Service Corp International 10-Q for FY2026 Q3
Service Corp International (SCI)
10-Q
2026-10-29
For: 2026-09-30
View Original
Added on
October 29, 2026
About this 10-Q
Service Corp International filed this 10-Q on October 29, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Service Corporation International reported third-quarter 2026 consolidated net income attributable to common stockholders of $141.3 million ($1.03 per diluted share). At September 30, 2026, it had a $17.7 billion future-revenue backlog. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.11B
- up 4.6% from $1.06B a year earlier
- Net income
- $141.28M
- up 20.3% from net income of $117.47M a year earlier
- Diluted EPS
- $1.03
- up 24.1% from $0.83 a year earlier
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 ended | |||||||||||
| 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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | ||||||||||||||||
| (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 | ||||||||||||
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. | 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). | 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): | |||||||||||||||||||||||||||||
| 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 Rule 12b-2 of the act). | Yes | No | þ | |||||||||||
The number of shares outstanding of the registrant’s common stock as of October 29, 2026 was 135,907,343 (net of treasury shares).
SERVICE CORPORATION INTERNATIONAL INDEX | ||||||||
| Page | ||||||||
Unaudited Condensed Consolidated Statement of Operations - Three and Nine Months Ended September 30, 2026 & 2025 | ||||||||
Unaudited Condensed Consolidated Statement of Comprehensive Income - Three and Nine Months Ended September 30, 2026 & 2025 | ||||||||
Unaudited Condensed Consolidated Balance Sheet - September 30, 2026 & December 31, 2025 | ||||||||
Unaudited Condensed Consolidated Statement of Cash Flows - Nine Months Ended September 30, 2026 & 2025 | ||||||||
Unaudited Condensed Consolidated Statement of Equity - Three and Nine Months Ended September 30, 2026 & 2025 | ||||||||
Results of Operations - Three and Nine Months Ended September 30, 2026 & 2025 | ||||||||
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 non-funeral home preneed sales revenue, core general agency 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 if the customer fails 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 included in the cemetery perpetual care trusts that may not be withdrawable. In certain states, some or all of the net realized capital gains can be distributed to us. Additionally, some states allow a total return distribution that may contain elements of income, capital appreciation, and principal.
Cemetery Marker — An item used to identify the deceased person in a particular burial space, crypt, niche, or cremation memorialization property. Permanent burial and cremation memorialization cemetery markers are usually made of bronze or stone.
Cemetery Merchandise and Services — Merchandise and services used in connection with a cemetery interment, including stone and bronze memorials, cemetery 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 generally 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 generally allow a total return distribution that may contain elements of income, capital appreciation, and principal.
Cemetery Property — Developed lots, lawn crypts, mausoleum spaces, cremation 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 a 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 who 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, cremation niches, etc. They also include memorial walls and memorial monuments where the name of the individual is inscribed but the remains have been scattered or kept by the family.
Cremation Niche — An aboveground burial space, in which a decedent's urn, containing their cremated remains and other keepsakes, is placed and sealed.
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 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.
FORM 10-Q 3
Interment — The burial or final placement of human remains in the ground (interment), in mausoleums (entombment), or in cremation niches or 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 designated areas.
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 aboveground 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.
Non-Funeral Home Preneed Sales Revenue — Non-funeral home general agency revenue and merchandise and travel protection revenue, net, sold to a preneed customer and delivered before a death has occurred.
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 funeral or cemetery merchandise and services prior to death occurring or prior to delivery of products and services.
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, is available for interment, and when the receivable is deemed collectible.
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 as the contract is between the customer and the insurance provider. Revenue from these policies is recognized when we perform the services and deliver the merchandise. The proceeds of the life insurance policies will be received upon maturity via death benefit claims.
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 service provided by a third-party that provides shipment of remains to the servicing funeral home of choice if the purchaser passes away outside of a certain radius of their residence.
Trust Fund Income — Recognized investment earnings from our merchandise, 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 September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||
| Property and merchandise revenue | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Service revenue | ||||||||||||||||||||||||||||||||
| Other revenue | ||||||||||||||||||||||||||||||||
| Total revenue | ||||||||||||||||||||||||||||||||
| Costs of revenue | ||||||||||||||||||||||||||||||||
| Cost of property and merchandise | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Cost of service | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Overhead and other expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Total costs of revenue | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Corporate general and administrative expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | ||||||||||||||||||||||||||||||
| Gains (losses) on divestitures and impairment charges, net | ( | |||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Other income, net | ||||||||||||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Basic weighted average number of shares | ||||||||||||||||||||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Diluted weighted average number of shares | ||||||||||||||||||||||||||||||||
(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 September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Other comprehensive income: | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total comprehensive income | ||||||||||||||||||||||||||||||||||||||
| Total comprehensive income attributable to noncontrolling interests | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Total comprehensive income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
(See notes to unaudited condensed consolidated financial statements)
6 Service Corporation International
PART I
Service Corporation International
Condensed Consolidated Balance Sheet (Unaudited)
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In thousands, except share amounts) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Receivables, net of reserves of $ | |||||||||||
| Inventories | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Preneed receivables, net of reserves of $ | |||||||||||
| Cemetery property | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
Deferred charges and other assets, net of reserves of $ | |||||||||||
| Cemetery perpetual care trust investments | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES & EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | $ | |||||||||
| Current maturities of long-term debt | |||||||||||
| Income taxes payable | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred revenue, net | |||||||||||
| Deferred tax liability | |||||||||||
| Other liabilities | |||||||||||
| Deferred compensation plan share awards | |||||||||||
| Deferred receipts held in trust | |||||||||||
| Care trusts’ corpus | |||||||||||
| Commitments and contingencies (Note 9) | |||||||||||
| Equity: | |||||||||||
Common stock, $1 per share par value, | |||||||||||
| Capital in excess of par value | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive income | ( | ||||||||||
| Total common stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
(See notes to unaudited condensed consolidated financial statements)
FORM 10-Q 7
PART I
Service Corporation International
Condensed Consolidated Statement of Cash Flows (Unaudited)
| Nine months ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of intangibles | |||||||||||
| Amortization of cemetery property | |||||||||||
| Amortization of loan costs | |||||||||||
| Provision for expected credit losses | |||||||||||
| Provision for deferred income taxes | |||||||||||
| Gains on divestitures and impairment charges, net | ( | ( | |||||||||
| Share-based compensation | |||||||||||
| Change in assets and liabilities, net of effects from acquisitions and divestitures: | |||||||||||
| Decrease (increase) in receivables | ( | ||||||||||
| Decrease (increase) in other assets | ( | ||||||||||
| Increase in payables and other liabilities | |||||||||||
| Effect of preneed sales production and maturities: | |||||||||||
| Increase in preneed receivables, net and trust investments | ( | ( | |||||||||
| Increase in deferred revenue, net | |||||||||||
| Increase in deferred receipts held in trust | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Business acquisitions, net of cash acquired | ( | ( | |||||||||
| Real estate acquisitions | ( | ( | |||||||||
| Corporate headquarters | ( | ( | |||||||||
| Proceeds from divestitures and sales of property and equipment | |||||||||||
| Payments for Company-owned life insurance policies | ( | ( | |||||||||
| Proceeds from Company-owned life insurance policies and other | |||||||||||
| Tax credit equity investments | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of long-term debt | |||||||||||
| Scheduled payments of debt | ( | ( | |||||||||
| Early payments of debt | ( | ( | |||||||||
| Proceeds from corporate headquarters debt facility | |||||||||||
| Principal payments on finance leases | ( | ( | |||||||||
| Proceeds from exercise of stock options | |||||||||||
| Purchase of Company common stock | ( | ( | |||||||||
| Payments of dividends | ( | ( | |||||||||
| Bank overdrafts and other | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign currency | ( | ||||||||||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | ( | ||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
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 (loss) | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
| Comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Share-based compensation earned | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Restricted stock awards, net of forfeitures | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Noncontrolling interest payments | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
| Comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Share-based compensation earned | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Noncontrolling interest payments | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Comprehensive income | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Share-based compensation earned | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Other | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
FORM 10-Q 9
PART I
| Common Stock | Treasury Stock, Par Value | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Share-based compensation earned | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Restricted stock awards, net of forfeitures | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Noncontrolling interest payments | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Share-based compensation earned | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Noncontrolling interest payments | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
| Comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Share-based compensation earned | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Return and reclassification of shares from deferred compensation plan | ( | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Noncontrolling interest payments | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
(See notes to unaudited condensed consolidated financial statements)
10 Service Corporation International
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 our funeral service locations.
Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, cremation niches, and custom inventory, including private mausoleums, family estates, and exclusive cremation memorialization options. Cemetery merchandise and services, including memorial cemetery markers and bases, outer burial containers, flowers and floral placement, other ancillary merchandise, graveside services, merchandise installation, and interments, are sold at our cemeteries.
2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
Our unaudited condensed consolidated financial statements include the accounts of SCI 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, service, 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. Our trusts are variable interest entities, for which we have determined that we are the primary beneficiary as we absorb a majority of the losses and returns associated with these trusts. 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.
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, 2025, 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.
Certain reclassifications have been made to prior period amounts to conform to the current period disclosure presentation with no effect on our consolidated net income, cash flows, or equity.
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.
FORM 10-Q 11
PART I
The components of cash, cash equivalents, and restricted cash were as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In thousands) | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Restricted cash(1): | |||||||||||
Included in Other current assets | |||||||||||
Included in Deferred charges and other assets, net | |||||||||||
| Total restricted cash | |||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||
(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:
| September 30, 2026 | |||||||||||||||||||||||||||||
| Atneed Funeral | Atneed Cemetery | Miscellaneous | Current Portion of Notes | Total | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Receivables | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reserve for credit losses | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
| Receivables, net | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Atneed Funeral | Atneed Cemetery | Miscellaneous | Current Portion of Notes | Total | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Receivables | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reserve for credit losses | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
| Receivables, net | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
12 Service Corporation International
PART I
Recently Issued Accounting Standards
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued guidance that requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted, and it can be adopted either on a prospective or retrospective basis. Upon adoption, we will include the additional disclosures in our financial statements and related notes; however, the guidance will not have a material effect on our financial position or results of operations.
Internal-Use Software
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:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In thousands) | |||||||||||
| Preneed receivables, net | $ | $ | |||||||||
| Trust investments, at fair value | |||||||||||
| Insurance-backed fixed income securities and other | |||||||||||
| Trust investments | |||||||||||
| Less: Cemetery perpetual care trust investments | ( | ( | |||||||||
| Preneed trust investments | |||||||||||
| Preneed receivables, net and trust investments | $ | $ | |||||||||
FORM 10-Q 13
PART I
Preneed receivables, net comprised the following:
| September 30, 2026 | |||||||||||||||||
| Funeral | Cemetery | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Preneed receivables | $ | $ | $ | ||||||||||||||
| Unearned finance charges | ( | ( | ( | ||||||||||||||
| Preneed receivables, at amortized cost | |||||||||||||||||
| Reserve for credit losses | ( | ( | ( | ||||||||||||||
| Preneed receivables, net | $ | $ | $ | ||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Funeral | Cemetery | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Preneed receivables | $ | $ | $ | ||||||||||||||
| Unearned finance charges | ( | ( | ( | ||||||||||||||
| Preneed receivables, at amortized cost | |||||||||||||||||
| Reserve for credit losses | ( | ( | ( | ||||||||||||||
| Preneed receivables, net | $ | $ | $ | ||||||||||||||
At September 30, 2026, the amortized cost basis of our preneed receivables by year of origination was as follows:
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Total | |||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
| Preneed receivables, at amortized cost: | |||||||||||||||||||||||||||||||||||||||||
| Funeral | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Cemetery | |||||||||||||||||||||||||||||||||||||||||
| Total preneed receivables, at amortized cost | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
At September 30, 2026, the payment status of our preneed receivables was as follows:
| Past Due | |||||||||||||||||||||||||||||||||||||||||
| <30 Days | 30-90 Days | 90-180 Days | >180 Days | Total | Current | Total | |||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
| Preneed receivables, at amortized cost: | |||||||||||||||||||||||||||||||||||||||||
| Funeral | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Cemetery | |||||||||||||||||||||||||||||||||||||||||
| Total preneed receivables, at amortized cost | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
14 Service Corporation International
PART I
The following table summarizes the activity for the reserve for credit losses on preneed receivables for the nine months ended September 30, 2026:
| December 31, 2025 | Provision for Expected Credit Losses | Write Offs | Effect of Foreign Currency | September 30, 2026 | |||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
| Funeral | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||
| Cemetery | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Total reserve for credit losses on preneed receivables | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||
The table below sets forth certain investment-related activities associated with our trusts:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Deposits | $ | $ | $ | $ | |||||||||||||||||||
| Withdrawals | $ | $ | $ | $ | |||||||||||||||||||
| Purchases of securities | $ | $ | $ | $ | |||||||||||||||||||
| Sales of securities | $ | $ | $ | $ | |||||||||||||||||||
Realized gains from sales of securities(1) | $ | $ | $ | $ | |||||||||||||||||||
Realized losses from sales of securities(1) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(1)All realized gains and losses are recognized in Other income, net for our trust investments and are offset by a corresponding reclassification in Other income, net to Deferred receipts held in trust and Care trusts’ corpus.
FORM 10-Q 15
PART I
The cost and market values associated with trust investments recorded at market value are detailed below. Cost reflects the investment of control holders in the trusts. Fair value represents the value of the underlying securities held by the trusts.
| September 30, 2026 | ||||||||||||||||||||||||||
| Fair Value Hierarchy Level | Cost | Unrealized Gains | Unrealized Losses | Value | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||||
| U.S. Treasury | 2 | $ | $ | $ | ( | $ | ||||||||||||||||||||
| Canadian government | 2 | |||||||||||||||||||||||||
| Corporate | 2 | ( | ||||||||||||||||||||||||
| Residential mortgage-backed | 2 | ( | ||||||||||||||||||||||||
| Asset-backed | 2 | ( | ||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Preferred stock | 2 | ( | ||||||||||||||||||||||||
| Common stock: | ||||||||||||||||||||||||||
| United States | 1 | ( | ||||||||||||||||||||||||
| Canada | 1 | ( | ||||||||||||||||||||||||
| Other international | 1 | ( | ||||||||||||||||||||||||
| Mutual funds: | ||||||||||||||||||||||||||
| Equity | 1 | ( | ||||||||||||||||||||||||
| Fixed income | 1 | ( | ||||||||||||||||||||||||
| Trust investments, at fair value | ( | |||||||||||||||||||||||||
| Commingled funds | ||||||||||||||||||||||||||
| Fixed income | ( | |||||||||||||||||||||||||
| Equity | ( | |||||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||||
| Alternative investments | ( | |||||||||||||||||||||||||
| Trust investments, at net asset value | ( | |||||||||||||||||||||||||
| Trust investments, at market | $ | $ | $ | ( | $ | |||||||||||||||||||||
As of September 30, 2026 and December 31, 2025, our unfunded commitment for our private equity investments was $532.6 million and $435.7 million, respectively, which, if called, would be funded by the assets of the trusts.
16 Service Corporation International
PART I
| December 31, 2025 | ||||||||||||||||||||||||||
| Fair Value Hierarchy Level | Cost | Unrealized Gains | Unrealized Losses | Value | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||||
| U.S. Treasury | 2 | $ | $ | $ | ( | $ | ||||||||||||||||||||
| Canadian government | 2 | |||||||||||||||||||||||||
| Corporate | 2 | ( | ||||||||||||||||||||||||
| Residential mortgage-backed | 2 | ( | ||||||||||||||||||||||||
| Asset-backed | 2 | ( | ||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Preferred stock | 2 | |||||||||||||||||||||||||
| Common stock: | ||||||||||||||||||||||||||
| United States | 1 | ( | ||||||||||||||||||||||||
| Canada | 1 | ( | ||||||||||||||||||||||||
| Other international | 1 | ( | ||||||||||||||||||||||||
| Mutual funds: | ||||||||||||||||||||||||||
| Equity | 1 | ( | ||||||||||||||||||||||||
| Fixed income | 1 | ( | ||||||||||||||||||||||||
| Trust investments, at fair value | ( | |||||||||||||||||||||||||
| Commingled funds | ||||||||||||||||||||||||||
| Fixed income | ( | |||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||||
| Alternative investments | ( | |||||||||||||||||||||||||
| Trust investments, at net asset value | ( | |||||||||||||||||||||||||
| Trust investments, at market | $ | $ | $ | ( | $ | |||||||||||||||||||||
Our alternative investments include funds invested in limited partnerships with interests in private equity, private market real estate, energy and natural resources, infrastructure, transportation, and private debt including both distressed debt 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. The funds' managers have not communicated the timing of any liquidations.
Maturity dates of our fixed income securities range from 2026 to 2082. Maturities of fixed income securities (excluding mutual funds) at September 30, 2026 are estimated as follows:
| Fair Value | |||||
| (In thousands) | |||||
| Due in one year or less | $ | ||||
| Due in one to five years | |||||
| Due in five to ten years | |||||
| Thereafter | |||||
| Total estimated maturities of fixed income securities | $ | ||||
Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $62.7 million and $51.0 million for the three months ended September 30, 2026 and 2025, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $33.6 million and $27.7 million for the three months ended September 30, 2026 and 2025, respectively.
FORM 10-Q 17
PART I
Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $181.6 million and $146.9 million for the nine months ended September 30, 2026 and 2025, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $99.1 million and $80.8 million for the nine months ended September 30, 2026 and 2025, respectively.
Deferred Revenue, Net
Deferred revenue, net represents future revenue, including distributed trust investment earnings associated with unperformed trust-funded preneed contracts that are not held in trust accounts. Future revenue and net trust investment earnings that are held in trust accounts are included in Deferred receipts held in trust.
