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Summary of Significant Accounting Policies (Policies) | 9 Months Ended
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Sep. 30, 2018
Summary of Significant Accounting Policies [Abstract] |
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 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 was estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements.
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.
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.
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 of 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. 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. 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.We made the enhanced revenue-related disclosures in Footnotes 2, 3, and 8 of this Form 10-Q. Additionally, the amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts are required to be presented with Deferred revenue, net, instead of as Preneed receivables, net and trust investments on our unaudited Condensed Consolidated Balance Sheet. Accordingly, we reclassified $544.8 million of these amounts 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 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 unaudited 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 unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2018 are as follows:
| Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2018
| As Reported |  | Effect of New Guidance |  | Without New Guidance |  | As Reported |  | Effect of New Guidance |  | Without New Guidance
| (in thousands, except per share amounts)
Revenue | $ | 778,786 |  |  | $ | 106 |  |  | $ | 778,892 |  |  | $ | 2,369,360 |  |  | $ | 1,124 |  |  | $ | 2,370,484 |
Costs and expenses | (612,616 | ) |  | (253 | ) |  | (612,869 | ) |  | (1,819,301 | ) |  | (14,205 | ) |  | (1,833,506 | )
Operating profit (loss) | 166,170 |  |  | (147 | ) |  | 166,023 |  |  | 550,059 |  |  | (13,081 | ) |  | 536,978 |
General and administrative expenses | (41,070 | ) |  |  |  | (41,070 | ) |  | (106,990 | ) |  | — |  |  | (106,990 | )
Gain on divestitures and impairment charges, net | 7,970 |  |  | — |  |  | 7,970 |  |  | 15,317 |  |  | — |  |  | 15,317 |
Hurricane recoveries, net | (767 | ) |  | — |  |  | (767 | ) |  | (437 | ) |  | — |  |  | (437 | )
Operating income (loss) | 132,303 |  |  | (147 | ) |  | 132,156 |  |  | 457,949 |  |  | (13,081 | ) |  | 444,868 |
Interest expense | (46,419 | ) |  |  |  | (46,419 | ) |  | (134,514 | ) |  | — |  |  | (134,514 | )
Loss on early extinguishment of debt, net | — |  |  | — |  |  | — |  |  | (10,131 | ) |  | — |  |  | (10,131 | )
Other income, net | 152 |  |  | — |  |  | 152 |  |  | 2,416 |  |  | — |  |  | 2,416 |
Income (loss) before income taxes | 86,036 |  |  | (147 | ) |  | 85,889 |  |  | 315,720 |  |  | (13,081 | ) |  | 302,639 |
(Provision for) benefit from income taxes | (17,043 | ) |  | 42 |  |  | (17,001 | ) |  | (61,398 | ) |  | 2,538 |  |  | (58,860 | )
Net income (loss) | 68,993 |  |  | (105 | ) |  | 68,888 |  |  | 254,322 |  |  | (10,543 | ) |  | 243,779 |
Net income attributable to noncontrolling interests | (58 | ) |  | — |  |  | (58 | ) |  | (160 | ) |  | — |  |  | (160 | )
Net income (loss) attributable to common stockholders | $ | 68,935 |  |  | $ | (105 | ) |  | $ | 68,830 |  |  | $ | 254,162 |  |  | $ | (10,543 | ) |  | $ | 243,619 |
Earnings per share (1) |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.38 |  |  | $ | — |  |  | $ | 0.38 |  |  | $ | 1.39 |  |  | $ | (0.06 | ) |  | $ | 1.33 |
Diluted | $ | 0.37 |  |  | $ | — |  |  | $ | 0.37 |  |  | $ | 1.36 |  |  | $ | (0.06 | ) |  | $ | 1.30 |
(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.
