þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2018 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________ |
Texas | 74-1488375 | |
(State or other jurisdiction of incorporation or organization) | (I. R. S. employer identification number) | |
1929 Allen Parkway, Houston, Texas | 77019 | |
(Address of principal executive offices) | (Zip code) | |
713-522-5141 | ||
(Registrant’s telephone number, including area code) | ||
None | ||
(Former name, former address, or former fiscal year, if changed since last report) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
(Do not check if smaller reporting company) |
Page | |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In thousands, except per share amounts) | |||||||
Revenue | $ | 794,482 | $ | 777,710 | |||
Costs and expenses | (598,720 | ) | (600,471 | ) | |||
Operating profit | 195,762 | 177,239 | |||||
General and administrative expenses | (34,784 | ) | (42,283 | ) | |||
Gains on divestitures and impairment charges, net | 482 | 4,935 | |||||
Hurricane recoveries, net | 2,232 | — | |||||
Operating income | 163,692 | 139,891 | |||||
Interest expense | (43,576 | ) | (40,636 | ) | |||
Loss on early extinguishment of debt, net | (10,131 | ) | — | ||||
Other income (expense), net | 384 | (729 | ) | ||||
Income before income taxes | 110,369 | 98,526 | |||||
(Provision for) benefit from income taxes | (28,321 | ) | 76,223 | ||||
Net income | 82,048 | 174,749 | |||||
Net income attributable to noncontrolling interests | (60 | ) | (47 | ) | |||
Net income attributable to common stockholders | $ | 81,988 | $ | 174,702 | |||
Basic earnings per share: | |||||||
Net income attributable to common stockholders | $ | 0.44 | $ | 0.93 | |||
Basic weighted average number of shares | 185,130 | 188,260 | |||||
Diluted earnings per share: | |||||||
Net income attributable to common stockholders | $ | 0.43 | $ | 0.91 | |||
Diluted weighted average number of shares | 189,923 | 192,867 | |||||
Dividends declared per share | $ | 0.17 | $ | 0.13 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Net income | $ | 82,048 | $ | 174,749 | |||
Other comprehensive income: | |||||||
Foreign currency translation adjustments | (9,592 | ) | 3,164 | ||||
Total comprehensive income | 72,456 | 177,913 | |||||
Total comprehensive income attributable to noncontrolling interests | (57 | ) | (47 | ) | |||
Total comprehensive income attributable to common stockholders | $ | 72,399 | $ | 177,866 |
March 31, 2018 | December 31, 2017 | ||||||
(In thousands, except share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 219,507 | $ | 330,039 | |||
Receivables, net | 77,080 | 90,304 | |||||
Inventories | 26,955 | 25,378 | |||||
Other | 27,463 | 35,575 | |||||
Total current assets | 351,005 | 481,296 | |||||
Preneed receivables, net and trust investments | 4,199,414 | 4,778,842 | |||||
Cemetery property | 1,794,070 | 1,791,989 | |||||
Property and equipment, net | 1,890,475 | 1,873,044 | |||||
Goodwill | 1,819,134 | 1,805,981 | |||||
Deferred charges and other assets | 877,690 | 601,184 | |||||
Cemetery perpetual care trust investments | 1,497,220 | 1,532,167 | |||||
Total assets | $ | 12,429,008 | $ | 12,864,503 | |||
LIABILITIES & EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 469,159 | $ | 489,172 | |||
Current maturities of long-term debt | 89,249 | 337,337 | |||||
Income taxes payable | 33,397 | 2,470 | |||||
Total current liabilities | 591,805 | 828,979 | |||||
Long-term debt | 3,316,695 | 3,135,316 | |||||
Deferred revenue, net | 1,337,045 | 1,789,776 | |||||
Deferred tax liability | 341,272 | 283,765 | |||||
Other liabilities | 403,877 | 410,982 | |||||
Deferred receipts held in trust | 3,431,781 | 3,475,430 | |||||
Care trusts’ corpus | 1,494,684 | 1,530,818 | |||||
Commitments and contingencies (Note 9) | |||||||
Equity: | |||||||
Common stock, $1 per share par value, 500,000,000 shares authorized, 192,428,122 and 191,935,647 shares issued, respectively, and 184,011,668 and 186,614,747 shares outstanding, respectively | 184,012 | 186,615 | |||||
Capital in excess of par value | 961,744 | 970,468 | |||||
Retained earnings | 333,864 | 210,364 | |||||
Accumulated other comprehensive income | 32,125 | 41,943 | |||||
Total common stockholders’ equity | 1,511,745 | 1,409,390 | |||||
Noncontrolling interests | 104 | 47 | |||||
Total equity | 1,511,849 | 1,409,437 | |||||
Total liabilities and equity | $ | 12,429,008 | $ | 12,864,503 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 82,048 | $ | 174,749 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Loss on early extinguishment of debt | 10,131 | — | |||||
Depreciation and amortization | 38,981 | 38,043 | |||||
Amortization of intangibles | 7,103 | 6,844 | |||||
Amortization of cemetery property | 12,825 | 13,881 | |||||
Amortization of loan costs | 1,518 | 1,433 | |||||
Provision for doubtful accounts | 2,158 | 2,484 | |||||
Benefit from deferred income taxes | (1,692 | ) | (149,585 | ) | |||
Gains on divestitures and impairment charges, net | (482 | ) | (4,935 | ) | |||
Share-based compensation | 3,699 | 3,633 | |||||
Change in assets and liabilities, net of effects from acquisitions and divestitures: | |||||||
Decrease in receivables | 11,587 | 10,959 | |||||
Increase in other assets | (6,685 | ) | (5,128 | ) | |||
Increase in payables and other liabilities | 20,486 | 86,596 | |||||
Effect of preneed sales production and maturities: | |||||||
Decrease (increase) in preneed receivables, net and trust investments | 9,742 | (10,243 | ) | ||||
Increase in deferred revenue, net | 16,550 | 23,401 | |||||
Increase (decrease) in deferred receipts held in trust | 3,489 | (4,019 | ) | ||||
Net cash provided by operating activities | 211,458 | 188,113 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (46,241 | ) | (40,150 | ) | |||
Acquisitions, net of cash acquired | (33,934 | ) | (33,212 | ) | |||
Proceeds from divestitures and sales of property and equipment | 6,452 | 20,235 | |||||
Payments on Company-owned life insurance policies | (9,246 | ) | (2,827 | ) | |||
Proceeds from Company-owned life insurance policies | 2,810 | 906 | |||||
Other | 70 | — | |||||
Net cash used in investing activities | (80,089 | ) | (55,048 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of long-term debt | 185,000 | 35,000 | |||||
Scheduled payments of debt | (8,535 | ) | (8,787 | ) | |||
Early payments of debt | (259,594 | ) | — | ||||
Principal payments on capital leases | (7,646 | ) | (21,055 | ) | |||
Proceeds from exercise of stock options | 4,989 | 15,261 | |||||
Purchase of Company common stock | (118,797 | ) | (83,460 | ) | |||
Payments of dividends | (31,348 | ) | (24,433 | ) | |||
Bank overdrafts and other | (7,574 | ) | (2,096 | ) | |||
Net cash used in financing activities | (243,505 | ) | (89,570 | ) | |||
Effect of foreign currency on cash, cash equivalents, and restricted cash | (1,145 | ) | 784 | ||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (113,281 | ) | 44,279 | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 340,601 | 211,506 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 227,320 | $ | 255,785 |
Common Stock | Treasury Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2017 | $ | 191,936 | $ | (5,321 | ) | $ | 970,468 | $ | 210,364 | $ | 41,943 | $ | 47 | $ | 1,409,437 | ||||||||||||
Cumulative effect of accounting changes | — | — | — | 172,461 | (229 | ) | — | $ | 172,232 | ||||||||||||||||||
Comprehensive income | — | — | — | 81,988 | (9,589 | ) | 57 | 72,456 | |||||||||||||||||||
Dividends declared on common stock ($0.17 per share) | — | — | — | (31,348 | ) | — | — | (31,348 | ) | ||||||||||||||||||
Employee share-based compensation earned | — | — | 3,699 | — | — | — | 3,699 | ||||||||||||||||||||
Stock option exercises | 282 | — | 4,707 | — | — | — | 4,989 | ||||||||||||||||||||
Restricted stock awards, net of forfeitures | 163 | — | (163 | ) | — | — | — | — | |||||||||||||||||||
Purchase of Company common stock | — | (3,095 | ) | (16,101 | ) | (99,601 | ) | — | — | (118,797 | ) | ||||||||||||||||
Other | 47 | — | (866 | ) | — | — | — | (819 | ) | ||||||||||||||||||
Balance at March 31, 2018 | $ | 192,428 | $ | (8,416 | ) | $ | 961,744 | $ | 333,864 | $ | 32,125 | $ | 104 | $ | 1,511,849 |
1. | Nature of Operations |
March 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Cash and cash equivalents | $ | 219,507 | $ | 330,039 | |||
Restricted cash(1): | |||||||
Included in Other current assets | 5,877 | 8,625 | |||||
Included in Deferred charges and other assets | 1,936 | 1,937 | |||||
Total restricted cash | 7,813 | 10,562 | |||||
Total cash, cash equivalents, and restricted cash | $ | 227,320 | $ | 340,601 |
(1) | Restricted cash in both periods primarily consists of proceeds from divestitures deposited into escrow accounts under IRS code section 1031 and collateralized obligations under certain insurance policies. |
As Reported | Effect of New Guidance | Without New Guidance | |||||||||
(In thousands, except per share amounts) | |||||||||||
Revenue | $ | 794,482 | $ | 557 | $ | 795,039 | |||||
Costs and expenses | (598,720 | ) | (7,267 | ) | (605,987 | ) | |||||
Operating profit (loss) | 195,762 | (6,710 | ) | 189,052 | |||||||
General and administrative expenses | (34,784 | ) | — | (34,784 | ) | ||||||
Gain on divestitures and impairment charges, net | 482 | — | 482 | ||||||||
Hurricane recoveries, net | 2,232 | — | 2,232 | ||||||||
Operating income (loss) | 163,692 | (6,710 | ) | 156,982 | |||||||
Interest expense | (43,576 | ) | — | (43,576 | ) | ||||||
Loss on early extinguishment of debt, net | (10,131 | ) | — | (10,131 | ) | ||||||
Other income, net | 384 | — | 384 | ||||||||
Income (loss) before income taxes | 110,369 | (6,710 | ) | 103,659 | |||||||
(Provision for) benefit from income taxes | (28,321 | ) | 1,724 | (26,597 | ) | ||||||
Net income (loss) | 82,048 | (4,986 | ) | 77,062 | |||||||
Net income attributable to noncontrolling interests | (60 | ) | — | (60 | ) | ||||||
Net income (loss) attributable to common stockholders | $ | 81,988 | $ | (4,986 | ) | $ | 77,002 | ||||
Earnings per share (1) | |||||||||||
Basic | $ | 0.44 | $ | (0.03 | ) | $ | 0.42 | ||||
Diluted | $ | 0.43 | $ | (0.03 | ) | $ | 0.41 |
(1) | Net income per share is computed independently for each of the columns presented. Therefore, the sum of the first two columns' earnings per share may not equal the Without New Guidance column. |
As Previously Reported | Effect of New Guidance | As Recast | |||||||||
(in thousands) | |||||||||||
Net cash provided by operating activities | $ | 188,383 | $ | (270 | ) | $ | 188,113 | ||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (40,150 | ) | — | (40,150 | ) | ||||||
Acquisitions | (19,327 | ) | (13,885 | ) | (33,212 | ) | |||||
Proceeds from divestitures and sales of property and equipment | 3,148 | 17,087 | 20,235 | ||||||||
Payments on Company-owned life insurance policies | — | (2,827 | ) | (2,827 | ) | ||||||
Proceeds from Company-owned life insurance policies | — | 906 | 906 | ||||||||
Net cash used in investing activities | (56,329 | ) | 1,281 | (55,048 | ) | ||||||
Net cash used in financing activities | (89,570 | ) | — | (89,570 | ) | ||||||
Effect of foreign currency on cash, cash equivalents, and restricted cash | 784 | — | 784 | ||||||||
Net increase in cash, cash equivalents, and restricted cash | 43,268 | 1,011 | 44,279 | ||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 194,986 | 16,520 | 211,506 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 238,254 | $ | 17,531 | 255,785 |
March 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Preneed funeral receivables(1) | $ | 33,528 | $ | 336,925 | |||
Preneed cemetery receivables(1) | 824,719 | 1,118,146 | |||||