The components of Deferred revenue, net in our unaudited Condensed Consolidated Balance Sheet were as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| (In thousands) | |||||||||||||||||
| Deferred revenue | $ | $ | |||||||||||||||
| Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts | ( | ( | |||||||||||||||
| Deferred revenue, net | $ | $ | |||||||||||||||
The following table summarizes the activity for our contract liabilities, which are reflected in Deferred revenue, net and Deferred receipts held in trust:
| Nine months ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
Beginning balance — Deferred revenue, net and Deferred receipts held in trust | $ | $ | |||||||||
| Net preneed contract sales | |||||||||||
| Acquisitions of businesses, net | |||||||||||
Net investment gains (losses)(1) | |||||||||||
Recognized revenue from backlog(2) | ( | ( | |||||||||
| Recognized revenue from current period sales | ( | ( | |||||||||
| Change in amounts due on unfulfilled performance obligations | ( | ||||||||||
| Change in cancellation reserve | ( | ( | |||||||||
| Effect of foreign currency and other | ( | ||||||||||
Ending balance — Deferred revenue, net and Deferred receipts held in trust | $ | $ | |||||||||
(1)Includes both realized and unrealized investment gains (losses)
(2)Includes current year trust fund income through the date of performance
18 Service Corporation International
PART I
4. 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, events such 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 25.1 % and 26.9 % for the three months ended September 30, 2026 and 2025, respectively. Our effective tax rate was 25.1 % and 26.1 % for the nine months ended September 30, 2026 and 2025, respectively. The effective tax rate was higher for the three and nine months ended September 30, 2025 primarily due to a change in estimate recorded in the prior year related to the finalization of the 2024 tax return. The effective tax rate for the three and nine months ended September 30, 2026 was higher than the federal statutory tax rate of 21.0 % primarily due to state and foreign tax expenses.
We participate in tax equity investments in renewable energy projects that qualify for federal investment tax credits. These investments are accounted for under the proportional amortization method. Tax credits and other related tax benefits are recognized as a reduction of income tax expense as they are realized, with corresponding amortization of the investment in proportion to the tax benefits received. During the nine months ended September 30, 2026, we recognized $52.1 million of investment tax credits and other tax benefits and recorded $49.9 million of amortization related to these investments. The tax credits and related amortization are presented net within the Provision for income taxes in the Consolidated Statement of Operations. As of September 30, 2026, the unamortized balance of renewable energy tax credit investments was $1.1 million included in Deferred charges and other assets. As of December 31, 2025, the unamortized balance of renewable energy tax credit investments was $51.1 million, and unfunded commitments related to these investments totaled $40.8 million. These amounts are included in Deferred charges and other assets and Accounts payable and accrued liabilities, respectively, on the Consolidated Balance Sheet.
FORM 10-Q 19
PART I
5. Debt
The components of Debt are:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In thousands) | |||||||||||
| $ | $ | ||||||||||
Term Loan due November 2030 | |||||||||||
Bank Credit Facility due November 2030 | |||||||||||
Corporate Headquarters Debt Facility due February 2037 | |||||||||||
| Obligations under finance leases | |||||||||||
| Mortgage notes and other debt, maturities through 2050 | |||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||
| Total debt | |||||||||||
| Less: Current maturities of long-term debt | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Current maturities of debt at September 30, 2026 include amounts due under our 7.50% Senior Notes due April 2027, term loan, mortgage notes and other debt, and finance leases within the next year as well as the portion of unamortized debt issuance costs expected to be recognized in the next twelve months. The Company believes it has sufficient existing liquidity to satisfy these obligations as well as continued access to the debt capital markets.
Approximately 79 % of our total debt had a fixed interest rate at both September 30, 2026 and December 31, 2025.
The components of our weighted average interest rate are as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Fixed Debt | % | % | |||||||||
| Floating Debt | % | % | |||||||||
| Total Debt | % | % | |||||||||
During the nine months ended September 30, 2026 and 2025, we paid $162.9 million and $159.5 million in cash interest, respectively.
Bank Credit Agreement
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 a maximum leverage ratio financial covenant and certain dividend and share repurchase restrictions. As of September 30, 2026, we were in compliance with all of our debt covenants. During the nine months ended September 30, 2026, we closed $46.0 million of letters of credit associated with our renewable energy tax credit investments that were fully funded. This was partially offset by a net $0.3 million letters of credit issued. At September 30, 2026, we issued $1.3 million of letters of credit and pay a quarterly fee on the unused commitment, which was 0.20 %. As of September 30, 2026, we have $1,513.7 million in borrowing capacity under the facility. The bank credit agreement had an interest rate of 5.65 % and 5.44 % at September 30, 2026 and December 31, 2025, respectively. As of December 31, 2025, we had $47.0 million of letters of credit outstanding.
20 Service Corporation International
PART I
Debt Issuances and Additions
During the nine months ended September 30, 2026, we issued or added $586.1 million of debt including:
•$530.0 million on our Bank Credit Facility due November 2030; and
•$56.1 million on our Corporate Headquarters Debt Facility due February 2037.
Net proceeds were used for general corporate purposes and to fund the new corporate headquarters.
During the nine months ended September 30, 2025, we issued or added $688.5 million of debt including:
•$655.0 million on our Bank Credit Facility due January 2028; and
•$33.5 million on our Corporate Headquarters Debt Facility due February 2037.
Net proceeds were used for general corporate purposes and to fund the new corporate headquarters.
Debt Reductions
During the nine months ended September 30, 2026, we made aggregate debt payments of $570.7 million for scheduled and early debt payments including:
•$550.0 million in aggregate principal of our Bank Credit Facility due November 2030;
•$14.1 million in aggregate principal of our Term Loan due November 2030; and
•$6.6 million in other debt.
During the nine months ended September 30, 2025, we made aggregate debt payments of $509.2 million for scheduled and early debt payments including:
•$490.0 million in aggregate principal of our Bank Credit Facility due January 2028;
•$12.7 million in aggregate principal of our Term Loan due January 2028; and
•$6.5 million in other debt.
FORM 10-Q 21
PART I
6. Credit Risk and 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 carrying values of receivables on preneed funeral and cemetery contracts approximate fair value as the terms and conditions of these contracts are comparable to our current contract offerings.
The fair value of our debt instruments was as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In thousands) | |||||||||||
| $ | $ | ||||||||||
| Term Loan due November 2030 | |||||||||||
| Bank Credit Facility due November 2030 | |||||||||||
| Corporate Headquarters Debt Facility due February 2037 | |||||||||||
| Mortgage notes and other debt, maturities through 2050 | |||||||||||
| Total fair value of debt instruments | $ | $ | |||||||||
7. Equity
(All shares reported in whole numbers)
Share Repurchase Program
Subject to market conditions, normal trading restrictions, and limitations in our debt covenants, we may make purchases of our common stock in the open market or through privately negotiated transactions under our share repurchase program. On June 11, 2026, we announced that our Board of Directors increased the authorized level of repurchases of our common stock by approximately $472.0 million.
During the nine months ended September 30, 2026, we repurchased 4,009,333 shares of common stock at an aggregate cost of $317.6 million, which is an average cost per share of $79.22 . The remaining dollar value of shares authorized to be purchased under the share repurchase program was $498.8 million at September 30, 2026.
22 Service Corporation International
PART I
8. 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 Chief Operating Decision Maker (CODM) is our Chief Executive Officer, who is responsible for making key operating, finance, and capital allocation decisions and specifically uses segment gross profit to aid in the decision making and to assess the performance of the operating segments.
Our reportable segment information, including disaggregated revenue, was as follows and includes a reconciliation of gross profit to our consolidated income before income taxes.
FORM 10-Q 23
PART I
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||
| Revenue from customers: | |||||||||||||||||||||||||||||||||||
| Funeral revenue: | |||||||||||||||||||||||||||||||||||
| Atneed revenue | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Matured preneed revenue | |||||||||||||||||||||||||||||||||||
| Core funeral revenue | |||||||||||||||||||||||||||||||||||
| Non-funeral home revenue | |||||||||||||||||||||||||||||||||||
| Non-funeral home preneed sales revenue | |||||||||||||||||||||||||||||||||||
| Core general agency and other revenue | |||||||||||||||||||||||||||||||||||
| Total funeral revenue | |||||||||||||||||||||||||||||||||||
| Direct cost | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Selling compensation | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Salaries & fringe expense | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Facility expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Other costs and overhead | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Total funeral expense | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Funeral gross profit | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cemetery revenue: | |||||||||||||||||||||||||||||||||||
| Atneed revenue | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Recognized preneed property revenue | |||||||||||||||||||||||||||||||||||
| Recognized preneed merchandise and services revenue | |||||||||||||||||||||||||||||||||||
| Core cemetery revenue | |||||||||||||||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||||||||||||||
| Total cemetery revenue | |||||||||||||||||||||||||||||||||||
| Direct cost | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Selling compensation | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Maintenance expense | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Other costs and overhead | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Total cemetery expense | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Cemetery gross profit | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Total revenue from customers | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Total segment expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Gross profit from reportable segments | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Corporate general and administrative expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | |||||||||||||||||||||||||||||||||
| Gains (losses) on divestitures and impairment charges, net | ( | ||||||||||||||||||||||||||||||||||
| Operating income | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
24 Service Corporation International
PART I
| United States | Canada | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Three months ended September 30, | |||||||||||||||||
| Revenue from external customers: | |||||||||||||||||
| 2026 | $ | $ | $ | ||||||||||||||
| 2025 | |||||||||||||||||
| Nine months ended September 30, | |||||||||||||||||
| Revenue from external customers: | |||||||||||||||||
| 2026 | $ | $ | $ | ||||||||||||||
| 2025 | |||||||||||||||||
9. Commitments and Contingencies
Insurance Loss Reserves
We purchase various insurance products with high deductibles including: comprehensive general liability, morticians and cemetery professional liability, automobile liability, and workers’ compensation. The high-deductible insurance program means we are primarily self-insured for claims and associated costs and losses covered by these policies. As of September 30, 2026 and December 31, 2025, we had self-insurance reserves of $113.5 million and $108.4 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 litigation matters incidental to our business are based on operational 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 vigorously defend ourselves in all matters; however, if we determine that an unfavorable outcome is probable and can be reasonably estimated, or if we determine an amount for which we would be willing to settle the matter to avoid further costs and risk, we establish the necessary accruals. We hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome of these matters. We accrue such insurance recoveries when they become probable of being paid and can be reasonably estimated.
Unclaimed Property Audits
We have received notices from auditors representing the unclaimed property departments of approximately forty states regarding the potential escheatment of preneed trust funds associated with unused preneed funeral and cemetery contracts ("Unused Preneed Trust Funds"). The states generally assert that all or a portion of these Unused Preneed Trust Funds may be subject to applicable unclaimed property or escheatment laws if the beneficiary and/or purchaser is deceased or presumed deceased and no merchandise or services have been provided. To date, audits have been resolved in nineteen states, with no additional property required to be reported. The remaining state audits are in various stages of the audit process.
Aside from these formal property audits, we may periodically review contracts to identify amounts that may be reportable under applicable unclaimed property laws. In limited circumstances, applicable laws permit us to retain trust earnings when property is escheated. As a result, our unclaimed property reporting has generated net trust fund income in each year from 2023 through 2026 as contracts are canceled and escheated.
We have reserved all of our rights, claims, and defenses with respect to these matters. Given the nature of the audits and the varying state laws involved, we are unable to reasonably estimate the total possible loss or range of loss, if any.
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 earnings per share
FORM 10-Q 25
PART I
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 stock that shared in our earnings.
A reconciliation of the numerators and denominators of basic and diluted EPS is presented below:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||
| Amounts attributable to common stockholders: | |||||||||||||||||||||||||||||||||||
| Net income — basic and diluted | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Weighted average shares: | |||||||||||||||||||||||||||||||||||
| Weighted average shares — basic | |||||||||||||||||||||||||||||||||||
| Stock options | |||||||||||||||||||||||||||||||||||
| Restricted share units | |||||||||||||||||||||||||||||||||||
| Weighted average shares — diluted | |||||||||||||||||||||||||||||||||||
| Amounts attributable to common stockholders: | |||||||||||||||||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
The computation of diluted EPS excludes outstanding stock options and restricted share units in certain periods in which the inclusion of such equity awards would be antidilutive to the periods presented. Total antidilutive options not currently included in the computation of diluted earnings per share are as follows (in shares):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||
| Antidilutive options | ||||||||||||||||||||||||||||||||||||||
26 Service Corporation International
PART I
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company
We are North America’s largest provider of deathcare products and services, with a network of funeral service locations and cemeteries unequaled in geographic scale and reach. At September 30, 2026, we operated 1,491 funeral service locations and 506 cemeteries (including 317 funeral service/cemetery combination locations), which are geographically diversified across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. Our funeral 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. Our Dignity Memorial® brand serves approximately 700,000 combined preneed and atneed families each year with professionalism, compassion, and attention to detail.
Our financial position is enhanced by our $17.7 billion backlog of future revenue from both trust and insurance-funded preneed sales at September 30, 2026. Preneed selling provides us with a strategic opportunity to gain future market share. We also believe it adds to the stability and predictability of our revenue and cash flows. While revenue on the majority of preneed merchandise and service sales is deferred until the time of need, sales of preneed cemetery property provide opportunities for revenue recognition to the extent that the property is developed and available for use.
We believe we have adequate liquidity and a favorable debt maturity profile, which allow us to reinvest and grow our business as well as return capital to shareholders through share repurchases and dividends.
Factors affecting our operating results include: demographic trends in terms of population growth and average age, which impact death rates; establishing and maintaining leading market share positions supported by strong local heritage and relationships; effectively responding to increasing cremation trends by selling complementary services and merchandise; controlling salary and merchandise costs; and exercising pricing leverage. The average revenue per funeral contract is influenced by the mix of traditional versus cremation services as our average revenue for cremations is lower than that for traditional burials. To further enhance revenue opportunities, we continue to focus on our cremation customers' preferences, and remaining relevant by developing additional cemetery property, memorialization merchandise and services that specifically appeal to cremation customers. We believe the presentation of these additional offerings through our customer-facing technology improves our customers' experience by allowing them to visualize the enhanced product and service offerings. In addition, we believe this will help drive increases in the average revenue for a cremation or incremental cemetery property sales in future periods. While general economic conditions, inflation, and consumer confidence may affect the timing or mix of customer purchases, demand is generally deferred rather than lost. Accordingly, demand for these products and services has historically been less sensitive to economic cycles than other discretionary consumer purchases.
For further discussion of our key operating metrics, see our "Cash Flow" and “Results of Operations” sections below.
Financial Condition, Liquidity, and Capital Resources
We have adequate liquidity and a favorable debt maturity profile, which allow us to reinvest and grow our business as well as return capital to shareholders through share repurchases and dividends.
Capital Allocation Considerations
We rely on cash flow from operations as a significant source of liquidity. Our cash flow from operating activities provided $869.3 million in the first nine months of 2026. As of September 30, 2026, we had $1,513.7 million in remaining borrowing capacity under our Bank Credit Facility.
Our Bank Credit Facility requires us to maintain a certain leverage ratio with which we were in compliance at September 30, 2026. We target a leverage ratio of 3.5x to 4.0x.
Our financial covenant requirement and actual ratio as of September 30, 2026 were as follows:
| Per Credit Agreement | Actual | ||||||||||
| Leverage ratio | 5.00 (Max) | 3.69 | |||||||||
We have the financial strength and flexibility to reward shareholders with dividends while maintaining a prudent capital structure and pursuing new opportunities for profitable growth.
FORM 10-Q 27
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Our unencumbered cash on hand, future operating cash flows, and the available capacity under our Bank Credit Facilities give us adequate liquidity to meet our short-term needs as well as our long-term financial obligations. Due to cash balances residing in Canada and minimum operating cash requirements, a portion of our cash on hand is encumbered.
We consistently evaluate the best uses of our cash flow that will yield the highest value and return on capital. Our capital investment strategy is prioritized as follows:
Investing in Acquisitions and Building New Funeral Service and Cemetery Locations. We manage our footprint by focusing on strategic acquisitions and building new funeral service and cemetery locations where the expected returns are attractive and exceed our weighted average cost of capital. We target businesses with favorable customer dynamics and/or where we can achieve the benefits of economies of scale. We continue to pursue strategic acquisitions and build new funeral service and cemetery locations in areas that provide us with the potential for additional scale.
Returning Excess Cash to Shareholders. In addition to any strategic acquisitions or new build opportunities, we continue to return cash to shareholders through regular quarterly dividends and our share repurchase program. Our quarterly dividend rate has steadily grown from $0.025 per common share in 2005 to $0.36 per common share in the third quarter of 2026. We target a dividend payout ratio of 30% to 40% of after tax earnings excluding special items and intend to grow our cash dividend commensurate with the growth in our business. While we intend to pay regular quarterly cash dividends for the foreseeable future, all future dividends are subject to limitations in our debt covenants, and final determination by our Board of Directors each quarter upon review of our financial performance. We also expect to continue to repurchase shares of our common stock in the open market or through privately negotiated transactions, subject to market conditions, debt covenants, and normal trading restrictions. On June 11, 2026, we announced that our Board of Directors increased the authorized level of repurchases of our common stock by approximately $472 million. There can be no assurance that we will buy our common stock under our repurchase program in the future. During the nine months ended September 30, 2026, we repurchased 4,009,333 shares of our common stock at an aggregate cost of $317.6 million, which is an average cost per share of $79.22.
Managing Debt. We continue to focus on maintaining optimal levels of liquidity and financial flexibility. We generate a relatively consistent annual cash flow stream that is generally resistant to down economic cycles. This cash flow stream and our significant liquidity allow us to substantially reduce our long-term debt maturities should we choose to do so.
Cash Flow
Our ability to generate strong operating cash flow is one of our fundamental financial strengths and provides us with substantial flexibility in meeting operating and investing needs.
Operating Activities
Net cash provided by operating activities was $869.3 million and $729.9 million for the nine months ended September 30, 2026 and 2025, respectively. The $139.4 million increase in operating cash flows from 2025 comprises:
•a $133.4 million increase in cash receipts from customers, General Agency (GA) commission and other receipts,
•a $49.0 million decrease in cash tax payments,
•a $20.8 million decrease in restructuring payments, and
•a $1.7 million increase in net trust withdrawals, partially offset by
•a $34.1 million increase in employee compensation payments,
•a $28.0 million increase in vendor and other payments, and
•a $3.4 million increase in cash interest payments.
