<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K
------------------------
<TABLE>
<S> <C>
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-6402-1
</TABLE>
------------------------
SERVICE CORPORATION INTERNATIONAL
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 74-1488375
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1929 ALLEN PARKWAY 77019
HOUSTON, TEXAS (Zip code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: 713/522-5141
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- -------------------------------------------- --------------------------------------------
<S> <C>
Common Stock ($1 par value) New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
6.5% Convertible Subordinated New York Stock Exchange
Debentures due 2001
10% Subordinated Debentures due 2000 American Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the common stock held by non-affiliates of
the registrant is $2,203,565,274 based upon a closing market price of $26 5/8 on
March 21, 1994 of a share of common stock as reported on the New York Stock
Exchange -- Composite Transactions Tape.
The number of shares outstanding of the registrant's common stock as of
March 21, 1994 was 85,837,877 (excluding treasury shares).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement in connection with its 1994
Annual Meeting of Shareholders (Part III)
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<PAGE> 2
PART I
ITEM 1. BUSINESS.
Service Corporation International was incorporated in Texas on July 5,
1962. The term "Company" includes the registrant and its subsidiaries, unless
the context indicates otherwise.
The Company is the largest publicly-held funeral/cemetery company in North
America. At December 31, 1993, the Company operated 792 funeral homes and 192
cemeteries located in 39 states, the District of Columbia, four provinces in
Canada and five Australian states, and other funeral and cemetery related
businesses. In addition, the Company provides capital financing to independent
funeral home and cemetery operators.
In 1993, the Company acquired an Australian funeral/cemetery company. This
was the Company's first acquisition of a firm located outside of North America.
Including this acquisition, the Company in 1993 acquired 124 funeral homes and
21 cemeteries through acquisitions. The Company has acquired most of its present
operations through acquisitions and has from time to time divested itself of
certain properties and/or operations previously acquired. The Company continues
to review the possible acquisition of various related businesses. For
information regarding acquisitions of funeral home and cemetery operations in
1993, see Note 3 to the consolidated financial statements in Item 8 of this Form
10-K.
For financial information about the Company's industry segments, including
the identifiable assets of the Company by industry segments, see Note 14 to the
consolidated financial statements in Item 8 of this Form 10-K.
FUNERAL SERVICES OPERATION
The Funeral Services Operation consists of the Company's funeral homes,
cemeteries and related businesses. The operation is organized into six domestic
and two foreign (Australia and Canada) regional groups, each of which is under
the direction of a regional president. Canadian operations are carried out by a
public company which is approximately 70% owned by the Company. Local funeral
home and cemetery managers, under the direction of the regional presidents,
receive support and resources from Houston headquarters and have substantial
autonomy with respect to the manner in which services are conducted.
To enhance operational efficiency, the majority of the Company's funeral
homes and cemeteries within a region are managed in groups called clusters. The
clusters, primarily designated in metropolitan areas, allow funeral homes and
cemeteries to share operating expenses such as service personnel, vehicles,
preparation services, clerical staff and certain building facility costs.
Funeral Homes. The funeral homes provide all professional services relating
to funerals, including the use of funeral facilities and motor vehicles. Funeral
homes sell caskets, burial vaults, cremation receptacles, flowers and burial
garments and also operate 75 crematories. The Funeral Services Operation owns 84
funeral home/cemetery combinations and operates 50 flower shops engaged
principally in the design and sale of funeral floral arrangements. These flower
shops provide floral arrangements to some of the Company's funeral homes and
cemeteries.
The Company markets prearranged funeral services. Funeral prearrangement is
a means through which a customer contractually agrees to the terms of a funeral
to be performed in the future. Payments on prearranged funerals currently
offered by the Company are deposited into trust funds or are used to purchase
life insurance or annuity contracts issued primarily by third party insurers.
Funds paid on prearranged funerals may not be withdrawn until death or
cancellation by the customer. For additional information concerning prearranged
funeral activities, see Notes 4 and 8 to the consolidated financial statements
in Item 8 of this Form 10-K.
The Funeral Services Operation has multiple funeral homes and cemeteries in
a number of metropolitan areas. Within individual metropolitan areas, the
funeral homes and cemeteries operate under various names because most operations
were acquired as going businesses and continue to be operated under the same
name as before acquisition.
1
<PAGE> 3
The death rate tends to be somewhat higher in the winter months and the
funeral homes generally experience a higher volume of business during those
months.
The funeral home industry is characterized by a large number of independent
operations, the vast majority of which are locally owned and operated. The
Company believes that there are in excess of 22,000 funeral homes operating in
the United States. There are many entities operating multiple branches, but none
have as many funeral homes or cover as many geographic areas as the Company. In
order to compete successfully, each of the Company's funeral homes must maintain
competitive prices, attractive, well-maintained and conveniently located
facilities, a good reputation and high professional standards.
In April 1984, the Federal Trade Commission (FTC) comprehensive trade
regulation rule for the funeral industry became fully effective. The rule
contains minimum guidelines for funeral industry practices, requires extensive
price and other affirmative disclosures and imposes mandatory itemization of
funeral goods and services. A pre-existing consent order between the Company and
the FTC applicable to certain funeral practices of the Company was amended in
1984 to make the consent order consistent with the funeral trade regulation
rule. From time to time in connection with acquisitions, the Company has entered
into consent orders with the FTC which limit the Company's ability to make
acquisitions in specified areas and/or which require the Company to dispose of
certain operations. The trade regulation rule and the consent orders have not
had a materially adverse effect on the Company's operations.
Cemeteries. The Company's cemeteries sell cemetery interment rights
(including mausoleum spaces and lawn crypts) and certain merchandise including
stone and bronze memorials and burial vaults. The Company's cemeteries also
perform interment services and provide management and maintenance of cemetery
grounds. Certain cemeteries also include crematory operations.
Cemetery sales are often made on a pre-need basis pursuant to installment
contracts providing for monthly payments. A portion of the proceeds from
cemetery sales is generally required by law to be paid into perpetual care trust
funds. Earnings of perpetual care trust funds are used to defray the maintenance
cost of cemeteries. In addition, a portion of the proceeds from the sale of
pre-need cemetery merchandise and services may be required to be paid into trust
funds. For additional information regarding cemetery trust funds, see Note 1 to
the consolidated financial statements in Item 8 of this Form 10-K.
The cemetery industry is characterized by a large number of independent
operations, the vast majority of which are locally owned and operated. Each of
the Company's cemeteries competes with other firms in the same general area. In
order to compete successfully, each of the Company's cemeteries must maintain
competitive prices, attractive and well kept properties, a good reputation and
an effective sales force.
FINANCIAL SERVICES OPERATION
In 1988, the Company formed Provident Services, Inc. ("Provident") to
provide capital financing to independent funeral home and cemetery operators.
The majority of Provident's loans are made to clients seeking to finance funeral
home or cemetery acquisitions. Additionally, Provident provides construction
loans for funeral home or cemetery improvement and expansion. Loan packages take
traditional forms of secured financing comparable to arrangements offered by
leading commercial banks. Provident's loans are generally made at interest rates
which fluctuate with the prime lending rate.
Provident had $250,000,000 in loans outstanding at December 31, 1993 and
unfunded loan commitments amounting to $19,499,000. Such loans outstanding
increased from $187,000,000 in loans outstanding at December 31, 1992. Provident
obtains its funds primarily from the Company's bank borrowings.
Provident is in competition with banks and other lending institutions, many
of which have substantially greater resources than Provident. However, Provident
believes that its knowledge of the death care industry provides it with the
ability to make more accurate assessments of funeral home and cemetery industry
loans, thereby providing Provident a competitive advantage in the industry.
2
<PAGE> 4
EMPLOYEES
At December 31, 1993, the Company employed 8,985 persons on a full time
basis and 3,731 persons on a part time basis. Of the full time employees 427
were in corporate services, 8,550 were in the Funeral Services Operation, and
eight were in Financial Services. All of the Company's eligible employees who so
elect are covered by the Company's group health and life insurance plans, and
all eligible employees are participants in retirement plans of the Company or
various subsidiaries.
