of California, and Does 1-50, Case No.

34-2019-00269617;

6 unchanged sentences

20-cv-60709 ;

in the United States District Court Southern District of Florida Fort Lauderdale Division.

This case was filed in April 2020 as a Florida class action alleging that the allocation of prices among certain of our cremation service contracts and cremation merchandise contracts, and the related preneed trust funding, and the failure to disclose commissions paid and sales practices associated with the sale of third-party travel protection plans, violate the Florida Deceptive and Unfair Trade Practices Act and constitute unjust enrichment.

Plaintiff seeks refunds, general, actual, compensatory and exemplary damages, civil penalties, interest, and attorney fees.

The parties have reached a tentative settlement of the lawsuit that would include an immaterial payment of attorney fees and provide consumers enhanced cancellation rights for a period of sixty days.

The impact of these enhanced cancellation rights is not expected to be material.

The court conditionally certified the class and granted preliminary approval of the settlement.

Unclaimed Property Audit

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.

in the United States District Court for the Southern District of Florida, Fort Lauderdale Division.

Practices Act and constitute unjust enrichment.

Plaintiff sought refunds;

general, actual, compensatory and exemplary damages;

civil penalties, interest, and attorney fees.

The parties have reached a settlement of the lawsuit that included an immaterial payment of attorney fees and provided consumers enhanced cancellation rights for a period of sixty days.

The impact of these enhanced cancellation rights was not material to our financial condition, results of operations, and cash flows.

The court has approved the settlement, the class has been certified, and the administrative claims process is now complete.

We consider this matter resolved.

Unclaimed Property Audits

We have received notices from auditors representing the unclaimed property departments of approximately forty states regarding the escheatment of preneed trust funds held in association with unused preneed funeral and cemetery contracts ("Unused Preneed Trust Funds").

The states claim that these Unused Preneed Trust Funds are subject to the states’ unclaimed property or escheatment laws and generally assert that all or a portion of the Unused Preneed Trust 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, Connecticut, Iowa, Kentucky, Maryland, Massachusetts, Montana, Nebraska, New Mexico, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, West Virginia, and Wyoming.

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

We have entered into an audit resolution agreement with the State of Florida Department of Financial Services and Division of Unclaimed Property ("Florida Agreement").

The Florida Agreement provides for the Company to retain the trust fund earnings and to escheat the principal to the State of Florida, which resulted in an increase in trust fund income in 2023.

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.

We intend to vigorously defend all of the above matters;

Given the nature of these matters, we are unable to reasonably estimate the total possible loss or ranges of loss, if any.

We believe we have strong defenses to these claims and 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.

16 unchanged sentences

Subsequent to December 31, 2023, we repurchased 310,581 shares for $ 20.9 million at an average cost per share of $ 67.39 .

68 Service Corporation International

Share-Based Compensation

3 unchanged sentences

In May 2017, our shareholders approved the amended 2016 Equity Incentive Plan ("the 2016 Plan"), which reserved 13,404,404 shares of common stock for outstanding and future awards of stock options, restricted stock, and other awards to officers and key associates.

70 Service Corporation International

Our benefit plans allow for options to be granted as either non-qualified or incentive stock options.

32 unchanged sentences

Exercised ( 926,610 ) $ 26.10

Cancelled ( 12,421 ) $ 50.80

Outstanding at December 31, 2023

40 unchanged sentences

Vested ( 114,826 ) $ 53.38

Forfeited and other ( 2,777 ) $ 53.97

Nonvested restricted share awards at December 31, 2023

19 unchanged sentences

Vested ( 61,390 ) $ 52.47

Forfeited and other ( 5,370 ) $ 54.07

Nonvested restricted share units at December 31, 2023

31 unchanged sentences

The Senior SERP provides retirement benefits based on years of service and position.

In October 2022, we terminated our retirement plan for certain non-employee directors and paid out, in a discounted lump sum, all benefits to the participants or their heirs in the amount of $ 0.8 million.

In December 2022, we amended the Senior SERP to terminate the participation of all our active employees and those participants were paid their benefits, in a discounted lump sum, in the amount of $ 0.7 million.

We recognize pension related gains and losses in Other income, net on our Consolidated Statement of Operations in the year such gains and losses are incurred.

72 unchanged sentences

Non-funeral home revenue 85,904 76,311 74,099

Recognized preneed revenue 164,493 159,595 124,645

Other revenue 143,699 140,898 111,767

Non-funeral home preneed sales revenue 134,770 146,496 139,260

Core general agency and other revenue 181,646 161,696 161,233

Total funeral revenue 2,303,031 2,332,045 2,343,176

19 unchanged sentences

76 Service Corporation International

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

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

Reportable Segments

18 unchanged sentences

Capital expenditures $ 139,420 $ 148,737 $ 15,503 $ 303,660

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

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

United States Canada Total

32 unchanged sentences

Other current assets:

Income tax receivable $ 7,018 $ 13,635

Prepaid insurance 5,182 5,035

Prepaid expenses 13,355 13,001

Restricted cash 370 10,379

55 unchanged sentences

Shares repurchased $ — $ ( 280 ) $ ( 323 )

Excise tax accrual on shares repurchased $ 4,724 $ — $ —

Earnings Per Share

13 unchanged sentences

Amounts attributable to common stockholders:

Income from continuing operations per share:

Net income per share:

9 unchanged sentences

Acquisitions and Divestiture-Related Activities

In the fourth quarter of 2022, we acquired ten funeral homes and three cemeteries in California as part of two acquisitions (the "2022 California Businesses") for $ 71.2 million in cash.

In 2023, we acquired 17 funeral homes and 2 cemeteries for $72.5 million in cash and $56.4 million for real estate transactions.

This amount includes the use of $24.0 million in IRS Section 1031 exchange funds.

This compares to $102.6 million and $121.4 million, net of cash acquired, for several business acquisitions, and $17.1 million and $26.6 million, net of cash acquired, for several real estate acquisitions for years ended December 31, 2022 and 2021, respectively.

The 2022 acquisitions include ten funeral homes and three cemeteries in California as part of two acquisitions (the "2022 California Businesses") for $ 71.2 million in cash.

This amount includes the use of $ 13.2 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:

1 unchanged sentence

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

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

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

Other current assets $ 241

13 unchanged sentences

Net assets acquired $ 71,220

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;

2 unchanged sentences

The identified intangible assets are indefinite lived tradenames with a fair value of $14.3 million.

We incurred acquisition costs of $ 0.2 million, which is included in Corporate general and administrative expenses in our Consolidated Statement of Operations for the year ended December 31, 2022.

We incurred acquisition costs of $ 0.2 million, which is included in G eneral and administrative expenses in our Consolidated Statement of Operations for the year ended December 31, 2022.

The 2022 California Businesses contributed revenue of $ 1.9 million and net income of $ 0.5 million from acquisition through December 31, 2022.

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.

The 2021 acquisitions include 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.

30 unchanged sentences

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

Excluding the acquisitions described above, we spent $ 31.2 million, $ 26.3 million, and $ 64.2 million, net of cash acquired, for several business acquisitions, and $ 17.1 million, $ 26.6 million, and $ 52.1 million, net of cash acquired, for several real estate acquisitions for the three years ended December 31, 2022, 2021, and 2020, respectively.

These amounts include the use of $ 21.7 million, $ 10.9 million, and $ 55.1 million in IRS Section 1031 exchange funds for the three years ended December 31, 2022, 2021, and 2020, respectively.

Divestiture-Related Activities

39 unchanged sentences

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