10-Q 1 sci-20220331.htm 10-Q sci-20220331
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMARCH 31, 2022
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          
Commission file number 1-6402-1
sci-20220331_g1.jpg
SERVICE CORPORATION INTERNATIONAL
(Exact name of registrant as specified in its charter)
Texas74-1488375
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification no.)
1929 Allen Parkway
Houston
Texas77019
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (713) 522-5141
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol (s)Name of Each Exchange on Which Registered
Common Stock ($1 par value) SCINew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
þ
No
¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
þ
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
þ
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the act).
Yes
No
þ
The number of shares outstanding of the registrant’s common stock as of May 04, 2022 was 158,735,972 (net of treasury shares).



SERVICE CORPORATION INTERNATIONAL
INDEX
 Page
  
PART II. OTHER INFORMATION
2 Service Corporation International


Glossary
The following terms are common to the deathcare industry, are used throughout this report, and have the following meanings:
Atneed — Funeral, including cremation, and cemetery arrangements sold once death has occurred.
Average Revenue per Service — Average revenue per funeral service performed, excluding the impact of funeral recognized preneed revenue, GA revenue, and certain other revenue.
Cancellation — Termination of a preneed contract, which relieves us of the obligation to provide the goods and services included in the contract. Cancellations may be requested by the customer or be initiated by us for failure to comply with the contractual terms of payment. State or provincial laws govern the amount of refund, if any, owed to the customer.
Care Trusts' Corpus — The deposits and net realized capital gains and losses included in the perpetual care trusts that cannot be withdrawn. In certain states, some or all of the net realized capital gains can be distributed, so they are not included in the corpus.
Cemetery Merchandise and Services — Stone and bronze memorials, markers, outer burial containers, floral placement, graveside services, merchandise installations, urns, and interments.
Cemetery Perpetual Care Trust or Endowment Care Fund (ECF) — A trust fund established for the purpose of maintaining cemetery grounds and property into perpetuity. For these trusts, the corpus remains in the trust in perpetuity and the investment earnings or elected distributions are withdrawn regularly and are intended to defray our expenses incurred to maintain the cemetery. In certain states, some or all of the net realized capital gains can also be distributed. Additionally, some states allow a total return distribution that may contain elements of income, capital appreciation, and principal.
Cemetery Property — Developed lots, lawn crypts, mausoleum spaces, niches, and cremation memorialization property items (constructed and ready to accept interments) and undeveloped land we intend to develop for the sale of interment rights. Includes the construction-in-progress balance during the pre-construction and construction phases of projects creating new developed property items.
Cemetery Property Amortization or Amortization of Cemetery Property — The non-cash recognized expenses of cemetery property interment rights, which are recorded by specific identification with the cemetery property revenue for each contract.
Cemetery Property Interment Rights — The exclusive right to determine the human remains that will be interred in a specific cemetery property space. See also Cemetery Property Revenue below.
Cemetery Property Revenue — Recognized sales of interment rights in cemetery property when the receivable is deemed collectible and the property is fully constructed and available for interment.
Combination Location (Combos) — Locations where a funeral service location is physically located within or adjoining an SCI-owned cemetery location.
Cremation — The reduction of human remains to bone fragments by intense heat.
Cremation Memorialization — Products specifically designed to commemorate and honor the life of an individual that has been cremated. These products include cemetery property items that provide for the disposition of cremated remains within our cemeteries such as benches, boulders, statues, glass front niches, etc. They also include memorial walls and books where the name of the individual is inscribed but the remains have been scattered or kept by the family.
Funeral Merchandise and Services — Merchandise such as burial caskets and related accessories, outer burial containers, urns and other cremation receptacles, casket and cremation memorialization products, flowers, and professional services relating to funerals including arranging and directing services, use of funeral facilities and motor vehicles, removal, preparation, embalming, cremations, memorialization, visitations, travel protection, and catering.
Funeral Recognized Preneed Revenue — Funeral merchandise and travel protection, net, sold on a preneed contract and delivered before a death has occurred.
Funeral Services Performed — The number of funeral services, including cremations, provided after the date of death, sometimes referred to as funeral volume.
General Agency (GA) Revenue — Commissions we receive from third-party life insurance companies for life insurance policies sold to preneed customers for the purpose of funding preneed funeral arrangements. The commission rate paid is determined based on the product type sold, the length of payment terms, and the health and age of the insured/annuitant.
Interment — The burial or final placement of human remains in the ground (interment), in mausoleums (entombment), in niches (inurnment), or in cremation memorialization property (inurnment).
Lawn Crypt — Cemetery property in which an underground outer burial receptacle constructed of concrete and reinforced steel has been pre-installed in predetermined designated areas.
FORM 10-Q 3