At December 31, 1993, 747 employees were covered by collective bargaining
agreements. Although disputes are experienced from time to time, in general,
relations with employees are considered satisfactory.
REGULATION
The Company's various operations are subject to regulations, supervision
and licensing under various federal, state, local and Canadian and Australian
statutes, ordinances and regulations. The Company believes that it is in
substantial compliance with the significant provisions of such statutes,
ordinances and regulations. See discussion of FTC funeral industry trade
regulation and consent orders in "Funeral Homes" above.
ITEM 2. PROPERTIES.
The Company's executive headquarters and the offices of management
personnel of the Funeral and Financial Service Operations are located at 1929
Allen Parkway, Houston, Texas 77019, in a 12-story office building. A
wholly-owned subsidiary of the Company owns an undivided one-half interest in
the underlying fee to the building and its parking garage. The property consists
of approximately 1.3 acres, 250,000 square feet of office space in the building
and 160,000 square feet of parking space in the garage. The Company leases all
of the office space in the building pursuant to a lease that expires June 30,
1995 providing for monthly rent of $87,000. The rent is subject to escalation
for all operating expenses above base year operating expenses. One half of the
rent is paid to the wholly-owned subsidiary and the other half is paid to the
owner of the remaining undivided one-half interest. The Company owns and
utilizes a three-story building at 1919 Allen Parkway, Houston, Texas 77019
containing 43,000 square feet of office space. The Company owns the facilities
of certain closed casket manufacturing operations.
At December 31, 1993, the Company owned the real estate and buildings of
803 of its funeral home and cemetery locations and leased facilities in
connection with 181 of such operations. In addition, the Company leased two
aircraft pursuant to a cancellable lease. At December 31, 1993, the Company
operated 3,831 vehicles, of which 1,805 were owned and 2,026 were leased. For
additional information regarding leases, see Note 9 to the consolidated
financial statements in Item 8 of this Form 10-K.
The Company's 192 cemeteries contain an aggregate of approximately 14,600
acres of which approximately 58% are developed.
The specialized nature of the Company's businesses requires that its
facilities be well maintained and kept in good condition. Management believes
that these standards are met.
ITEM 3. LEGAL PROCEEDINGS.
The staff of the Securities and Exchange Commission (the "Commission") is
conducting an informal private investigation relating to the change in the
Company's principal independent accountants and the Company's Current Report on
Form 8-K dated March 31, 1993, as amended, filed with the Commission reporting
such change, as well as the Company's current accounting and reporting of
pre-need sales. The Commission staff has advised the Company that the
investigation should not be construed as an indication by the Commission or its
staff that any violations of law have occurred, or as a reflection upon any
person, entity or security. The investigation is continuing. Also see Item 9.
Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure in this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
3
<PAGE> 5
EXECUTIVE OFFICERS OF THE COMPANY
Pursuant to General Instruction G to Form 10-K, the information regarding
executive officers of the Company called for by Item 401 of Regulation S-K is
hereby included in Part I of this report.
The following table sets forth as of March 25, 1994 the name and age of
each executive officer of the Company, the office held, and the date first
elected an officer.
<TABLE>
<CAPTION>
YEAR FIRST
BECAME
OFFICER NAME AGE POSITION OFFICER(1)
------------ ----- -------- ----------
<S> <C> <C> <C>
R. L. Waltrip........................ (63) Chairman of the Board and Chief 1962
Executive Officer
L. William Heiligbrodt............... (52) President and Chief Operating Officer 1988
W. Blair Waltrip..................... (39) Executive Vice President Operations 1980
Samuel W. Rizzo...................... (58) Executive Vice President and Chief 1987
Financial Officer/Treasurer
John W. Morrow, Jr................... (58) Executive Vice President Corporate 1989
Development
Glenn G. McMillen.................... (51) Senior Vice President Australia 1993
Jerald L. Pullins.................... (52) Senior Vice President Corporate 1992
Development
James M. Shelger..................... (44) Senior Vice President General Counsel 1987
and Secretary
Jack L. Stoner....................... (48) Senior Vice President Administration 1992
T. Craig Benson...................... (32) Vice President Operations; 1990
President -- Investment Capital
Corporation, a subsidiary of the
Company
George R. Champagne.................. (40) Vice President and Assistant to Chief 1989
Operating Officer
Richard T. Sells..................... (54) Vice President Prearranged Sales 1987
Vincent L. Visosky................... (46) Vice President Finance 1989
Henry M. Nelly, III.................. (49) President -- Provident Services, 1989
Inc., a subsidiary of the Company
</TABLE>
- ---------------
(1) Indicates the year a person was first elected as an officer although there
were subsequent periods when certain persons ceased being officers of the
Company.
Unless otherwise indicated below, the persons listed above have been
executive officers or employees for more than five years.
Mr. Morrow was elected as an executive Vice President in May 1991. From May
1990 to May 1991, Mr. Morrow was President of SCI Funeral Services, Inc., a
subsidiary of the Company. From February 1990 to May 1990, Mr. Morrow was
President and Chief Operating Officer of the Funeral Service Division of the
Company. From August 1989 to February 1990, Mr. Morrow was an officer of the
Company serving as Executive Vice President. Prior thereto, Mr. Morrow was
President and owner of J. W. Morrow Investment Company, a funeral home business,
and also provided consulting services to the Company.
Mr. Pullins joined the Company in September 1991 and was elected to his
present position in February 1992. Prior thereto from January 1987 through
August 1991, Mr. Pullins was President, Chief Executive Officer and Chief
Operating Officer of Sentinel Group, Inc., a funeral service company.
4
<PAGE> 6
Mr. Stoner joined the Company in September 1991 and was elected to his
present position in August 1992. Prior thereto for more than five years, Mr.
Stoner was a general partner and Director of Tax of Ernst & Young (formerly
Arthur Young & Company), certified public accountants.
Each officer of the Company is elected by the Board of Directors and holds
his office until his successor is elected and qualified or until his earlier
death, resignation or removal in the manner prescribed in the Bylaws of the
Company. Each officer of a subsidiary of the Company is elected by the
subsidiary's board of directors and holds his office until his successor is
elected and qualified or until his earlier death, resignation or removal in the
manner prescribed in the bylaws of the subsidiary. There is no family
relationship between any of the persons in the preceding table except that W.
Blair Waltrip is a son of R. L. Waltrip, that T. Craig Benson is a son-in-law to
R. L. Waltrip and that T. Craig Benson is a brother-in-law to W. Blair Waltrip.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The Company's common stock has been traded on the New York Stock Exchange
since May 14, 1974. On March 21, 1994, there were approximately 8,700 holders of
record of the Company's common stock.
The Company has declared 83 consecutive quarterly dividends on its common
stock since it began paying dividends in 1974. The dividend rate is $.105 per
quarter, or an indicated annual rate of $.42. For the three years ended December
31, 1993, dividends were $.40, $.39 and $.37, respectively.