Preneed receivables from customers(1) | 858,247 | 1,455,071 | |||||
Unearned finance charge | (45,541 | ) | (45,515 | ) | |||
Allowance for cancellation (1) | (46,136 | ) | (107,749 | ) | |||
Preneed receivables, net | $ | 766,570 | $ | 1,301,807 | |||
Trust investments, at market | $ | 4,666,645 | $ | 4,749,548 | |||
Assets associated with businesses held for sale | (144 | ) | (5,660 | ) | |||
Insurance-backed fixed income securities and other | 263,563 | 265,314 | |||||
Trust investments | 4,930,064 | 5,009,202 | |||||
Less: Cemetery perpetual care trust investments | (1,497,220 | ) | (1,532,167 | ) | |||
Preneed trust investments | $ | 3,432,844 | $ | 3,477,035 | |||
Preneed receivables, net and trust investments | $ | 4,199,414 | $ | 4,778,842 |
(1) | Upon adoption of "Revenue from Contracts with Customers" on January 1, 2018, we reclassified amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts as a reduction in Deferred revenue, net. As a result of this reclassification, we eliminated the allowance for cancellation on these performance obligations. |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Deposits | $ | 93,269 | $ | 84,487 | ||||
Withdrawals | $ | 106,769 | $ | 93,082 | ||||
Purchases of securities | $ | 599,651 | $ | 517,031 | ||||
Sales of securities | $ | 614,424 | $ | 487,925 | ||||
Realized gains (1) | $ | 58,306 | $ | 52,433 | ||||
Realized losses (1) | $ | (12,296 | ) | $ | (21,774 | ) |
(1) | All realized gains and losses are recognized in Other income (expense), net for our trust investments and are offset by a corresponding reclassification in Other income (expense), net to Deferred receipts held in trust and Care trusts' corpus. |
March 31, 2018 | |||||||||||||||||
Value Hierarchy Level | Cost | Unrealized Gains | Unrealized Losses | Value | |||||||||||||
(In thousands) | |||||||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 2 | $ | 47,338 | $ | 12 | $ | (429 | ) | $ | 46,921 | |||||||
Canadian government | 2 | 60,522 | 78 | (1,379 | ) | 59,221 | |||||||||||
Corporate | 2 | 12,402 | 269 | (260 | ) | 12,411 | |||||||||||
Residential mortgage-backed | 2 | 3,312 | 16 | (61 | ) | 3,267 | |||||||||||
Asset-backed | 2 | 305 | 11 | (11 | ) | 305 | |||||||||||
Equity securities: | |||||||||||||||||
Preferred stock | 2 | 7,120 | 363 | (172 | ) | 7,311 | |||||||||||
Common stock: | |||||||||||||||||
United States | 1 | 1,208,816 | 241,804 | (46,846 | ) | 1,403,774 | |||||||||||
Canada | 1 | 30,150 | 9,751 | (1,503 | ) | 38,398 | |||||||||||
Other international | 1 | 63,594 | 12,741 | (3,280 | ) | 73,055 | |||||||||||
Mutual funds: | |||||||||||||||||
Equity | 1 | 696,520 | 53,631 | (9,364 | ) | 740,787 | |||||||||||
Fixed income | 1 | 1,139,940 | 4,227 | (32,959 | ) | 1,111,208 | |||||||||||
Other | 3 | 5,441 | 3,107 | (15 | ) | 8,533 | |||||||||||
Trust investments, at fair value | 3,275,460 | 326,010 | (96,279 | ) | 3,505,191 | ||||||||||||
Commingled funds | |||||||||||||||||
Fixed income | 417,729 | 41 | (12,473 | ) | 405,297 | ||||||||||||
Equity | 223,207 | 10,312 | (647 | ) | 232,872 | ||||||||||||
Money market funds | 294,039 | — | — | 294,039 | |||||||||||||
Private equity | 172,522 | 59,112 | (2,388 | ) | 229,246 | ||||||||||||
Trust investments, at net asset value | 1,107,497 | 69,465 | (15,508 | ) | 1,161,454 | ||||||||||||
Trust investments, at market | $ | 4,382,957 | $ | 395,475 | $ | (111,787 | ) | $ | 4,666,645 |
December 31, 2017 | |||||||||||||||||
Value Hierarchy Level | Cost | Unrealized Gains | Unrealized Losses | Value | |||||||||||||
(In thousands) | |||||||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 2 | $ | 48,805 | $ | 14 | $ | (117 | ) | $ | 48,702 | |||||||
Canadian government | 2 | 81,500 | 160 | (1,089 | ) | 80,571 | |||||||||||
Corporate | 2 | 13,540 | 327 | (170 | ) | 13,697 | |||||||||||
Residential mortgage-backed | 2 | 3,279 | 16 | (14 | ) | 3,281 | |||||||||||
Asset-backed | 2 | 320 | 15 | (10 | ) | 325 | |||||||||||
Equity securities: | |||||||||||||||||
Preferred stock | 2 | 7,834 | 385 | (139 | ) | 8,080 | |||||||||||
Common stock: | |||||||||||||||||
United States | 1 | 1,161,015 | 266,822 | (24,739 | ) | 1,403,098 | |||||||||||
Canada | 1 | 30,762 | 12,545 | (522 | ) | 42,785 | |||||||||||
Other international | 1 | 63,510 | 13,174 | (2,834 | ) | 73,850 | |||||||||||
Mutual funds: | |||||||||||||||||
Equity | 1 | 613,934 | 59,100 | (4,312 | ) | 668,722 | |||||||||||
Fixed income | 1 | 1,230,196 | 11,897 | (23,943 | ) | 1,218,150 | |||||||||||
Other | 3 | 5,953 | 3,114 | — | 9,067 | ||||||||||||
Trust investments, at fair value | 3,260,648 | 367,569 | (57,889 | ) | 3,570,328 | ||||||||||||
Commingled funds | |||||||||||||||||
Fixed income | 454,242 | 235 | (5,860 | ) | 448,617 | ||||||||||||
Equity | 214,000 | 12,826 | — | 226,826 | |||||||||||||
Money market funds | 287,435 | — | — | 287,435 | |||||||||||||
Private equity | 166,860 | 51,631 | (2,149 | ) | 216,342 | ||||||||||||
Trust investments, at net asset value | 1,122,537 | 64,692 | (8,009 | ) | 1,179,220 | ||||||||||||
Trust investments, at market | $ | 4,383,185 | $ | 432,261 | $ | (65,898 | ) | $ | 4,749,548 |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Fair value, beginning balance | $ | 9,067 | $ | 8,667 | ||||
Net unrealized (loss) gain included in Other income (expense), net(1) | (534 | ) | 16 | |||||
Distributions and other | — | (73 | ) | |||||
Fair value, ending balance | $ | 8,533 | $ | 8,610 |
(1) | All net unrealized (losses) gains recognized in Other income (expense), net for our trust investments are offset by a corresponding reclassification in Other income (expense), net to Deferred receipts held in trust and Care trusts' corpus. |
Fair Value | |||
(In thousands) | |||
Due in one year or less | $ | 54,629 | |
Due in one to five years | 57,445 | ||
Due in five to ten years | 9,680 | ||
Thereafter | 371 | ||
$ | 122,125 |
March 31, 2018 | |||||||||||||||||||||||
In Loss Position Less Than 12 Months | In Loss Position Greater Than 12 Months | Total | |||||||||||||||||||||
Value | Unrealized Losses | Value | Unrealized Losses | Value | Unrealized Losses | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. Treasury | $ | 27,045 | $ | (402 | ) | $ | 2,045 | $ | (27 | ) | $ | 29,090 | $ | (429 | ) | ||||||||
Canadian government | 16,545 | (684 | ) | 9,999 | (695 | ) | 26,544 | (1,379 | ) | ||||||||||||||
Corporate | 4,728 | (80 | ) | 4,165 | (180 | ) | 8,893 | (260 | ) | ||||||||||||||
Residential mortgage-backed | 2,868 | (59 | ) | 150 | (2 | ) | 3,018 | (61 | ) | ||||||||||||||
Asset-backed | 5 | (1 | ) | 93 | (10 | ) | 98 | (11 | ) | ||||||||||||||
Total temporarily fixed income impaired securities | $ | 51,191 | $ | (1,226 | ) | $ | 16,452 | $ | (914 | ) | $ | 67,643 | $ | (2,140 | ) |
December 31, 2017 | |||||||||||||||||||||||
In Loss Position Less Than 12 Months | In Loss Position Greater Than 12 Months | Total | |||||||||||||||||||||
Value | Unrealized Losses | Value | Unrealized Losses | Value | Unrealized Losses | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. Treasury | $ | 29,014 | $ | (115 | ) | $ | 106 | $ | (2 | ) | $ | 29,120 | $ | (117 | ) | ||||||||
Canadian government | 20,947 | (639 | ) | 6,370 | (450 | ) | 27,317 | (1,089 | ) | ||||||||||||||
Corporate | 2,423 | (31 | ) | 4,453 | (139 | ) | 6,876 | (170 | ) | ||||||||||||||
Residential mortgage-backed | 2,880 | (12 | ) | 151 | (2 | ) | 3,031 | (14 | ) | ||||||||||||||
Asset-backed | — | — | 74 | (10 | ) | 74 | (10 | ) | |||||||||||||||
Total temporarily impaired fixed income securities | $ | 55,264 | $ | (797 | ) | $ | 11,154 | $ | (603 | ) | $ | 66,418 | $ | (1,400 | ) |
March 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Deferred revenue | $ | 1,943,933 | $ | 1,789,776 | |||
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts(1) | (606,888 | ) | — | ||||
Deferred revenue, net | $ | 1,337,045 | $ | 1,789,776 |
(1) | Prior to adoption of "Revenue from Contracts with Customers" on January 1, 2018, amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts were included in Preneed receivables, net and trust investments. |
2018 | |||
(In thousands) | |||
Beginning balance — Deferred revenue, net and Deferred receipts held in trust | $ | 5,265,206 | |
Cumulative effect of accounting changes | 37,991 | ||
Net preneed contract sales | 244,091 | ||
Acquisitions (divestitures) of businesses, net | 40,332 | ||
Net investment losses (1) | (46,918 | ) | |
Recognized revenue from backlog (2) | (115,202 | ) | |
Recognized revenue from current period sales | (105,256 | ) | |
Change in amounts due on unfulfilled performance obligations | (606,888 | ) | |
Change in cancellation reserve | 61,987 | ||
Effect of foreign currency and other | (6,517 | ) | |
Ending balance — Deferred revenue, net and Deferred receipts held in trust | $ | 4,768,826 |
March 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
7.625% Senior Notes due October 2018 | $ | — | $ | 250,000 | |||
4.5% Senior Notes due November 2020 | 200,000 | 200,000 | |||||
8.0% Senior Notes due November 2021 | 150,000 | 150,000 | |||||
5.375% Senior Notes due January 2022 | 425,000 | 425,000 | |||||
5.375% Senior Notes due May 2024 | 850,000 | 850,000 | |||||
7.5% Senior Notes due April 2027 | 200,000 | 200,000 | |||||
4.625% Senior Notes due December 2027 | 550,000 | 550,000 | |||||
Term Loan due December 2022 | 666,563 | 675,000 | |||||
Bank Credit Facility due December 2022 | 185,000 | — | |||||
Obligations under capital leases | 202,324 | 197,232 | |||||
Mortgage notes and other debt, maturities through 2050 | 5,940 | 6,036 | |||||
Unamortized premiums, net | 7,236 | 7,456 | |||||
Unamortized debt issuance costs | (36,119 | ) | (38,071 | ) | |||
Total debt | 3,405,944 | 3,472,653 | |||||
Less: Current maturities of long-term debt | (89,249 | ) | (337,337 | ) | |||
Total long-term debt | $ | 3,316,695 | $ | 3,135,316 |
March 31, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
7.625% Senior Notes due October 2018 | $ | — | $ | 259,563 | |||
4.5% Senior Notes due November 2020 | 201,500 | 199,590 | |||||
8.0% Senior Notes due November 2021 | 173,340 | 175,313 | |||||
5.375% Senior Notes due January 2022 | 433,373 | 436,178 | |||||
5.375% Senior Notes due May 2024 | 882,181 | 892,118 | |||||
4.625% Senior Notes due December 2027 | 531,449 | 558,250 | |||||
7.5% Senior Notes due April 2027 | 229,000 | 238,004 | |||||
Term Loan due December 2022 | 666,563 | 675,000 | |||||
Bank Credit Facility due December 2022 | 185,000 | — | |||||
Mortgage notes and other debt, maturities through 2050 | 5,941 | 6,036 | |||||
Total fair value of debt instruments | $ | 3,308,347 | $ | 3,440,052 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017(1) | ||||||
(In thousands) | |||||||
Revenue from customers: | |||||||
Funeral revenue: | |||||||
Atneed revenue | $ | 274,406 | $ | 271,833 | |||
Matured preneed revenue | 165,306 | 151,797 | |||||
Core funeral revenue | 439,712 | 423,630 | |||||
Non-funeral home revenue | 13,793 | 12,274 | |||||
Recognized preneed revenue | 32,460 | 32,056 | |||||
Other revenue | 28,400 | 30,804 | |||||
Total funeral revenue | 514,365 | 498,764 | |||||
Cemetery revenue: | |||||||
Atneed revenue | 83,044 | 81,574 | |||||
Recognized preneed property revenue | 108,940 | 114,025 | |||||
Recognized preneed merchandise and services revenue | 68,363 | 63,866 | |||||
Core revenue | 260,347 | 259,465 | |||||
Other revenue | 19,770 | 19,481 | |||||
Total cemetery revenue | 280,117 | 278,946 | |||||
Total revenue from customers | $ | 794,482 | $ | 777,710 | |||
Operating profit: | |||||||
Funeral operating profit | $ | 120,455 | $ | 112,607 | |||
Cemetery operating profit | 75,307 | 64,632 | |||||
Operating profit from reportable segments | 195,762 | 177,239 | |||||
