What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-13 compared with 2024-02-13 · 145 added, 159 removed, 1530 unchanged (17% of the section changed)

5 unchanged sentences

Consolidated Statement of Comprehensive Income for the years ended December 31, 202 4 , 202 3 , and 202 2

Consolidated Balance Sheet as of December 31, 2023 and 2022

Consolidat ed Balance Sheet as of December 31, 202 4 and 202 3

Consolidated Statement of Cash Flows for the years ended December 31, 202 4 , 202 3 , and 202 2

14 unchanged sentences

Financial Statement Schedule:

II — Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022, and 2021

II — Val uation and Qualifying Accounts for the years ended December 31, 202 4 , 202 3 , and 202 2

All other schedules have been omitted because the required information is not applicable or is not present in amounts sufficient to require submission or because the information required is included in the consolidated financial statements or the related notes thereto.

34 unchanged sentences

In order to perform the goodwill impairment test, management compares the fair value of a reporting unit to its carrying amount, including goodwill.

Management determines fair value of a reporting unit using both a market and income approach.

Management determines fair value of a reporting unit using an income approach.

The income approach, which is a discounted cash flow method, uses projections of future cash flows and includes assumptions concerning future operating performance and economic conditions, such as revenue and other growth rates and a discount rate, that may differ from actual future cash flows.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the funeral reporting unit is a critical audit matter are the significant judgment by management when developing the fair value measurement of the reporting unit under the income approach.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s cash flow projections and significant assumptions related to revenue growth rates (over a seven year period (“discrete years”) and terminal year) and ratio of expenses to revenue.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s cash flow projections and significant assumptions related to revenue growth rates (over a six year period (“discrete years”) and terminal year) and ratio of expenses to revenue.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

28 unchanged sentences

Corporate general and administrative expenses ( 139,019 ) ( 157,368 ) ( 237,248 )

Gains on divestitures and impairment charges, net 9,816 9,962 25,169

Restructuring charge ( 11,470 ) — —

(Losses) gains on divestitures and impairment charges, net ( 12,488 ) 9,816 9,962

Operating income 927,680 944,255 927,316

64 unchanged sentences

Retained earnings 553,701 432,454

Accumulated other comprehensive income 24,891 16,538

Accumulated other comprehensive (loss) income ( 7,221 ) 24,891

Total common stockholders’ equity 1,678,005 1,541,264

11 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Losses on early extinguishment of debt, net 1,114 1,225 5,226

Loss on early extinguishment of debt, net 25 1,114 1,225

Depreciation and amortization 208,211 191,272 175,330

3 unchanged sentences

Provision for expected credit losses 11,542 11,245 16,700

Provision for (benefit from) deferred income taxes 191,516 3,471 ( 5,837 )

Gains on divestitures and impairment charges, net ( 9,816 ) ( 9,962 ) ( 25,169 )

Provision for deferred income taxes 7,541 191,516 3,471

Loss (gain) on divestitures and impairment charges, net 12,488 ( 9,816 ) ( 9,962 )

Gain on sale of investments — — ( 1,169 )

1 unchanged sentence

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

Decrease (increase) in receivables ( 3,810 ) 4,151 ( 20,215 )

Increase in other assets ( 131,581 ) ( 8,206 ) ( 54,883 )

Increase in payables and other liabilities ( 9,676 ) 37,029 53,747

(Increase) decrease in receivables ( 1,481 ) ( 3,810 ) 4,151

Decrease (increase) in other assets 65,043 ( 131,581 ) ( 8,206 )

Increase (decrease) in payables and other liabilities 22,720 ( 9,676 ) 37,029

Effect of preneed sales production and maturities:

1 unchanged sentence

Increase in deferred revenue, net 59,189 157,656 195,358

Increase in deferred receipts held in trust ( 30,160 ) 20,781 43,451

Increase (decrease) in deferred receipts held in trust 31,445 ( 30,160 ) 20,781

Net cash provided by operating activities 944,912 869,043 825,725

80 unchanged sentences

Funeral merchandise, including burial caskets and related accessories, urns and other cremation receptacles, outer burial containers, flowers, online and video tributes, stationery products, casket and cremation memorialization products, and other ancillary merchandise, is sold at funeral service locations.

Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, niches, and other cremation memorialization and interment options.

Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, cremation niches, and other cremation memorialization and interment options.

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.

4 unchanged sentences

Our consolidated financial statements also include the accounts of the merchandise and service trusts and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary.

We have retained the specialized industry accounting principles when consolidating the trusts.

We have retained specialized industry accounting principles when consolidating the trusts.

Our trusts are variable interest entities, for which we have determined that we are the primary beneficiary as we absorb a majority of the losses and returns associated with these trusts.

43 unchanged sentences

Long-term miscellaneous receivables, net $ 7,913 $ 7,340

Our atneed trade receivables primarily consist of amounts due for funeral and cemetery services already performed.

We provide reserves for credit losses for our receivables.

1 unchanged sentence

These estimates are impacted by a number of factors, including changes in the economy and demographic or competitive changes in our areas of operation.

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

Our atneed trade receivables primarily consist of amounts due for funeral and cemetery services already performed.

Payment on atneed contracts is generally due at the time the merchandise is delivered or the services are performed.

We also have preneed receivables, as disclosed in Note 3, for which payment generally occurs prior to our fulfillment of the performance obligations.

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

Our preneed contracts may also have extended payment terms with associated financing charges.

2 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 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.

Collections are generally managed by the locations or our in house collection team 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, 2024:

32 unchanged sentences

Cemetery property is recorded at cost.

Inventory costs and cemetery property are relieved using specific identification in fulfillment of performance obligations on our contracts.

Inventory costs and cemetery property are relieved using specific identification upon fulfillment of performance obligations of our contracts.

Cemetery property amortization was $ 102.5 million, $ 101.2 million, and $ 94.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.

3 unchanged sentences

Depreciation is recognized ratably over the estimated useful lives of the various classes of assets.

Buildings and improvements are depreciated over a period ranging from ten years to forty years , equipment is depreciated over a period from three years to twelve years , and leasehold improvements are depreciated over the shorter of the lease term or twelve years .

Buildings and improvements are depreciated over a period ranging from ten years to forty years , equipment is depreciated over a period from three years to twelve years ;

and leasehold improvements are depreciated over the shorter of the lease term or twelve years .

Depreciation and amortization expense related to property and equipment was $ 208.2 million, $ 191.3 million, and $ 175.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

4 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 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.

33 unchanged sentences

In order to perform our goodwill impairment test, we compare the fair value of a reporting unit to its carrying amount, including goodwill.

We determine fair value of each reporting unit using both a market and income approach.

We determine fair value of each reporting unit using an income approach.

1 unchanged sentence

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 3.0 % 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 7.50 % discount rate, revenue growth rates averaging 2.8 % over a six-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 2.0 % and 2.5 % for our funeral and cemetery reporting units, respectively.

Additionally, we used a ratio of expenses to revenue ranging from 70.0 % to 80.0 % and growth rates for other assumptions in our model ranging from 2.0 % to 3.0 %.

Fair value was calculated as the sum of the projected discounted cash flows of our reporting units over the next seven years plus terminal value at the end of those seven years.

In addition to our annual review, we assess the impairment of goodwill whenever certain events or changes in circumstances indicate that the carrying value may be greater than fair value.

Additionally, we used a ratio of expenses to revenue averaging 73.0 % and growth rates for other assumptions in line with revenue growth rate assumptions.

Fair value was calculated as the sum of the projected discounted cash flows of our reporting units over the next six years plus terminal value at the end of those six years.

In addition to our annual review, we may assess the impairment of goodwill whenever certain events or changes in circumstances indicate that the carrying value may be greater than fair value.

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.

8 unchanged sentences

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 % ( 4.7 % 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 2.8 % for our funeral and cemetery segments ( 1.5 % 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 our overall business.

We also assumed a terminal growth rate of 2.0 % and 2.5 % for our funeral and cemetery segments, respectively, and discounted the cash flows at a 7.75 % discount rate based on the relative risk of these assets to our overall business.

In addition to our annual review, we may assess the impairment of intangible assets whenever certain events or changes in circumstances indicate that the carrying value may be greater than the fair value.