The table below shows the Company's quarterly high and low common stock
prices:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1993 1992 1991
------------ ------------ ------------
HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
First............................................. 21 5/8 17 7/8 18 3/8 15 5/8 17 3/8 13 1/2
Second............................................ 22 1/8 18 1/2 18 3/4 16 1/8 18 3/8 14
Third............................................. 25 1/4 20 3/4 18 1/2 16 3/8 18 1/8 14 1/2
Fourth............................................ 26 3/8 23 1/2 18 1/2 16 3/4 18 14 7/8
</TABLE>
SRV is the New York Stock Exchange ticker symbol for the common stock of
Service Corporation International.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,*
--------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues.......................... $ 899,178 $ 772,477 $ 643,248 $ 563,156 $ 518,809
Income before income taxes and
preferred dividend
requirement..................... $ 173,492 $ 139,336 $ 108,872 $ 99,432 $ 84,618
Income available to common
stockholders.................... $ 101,061 $ 86,536 $ 73,372 $ 60,218 $ 46,721
Income available to common
stockholders per share.......... $ 1.21 $ 1.13 $ 1.03 $ .85 $ .65
Dividends per share............... $ .40 $ .39 $ .37 $ .37 $ .36
Total assets...................... $3,683,304 $2,611,123 $2,123,452 $1,653,689 $1,601,468
Long-term debt.................... $1,062,222 $ 980,029 $ 786,685 $ 577,378 $ 485,669
Stockholders' equity.............. $ 884,513 $ 683,097 $ 615,776 $ 434,323 $ 557,777
Shares outstanding................ 84,859 76,905 75,981 68,801 72,575
Ratio of earnings to fixed
charges**....................... 3.19 3.03 2.82 2.62 2.38
</TABLE>
(See notes on following page)
5
<PAGE> 7
- ---------------
* The year ended December 31, 1993 reflects the change in accounting principles
adopted January 1, 1993. The four years ended December 31, 1992 reflect
results as historically reported.
** For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes from continuing operations, less
undistributed income of equity investees which are less than 50% owned, plus
the minority interest of majority-owned subsidiaries with fixed charges, and
plus fixed charges (excluding capitalized interest and preferred dividends).
Fixed charges consist of interest expense, whether capitalized or expensed,
amortization of debt costs, one-third of rental expense which the Company
considers representative of the interest factor in the rentals and preferred
dividends.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
ORGANIZATION
The majority of the Company's funeral homes and cemeteries are managed in
groups called clusters. Clusters are primarily designated in metropolitan areas
to take advantage of operational efficiencies, including the sharing of
operating expenses such as service personnel, vehicles, preparation services,
clerical staff and certain building facility costs. The Company has
approximately 165 clusters which range in size from two to 46 operations. There
may be more than one cluster in a given metropolitan area, depending upon the
level and degree of shared costs.
The cluster management approach recognizes that, as the Company adds
operations to a geographic area that contains an existing Company presence,
additional economies of scale through cost sharing will be achieved and the
Company will also be in a better position to serve the population that resides
within the area served by the cluster. Funeral service and cemetery operations
primarily depend upon a long-term development of customer relationships and
loyalty. Over time, these client families may relocate within a cluster area
which may justify the relocation or addition of Company locations. The Company
has attempted to satisfy this need for convenient locations by either acquiring
existing independent locations within the Company's cluster areas or
constructing satellite funeral homes (sometimes on Company-owned cemeteries)
while still maintaining the sharing of certain expenses within that cluster of
operations.
CHANGE IN ACCOUNTING PRINCIPLES
Effective January 1, 1993, the Company changed its method of accounting for
prearranged funeral service contracts and cemetery sales. For a more detailed
discussion of these changes, see Note 2 to the consolidated financial statements
in Item 8 of this Form 10-K. The cumulative effect of these changes resulted in
an after tax charge of $2,031,000 or $.03 per share on January 1, 1993.
Generally these changes will result in reduced funeral revenues and funeral
operating income, at least in the near future, due to the deferral of previously
recognized prearranged funeral service trust fund income until performance of
the specific funeral. Additionally, these changes will generally result in
higher cemetery revenues and cemetery operating income because all cemetery
sales and costs are recorded in current income. See Item 3. Legal Proceedings in
this Form 10-K for information regarding an informal investigation by the
Securities and Exchange Commission.
6
<PAGE> 8
For purposes of managements's discussion and analysis of results of
operations and financial condition, all comparisons to 1992 and 1991 reflect the
pro forma effects of applying the new accounting principles as if the changes
had occurred on December 31, 1990. The following table presents the pro forma
results for the years ended 1992 and 1991:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
UNAUDITED
PRO FORMA
AS REPORTED ---------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Funeral............................................... $ 603,099 $ 532,914 $ 430,565
Cemetery.............................................. 280,421 217,100 194,434
Financial services.................................... 15,658 10,741 14,823
----------- ----------- -----------
899,178 760,755 639,822
Costs and expenses:
Funeral............................................... (426,008) (379,223) (307,090)
Cemetery.............................................. (200,682) (164,188) (149,822)
Financial services.................................... (9,168) (6,632) (10,666)
----------- ----------- -----------
(635,858) (550,043) (467,578)
----------- ----------- -----------
Gross profit............................................ 263,320 210,712 172,244
General and administrative expenses..................... (43,706) (38,693) (35,448)
Interest expense........................................ (59,631) (53,902) (42,429)
Other income............................................ 13,509 9,876 8,241
----------- ----------- -----------
Income before income taxes.............................. 173,492 127,993 102,608
Income taxes............................................ (70,400) (48,500) (33,200)
----------- ----------- -----------
Income before cumulative effect of change in accounting
principles............................................ $ 103,092 $ 79,493 $ 69,408
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
RESULTS OF OPERATIONS
Year Ended 1993 Compared to 1992
In 1993, total funeral revenues increased $70,185,000 or 13.2% over 1992.
Funeral revenues were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------- INCREASE PERCENTAGE
1993 1992* (DECREASE) INCREASE
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
(THOUSANDS)
Existing clusters............................... $548,771 $497,092 $ 51,679 10.4%
New clusters**.................................. 28,376 2,259 26,117
-------- -------- ---------- ----------
Total clusters........................ 577,147 499,351 77,796 15.6%
Non-cluster and disposed operations............. 25,952 33,563 (7,611)
-------- -------- ---------- ----------
Total funeral revenues................ $603,099 $532,914 $ 70,185 13.2%
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
The $51,679,000 increase in revenues at existing clusters was the result of
10,193 or 6.9% more funeral services performed and a $111 or 3.3% higher average
sales price. Included in this increase were $29,281,000 in revenues from
locations acquired during the two year period. Overall, funeral services
performed are
- ---------------
* Unaudited pro forma.
** Represents new geographic areas entered into after December 31, 1991 for the
period that those businesses were owned by the Company.
7
<PAGE> 9
expected to grow slowly for the near future and it is expected that the
Company's revenue growth will primarily be generated from acquired operations
(added to existing clusters and the creation of new clusters) as well as higher
average sales prices.
During 1993, the Company sold $159,000,000 of prearranged funeral services
compared to $119,000,000 for 1992. These prearranged funeral services are
deferred and will be reflected in funeral revenues in the periods that the
funeral services are performed. An increased emphasis on sales of prearranged
funerals is expected to continue.
Total funeral costs increased $46,785,000 or 12.3% in 1993. Funeral costs
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------- INCREASE PERCENTAGE
1993 1992* (DECREASE) INCREASE
-------- -------- ---------- ----------
(THOUSANDS)
<S> <C> <C> <C> <C>
Existing clusters............................... $357,118 $324,893 $ 32,225 9.9%
New clusters**.................................. 21,571 1,755 19,816
-------- -------- ---------- ----------
Total clusters........................ 378,689 326,648 52,041 15.9%
Non-cluster and disposed operations............. 18,838 27,654 (8,816)
Administrative overhead......................... 28,481 24,921 3,560
-------- -------- ---------- ----------
Total funeral costs................... $426,008 $379,223 $ 46,785 12.3%
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
Existing cluster funeral costs, expressed as a percentage of revenues, were
65.1%, which was slightly lower than the 65.4% recorded in 1992. This operating
margin improvement was achieved despite the large number of acquisitions which
occurred during the two year period. Typically, acquisitions will temporarily
exhibit slightly lower operating margins than the Company's existing locations.
These acquisitions accounted for $19,548,000 of the existing cluster cost
increase. The improved operating margin reflects, increased revenues, reduced
personnel costs (the largest funeral expense item) and facility costs at other
funeral homes included in existing clusters. As a percentage of revenues,
administrative overhead costs related to funeral operations remained at 4.7% in
both years.