General and administrative expenses | (34,784 | ) | (42,283 | ) | |||
Gains on divestitures and impairment charges, net | 482 | 4,935 | |||||
Hurricane recoveries, net | 2,232 | — | |||||
Operating income | 163,692 | 139,891 | |||||
Interest expense | (43,576 | ) | (40,636 | ) | |||
Loss on early extinguishment of debt, net | (10,131 | ) | — | ||||
Other income (expense), net | 384 | (729 | ) | ||||
Income before income taxes | $ | 110,369 | $ | 98,526 |
United States | Canada | Total | |||||||||
(In thousands) | |||||||||||
Three Months Ended March 31, | |||||||||||
Revenue from external customers: | |||||||||||
2018 | $ | 744,113 | $ | 50,369 | $ | 794,482 | |||||
2017 | $ | 727,240 | $ | 50,470 | $ | 777,710 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In thousands, except per share amounts) | |||||||
Amounts attributable to common stockholders: | |||||||
Net income: | |||||||
Net income — basic | $ | 81,988 | $ | 174,702 | |||
After tax interest on convertible debt | 15 | 12 | |||||
Net income — diluted | $ | 82,003 | $ | 174,714 | |||
Weighted average shares (denominator): | |||||||
Weighted average shares — basic | 185,130 | 188,260 | |||||
Stock options | 4,522 | 4,425 | |||||
Restricted stock units | 150 | 61 | |||||
Convertible debt | 121 | 121 | |||||
Weighted average shares — diluted | 189,923 | 192,867 | |||||
Net income per share: | |||||||
Basic | $ | 0.44 | $ | 0.93 | |||
Diluted | $ | 0.43 | $ | 0.91 |
Three Months Ended | |||||
March 31, | |||||
2018 | 2017 | ||||
(In thousands) | |||||
Antidilutive options | 577 | 898 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Gains on divestitures, net | $ | 1,276 | $ | 16,751 | |||
Impairment losses | (794 | ) | (11,816 | ) | |||
Gains on divestitures and impairment charges, net | $ | 482 | $ | 4,935 |
Per Credit Agreement | Actual | ||
Leverage ratio | 4.50 (Max) | 3.70 | |
Interest coverage ratio | 3.00 (Min) | 5.24 |
• | a $25.6 million increase in cash receipts from customers, |
• | a $10.8 million increase in net trust withdrawals, |
• | a $2.1 million increase in General Agency (GA) and other receipts, |
• | a $0.8 million increase in insurance proceeds, and |
• | a $15.9 million decrease in cash tax payments as a result of the timing of federal tax payments in 2018 versus 2017 (excluding the refund noted above), partially offset by |
• | a $27.1 million increase in vendor and other payments, |
• | a $5.4 million increase in employee compensation paid, and |
• | a $4.9 million increase in cash interest paid. |
March 31, 2018 | December 31, 2017 | ||||||
(In millions) | |||||||
Preneed funeral | $ | 109.3 | $ | 109.8 | |||
Preneed cemetery: | |||||||
Merchandise and services | 136.5 | 132.2 | |||||
Pre-construction | 14.9 | 11.9 | |||||
Bonds supporting preneed obligations | 260.7 | 253.9 | |||||
Bonds supporting preneed business permits | 4.6 | 4.5 | |||||
Other bonds | 18.2 | 18.0 | |||||
Total surety bonds outstanding | $ | 283.5 | $ | 276.4 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Preneed insurance-funded: | |||||||
Sales production (1) | $ | 126.6 | $ | 128.3 | |||
Sales production (number of contracts) (1) | 21,589 | 21,029 | |||||
General agency revenue | $ | 31.5 | $ | 31.8 | |||
Maturities | $ | 96.4 | $ | 91.3 | |||
Maturities (number of contracts) | 16,231 | 15,476 |
(1) | Amounts are not included in our unaudited Condensed Consolidated Balance Sheet. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Funeral: | |||||||
Preneed trust-funded (including bonded): | |||||||
Sales production | $ | 92.7 | $ | 83.4 | |||
Sales production (number of contracts) | 25,873 | 25,690 | |||||
Maturities | $ | 77.1 | $ | 67.6 | |||
Maturities (number of contracts) | 19,661 | 18,186 | |||||
Cemetery: | |||||||
Sales production: | |||||||
Preneed | $ | 201.5 | $ | 207.7 | |||
Atneed | 85.1 | 83.7 | |||||
Total sales production | $ | 286.6 | $ | 291.4 | |||
Sales production deferred to backlog: | |||||||
Preneed | $ | 97.2 | $ | 88.1 | |||
Atneed | 63.3 | 60.4 | |||||
Total sales production deferred to backlog | $ | 160.5 | $ | 148.5 | |||
Revenue recognized from backlog: | |||||||
Preneed | $ | 57.0 | $ | 55.0 | |||
Atneed | 60.9 | 57.3 | |||||
Total revenue recognized from backlog | $ | 117.9 | $ | 112.3 |
March 31, 2018 | December 31, 2017 | ||||||||||||||
Fair Value | Cost | Fair Value | Cost | ||||||||||||
(In billions) | |||||||||||||||
Deferred revenue, net | $ | 1.34 | $ | 1.34 | $ | 1.79 | $ | 1.79 | |||||||
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts(1) | 0.60 | 0.60 | — | — | |||||||||||
Deferred receipts held in trust | 3.43 | 3.19 | 3.48 | 3.18 | |||||||||||
Allowance for cancellation | (0.27 | ) | (0.25 | ) | (0.27 | ) | (0.25 | ) | |||||||
Backlog of trust-funded deferred revenue, net of estimated allowance for cancellation | $ | 5.10 | $ | 4.88 | $ | 5.00 | $ | 4.72 | |||||||
Backlog of insurance-funded deferred revenue(2) | 5.71 | 5.71 | 5.66 | 5.66 | |||||||||||
Total backlog of deferred revenue | $ | 10.81 | $ | 10.59 | $ | 10.66 | $ | 10.38 | |||||||
Preneed receivables, net and trust investments | $ | 4.20 | $ | 3.96 | $ | 4.78 | $ | 4.48 | |||||||
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts(1) | 0.60 | 0.60 | — | — | |||||||||||
Allowance for cancellation on trust investments | (0.27 | ) | (0.25 | ) | (0.27 | ) | (0.25 | ) | |||||||
Assets associated with backlog of trust-funded deferred revenue, net of estimated allowance for cancellation | $ | 4.53 | $ | 4.31 | $ | 4.51 | $ | 4.23 | |||||||
Insurance policies associated with insurance-funded deferred revenue(2) | 5.71 | 5.71 | 5.66 | 5.66 | |||||||||||
Total assets associated with backlog of preneed deferred revenue | $ | 10.24 | $ | 10.02 | $ | 10.17 | $ | 9.89 |
(1) | Prior to adoption of "Revenue from Contracts with Customers" on January 1, 2018, amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts was included in Preneed receivables, net and trust investments. |
(2) | Amounts are not included in our unaudited Condensed Consolidated Balance Sheet. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Pre-tax (losses) gains from divestitures and impairment charges, net | $ | 0.5 | $ | 4.9 | |||
Pre-tax losses from the early extinguishment of debt, net | $ | (10.1 | ) | $ | — | ||
Pre-tax pension termination obligation | $ | — | $ | (11.6 | ) | ||
Tax benefit from above items | $ | 1.5 | $ | 2.4 | |||
Change in certain tax reserves and other | $ | 1.2 | $ | 106.0 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(Dollars in millions, except average revenue per service) | |||||||
Consolidated funeral revenue | $ | 514.4 | $ | 498.8 | |||
Less: Revenue associated with acquisitions/new construction | 6.6 | 1.5 | |||||
Less: Revenue associated with divestitures | 0.5 | 3.6 | |||||
Comparable1 funeral revenue | 507.3 | 493.7 | |||||
Less: Comparable recognized preneed revenue | 32.4 | 32.1 | |||||
Less: Comparable general agency and other revenue | 28.1 | 30.5 | |||||
Adjusted comparable funeral revenue | $ | 446.8 | $ | 431.1 | |||
Comparable services performed | 84,910 | 81,918 | |||||
Comparable average revenue per service2 | $ | 5,262 | $ | 5,263 | |||
Consolidated funeral operating profit | $ | 120.5 | $ | 112.6 | |||
Less: Operating profit associated with acquisitions/new construction | 1.0 | 0.8 | |||||
Less: Operating loss associated with divestitures | (0.6 | ) | (1.5 | ) | |||
Comparable funeral operating profit | $ | 120.1 | $ | 113.3 |
(1) | We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2017 and ending March 31, 2018. |
(2) | We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding recognized preneed revenue, general agency revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of services performed during the period. Recognized preneed revenue are preneed sales of merchandise that are delivered at the time of sale, including memorial merchandise and travel protection, and are excluded from our calculation of comparable average revenue per service because the associated service has not yet been performed. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Consolidated cemetery revenue | $ | 280.1 | $ | 278.9 | |||
Less: Revenue associated with acquisitions/new construction | 1.7 | 0.6 | |||||
Less: Revenue associated with divestitures | 0.1 | 0.4 | |||||
Comparable1 cemetery revenue | $ | 278.3 | $ | 277.9 | |||
Consolidated cemetery operating profit | $ | 75.3 | $ | 64.6 | |||
Less: Operating profit associated with acquisitions/new construction | 0.5 | 0.1 | |||||
Less: Operating loss associated with divestitures | (0.1 | ) | — | ||||
Comparable cemetery operating profit | $ | 74.9 | $ | 64.5 |
(1) | We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2017 and ending March 31, 2018. |
• | Our affiliated funeral and cemetery trust funds own investments in securities, which are affected by market conditions that are beyond our control. |
• | We may be required to replenish our affiliated funeral and cemetery trust funds to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow. |
• | Our ability to execute our strategic plan depends on many factors, some of which are beyond our control. |
• | Our credit agreements contain covenants that may prevent us from engaging in certain transactions. |
• | If we lost the ability to use surety bonding to support our preneed funeral and preneed cemetery activities, we may be required to make material cash payments to fund certain trust funds. |
• | The funeral and cemetery industry is competitive. |
• | Increasing death benefits related to preneed contracts funded through life insurance or annuity contracts may not cover future increases in the cost of providing a price-guaranteed service. |
• | The financial condition of third-party insurance companies that fund our preneed contracts may impact our future revenue. |
• | Unfavorable results of litigation could have a material adverse impact on our financial statements. |
• | Unfavorable publicity could affect our reputation and business. |
• | If the number of deaths in our markets decline, our cash flows and revenue may decrease. |
• | If we are not able to respond effectively to changing consumer preferences, our market share, revenue, and/or profitability could decrease. |
• | The continuing upward trend in the number of cremations performed in North America could result in lower revenue, operating profit, and cash flows. |
• | Our funeral home and cemetery businesses are high fixed-cost businesses. |
• | Regulation and compliance could have a material adverse impact on our financial results. |
• | Cemetery burial practice claims could have a material adverse impact on our financial results. |
• | We use a combination of insurance, self-insurance, and large deductibles in managing our exposure to certain inherent risks, therefore, we could be exposed to unexpected costs that could negatively affect our financial performance. |
• | A number of years may elapse before particular tax matters, for which we have established accruals, are audited and finally resolved. |
• | Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows. |
• | Declines in overall economic conditions beyond our control could reduce future potential earnings and cash flows and could result in future impairments to goodwill and/or other intangible assets. |
• | Any failure to maintain the security of the information relating to our customers, their loved ones, our associates, and our vendors could damage our reputation, could cause us to incur substantial additional costs and to become subject to litigation, and could adversely affect our operating results, financial condition, or cash flow. |
• | Our Canadian business exposes us to operational, economic, and currency risks. |
• | Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and may prevent us from fulfilling our obligations under our indebtedness. |
• | A failure of key information technology systems or processes could disrupt and adversely affect our business. |
• | Failure to maintain effective internal control over financial reporting could adversely affect our results of operations, investor confidence, and our stock price. |
• | The application of unclaimed property laws by certain states to our preneed funeral and cemetery backlog could have a material adverse impact on our liquidity, cash flows, and our financial results. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs | Dollar value of shares that may yet be purchased under the program (1) | ||||||||||
January 1, 2018 - January 31, 2018 | 1,227,831 | $ | 38.44 | 1,227,831 | $ | 121,380,433 | ||||||||
February 1, 2018 - February 28, 2018 | 1,029,682 | $ | 38.28 | 1,029,682 | $ | 382,762,278 | ||||||||
March 1, 2018 - March 31, 2018 | 838,041 | $ | 38.41 | 817,435 | $ | 351,360,829 | ||||||||
3,095,554 | 3,074,948 |
12.1 | — | ||||
31.1 | — | ||||
31.2 | — | ||||
32.1 | — | ||||
32.2 | — | ||||
101 | — | Interactive data file. |
April 26, 2018 | SERVICE CORPORATION INTERNATIONAL | |
By: | /s/ Tammy Moore | |
Tammy Moore | ||
Vice President and Corporate Controller (Principal Accounting Officer) |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Earnings: | |||||||
Pretax income | $ | 110,369 | 98,526 | ||||
Add fixed charges as adjusted (from below) | 45,162 | 42,829 | |||||
$ | 155,531 | $ | 141,355 | ||||
Fixed charges: | |||||||
Interest expense: | |||||||
Corporate | $ | 42,058 | $ | 39,203 | |||
Amortization of deferred financing costs | 1,518 | 1,433 | |||||
Portion of rent representative of interest | 1,586 | 2,193 | |||||
Fixed charges | $ | 45,162 | $ | 42,829 | |||
Ratio (earnings divided by fixed charges) | 3.44 | 3.30 |
1. | I have reviewed this quarterly report on Form 10-Q of Service Corporation International, a Texas corporation (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | April 26, 2018 | /s/ Thomas L. Ryan |
Thomas L. Ryan Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Service Corporation International, a Texas corporation (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | April 26, 2018 | /s/ Eric D. Tanzberger |
Eric D. Tanzberger | ||
Chief Financial Officer (Principal Financial Officer) |
(1) | the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Service Corporation International. |
Dated: | April 26, 2018 | /s/ Thomas L. Ryan |
Thomas L. Ryan Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
(1) | the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Service Corporation International. |
Dated: | April 26, 2018 | /s/ Eric D. Tanzberger |
Eric D. Tanzberger | ||
Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information Document - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 24, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Service Corp International | |
Entity Central Index Key | 0000089089 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 183,343,868 |
Unaudited Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Unaudited Condensed Consolidated Statement of Comprehensive Income [Abstract] | ||
Net income | $ 82,048 | $ 174,749 |
Other comprehensive income: | ||
Foreign currency translation adjustments | (9,592) | 3,164 |
Total comprehensive income | 72,456 | 177,913 |
Total comprehensive income attributable to noncontrolling interests | (57) | (47) |
Total comprehensive income attributable to common stockholders | $ 72,399 | $ 177,866 |
Unaudited Condensed Consolidated Balance Sheet (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Stockholders' Equity: | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 192,428,122 | 191,935,647 |
Common stock, shares outstanding | 184,011,668 | 186,614,747 |
Unaudited Condensed Consolidated Statement of Equity Statement - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands |
Total |
Common Stock |
Treasury Stock |
Capital in Excess of Par Value |
Retained Earnings [Member] |
Accumulated Other Comprehensive Income (Loss) |
Noncontrolling Interest |
---|---|---|---|---|---|---|---|
Balance at beginning of period at Dec. 31, 2017 | $ 1,409,437 | $ 191,936 | $ (5,321) | $ 970,468 | $ 210,364 | $ 41,943 | $ 47 |
Stockholders' Equity [Roll Forward] | |||||||
Comprehensive income | 72,456 | 0 | 0 | 0 | 81,988 | (9,589) | 57 |
Dividends declared on common stock | 31,348 | 0 | 0 | 0 | (31,348) | 0 | 0 |
Employee share-based compensation earned | 3,699 | 0 | 0 | 3,699 | 0 | 0 | 0 |
Stock option exercises | (4,989) | (282) | 0 | (4,707) | 0 | 0 | 0 |
Restricted stock awards, net of forfeitures | 0 | 163 | 0 | 163 | 0 | 0 | 0 |
Purchase of Company common stock | (118,797) | 0 | (3,095) | (16,101) | (99,601) | 0 | 0 |
Other | (819) | 47 | 0 | (866) | 0 | 0 | 0 |
Balance at end of period at Mar. 31, 2018 | 1,511,849 | $ 192,428 | $ (8,416) | $ 961,744 | 333,864 | 32,125 | $ 104 |
Stockholders' Equity [Roll Forward] | |||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 172,232 | $ 172,461 | $ (229) |
Unaudited Condensed Consolidated Statement of Equity (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Dividends declared per share | $ 0.17 | $ 0.13 |
Nature of Operations (Notes) |
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Mar. 31, 2018 | |
Nature of Operations [Abstract] | |
Nature of Operations | We are North America’s largest provider of deathcare products and services, with a network of funeral service locations and cemeteries operating in the United States and Canada. Our funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and other related businesses, which enable us to serve a wide array of customer needs. We sell cemetery property and funeral and cemetery merchandise and services at the time of need and on a preneed basis. Funeral service locations provide all professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles, arranging and directing services, removal, preparation, embalming, cremations, memorialization, travel protection, and catering. Funeral merchandise, including burial caskets and related accessories, urns and other cremation receptacles, outer burial containers, flowers, online and video tributes, stationery products, casket and cremation memorialization products, and other ancillary merchandise, is sold at funeral service locations. Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, niches, and other cremation memorialization and interment options. Cemetery merchandise and services, including memorial markers and bases, outer burial containers, flowers and floral placement, other ancillary merchandise, graveside services, merchandise installation, and interments, are sold at our cemeteries. |
Summary of Significant Accounting Policies (Notes) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of Service Corporation International (SCI) and all subsidiaries in which we hold a controlling financial interest. Our 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. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair statement of our results for these periods. Our unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2017, unless otherwise disclosed herein, and should be read in conjunction therewith. The accompanying year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. Reclassifications to Prior Period Financial Statements and Adjustments Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation with no effect on our previously reported results of operations, consolidated financial position, or cash flows except as described below under "Accounting Standards Adopted in 2018". Use of Estimates in the Preparation of Financial Statements The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in our Annual Report on Form 10-K for the year ended December 31, 2017. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates. Funeral and Cemetery Operations Revenue is recognized when control of the performance obligation is transferred to the customer. Our performance obligations include funeral and cemetery merchandise and services and cemetery property internment rights. Control transfers when merchandise is delivered or services are performed. For cemetery property interment rights, control transfers when construction is complete and the property is available for use by the customer. Once the property is constructed, the customer has obtained substantially all of the remaining benefits of the property. Sales taxes collected are recognized on a net basis in our condensed consolidated financial statements. We sell price-guaranteed preneed contracts through various programs providing for future merchandise and services at prices prevailing when the agreements are signed. Revenue associated with sales of preneed contracts is deferred until merchandise is delivered or the services are performed, generally at the time of need. Travel protection and certain memorialization merchandise sold on a preneed basis are delivered to the customer at the time of sale and are recognized at the time delivery occurs. For personalized marker merchandise, with the customer’s direction generally obtained at the time of sale, we may order, store, and transfer title to the customer. In situations in which we have no further obligation or involvement related to the merchandise, we recognize revenue and record the cost of sales upon the earlier of vendor storage of these items or delivery in our cemetery. There is no general right of return for delivered items. The total consideration received for contracts with customers is allocated to each performance obligation based on relative selling price. Relative selling prices are determined by either the amount we sell the performance obligation for on a stand-alone basis or our best estimate of the amount we would sell it for based on an adjusted market assessment approach that is consistent with our historical pricing practices. Payment on atneed contracts is generally due at the time the merchandise is delivered or the services are performed. For preneed contracts, payment generally occurs prior to our fulfillment of the performance obligations. Our preneed contracts may also have extended payment terms with associated financing charges. Pursuant to state or provincial law, all or a portion of the proceeds from merchandise or services sold on a preneed basis may be required to be deposited into trust funds. When we receive payments from the customer, we deposit the amount required by law into the merchandise and service trusts and reclassify the corresponding amount from Deferred revenue, net into Deferred receipts held in trust. Amounts are withdrawn from the merchandise and service trusts when we fulfill the performance obligations. We defer investment earnings related to these merchandise and service trusts until the associated merchandise is delivered or services are performed. Fees charged by our wholly-owned registered investment advisor are also included in revenue in the period in which they are earned. In addition, we are entitled to retain, in certain jurisdictions, a portion of collected customer payments when a customer cancels a preneed contract; these amounts are also recognized in revenue. A portion of the proceeds from the sale of cemetery property interment rights is required by state or provincial law to be paid into perpetual care trust funds. Investment earnings from these trusts are distributed to us regularly, are recognized in current cemetery revenue, and are intended to defray cemetery maintenance costs, which are expensed as incurred. The principal of such perpetual care trust funds generally cannot be withdrawn. However, some states