XML 72 R13.htm IDEA: XBRL DOCUMENT
v3.3.0.814

Preneed Cemetery Activities (Notes) | 9 Months Ended
--- | ---
Sep. 30, 2015
Cemetery |
Preneed Cemetery Activities | Preneed Cemetery Activities Preneed cemetery receivables, net and trust investments represent trust investments, including investment earnings, and customer receivables, net of unearned finance charges, for contracts sold in advance of when the property interment rights, merchandise, or services are needed. Our merchandise and service trusts are variable interest entities as defined in the Consolidation accounting standard. In accordance with this standard, we have determined that we are the primary beneficiary of these trusts, as we absorb a majority of the losses and returns associated with these trusts. The trust investments detailed in Notes 4 and 6 are also accounted for as variable interest entities. When we receive payments from the customer, we deposit the amount required by law into the trust and reclassify the corresponding amount from Deferred preneed cemetery revenue into Deferred preneed receipts held in trust. Amounts are withdrawn from the trusts when the contract obligations are performed. Cash flows from preneed cemetery contracts are presented as operating cash flows in our unaudited condensed consolidated statement of cash flows. Preneed cemetery receivables, net and trust investments are reduced by the trust investment earnings (realized and unrealized) that we have been allowed to withdraw in certain states prior to maturity. These earnings are recorded in Deferred preneed cemetery revenue until the merchandise is delivered or the service is performed. The table below sets forth certain investment-related activities associated with these preneed merchandise and service trusts:
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
| (In thousands)
Deposits | $ | 40,327 |  |  | $ | 34,018 |  |  | $ | 116,581 |  |  | $ | 95,421 |
Withdrawals | $ | 33,260 |  |  | $ | 33,669 |  |  | $ | 115,930 |  |  | $ | 96,238 |
Purchases of available-for-sale securities | $ | 165,025 |  |  | $ | 247,853 |  |  | $ | 389,219 |  |  | $ | 458,176 |
Sales of available-for-sale securities | $ | 150,804 |  |  | $ | 285,411 |  |  | $ | 389,747 |  |  | $ | 481,258 |
Realized gains from sales of available-for-sale securities | $ | 10,318 |  |  | $ | 40,635 |  |  | $ | 33,859 |  |  | $ | 86,822 |
Realized losses from sales of available-for-sale securities | $ | (11,948 | ) |  | $ | (4,439 | ) |  | $ | (25,375 | ) |  | $ | (10,564 | )
The components of Preneed cemetery receivables, net and trust investments in our unaudited condensed consolidated balance sheet at September 30, 2015 and December 31, 2014 are as follows:
| September 30, 2015 |  | December 31, 2014
| (In thousands)
Trust investments, at fair value | $ | 1,317,018 |  |  | $ | 1,404,298 |
Cash and cash equivalents | 120,805 |  |  | 122,355 |
Trust investments | 1,437,823 |  |  | 1,526,653 |
Receivables from customers | 935,844 |  |  | 881,082 |
Unearned finance charges | (33,477 | ) |  | (31,524 | )
| 2,340,190 |  |  | 2,376,211 |
Allowance for cancellation | (72,384 | ) |  | (69,542 | )
Preneed cemetery receivables, net and trust investments | $ | 2,267,806 |  |  | $ | 2,306,669 |
The costs and fair values associated with the trust investments measured at fair value at September 30, 2015 and December 31, 2014 are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Fair value represents the market value of the underlying securities held by the trusts.