Investing Activities
Net cash flows used in investing activities was $470.1 million and $341.4 million for the nine months ended September 30, 2026 and 2025, respectively. The $128.7 million increased outflow in 2026 over 2025 is primarily due to the following:
•a $39.3 million increase in tax credit equity investments,
•a $27.5 million increase in capital expenditures related to construction of our new corporate headquarters which is substantially financed through a separate construction loan facility,
•a $12.2 million increase in total capital expenditures, which comprises:
•a $7.8 million increase in expenditures for growth capital expenditures/construction of new funeral service locations, and
•a $4.4 million net increase in maintenance capital expenditures, which includes:
28 Service Corporation International
PART I
•a $6.5 million increase in expenditures for cemetery property development, and
•a $2.0 million increase in expenditures for digital investments and corporate, partially offset by
•a $4.1 million decrease in expenditures for capital improvements at existing field locations,
•an $11.4 million decrease in proceeds from Company-owned life insurance policies,
•a $10.6 million increase in payments for Company-owned life insurance policies,
•a $9.9 million increase in cash spent on real estate acquisitions,
•a $9.6 million decrease in cash receipts from divestitures and asset sales, and
•an $8.2 million increase in cash spent on business acquisitions.
Financing Activities
Net cash used in financing activities was $467.1 million and $368.9 million for the nine months ended September 30, 2026 and 2025, respectively. The $98.2 million increased outflow in 2026 over 2025 is primarily due to the following:
•a $188.1 million increase in payments of debt, as we moved from net borrowings of $117.3 million in 2025 to net repayments of $70.7 million in 2026,
•a $9.4 million increase in payments of dividends, and
•a $9.0 million increase in bank overdrafts and other, partially offset by
•an $83.2 million decrease in purchase of Company common stock,
•a $22.6 million increase in borrowings from our corporate headquarters debt facility, and
•a $2.5 million increase in proceeds from exercises of stock options.
Financial Assurances
In support of our operations, we have entered into arrangements with certain surety companies whereby such companies agree to issue surety bonds on our behalf as financial assurance and/or as required by existing state and local regulations. The surety bonds are used for various business purposes; however, the majority of the surety bonds issued and outstanding have been used to support our preneed sales activities. The obligations underlying these surety bonds are recorded on our unaudited Condensed Consolidated Balance Sheet as Deferred revenue, net. The breakdown of surety bonds between funeral and cemetery preneed arrangements, as well as surety bonds for other activities, is described below.
| September 30, 2026 | December 31, 2025 | ||||||||||
| (In millions) | |||||||||||
| Preneed funeral | $ | 211.8 | $ | 209.2 | |||||||
| Preneed cemetery: | |||||||||||
| Merchandise and services | 134.9 | 134.9 | |||||||||
| Pre-construction | 64.7 | 64.5 | |||||||||
| Bonds supporting preneed funeral and cemetery obligations | 411.4 | 408.6 | |||||||||
| Bonds supporting preneed business permits | 9.2 | 8.7 | |||||||||
| Other bonds | 77.7 | 76.5 | |||||||||
| Total surety bonds outstanding | $ | 498.3 | $ | 493.8 | |||||||
When selling preneed contracts, we may post surety bonds where allowed by state law. We post the surety bonds in lieu of trusting a certain amount of funds received from the customer. The amount of the bond posted is generally determined by the total amount of the preneed contract that would otherwise be required to be trusted, in accordance with applicable state law.
Surety bond premiums are paid annually and the bonds are automatically renewable until maturity of the underlying preneed contracts, unless we are given prior notice of cancellation.
FORM 10-Q 29
PART I
Except for cemetery pre-construction bonds (which are irrevocable), the surety companies generally have the right to cancel the surety bonds at any time with appropriate notice. In the event a surety company were to cancel the surety bond, we are required to obtain replacement surety assurance from another surety company or fund a trust for an amount generally less than the posted bond amount. Management does not expect that we will be required to fund material amounts related to these surety bonds in the future due to a lack of surety capacity or surety company non-performance.
During the second quarter of 2025, we replaced our letters of credit with a $46.0 million surety bond and a related indemnity obligation with a large insurance company, which is included in Other bonds in the table above.
Preneed Activities and Backlog of Contracts
In addition to selling our products and services to client families at the time of need, we enter into price-guaranteed preneed contracts, which provide for future funeral or cemetery merchandise and services. Because preneed funeral and cemetery merchandise or services will generally not be provided until sometime in the future, most states and provinces require that all or a portion of the funds collected from customers on preneed contracts be deposited into merchandise and service trusts until the merchandise is delivered or the service is performed. In certain situations, as described above, where permitted by state or provincial laws, we may post a surety bond as financial assurance for a certain amount of the preneed contract in lieu of placing funds into trust accounts. Alternatively, we may sell a life insurance or annuity policy from third-party insurance companies or use other non-insurance funded third-party providers.
Insurance and Other Funded Preneed Contracts
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 a 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 and other funded preneed contract amounts in our unaudited 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. In addition, we have shifted our non-funeral home preneed sales production strategy from trust to insurance-funded contracts.
The table below details our results of insurance-funded and other non-insurance funded third-party preneed production and maturities.
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Preneed insurance-funded: | |||||||||||||||||||||||
Sales production(1) | $ | 233.2 | $ | 214.3 | $ | 679.2 | $ | 603.3 | |||||||||||||||
Sales production (number of contracts)(1) | 45,164 | 41,617 | 133,814 | 118,797 | |||||||||||||||||||
| General agency revenue | $ | 77.5 | $ | 75.9 | $ | 223.1 | $ | 221.6 | |||||||||||||||
| Maturities | $ | 100.8 | $ | 95.5 | $ | 312.6 | $ | 303.4 | |||||||||||||||
| Maturities (number of contracts) | 15,950 | 15,438 | 49,802 | 48,944 | |||||||||||||||||||
| Other non-insurance funded third-party: | |||||||||||||||||||||||
Sales production(1) | $ | 11.7 | $ | 11.1 | $ | 36.1 | $ | 31.0 | |||||||||||||||
Sales production (number of contracts)(1) | 1,191 | 1,109 | 3,555 | 3,206 | |||||||||||||||||||
| Maturities | $ | 7.4 | $ | 7.2 | $ | 23.1 | $ | 22.7 | |||||||||||||||
| Maturities (number of contracts) | 770 | 704 | 2,377 | 2,297 | |||||||||||||||||||
(1) Amounts are not included in our unaudited Condensed Consolidated Balance Sheet.
Trust-Funded Preneed Contracts
The funds collected from customers are deposited into trusts as required by state or provincial law. We retain any funds above the amounts required to be deposited into trust accounts and use them for working capital purposes, generally to offset the selling and administrative costs of our preneed programs. Although this represents cash flow to us, the associated revenues are deferred until the merchandise is delivered or services are performed (typically at maturity). The funds in trust are then invested by professional money managers with oversight by independent trustees in accordance with state and provincial laws. As discussed above in Insurance and Other Funded Preneed Contracts, we have shifted our non-funeral home preneed sales production strategy from trust to insurance-funded contracts.
30 Service Corporation International
PART I
The tables below detail our results of preneed production and maturities, excluding insurance contracts:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Funeral: | |||||||||||||||||||||||
| Preneed trust-funded (including bonded): | |||||||||||||||||||||||
| Sales production | $ | 85.4 | $ | 80.5 | $ | 252.7 | $ | 262.8 | |||||||||||||||
| Sales production (number of contracts) | 13,379 | 12,775 | 39,065 | 45,226 | |||||||||||||||||||
| Maturities | $ | 107.1 | $ | 97.8 | $ | 320.6 | $ | 298.1 | |||||||||||||||
| Maturities (number of contracts) | 20,641 | 20,206 | 63,199 | 63,421 | |||||||||||||||||||
| Cemetery: | |||||||||||||||||||||||
| Sales production: | |||||||||||||||||||||||
| Preneed | $ | 370.2 | $ | 352.3 | $ | 1,126.9 | $ | 1,046.7 | |||||||||||||||
| Atneed | 105.4 | 104.9 | 325.3 | 326.6 | |||||||||||||||||||
| Total sales production | $ | 475.6 | $ | 457.2 | $ | 1,452.2 | $ | 1,373.3 | |||||||||||||||
| Sales production deferred to backlog: | |||||||||||||||||||||||
| Preneed | $ | 194.9 | $ | 188.3 | $ | 579.9 | $ | 521.8 | |||||||||||||||
| Atneed | 72.6 | 73.4 | 225.9 | 228.1 | |||||||||||||||||||
| Total sales production deferred to backlog | $ | 267.5 | $ | 261.7 | $ | 805.8 | $ | 749.9 | |||||||||||||||
| Revenue recognized from backlog: | |||||||||||||||||||||||
| Preneed | $ | 141.5 | $ | 135.5 | $ | 371.8 | $ | 345.8 | |||||||||||||||
| Atneed | 73.3 | 75.4 | 226.0 | 230.3 | |||||||||||||||||||
| Total revenue recognized from backlog | $ | 214.8 | $ | 210.9 | $ | 597.8 | $ | 576.1 | |||||||||||||||
Backlog of Preneed Contracts
The following table reflects our backlog of trust-funded deferred preneed contract revenue, including amounts related to Deferred receipts held in trust at September 30, 2026 and December 31, 2025. Additionally, the table reflects our backlog of unfulfilled insurance-funded contracts and other non-insurance funded third-party contracts (which are not included in our unaudited Condensed Consolidated Balance Sheet) at September 30, 2026 and December 31, 2025. The backlog amounts presented include amounts due from customers for undelivered performance obligations on cancelable preneed contracts to arrive at our total backlog of deferred revenue. The table does not include the backlog associated with businesses that are held for sale.
The table also reflects our preneed receivables and trust investments associated with the backlog of deferred preneed contract revenue including the amounts due from customers for undelivered performance obligations on cancelable preneed contracts. The table below is meaningful because it sets forth the aggregate amount of future revenue we expect to recognize as a result of preneed sales, as well as the amount of funds associated with this revenue. Because the future revenue exceeds the assets, future revenue will exceed the cash distributions actually received from the associated trusts and future collections from the customer.
FORM 10-Q 31
PART I
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Fair Value | Cost | Fair Value | Cost | ||||||||||||||||||||
| (In billions) | |||||||||||||||||||||||
| Deferred revenue, net | $ | 1.82 | $ | 1.82 | $ | 1.78 | $ | 1.78 | |||||||||||||||
| Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts | 1.00 | 1.00 | 1.01 | 1.01 | |||||||||||||||||||
| Deferred receipts held in trust | 6.05 | 5.13 | 5.78 | 4.83 | |||||||||||||||||||
| Allowance for cancellation on trust investments | (0.30) | (0.26) | (0.29) | (0.24) | |||||||||||||||||||
| Backlog of trust-funded deferred revenue, net of estimated allowance for cancellation | 8.57 | 7.69 | 8.28 | 7.38 | |||||||||||||||||||
Backlog of insurance and other funded deferred revenue(1) | 9.15 | 9.15 | 8.73 | 8.73 | |||||||||||||||||||
| Total backlog of deferred revenue | $ | 17.72 | $ | 16.84 | $ | 17.01 | $ | 16.11 | |||||||||||||||
| Preneed receivables, net and trust investments | $ | 7.59 | $ | 6.67 | $ | 7.36 | $ | 6.41 | |||||||||||||||
| Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts | 1.00 | 1.00 | 1.01 | 1.01 | |||||||||||||||||||
| Allowance for cancellation on trust investments | (0.30) | (0.26) | (0.29) | (0.24) | |||||||||||||||||||
| Assets associated with backlog of trust-funded deferred revenue, net of estimated allowance for cancellation | 8.29 | 7.41 | 8.08 | 7.18 | |||||||||||||||||||
Policies associated with insurance and other funded deferred revenue (1) | 9.15 | 9.15 | 8.73 | 8.73 | |||||||||||||||||||
| Total assets associated with backlog of preneed revenue | $ | 17.44 | $ | 16.56 | $ | 16.81 | $ | 15.91 | |||||||||||||||
(1) Amounts are not included in our unaudited Condensed Consolidated Balance Sheet.
The fair value of our trust investments was based on a combination of quoted market prices, observable inputs such as interest rates or yield curves, and appraisals. As of September 30, 2026, the difference between the backlog and total assets at fair value represents $0.16 billion related to contracts for which we have posted surety bonds as financial assurance in lieu of trusting, $1.45 billion collected from customers that were not required to be deposited into trusts, and $0.20 billion in allowable cash distributions from trust assets partially offset by $1.53 billion in amounts due on delivered property and merchandise. As of September 30, 2026, the fair value of the total backlog comprised $5.31 billion related to cemetery contracts and $12.41 billion related to funeral contracts. As of September 30, 2026, the fair value of the assets associated with the backlog of trust-funded deferred revenue comprised $5.31 billion related to cemetery contracts and $2.98 billion related to funeral contracts. As of September 30, 2026, the backlog of insurance-funded contracts of $9.15 billion was equal to the proceeds we expect to receive from the associated insurance policies when the corresponding contract is serviced by one of our operating locations.
Trust Investments
In addition to selling our products and services to client families at the time of need, we also enter into price-guaranteed preneed funeral and cemetery contracts, which provide for future funeral or cemetery merchandise and services. Since preneed funeral and cemetery merchandise or services will generally not be provided until sometime in the future, most states and provinces require that all or a portion of the funds collected from customers on preneed funeral and cemetery contracts be paid into trusts and/or escrow accounts until the merchandise is delivered or the service is performed. Investment earnings associated with the trust investments are expected to mitigate the inflationary costs of providing the preneed funeral and cemetery merchandise and services in the future at the prices that were guaranteed at the time of sale. Also, we are required by state and provincial law to pay a portion of the proceeds from the preneed or atneed sale of cemetery property interment rights into perpetual care trusts. For these investments, the original corpus generally remains in the trust in perpetuity and the earnings or elected distributions are withdrawn as allowed to defray the expenses to maintain the cemetery property. While many states require that net capital gains or losses be retained and added to the corpus, certain states allow the net realized capital gains and losses to be included in the earnings that are distributed. Additionally, some states allow a total return distribution that may contain elements of income, capital appreciation, and principal.
Independent trustees manage and invest the majority of the funds deposited into the funeral and cemetery merchandise and service trusts as well as the cemetery perpetual care trusts. The majority of the trustees are selected based on their respective geographic footprint and qualifications per state and provincial regulations. These trustees, with input from SCI's wholly-owned registered investment advisor, establish an investment policy that serves as an operating document to guide the investment activities of the trusts including asset allocation and manager selection. The investments are also governed by
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state and provincial guidelines. All of the trusts are intended to control risk and volatility through a combination of asset classes, investment styles, and a diverse mix of investment managers.
Asset allocation is based on the liability structure of each funeral, cemetery, and perpetual care trust. Based on the various criteria set forth in the investment policy, the investment advisor recommends investment managers to the trustees. The primary investment objectives for the funeral and cemetery merchandise and service trusts include 1) preserving capital within acceptable levels of volatility and risk and 2) achieving growth of principal over time sufficient to preserve and increase the purchasing power of the assets. Preneed funeral and cemetery contracts generally take several years to mature; therefore, the funds associated with these contracts are often invested through several market cycles.
Where allowed by state and provincial regulations, the cemetery perpetual care trusts’ primary investment objectives are growth-oriented to provide for a fixed distribution rate from the trusts’ assets. Where such distributions are limited to ordinary income, the cemetery perpetual care trusts’ investment objectives emphasize providing a steady stream of current investment income with some capital appreciation. Both types of distributions are used to provide for the current and future maintenance and beautification of the cemetery properties.
As of September 30, 2026, approximately 96% of our trusts were under the control and custody of five large financial institutions. The U.S. trustees primarily use five managed limited liability companies (LLCs), three for the merchandise and service trust type and two for the cemetery perpetual care trust type, with independent trustees as custodians. Each financial institution acting as trustee, manages its allocation of trust assets in accordance with the investment policy through the purchase of the appropriate LLCs' units. For those accounts not eligible for participation in the LLCs or where a particular state's regulations contain other investment restrictions, the trustee utilizes institutional mutual funds that comply with our investment policy or with such state restrictions. The U.S. trusts include a modest allocation to alternative investments. These alternative investments are held in vehicles structured as LLCs and are managed by certain trustees. The trusts that are eligible to allocate a portion of their investments to alternative investments purchase units of the respective alternative investment LLCs.
Investment Structures
The managed LLCs use the following structures for investments:
Commingled funds allow the trusts to access, at a reduced cost, some of the same investment managers and strategies used elsewhere in the portfolios.
Separately managed accounts are trusts that utilize separately managed accounts, where appropriate, to reduce the costs to the investment portfolios.
Mutual funds employ institutional share class mutual funds where operationally or economically efficient. These mutual funds are utilized to invest in various asset classes including U.S. equities, non-U.S. equities, corporate bonds, government bonds, high yield bonds, and commodities, all of which are governed by guidelines outlined in their individual prospectuses.
Asset Classes
Equity investments have historically provided long-term capital appreciation in excess of inflation. The trusts have direct investments in individual equity securities primarily in domestic equity portfolios that include large, mid, and small capitalization companies of different investment styles (i.e., growth and value). The majority of the equity allocation is managed by institutional investment managers that specialize in an objective-specific area of expertise. Our equity securities are exposed to market risk; however, we believe these securities are well-diversified. As of September 30, 2026, the largest single equity position represented approximately 1.3% of the total securities portfolio.
Fixed income investments are intended to preserve principal, provide a source of current income, and reduce overall portfolio volatility. The majority of the fixed income allocation for the trusts is invested in institutional share class mutual funds. Where the trusts have direct investments in individual fixed income securities, these are primarily in government and corporate instruments.
Canadian government fixed income securities are investments in Canadian federal and provincial government instruments. In many cases, regulatory restrictions mandate that the funds from the sales of preneed funeral and cemetery contracts sold in certain Canadian jurisdictions must be invested in these instruments.
Alternative investments serve to provide high rates of return with reduced volatility and lower correlation to publicly-traded securities. These investments are typically longer term in duration and are diversified by strategy, sector, manager, geography, and vintage year. The investments consist of numerous limited partnerships invested in private equity, private market real estate, energy and natural resources, infrastructure, transportation, and private debt including both distressed debt and mezzanine financing. The trustees that have oversight of their respective alternative LLCs work closely with the investment advisor in making all investment decisions.