allow a total return distribution that may contain elements of income, capital appreciation, and principal. Costs related to delivery or performance of merchandise and services are charged to expense when merchandise is delivered or services are performed. Costs related to property interment rights include the property and construction costs specifically identified by each project. Property and construction costs are charged to expense when the revenue is recognized by specific identification in the performance of a contract. Incremental direct selling costs are deferred and recognized when the associated performance obligation is fulfilled based on specific identification in the fulfillment of a contract. All other selling costs are expensed as incurred. As of March 31, 2018, we had $274.7 million in deferred incremental direct selling costs included in Deferred charges and other assets. These deferred costs are classified as long-term on our Condensed Consolidated Balance Sheet because we do not control the timing of the delivery of the merchandise or performance of the services as they are generally provided at the time of need. During the three months ended March 31, 2018, we recognized $7.3 million from deferred incremental direct selling costs. Insurance-funded preneed contracts Not included in our Condensed Consolidated Balance Sheet are insurance-funded preneed contracts that will be funded by life insurance or annuity contracts issued by third party insurers. Where permitted by state or provincial law, we may sell a life insurance or annuity policy from third-party insurance companies, for which we earn a commission as general sales agent for the insurance company. These general agency commissions (GA revenue) are based on a percentage per contract sold and are recognized as funeral revenue when the insurance purchase transaction between the preneed purchaser and third-party insurance provider is completed. All selling costs incurred pursuant to the sale of insurance-funded preneed contracts are expensed as incurred. We do not reflect the unfulfilled insurance-funded preneed contract amounts in our Condensed Consolidated Balance Sheet. The proceeds of the life insurance policies or annuity contracts will be reflected in funeral revenue as we perform these funerals. Cash, Cash Equivalents, and Restricted Cash The components of cash, cash equivalents, and restricted cash at March 31, 2018 and December 31, 2017 are as follows:
Accounting Standards Adopted in 2018 Revenue Recognition In May 2014, the FASB issued "Revenue from Contracts with Customers", which replaced existing revenue recognition guidance. During 2016, the FASB made several amendments to the new standard that clarified guidance on several matters, including principal vs. agent considerations, identifying performance obligations, sales taxes, and licensing. The new standard, as amended, requires that we recognize revenue in the amount to which we expect to be entitled for delivery of promised goods and services to our customers. The new standard also resulted in enhanced revenue-related disclosures, including any significant judgments and changes in judgments. Additionally, the new standard requires the deferral of incremental direct selling costs to the period in which the related revenue is recognized. We adopted the standard as of January 1, 2018 using the modified retrospective approach applied to all contracts that were not completed at adoption based on the contract terms in existence at adoption. As a result of the adoption, we recorded a $172.2 million increase to Retained earnings, which comprises a $268.0 million increase to Deferred charges and other assets partially offset by a $38.0 million increase to Deferred revenue, net and a $57.8 million increase to Deferred tax liability. Additionally, we reclassified $606.9 million of amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts from Preneed receivables, net and trust investments to Deferred revenue, net. As a result of this reclassification, we eliminated our previous cancellation reserve on these performance obligations. We made the enhanced revenue-related disclosures in Footnotes 2, 3, and 8 of this Form 10-Q. The standard primarily impacts the manner in which we recognize a) certain nonrefundable up-front fees and b) incremental costs to acquire new preneed funeral trust contracts and preneed and atneed cemetery contracts (i.e., selling costs). The nonrefundable fees will be deferred and recognized as revenue when the underlying goods and services are delivered to the customer. The incremental direct selling costs will be deferred and recognized by specific identification to the delivery of the underlying goods and services. Additionally, the amounts due from customers for unfulfilled performance obligations for cancelable preneed contracts are required to be presented with Deferred revenue, net, instead of as Preneed receivables, net and trust investments on our Condensed Consolidated Balance Sheet. We will continue to expense costs to acquire new preneed funeral insurance contracts in the period incurred. The insurance contracts are not, and will not be, reflected in our Condensed Consolidated Balance Sheet because they do not represent assets or liabilities, as we have no claim to the insurance proceeds until the contract is fulfilled and no obligation under the contract until the benefits are assigned to us at the time of need. The impact of adopting the new guidance on our Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 is as follows:
Cash Flow In August and November 2016, the FASB amended "Statement of Cash Flows" to clarify guidance on the classification of certain cash receipts and cash payments. Additionally, the guidance requires that the statement of cash flows reflects changes in restricted cash in addition to cash and cash equivalents. Amended guidance includes clarification on debt prepayment and extinguishment costs, contingent consideration in business combinations, proceeds from insurance claims, and premium payments on Company-owned life insurance. We adopted the new guidance retrospectively on January 1, 2018. As a result, we have recast our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017 as follows:
Retirement Plans In March 2017, the FASB amended "Retirement Plans" to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost by requiring the classification of interest costs and actuarial gains and losses separately from operating income on the Condensed Consolidated Statement of Operations. We adopted the new guidance on January 1, 2018 and applied the practical expedient of reclassifying the amounts disclosed as "total net periodic benefit cost" in Note 11 to our December 31, 2017 Form 10-K from Operating income to Other income (expense), net. For the three months ended March 31, 2017 we reclassified $74 thousand and $221 thousand from Costs and expenses and General and administrative expenses, respectively, to Other income (expense), net. Financial Instruments In January 2016 and February 2018, the FASB amended "Financial Instruments" to provide additional guidance on the recognition and measurement of financial assets and liabilities. The amendment requires investments in equity instruments to be measured at fair value with changes in fair value reflected in net income. For us, these changes in fair value will be offset by a corresponding change in the fair value of Deferred receipts held in trust or Care trusts' corpus. The amendment also changes the required disclosures associated with equity instruments as a result of the change in presentation. The new guidance was effective for us on January 1, 2018 and our adoption did not materially impact our consolidated results of operations, consolidated financial position, or cash flows as of and for the three months ended March 31, 2018. We made the appropriate disclosure changes in Footnote 3 of this Form 10-Q. Stock Compensation In May 2017, the FASB amended "Stock Compensation" to clarify which changes in terms and conditions of share-based awards require accounting for as modifications. Under the new guidance, modification accounting is required only if the fair value, vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. We adopted the new guidance on January 1, 2018 and adoption did not have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Recently Issued Accounting Standards Financial Instruments In June 2016, the FASB amended "Financial Instruments" to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. This amendment replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and we are still evaluating the impact of adoption on our consolidated results of operations, consolidated financial position, and cash flows. Leases In February 2016 and January 2018, the FASB amended "Leases" to increase transparency and comparability among organizations. Under the new standard, an entity will be required to recognize lease assets and liabilities on its balance sheet and disclose key information about leasing arrangements. In addition, the new standard offers specific accounting guidance for a lessee, a lessor, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. This new standard will be effective for us on January 1, 2019. We are in the process of reviewing our existing leases, have selected a software solution, and are assessing process changes as a result of the new guidance. We are still evaluating the impact of adoption on our consolidated results of operations, consolidated financial position, and cash flows. Goodwill In January 2017, the FASB amended "Goodwill" to simplify the subsequent measurement of goodwill. Amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill. The new guidance is effective for us on January 1, 2020, and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. |
Preneed Activities (Notes) |
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Preneed Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preneed Activities | 3. Preneed Activities Preneed receivables, net and trust investments The components of Preneed receivables, net and trust investments in our unaudited Condensed Consolidated Balance Sheet at March 31, 2018 and December 31, 2017 are as follows:
The table below sets forth certain investment-related activities associated with our trusts:
The costs and values associated with trust investments recorded at fair value at March 31, 2018 and December 31, 2017 are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Fair value represents the value of the underlying securities held by the trusts.
As of March 31, 2018, our unfunded commitment for our private equity and other investments was $112.8 million which, if called, would be funded by the assets of the trusts. The change in our market-based trust investments with significant unobservable inputs (Level 3) is as follows:
Maturity dates of our fixed income securities range from 2018 to 2040. Maturities of fixed income securities (excluding mutual funds) at March 31, 2018 are estimated as follows:
Recognized trust fund income (realized and unrealized) related to these trust investments was $44.9 million and $38.2 million for the three months ended March 31, 2018 and 2017, respectively. We have determined that the unrealized losses in our fixed income investments are considered temporary in nature, as the unrealized losses were due to temporary fluctuations in interest rates. We believe that none of the securities are other-than-temporarily impaired based on our analysis of the investments. Our analysis included a review of the portfolio holdings and discussions with the individual money managers as to the credit ratings and the severity and duration of the unrealized losses. Our fixed income investment unrealized losses, their associated values, and the duration of unrealized losses as of March 31, 2018 and December 31, 2017, respectively, are shown in the following tables:
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Income Taxes (Notes) |
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Mar. 31, 2018 | |
Income Taxes [Abstract] | |
Income Tax Disclosure | Income Taxes Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items, which are recorded in the period in which they occur. Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitation, and increases or decreases in valuation allowances on deferred tax assets. Our effective tax rate was an expense of 25.7% and a benefit of 77.4% for the three months ended March 31, 2018 and 2017, respectively. The lower effective tax rate for the three months ended March 31, 2017 was primarily due to the effects of the IRS audit settlement and windfall tax benefits recognized on the settlement of employee share-based awards, partially offset by a higher corporate income tax rate, which was reduced from 35% to 21% as a result of the Tax Cuts and Jobs Act ("the Tax Act") enacted in December 2017. The higher effective tax rate for the three months ended March 31, 2018 was primarily a result of limitation on deductibility of certain executive compensation and repeal of the domestic manufacturing deduction. We continue to assess forthcoming guidance and accounting interpretations on the effects of the Tax Act, which could potentially affect the provisional estimates that were recorded at December 31, 2017, and expect to complete our analysis within the measurement period. Unrecognized Tax Benefits As of March 31, 2018, the total amount of our unrecognized tax benefits was $79.5 million and the total amount of our accrued interest was $11.1 million. In March 2017, we received from the IRS Office of Appeals the fully executed Form 870-AD for the years 1999-2005, which effectively settled the issues under audit for those years. Tax years subsequent to 2005 remain open to review and adjustment by the IRS. In addition, we are under audit by various state jurisdictions for years 2000 through 2016. There are currently no federal or provincial audits in Canada. It is reasonably possible that the amount of unrecognized tax benefits could significantly decrease over the next 12 months as certain tax positions will be released as a result of Statutes closing. However, since the years to which uncertain tax positions relate remain subject to review by the tax authorities, a current estimate of the range of decrease that may occur within the next 12 months cannot be made. |
Debt (Notes) |
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Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure | Debt Debt as of March 31, 2018 and December 31, 2017 was as follows:
Current maturities of debt at March 31, 2018 include amounts due under our Term Loan, mortgage notes and other debt, and capital leases within the next year. Our consolidated debt had a weighted average interest rate of 4.90% and 4.73% at March 31, 2018 and December 31, 2017, respectively. Approximately 70% and 75% of our total debt had a fixed interest rate at March 31, 2018 and December 31, 2017, respectively. During the three months ended March 31, 2018 and 2017, we paid $24.9 million and $20.0 million in cash interest, respectively. Bank Credit Agreement As of March 31, 2018, we have $185.0 million of outstanding borrowings under our Bank Credit Facility due December 2022; $667 million of outstanding borrowings under our Term Loan due December 2022; and issued $33 million of letters of credit. The bank credit agreement provides us with flexibility for working capital, if needed, and is guaranteed by a majority of our domestic subsidiaries. The subsidiary guaranty is a guaranty of payment of the outstanding amount of the total lending commitment, including letters of credit. The bank credit agreement contains certain financial covenants, including a minimum interest coverage ratio, a maximum leverage ratio, and certain dividend and share repurchase restrictions. As of March 31, 2018, we were in compliance with all of our debt covenants. We pay a quarterly fee on the unused commitment, which was 0.25% at March 31, 2018. As of March 31, 2018, we have $781.7 million in borrowing capacity under the Bank Credit Facility. Debt Issuances and Additions In January 2018, we drew $175.0 million on our Bank Credit Facility to fund the redemption of our 7.625% Senior notes due October 2018. In March 2018, we drew $10.0 million on our Bank Credit Facility to make required payments on our Term Loan due December 2022. In January 2017, we drew $25.0 million and in March 2017 we drew $10.0 million on our Bank Credit Facility due March 2021 to make required payments on our Term Loan due March 2021 and for general corporate purposes. Debt Extinguishments and Reductions During the three months ended March 31, 2018, we made aggregate debt payments of $268.1 million for scheduled and early extinguishment payments including: •$250 million in aggregate principal of our 7.625% Senior Notes due October 2018; •$9.6 million in call premium for redemption of the 7.625% Senior Notes due October 2018; •$8.4 million in aggregate principal of our Term Loan due December 2022; and •$0.1 million in other debt. Certain of the above transactions resulted in the recognition of a loss of $10.1 million recorded in Losses on early extinguishment of debt in our unaudited Condensed Consolidated Statement of Operations. During the three months end March 31, 2017, we made aggregate principal payments of $8.8 million for scheduled payments toward our previous Term Loan due March 2021. |
Credit Risk and Fair Value of Financial Instruments (Notes) |
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Credit Risk and Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Risk and Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair Value Estimates The fair value estimates of the following financial instruments have been determined using available market information and appropriate valuation methodologies. The carrying values of cash and cash equivalents, trade receivables, and trade payables approximate the fair values of those instruments due to the short-term nature of the instruments. The fair value of receivables on preneed contracts are impracticable to estimate because of the lack of a trading market and the diverse number of individual contracts with varying terms. The fair value of our debt instruments at March 31, 2018 and December 31, 2017 was as follows:
The fair value 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, Bank Credit Facility agreement, and the mortgage notes and other debt are classified within Level 3 of the fair value measurements hierarchy. The fair value of these instruments has been estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. An increase (decrease) in the inputs results in a directionally opposite change in the fair value of the instruments. |
Equity (Notes) |
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Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure | Equity Share Repurchases Subject to market conditions, normal trading restrictions, and limitations in our debt covenants, we may make purchases in the open market or through privately negotiated transactions under our stock repurchase program. During the three months ended March 31, 2018, we repurchased 3,095,554 shares of common stock at an aggregate cost of $118.8 million, which is an average cost per share of $38.38. After these repurchases, the remaining dollar value of shares authorized to be purchased under our share repurchase program was approximately $351.4 million at March 31, 2018. |
Segment Reporting (Notes) |
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Segment Reporting Disclosure [Text Block] | Segment Reporting Our operations are both product-based and geographically-based, and the reportable operating segments presented below include our funeral and cemetery operations. Our geographic areas include the United States and Canada, where we conduct both funeral and cemetery operations. Our reportable segment, including disaggregated revenue, information is as follows:
(1) The results for the three months ended March 31, 2017 have not been adjusted for the impact of our adoption of "Revenue from Contracts with Customers" on January 1, 2018. Our geographic area information is as follows:
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Commitments and Contingencies (Notes) |
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Mar. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingencies Insurance Loss Reserves We purchase comprehensive general liability, morticians’ and cemetery professional liability, automobile liability, and workers’ compensation insurance coverage, all of which are structured with high deductibles. The high-deductible insurance program means we are primarily self-insured for claims and associated costs and losses covered by these policies. As of March 31, 2018 and December 31, 2017, we have self-insurance reserves of $75.4 million and $78.2 million, respectively. Litigation and Regulatory Matters We are a party to various litigation and regulatory matters, investigations, and proceedings. Some of the more frequent routine litigations incidental to our business are based on burial practices claims and employment-related matters, including discrimination, harassment, and wage and hour laws and regulations. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies, and the likelihood of an unfavorable outcome. We intend to vigorously defend ourselves in the matters described herein; however, if we determine that an unfavorable outcome is probable and can be reasonably estimated, we establish the necessary accruals. We hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome of certain of these matters. We accrue such insurance recoveries when they become probable of being paid and can be reasonably estimated. Wage and Hour Claims. We are named a defendant in various lawsuits alleging violations of federal and state laws regulating wage and hour pay, including but not limited to the Samborsky, Vasquez, Romano, and Horton lawsuits described below. Charles Samborsky, et al, individually and on behalf of those persons similarly situated, v. SCI California Funeral Services, Inc., et al ; Case No. BC544180; in the Superior Court of the State of California for the County of Los Angeles, Central District-Central Civil West Courthouse. This lawsuit was filed in April 2014 against an SCI subsidiary and purports to have been brought on behalf of employees who worked as family service counselors in California since April 2010. The plaintiffs allege causes of action for various violations of state laws regulating wage and hour pay. The plaintiffs seek unpaid wages, compensatory and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. The claims have been sent to arbitration. In July 2017, the arbitrator entered an award rejecting the plantiffs' claims, ruling that they did not sue the correct party. We cannot quantify our ultimate liability, if any, in this lawsuit. Adrian Mercedes Vasquez, an individual and on behalf of others similarly situated, v. California Cemetery and Funeral Services, LLC, et al; Case No. BC58837; in the Superior Court of the State of California for the County of Los Angeles. This lawsuit was filed in July 2015 against SCI subsidiaries and purports to be brought on behalf of current and former non-exempt California employees of defendants during the four years preceding the