Marker — A method of identifying a deceased person in a particular burial space, crypt, niche, or cremation memorialization property. Permanent burial and cremation memorialization markers are usually made of bronze or stone.
Maturity — When the underlying contracted merchandise is delivered or service is performed, typically at death. This is the point at which preneed funeral contracts are converted to atneed contracts (note — delivery of certain merchandise and services can occur prior to death).
Mausoleum — An above ground structure that is designed to house caskets and/or cremation urns.
Merchandise and Service Trust — A trust account established in accordance with state or provincial law into which we deposit the required percentage of customers’ payments for preneed funeral, cremation, or cemetery merchandise and services to be delivered or performed by us in the future. The amounts deposited can be withdrawn only after we have completed our obligations under the preneed contract or upon the cancellation of the contract. Also referred to as a preneed trust.
Outer Burial Container — A reinforced container intended to inhibit the subsidence of the earth and house the casket after it is placed in the ground, also known as a burial vault.
Preneed — Purchase of cemetery property interment rights or any merchandise and services prior to death occurring.
Preneed Backlog or Backlog of Preneed Revenue — Future revenue from unfulfilled preneed funeral, cremation, and cemetery contractual arrangements.
Preneed Cemetery Sales Production — Sales of preneed cemetery contracts. These sales are recorded in Deferred revenue, net until the merchandise is delivered, the service is performed, or the property has been constructed and is available for interment.
Preneed Funeral Sales Production — Sales of preneed funeral trust-funded and insurance-funded contracts. Preneed funeral trust-funded contracts are recorded in Deferred revenue, net until the merchandise is delivered or the service is performed. We do not reflect the unfulfilled insurance-funded preneed funeral contract amounts in our Consolidated Balance Sheet. The proceeds of the life insurance policies will be reflected in revenue as these funerals are performed by us in the future.
Preneed Receivables, Net — Amounts due from customers when we have delivered the merchandise, performed the service, or transferred control of the cemetery property interment rights prior to a death occurring and amounts due from customers on irrevocable preneed contracts.
Travel Protection — A product that provides shipment of remains to the servicing funeral home or cemetery of choice if the purchaser passes away outside of a certain radius of their residence, without any additional expense to the family.
Trust Fund Income — Recognized investment earnings from our merchandise and service and perpetual care trust investments.
As used herein, “SCI,” “Company,” “we,” “our,” and “us” refer to Service Corporation International and companies owned directly or indirectly by Service Corporation International, unless the context requires otherwise. Management has published a white paper on the corporate website for further understanding of accounting for preneed sales. You can view the white paper at http://investors.sci-corp.com under Featured Documents. Documents and information on our website are not incorporated by reference herein.


4 Service Corporation International


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Service Corporation International
Condensed Consolidated Statement of Operations (Unaudited)         
Three months ended March 31,
20222021
(In thousands, except per share amounts)
Revenue
Property and merchandise revenue$561,547 $554,591 
Service revenue480,609 463,859 
Other revenue70,247 59,531 
Total revenue1,112,403 1,077,981 
Costs of revenue
Cost of property and merchandise(260,051)(251,692)
Cost of service(219,538)(202,978)
Overhead and other expenses(255,901)(240,868)
Costs of revenue(735,490)(695,538)
Gross profit376,913 382,443 
Corporate general and administrative expenses(41,704)(41,669)
Gains on divestitures and impairment charges, net489 1,266 
Operating income335,698 342,040 
Interest expense(39,028)(35,812)
Other income, net128 341 
Income before income taxes296,798 306,569 
Provision for income taxes(77,231)(77,614)
Net income219,567 228,955 
Net income attributable to noncontrolling interests(54)(76)
Net income attributable to common stockholders$219,513 $228,879 
Basic earnings per share: 
Net income attributable to common stockholders$1.36 $1.35 
Basic weighted average number of shares161,328 169,918 
Diluted earnings per share:
Net income attributable to common stockholders$1.34 $1.33 
Diluted weighted average number of shares163,807 172,367 
(See notes to unaudited condensed consolidated financial statements)
FORM 10-Q 5