FORM 10-Q 33
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Trust Performance
During the nine months ended September 30, 2026, the Standard and Poor’s 500 Index increased 12.8% and the Bloomberg’s US Aggregate Bond Index decreased 2.9%. This compares to the SCI trusts that increased 6.2% during the same period. The SCI trusts have a diversified allocation of approximately 60% equities, 26% fixed income securities, 10% alternative and other investments with the remaining 4% available in money market funds.
Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $181.6 million and $146.9 million for the nine months ended September 30, 2026 and 2025, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $99.1 million and $80.8 million for the nine months ended September 30, 2026 and 2025, respectively.
SCI, the trustees, and the investment advisor monitor the capital markets and the trusts on an on-going basis. The trustees, with input from the investment advisor, take prudent action as needed to achieve the investment goals and objectives of the trusts.
Results of Operations — Three and Nine months ended September 30, 2026 and 2025
Three Months Ended September 30, 2026 and 2025
Management Summary
In the third quarter of 2026, we reported consolidated net income attributable to common stockholders of $141.3 million ($1.03 per diluted share) compared to net income attributable to common stockholders in the third quarter of 2025 of $117.5 million ($0.83 per diluted share). These results were impacted by certain items including:
| Three months ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In millions) | |||||||||||
| Pre-tax gains (losses) on divestitures and impairment charges, net | $ | 11.2 | $ | (0.4) | |||||||
| Pre-tax restructuring charge | $ | — | $ | (0.4) | |||||||
| Tax effect from significant items | $ | (2.7) | $ | 0.1 | |||||||
| Change in non-recurring tax items | $ | 0.2 | $ | (4.5) | |||||||
In addition to the above items, the increase was due to higher funeral and cemetery gross profit combined with lower corporate general and administrative expenses and a lower share count over prior-year quarter. This increase was offset by higher healthcare costs, selling compensation, and costs associated with targeted sales initiatives supporting our higher preneed production.
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Funeral Results
| Three months ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (Dollars in millions, except average revenue per service) | |||||||||||||||||
| Consolidated funeral revenue | $ | 602.6 | $ | 574.1 | |||||||||||||
| Less: revenue associated with acquisitions/new construction | 14.2 | 3.5 | |||||||||||||||
| Less: revenue associated with divestitures | 0.2 | 1.1 | |||||||||||||||
Comparable(1) funeral revenue | 588.2 | 569.5 | |||||||||||||||
| Less: non-funeral home preneed sales revenue | 20.7 | 22.4 | |||||||||||||||
| Less: core general agency and other revenue | 63.8 | 56.7 | |||||||||||||||
| Adjusted comparable funeral revenue | $ | 503.7 | $ | 490.4 | |||||||||||||
| Comparable services performed | 83,638 | 83,686 | |||||||||||||||
Comparable average revenue per service(2) | $ | 6,022 | $ | 5,860 | |||||||||||||
| Consolidated funeral gross profit | $ | 104.9 | $ | 99.6 | |||||||||||||
| Less: gross profit associated with acquisitions/new construction | 1.6 | — | |||||||||||||||
| Less: gross losses associated with divestitures | (0.5) | (0.6) | |||||||||||||||
Comparable(1) funeral gross profit | $ | 103.8 | $ | 100.2 | |||||||||||||
(1) We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2025 and ending September 30, 2026.
(2) We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding general agency revenue, non-funeral home preneed sales revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of funeral services performed during the period.
Funeral Revenue
Consolidated revenue from funeral operations was $602.6 million for the three months ended September 30, 2026 compared to $574.1 million for the same period in 2025. This $28.5 million increase is primarily attributable to an $18.7 million increase in comparable revenue and a $10.7 million increase in revenue from acquired and newly constructed properties, partially offset by a $0.9 million decrease in revenue associated with divested properties.
Comparable revenue from funeral operations was $588.2 million for the three months ended September 30, 2026 compared to $569.5 million for the same period in 2025. This $18.7 million, or 3.3%, increase was due to a $13.3 million increase in adjusted comparable funeral revenue and a $7.1 million increase in core general agency and other revenue, partially offset by a $1.7 million decrease in non-funeral home preneed sales revenue.
Adjusted comparable funeral revenue increased $13.3 million due to a 2.8% increase in comparable average revenue per service, partially offset by a 0.1% decrease in comparable funeral services performed. The total comparable cremation rate increased by 60 basis points to 65.0%.
Non-funeral home preneed sales revenue decreased $1.7 million, primarily due to a reduction in general agency revenue. While non-funeral home insurance sales production increased 9.3%, a lower general agency commission rate impacted revenue quarter over quarter.
Core general agency and other revenue grew $7.1 million. Core general agency revenue benefited from higher insurance sales production partially offset by a slightly lower general agency commission rate quarter over quarter. The current commission rate is generally stable and is trending in line with expectations.
Funeral Gross Profit
Consolidated funeral gross profit increased $5.3 million, or 5.3%, for the three months ended September 30, 2026 compared to the same period in 2025, primarily attributable to a $3.6 million, or 3.6%, increase in comparable funeral gross profit and a $1.6 million increase in gross profit contributed by newly constructed and acquired properties. Comparable funeral gross profit increased from $100.2 million to $103.8 million, and the comparable gross profit percentage was 17.6% in both periods. Comparable funeral revenue increased $18.7 million which was partially offset by higher selling compensation and higher advertising and marketing expenditures supporting preneed sales production. In addition, we experienced an increase in health insurance expense.
FORM 10-Q 35
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Cemetery Results
| Three months ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (In millions) | |||||||||||||||||
| Consolidated cemetery revenue | $ | 504.6 | $ | 484.0 | |||||||||||||
| Less: revenue associated with acquisitions/new construction | 1.2 | — | |||||||||||||||
Comparable(1) cemetery revenue | $ | 503.4 | $ | 484.0 | |||||||||||||
| Consolidated cemetery gross profit | $ | 167.4 | $ | 165.9 | |||||||||||||
| Less: gross profit (losses) associated with acquisitions/new construction | 0.3 | (0.1) | |||||||||||||||
Comparable(1) cemetery gross profit | $ | 167.1 | $ | 166.0 | |||||||||||||
(1) We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2025 and ending September 30, 2026.
Cemetery Revenue
Consolidated revenue from our cemetery operations increased $20.6 million, or 4.3%, for the three months ended September 30, 2026 compared to the same period in 2025 primarily due to a $19.4 million increase in comparable cemetery revenue and a $1.2 million increase in revenue contributed by newly constructed and acquired properties.
Comparable cemetery revenue increased $19.4 million, or 4.0%, for the three months ended September 30, 2026 primarily due to higher comparable core revenue of $11.9 million and higher comparable other revenue of $7.5 million. The comparable core revenue increase of $11.9 million was primarily due to a $13.6 million, or 4.0%, increase in total recognized preneed revenue from higher property and merchandise and service revenue. This includes the benefit of increased trust fund income. Additionally, recognized preneed cemetery property revenue grew 1.2%, while preneed property sales production increased 4.2%. This dynamic puts near-term pressure on cemetery gross margins but builds the backlog of revenue to be recognized in future periods.
Other revenue was $7.5 million, or 19.7%, higher compared to the prior-year quarter, primarily due to an increase in endowment care trust fund income based on market performance and higher total return distributions.
Cemetery Gross Profit
Consolidated cemetery gross profit increased $1.5 million, or 0.9%, in the three months ended September 30, 2026 compared to the same period in 2025, which is primarily attributable to a $1.1 million increase in comparable cemetery gross profit. Comparable cemetery gross profit increased $1.1 million to $167.1 million. The gross profit percentage decreased from 34.3% to 33.2%. Comparable cemetery revenue increased $19.4 million which was largely offset by higher selling compensation and higher advertising and marketing expenditures supporting preneed sales production. Changes to our sales compensation structure, which increased guaranteed hourly wages, resulted in a higher selling compensation rate. In addition, this resulted in more selling costs being recognized in the current period rather than deferred, which will reduce selling compensation expense recognized in subsequent periods. We also experienced an increase in health insurance expense. While these elevated costs are pressuring cemetery gross margins, the growth in preneed sales production continues to strengthen our backlog with high quality deferred property, merchandise and service revenue, which will benefit future periods.
Other Financial Statement Items
Corporate General and Administrative Expenses
Corporate general and administrative expenses decreased $7.7 million to $30.6 million in the third quarter of 2026 compared to the third quarter of 2025 of $38.3 million. The decrease was driven primarily by lower long-term incentive compensation expense tied to total shareholder return and a favorable legal settlement.
Gains (losses) on Divestitures and Impairment Charges, Net
Gains (losses) on divestitures and impairment charges, net increased to $11.2 million in the third quarter of 2026 due to non-strategic asset divestitures of excess land compared to a $0.4 million net pre-tax loss in the third quarter of 2025.
Interest Expense
Interest expense decreased $0.7 million to $65.0 million for the three months ended September 30, 2026 due to lower rates on floating rate debt more than offsetting higher balances.
FORM 10-Q 36
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Provision for Income Taxes
Our effective tax rate was 25.1% and 26.9% for the three months ended September 30, 2026 and 2025, respectively. The higher effective tax rate in the prior period was primarily due to a change in estimate recorded in the prior year related to the finalization of the 2024 tax return. The effective tax rate was higher than the federal statutory tax rate of 21.0% primarily due to state and foreign taxes.
Weighted Average Shares
The diluted weighted average number of shares outstanding was 137.2 million for the three months ended September 30, 2026 compared to 141.4 million for the same period in 2025. The decrease primarily reflects the impact of shares repurchased under our share repurchase program.
Nine Months Ended September 30, 2026 and 2025
Management Summary
In the first nine months of 2026, we reported consolidated net income attributable to common stockholders of $401.9 million ($2.90 per diluted share) compared to net income attributable to common stockholders for the same period in 2025 of $383.2 million ($2.68 per diluted share). These results were impacted by certain items including:
| Nine months ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In millions) | |||||||||||
| Pre-tax gains on divestitures and impairment charges, net | $ | 12.3 | $ | 8.6 | |||||||
| Pre-tax legal settlements | $ | — | $ | (6.4) | |||||||
Pre-tax restructuring charge | $ | — | $ | (2.0) | |||||||
| Tax effect from significant items | $ | (3.0) | $ | (0.3) | |||||||
| Change in non-recurring tax items | $ | (0.1) | $ | (4.5) | |||||||
In addition to the above items, lower funeral gross profit resulting from lower funeral volumes during the year was more than offset by higher cemetery gross profit combined with lower corporate general and administrative expenses, lower share count, and a favorable tax rate.
FORM 10-Q 37
PART I
Funeral Results
| Nine months ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (Dollars in millions, except average revenue per service) | |||||||||||||||||
| Consolidated funeral revenue | $ | 1,838.0 | $ | 1,804.9 | |||||||||||||
| Less: revenue associated with acquisitions/new construction | 36.2 | 6.3 | |||||||||||||||
| Less: revenue associated with divestitures | 0.9 | 4.0 | |||||||||||||||
Comparable(1) funeral revenue | 1,800.9 | 1,794.6 | |||||||||||||||
| Less: non-funeral home preneed sales revenue | 63.9 | 70.9 | |||||||||||||||
| Less: core general agency and other revenue | 177.2 | 170.5 | |||||||||||||||
| Adjusted comparable funeral revenue | $ | 1,559.8 | $ | 1,553.2 | |||||||||||||
| Comparable services performed | 260,225 | 267,327 | |||||||||||||||
Comparable average revenue per service(2) | $ | 5,994 | $ | 5,810 | |||||||||||||
| Consolidated funeral gross profit | $ | 349.2 | $ | 369.6 | |||||||||||||
| Less: gross profit (losses) associated with acquisitions/new construction | 4.1 | (0.3) | |||||||||||||||
| Less: gross losses associated with divestitures | (1.4) | (2.5) | |||||||||||||||
Comparable(1) funeral gross profit | $ | 346.5 | $ | 372.4 | |||||||||||||
(1) We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2025 and ending September 30, 2026.
(2) We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding general agency revenue, non-funeral home preneed sales revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of funeral services performed during the period.
Funeral Revenue
Consolidated revenue from funeral operations was $1,838.0 million for the nine months ended September 30, 2026, compared to $1,804.9 million for the same period in 2025. This $33.1 million increase in revenue is primarily attributable to a $29.9 million increase in revenue contributed by newly constructed and acquired properties and a $6.3 million increase in comparable revenue, partially offset by a $3.1 million decrease in revenue related to divested properties.
Comparable revenue from funeral operations was $1,800.9 million for the nine months ended September 30, 2026 compared to $1,794.6 million for the same period in 2025. The $6.3 million, or 0.4%, increase was due to a $6.7 million increase in core general agency and other revenue, a $6.6 million increase in adjusted comparable funeral revenue, both partially offset by a $7.0 million decrease in non-funeral home preneed sales revenue.
Adjusted comparable funeral revenue increased $6.6 million, or 0.4%, primarily due to a 3.2% increase in comparable average revenue per service, partially offset by a 2.7% decrease in comparable funeral services performed. The total comparable cremation rate slightly increased 70 basis points over the prior year to 64.9%.
Non-funeral home preneed sales revenue decreased $7.0 million, primarily due to an operational shift to defer the delivery of urns on preneed contracts to the time of need. This transition was completed late in 2025, and this decrease is short-term in nature as we will recognize deferred urn revenue from the backlog at the time of need as revenue in future periods. This can be seen as our comparable non-funeral home average revenue per service increased 9.0% over the prior year.
Core general agency and other revenue increased $6.7 million. Core general agency revenue benefited from higher insurance sales production partially offset by a lower general agency commission rate year over year. The current commission rate is generally stable and is trending in line with expectations.
Funeral Gross Profit
Consolidated funeral gross profit decreased $20.4 million, or 5.5%, in the first nine months of 2026 compared to the same period in 2025. This decrease is primarily attributable to a $25.9 million, or 7.0%, decrease in comparable funeral gross profit, partially offset by a $4.4 million increase in gross profit contributed by acquired and newly constructed properties and a $1.1 million increase in gross profit related to divested properties. Comparable funeral gross profit decreased $25.9 million to $346.5 million, and the comparable gross profit percentage declined from 20.8% to 19.2%. The decline primarily reflects lower funeral volumes, combined with increases in our fixed-cost operating structure. Higher selling compensation and higher advertising and marketing expenditures supporting preneed sales production also contributed to the decline. In addition, we experienced an increase in health insurance expense.
FORM 10-Q 38
PART I
Cemetery Results
| Nine months ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (In millions) | |||||||||||||||||
| Consolidated cemetery revenue | $ | 1,469.0 | $ | 1,392.8 | |||||||||||||
| Less: revenue associated with acquisitions/new construction | 3.2 | — | |||||||||||||||
| Less: revenue associated with divestitures | — | 0.1 | |||||||||||||||
Comparable(1) cemetery revenue | $ | 1,465.8 | $ | 1,392.7 | |||||||||||||
| Consolidated cemetery gross profit | $ | 483.0 | $ | 458.8 | |||||||||||||
| Less: gross profit (loss) associated with acquisitions/new construction | 1.3 | (0.2) | |||||||||||||||
| Less: gross profit associated with divestitures | — | 0.1 | |||||||||||||||
Comparable(1) cemetery gross profit | $ | 481.7 | $ | 458.9 | |||||||||||||
(1) We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2025 and ending September 30, 2026.
Cemetery Revenue
Consolidated revenue from our cemetery operations increased $76.2 million, or 5.5%, in the nine months ended September 30, 2026 compared to the same period in 2025, primarily due to a $73.1 million, or 5.2%, increase in comparable cemetery revenue and a $3.2 million increase in revenue contributed by acquired and newly constructed properties.
The $73.1 million increase in comparable cemetery revenue was attributable to a $51.5 million increase in comparable cemetery core revenue and an increase in other revenue of $21.6 million. The increase in core revenue was primarily due to a $57.3 million increase in recognized preneed revenue, partially offset by a $5.7 million decrease in atneed revenue. Additionally, recognized preneed cemetery property revenue grew 4.4%, while preneed property sales production increased 7.1%. This dynamic puts near-term pressure on cemetery gross margins but builds the backlog of revenue to be recognized in future periods.
Cemetery Gross Profit
Consolidated cemetery gross profit increased $24.2 million, or 5.3%, in the nine months ended September 30, 2026 compared to the same period in 2025. This increase is primarily attributable to a $22.8 million increase in comparable cemetery gross profit and a $1.5 million increase in gross profit contributed by newly constructed and acquired properties. Comparable cemetery gross profit increased from $458.9 million to $481.7 million, and the gross profit percentage slightly decreased from 33.0% to 32.9% primarily due to the growth in core revenue mentioned above, partially offset by the impact of higher selling compensation and higher advertising and marketing expenditures supporting preneed sales production. In addition, we experienced an increase in health insurance expense.
Other Financial Statement Items
Corporate General and Administrative Expenses
Corporate general and administrative expenses decreased $16.2 million to $116.3 million for the nine months ended September 30, 2026. Of the decrease, $6.4 million was due to the settlement of certain legal matters in prior year, with the remainder primarily due to favorable adjustments to self-insurance actuarial reserves for workers’ compensation, general liability and auto based on improved claims experience.
Gains (losses) on Divestitures and Impairment Charges, Net
Gains (losses) on divestitures and impairment charges, net increased to $12.3 million in the nine months ended September 30, 2026 due to non-strategic asset divestitures of excess land compared to an $8.6 million net pre-tax gain in the nine months ended September 30, 2025.
Interest Expense
Interest expense increased $2.5 million to $193.7 million for the nine months ended September 30, 2026 primarily due to higher average debt outstanding, partially offset by lower interest rates on our floating-rate debt. During the nine months ended September 30, 2026, our floating-rate debt carried a weighted average rate of 4.1%, which is over 230 basis points lower than the weighted average rate for our floating rate debt in the prior year.