filing of the complaint. The plaintiff alleges numerous causes of action for alleged wage and hour pay violations. The plaintiff seeks unpaid wages, compensatory and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. The claims have been ordered to arbitration, with the arbitrator to determine whether the claims will proceed as a class or individual claims. In addition, the plaintiff filed an unfair labor practice charge against defendants with the National Labor Relations Board alleging that by enforcing a mandatory arbitration provision, defendants allegedly violated the National Labor Relations Act. We cannot quantify our ultimate liability, if any, in this lawsuit. Nicole Romano, individually and on behalf of all others similarly situated v. SCI Direct, Inc., et al; Case No. BC656654; in the Superior Court of California for the County of Los Angeles. This lawsuit was filed in April 2017 against an SCI subsidiary and purports to have been brought on behalf of persons who worked as independent sales representatives in the U.S. during the four years preceding the filing of the complaint. The plaintiff alleges numerous causes of action for alleged wage and hour pay violations, including misclassifying the independent sales representatives as independent contractors instead of employees. The plaintiff seeks unpaid wages, compulsory and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. We cannot quantify our ultimate liability, if any, in the lawsuit. Felicia Horton, an individual and on behalf of other aggrieved employees v. SCI Direct, Inc., et al; Case No. 37-2016-00039356-CU-OE-CTL; in the Superior Court of California for the County of San Diego. This lawsuit was filed in November 2016 on behalf of the plaintiff who worked as an independent sales representative of our subsidiary in California. In addition, this lawsuit asserts claims under California Private Attorney General Act (“PAGA”) provisions on behalf of other similarly situated California persons. The lawsuit alleges causes of action and seeks damages and relief similar to those in the Romano case described above. The attorneys in the Horton case have also filed additional lawsuits alleging individual and PAGA claims similar to those alleged in the Horton case. The additional lawsuits are styled Jandy Quismundo v. SCI Direct, Inc., et al; Case No. 37-2017-00031825-CU-OE-CTL; in the Superior Court of California for the County of San Diego, and Jaime Kallweit v. SCI Direct, Inc., et al; Case No. 37-2017-00037186-CU-OE-CTL; The Superior Court for the State of California for the County of San Diego. We cannot quantify our ultimate liability, if any, in the lawsuits. Claims Regarding Acquisition of Stewart Enterprises. We are involved in the following lawsuit. Karen Moulton, Individually and on behalf of all others similarly situated v. Stewart Enterprises, Inc., Service Corporation International and others ; Case No. 2013-5636; in the Civil District Court Parish of New Orleans. This case was filed as a class action in June 2013 against SCI and our subsidiary in connection with SCI's acquisition of Stewart Enterprises, Inc. The plaintiffs allege that SCI aided and abetted breaches of fiduciary duties by Stewart Enterprises and its board of directors in negotiating the combination of Stewart Enterprises with a subsidiary of SCI. The plaintiffs seek damages concerning the combination. We filed exceptions to the plaintiffs’ complaint that were granted in June 2014. Thus, subject to appeals, SCI will no longer be party to the suit. The case has continued against our subsidiary Stewart Enterprises and its former individual directors. However, in October 2016, the court entered a judgment dismissing all of plaintiffs’ claims. Plaintiffs have appealed the dismissal. We cannot quantify our ultimate liability, if any, for the payment of damages. Operational Claims. We are named a defendant in various lawsuits alleging operational claims, including but not limited to the Allard lawsuit described below. Linda Allard, on behalf of herself and all others similarly situated v. SCI Direct, Inc., Case No 16-1033; in the United States District Court, Middle District of Tennessee. This case was filed in June 2016 as a class action under the Telephone Consumer Protection Act (the Act). Plaintiff alleged she received telemarketing telephone calls that were made with a prerecorded voice or made by an automatic telephone dialing system in violation of the Act. Plaintiff sought actual and statutory damages, as well as attorney’s fees and costs. The parties reached a settlement of the lawsuit as reported in our Form 8-K filed on August 30, 2017. The settlement agreement has been approved by the Court and is final. The financial terms of the settlement called for SCI Direct to pay $15.0 million, of which $3.5 million was paid by its insurer. Caroline Bernstein, on behalf of herself and Marla Urofsky on behalf of Rhea Schwartz, and both on behalf of all others similarly situated v. SCI Pennsylvania Funeral Services, Inc. and Service Corporation International, Case No. 2:17-cv-04960-GAM; in the United States District Court Eastern District of Pennsylvania. This case was filed in November 2017 as a purported national or alternatively as a Pennsylvania class action regarding our Forest Hills/Shalom Memorial Park in Huntingdon Valley, Pennsylvania and our Roosevelt Memorial Park Cemetery in Trevose, Pennsylvania. Plaintiffs allege wrongful burial and sales practices. Plaintiffs seek compensatory, consequential and punitive damages, attorneys’ fees and costs, interest, and injunctive relief. We cannot quantify our ultimate liability, if any, in this matter. Unclaimed Property Audit. We are involved in the following matter. We received notices from a third party auditor representing unclaimed property departments of certain states regarding preneed funeral and cemetery contracts that were not funded by the purchase and assignment of the proceeds of insurance policies. The auditor claims that we are subject to the laws of those states concerning escheatment of unclaimed funds. The auditor seeks escheatment of funds from the portion of such contracts for which it claims that we will probably not be required to provide services or merchandise in the future. No actual audits have commenced at this time. We cannot quantify our ultimate liability, if any, in this matter. The ultimate outcome of the matters described above cannot be determined at this time. 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. |
Earnings Per Share (Notes) |
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Earnings Per Share | 10. Earnings Per Share Basic earnings per common share (EPS) excludes dilution and is computed by dividing Net income attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other obligations to issue common stock were exercised or converted into common stock or resulted in the issuance of common shares that then shared in our earnings. A reconciliation of the numerators and denominators of the basic and diluted EPS computations is presented below:
The computation of diluted EPS excludes outstanding stock options in certain periods in which the inclusion of such options would be anti-dilutive in the periods presented. Total options not included in the computation of dilutive EPS are as follows (in shares):
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Divestiture-Related Activities (Notes) |
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Disposal Groups, Including Discontinued Operations, Disclosure | Divestiture-Related Activities As divestitures occur in the normal course of business, gains or losses on the sale of such assets are recognized in the income statement line item Gains on divestitures and impairment charges, net, which consist of the following:
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Summary of Significant Accounting Policies (Policies) |
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Fair Value of Financial Instruments, Policy | The fair value 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, Bank Credit Facility agreement, and the mortgage notes and other debt are classified within Level 3 of the fair value measurements hierarchy. The fair value of these instruments has been estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. |
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Consolidation, Policy | Principles of Consolidation and Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of Service Corporation International (SCI) and all subsidiaries in which we hold a controlling financial interest. Our 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. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair statement of our results for these periods. Our unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2017, unless otherwise disclosed herein, and should be read in conjunction therewith. The accompanying year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. |
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Use of Estimates, Policy | Use of Estimates in the Preparation of Financial Statements The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in our Annual Report on Form 10-K for the year ended December 31, 2017. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Accounting Standards Adopted in 2018 Revenue Recognition In May 2014, the FASB issued "Revenue from Contracts with Customers", which replaced existing revenue recognition guidance. During 2016, the FASB made several amendments to the new standard that clarified guidance on several matters, including principal vs. agent considerations, identifying performance obligations, sales taxes, and licensing. The new standard, as amended, requires that we recognize revenue in the amount to which we expect to be entitled for delivery of promised goods and services to our customers. The new standard also resulted in enhanced revenue-related disclosures, including any significant judgments and changes in judgments. Additionally, the new standard requires the deferral of incremental direct selling costs to the period in which the related revenue is recognized. We adopted the standard as of January 1, 2018 using the modified retrospective approach applied to all contracts that were not completed at adoption based on the contract terms in existence at adoption. As a result of the adoption, we recorded a $172.2 million increase to Retained earnings, which comprises a $268.0 million increase to Deferred charges and other assets partially offset by a $38.0 million increase to Deferred revenue, net and a $57.8 million increase to Deferred tax liability. Additionally, we reclassified $606.9 million of amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts from Preneed receivables, net and trust investments to Deferred revenue, net. As a result of this reclassification, we eliminated our previous cancellation reserve on these performance obligations. We made the enhanced revenue-related disclosures in Footnotes 2, 3, and 8 of this Form 10-Q. The standard primarily impacts the manner in which we recognize a) certain nonrefundable up-front fees and b) incremental costs to acquire new preneed funeral trust contracts and preneed and atneed cemetery contracts (i.e., selling costs). The nonrefundable fees will be deferred and recognized as revenue when the underlying goods and services are delivered to the customer. The incremental direct selling costs will be deferred and recognized by specific identification to the delivery of the underlying goods and services. Additionally, the amounts due from customers for unfulfilled performance obligations for cancelable preneed contracts are required to be presented with Deferred revenue, net, instead of as Preneed receivables, net and trust investments on our Condensed Consolidated Balance Sheet. We will continue to expense costs to acquire new preneed funeral insurance contracts in the period incurred. The insurance contracts are not, and will not be, reflected in our Condensed Consolidated Balance Sheet because they do not represent assets or liabilities, as we have no claim to the insurance proceeds until the contract is fulfilled and no obligation under the contract until the benefits are assigned to us at the time of need. The impact of adopting the new guidance on our Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 is as follows:
Cash Flow In August and November 2016, the FASB amended "Statement of Cash Flows" to clarify guidance on the classification of certain cash receipts and cash payments. Additionally, the guidance requires that the statement of cash flows reflects changes in restricted cash in addition to cash and cash equivalents. Amended guidance includes clarification on debt prepayment and extinguishment costs, contingent consideration in business combinations, proceeds from insurance claims, and premium payments on Company-owned life insurance. We adopted the new guidance retrospectively on January 1, 2018. As a result, we have recast our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017 as follows:
Retirement Plans In March 2017, the FASB amended "Retirement Plans" to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost by requiring the classification of interest costs and actuarial gains and losses separately from operating income on the Condensed Consolidated Statement of Operations. We adopted the new guidance on January 1, 2018 and applied the practical expedient of reclassifying the amounts disclosed as "total net periodic benefit cost" in Note 11 to our December 31, 2017 Form 10-K from Operating income to Other income (expense), net. For the three months ended March 31, 2017 we reclassified $74 thousand and $221 thousand from Costs and expenses and General and administrative expenses, respectively, to Other income (expense), net. Financial Instruments In January 2016 and February 2018, the FASB amended "Financial Instruments" to provide additional guidance on the recognition and measurement of financial assets and liabilities. The amendment requires investments in equity instruments to be measured at fair value with changes in fair value reflected in net income. For us, these changes in fair value will be offset by a corresponding change in the fair value of Deferred receipts held in trust or Care trusts' corpus. The amendment also changes the required disclosures associated with equity instruments as a result of the change in presentation. The new guidance was effective for us on January 1, 2018 and our adoption did not materially impact our consolidated results of operations, consolidated financial position, or cash flows as of and for the three months ended March 31, 2018. We made the appropriate disclosure changes in Footnote 3 of this Form 10-Q. Stock Compensation In May 2017, the FASB amended "Stock Compensation" to clarify which changes in terms and conditions of share-based awards require accounting for as modifications. Under the new guidance, modification accounting is required only if the fair value, vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. We adopted the new guidance on January 1, 2018 and adoption did not have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Recently Issued Accounting Standards Financial Instruments In June 2016, the FASB amended "Financial Instruments" to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. This amendment replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and we are still evaluating the impact of adoption on our consolidated results of operations, consolidated financial position, and cash flows. Leases In February 2016 and January 2018, the FASB amended "Leases" to increase transparency and comparability among organizations. Under the new standard, an entity will be required to recognize lease assets and liabilities on its balance sheet and disclose key information about leasing arrangements. In addition, the new standard offers specific accounting guidance for a lessee, a lessor, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. This new standard will be effective for us on January 1, 2019. We are in the process of reviewing our existing leases, have selected a software solution, and are assessing process changes as a result of the new guidance. We are still evaluating the impact of adoption on our consolidated results of operations, consolidated financial position, and cash flows. Goodwill In January 2017, the FASB amended "Goodwill" to simplify the subsequent measurement of goodwill. Amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill. The new guidance is effective for us on January 1, 2020, and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. |
Summary of Significant Accounting Policies (Tables) |
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Schedule of Available-for-sale Securities Reconciliation |
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Investments Classified by Contractual Maturity Date |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation |
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Schedule of Unrealized Loss on Investments |
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt as of March 31, 2018 and December 31, 2017 was as follows:
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Credit Risk and Fair Value of Financial Instruments (Tables) |
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Credit Risk and Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Measurement Inputs, Disclosure | The fair value of our debt instruments at March 31, 2018 and December 31, 2017 was as follows:
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Equity (Tables) |
3 Months Ended |
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Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) |
Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Our reportable segment, including disaggregated revenue, information is as follows:
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Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block] | Our geographic area information is as follows:
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Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted |
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] |
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Divestiture-Related Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Divestiture-Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) on Divestitures and Impairment Charges |
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Summary of Significant Accounting Policies Supplemental Cash Flow Disclosure (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
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Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 219,507 | $ 330,039 | $ 255,785 | |
Current restricted cash | 5,877 | 8,625 | ||
Restricted Cash and Cash Equivalents, Noncurrent | 1,936 | 1,937 | ||
Restricted Cash and Cash Equivalents | 7,813 | 10,562 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 227,320 | $ 340,601 | $ 255,785 | $ 211,506 |
Preneed Activities Investment Related Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
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Investment related activities [Line Items] | ||
Deposits | $ 93,269 | $ 84,487 |
Withdrawals | 106,769 | 93,082 |
Purchases of available-for-sale securities | 599,651 | 517,031 |
Sales of available-for-sale securities | 614,424 | 487,925 |
Realized gains on investments | 58,306 | 52,433 |
Realized losses on investments | $ (12,296) | $ (21,774) |
Preneed Activities Level 3 Activities (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair market value, beginning balance | $ 9,067 | $ 8,667 |
Net unrealized (losses) gains included in Accumulated other comprehensive income | (534) | 16 |
Fair market value, ending balance | 8,533 | 8,610 |
Distributions and other | $ 0 | $ (73) |
Preneed Activities Investments Classified by Contractual Maturity Date (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
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Investments Classified By Contractual Maturity Date [Line Items] | |
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value | $ 54,629 |
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value | 57,445 |
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value | 9,680 |
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value | 371 |
Available-for-sale Securities, Debt Maturities, Total, Fair Value | $ 122,125 |
Preneed Activities Preneed Activities, Textuals (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Preneed Activities [Abstract] | ||
Unfunded Commitments | $ 112.8 | |
Investment Earnings, Net | $ 44.9 | $ 38.2 |
Preneed Activities Deferred Preneed Revenues [Roll Forward] (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
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Preneed Activities Deferred Preneed Revenues (Details) [Abstract] | |||
Deferred revenue and deferred receipts held in trust | $ 4,768,826 | $ 5,265,206 | |
Accounting Changes [Text Block] | 37991 | ||
Net Preneed Deferred Sales | $ 244,091 | ||
Deferred Revenue Acquisitions (dispositions) of businesses, net | 40,332 | ||
Deferred Investment Earnings, Net | (46,918) | ||
Recognized deferred preneed revenues | (115,202) | ||
Recognized deferred revenues, current period sales | (105,256) | ||
Change in amounts due for unfulfilled performance obligations | (606,888) | $ 0 | |
Deferred Revenue Change in Cancellation Allowance | 61,987 | ||
Effect of foreign currency and other on deferred revenue | $ (6,517) |
Preneed Activities Deferred Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Deferred Revenue [Abstract] | |||
Deferred revenue, Gross | $ 1,943,933 | $ 1,789,776 | |
Change in amounts due for unfulfilled performance obligations | (606,888) | $ 0 | |
Deferred Revenue | $ 1,337,045 | $ 1,789,776 |
Income Taxes Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Income Taxes [Abstract] | |||
Effective Income Tax Rate, Continuing Operations | 25.70% | 77.40% | |
Federal Statutory Tax Rate | 21.00% | 35.00% | |
Unrecognized Tax Benefits | $ 79.5 | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 11.1 |
Equity Narratives (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 25, 2018 |
Mar. 31, 2018 |
|
Subsequent Event [Line Items] | ||
Treasury Stock, Shares, Acquired | 3,095,554 | |
Treasury Stock, Value, Acquired, Par Value Method | $ 118.8 | |
Treasury Stock Acquired, Average Cost Per Share | $ 38.38 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 351.4 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Treasury Stock, Shares, Acquired | 667,800 | |
Treasury Stock, Value, Acquired, Par Value Method | $ 25.5 | |
Treasury Stock Acquired, Average Cost Per Share | $ 38.12 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 325.9 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Commitments and Contingencies [Abstract] | ||
Self Insurance Reserve | $ (75,400) | $ (78,200) |
Litigation Settlement, Expense | 15,000 | |
Insurance Settlements Receivable | $ 3,500 |
Divestiture-Related Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Divestiture-Related Activities [Abstract] | ||
Gains on divestitures, net | $ 1,276 | $ 16,751 |
Impairment losses | (794) | (11,816) |
Gains on divestitures and impairment charges, net | $ 482 | $ 4,935 |
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