Total cemetery revenues increased $63,321,000 or 29.2% over 1992. Cemetery
revenues were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------- INCREASE PERCENTAGE
1993 1992* (DECREASE) INCREASE
-------- -------- ---------- ----------
(THOUSANDS)
<S> <C> <C> <C> <C>
Existing clusters............................... $254,343 $202,709 $ 51,634 25.5%
New clusters**.................................. 14,818 946 13,872
-------- -------- ---------- ----------
Total clusters........................ 269,161 203,655 65,506 32.2%
Non-cluster and disposed operations............. 11,260 13,445 (2,185)
-------- -------- ---------- ----------
Total cemetery revenues............... $280,421 $217,100 $ 63,321 29.2%
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
Revenues for the existing clusters increased due to increased at-need and
pre-need sales volume, higher average at-need and pre-need contract prices and
additional earnings from cemetery perpetual care and merchandise and service
trust funds. Included in the existing cluster increase, was $40,059,000 in
increased revenues from cemeteries acquired during the two year period.
- ---------------
* Unaudited pro forma.
** Represents new geographic areas entered into after December 31, 1991 for the
period that those businesses were owned by the Company.
8
<PAGE> 10
Total cemetery costs increased $36,494,000 or 22.2% over the prior year.
Cemetery costs were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------- INCREASE PERCENTAGE
1993 1992* (DECREASE) INCREASE
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
(THOUSANDS)
Existing clusters......................... $167,635 $141,178 $ 26,457 18.7%
New clusters**............................ 8,414 892 7,522
-------- -------- ---------- ----------
Total clusters.................. 176,049 142,070 33,979 23.9%
Non-cluster and disposed operations....... 8,038 10,437 (2,399)
Administrative overhead................... 16,595 11,681 4,914
-------- -------- ---------- ----------
Total cemetery costs............ $200,682 $164,188 $ 36,494 22.2%
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
The entire increase in existing cluster costs resulted from increased costs
at cemeteries acquired during the two year period. There was no increase in
costs at other cemeteries included in existing clusters despite the sales
increase discussed above. Cost containment in the areas of selling and
maintenance expenses contributed to the lack of increase. Cemetery costs,
expressed as a percentage of revenues, at existing clusters decreased to 65.9%
this year from 69.6% in 1992. The Company believes that the operating margins
realized in 1993 are achievable in the future through continued aggressive sales
as well as cost containment programs. Administrative overhead costs have
increased slightly, when expressed as a percentage of revenues, to 5.9%
currently from 5.4% in 1992.
Financial service revenues and costs have increased in 1993 as a result of
increased loans outstanding and improved interest rate spreads. The average
outstanding loan portfolio during 1993 was $215,726,000 with an average interest
rate spread of 3.3% compared to $143,773,000 and 2.6%, respectively, in 1992.
Financial services are provided through Provident which is a major source of
funding to independent funeral home and cemetery operators. Unlike a commercial
bank, Provident does not have access to low-cost deposit funds so its net
interest margin is lower because it borrows money at market rates. Additionally,
Provident does not incur as much administrative costs as does a commercial bank.
Through Provident's relationships with these borrowers, the Company derives the
benefit of developing a continuing relationship with these entities. The credit
risk for this type of lending is considered minimal to the Company.
General and administrative expenses increased by $5,013,000 or 13.0%. The
increase is primarily attributable to compensation expense in connection with
performance-based vesting of restricted stock grants to Company management.
Vesting is based on a formula primarily tied to earnings per share growth.
Interest expense, which excludes the amount incurred through financial
service operations, increased $5,729,000 or 10.6% during 1993. In February 1993,
the Company issued $150,000,000 of 7.875% debentures due in 2013. The proceeds
were primarily used to repay existing credit agreement borrowings. Also in
February 1993, the Company called the $100,000,000 6.5% convertible debentures
originally issued in 1986. Holders of the debentures converted $97,164,000 into
Company common stock at $17.33 per share (5,607,000 shares) with the remaining
$2,836,000 redeemed in cash. Additionally, interest expense was reduced by
decreased average interest rates on amounts borrowed under the Company's credit
agreements during 1993 compared to 1992.
Other income includes the recognition of gains from the sale of excess real
estate and existing businesses during both periods.
The provision for income taxes has increased to 40.6% from 37.9% during
1992 primarily due to the enactment of the Omnibus Budget Reconciliation Act of
1993 in August 1993 which increased corporate tax rates retroactively to January
1, 1993. As a result of the new law, the Company's 1993 tax expense increased
- ---------------
* Unaudited pro forma.
** Represents new geographic areas entered into after December 31, 1991 for the
period that those businesses were owned by the Company.
9
<PAGE> 11
$2,431,000 from increased deferred income taxes and $1,700,000 from the higher
corporate tax rate on 1993 earnings ($.05 earnings per share).
RESULTS OF OPERATIONS
Year Ended 1992 Compared to 1991
In 1992, total funeral revenues increased $102,349,000 or 23.8% over 1991.
Funeral revenues were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------- PERCENTAGE
1992* 1991* INCREASE INCREASE
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
(THOUSANDS)
Existing clusters......................... $456,617 $390,807 $ 65,810 16.8%
New clusters**............................ 43,377 11,190 32,187
-------- -------- -------- ----------
Total clusters.................. 499,994 401,997 97,997 24.4%
Non-cluster and disposed operations....... 32,920 28,568 4,352
-------- -------- -------- ----------
Total funeral revenues.......... $532,914 $430,565 $102,349 23.8%
-------- -------- -------- ----------
-------- -------- -------- ----------
</TABLE>
The $65,810,000 increase in revenues at existing clusters, which included
an increase of $59,598,000 from acquired operations, was the result of 13,857 or
11.4% more funeral services performed and a $157 or 4.9% higher average sales
price.
Total funeral costs increased $72,133,000 or 23.5% in 1992. Funeral costs
were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------- PERCENTAGE
1992* 1991* INCREASE INCREASE
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
(THOUSANDS)
Existing clusters......................... $292,331 $254,186 $ 38,145 15.0%
New clusters**............................ 34,972 9,063 25,909
-------- -------- -------- ----------
Total clusters.................. 327,303 263,249 64,054 24.3%
Non-cluster and disposed operations....... 26,999 26,032 967
Administrative overhead................... 24,921 17,809 7,112
-------- -------- -------- ----------
Total funeral costs............. $379,223 $307,090 $ 72,133 23.5%
-------- -------- -------- ----------
-------- -------- -------- ----------
</TABLE>
All of the increase in costs at existing clusters was the result of funeral
homes acquired during the two year period. For other funeral homes included in
existing clusters, personnel costs increased primarily as the result of higher
benefit costs. This was offset by decreased merchandise costs, reflecting more
effective purchasing arrangements with vendors and an additional year-end
discount from the revision of a merchandise purchasing contract with one vendor.
Discounts should continue through 1998 based on the provisions of the revised
contract as well as with agreements with other vendors. Facility costs also
declined when compared to 1991.
- ---------------
* Unaudited pro forma.
** Represents new geographic areas entered into after December 31, 1990 for the
period that those businesses were owned by the Company.
10
<PAGE> 12
Total cemetery revenues increased $22,666,000 or 11.7% over 1991. Cemetery
revenues were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------- INCREASE PERCENTAGE
1992* 1991* (DECREASE) INCREASE
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
(THOUSANDS)
Existing clusters......................... $186,051 $171,273 $ 14,778 8.6%
New clusters**............................ 13,823 5,308 8,515
-------- -------- ---------- ----------
Total clusters.................. 199,874 176,581 23,293 13.2%
Non-cluster and disposed operations....... 17,226 17,853 (627)
-------- -------- ---------- ----------
Total cemetery revenues......... $217,100 $194,434 $ 22,666 11.7%
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
Revenues at existing clusters, which include an increase of $11,937,000
from acquired operations, increased a total of $14,778,000 or 8.6% due to
increased at-need sales, higher average at-need and pre-need contract prices
partially offset by a slight decline in the number of pre-need contracts sold.