FORM 10-Q 39
PART I
Other Income, Net
Other income, net decreased $5.0 million to $2.2 million for the nine months ended September 30, 2026 primarily due to the change in foreign currency exchange rates and lower investment income compared to the prior year.
Provision for Income Taxes
Our effective tax rate was 25.1% and 26.1% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in the effective tax rate in the current period was primarily due to a change in estimate recorded in the prior year related to the finalization of the 2024 tax return. The effective tax rate was higher than the federal statutory tax rate of 21.0% primarily due to state and foreign taxes.
Weighted Average Shares
The diluted weighted average number of shares outstanding was 138.5 million for the nine months ended September 30, 2026 compared to 143.2 million for the same period in 2025. The decrease primarily reflects the impact of shares repurchased under our share repurchase program.
Critical Accounting Policies, Recent Accounting Pronouncements, and Accounting Changes
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Although we base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, actual results may differ from the estimates on which our financial statements are prepared at any given point of time. Changes in these estimates could materially affect our consolidated financial position, consolidated results of operations, or cash flows. Significant items that are subject to such estimates and assumptions include revenue and expense accruals, fair value of merchandise and perpetual care trust assets, and the allocation of purchase price to the fair value of assets acquired. Our critical accounting policies have not significantly changed since December 31, 2025 and are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements and Accounting Changes
For discussion of recent accounting pronouncements and accounting changes, see Part I, Item 1. Financial Statements, Note 2 of this Form 10-Q.
Cautionary Statement on Forward-Looking Statements
The statements in this Form 10-Q that are not historical facts are forward-looking statements made in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. These statements may be accompanied by words such as “believe”, “estimate”, “project”, “expect”, “anticipate”, or “predict” that convey the uncertainty of future events or outcomes. These statements are based on assumptions that we believe are reasonable; however, many important factors could cause our actual consolidated results in the future to differ materially from the forward-looking statements made herein and in any other documents or oral presentations made by, or on behalf of, the Company. These factors are discussed below. Except as required by applicable law, we assume no obligation and make no undertaking to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the Company, whether as a result of new information, future events, or otherwise.
•Our affiliated 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.
•We may be adversely affected by the effects of inflation.
•Our results may be adversely affected by significant weather events, natural disasters, catastrophic events or public health crises.
•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 activities, we may be required to make material cash payments to fund certain trust funds.
•The financial condition of third-party insurance companies that fund our preneed contracts may impact our future revenue.
FORM 10-Q 40
PART I
•Unfavorable publicity could affect our reputation and business.
•Our failure to attract and retain qualified sales personnel and licensed funeral professionals could have an adverse effect on our business and financial condition.
•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.
•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 protect personal 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.
•A failure of a key information technology system or process could disrupt and adversely affect our business.
•Our Canadian business exposes us to operational, economic, and currency risks.
•Our level of indebtedness could adversely affect our cash flows, 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.
•The funeral and cemetery industry is competitive.
•If the number of deaths in our markets declines, our cash flows and revenue may decrease. Changes in the number of deaths are not predictable from market to market or over the short term.
•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 life expectancy and an increase in the number of cremations performed in North America could result in lower revenue, operating profit, and cash flows.
•Our funeral and cemetery businesses are high fixed-cost businesses.
•Risks associated with our supply chain, such as tariffs, could materially adversely affect our financial performance.
•Regulation and compliance could have a material adverse impact on our financial results.
•Unfavorable results of litigation could have a material adverse impact on our financial statements.
•Cemetery burial practice claims could have a material adverse impact on our financial results.
•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 financial results.
•Changes in taxation, or the interpretation of tax laws or regulations, 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.
For further information on these and other risks and uncertainties, see our Securities and Exchange Commission filings, including our 2025 Annual Report on Form 10-K. Copies of this document as well as other SEC filings can be obtained from our website at www.sci-corp.com.
FORM 10-Q 41
PART I
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term “market” risk refers to the risk of gains or losses arising from changes in interest rates and prices of marketable securities. The disclosures are not meant to be precise indicators of expected future gains or losses, but rather indicators of reasonably possible gains or losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk-sensitive instruments were entered into for purposes other than trading.
Marketable Equity and Debt Securities — Price Risk
In connection with our preneed funeral operations and preneed cemetery merchandise and service sales, the related funeral and cemetery trust funds own investments in equity and debt securities and mutual funds, which are sensitive to current market prices.
Cost and market values as of September 30, 2026 are presented in Part I, Item 1. Financial Statements, Note 3 of this Form 10-Q. Also, see "Trust Investments" in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations "Financial Condition, Liquidity, and Capital Resources" section for discussion of trust investments.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As of September 30, 2026, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the Securities and Exchange Commission (SEC) reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time period specified by the SEC’s rules and forms and that such information is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on our evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective as of September 30, 2026 and that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our consolidated financial condition, consolidated results of operations, and cash flows for the periods presented in conformity with US GAAP.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
42 Service Corporation International
PART II. OTHER INFORMATION | ||
Item 1. Legal Proceedings
Information regarding legal proceedings is set forth in Part I, Item 1. Financial Statements, Note 9 of this Form 10-Q, which information is hereby incorporated by reference herein.
Item 1A. Risk Factors
There have been no material changes in our Risk Factors as set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes our share repurchases during the three months ended September 30, 2026:
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program | ||||||||||||||||||||||
July 1, 2026 — July 31, 2026 (1) | 336,632 | $ | 78.41 | 336,435 | $ | 541,158,593 | ||||||||||||||||||||
August 1, 2026 — August 31, 2026 (2) | 122,337 | $ | 83.78 | 121,704 | $ | 530,909,964 | ||||||||||||||||||||
September 1, 2026 — September 30, 2026 (3) | 199,491 | $ | 79.80 | 198,188 | $ | 498,799,601 | ||||||||||||||||||||
| 656,327 | ||||||||||||||||||||||||||
(1) 197 shares were purchased in July 2026 in connection with the surrender of shares by associates to satisfy certain tax withholding obligations under compensation plans. These repurchases were not part of our publicly announced program and do not affect our share repurchase program.
(2) 633 shares were purchased in August 2026 in connection with the surrender of shares by associates to satisfy certain tax withholding obligations under compensation plans. These repurchases were not part of our publicly announced program and do not affect our share repurchase program.
(3) September 2026 includes a reduction to the approximate dollar value of shares that may yet be purchased under the program of approximately $16.4 million in connection with a return of shares from our deferred compensation plan. Additionally, 1,303 shares were purchased in September 2026 in connection with the surrender of shares by associates to satisfy certain tax withholding obligations under compensation plans. These repurchases were not part of our publicly announced program and do not affect our share repurchase program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) Not applicable.
(b) Not applicable.
FORM 10-Q 43
PART II
(c) During the three months ended September 30, 2026, no director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits
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| 101 | — | Interactive data file formatted Inline XBRL. | |||||||||
| 104 | — | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||
44 Service Corporation International
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| October 29, 2026 | SERVICE CORPORATION INTERNATIONAL | |||||||
| By: | /s/ TAMMY MOORE | |||||||
Tammy Moore Vice President and Chief Accounting Officer (Principal Accounting Officer) | ||||||||
FORM 10-Q 45
Exhibit 10.3
Service Corporation International
Deferred Compensation Plan
Amended and Restated Effective August 4, 2026
TABLE OF CONTENTS
Page
ARTICLE 2 Selection, Enrollment, Eligibility 9
2.1 Selection by Committee 9
2.2 Enrollment and Eligibility Requirements; Commencement of Participation 10
ARTICLE 3 Deferral Commitments/Company Contribution Amounts Company Restoration Matching Amounts/Vesting/Crediting/Taxes 10
3.1 Annual Deferral Amount 10
3.2 Timing of Deferral Elections; Effect of Election Form 11
3.3 Withholding and Crediting of Annual Deferral Amounts 12
3.4 Company Contribution Amount 13
3.5 Company Restoration Matching Amount 13
3.6 Vesting 14
3.7 Crediting/Debiting of Account Balances 15
3.8 Automatic Changes in Investment for Stock Award Accounts and RSU Award Accounts 16
3.9 Distributions from Stock Award Accounts and RSU Award Accounts. Distributions from a Participant’s Stock Award Unit Account shall be made in the form of shares of the Company’s common stock for each Stock Award Unit or RSU Award Unit, as applicable, which shares shall be issued pursuant to the Incentive Plan’s terms 17
3.10 FICA and Other Taxes 17
ARTICLE 4 Scheduled Distribution; Unforeseeable Emergencies 18
4.1 Scheduled Distributions 18
4.2 Postponing Scheduled Distributions 18
4.3 Other Benefits Take Precedence Over Scheduled Distributions 19
4.4 Unforeseeable Emergencies 19
ARTICLE 5 Change in Control Benefit 19
5.1 Change in Control Benefit 19
5.2 Payment of Change in Control Benefit 20
ARTICLE 6 Retirement Benefit 20
6.1 Retirement Benefit 20
6.2 Payment of Retirement Benefit 20
ARTICLE 7 Termination Benefit 21
7.1 Termination Benefit 21
7.2 Payment of Termination Benefit 21
ARTICLE 8 Disability Benefit 22
8.1 Disability Benefit 22
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8.2 Payment of Disability Benefit 22
ARTICLE 9 Death Benefit 23
9.1 Death Benefit 23
9.2 Payment of Death Benefit 23
ARTICLE 10 Director Deferred Units 23
10.1 General 23
10.2 Deferral of Unit Awards 23
10.3 Automatic Changes in Investment 26
10.4 Elective Change in Investment 26
ARTICLE 11 Beneficiary Designation 26
11.1 Beneficiary 26
11.2 Beneficiary Designation; Change; Spousal Consent 26
11.3 Acknowledgment 27
11.4 No Beneficiary Designation 27
11.5 Doubt as to Beneficiary 27
11.6 Discharge of Obligations 27
ARTICLE 12 Leave of Absence 27
12.1 Paid Leave of Absence 27
12.2 Unpaid Leave of Absence 27
ARTICLE 13 Termination of Plan, Amendment or Modification 27
13.1 Termination of Plan 27
13.2 Amendment 28
13.3 Plan Agreement 28
13.4 Effect of Payment 28
ARTICLE 14 Administration 28
14.1 Committee Duties 28
14.2 Administration Upon Change in Control 29
14.3 Agents 29
14.4 Binding Effect of Decisions 29
14.5 Indemnity of Committee 29
14.6 Employer Information 29
ARTICLE 15 Other Benefits and Agreements 29
15.1 Coordination with Other Benefits 29
ARTICLE 16 Claims Procedures 30
16.1 Presentation of Claim 30
16.2 Notification of Decision 30
16.3 Review of a Denied Claim 31
16.4 Decision on Review 31
ii
16.5 Legal Action 31
ARTICLE 17 Trust 31
17.1 Establishment of the Trust 31
17.2 Interrelationship of the Plan and the Trust 32
17.3 Distributions From the Trust 32
ARTICLE 18 Miscellaneous 32
18.1 Status of Plan 32
18.2 Unsecured General Creditor 32
18.3 Employer’s Liability 32
18.4 Nonassignability 32
18.5 Not a Contract of Employment 33
18.6 Furnishing Information 33
18.7 Terms 33
18.8 Captions 33
18.9 Governing Law 33
18.10 Notice 33
18.11 Successors 34
18.12 Spouse’s Interest 34
18.13 Validity 34
18.14 Incompetent 34
18.15 Domestic Relations Orders 34
18.16 Distribution in the Event of Income Inclusion Under Code Section 409A 34
iii
SERVICE CORPORATION INTERNATIONAL
Deferred Compensation Plan
Amended and Restated August 4, 2026
Purpose
The Plan was originally adopted effective as of January 1, 2005. The purpose of this Plan is to provide specified benefits to Directors and a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of Service Corporation International, a Texas corporation, and its subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.
The Plan has been previously amended and restated in its entirety to (i) comply with all applicable laws, including Code Section 409A and related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with this intention; (ii) to permit participation by members of the Company’s Board of Directors, and (iii) to provide for administration of deferrals pursuant to the Service Corporation International Amended and Restated Director Fee Plan (the “Director Plan”), which had been consolidated with and into the Service Corporation International Amended and Restated 2016 Equity Incentive Plan.
Effective August 4, 2026, the Plan will be amended and restated to (i) consolidate the Director Plan with and into the Plan, and (ii) make certain additional changes to clarify the Plan’s terms.
ARTICLE 1
Definitions
Definitions
For the purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:
1.1.“Account Balance” shall mean, with respect to a Participant, an entry on the records of the Employer equal to the sum of the Participant’s Annual Accounts. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
If a Participant is both an Employee and a Director and participates in the Plan in each capacity, then separate Account Balances (and separate Annual Accounts, if applicable) shall be established for such Participant as a device for the measurement and determination of the (i) amounts deferred under the Plan that are attributable to the Participant’s status as an Employee, and (ii) amounts deferred under the Plan that are attributable to the Participant’s status as a Director.
1.2.“Annual Account” shall mean, with respect to a Participant, an entry on the records of the Employer equal to (i) the sum of the Participant’s Annual Deferral Amount, Company Contribution Amount and Company Restoration Matching Amount for any one Plan Year, plus (ii) amounts credited or debited to such amounts pursuant to this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Annual Account for such Plan Year. The Annual Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan. The distribution elections made for a Participant’s Annual Account for each Plan Year shall apply until such elections are changed pursuant to Sections 4.2, 6.2(b), 7.2(b) or 8.2, as applicable.
1.3.“Annual Deferral Amount” shall mean that portion of a Participant’s Base Salary, Bonus, Director Fees, LTIP Amounts, RSU Awards and Stock Awards that a Participant defers in accordance with Article 3 for any one Plan Year, without regard to whether such amounts are withheld and credited during such Plan Year.
1.4.“Annual Installment Method” shall mean the method used to determine the amount of each payment due to a Participant who has elected to receive a benefit over a period of years in accordance with the applicable provisions of the Plan. The amount of each annual payment due to the Participant shall be calculated by multiplying the balance of the Participant’s benefit by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due to the Participant. The amount of the first annual payment shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date, and the amount of each subsequent annual payment shall be calculated on or around each anniversary of such Benefit Distribution Date. For purposes of this Plan, the right to receive a benefit payment in annual installments shall be treated as the entitlement to a single payment.
1.5.“Base Salary” shall mean the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, director fees and other fees, and automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee’s gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Employee.
1.6.“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 11, that are entitled to receive benefits under this Plan upon the death of a Participant.
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1.7.“Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.
1.8.“Benefit Distribution Date” shall mean the date upon which all or an objectively determinable portion of a Participant’s vested benefits will become eligible for distribution. Except as otherwise provided in the Plan, a Participant’s Benefit Distribution Date shall be determined based on the earliest to occur of an event or scheduled date set forth in Articles 4 through 10, as applicable.
1.9.“Board” shall mean the board of directors of the Company.
1.10.“Bonus” shall mean any compensation, in addition to Base Salary, and LTIP Amounts, earned by a Participant under any Employer’s annual bonus and cash incentive plans.
1.11.“Change in Control” shall mean the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, as determined in accordance with this Section. In order for an event described below to constitute a Change in Control with respect to a Participant, except as otherwise provided in Subsection (b)(ii), the applicable event must relate to the corporation for which the Participant is providing services, the corporation that is liable for payment of the Participant’s Account Balance (or all corporations liable for payment if more than one), as identified by the Committee in accordance with Treas. Reg. § 1.409A-3(i)(5)(ii)(A)(2), or such other corporation identified by the Committee in accordance with Treas. Reg. § 1.409A-3(i)(5)(ii)(A)(3).
In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, the following provisions shall apply:
(a)A “change in the ownership” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of such corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. § 1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of such corporation, or to have effective control of such corporation within the meaning of Subsection (b), and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of such corporation.
(b)A “change in the effective control” of the applicable corporation shall occur on either of the following dates:
(i)The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of such corporation possessing 30% or more of the total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. § 1.409A-3(i)(5)(vi). If a person or group is considered to possess
3
30% or more of the total voting power of the stock of a corporation, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of such corporation; or
(ii)The date on which a majority of the members of the applicable corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such corporation’s board of directors before the date of the appointment or election, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi). In determining whether the event described in the preceding sentence has occurred, the applicable corporation to which the event must relate shall only include a corporation identified in accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder.
(c)A “change in the ownership of a substantial portion of the assets” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the transferor corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B).
1.12.“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.
1.13.“Committee” shall mean the committee described in Article 14.
1.14.“Company” shall mean Service Corporation International, a Texas corporation, and any successor to all or substantially all of the Company’s assets or business.
1.15.“Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.4.
1.16.“Company Restoration Matching Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.5.
1.17.“Death Benefit” shall have the meaning provided in Section 9.1.
1.18.“Director” shall mean any member of the board of directors of any Employer who is not an Employee.
1.19.“Director Deferred Units” means such portion of a Unit Award to a Director that is timely elected to be deferred into a Director Unit Account under the Incentive Plan.
1.20.“Director Fees” shall mean the annual fees earned by a Director from any Employer, including retainer fees and meetings fees, as compensation for serving on the board of directors.
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1.21.“Director Plan” shall mean the Service Corporation International Amended and Restated Director Fee Plan, which was combined with and into the Incentive Plan effective August 1, 2017. Effective May 6 2026, the Director Plan shall be combined with and into this Plan.
1.22.“Director Unit Account” means an account established with the Company in the name of such Director that will be credited with (i) the hypothetical number of Director Deferred Units deferred by the Director under the terms of the Company’s Incentive Plan, and (ii) dividend equivalent payments with respect to such Director Deferred Units.
1.23.“Disability” or “Disabled” shall mean that a Participant is either (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration. A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s Employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this Section.
1.24.“Dividend Equivalents” means the amount credited to a Participant’s Dividend Equivalent Account as provided in Sections 3.2 and 10.2.
1.25.“Dividend Equivalent Account” shall mean a bookkeeping account to which the Committee (or its delegate) shall credit the Dividend Equivalents for each calendar year for the benefit of a Participant. Any Dividend Equivalents paid with respect to Stock Awards pursuant to Section 3.2 shall be accounted for by the Employer on its books and records.
1.26.“Election Form” shall mean the form, which may be in paper or electronic format, established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make an election under the Plan.