| September 30, 2015
| Fair Value Hierarchy Level |  | Cost |  | Unrealized Gains |  | Unrealized Losses |  | Fair Value
|  |  |  |  | (In thousands) |  |
Fixed income securities: |  |  |  |  |  |  |  |  |
U.S. Treasury | 2 |  | $ | 67,552 |  |  | $ | 41 |  |  | $ | (1,258 | ) |  | $ | 66,335 |
Canadian government | 2 |  | 25,546 |  |  | 306 |  |  | (86 | ) |  | 25,766 |
Corporate | 2 |  | 5,293 |  |  | 31 |  |  | (112 | ) |  | 5,212 |
Residential mortgage-backed | 2 |  | 135 |  |  | 3 |  |  | (2 | ) |  | 136 |
Asset-backed | 2 |  | 170 |  |  | 18 |  |  | — |  |  | 188 |
Equity securities: |  |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |  |
United States | 1 |  | 546,840 |  |  | 27,293 |  |  | (47,051 | ) |  | 527,082 |
Canada | 1 |  | 9,077 |  |  | 3,737 |  |  | (1,191 | ) |  | 11,623 |
Other international | 1 |  | 56,256 |  |  | 2,102 |  |  | (9,341 | ) |  | 49,017 |
Mutual funds: |  |  |  |  |  |  |  |  |
Equity | 1 |  | 352,117 |  |  | 1,525 |  |  | (48,602 | ) |  | 305,040 |
Fixed income | 1 |  | 302,920 |  |  | 322 |  |  | (13,353 | ) |  | 289,889 |
Private equity | 3 |  | 30,896 |  |  | 6,462 |  |  | (2,976 | ) |  | 34,382 |
Other | 3 |  | 2,089 |  |  | 259 |  |  | — |  |  | 2,348 |
Trust investments |  |  | $ | 1,398,891 |  |  | $ | 42,099 |  |  | $ | (123,972 | ) |  | $ | 1,317,018 |
| December 31, 2014
| Fair Value Hierarchy Level |  | Cost |  | Unrealized Gains |  | Unrealized Losses |  | Fair Value
|  |  |  |  | (In thousands) |  |
Fixed income securities: |  |  |  |  |  |  |  |  |
U.S. Treasury | 2 |  | $ | 63,447 |  |  | $ | 257 |  |  | $ | (605 | ) |  | $ | 63,099 |
Canadian government | 2 |  | 21,687 |  |  | 261 |  |  | (134 | ) |  | 21,814 |
Corporate | 2 |  | 8,725 |  |  | 122 |  |  | (116 | ) |  | 8,731 |
Residential mortgage-backed | 2 |  | 111 |  |  | 3 |  |  | (1 | ) |  | 113 |
Asset-backed | 2 |  | 170 |  |  | 16 |  |  | — |  |  | 186 |
Equity securities: |  |  |  |  |  |  |  |  |
Preferred stock | 2 |  | 10 |  |  | 1 |  |  | — |  |  | 11 |
Common stock: |  |  |  |  |  |  |  |  |
United States | 1 |  | 557,955 |  |  | 22,746 |  |  | (11,706 | ) |  | 568,995 |
Canada | 1 |  | 10,962 |  |  | 5,011 |  |  | (841 | ) |  | 15,132 |
Other international | 1 |  | 55,632 |  |  | 1,605 |  |  | (2,395 | ) |  | 54,842 |
Mutual funds: |  |  |  |  |  |  |  |  |
Equity | 1 |  | 344,443 |  |  | 4,244 |  |  | (18,430 | ) |  | 330,257 |
Fixed income | 1 |  | 314,600 |  |  | 679 |  |  | (4,702 | ) |  | 310,577 |
Private equity | 3 |  | 32,342 |  |  | 3,185 |  |  | (6,183 | ) |  | 29,344 |
Other | 3 |  | 1,082 |  |  | 186 |  |  | (71 | ) |  | 1,197 |
Trust investments |  |  | $ | 1,411,166 |  |  | $ | 38,316 |  |  | $ | (45,184 | ) |  | $ | 1,404,298 |
Where quoted prices are available in an active market, securities held by the trusts are classified as Level 1 investments pursuant to the fair value measurements hierarchy. Where quoted market prices are not available for the specific security, fair values are estimated by using either quoted prices of securities with similar characteristics or an income approach fair value model with observable inputs that include a combination of interest rates, yield curves, credit risks, prepayment speeds, ratings, and tax-exempt status. These funds are classified as Level 2 investments pursuant to the fair value measurements hierarchy. The valuation of private equity and other alternative investments requires management judgment due to the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. The fair value of these investments is estimated based on the market value of the underlying real estate and private equity investments. The underlying real estate value is determined using the most recent available appraisals. Private equity investments are valued based on reported net asset values. Valuation policies and procedures are determined by our Trust Services department, which reports to our Chief Financial Officer. Additionally, valuations are reviewed by the Investment Committee of the Board of Directors quarterly. These funds are classified as Level 3 investments pursuant to the fair value measurements hierarchy. As of September 30, 2015, our unfunded commitment for our private equity and other investments was $46.8 million which, if called, would be funded by the assets of the trusts. Our private equity and other investments include several funds that invest in limited partnerships, distressed debt, real estate, and mezzanine financing. These investments can never be redeemed by the funds. Instead, due to the nature of the investments in this category, distributions are received through the liquidation of the underlying assets of the funds. We estimate that the underlying assets will be liquidated over the next 2 to 10 years. The change in our trust investments measured at fair value with significant unobservable inputs (Level 3) is as follows:
| Three Months Ended
| September 30, 2015 |  | September 30, 2014
| Private Equity |  | Other |  | Private Equity |  | Other
| (In thousands)
Fair value, beginning balance | $ | 34,867 |  |  | $ | 2,448 |  |  | $ | 27,557 |  |  | $ | 1,078 |
Net unrealized gains (losses) included in Accumulated other comprehensive income(1) | 1,779 |  |  | 1,045 |  |  | 1,056 |  |  | (186 | )
Net realized losses included in Other income (expense), net(2) | (6 | ) |  | (4 | ) |  | (8 | ) |  | (5 | )
Purchases | — |  |  | (26 | ) |  | — |  |  | — |
Contributions | — |  |  | — |  |  | 5,379 |  |  | 127 |
Distributions and other | (2,258 | ) |  | (1,115 | ) |  | (3,147 | ) |  | — |
Fair value, ending balance | $ | 34,382 |  |  | $ | 2,348 |  |  | $ | 30,837 |  |  | $ | 1,014 |
| Nine Months Ended
| September 30, 2015 |  | September 30, 2014
| Private Equity |  | Other |  | Private Equity |  | Other
| (In thousands)
Fair value, beginning balance | $ | 29,344 |  |  | $ | 1,197 |  |  | $ | 26,844 |  |  | $ | 1,245 |
Net unrealized gains (losses) included in Accumulated other comprehensive income(1) | 5,312 |  |  | 590 |  |  | 2,666 |  |  | (149 | )
Net realized losses included in Other income (expense), net(2) | (46 | ) |  | (17 | ) |  | (23 | ) |  | (6 | )
Purchases | — |  |  | 1,348 |  |  | — |  |  | — |
Contributions | 4,830 |  |  | 1,294 |  |  | 6,404 |  |  | 127 |
Distributions and other | (5,058 | ) |  | (2,064 | ) |  | (5,054 | ) |  | (203 | )
Fair value, ending balance | $ | 34,382 |  |  | $ | 2,348 |  |  | $ | 30,837 |  |  | $ | 1,014 |
________________________________________
(1) | All unrealized gains (losses) recognized in Accumulated other comprehensive income for our merchandise and service trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Accumulated other comprehensive income to Deferred preneed receipts held in trust. See Note 7 for further information related to our Deferred preneed receipts held in trust.
(2) | All net realized losses recognized in Other income (expense), net for our merchandise and service trust investments are attributable to our preneed customers and are offset by a corresponding reclassification in Other income (expense), net to Deferred preneed receipts held in trust. See Note 7 for further information related to our Deferred preneed receipts held in trust.
Maturity dates of our fixed income securities range from 2015 to 2045. Maturities of fixed income securities, excluding mutual funds, at September 30, 2015 are estimated as follows:
| Fair Value
| (In thousands)
Due in one year or less | $ | 26,631 |
Due in one to five years | 25,881 |
Due in five to ten years | 26,261 |
Thereafter | 18,864 |
| $ | 97,637 |
Earnings from all our merchandise and service trust investments are recognized in current revenue when merchandise is delivered or a service is performed. Fees charged by our wholly-owned registered investment advisor are also included in current revenue. 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 current revenue in the period in which they are earned. Recognized trust fund income (realized and unrealized) related to these trust investments was $10.7 million and $12.2 million for the three months ended September 30, 2015 and 2014, respectively. Recognized trust fund income (realized and unrealized) related to these trust investments was $34.9 million and $36.2 million for the nine months ended September 30, 2015 and 2014, respectively. We assess our trust investments for other-than-temporary declines in fair value on a quarterly basis. Impairment charges resulting from this assessment are recognized as investment losses in Other income (expense), net and a decrease to Preneed cemetery receivables, net and trust investments. These investment losses, if any, are offset by the corresponding reclassification in Other income (expense), net, which reduces Deferred preneed receipts held in trust. See Note 7 for further information related to our Deferred preneed receipts held in trust. For the three months ended September 30, 2015 and 2014, we recorded a $1.8 million and a $59.3 million impairment charge, respectively, for other-than-temporary declines in fair value related to unrealized losses on certain investments. For the nine months ended September 30, 2015 and 2014, we recorded a $3.8 million and a $59.8 million impairment charge, respectively, for other-than-temporary declines in fair value related to unrealized losses on certain investments. The third quarter 2014 impairment charges were recorded in anticipation of