Total cemetery costs increased $14,366,000 or 9.6% over 1991. Cemetery
costs were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------- INCREASE PERCENTAGE
1992* 1991* (DECREASE) INCREASE
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
(THOUSANDS)
Existing clusters......................... $127,626 $116,711 $ 10,915 9.4%
New clusters**............................ 10,502 4,618 5,884
-------- -------- ---------- ----------
Total clusters.................. 138,128 121,329 16,799 13.8%
Non-cluster and disposed operations....... 14,379 13,315 1,064
Administrative overhead................... 11,681 15,178 (3,497)
-------- -------- ---------- ----------
Total cemetery costs............ $164,188 $149,822 $ 14,366 9.6%
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
Costs at existing clusters, which include an increase of $9,667,000 from
acquired operations, increased a total of $10,915,000 or 9.4%. Merchandise and
repair and maintenance expenses increased at other cemeteries included in
existing clusters. Cemetery overhead costs declined in 1992 due to the closing
of the San Diego administrative office in late 1991. These costs were either
eliminated or transferred to general and administrative expense at the Houston
corporate offices.
Financial service revenues and costs have decreased during 1992 as a result
of a decrease in the average outstanding loan portfolio and borrowed amounts for
Provident in 1992. Operating income remained level for both years. For the year
1992, Provident's outstanding loan portfolio averaged $143,773,000 with an
average interest rate spread of 2.6% compared to $148,652,000 and 2.4%,
respectively, in 1991.
General and administrative expenses increased in 1992 by $3,245,000 or
9.2%. Personnel costs, including the cost of restricted stock grants and other
employee benefit accruals, increased $2,141,000. The remainder of the increase
resulted primarily from higher facility and administrative costs. A portion of
the additional costs resulted from the relocation of cemetery administrative
offices from San Diego to Houston.
Interest expense, which excludes the amount incurred through financial
service operations, increased $11,473,000 or 27.0% during 1992. In October 1991,
the Company issued $172,500,000 of 6.5% convertible debentures due in 2001. Also
contributing to the increase was the interest on debt assumed and not refinanced
from various 1991 acquisitions. Lower interest rates in 1992 helped to offset
increases in interest expense from increased average amounts borrowed under the
Company's credit agreements.
- ---------------
* Unaudited pro forma.
** Represents new geographic areas entered into after December 31, 1990 for the
period that those businesses were owned by the Company.
11
<PAGE> 13
Other income increased during 1992 due primarily to the recognition of two
gains in 1992. One resulted from the collection of a note receivable that had
previously been written off, and the other from the sale of an equity
investment. Partially offsetting the increase was less income on corporate
investments. Both years include pretax gains associated with the disposition of
certain excess funeral and cemetery real property.
During the third quarter of 1991, certain Internal Revenue Service audits
of the Company were settled and resulted in the recognition of $4,800,000 or
$.07 per share of income tax benefits.
FINANCIAL CONDITION AT DECEMBER 31, 1993
Cash flows continue to be impacted by the Company's aggressive acquisition
of funeral homes and cemeteries. In addition, capital expenditures, including
major improvements to existing properties, continue to require a significant
amount of cash. Funds generated from the stable earnings of existing funeral and
cemetery operations, together with unused lines of credit or other available
borrowings, are expected to be sufficient for the Company to continue its
current acquisition and operating policies. At December 31, 1993, the Company
had available approximately $250,000,000 of borrowing ability under its various
credit lines. The change in accounting principles previously mentioned did not
affect the Company's recognition of cash collections and disbursements.
In November 1993, the Company's $250,000,000 revolving credit agreement was
extended for an additional three years. Also in November 1993, the Company
entered into a new $350,000,000 revolving credit/term loan agreement that
matures in November 1994 and contains provisions for renewals. At the end of any
term, the outstanding balance may be converted into a two-year term loan.
Interest rates for each of these agreements are based on a Euro-dollar rate,
alternative base loan rate or a rate which is competitively bid by participating
banks. Each of these credit facilities is to be used for acquisitions, general
corporate purposes and to support the Company's selling of commercial paper.
In addition to the sources of cash, the Company has 13,228,000 shares of
common stock, $93,415,000 of guarantees of promissory notes and $87,103,000 of
convertible debentures registered with the Commission to be used exclusively for
future acquisitions.
The Company's debt to capitalization ratio decreased to 54.6% at December
31, 1993 from 59.0% at December 31, 1992, primarily reflecting the net reduction
in debt from the February 1993 conversion of $97,164,000 of debentures into
equity and increased net income from operations.
PREARRANGED FUNERAL SERVICES
The Company has a marketing program to sell prearranged funeral contracts
and the funds collected are generally held in trust or are used to purchase a
life insurance or annuity contract. The principal amount of these prearranged
funeral contracts will be received in cash by a Company funeral home at the time
the funeral is performed. Earnings on trust funds and increasing benefits under
insurance funded contracts also increase the amount of cash to be received and
allow the Company to adequately cover the inflationary increase in costs.
Marketing costs incurred with the sale of prearranged funeral contracts are a
current use of cash which is partially offset with cash retained, pursuant to
state laws, from amounts trusted and certain commissions earned by the Company
for sales of insurance products. The Company believes prearrangements add
stability to the funeral service industry and will stimulate future revenue
growth. Prearranged funeral services fulfilled as a percent of the total
funerals performed (19% for 1993) is expected to grow, thereby making the total
number of funerals performed more predictable.
Of the total prearranged funeral contracts at December 31, 1993, 45% were
trust funded and 55% were insurance funded. The Company's cancellation rate for
all prearranged funeral contracts approximates 10% for which a reserve has been
established.
The Company believes that several factors will continue to cause an
increase in the sale of these contracts such as a desire on the part of an aging
North American population to preplan their funerals and various industry
advertising campaigns. The Company intends to actively sell these prearranged
funeral contracts into the foreseeable future.
12
<PAGE> 14
FOREIGN OPERATIONS
The Company has operated in Canada for many years and in 1993 purchased a
funeral service operation in Australia with 60 funeral homes and eight
cemeteries. Since foreign revenues are less than 10% of consolidated revenues
and identifiable foreign assets are less than 10% of total assets, segment
information has not been presented in the notes to the consolidated financial
statements. Though historically the currencies of these two countries have been
stable, the Company has nevertheless entered into a currency swap agreement for
the Australian acquisition as more fully discussed in Note 12 to the
consolidated financial statements in Item 8 of this Form 10-K to minimize any
possible currency risk exposure.
PROSPECTIVE ACCOUNTING CHANGES
In 1994, Statement of Financial Accounting Standards (FAS) 112 "Employer's
Accounting for Postemployment Benefits" becomes effective. This FAS requires the
Company to accrue for estimated future postemployment benefits during the years
employees are working and earning these benefits. Also in 1994, FAS 115
"Accounting for Certain Investments in Debt and Equity Securities" becomes
effective. This FAS addresses the accounting for investments in equity and debt
securities held by the Company. In 1995, FAS 114 "Accounting by Creditors for
Impairment of a Loan" becomes effective. This FAS requires present value
computations for impaired loans when determining allowances for loan losses.
Adoption of these three standards is not expected to materially affect the
Company's financial position or results of operations.
13
<PAGE> 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND RELATED SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports of Independent Accountants.................................................... 15
Consolidated Statement of Income for the three years ended December 31, 1993.......... 17
Consolidated Balance Sheet as of December 31, 1993 and 1992........................... 18
Consolidated Statement of Stockholders' Equity for the three years ended December 31,
1993................................................................................ 19
Consolidated Statement of Cash Flows for the three years ended December 31, 1993...... 20
Notes to Consolidated Financial Statements............................................ 21
Financial Statement Schedules:
II -- Amounts Receivable from Related Parties....................................... 39
VIII -- Valuation and Qualifying Accounts............................................. 43
X -- Supplementary Income Statement Information..................................... 44
</TABLE>
All other schedules have been omitted because the required information is
not applicable or is not present in amounts sufficient to require submission or
because the information required is included in the consolidated financial
statements or the related notes thereto.