PART I
Service Corporation International
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
Three months ended March 31,
20222021
(In thousands)
Net income$219,567 $228,955 
Other comprehensive income:
Foreign currency translation adjustments7,279 5,005 
Total comprehensive income226,846 233,960 
Total comprehensive income attributable to noncontrolling interests(54)(76)
Total comprehensive income attributable to common stockholders$226,792 $233,884 
(See notes to unaudited condensed consolidated financial statements)
6 Service Corporation International



PART I
Service Corporation International
Condensed Consolidated Balance Sheet (Unaudited)
 March 31, 2022December 31, 2021
 (In thousands, except share amounts)
ASSETS
Current assets:  
Cash and cash equivalents$300,556 $268,626 
Receivables, net of reserves of $5,849 and $6,338, respectively
103,034 106,051 
Inventories28,654 25,935 
Other26,488 40,448 
Total current assets458,732 441,060 
Preneed receivables, net of reserves of $21,283 and $20,727, respectively, and trust investments
5,870,456 6,015,323 
Cemetery property1,890,932 1,900,844 
Property and equipment, net2,254,916 2,252,158 
Goodwill1,916,965 1,915,082 
Deferred charges and other assets, net of reserves of $3,917 and $4,577, respectively
1,171,065 1,169,813 
Cemetery perpetual care trust investments1,894,068 1,996,898 
Total assets$15,457,134 $15,691,178 
LIABILITIES & EQUITY
Current liabilities:  
Accounts payable and accrued liabilities$645,125 $659,494 
Current maturities of long-term debt63,863 65,016 
Income taxes payable66,217 3,751 
Total current liabilities775,205 728,261 
Long-term debt3,962,944 3,901,304 
Deferred revenue, net1,567,217 1,532,749 
Deferred tax liability436,459 437,902 
Other liabilities427,234 438,903 
Deferred receipts held in trust4,574,762 4,766,492 
Care trusts’ corpus1,870,667 1,976,118 
Commitments and contingencies (Note 9)
Equity:
Common stock, $1 per share par value, 500,000,000 shares authorized, 166,975,651 and 166,821,502 shares issued, respectively, and 159,164,117 and 163,114,202 shares outstanding, respectively
159,164 163,114 
Capital in excess of par value957,161 979,096 
Retained earnings678,932 727,021 
Accumulated other comprehensive income47,493 40,214 
Total common stockholders’ equity1,842,750 1,909,445 
Noncontrolling interests(104)4 
Total equity1,842,646 1,909,449 
Total liabilities and equity$15,457,134 $15,691,178 
(See notes to unaudited condensed consolidated financial statements)
FORM 10-Q 7