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 prepayments 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 unaudited Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2017 as follows:
| As Previously Reported |  | Effect of New Guidance |  | As Recast
| (in thousands)
Net cash provided by (used in) operating activities | $ | 389,614 |  |  | $ | (131 | ) |  | $ | 389,483 |
Cash flows from investing activities: |  |  |  |  |
Capital expenditures | (141,652 | ) |  | — |  |  | (141,652 | )
Acquisitions, net of cash acquired | (49,635 | ) |  | (26,183 | ) |  | (75,818 | )
Proceeds from divestitures and sales of property and equipment | 12,547 |  |  | 20,041 |  |  | 32,588 |
Payments for Company-owned life insurance policies | — |  |  | (6,189 | ) |  | (6,189 | )
Proceeds from Company-owned life insurance policies | — |  |  | 2,591 |  |  | 2,591 |
Other | 175 |  |  | — |  |  | 175 |
Net cash used in investing activities | (178,565 | ) |  | (9,740 | ) |  | (188,305 | )
Net cash used in financing activities | (147,532 | ) |  | — |  |  | (147,532 | )
Effect of foreign currency on cash, cash equivalents, and restricted cash | 9,453 |  |  | 10 |  |  | 9,463 |
Net increase in cash, cash equivalents, and restricted cash | 72,970 |  |  | (9,861 | ) |  | 63,109 |
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 | $ | 267,956 |  |  | $ | 6,659 |  |  | 274,615 |
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 unaudited 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 third quarter of 2017, we reclassified $74 thousand and $221 thousand from Costs and expenses and General and administrative expenses, respectively, to Other income (expense), net. For the first nine months of 2017 we reclassified $221 thousand and $663 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, and cash flows as of and for the three and nine months ended September 30, 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, which 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, January 2018, and July 2018, the FASB amended "Leases" to increase transparency and comparability among organizations. Under the new standard, an entity will be required to recognize right of use 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. We will adopt ASU 2016-02 “Leases” on January 1, 2019 using the modified retrospective transition method, with a cumulative effect adjustment to opening Retained earnings recorded as of that date. The modified retrospective transition method includes a number of optional practical expedients and accounting policy elections.
1) | We will elect a Package of Practical Expedients to not reassess:
• | whether a contract is or contains a lease (as an accounting policy election, we will not reassess whether arrangements grandfathered under EITF 01-8 are or contain leases),
• | lease classification, or
• | initial direct costs.
2) | We will not elect a practical expedient to use hindsight when determining lease term.
3) | We will elect the short-term lease recognition exemption.
4) | The remaining practical expedients do not apply or are not expected to have a material impact.
We have established a team to implement the standard update. The implementation team reports findings and progress of the project to management on a frequent basis. We have begun implementation of a new enterprise-wide lease management system in the form of a pre-configured software as a service cloud-based application to support the adoption and ongoing lease requirements under the new guidance. This system serves as a lease database to manage our lease inventory centrally and ensure completeness of lease inventory. The system also produces accounting entries and financial reporting disclosures accurately under the new guidance and provides lease activity business intelligence reporting. We are currently testing the new system to ensure it produces the data to prepare the required accounting entries and disclosures under the new guidance upon adoption and on an ongoing basis. We are evaluating additional changes to our processes and internal controls to facilitate adoption on January 1, 2019 and to meet the standard’s on-going reporting and disclosure requirements. Our current operating lease portfolio is primarily composed of real estate and equipment. Upon adoption of this standard, we expect to recognize a right-of-use asset and liability related to substantially all operating lease arrangements. We are developing our estimate of the right-of-use asset and lease liability based on the present value of the lease payments. Based on our current lease portfolio, we expect the adoption of the new standard to significantly impact our consolidated financial position due to the recognition of the right-of-use asset and liability for our operating leases. However, the ultimate impact of adoption will depend on the lease portfolio as of the adoption date. Goodwill In January 2017, the FASB amended "Goodwill" to simplify the subsequent measurement of goodwill. The 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. Fair Value Measurements In August 2018, the FASB amended "Fair Value Measurements" to modify the disclosure requirements. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy for timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for us with our quarterly filing for the period ended March 31, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Retirement Plans In August 2018, the FASB amended "Retirement Plans" to modify the disclosure requirements for defined benefit plans. For us, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for us with our annual filing for the year ended December 31, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. Internal Use Software In August 2018, the FASB amended "Internal Use Software" to align the requirements for capitalizing implementation costs incurred in a hosting arrangement for software-as-a-service that is a service contract with the requirements for capitalizing those costs in a hosting arrangement that includes a software license. Costs for implementation activities in the application development stage are capitalized, depending on the nature of the costs, while costs incurred during the preliminary project and postimplementation stages are expensed. Any capitalized costs are expensed over the term of the hosting arrangement. Cash payments for the implementation costs, whether capitalized or not, are presented as operating outflows as that is consistent with the presentation of the fees in the hosting arrangement.The new guidance is effective for us on January 1, 2020, and we are still assessing the impact on our consolidated results of operations, consolidated financial position, and cash flows.

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