Factors that could trigger an interim

50 Service Corporation International

In addition to our annual review, we assess the impairment of intangible assets whenever certain events or changes in circumstances indicate that the carrying value may be greater than the fair value.

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.

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.

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

55 unchanged sentences

We do not provide these travel protection services, and we are not primarily obligated to provide such services under these arrangements.

Therefore, we record revenues, net of amounts due to the third-party, at the time of sale.

Therefore, we record revenue, net of amounts due to the third-party, at the time of sale.

Total consideration received for price-guaranteed preneed and for atneed contracts with customers represents the stated amount of the contract excluding any amounts collected on behalf of third parties, such as sales taxes.

57 unchanged sentences

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 2023

Financial Instruments

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.

Restructuring Charge

During the fourth quarter of 2024, we recognized a restructuring charge of $11.5 million, which included the retirements and position eliminations of various home office and corporate positions as part of ongoing cost management.

We paid $2.3 million of the recognized charge during the fourth quarter.

The restructuring charge is presented separately on our Consolidated Statement of Operations.

Recently Issued Accounting Standards

Fair Value Measurements

In June 2022, the FASB amended guidance to clarify that the fair value of investments in equity instruments with contractual sale restrictions should not be discounted as a result of the contractual restrictions.

Additionally, the new guidance mandated disclosure of the fair value of any such securities, a description of the nature and duration of the restrictions, and circumstances that could cause a lapse in the restrictions.

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.

We adopted the standard effective December 31, 2024 and applied the disclosure requirements retrospectively to all prior periods presented in the financial statements.

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

Upon adoption, we will include the additional disclosures in our financial statements and related notes, however the guidance will not have a material effect on our financial position or results of operations.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued guidance that requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The guidance is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted, and it can be adopted either on a prospective or retrospective basis.

Preneed Activities

19 unchanged sentences

Preneed receivables, net $ 151,801 $ 1,418,972 $ 1,570,773

54 Service Corporation International

December 31, 2023

21 unchanged sentences

The following table summarizes the activity for the reserve for credit losses on preneed receivables for the twelve months ended December 31, 2024.

December 31, 2022 Provision for Expected Credit Losses (Acquisitions) Divestitures, Net Write Offs Effect of Foreign Currency December 31, 2023

December 31, 2023 Provision for Expected Credit Losses Write Offs Effect of Foreign Currency December 31, 2024

(In thousands)

15 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:

17 unchanged sentences

(1) Includes both realized and unrealized investment earnings.

56 Service Corporation International

The cost and fair values associated with trust investments recorded at fair value at December 31, 2024 and 2023 are detailed below.

148 unchanged sentences

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.

During 2024, we recognized investment tax credits totaling $ 7.4 million and $3.1 million in other tax benefits primarily from depreciation.

As a result, the equity investment was amortized by $ 10.0 million to reflect the realization of these benefits.

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

32 unchanged sentences

Changes in uncertain tax positions and audit settlements ( 1,083 ) 110 53

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

Excess tax benefit from share-based compensation ( 11,924 ) ( 8,406 ) ( 8,918 )

3 unchanged sentences

The 2024 consolidated effective tax rate was 23.2 %, compared to 24.1 % in 2023.

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

The lower effective tax rate in 2024 was primarily due to an increase in excess tax benefit recognized on the settlement of employee share-based awards.

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.

10 unchanged sentences

Loss and tax credit carryforwards 113,603 127,796

Deferred revenue on preneed funeral and cemetery contracts — 153,479

Accrued liabilities 115,515 122,887

22 unchanged sentences

Balance at December 31, 2023 $ 1,348

Reductions to tax positions related to prior years —

Reductions to tax positions due to lapse of statutes of limitations ( 1,348 )

Additions to tax positions related to prior years $ 834

Balance at December 31, 2024 $ 834

Our total unrecognized tax benefits that, if recognized, would affect our effective tax rates were $ 1.3 million as of December 31, 2023, 2022 and 2021.

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

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

Our total unrecognized tax benefits that, if recognized, would affect our effective tax rates were $ 0.8 million, $ 1.3 million and $ 1.3 million as of December 31, 2024, 2023 and 2022, respectively.

62 Service Corporation International

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.