PART I
Service Corporation International
Condensed Consolidated Statement of Cash Flows (Unaudited)
 Three months ended March 31,
 20222021
(In thousands)
Cash flows from operating activities:  
Net income$219,567 $228,955 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization42,436 39,558 
Amortization of intangibles5,074 5,335 
Amortization of cemetery property24,849 28,929 
Amortization of loan costs1,644 1,526 
Provision for expected credit losses3,078 3,824 
(Benefit from) provision for deferred income taxes(4,580)553 
Gains on divestitures and impairment charges, net(489)(1,266)
Share-based compensation3,687 3,500 
Change in assets and liabilities, net of effects from acquisitions and divestitures:
Decrease in receivables5,435 2,525 
Increase in other assets(2,714)(12,204)
Increase in payables and other liabilities52,003 43,046 
Effect of preneed sales production and maturities:
Increase in preneed receivables, net and trust investments(91,641)(66,194)
Increase in deferred revenue, net67,625 19,660 
Increase (decrease) in deferred receipts held in trust6,199 (141)
Net cash provided by operating activities332,173 297,606 
Cash flows from investing activities:
Capital expenditures(56,748)(42,274)
Business acquisitions, net of cash acquired (1,160)
Real estate acquisitions(226)(5,608)
Proceeds from divestitures and sales of property and equipment2,986 4,045 
Payments for Company-owned life insurance policies
(1,666)(18)
Net cash used in investing activities(55,654)(45,015)
Cash flows from financing activities:
Proceeds from issuance of long-term debt75,000 20,000 
Scheduled payments of debt(9,075)(9,023)
Early payments and extinguishment of debt (100,000)
Principal payments on finance leases(9,059)(6,652)
Proceeds from exercise of stock options272 2,282 
Purchase of Company common stock(256,355)(106,135)
Payments of dividends(39,964)(35,568)
Bank overdrafts and other(12,517)(7,932)
Net cash used in financing activities(251,698)(243,028)
Effect of foreign currency2,556 1,412 
Net increase in cash, cash equivalents, and restricted cash27,377 10,975 
Cash, cash equivalents, and restricted cash at beginning of period278,555 238,610 
Cash, cash equivalents, and restricted cash at end of period$305,932 $249,585 
(See notes to unaudited condensed consolidated financial statements)
8 Service Corporation International



PART I
Service Corporation International
Condensed Consolidated Statement of Equity (Unaudited)
Common
Stock
Treasury
Stock,
Par Value
Capital in
Excess of
Par Value

Retained
Earnings
Accumulated Other
Comprehensive
Income (Deficit)
Noncontrolling
Interest
Total
 (In thousands, except per share amounts)
Balance at December 31, 2020$174,792 $(4,075)$981,934 $560,731 $39,366 $(127)$1,752,621 
Cumulative effect of accounting changes       
Comprehensive income   228,879 5,005 76 233,960 
Dividends declared on common stock ($0.21 per share)
   (35,568)  (35,568)
Employee share-based compensation earned  3,500    3,500 
Stock option exercises99  2,265    2,364 
Restricted stock awards, net of forfeitures163  (163)    
Purchase of Company common stock (2,142)(12,304)(91,771)  (106,217)
Other       
Balance at March 31, 2021$175,054 $(6,217)$975,232 $662,271 $44,371 $(51)$1,850,660 

Common
Stock
Treasury
Stock,
Par Value
Capital in
Excess of
Par Value
 
Retained
Earnings
Accumulated Other
Comprehensive
Income (Deficit)
Noncontrolling
Interest
Total
 (In thousands, except per share amounts)
Balance at December 31, 2021$166,822 $(3,708)$979,096 $727,021 $40,214 $4 $1,909,449 
Comprehensive income   219,513 7,279 54 226,846 
Dividends declared on common stock ($0.25 per share)
   (39,964)  (39,964)
Employee share-based compensation earned  3,687    3,687 
Stock option exercises7  265    272 
Restricted stock awards and units, net of forfeitures147  (147)    
Purchase of Company common stock (4,104)(24,613)(227,638)  (256,355)
Noncontrolling interest payments     (162)(162)
Other  (1,127)   (1,127)
Balance at March 31, 2022$166,976 $(7,812)$957,161 $678,932 $47,493 $(104)$1,842,646 
(See notes to unaudited condensed consolidated financial statements)
FORM 10-Q 9



PART I
Service Corporation International
Notes to Unaudited Condensed Consolidated Financial Statements
1. Nature of Operations
Service Corporation International (SCI) is a holding company and all operations are conducted by its subsidiaries. We are North America’s largest provider of deathcare products and services, with a network of funeral service locations and cemeteries operating in the United States and Canada. 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. We strive to offer families exceptional service in planning life celebrations and personalized remembrances.
Funeral service locations provide all professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles, arranging and directing services, removal, preparation, embalming, cremations, memorialization, travel protection, and catering. 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 memorial services, merchandise installation, and interments, are sold at our cemeteries.
2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
Our consolidated financial statements include the accounts of Service Corporation International and all subsidiaries in which we hold a controlling financial interest. Intercompany balances and transactions have been eliminated in consolidation.
Our unaudited condensed consolidated financial statements also include the accounts of the merchandise and service trusts and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary. We have retained the specialized industry accounting principles when consolidating the trusts. Although we consolidate the trusts, it does not change the legal relationships among the trusts, us, or our customers. The customers are the legal beneficiaries of these trusts; therefore, their interests in these trusts represent a liability to us.
Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation with no effect on our consolidated net income or cash flows.
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, 2021, 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.
Use of Estimates in the Preparation of Financial Statements
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. As a result, actual results could differ from these estimates.
Cash, Cash Equivalents, and Restricted Cash
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying amounts of our cash and cash equivalents approximate fair value due to the short-term nature of these instruments.
10 Service Corporation International