14
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Service Corporation International
We have audited the consolidated financial statements and the financial
statement schedules of Service Corporation International listed in the index on
page 14 of this Form 10-K as of December 31, 1993 and for the year then ended.
These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Service
Corporation International as of December 31, 1993, and the consolidated results
of their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
As discussed in Notes Two and Six to the consolidated financial statements,
effective January 1, 1993, the Company changed its method of accounting for
prearranged funeral contracts and cemetery sales and income taxes.
COOPERS & LYBRAND
Houston, Texas
February 8, 1994
15
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
Service Corporation International
We have audited the accompanying consolidated balance sheet of Service
Corporation International as of December 31, 1992 and the related consolidated
statements of income, stockholders' equity and cash flows for each of the two
years in the period ended December 31, 1992. Our audits also included the
financial statement schedules for the years ended December 31, 1992 and 1991
listed in the index at Item 8. These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Service Corporation International at December 31, 1992 and the consolidated
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1992, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules for
the years ended December 31, 1992 and 1991, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
ERNST & YOUNG
Houston, Texas
February 8, 1993
16
<PAGE> 18
SERVICE CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
(THOUSANDS, EXCEPT PER SHARE
INFORMATION)
Revenues................................................ $ 899,178 $ 772,477 $ 643,248
Costs and expenses...................................... (635,858) (550,422) (464,740)
--------- --------- ---------
Gross profit............................................ 263,320 222,055 178,508
General and administrative expenses..................... (43,706) (38,693) (35,448)
--------- --------- ---------
Income from operations.................................. 219,614 183,362 143,060
Interest expense........................................ (59,631) (53,902) (42,429)
Other income............................................ 13,509 9,876 8,241
--------- --------- ---------
(46,122) (44,026) (34,188)
--------- --------- ---------
Income before income taxes.............................. 173,492 139,336 108,872
Provision for income taxes.............................. (70,400) (52,800) (35,500)
--------- --------- ---------
Income before cumulative effect of change in accounting
principles............................................ 103,092 86,536 73,372
Cumulative effect of change in accounting principles
(net of income tax)................................... (2,031) -- --
--------- --------- ---------
Net income.............................................. $ 101,061 $ 86,536 $ 73,372
--------- --------- ---------
--------- --------- ---------
Earnings per share:
Primary
Income before cumulative effect of change in
accounting principles............................ $ 1.24 $ 1.13 $ 1.03
Cumulative effect of change in accounting
principles (net of income tax)................... (.03) -- --
--------- --------- ---------
Net income............................................ $ 1.21 $ 1.13 $ 1.03
--------- --------- ---------
--------- --------- ---------
Fully diluted
Income before cumulative effect of change in
accounting principles............................ $ 1.19 $ 1.07 $ 1.00
Cumulative effect of change in accounting
principles (net of income tax)................... (.02) -- --
--------- --------- ---------
Net income............................................ $ 1.17 $ 1.07 $ 1.00
--------- --------- ---------
--------- --------- ---------
Weighted average number of shares and equivalents....... 83,372 76,856 71,426
--------- --------- ---------
--------- --------- ---------
</TABLE>
(See notes)
17
<PAGE> 19
SERVICE CORPORATION INTERNATIONAL
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
---------- ----------
<S> <C> <C>
(THOUSANDS)
Current assets:
Cash and cash equivalents......................................... $ 20,822 $ 31,253
Receivables, net of allowances.................................... 236,786 182,272
Inventories....................................................... 45,211 40,577
Other............................................................. 9,640 4,496
---------- ----------
Total current assets...................................... 312,459 258,598
---------- ----------
Prearranged funeral contracts....................................... 1,244,866 --
Long-term receivables............................................... 500,062 274,793
Investments......................................................... -- 661,788
Cemetery property, at cost.......................................... 417,050 298,247
Property, plant and equipment, at cost (net)........................ 606,826 504,471
Deferred charges and other assets................................... 174,345 202,956
Names and reputations (net)......................................... 427,696 410,270
---------- ----------
$3,683,304 $2,611,123
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.......................... $ 96,881 $ 89,004
Income taxes...................................................... 18,695 3,673
Current maturities of long-term debt.............................. 24,982 10,602
---------- ----------
Total current liabilities................................. 140,558 103,279
---------- ----------
Long-term debt...................................................... 1,062,222 980,029
Prearranged funeral and cemetery perpetual care obligations......... -- 477,951
Deferred income taxes............................................... 146,968 99,207
Other liabilities and deferred cemetery costs....................... 185,636 267,560
Deferred prearranged funeral contract revenues...................... 1,263,407 --
Commitments and contingencies....................................... -- --
Stockholders' equity:
Common stock, $1 par value, 200,000,000 shares authorized,
84,859,110 and 76,904,954, respectively, issued and
outstanding.................................................... 84,859 76,905
Capital in excess of par value.................................... 517,902 389,238
Retained earnings................................................. 284,879 220,497
Unrealized depreciation of investments............................ -- (1,254)
Foreign translation adjustment.................................... (3,127) (2,289)
---------- ----------
Total stockholders' equity................................ 884,513 683,097
---------- ----------
$3,683,304 $2,611,123
---------- ----------
---------- ----------
</TABLE>
(See notes)
18
<PAGE> 20
SERVICE CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
(THOUSANDS)
Cash flows from operating activities:
Net income.............................................. $ 101,061 $ 86,536 $ 73,372
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 58,214 47,369 34,990
Undistributed earnings of trusts...................... -- (17,959) (15,508)
Provision for deferred income taxes................... 29,235 13,324 6,205
Gains from dispositions (net)......................... (7,076) (3,237) (2,184)
Cumulative effect of change in accounting
principles......................................... 2,031 -- --
Change in assets and liabilities net of effects from
acquisitions:
(Increase) in receivables.......................... (35,520) (10,962) (27,435)
(Increase) in prearranged funeral contracts and
associated deferred revenues..................... (14,464) -- --
(Increase) decrease in other assets................ 1,967 528 (15,212)
Increase (decrease) in other liabilities........... (9,826) 28,514 (2,110)
Other.............................................. 5,332 1,411 2,934
--------- --------- ---------
Net cash provided by operating activities............... 130,954 145,524 55,052
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures.................................. (59,585) (66,820) (38,489)
Proceeds from sales of property and equipment......... 24,006 18,812 12,520
Acquisitions.......................................... (175,753) (117,737) (123,486)
Loans issued by Provident............................. (102,328) (136,959) (58,496)
Principal payments received on loans by Provident..... 41,652 44,280 45,132
Change in investments and other....................... (2,367) (23,000) (8,235)
--------- --------- ---------
Net cash used in investing activities................... (274,375) (281,424) (171,054)
--------- --------- ---------
Cash flows from financing activities:
Borrowings under lines of credit...................... 37,500 194,403 22,922
Subordinated debentures issued........................ 150,000 -- 172,500
Payments of debt...................................... (24,283) (32,008) (17,927)
Repurchase of common stock............................ (1,637) (6,569) (17,989)
Dividends paid........................................ (32,887) (29,629) (26,320)
Exercise of stock options and other................... 4,297 2,534 3,450
--------- --------- ---------
Net cash provided by financing activities............... 132,990 128,731 136,636
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents.... (10,431) (7,169) 20,634
Cash and cash equivalents at beginning of year.......... 31,253 38,422 17,788