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

We have accrued $ 0.4 million, $ 1.0 million and $ 0.9 million for the payment of interest, net of tax benefits, and penalties as of December 31, 2024, 2023 and 2022, respectively.

We recorded a decrease of interest and penalties of $ 0.6 million and an increase of $ 0.1 million and $ 0.1 million for years ended December 31, 2024, 2023 and 2022, 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.

3 unchanged sentences

The federal statutes of limitations have expired for all tax years prior to 2021, 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 2021.

There are currently no federal or provincial audits in Canada;

however, years subsequent to 2017 remain open and could be subject to examination.

We believe that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $ 1.3 million within the next twelve months as a result of concluding various state tax matters.

Various subsidiaries have federal, state, and foreign loss carryforwards in the aggregate of $ 2.5 billion with expiration dates through 2041.

Various state and foreign jurisdictions are auditing years 2020 through 2022.

We believe that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $ 0.4 million within the next twelve months as a result of the resolution of certain state tax matters.

Various subsidiaries have federal, state, and foreign loss carryforwards totaling $ 2.4 billion with expiration dates ranging through 2042.

Such loss carryforwards will expire as follows:

25 unchanged sentences

4.000% Senior Notes due May 2031 800,000 800,000

Term Loan due May 2024 — 536,250

5.750% Senior Notes due October 2032 800,000 —

Term Loan due January 2028 641,250 658,125

Bank Credit Facility due May 2024 — 570,000

Bank Credit Facility due January 2028 120,000 790,000

14 unchanged sentences

2025 $ 83,850

2028 1,349,969

2030 and thereafter 2,479,071

Total debt maturities $ 4,835,298

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.

5 unchanged sentences

As of December 31, 2023, we issued $ 39.1 million of letters of credit.

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.

64 Service Corporation International

Building Financing

In August 2024, we entered into a new $ 129.9 million construction loan agreement due 2037 with a syndicate of banks.

The purpose of this loan is to provide financing for a new corporate headquarters building.

This transaction resulted in additional debt issuance costs of $ 1.1 million.

As of December 31, 2024, we had no borrowing outstanding.

Debt Issuances and Additions

During the year ended December 31, 2024, we issued or added $ 1,451.1 million of debt including:

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

• $ 800.0 million unsecured 5.75% Senior Notes due October 2032;

• $ 645.0 million on our Bank Credit Facility due January 2028;

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

• $ 6.1 million in other debt.

Net proceeds from newly issued debt during the year ended December 31, 2024 were used to pay down our Bank Credit Facility due January 2028 and for general corporate purposes.

These transactions resulted in additional debt issuance costs of $ 14.3 million.

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

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

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

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

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

2 unchanged sentences

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

1 unchanged sentence

• $ 1,315.0 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;

• $ 0.5 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;

• $ 7.6 million in other debt.

Certain of the above transactions resulted in the recognition of a loss of $ 1.1 million recorded in Losses on early extinguishment of debt, net in our Consolidated Statement of Operations for the year ended December 31, 2023.

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 to certain banks in our Bank Credit Facility due May 2024;

• $ 145.3 million in aggregate principal 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;

2 unchanged sentences

Additional Debt Disclosures

At December 31, 2023 and 2022, we had deposits of $ 0.7 million and $ 0.5 million, respectively, in restricted, interest-bearing accounts that were pledged as collateral for various credit instruments and commercial commitments.

At both December 31, 2024 and 2023, we had deposits of $ 0.7 million, respectively, in restricted, interest-bearing accounts that were pledged as collateral for various credit instruments and commercial commitments.

These deposits are included in Other current assets and Deferred charges and other assets, net in our Consolidated Balance Sheet.

25 unchanged sentences

4.000% Senior Notes due May 2031 712,640 711,336

Term Loan due May 2024 — 536,250

5.750% Senior Notes due October 2032 778,752 —

Term Loan due January 2028 641,250 658,125

Bank Credit Facility due May 2024 — 570,000

Bank Credit Facility due January 2028 120,000 790,000

1 unchanged sentence

Total fair value of debt instruments $ 4,488,925 $ 4,385,434

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.

The Term Loan, the revolving credit facility agreement, and the mortgage and other debt are classified within Level 3 of the fair value measurements hierarchy.