PART I
The components of cash, cash equivalents, and restricted cash were as follows:
March 31, 2022December 31, 2021
 (In thousands)
Cash and cash equivalents$300,556 $268,626 
Restricted cash (1)
Included in Other current assets
3,291 7,847 
Included in Deferred charges and other assets, net
2,085 2,082 
Total restricted cash5,376 9,929 
Total cash, cash equivalents, and restricted cash$305,932 $278,555 
(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.
Receivables, net
The components of Receivables, net in our unaudited Condensed Consolidated Balance Sheet were as follows:
March 31, 2022
Atneed FuneralAtneed CemeteryMiscellaneousCurrent Portion of NotesTotal
 (In thousands)
Receivables$42,171 $27,108 $39,329 $275 $108,883 
Reserve for credit losses(3,467)(1,876)(345)(161)(5,849)
Receivables, net$38,704 $25,232 $38,984 $114 $103,034 
December 31, 2021
Atneed FuneralAtneed CemeteryMiscellaneousCurrent Portion of NotesTotal
 (In thousands)
Receivables$49,011 $27,461 $35,650 $267 $112,389 
Reserve for credit losses(3,597)(2,231)(344)(166)(6,338)
Receivables, net$45,414 $25,230 $35,306 $101 $106,051 

Additionally, included in Deferred charges and other assets, net were long-term miscellaneous receivables, net and notes receivable, net as follows:
March 31, 2022December 31, 2021
 (In thousands)
Notes receivable$8,846 $8,684 
Reserve for credit losses(2,798)(3,424)
Notes receivable, net$6,048 $5,260 
Long-term miscellaneous receivables$7,880 $8,146 
Reserve for credit losses(1,119)(1,153)
Long-term miscellaneous receivables, net$6,761 $6,993 

FORM 10-Q 11



PART I
The following table summarizes the activity in our reserve for credit losses by portfolio segment, excluding preneed receivables which are presented in Note 3, for the three months ended March 31, 2022:
December 31, 2021(Provision) benefit for Expected Credit LossesAcquisitions
(Divestitures), net
Write OffsRecoveriesEffect of Foreign Currency and OtherMarch 31, 2022
 (In thousands)
Trade receivables:
Funeral$(3,597)$(1,708)$(99)$2,196 $(365)$106 $(3,467)
Cemetery(2,231)170 (48)297 (63)(1)(1,876)
Total reserve for credit losses on trade receivables$(5,828)$(1,538)$(147)$2,493 $(428)$105 $(5,343)
Miscellaneous receivables:
Current$(344)$(1)$ $ $ $ $(345)
Long-term(1,153)34     (1,119)
Total reserve for credit losses on miscellaneous receivables$(1,497)$33 $ $ $ $ $(1,464)
Notes receivable$(3,590)$6 $ $625 $ $ $(2,959)

At March 31, 2022, the amortized cost basis of our miscellaneous and notes receivables by year of origination was as follows:
20222021202020192018PriorRevolving Line of CreditTotal
 (In thousands)
Miscellaneous receivables:
Current$37,445 $905 $442 $378 $152 $7 $ $39,329 
Long-term1,173 3,175 1,440 1,618 443 31  7,880 
Total miscellaneous receivables$38,618 $4,080 $1,882 $1,996 $595 $38 $ $47,209 
Notes receivable$ $ $ $93 $ $4,927 $4,101 $9,121 
At March 31, 2022, the payment status of our miscellaneous and notes receivables was as follows:
Past Due
<30 Days30-90 Days90-180 Days>180 DaysTotalCurrentTotal
 (In thousands)
Miscellaneous receivables:
Current$ $9 $5 $205 $219 $39,110 $39,329 
Long-term     7,880 7,880 
Total miscellaneous receivables$ $9 $5 $205 $219 $46,990 $47,209 
Notes receivable$2 $2 $5 $1,119 $1,128 $7,993 $9,121 
Recently Issued Accounting Standards
Business Combinations
In October 2021, the Financial Accounting Standards Board ("FASB") amended guidance to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.
12 Service Corporation International