1.27.“Employee” shall mean a person who is an employee of an Employer.
1.28.“Employer(s)” shall be defined as follows:
(a)Except as otherwise provided in Subsection (b), the term “Employer” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.
(b)For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:
5
(i)The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and
(ii)All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable. In order to identify the group of entities described in the preceding sentence, the Committee shall use an ownership threshold of at least 50% as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (A) Code Section 1563 for determining a controlled group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).
1.29.“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.
1.30.“401(k) Plan” shall mean the SCI Retirement Savings Plan, as it may be amended from time to time, or any successor thereto.
1.31.“Incentive Plan” shall mean the Service Corporation International 2026 Equity Incentive Plan, as such plan may be amended from time to time, and any successor equity incentive plan adopted by the Company at a future date. With respect to equity awards issued by the Company prior to May 6, 2026, the term “Incentive Plan” shall refer to the Service Corporation International Amended and Restated 2016 Equity Incentive Plan or, if applicable, a prior equity plan pursuant to which such awards were issued.
1.32.“Investment Selection Committee” shall mean the Retirement Plan Committee of Service Corporation International.
1.33.“LTIP Amounts” shall mean any portion of the compensation attributable to a Plan Year that is earned by a Participant under the Company’s Performance Unit Plan or any other “performance-based compensation plan within the meaning of Code Section 409A and so designated by the Committee.
1.34.“Participant” shall mean any Employee or Director (i) who is selected to participate in the Plan, (ii) whose executed Plan Agreement, Election Form and Beneficiary Designation Form are accepted by the Committee, and (iii) whose Plan Agreement has not terminated.
1.35.“Performance-Based Compensation” shall mean compensation the entitlement to or amount of which is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).
1.36.“Plan” shall mean the Service Corporation International Deferred Compensation Plan, Amended and Restated effective May 6, 2026, which shall be evidenced by this instrument,
6
as it may be amended from time to time, and by any other documents that together with this instrument define a Participant’s rights to amounts credited to his or her Account Balance.
1.37.“Plan Agreement” shall mean a written agreement in the form, which may be in electronic format, prescribed by or acceptable to the Committee that evidences a Participant’s agreement to the terms of the Plan, and which may establish additional terms or conditions of Plan participation for a Participant. Unless otherwise determined by the Committee, the most recent Plan Agreement accepted with respect to a Participant shall supersede any prior Plan Agreements for such Participant. Plan Agreements may vary among Participants and may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan.
1.38.“Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.
1.39.“RSU Award” shall mean any grant of Restricted Stock Units as defined in and pursuant to the Incentive Plan.
1.40.“RSU Award Unit” shall mean a nominal unit of the Company’s common stock that is credited to a Participant’s Stock Award Unit Account pursuant to Section 3.1 below.
1.41.“Retirement,” “Retire(s)” or “Retired” shall mean with respect to a Participant who is an Employee, a Separation from Service on or after the attainment of age sixty (60) with five (5) Years of Service, and shall mean with respect to a Participant who is a Director, a Separation from Service. If a Participant is both an Employee and a Director and participates in the Plan in each capacity, (i) the determination of whether the Participant qualifies for Retirement as an Employee shall be made when the Participant experiences a Separation from Service as an Employee and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as an Employee, and (ii) the determination of whether the Participant qualifies for Retirement as a Director shall be made at the time the Participant experiences a Separation from Service as a Director and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as a Director.
1.42.“Separation from Service” shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:
(a)For a Participant who provides services to an Employer as an Employee, except as otherwise provided in Subsection (c) below, a Separation from Service shall occur when such Participant has experienced a termination of employment with such Employer. A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (i) no further services will be performed for the Employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the Employer after such date
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(whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).
If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such six month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.
(b)For a Participant who provides services to an Employer as a Director, a Separation from Service shall occur on the date the Participant ceases to serve on the Board of Directors of the Employer and each of its subsidiaries and affiliates.
(c)For a Participant who provides services to an Employer as both an Employee and a Director, a Separation from Service generally shall not occur until the Participant has ceased providing services for such Employer as both as an Employee and as a Director, as determined in accordance with the provisions set forth in Subsections (a) and (b) above, respectively. Notwithstanding the foregoing provisions in this Subsection (c), if a Participant provides services for an Employer as both an Employee and as a Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an Employee, and the services provided by such Participant as an Employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service as a Director.
1.43.“Specified Employee” shall mean any Participant who is determined to be a “key employee” (as defined under Code Section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined annually by the Committee in accordance with Treas. Reg. §1.409A-1(i). In determining whether a Participant is a Specified Employee, the following provisions shall apply:
(a)The Committee’s identification of the individuals who fall within the definition of “key employee” under Code Section 416(i) (without regard to paragraph (5) thereof) shall be based upon the 12-month period ending on each December 31st (referred to below as the “identification date”). In applying the applicable provisions of Code Section 416(i) to identify such individuals, “compensation” shall be determined in accordance with Treas. Reg. §1.415(c)-2(a) without regard to (i) any safe harbor provided in Treas. Reg. §1.415(c)-2(d), (ii) any of the special timing rules provided in Treas. Reg. §1.415(c)-2(e), and (iii) any of the special rules provided in Treas. Reg. §1.415(c)-2(g); and
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(b)Each Participant who is among the individuals identified as a “key employee” in accordance with Subsection (a) shall be treated as a Specified Employee for purposes of this Plan if such Participant experiences a Separation from Service during the 12-month period that begins on the April 1st following the applicable identification date.
1.44.“Stock Award” shall mean any grant of Restricted Stock as defined in and pursuant to the Incentive Plan.
1.45.“Stock Award Unit” shall mean a nominal unit of the Company’s common stock that is credited to a Participant’s Stock Award Unit Account pursuant to Section 3.1 below.
1.46.“Stock Award Unit Account” shall mean the account established with the Company will be credited with (i) deferred Stock Awards; and (ii) deferred Restricted Unit Awards.
1.47.“Termination Benefit” shall have the meaning provided in Section 7.1.
1.48.“Trust” shall mean one or more trusts established by the Company in accordance with Article 17.
1.49.“Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting from (i) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary or the Participant’s dependent (as defined in Code Section 152 without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (ii) a loss of the Participant’s property due to casualty, or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined by the Committee based on the relevant facts and circumstances.
1.50.“Unit Award” means that portion of Director Fees awarded in shares of Company’s common stock, a restricted stock award, or a restricted stock unit award.
1.51.“Years of Service” shall mean the total number of full years in which a Participant has been employed by one or more Employers. For purposes of this definition, a year of employment shall be a 365-day period (or 366-day period in the case of a leap year) that, for the first year of employment, commences on the Employee’s date of hiring and that, for any subsequent year, commences on an anniversary of that hiring date. A partial year of employment shall not be treated as a Year of Service.
ARTICLE 2
Selection, Enrollment, Eligibility
Selection, Enrollment, Eligibility
2.1Selection by Committee. Participation in the Plan shall be limited to Directors and, as determined by the Committee in its sole discretion, a select group of management or highly compensated Employees. From that group, the Committee shall select, in its sole discretion, those individuals who may actually participate in this Plan.
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2.2Enrollment and Eligibility Requirements; Commencement of Participation.
(a)As a condition to participation, selected Employee or Director shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form by the deadline(s) established by the Committee in accordance with the applicable provisions of this Plan. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.
(b)Each selected Employee or Director who is eligible to participate in the Plan shall commence participation in the Plan on the date that the Committee determines that the Director or Employee has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.
(c)If an Employee or a Director fails to meet all requirements established by the Committee within the period required, that Employee or Director, as applicable, shall not be eligible to participate in the Plan during such Plan Year.
ARTICLE 3
Deferral Commitments/Company Contribution Amounts
Company Restoration Matching Amounts/Vesting/Crediting/Taxes
Deferral Commitments/Company Contribution Amounts
Company Restoration Matching Amounts/Vesting/Crediting/Taxes
3.1Annual Deferral Amount. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus, LTIP Amounts, RSU Awards, Stock Awards, and Director Fees up to the following maximum percentages for each deferral elected:
Deferral | Maximum Percentage | ||||
Base Salary | 80% | ||||
Bonus | 90% | ||||
LTIP Amounts | 90% | ||||
RSU Awards | 100% | ||||
Stock Awards | 100% | ||||
Director Fees | 100% | ||||
Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, then to the extent required by Section 3.2 and Code Section 409A and related Treasury Regulations, the maximum amount of the Participant’s Base Salary, Bonus, LTIP Amounts, RSU Awards, Stock Awards, or Director Fees that may be deferred by the Participant for the Plan Year shall be determined by applying the percentages set forth above to the portion of such compensation attributable to services performed after the date that the Participant’s deferral election is made.
3.2Timing of Deferral Elections; Effect of Election Form.
(a)Timing of Annual Deferral Elections. Except as otherwise provided in this Section 3.2, in order for a Participant to make a valid election to defer Base Salary, Bonus, LTIP Amounts, RSU Awards, Stock Awards, and/or Director Fees, the Participant must submit an Election Form on or before the deadline established by the Committee, which in no event
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shall be later than the December 31st preceding the Plan Year in which such compensation will be earned.
(i)Except as provided in Section 3.2(b) below for Performance-Based Compensation, any deferral election made in accordance with this Section 3.2(a) shall be irrevocable.
(ii)Any Stock Awards or RSU Awards deferred pursuant to this Section 3.2(a) shall be accounted for by the Employer on its books and records and the Employer may, in its discretion, transfer shares of the Company’s common stock to the Trustee at such times as the Employer shall, in its discretion, determine.
(iii)A Participant who has elected to defer one or more Stock Awards shall be permitted to make a separate distribution election for Dividend Equivalent payments made with respect to such Stock Awards during each calendar year. If a Participant does not make a distribution election for Dividend Equivalent payments made with respect to Stock Awards for a calendar year, any Dividend Equivalent payments credited for such calendar year shall be paid to the Participant in a lump sum cash payment no later than 60 days following the Participant’s termination of employment. Following a Participant’s termination of employment, any future Dividend Equivalents on Stock Awards shall be paid to the Participant in cash as soon as administratively feasible after the applicable dividend payment date occurs.
(iv)A Participant who has elected to defer an RSU Award, to the extent Dividend Equivalent payments are made pursuant to terms of such RSU Award, shall not be permitted to make a separate distribution election for Divided Equivalent payments made with respect to such RSU Award. The distribution election applicable to an RSU Award shall apply to the Dividend Equivalent payments, if any, made with respect to such RSU Award.
(b)Timing of Deferral Elections for Performance-Based Compensation. Subject to the limitations described below, the Committee may determine that an irrevocable deferral election for an amount that qualifies as Performance-Based Compensation may be made by submitting an Election Form on or before the deadline established by the Committee, which in no event shall be later than 6 months before the end of the performance period.
(i)In order for a Participant to be eligible to make a deferral election for Performance-Based Compensation in accordance with the deadline established pursuant to this Section 3.2, the Participant must have performed services continuously from the later of (A) the beginning of the performance period for such compensation, or (B) the date upon which the performance criteria for such compensation are established, through the date upon which the Participant makes the deferral election for such compensation.
(ii)In no event shall a deferral election submitted under this Section 3.2 be permitted to apply to any amount of Performance-Based Compensation that has become readily ascertainable.
(c)Special Timing Rule for Newly Eligible Employees. A selected Employee who first becomes eligible to participate in the Plan on or after the beginning of a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted to make an election to defer the portion of Base Salary, Bonus, and/or LTIP Amounts attributable to services to be performed after such election, provided that the Participant submits an Election Form on or before the deadline established by the Committee, which in no event shall be later than 30 days after the Participant first becomes eligible to participate in the Plan.
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(i)If a deferral election made in accordance with this Section 3.2(c) relates to compensation earned based upon a specified performance period, the amount eligible for deferral shall be equal to (A) the total amount of compensation for the performance period, multiplied by (B) a fraction, the numerator of which is the number of days remaining in the service period after the Participant’s deferral election is made, and the denominator of which is the total number of days in the performance period.
(ii)Any deferral election made in accordance with this Section 3.2(c) shall become irrevocable no later than the 30th day after the date the selected Employee becomes eligible to participate in the Plan.
(d)Special Timing Rule for Newly Eligible Directors. A new Director may make an election to defer his or her annual retainer fee in accordance with procedures established by the Company, provided that such election (i) is made prior to the date the Director is appointed or elected to the Board, (ii) is effective as of the Director’s appointment or election to the Board, and (iii) only applies to that portion of the annual retainer fee earned after the signed election is delivered to the Company. Failure to timely elect a deferral of the annual retainer fee in any year shall result in such amount being paid to the Director at the time such payments are scheduled to be made. If a new Director files a timely election to receive payment of some or all the annual retainer fee, then (A) any portion of such deferred annual retainer fee that would have been paid as equity shall be credited as Deferred Units to the Director Unit Account established for such Director, and (B) any portion of such deferred annual retainer fee that would have been paid in cash, shall be credited to the Annual Account established for such Director.
Any deferral election made in accordance with this Section 3.2(c) shall be irrevocable upon receipt by the Company.
3.3Withholding and Crediting of Annual Deferral Amounts. For each Plan Year, the Base Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Salary. The Bonus, LTIP Amounts and/or Director Fees portion of the Annual Deferral Amount shall be withheld at the time the Bonus, LTIP Amounts or Director Fees are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself. Annual Deferral Amounts shall be credited to the Participant’s Annual Account for such Plan Year at the time such amounts would otherwise have been paid to the Participant.
3.4Company Contributions.
(a)Mandatory Contributions. For each Plan Year, an Employer may be required to credit amounts to a Participant’s Annual Account in accordance with employment or other agreements entered into between the Participant and the Employer, which amounts shall be part of the Participant’s Company Contribution Amount for that Plan Year. Such amounts shall be credited to the Participant’s Annual Account for the applicable Plan Year on the date or dates prescribed by such agreements.
(b)Discretionary Contributions. For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant’s Annual Account under this Plan, which amount shall be part of the Participant’s Company Contribution Amount for that Plan Year. The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive a Company Contribution Amount for that Plan Year. The Company Contribution Amount described in this
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Section 3.4(b), if any, shall be credited to the Participant’s Annual Account for the applicable Plan Year on a date or dates to be determined by the Committee.
(c)Allocation Formula. If not otherwise specified in the Participant’s employment or other agreement entered into between the Participant and the Employer, the amount (or the method or formula for determining the amount) of a Participant’s Company Contribution Amount shall be set forth in writing in one or more documents, which shall be deemed to be incorporated into this Plan in accordance with Section 1.36, no later than the date on which such Company Contribution Amount is credited to the applicable Annual Account of the Participant.
3.5Company Restoration Matching Amount.
(a)For each Plan Year, the Company shall contribute the Company Restoration Matching Amount to each Participant’s Annual Account. The amount contributed for any Plan Year shall be an amount determined by the Committee to make up for certain limits applicable to the 401(k) Plan or other qualified plan for such Plan Year, as identified by the Committee, or for such other purposes as determined by the Committee in its sole discretion. The amount so credited to a Participant under this Plan for any Plan Year (i) may be smaller or larger than the amount credited to any other Participant, and (ii) may differ from the amount credited to such Participant in the preceding Plan Year.
(b)Each Participant’s Company Restoration Matching Amount, if any, shall be credited to the Participant’s Annual Account for the applicable Plan Year on a date or dates to be determined by the Committee. The amount (or the method or formula for determining the amount) of a Participant’s Company Restoration Matching Amount shall be set forth in writing in one or more documents, which shall be deemed to be incorporated into this Plan in accordance with Section 1.37, no later than the date on which such Company Restoration Matching Amount is credited to the applicable Annual Account of such Participant.
3.6Vesting.
(a)A Participant shall at all times be 100% vested in the portion of his or her Account Balance attributable to Annual Deferral Amounts, plus amounts credited or debited on such amounts pursuant to Section 3.7.
(b)A Participant shall be vested in the portion of his or her Account Balance attributable to any Company Contribution Amounts, plus amounts credited or debited on such amounts pursuant to Section 3.7, in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement or any other agreement entered into between the Participant and his or her Employer. If not addressed in such agreements, a Participant shall vest in the portion of his or her Account Balance attributable to any Company Contribution Amounts as provided in Subsection (c) below.
(c)A Participant shall be vested in the portion of his or her Account Balance attributable to any Company Restoration Matching Amounts, plus amounts credited or debited on such amounts pursuant to Section 3.7, only to the extent that the Participant would be vested in such amounts under the provisions of the 401(k) Plan, as determined by the Committee in its sole discretion.
(d)Notwithstanding anything to the contrary contained in this Section 3.6, in the event of (i) a Change in Control, (ii) a Participant’s Disability, (iii) a Participant’s Separation from Service resulting from involuntary termination by the Company for any reason other than cause, or (iv) a Participant’s death prior to Separation from Service, any amounts that are not
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vested in accordance with Sections 3.6(b) or 3.6(c) above, shall immediately become 100% vested.
(e)Notwithstanding Section 3.6(d) above, the vesting schedules described in Sections 3.6(b) or 3.6(c) above shall not be accelerated upon a Change in Control to the extent that the Committee determines that such acceleration would cause the deduction limitations of Section 280G of the Code to become effective. In the event of such a determination, the Participant may request independent verification of the Committee’s calculations with respect to the application of Section 280G. In such case, the Committee must provide to the Participant within 90 days of such a request an opinion from a nationally recognized accounting firm selected by the Participant (the “Accounting Firm”). The opinion shall state the Accounting Firm’s opinion that any limitation in the vested percentage hereunder is necessary to avoid the limits of Section 280G and contain supporting calculations. The cost of such opinion shall be paid for by the Company.
(f)Section 3.6(e) shall not prevent the acceleration of the vesting schedules described in Sections 3.6(b) and (c) if such Participant is entitled to a “gross-up” payment, to eliminate the effect of the Code Section 4999 excise tax, pursuant to his or her employment agreement or other agreement entered into between such Participant and the Employer.