The Term Loan, the revolving credit facility agreement, and the mortgage notes and other debt are classified within Level 3 of the fair value measurements hierarchy.

The fair values of these instruments have been estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements.

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

66 Service Corporation International

Credit Risk Exposure

5 unchanged sentences

Furthermore, bad debts have not been significant relative to the volume of deferred revenue.

Customer payments on preneed funeral or preneed cemetery contracts that are either placed into state-regulated trusts or used to pay premiums on life insurance contracts generally do not subject us to collection risk.

Customer payments on preneed funeral or preneed cemetery contracts that generally are either placed into state-regulated trusts or used to pay premiums on life insurance contracts generally do not subject us to collection risk.

Insurance-funded contracts are subject to supervision by state insurance departments and are protected in the majority of states by insurance guaranty acts.

76 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 $ 0.4 million for the year ended December 31, 2023 and $ 0.7 million for each of the years ended December 31, 2022 and 2021.

For these properties, we recorded depreciation expense of $ 0.4 million for the years ended December 31, 2024 and 2023, and $ 0.7 million for the year ended December 31, 2022.

As of December 31, 2024, our Consolidated Balance Sheet includes land of $ 31.9 million, and buildings and improvements of $ 9.7 million, net of $ 2.4 million accumulated depreciation, related to these properties.

13 unchanged sentences

Operational Claims .

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.

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

The People of the State of California v.

12 unchanged sentences

On December 2, 2019, the CAAG filed the complaint, referenced above, seeking permanent injunction from making false statements and engaging in unfair competition, a placement of funds into preneed trusts, civil penalties, customer refunds, attorneys’ fees, and costs.

While we believe our contracts comply with applicable laws, the parties have engaged in settlement discussions in an effort to resolve this dispute, which may or may not be successful.

We anticipate any settlement in connection with this matter may include preneed contract refunds, governmental investigative costs, and other legal expenses.

Nancy Taylor, on behalf of herself and others similarly situated v.

Service Corporation International and others, Case No.

20-cv-60709 ;

in the United States District Court for the 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 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.

The parties have reached a settlement of the lawsuit that includes civil penalties of $23 million and provides certain preneed contract consumers the right to receive refunds.

The court approved the settlement and the civil penalties have been paid.

The claims period closed on October 7, 2024, and although some customers may still request refunds beyond that date, we maintain a reserve that we believe is sufficient to cover all costs related to future refunds.

The settlement represents a compromise of contested claims and does not contain any admission of wrongdoing or fault on the part of the Company, its board of directors or executive officers in the action settlement.

We consider this litigation concluded.

Unclaimed Property Audits

4 unchanged sentences

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.

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 and 2024.

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

16 unchanged sentences

In 2023, we repurchased 8,700,767 shares of our common stock at an aggregate cost of $ 549.6 million, which is an average cost per share of $ 63.17 .

Additionally, in November 2023, our Board of Directors increased our share repurchase authorization to $ 600.0 million.

In November 2023, 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 $ 280.6 million at December 31, 2024.

5 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.

4 unchanged sentences

Restricted shares are generally expensed ratably over the period during which the restrictions lapse, which is typically 33 1 / 3 % each year.

At December 31, 2023 and 2022, 3,470,575 and 4,090,978 shares, respectively, were reserved for future option and restricted share grants under our stock benefit plans.

At December 31, 2024 and 2023,

70 Service Corporation International

2,821,617 and 3,470,575 shares, respectively, were reserved for future option and restricted share grants under our stock benefit plans.

We utilize the Black-Scholes option valuation model for estimating the fair value of our stock options.

46 unchanged sentences

$0.00 — 75.00 3,643,548 3.9 $ 53.00 2,902,692 $ 49.19

$65.01 — 75.00 371,700 7.1 $ 70.34 — $ —

$0.00 — 75.00 4,906,195 3.6 $ 45.44 3,989,812 $ 41.68

Other information pertaining to stock options was as follows (in thousands, except weighted-average grant date fair value):

31 unchanged sentences

At December 31, 2024, unrecognized compensation expense of $ 7.2 million related to restricted share awards is expected to be recognized over a weighted average period of 1.8 years.