PART I
Generally, this new guidance will result in the Company recognizing contract assets and contract liabilities consistent with those reported by the acquiree immediately before the acquisition date. The standard will be effective for all acquisitions after December 31, 2022, although early adoption is permitted. We are still evaluating the impact of adoption on our consolidated results of operations, consolidated financial position, and cash flows.
Financial Instruments
In March 2022, the FASB amended guidance to require public companies to disclose the vintage year of receivable write-offs during the reporting period. This new disclosure is required for us beginning with our Form 10-Q for the three months ended March 31, 2023 and we will add the additional disclosures if write-offs during the period are material. This standard has no impact on our consolidated results of operations, consolidated financial position, and cash flows.
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 were as follows:
March 31, 2022December 31, 2021
 (In thousands)
Preneed receivables, net$1,292,600 $1,243,781 
Trust investments, at market6,243,312 6,536,851 
Insurance-backed fixed income securities and other228,612 231,589 
Trust investments6,471,924 6,768,440 
Less: Cemetery perpetual care trust investments(1,894,068)(1,996,898)
Preneed trust investments4,577,856 4,771,542 
Preneed receivables, net and trust investments$5,870,456 $6,015,323 

Preneed receivables, net comprised the following:
March 31, 2022
FuneralCemeteryTotal
 (In thousands)
Preneed receivables$169,607 $1,165,693 $1,335,300 
Unearned finance charges(11,709)(9,708)(21,417)
Preneed receivables, at amortized cost157,898 1,155,985 1,313,883 
Reserve for credit losses (13,177)(8,106)(21,283)
Preneed receivables, net$144,721 $1,147,879 $1,292,600 
December 31, 2021
FuneralCemeteryTotal
 (In thousands)
Preneed receivables$162,183 $1,125,539 $1,287,722 
Unearned finance charges(12,038)(11,176)(23,214)
Preneed receivables, at amortized cost150,145 1,114,363 1,264,508 
Reserve for credit losses(12,722)(8,005)(20,727)
Preneed receivables, net$137,423 $1,106,358 $1,243,781 
FORM 10-Q 13



PART I
At March 31, 2022, the amortized cost basis of our preneed receivables by year of origination was as follows:
20222021202020192018PriorTotal
 (In thousands)
Preneed receivables, at amortized cost:
Funeral$24,522 $61,712 $32,845 $18,626 $6,279 $13,914 $157,898 
Cemetery145,212 478,291 278,100 131,397 71,731 51,254 1,155,985 
Total preneed receivables, at amortized cost$169,734 $540,003 $310,945 $150,023 $78,010 $65,168 $1,313,883 

At March 31, 2022, the payment status of our preneed receivables was as follows:
Past Due
<30 Days30-90 Days90-180 Days>180 DaysTotalCurrentTotal
 (In thousands)
Preneed receivables, at amortized cost:
Funeral$4,007 $2,668 $1,827 $19,264 $27,766 $130,132 $157,898 
Cemetery32,849 22,251 2,221 9,069 66,390 1,089,595 1,155,985 
Total preneed receivables, at amortized cost$36,856 $24,919 $4,048 $28,333 $94,156 $1,219,727 $1,313,883 

The following table summarizes the activity for the reserve for credit losses on preneed receivables for the three months ended March 31, 2022:
December 31, 2021Provision for Expected Credit LossesWrite OffsEffect of Foreign CurrencyMarch 31, 2022
 (In thousands)
Funeral$(12,722)$(1,323)$869 $(1)$(13,177)
Cemetery(8,005)(256)158 (3)(8,106)
Total reserve for credit losses on preneed receivables$(20,727)$(1,579)$1,027 $(4)$(21,283)

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

Three months ended March 31,
20222021
 (In thousands)
Deposits$127,972 $120,283