--------- --------- ---------
Cash and cash equivalents at end of year................ $ 20,822 $ 31,253 $ 38,422
--------- --------- ---------
--------- --------- ---------
</TABLE>
(See notes)
19
<PAGE> 21
SERVICE CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CAPITAL IN UNREALIZED FOREIGN
COMMON EXCESS OF RETAINED (DEPRECIATION) TRANSLATION
STOCK PAR VALUE EARNINGS OF INVESTMENTS ADJUSTMENT
------- ---------- -------- -------------- -----------
<S> <C> <C> <C> <C> <C>
(THOUSANDS)
Balance at December 31, 1990............ $68,801 $ 241,961 $133,443 $(11,351) $ 1,469
Add (deduct):
Net income............................ 73,372
Repurchase of common stock............ (1,196) (5,388) (11,405)
Common stock issued:
Stock option exercises and stock
grants........................... 296 4,216
Acquisitions....................... 8,080 129,153
Dividends on common stock ($.37 per
share)............................. (27,039)
Unrealized appreciation of
investments........................ 11,351
Foreign translation adjustment........ 13
------- ---------- -------- -------------- -----------
Balance at December 31, 1991............ 75,981 369,942 168,371 -- 1,482
Add (deduct):
Net income............................ 86,536
Repurchase of common stock............ (398) (1,974) (4,197)
Common stock issued:
Stock option exercises and stock
grants........................... 589 9,150
Acquisitions....................... 733 12,120
Dividends on common stock ($.39 per
share)............................. (30,213)
Unrealized depreciation of
investments........................ (1,254)
Foreign translation adjustment........ (3,771)
------- ---------- -------- -------------- -----------
Balance at December 31, 1992............ 76,905 389,238 220,497 (1,254) (2,289)
Add (deduct):
Net income............................ 101,061
Repurchase of common stock............ (66) (388) (1,183)
Common stock issued:
Stock option exercises and stock
grants........................... 995 18,899
Acquisitions....................... 1,418 17,432 (1,422)
Debenture conversion............... 5,607 92,721
Dividends on common stock ($.40 per
share)............................. (34,074)
Unrealized depreciation of
investments........................ 1,254
Foreign translation adjustment........ (838)
------- ---------- -------- -------------- -----------
Balance at December 31, 1993............ $84,859 $ 517,902 $284,879 $ -- $(3,127)
------- ---------- -------- -------------- -----------
------- ---------- -------- -------------- -----------
</TABLE>
(See notes)
20
<PAGE> 22
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE ONE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: The consolidated financial statements include
the accounts of Service Corporation International and all wholly-owned
subsidiaries (the Company). Significant intercompany balances and transactions
have been eliminated in consolidation. Certain reclassifications of prior years
have been made to conform to current period classifications.
Cash equivalents: The Company considers all liquid investments purchased
with a maturity of three months or less to be cash equivalents and the carrying
amount approximates fair value because of the short maturity.
Inventories: Inventories, consisting of funeral merchandise and cemetery
space and merchandise, are stated at cost, which is not in excess of market,
determined using average cost.
Depreciation and amortization: Depreciation and amortization of property,
plant and equipment is provided using the straight line method over the
estimated useful lives of the various classes of assets. Maintenance and repairs
are charged to expense whereas renewals and major replacements are capitalized.
Cemetery trust funds: Generally, a portion of the proceeds from the sale of
cemetery lots is required by state law to be paid into perpetual care trust
funds. Earnings from these trusts are recognized in current cemetery revenues
and are intended to defray cemetery maintenance costs. The amount of perpetual
care funds trusted at December 31, 1993 and 1992 was $197,969,000 and
$183,206,000, respectively, and such principal generally cannot be withdrawn by
the Company (see Note 2). Additionally, pursuant to state law, a portion of the
proceeds from the sale of preneed cemetery merchandise and services may also be
required to be paid into trust funds. Merchandise and service trusts, which were
previously included in investments on the Consolidated Balance Sheet, are now
classified as long-term receivables. The Company recognizes income on these
merchandise and service trusts in current cemetery revenues as trust earnings
accrue to defray inflation costs recognized related to the unpurchased cemetery
merchandise. For the three years ended December 31, 1993, the earnings on trusts
recognized for all cemetery trusts was $23,721,000, $18,910,000 and $17,843,000,
respectively.
Deferred obtaining costs: Included in "Deferred prearranged funeral
contract revenues" on the Consolidated Balance Sheet are obtaining costs,
including sales commissions and certain other direct marketing costs, applicable
to prearranged funeral contracts which are deferred and will be expensed when
the service is performed. The aggregate costs deferred as of December 31, 1993
and 1992 were $32,518,000 and $23,934,000, respectively.
Names and reputations: The excess of purchase price over the fair value of
identifiable net tangible assets acquired in transactions accounted for as a
purchase are included in "Names and reputations" and generally amortized on a
straight line basis over 40 years which, in the opinion of management, is not
necessarily the maximum period benefited. Many of the Company's acquired funeral
homes have been providing high quality service to client families for many
decades and such loyalty often forms the basic valuation of a funeral business.
The amortization charged against income was $10,339,000, $9,601,000 and
$4,785,000 for the three years ended December 31, 1993, respectively. Fair
values are determined by management or independent appraisals.
NOTE TWO
CHANGE IN ACCOUNTING PRINCIPLES
The Company changed the following accounting principles effective January
1, 1993.
21
<PAGE> 23
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(A) All price guaranteed prearranged funeral sales contracts are
included in the accompanying balance sheet as a long-term asset with a
corresponding credit to deferred prearranged funeral contract revenues.
Insurance funded contracts were previously disclosed in a note to the
financial statements and certain trust funded contracts were previously
included under investments and prearranged funeral obligations. This change
has no effect on the existing policy of recognizing revenue when the
funeral service is performed.
(B) Prearranged funeral trust earnings previously recognized as
current income are now deferred until the funeral service is performed.
Increasing benefits under insurance funded contracts are now accrued and
deferred until the funeral service is performed.
(C) Preneed sales of cemetery interment rights and other related
products and services are recorded as revenues when customer contracts are
signed with concurrent recognition of related costs. Allowances for
customer cancellations and refunds are provided at the date of sale based
upon historical experience. Previously, such sales were generally deferred
under accounting principles prescribed for sales of real estate. Under the
Company's application of this method of accounting for sales of real
estate, revenues and costs were deferred until 20% of the contract amount
had been collected.
(D) Funds held in perpetual care cemetery trusts were previously
included on the Consolidated Balance Sheet in investments and cemetery
perpetual care obligations, whereas now such amounts are excluded.
The accounting changes were made principally for the following reasons and
are described below in the order referred to above.
(A) The Company believes this accounting is more informative and
provides better disclosure of the future economic events because the
activity is all reported on the Consolidated Balance Sheet.
(B) Funeral trust earnings and increasing benefits under insurance
contracts are intended to cover increases in the future costs of providing
price guaranteed funeral services. Accrued trust earnings were previously
recognized in current income and a provision was made for the estimated
effect of inflation on the costs of merchandise purchased by the Company.
Trust earnings are now deferred until performance of the funeral service
and increasing benefits under insurance funded contracts will be accounted
for similarly. The Company believes this policy will better match revenues
and costs because the total funds (principal and accrued earnings)
available to satisfy the contract will be included in revenues when the
funeral service is performed together with all costs related to performance
of the service.
(C) This method of cemetery accounting has been adopted because all
significant remaining obligations of the Company have been satisfied in the
period the contract is signed. Related costs are provided based on actual
costs incurred, firm commitments or reliable estimates. Historical
experience is the basis for making appropriate allowances for customer
cancellations and will be adjusted when required.
(D) Cemetery perpetual care trusts are excluded from the Consolidated
Balance Sheet because the Company generally does not have the right to
withdraw the principal.