72 Service Corporation International

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

4 unchanged sentences

Vested ( 60,490 ) $ 60.02

Forfeited and other ( 5,403 ) $ 68.35

Nonvested restricted share units at December 31, 2024

103,954 $ 68.42

72 Service Corporation International

Other information pertaining to restricted share units was as follows (in thousands, except weighted-average grant date fair value):

35 unchanged sentences

Interest cost on projected benefit obligation $ 674 $ 797 $ 535

Recognized net actuarial (gains) losses 654 ( 3,254 ) ( 353 )

Total net periodic benefit cost $ 1,451 $ ( 2,719 ) $ 129

Recognized net actuarial (gain) loss ( 995 ) 654 ( 3,254 )

Total net periodic benefit (gain) cost $ ( 321 ) $ 1,451 $ ( 2,719 )

The Plans’ funded status were as follows:

6 unchanged sentences

Benefits paid ( 1,710 ) ( 1,994 )

( 1,994 ) ( 3,756 )

Benefit obligation at end of year $ 13,332 $ 15,363

3 unchanged sentences

Benefits paid, including expenses ( 1,710 ) ( 1,994 )

( 1,994 ) ( 3,756 )

Fair value of plan assets at end of year $ — $ —

9 unchanged sentences

Total accrued liability $ ( 13,332 ) $ ( 15,363 )

( 1) In 2022, we terminated our Directors' Plan and amended Senior SERP to terminate the participation of all our active employees and paid out, in a discounted lump sum, all benefits to the participants or their heirs in the amount of $1.5 million.

The retirement benefits under the Plans are unfunded obligations of the Company.

25 unchanged sentences

Segment Reporting

Our operations are both product-based and geography-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 and operating segments presented below include our funeral and cemetery operations.

Our geographic areas include the United States and Canada, where we conduct both funeral and cemetery operations.

Our Chief Operating Decision Maker, (CODM) is our Chief Executive officer, who is responsible for making key operating, finance, and capital allocation decisions and specifically uses segment gross profit to aid in the decision making and to assess the performance of the operating segments.

Our reportable segment information, including disaggregated revenue, was as follows and includes a reconciliation of gross profit to our consolidated income before income taxes.

2 unchanged sentences

(In thousands)

Revenue from customers:

Funeral revenue:

6 unchanged sentences

Total funeral revenue 2,324,200 2,303,031 2,332,045

Direct cost ( 344,133 ) ( 351,327 ) ( 360,708 )

Selling compensation ( 177,887 ) ( 173,430 ) ( 164,603 )

Salaries & fringe expense ( 653,753 ) ( 636,763 ) ( 610,170 )

Facility expenses ( 258,556 ) ( 240,553 ) ( 231,848 )

Other costs and overhead ( 424,609 ) ( 403,852 ) ( 419,023 )

Total funeral expense ( 1,858,938 ) ( 1,805,925 ) ( 1,786,352 )

Funeral gross profit $ 465,262 $ 497,106 $ 545,693

Cemetery revenue:

5 unchanged sentences

Total cemetery revenue 1,862,179 1,796,747 1,776,616

Total revenue from customers $ 4,099,778 $ 4,108,661 $ 4,143,143

Gross profit:

Funeral gross profit $ 497,106 $ 545,693 $ 639,775

Direct cost ( 258,339 ) ( 261,826 ) ( 243,543 )

Selling compensation ( 329,080 ) ( 327,154 ) ( 321,274 )

Maintenance expense ( 261,570 ) ( 247,790 ) ( 236,145 )

Other costs and overhead ( 387,795 ) ( 365,276 ) ( 366,745 )

Total cemetery expense ( 1,236,784 ) ( 1,202,046 ) ( 1,167,707 )

Cemetery gross profit $ 625,395 $ 594,701 $ 608,909

Total revenue from customers 4,186,379 4,099,778 4,108,661

Total segment expenses ( 3,095,722 ) ( 3,007,971 ) ( 2,954,059 )

Gross profit from reportable segments 1,090,657 1,091,807 1,154,602

Corporate general and administrative expenses ( 139,019 ) ( 157,368 ) ( 237,248 )