(g)Notwithstanding anything to the contrary contained in this Section 3.6, in the event of a Participant’s Separation from Service resulting from (i) voluntary resignation on or after attainment of age 60 with 10 years of service, or (ii) voluntary resignation on or after attainment of age 55 with 20 years of service, any amounts that are not vested in accordance with Sections 3.6(b), 3.6(c) or 3.6(d) above, shall immediately become 100% vested if the Committee, in its sole discretion exercised during a meeting or by unanimous written consent prior to the date of retirement, causes such amounts to vest.
(h)Amounts credited to a Participant’s Dividend Equivalent Account shall be vested at the same level as the associated Stock Award.
3.7Crediting/Debiting of Account Balances. In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, amounts shall be credited or debited to a Participant’s Account Balance in accordance with the following rules:
(a)Measurement Funds. The Participant may elect one or more of the measurement funds selected by the Investment Selection Committee, in its sole discretion, which are based on certain mutual funds (the “Measurement Funds”), for the purpose of crediting or debiting additional amounts to his or her Account Balance. As necessary, the Investment Selection Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund. Amounts credited to a Participant’s Dividend Equivalent Account shall initially be invested in the same manner as directed by the Participant. If no such election is provided, then such amounts shall be invested in a default investment fund as determined by the Committee.
(b)Election of Measurement Funds. A Participant, in connection with his or her initial deferral election in accordance with Section 3.2 above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.7(a) above) to be used to determine the amounts to be credited or debited to his or her Account Balance. If a Participant does not elect any of the Measurement Funds as described in the previous sentence, the Participant’s Account Balance shall automatically be allocated into the lowest-risk Measurement Fund, as determined by the Investment Selection Committee, in its sole discretion. The Participant may (but is not required to) elect, by submitting an Election Form to the Committee that is accepted by the Committee, to add or delete one or more Measurement Fund(s) to be used
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to determine the amounts to be credited or debited to his or her Account Balance, or to change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund. If an election is made in accordance with the previous sentence, it shall apply as of the first business day deemed reasonably practicable by the Committee, in its sole discretion, and shall continue thereafter for each subsequent day in which the Participant participates in the Plan, unless changed in accordance with the previous sentence. Notwithstanding the foregoing, the Investment Selection Committee may, in its sole discretion, may impose limitations on the frequency with which one or more of the Measurement Funds elected in accordance with this Section 3.7(b) may be added or deleted by such Participant; furthermore, the Investment Selection Committee, in its sole discretion, may impose limitations on the frequency with which the Participant may change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund.
(c)Proportionate Allocation. In making any election described in Section 3.7(b) above, the Participant shall specify on the Election Form, in increments of one percent (1%), the percentage of his or her Account Balance or Measurement Fund, as applicable, to be allocated/reallocated.
(d)Crediting or Debiting Method. The performance of each Measurement Fund (either positive or negative) will be determined on a daily basis based on the manner in which such Participant’s Account Balance has been hypothetically allocated among the Measurement Funds by the Participant.
(e)No Actual Investment. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation of his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account Balance shall not be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.
3.8Automatic Changes in Investment for Stock Award Accounts and RSU Award Accounts.
(a)If a Participant has elected to defer a portion of any Stock Award and/or RSU Award and to have his or her Stock Award Unit Account credited with Stock Award Units and/or RSU Award Units, as applicable, and such individual is required to divest himself or herself of any and all equity ownership in the Company to satisfy the requirements of a written agreement between the Company and the Federal Trade Commission, then any Stock Award Units and/or vested RSU Award Units credited to such Participant’s Account shall be automatically converted to cash as soon as administratively feasible following the Participant’s termination of employment. For purposes of such conversion, the price per Stock Award Unit or vested RSU Award Unit shall be the closing price of a share of the Company’s common stock on the date the Participant’s employment with the Company ceases.
(b)Following the conversion of a Participant’s Stock Award Units and/or vested RSU Award Units, as applicable, to an equivalent value and automatically invested in a default investment fund as determined by the Committee. Thereafter, the Participant shall be
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permitted to direct the investment of amounts credited to his Stock Award Unit Account and/or RSU Award Account among any investment options which are otherwise available under the Plan’s terms.
(c)If this Section 3.8 applies to a Participant’s Stock Award Unit Account or RSU Unit Account, then any distributions from such account shall be made in the form of cash and shall not be paid as shares of the Company’s common stock.
(d)Nothing in this Section 3.8 shall be interpreted as changing the payment timing for any amounts credited to a Participant’s Stock Award Unit Account or RSU Unit Account.
3.9Distributions from Stock Award Accounts and RSU Award Accounts. Distributions from a Participant’s Stock Award Unit Account shall be made in the form of shares of the Company’s common stock for each Stock Award Unit or RSU Award Unit, as applicable, which shares shall be issued pursuant to the Incentive Plan’s terms.
3.10FICA and Other Taxes.
(a)Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus, and/or LTIP Amounts that is not being deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount. If necessary, the Committee may reduce the Annual Deferral Amount in order to comply with applicable withholding requirements.
(b)Company Restoration Matching Amounts and Company Contribution Amounts. When a Participant becomes vested in a portion of his or her Account Balance attributable to any Company Restoration Matching Amounts and/or Company Contribution Amounts, the Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus, and/or LTIP Amounts that is not deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such amounts. If necessary, the Committee may reduce the vested portion of the Participant’s Company Restoration Matching Amount or Company Contribution Amount, as applicable, in order to comply with applicable withholding amounts.
(c)Distributions. The Participant’s Employer(s), or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer(s), or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer(s) and the trustee of the Trust.
(d)Right to Offset Against Account Balance. To the extent determined necessary by the Committee in its sole discretion, the Company reserves the right to direct that the Participant’s Account Balance be reduced to satisfy any and all federal, state and local income, employment and other taxes required to be paid in connection with earnings of the Measurement Funds hypothetically allocated to the Participant’s Account Balance.
ARTICLE 4
Scheduled Distribution; Unforeseeable Emergencies
Scheduled Distribution; Unforeseeable Emergencies
4.1Scheduled Distributions. In connection with each election to defer an Annual Deferral Amount, a Participant may elect to receive all or a portion of such Annual Deferral
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Amount, plus amounts credited or debited on that amount pursuant to Section 3.7, in the form of a lump sum payment, calculated as of the close of business on or around the Benefit Distribution Date designated by the Participant in accordance with this Section (a “Scheduled Distribution”). The Benefit Distribution Date for the amount subject to a Scheduled Distribution election shall be the first day of any Plan Year designated by the Participant, which may be no sooner than three Plan Years after the end of the Plan Year to which the Participant’s deferral election relates, unless otherwise provided on an Election Form approved by the Committee.
Subject to the other terms and conditions of this Plan, each Scheduled Distribution elected shall be paid out during a 60-day period commencing immediately after the Benefit Distribution Date. By way of example, if a Scheduled Distribution is elected for Annual Deferral Amounts that relate to services performed in the Plan Year commencing January 1, 2017, the earliest Benefit Distribution Date that may be designated by a Participant would be January 1, 2021, and the Scheduled Distribution would be paid out during the 60 day period commencing immediately after such Benefit Distribution Date.
Notwithstanding the preceding, no portion of a Stock Award Unit and/or RSU Award Unit may be distributed in a Scheduled Distribution until an annual distribution date which occurs following the date the Participant’s Stock Award and/or RSU Award, as applicable, would have been fully vested. By way of example, if a Stock Award Unit becomes fully vested on March 1, 2027, then such Stock Award Unit shall be eligible for distribution as part of a Scheduled Distribution during January 2028.
4.2Postponing Scheduled Distributions. A Participant may elect to postpone a Scheduled Distribution described in Section 4.1 above, and have such amount paid out during a 60 day period commencing immediately after an allowable alternative Benefit Distribution Date designated in accordance with this Section 4.2. In order to make such an election, the Participant must submit an Election Form to the Committee in accordance with the following criteria:
(a)The election of the new Benefit Distribution Date shall have no effect until at least 12 months after the date on which the election is made;
(b)The new Benefit Distribution Date selected by the Participant for such Scheduled Distribution must be the first day of a Plan Year that is no sooner than 5 years after the previously designated Benefit Distribution Date; and
(c)The election must be made at least 12 months prior to the Participant’s previously designated Benefit Distribution Date for such Scheduled Distribution.
For purposes of applying the provisions of this Section 4.2, a Participant’s election to postpone a Scheduled Distribution shall not be considered to be made until the date on which the election becomes irrevocable. Such an election shall become irrevocable no later than the date that is 12 months prior to the Participant’s previously designated Benefit Distribution Date for such Scheduled Distribution.
4.3Other Benefits Take Precedence Over Scheduled Distributions. Should an event occur prior to any Benefit Distribution Date designated for a Scheduled Distribution that would trigger a benefit under Articles 5 through 10, as applicable, all amounts subject to a Scheduled Distribution election shall be paid in accordance with the other applicable provisions of the Plan and not in accordance with this Article 4.
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4.4Unforeseeable Emergencies.
(a)If a Participant experiences an Unforeseeable Emergency prior to the occurrence of a distribution event described in Articles 5 through 10, as applicable, the Participant may petition the Committee to receive a partial or full payout from the Plan. The payout, if any, from the Plan shall not exceed the lesser of (i) the Participant’s vested Account Balance, calculated as of the close of business on or around the Benefit Distribution Date for such payout, as determined by the Committee in accordance with provisions set forth below, or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution. A Participant shall not be eligible to receive a payout from the Plan to the extent that the Unforeseeable Emergency is or may be relieved (A) through reimbursement or compensation by insurance or otherwise, (B) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (C) by cessation of deferrals under this Plan.
If the Committee, in its sole discretion, approves a Participant’s petition for payout from the Plan, the Participant’s Benefit Distribution Date for such payout shall be the date on which such Committee approval occurs and such payout shall be distributed to the Participant in a lump sum no later than 60 days after such Benefit Distribution Date. In addition, in the event of such approval the Participant’s outstanding deferral elections under the Plan shall be cancelled.
(b)A Participant’s deferral elections under this Plan shall also be cancelled to the extent the Committee determines that such action is required for the Participant to obtain a hardship distribution from an Employer’s 401(k) Plan pursuant to Treas. Reg. §1.401(k)-1(d)(3).
ARTICLE 5
Change in Control Benefit
Change in Control Benefit
5.1Change in Control Benefit. A Participant, in connection with his or her commencement of participation in the Plan, shall have an opportunity to irrevocably elect to receive his or her vested Account Balance in the form of a lump sum payment in the event that a Change in Control occurs prior to the Participant’s Separation from Service, Disability or death (the “Change in Control Benefit”). The Benefit Distribution Date for the Change in Control Benefit, if any, shall be the date on which the Change in Control occurs.
If a Participant elects not to receive a Change in Control Benefit, or fails to make an election in connection with his or her commencement of participation in the Plan, the Participant’s Account Balance shall be paid in accordance with the other applicable provisions of the Plan.
5.2Payment of Change in Control Benefit. The Change in Control Benefit, if any, shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date, as determined by the Committee, and paid to the Participant no later than 60 days after the Participant’s Benefit Distribution Date.
ARTICLE 6
Retirement Benefit
Retirement Benefit
6.1Retirement Benefit. If a Participant experiences a Separation from Service that qualifies as a Retirement, the Participant shall be eligible to receive his or her vested Account
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Balance in either a lump sum or annual installment payments, as elected by the Participant in accordance with Section 6.2 (the “Retirement Benefit”). A Participant’s Retirement Benefit shall be calculated as of the close of business on or around the applicable Benefit Distribution Date for such benefit, which shall be (i) the first day after the end of the six-month period immediately following the date on which the Participant experiences such Separation from Service if the Participant is a Specified Employee, and (ii) for all other Participants, the date on which the Participant experiences a Separation from Service; provided, however, if a Participant changes the form of distribution for the Retirement Benefit in accordance with Section 6.2(b), the Benefit Distribution Date for the Retirement Benefit shall be determined in accordance with such Section 6.2(b).
6.2Payment of Retirement Benefit.
(a)In connection with a Participant’s election to defer an Annual Deferral Amount, the Participant shall elect the form in which the Retirement Benefit from his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive the Retirement Benefit paid from each Annual Account in the form of a lump sum or pursuant to an Annual Installment Method up to 15 years. If a Participant does not make any election with respect to the payment of an Annual Account, then the Participant shall be deemed to have elected to receive the Retirement Benefit paid from such Annual Account as a lump sum.
(b)A Participant may change the form of payment for the Retirement Benefit by submitting an Election Form to the Committee in accordance with the following criteria:
(i)The election shall not take effect until at least 12 months after the date on which the election is made;
(ii)The new Benefit Distribution Date for the Participant’s Retirement Benefit shall be 5 years after the Benefit Distribution Date that would otherwise have been applicable to such benefit; and
(iii)The election must be made at least 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to the Participant’s Retirement Benefit.
For purposes of applying the provisions of this Section 6.2(b), a Participant’s election to change the form of payment for the Retirement Benefit shall not be considered to be made until the date on which the election becomes irrevocable. Such an election shall become irrevocable no later than the date that is 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to the Participant’s Retirement Benefit. Subject to the requirements of this Section 6.2(b), the Election Form most recently accepted by the Committee that has become effective shall govern the form of payout of the Participant’s Retirement Benefit.
(c)The lump sum payment shall be made, or installment payments shall commence, no later than 60 days after the Participant’s Benefit Distribution Date. Remaining installments, if any, shall be paid no later than 60 days after each anniversary of the Participant’s Benefit Distribution Date.
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ARTICLE 7
Termination Benefit
Termination Benefit
7.1Termination Benefit. If a Participant experiences a Separation from Service that does not qualify as a Retirement, the Participant shall receive his or her vested Account Balance in the form of a lump sum payment or pursuant to an Annual Installment Method of up to five years (the “Termination Benefit”). A Participant’s Termination Benefit shall be calculated as of the close of business on or around the Benefit Distribution Date for such benefit, which shall be (i) the first day after the end of the six-month period immediately following the date on which the Participant experiences such Separation from Service if the Participant is a Specified Employee, and (ii) for all other Participants, the date on which the Participant experiences a Separation from Service; provided, however, if a Participant changes the form of distribution for the Termination Benefit in accordance with Section 7.2(b), the Benefit Distribution Date for the Termination Benefit shall be determined in accordance with such Section 7.2(b).
7.2Payment of Termination Benefit.
(a)In connection with a Participant’s election to defer an Annual Deferral Amount, the Participant shall elect the form in which the Termination Benefit from his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive the Termination Benefit paid from each Annual Account in the form of a lump sum or pursuant to an Annual Installment Method up to five years. If a Participant does not make any election with respect to the payment of the Termination Benefit, then such Participant shall be deemed to have elected to receive the Termination Benefit as a lump sum.
(b)A Participant may change the form of payment for the Termination Benefit by submitting an Election Form to the Committee in accordance with the following criteria:
(i)The election shall not take effect until at least 12 months after the date on which the election is made;
(ii)The new Benefit Distribution Date for the Participant’s Termination Benefit shall be five years after the Benefit Distribution Date that would otherwise have been applicable to such benefit; and
(iii)The election must be made at least 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to the Participant’s Termination Benefit.
For purposes of applying the provisions of this Section 7.2(b), a Participant’s election to change the form of payment for the Termination Benefit shall not be considered to be made until the date on which the election becomes irrevocable. Such an election shall become irrevocable no later than the date that is 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to the Participant’s Termination Benefit. Subject to the requirements of this Section 7.2(b), the Election Form most recently accepted by the Committee that has become effective shall govern the form of payout of the Participant’s Termination Benefit.
(c)The lump sum payment shall be made, or installment payments shall commence, no later than 60 days after the Participant’s Benefit Distribution Date. Remaining
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installments, if any, shall be paid no later than 60 days after each anniversary of the Participant’s Benefit Distribution Date.
ARTICLE 8
Disability Benefit
Disability Benefit
8.1Disability Benefit. If a Participant becomes Disabled prior to the occurrence of a distribution event described in Articles 5 through 7, as applicable, the Participant shall receive his or her vested Account Balance in the form of a lump sum or installment payment as provided in Section 8.2 below (the “Disability Benefit”). The Disability Benefit shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date for such benefit, which shall be the date on which the Participant becomes Disabled.
8.2Payment of Disability Benefit. The Disability Benefit shall be paid to the Participant no later than 60 days after the Participant’s Benefit Distribution Date.
(a)In connection with a Participant’s election to defer an Annual Deferral Amount, the Participant shall elect the form in which the Disability Benefit from his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive the Disability Benefit paid from each Annual Account in the form of a lump sum or pursuant to an Annual Installment Method up to five years. If a Participant does not make any election with respect to the payment of the Disability Benefit, then such Participant shall be deemed to have elected to receive the Disability Benefit as a lump sum.
(b)A Participant may change the form of payment for the Disability Benefit by submitting an Election Form to the Committee in accordance with the following criteria:
(i)The election shall not take effect until at least 12 months after the date on which the election is made; and
(ii)The election must be made at least 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to the Participant’s Disability Benefit.
For purposes of applying the provisions of this Section 8.2(b), a Participant’s election to change the form of payment for the Disability Benefit shall not be considered to be made until the date on which the election becomes irrevocable. Such an election shall become irrevocable no later than the date that is 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to the Participant’s Disability Benefit. Subject to the requirements of this Section 8.2(b), the Election Form most recently accepted by the Committee that has become effective shall govern the form of payout of the Participant’s Disability Benefit.
ARTICLE 9
Death Benefit
Death Benefit
9.1Death Benefit. In the event of a Participant’s death prior to the complete distribution of his or her vested Account Balance, the Participant’s Beneficiary(ies) shall receive the Participant’s unpaid vested Account Balance in a lump sum payment (the “Death Benefit”). The Death Benefit shall be calculated as of the close of business on or around the Benefit Distribution Date for such benefit, which shall be the date of the Participant’s death.
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9.2Payment of Death Benefit. The Death Benefit shall be paid to the Participant’s Beneficiary(ies) no later than 60 days after the Participant’s Benefit Distribution Date.
ARTICLE 10
Director Deferred Units
Director Deferred Units
10.1General. The provisions of this Article 10 shall govern the deferral and payment of Director Deferred Units, including deferrals that occurred (i) for periods between August 1, 2017 and May 6, 2026, pursuant to Article XIV of the 2016 Incentive Plan; and (ii) for periods prior to August 1, 2017, the Director Plan. To the extent the terms of this Article 10 are different from the remaining terms of the Plan, this Article 10 shall apply in lieu of the contrary provision of the Plan.