a strategic change in the management of our trust assets requiring the liquidation of a majority of our US trust assets during the fourth quarter of 2014. This change did not impact our asset allocation, but did change the underlying legal structure housing the assets. These impairment charges reflect the unrealized loss positions on these liquidated assets as of September 30, 2014. We have determined that the remaining unrealized losses in our merchandise and service trust investments are considered temporary in nature, as the unrealized losses were due to temporary fluctuations in interest rates and equity prices. The investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk. We believe that none of the remaining 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 sector exposures, credit ratings, and the severity and duration of the unrealized losses. Our merchandise and service trust investment unrealized losses, their associated fair values and the duration of unrealized losses as of September 30, 2015 are shown in the following tables:
| September 30, 2015
| In Loss Position Less Than 12 Months |  | In Loss Position Greater Than 12 Months |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
|  |  |  |  | (In thousands) |  |  |  |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 55,492 |  |  | $ | (1,257 | ) |  | $ | 13 |  |  | $ | (1 | ) |  | $ | 55,505 |  |  | $ | (1,258 | )
Canadian government | 1,242 |  |  | (20 | ) |  | 879 |  |  | (66 | ) |  | 2,121 |  |  | (86 | )
Corporate | 204 |  |  | (8 | ) |  | 2,441 |  |  | (104 | ) |  | 2,645 |  |  | (112 | )
Residential mortgage-backed | 27 |  |  | — |  |  | 19 |  |  | (2 | ) |  | 46 |  |  | (2 | )
Equity securities: |  |  |  |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |  |  |  |
United States | 300,606 |  |  | (47,051 | ) |  | — |  |  | — |  |  | 300,606 |  |  | (47,051 | )
Canada | 789 |  |  | (442 | ) |  | 1,231 |  |  | (749 | ) |  | 2,020 |  |  | (1,191 | )
Other international | 28,359 |  |  | (9,341 | ) |  | — |  |  | — |  |  | 28,359 |  |  | (9,341 | )
Mutual funds: |  |  |  |  |  |  |  |  |  |  |
Equity | 296,807 |  |  | (48,088 | ) |  | 1,889 |  |  | (514 | ) |  | 298,696 |  |  | (48,602 | )
Fixed income | 259,288 |  |  | (12,800 | ) |  | 13,519 |  |  | (553 | ) |  | 272,807 |  |  | (13,353 | )
Private equity | — |  |  | — |  |  | 8,325 |  |  | (2,976 | ) |  | 8,325 |  |  | (2,976 | )
Total temporarily impaired securities | $ | 942,814 |  |  | $ | (119,007 | ) |  | $ | 28,316 |  |  | $ | (4,965 | ) |  | $ | 971,130 |  |  | $ | (123,972 | )
| December 31, 2014
| In Loss Position Less Than 12 Months |  | In Loss Position Greater Than 12 Months |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
|  |  |  |  | (In thousands) |  |  |  |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 45,072 |  |  | $ | (605 | ) |  | $ | — |  |  | $ | — |  |  | $ | 45,072 |  |  | $ | (605 | )
Canadian government | — |  |  | — |  |  | 4,858 |  |  | (134 | ) |  | 4,858 |  |  | (134 | )
Corporate | 2,017 |  |  | (61 | ) |  | 1,936 |  |  | (55 | ) |  | 3,953 |  |  | (116 | )
Residential mortgage-backed | 33 |  |  | (1 | ) |  | — |  |  | — |  |  | 33 |  |  | (1 | )
Equity securities: |  |  |  |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |  |  |  |
United States | 192,015 |  |  | (11,706 | ) |  | 585 |  |  | — |  |  | 192,600 |  |  | (11,706 | )
Canada | 2,069 |  |  | (319 | ) |  | 778 |  |  | (522 | ) |  | 2,847 |  |  | (841 | )
Other international | 28,308 |  |  | (2,395 | ) |  | — |  |  | — |  |  | 28,308 |  |  | (2,395 | )
Mutual funds: |  |  |  |  |  |  |  |  |  |  |
Equity | 303,211 |  |  | (18,329 | ) |  | 1,577 |  |  | (101 | ) |  | 304,788 |  |  | (18,430 | )
Fixed income | 159,572 |  |  | (4,106 | ) |  | 15,113 |  |  | (596 | ) |  | 174,685 |  |  | (4,702 | )
Private equity | 88 |  |  | (100 | ) |  | 7,518 |  |  | (6,083 | ) |  | 7,606 |  |  | (6,183 | )
Other | 2 |  |  | (3 | ) |  | 259 |  |  | (68 | ) |  | 261 |  |  | (71 | )
Total temporarily impaired securities | $ | 732,387 |  |  | $ | (37,625 | ) |  | $ | 32,624 |  |  | $ | (7,559 | ) |  | $ | 765,011 |  |  | $ | (45,184 | )

X
- Definition This note represents disclosures relating to preneed cemetery activity and major accounts which also include: (1) fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments; (2) variable interest entities; and (3)all other required (as defined) and desired information. + References No definition available. + Details
Name: | sci_PreneedCemeteryActivitiesTextBlock
Namespace Prefix: | sci_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_StatementBusinessSegmentsAxis=sci_CemeteryMember
Namespace Prefix: |
Data Type: | na
Balance Type: |
Period Type: |