Gains on divestitures and impairment charges, net 9,816 9,962 25,169

Restructuring charge ( 11,470 ) — —

(Losses) gains on divestitures and impairment charges, net ( 12,488 ) 9,816 9,962

Operating income 927,680 944,255 927,316

5 unchanged sentences

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

Reportable Segments

Funeral Cemetery Corporate Consolidated

Reportable Segments Total

Funeral Cemetery Segments Corporate Consolidated

(In thousands)

25 unchanged sentences

Operating income $ 871,760 $ 55,920 $ 927,680

Gains on divestitures and impairment charges, net $ 8,512 $ 1,304 $ 9,816

(Loss) gain on divestitures and impairment charges, net $ ( 13,471 ) $ 983 $ ( 12,488 )

Long-lived assets $ 7,786,598 $ 322,146 $ 8,108,744

5 unchanged sentences

Operating income $ 887,110 $ 57,145 $ 944,255

Gains on divestitures and impairment charges, net $ 7,220 $ 2,742 $ 9,962

Gain on divestitures and impairment charges, net $ 8,512 $ 1,304 $ 9,816

Long-lived assets $ 7,386,819 $ 339,142 $ 7,725,961

5 unchanged sentences

Operating income $ 856,277 $ 71,039 $ 927,316

Gains on divestitures and impairment charges, net $ 19,837 $ 5,332 $ 25,169

Gain on divestitures and impairment charges, net $ 7,220 $ 2,742 $ 9,962

Supplementary Information

93 unchanged sentences

Acquisitions and Divestiture-Related Activities

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.

We spent $ 182.9 million and $ 72.5 million for several business acquisitions during the twelve months ended December 31, 2024 and 2023, respectively.

This includes $ 1.7 million of cash acquired in 2024.

In addition, we spent $ 62.1 million and $ 56.4 million for several real estate acquisitions during the twelve months ended December 31, 2024 and 2023, respectively.

In 2024, we acquired 26 funeral homes and 6 cemeteries.

This includes two separate acquisitions in major metropolitan markets for $ 120.6 million in cash in the third quarter.

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 thousands):

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

Other current assets $ 2,201

9 unchanged sentences

Deferred revenue and deferred receipts held in trust 60,855

Long-term debt 15,431

Deferred tax liability 3,003

Care trusts' corpus 9,223

2 unchanged sentences

Net assets acquired $ 120,647

The purchase accounting is preliminary as 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 $ 36.2 million in goodwill recognized, all of which is deductible for tax purposes, $ 17.3 million was allocated to our cemetery segment and $ 18.9 million was allocated to our funeral segment.

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 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.

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.

Of the $ 72.3 million in recognized goodwill, $ 59.7 million is deductible for tax purposes.

Of this total, $ 26.1 million was allocated to our cemetery segment, while $ 46.2 million was allocated to our funeral segment.

The identified intangible assets are comprised of tradenames.

We incurred acquisition costs of $ 0.7 million, which is included in G eneral and administrative expenses in our Consolidated Statement of Operations.

These businesses contributed revenue of $ 7.7 million and net income of $ 0.8 million from acquisition through December 31, 2024.

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.

2 unchanged sentences

• 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

2 unchanged sentences

Preneed receivables, net and trust investments 6,539

Finite-lived intangible assets 3,900

Indefinite-lived intangible assets 14,257

12 unchanged sentences

Of the $36.2 million in goodwill recognized, all of which is deductible for tax purposes, $17.3 million was allocated to our cemetery segment and $18.9 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 for the year ended December 31, 2021.

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 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 General 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.

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 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 (Losses) g ains on divestitures and impairment charges, net , which consist of the following:

Years Ended December 31,

3 unchanged sentences

Impairment losses ( 23,825 ) ( 2,727 ) ( 961 )

Gains on divestitures and impairment charges, net $ 9,816 $ 9,962 $ 25,169

(Losses) gains on divestitures and impairment charges, net $ ( 12,488 ) $ 9,816 $ 9,962

During 2024, we incurred $23.8 million in impairments primarily from the following events:

impairments on assets held for sale, impairments on internally developed software due to a change in insurance vendor and re-prioritization of digital projects, and impairment of intangibles as part of our annual test for impairment.

82 Service Corporation International

31 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