10.2Deferral of Unit Awards.
(a)Annual Accounting. For each Director who elects to defer a portion of a Unit Award, a separate Director Unit Account shall be established for each Plan Year to hold the Participant’s Director Deferred Units. In addition, as provided in Section 10.2(d), a separate Dividend Equivalent Account shall be established for each Plan Year for each Director who has elected to defer a portion of a Unit Award under this Plan’s terms or, for periods prior to May 6, 2026, the terms of the Incentive Plan or the Director Plan, as applicable. Earnings with respect to any Director Unit Account which are paid during a calendar year shall be allocated the Dividend Equivalent Account established for such Plan Year.1
(b)Unit Award Deferral Elections. Subject to the limitations below, a Director may elect to defer all or a portion of a Unit Award on such terms as the Committee (or its delegate) may permit by completing an Election Form and submitting it to the Committee (or its delegate) prior to the calendar year in which the Unit Award is made. In each annual Election Form, a Director shall elect the manner of distribution from the Director Unit Account for that annual Election Form. The Director shall designate whether payment will be made as either (i) in a single lump sum payment, or (ii) in approximately equal annual installments over a period of up to 5 years. A failure to timely make such election shall result in a single lump sum payment with respect to deferrals that occur pursuant to that Election Form.
(c)The Committee (or its delegate) shall, credit a Director Deferred Unit to the Director Unit Account for the benefit of such Director. Any Unit Awards deferred pursuant to this Section 10.2(b) shall be accounted for by the Employer on its books and records and the Employer may, in its discretion, transfer shares of the Company’s common stock to the Trustee at such times as the Employer shall, in its discretion, determine.
(d)Vesting and Form of Distribution. A Participant’s Director Deferred Units shall be fully vested at all times; provided, however, that if a Unit Award was subject to a vesting schedule when issued, then such vesting schedule shall apply to the corresponding Director Deferred Units.
(i)Distributions from a Participant’s Director Unit Account shall be made in the form of shares of the Company’s common stock for each Director Deferred Unit, which shares shall be issued pursuant to the applicable Incentive Plan’s terms. The Company
1 As an example, assume a Director elects to defer a portion of her 2027 Unit Award. The Company will cause the Plan to establish the following bookkeeping accounts: (i) a 2027 Director Unit Account, to which the Director Deferred Units provided pursuant to the 2027 Unit Award will be credited, and (ii) a 2027 Dividend Equivalent Account, to which Dividend Equivalents associated with the 2027 Unit Award will be credited.
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shall be obligated to issue one share of Stock under this Plan with respect to each vested Director Deferred Unit. In addition, any Director Deferred Units attributable to periods prior to August 1, 2017, shall be issued pursuant to the same terms and conditions as applied pursuant to the Director Plan and any distribution elections made by the Directors under such plan’s terms.
(ii)Distribution of a Director Unit Account to a Director is intended to begin after termination of service as a Director, whether through retirement or otherwise, unless a Director has indicated in such Director’s Annual Election a specified date for such distribution to occur as provided in Article 7. If a Director has selected the distribution of the Director Unit Account to begin after termination of service as a Director, distributions shall commence on June 15 following such Director’s termination of service, unless the distribution is required to be delayed under Section 409A, in which case such distribution shall commence at the time this statutory delay has expired.
(iii)A Director may request that the time or manner of distribution selected in previously executed Elections be changed. Any request by a Director to change the time/manner of such previously selected distribution must comply with the following:
(A) such election may not take effect until at least twelve (12) months after the date on which this election is made;
(B) the distribution must be deferred for at least five (5) years from the date the distribution otherwise would have been paid; and
(C) such election may not be made less than twelve (12) months before the date the distribution is otherwise scheduled to be paid.
(iv)Any Director Deferred Units that have not become vested at the time a Director incurs a Separation from Service shall be automatically forfeited on such date.
(e)Dividend Equivalent Accounts. The Committee shall establish a Dividend Equivalent Account for each calendar year that a Director has elected to defer shares, whether pursuant to this Plan or, previously, the Director Plan.
(f)The Committee (or its delegate) shall credit the Dividend Equivalent Account established for the Director for each calendar year with a cash equivalent amount equal to any dividend that the Participant would have received if he or she had directly owned one share of the Company’s common stock for each Director Deferred Unit credited to any of the Participant’s Director Unit Accounts. Dividend Equivalents credited to a Participant’s Director Unit Account shall be subject to the same vesting provisions as applicable to the associated Director Deferred Units. Amounts credited as Dividend Equivalents to a Participant’s Director Unit Account shall be invested in the manner directed by the Director. If no such election is provided, then such amounts shall be invested in a default investment fund as determined by the Committee.
(g)Notwithstanding the preceding, dividend equivalent payments made with respect to Director Deferred Units issued pursuant to the terms of the Director Plan shall be credited as a cash dividend equivalent payment instead of a stock dividend equivalent payment. On each date a dividend is paid by the Company to its shareholders with respect to a share of Stock, the Director’s Deferred Unit Account shall be credited with a cash dividend equivalent
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payment equal to the amount of the dividend that would have been paid with respect to a share of stock. Any cash dividend equivalent payment credited under this paragraph shall be paid to the Director on the same date as a stock dividend equivalent payment would have been paid pursuant to the election or elections made under the Director Plan prior to August 1, 2017.
(h)Merged Accounts. Any Unit Awards issued under the Director Plan for periods on or before August 1, 2017, including dividend equivalent payments credited as additional Director Deferred Units, have been incorporated into the Incentive Plan and shall be administered by the Company as provided in Incentive Plan. Each Unit Award incorporated into the Incentive Plan shall be separately accounted for in a Director Unit Account established under this Plan for each Participant for each applicable Plan Year. Any previously filed deferral elections made pursuant to the Director Plan’s terms shall be honored by the Incentive Plan and this Plan, and administered in accordance with their terms.
10.3Automatic Changes in Investment. The provisions of Section 3.8 shall apply to each Director’s Director Unit Account.
10.4Elective Change in Investment. A Director who has completed ten (10) years of service and has attained age sixty-five as a member of the Company’s Board of Directors may elect to cause some or all of the Director Deferred Units credited to the Director’s Director Unit Account to instead be credited to one or more of the Measurement Funds then available for Participants under the Plan’s terms. An election under the preceding sentence (i) shall be irrevocable, and (ii) may be submitted on a one-time basis to the Committee during any period in which the Company has an open trading window under the Company’s insider trading policy, as determined by the Company’s General Counsel, and such change in investment allocation shall occur during such open trading window. Any election made under this Section 10.4 shall designate the number of Director Deferred Units that will no longer be deemed to be invested in the Company’s Stock, including the year such Director Deferred Units were credited to the Director’s Director Deferred Unit Account. As soon as administratively feasible after the election is received, an amount equal to the value of such Director Deferred Units shall be reinvested in the Plan’s default Measurement Fund, as determined by the Committee. Following the conversion of a Participant’s Stock Award Units and/or vested RSU Award Units, as applicable, to an equivalent value and automatic investment in the default Measurement Fund, the Director may provide investment direction with respect to such amount.
ARTICLE 11
Beneficiary Designation
Beneficiary Designation
11.1Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.
11.2Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time to time. If the Participant names someone other than his or her spouse as a Beneficiary, the Committee may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Committee, executed by such Participant’s spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form,
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all Beneficiary designations previously filed shall be canceled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.
11.3Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Committee or its designated agent.
11.4No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 11.1, 11.2 and 11.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant’s estate.
11.5Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant’s Employer to withhold such payments until this matter is resolved to the Committee’s satisfaction.
11.6Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant’s Plan Agreement shall terminate upon such full payment of benefits.
ARTICLE 12
Leave of Absence
Leave of Absence
12.1Paid Leave of Absence. If a Participant is authorized by the Participant’s Employer to take a paid leave of absence from the employment of the Employer, and such leave of absence does not constitute a Separation from Service, (i) the Participant shall continue to be considered eligible for the benefits provided under the Plan, and (ii) the Annual Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with Section 3.2.
12.2Unpaid Leave of Absence. If a Participant is authorized by the Participant’s Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a Separation from Service, such Participant shall continue to be eligible for the benefits provided under the Plan. During the unpaid leave of absence, the Participant shall not be allowed to make any additional deferral elections. However, if the Participant returns to employment, the Participant may elect to defer an Annual Deferral Amount for the Plan Year following his or her return to employment and for every Plan Year thereafter while a Participant in the Plan, provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.2 above.
ARTICLE 13
Termination of Plan, Amendment or Modification
Termination of Plan, Amendment or Modification
13.1Termination of Plan. Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to terminate the Plan with respect to all of its Participants. In the event of a Plan termination no new deferral elections shall be permitted for the affected Participants and
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such Participants shall no longer be eligible to receive new company contributions. However, after the Plan termination the Account Balances of such Participants shall continue to be credited with Annual Deferral Amounts attributable to a deferral election that was in effect prior to the Plan termination to the extent deemed necessary to comply with Code Section 409A and related Treasury Regulations, and additional amounts shall continue to credited or debited to such Participants’ Account Balances pursuant to Section 3.7. The Measurement Funds available to Participants following the termination of the Plan shall be comparable in number and type to those Measurement Funds available to Participants in the Plan Year preceding the Plan Year in which the Plan termination is effective. In addition, following a Plan termination, Participant Account Balances shall remain in the Plan and shall not be distributed until such amounts become eligible for distribution in accordance with the other applicable provisions of the Plan. Notwithstanding the preceding sentence, to the extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix), the Employer may provide that upon termination of the Plan, all Account Balances of the Participants shall be distributed, subject to and in accordance with any rules established by such Employer deemed necessary to comply with the applicable requirements and limitations of Treas. Reg. §1.409A-3(j)(4)(ix).
13.2Amendment. Any Employer may, at any time, amend or modify the Plan in whole or in part with respect to that Employer. Notwithstanding the foregoing, (i) no amendment or modification shall be effective to decrease the value of a Participant’s vested Account Balance in existence at the time the amendment or modification is made, and (ii) no amendment or modification of this Section 13.2 or Section 14.2 of the Plan shall be effective.
13.3Plan Agreement. Despite the provisions of Sections 13.1 and 13.2 above, if a Participant’s Plan Agreement contains benefits or limitations that are not in this Plan document, the Employer may only amend or terminate such provisions with the written consent of the Participant.
13.4Effect of Payment. The full payment of the Participant’s vested Account Balance in accordance with the applicable provisions of the Plan shall completely discharge all obligations to a Participant and his or her designated Beneficiaries under this Plan, and the Participant’s Plan Agreement shall terminate.
ARTICLE 14
Administration
Administration
14.1Committee Duties. Except as otherwise provided in this Article 14, this Plan shall be administered by a Committee, which shall consist of the Board, or such committee as the Board shall appoint. Members of the Committee may be Participants under this Plan. The Committee shall also have the discretion and authority to (i) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan, (ii) decide or resolve any and all questions, including benefit entitlement determinations and interpretations of this Plan, as may arise in connection with the Plan, and (iii) to delegate any or all of its authority to one or more individuals or committees from time to time. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Committee shall be entitled to rely on information furnished by a Participant or the Company.
14.2Administration Upon Change in Control. Within 120 days following a Change in Control, the individuals who comprised the Committee immediately prior to the Change in Control (whether or not such individuals are members of the Committee following the Change in Control) may, by written consent of the majority of such individuals, appoint an independent third party administrator (the “Administrator”) to perform any or all of the Committee’s duties described in Section 14.1 above, including without limitation, the power to determine any
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questions arising in connection with the administration or interpretation of the Plan, and the power to make benefit entitlement determinations. Upon and after the effective date of such appointment, (i) the Company must pay all reasonable administrative expenses and fees of the Administrator, and (ii) the Administrator may only be terminated with the written consent of the majority of Participants with an Account Balance in the Plan as of the date of such proposed termination.
14.3Agents. In the administration of this Plan, the Committee or the Administrator, as applicable, may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time-to-time consult with counsel.
14.4Binding Effect of Decisions. The decision or action of the Committee or Administrator, as applicable, with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
14.5Indemnity of Committee. All Employers shall indemnify and hold harmless the members of the Committee, the Investment Selection Committee, any Employee to whom the duties of the Committee may be delegated, and the Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, the Investment Selection Committee, any of its members, any such Employee or the Administrator.
14.6Employer Information. To enable the Committee and/or Administrator to perform its functions, the Company and each Employer shall supply full and timely information to the Committee and/or Administrator, as the case may be, on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the Participants, the compensation of its Participants, the date and circumstances of the Separation from Service, Disability or death of its Participants, and such other pertinent information as the Committee or Administrator may reasonably require.
ARTICLE 15
Other Benefits and Agreements
Other Benefits and Agreements
15.1Coordination with Other Benefits. The benefits provided for a Participant and Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant’s Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.
ARTICLE 16
Claims Procedures
Claims Procedures
16.1Presentation of Claim. Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 60 days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
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16.2Notification of Decision. The Committee shall consider a Claimant’s claim within a reasonable time, but no later than 90 days after receiving the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. The Committee shall notify the Claimant in writing:
(a)that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
(b)that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:
(i)the specific reason(s) for the denial of the claim, or any part of it;
(ii)specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
(iii)a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;
(iv)an explanation of the claim review procedure set forth in Section 16.3 below; and
(v)a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
16.3Review of a Denied Claim. On or before 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. The Claimant (or the Claimant’s duly authorized representative):
(a)may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claim for benefits;
(b)may submit written comments or other documents; and/or
(c)may request a hearing, which the Committee, in its sole discretion, may grant.
16.4Decision on Review. The Committee shall render its decision on review promptly, and no later than 60 days after the Committee receives the Claimant’s written request for a review of the denial of the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. In rendering its decision, the Committee shall take into account all comments, documents, records and other information
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submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The decision must be written in a manner calculated to be understood by the Claimant, and it must contain:
(a)specific reasons for the decision;
(b)specific reference(s) to the pertinent Plan provisions upon which the decision was based;
(c)a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and
(d)a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).
16.5Legal Action. A Claimant’s compliance with the foregoing provisions of this Article 16 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan.
ARTICLE 17
Trust
Trust
17.1Establishment of the Trust. In order to provide assets from which to fulfill its obligations to the Participants and their Beneficiaries under the Plan, the Company may establish a trust by a trust agreement with a third party, the trustee, to which each Employer may, in its discretion, contribute cash or other property, including securities issued by the Company, to provide for the benefit payments under the Plan (the “Trust”).
17.2Interrelationship of the Plan and the Trust. The provisions of the Plan and the Plan Agreement shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employers, Participants and the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its obligations under the Plan.
17.3Distributions From the Trust. Each Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under this Plan.
ARTICLE 18
Miscellaneous
Miscellaneous
18.1Status of Plan. The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted (i) to the extent possible in a manner consistent with the intent described in the preceding sentence, and (ii) in accordance with Code Section 409A and related Treasury guidance and Regulations.
18.2Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer. For purposes of the payment of benefits under this Plan, any and all of an Employer’s assets shall be, and remain, the general, unpledged unrestricted assets of the
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Employer. An Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
18.3Employer’s Liability. An Employer’s liability for the payment of benefits shall be defined only by the Plan and the Plan Agreement, as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan and his or her Plan Agreement.
18.4Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.
18.5Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer, either as an Employee or a Director, or to interfere with the right of any Employer to discipline or discharge the Participant at any time.
18.6Furnishing Information. A Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee may deem necessary.
18.7Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
18.8Captions. The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
18.9Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of Texas without regard to its conflicts of laws principles.
18.10Notice. Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:
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Service Corporation International | ||
Attn: Managing Director, Compensation and Benefits | ||
| 1929 Allen Parkway | ||
Houston, Texas 77019 | ||
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.
18.11Successors. The provisions of this Plan shall bind and inure to the benefit of the Participant’s Employer and its successors and assigns and the Participant and the Participant’s designated Beneficiaries.
18.12Spouse’s Interest. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.
18.13Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.
18.14Incompetent. If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.
18.15Domestic Relations Orders. If necessary to comply with a domestic relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan, the Committee shall have the right to immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits under the Plan to such spouse or former spouse.
18.16Distribution in the Event of Income Inclusion Under Code Section 409A. If any portion of a Participant’s Account Balance under this Plan is required to be included in income by the Participant prior to receipt due to a failure of this Plan to comply with the requirements of Code Section 409A and related Treasury Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of (i) the portion of his or her Account Balance required to be included in income as a result of the failure of the Plan to comply with the requirements of Code Section 409A and related Treasury Regulations, or (ii) the unpaid vested Account Balance.
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IN WITNESS WHEREOF, the Company has signed this Plan document as of August 4, 2026.
SERVICE CORPORATION INTERNATIONAL,
a Texas corporation
By: /s/ Lori Spilde
Title: Senior Vice President, General Counsel & Secretary
Exhibit 31.1
Service Corporation International
a Texas corporation
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Section 302 Certification
I, Thomas L. Ryan, certify that:
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.
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.
| /s/ Thomas L. Ryan | |||||
| Thomas L. Ryan Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | |||||
Date: October 29, 2026
Exhibit 31.2
Service Corporation International
a Texas corporation
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Section 302 Certification
I, Eric D. Tanzberger, certify that:
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.
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.
| /s/ Eric D. Tanzberger | |||||
| Eric D. Tanzberger Executive Vice President Chief Financial Officer (Principal Financial Officer) | |||||
Date: October 29, 2026
Exhibit 32.1
Certification of Chief Executive Officer
I, Thomas L. Ryan, of Service Corporation International, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 (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.
| /s/ Thomas L. Ryan | |||||
| Thomas L. Ryan Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | |||||
Dated: October 29, 2026
Exhibit 32.2
Certification of Chief Financial Officer
I, Eric D. Tanzberger, of Service Corporation International, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 (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.
| /s/ Eric D. Tanzberger | |||||
| Eric D. Tanzberger Executive Vice President Chief Financial Officer (Principal Financial Officer) | |||||
Dated: October 29, 2026