The cumulative effect, through December 31, 1992, of changing these
accounting principles resulted in a charge to first quarter 1993 net income of
$2,031,000 (net of a $1,354,000 tax benefit), or $.03 per share. For the year
ended December 31, 1993, the effect of the change in accounting principles
resulted in a decrease in
22
<PAGE> 24
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
net income of $1,608,000, or $.02 per share. The following table shows the
unaudited pro forma effects of retroactive application using the changed
accounting principles for the two years ended December 31, 1992:
<TABLE>
<CAPTION>
1992 1991
------- -------
<S> <C> <C>
(THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
Net income................................................... $79,493 $69,408
------- -------
------- -------
Primary earnings per share................................... $ 1.03 $ .97
------- -------
------- -------
Fully diluted earnings per share............................. $ .99 $ .95
------- -------
------- -------
</TABLE>
Effective January 1, 1993, the Company adopted FAS 109, "Accounting for
Income Taxes" (see Note 6).
NOTE THREE
ACQUISITIONS
The following table is a summary of acquisitions made during the years
ended December 31, 1993 and 1992 accounted for as purchases:
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Number acquired:
Funeral homes............................................ 124 54
Cemeteries............................................... 21 18
Purchase price............................................. $220,532 $203,708
</TABLE>
The purchase price in both years consisted primarily of combinations of
cash, Company stock, issued and assumed debt and the retirement of loans
receivable issued by the Company's finance subsidiary. The effect of
acquisitions on the Consolidated Balance Sheet at December 31, was as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
(THOUSANDS)
Current assets............................................. $ 19,356 $ 24,046
Prearranged funeral contracts.............................. 59,932 --
Investments................................................ -- 87,789
Long-term receivables...................................... 15,699 1,241
Cemetery property.......................................... 137,563 88,664
Property, plant and equipment.............................. 80,547 31,982
Deferred charges and other assets.......................... (3,109) 8,525
Names and reputations...................................... 32,090 103,474
Current liabilities........................................ (11,895) (25,828)
Prearranged funeral and cemetery perpetual care
obligations.............................................. -- (77,773)
Long-term debt............................................. (28,444) (29,075)
Deferred liabilities....................................... (49,156) (82,455)
Deferred prearranged funeral contract revenues............. (59,402) --
Stockholders' equity....................................... (17,428) (12,853)
-------- --------
Cash used for acquisitions................................. $175,753 $117,737
-------- --------
-------- --------
</TABLE>
23
<PAGE> 25
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The operating results of each acquisition are included in consolidated net
income from the date of acquisition. The following represents the unaudited pro
forma results of operations as if all of the above noted business combinations
had occurred at the beginning of 1992.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1992*
-------- --------
(THOUSANDS)
<S> <C> <C>
Revenues................................................... $955,311 $916,831
-------- --------
-------- --------
Net income................................................. $108,093 $100,165
-------- --------
-------- --------
Primary earnings per common share.......................... $ 1.29 $ 1.27
-------- --------
-------- --------
</TABLE>
- ---------------
* After change in accounting principles discussed in Note 2.
The pro forma information given above does not purport to be indicative of
the results that actually would have been obtained if the acquisitions had been
in effect for the entire periods presented, and is not intended to be a
projection of future results or trends.
NOTE FOUR
PREARRANGED FUNERAL CONTRACTS
The Company sells prearranged funeral contracts through various programs
providing for future funeral services at prices prevailing when the agreement is
signed. Payments under these contracts are generally placed in trust (pursuant
to state law) or are used to pay premiums on life insurance policies. Life
insurance policies are issued by third party insurers.
At December 31, 1993, trust and insurance funds of $1,244,866,000 (net of
cancellation reserve) included in the Consolidated Balance Sheet as "Prearranged
funeral contracts" are available to the Company for previously sold guaranteed
price contracts. Of this amount, $554,879,000 will be funded by trusts and
$689,987,000 will be funded by insurance policies. Accumulated earnings from
trust funds and increasing insurance benefits have been included to the extent
that they have accrued through December 31, 1993. The cumulative total has been
reduced by allowable cash withdrawals for trust earning distributions and
amounts retained by the Company pursuant to various state laws. In addition, a
reserve, based on historical experience, equivalent to approximately 10% of the
total balance has been provided for contract cancellations.
NOTE FIVE
INVESTMENTS
At December 31, 1992, investments include $363,971,000 and $297,817,000 of
prearranged funeral and cemetery perpetual care and merchandise and service
obligations, respectively, held in trust. These investments are carried at the
lower of cost or market and include unrealized gains of $31,496,000 and
unrealized losses of $18,327,000 (see Notes 1 and 2).
NOTE SIX
INCOME TAXES
The Company adopted FAS 109 "Accounting for Income Taxes" effective January
1, 1993. The adoption had no material impact on the Company's results of
operations or financial position. FAS 109 is an asset and liability approach
requiring recognition of deferred tax assets and liabilities for the expected
future tax consequences of events recognized in the Company's financial
statements or tax returns. Under FAS 109, all expected future events other than
changes in the law or tax rates, are considered in estimating future tax
24
<PAGE> 26
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
consequences. The Company previously had followed FAS 96, which was superseded
by FAS 109, and gave no recognition to future events other than recovery of
assets and settlement of liabilities at their carrying amounts.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (the Act) was
enacted and among other changes, the Act increased the top United States
corporate income tax rate to 35% from 34% effective January 1, 1993. The
provision for income taxes for the year ended December 31, 1993 includes an
adjustment to deferred taxes under FAS 109 of $2,431,000 related to this
increase in the corporate tax rate.
The provision for income taxes includes United States income taxes,
determined on a consolidated return basis, foreign and state and local income
taxes.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
(THOUSANDS)
Income before income taxes:
United States.................................... $157,004 $130,971 $ 99,980
Foreign.......................................... 16,488 8,365 8,892
-------- -------- --------
$173,492 $139,336 $108,872
-------- -------- --------
-------- -------- --------
Provision for income taxes:
Current:
United States.................................... $ 29,449 $ 31,432 $ 24,157
Foreign.......................................... 6,083 4,257 4,045
State and local.................................. 5,633 3,787 1,093
-------- -------- --------
41,165 39,476 29,295
-------- -------- --------
Deferred:
United States.................................... 26,245 11,119 3,612
Foreign.......................................... (512) (120) (261)
State and local.................................. 3,502 2,325 2,854
-------- -------- --------
29,235 13,324 6,205
-------- -------- --------
Total provision.................................... $ 70,400 $ 52,800 $ 35,500
-------- -------- --------
-------- -------- --------
</TABLE>
During the three years ended December 31, 1993, tax expense resulting from
allocating certain tax benefits directly to capital in excess of par totaled
$1,197,000, $339,000 and $419,000, respectively.
25
<PAGE> 27
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The differences between the U.S. federal statutory tax rate and the
Company's effective rate was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
(THOUSANDS)
<S> <C> <C> <C>
Computed tax provision at the applicable federal
statutory income tax rate........................... $60,722 $47,375 $37,016
State and local taxes, net of federal income tax
benefits............................................ 5,930 4,034 2,605
Dividends received deduction and tax exempt
interest............................................ (1,767) (2,129) (2,944)
Amortization of names and reputations................. 3,426 3,226 1,679
Enacted tax rate increase for deferred income taxes... 2,431 -- --
Foreign rate difference............................... (26) 1,308 1,088
Settlement of certain federal tax audits.............. -- -- (4,800)
Other................................................. (316) (1,014) 856
------- ------- -------
Provision for income taxes.......................... $70,400 $52,800 $35,500
------- ------- -------
------- ------- -------
Total effective tax rate.............................. 40.6% 37.9% 32.6%
------- ------- -------
------- ------- -------
</TABLE>
Deferred tax assets and liabilities as of December 31 was as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS)
<S> <C> <C>
Receivables, principally due to sales of cemetery interment
rights and related products................................... $ 75,064 $ 20,344
Inventories and cemetery property, principally due to purchase
accounting adjustments........................................ 79,029 46,310
Property, plant and equipment, principally due to depreciation
and to purchase accounting adjustments........................ 65,454 50,566
Other........................................................... 1,547 6,791
-------- --------
Deferred tax liabilities...................................... 221,094 124,011
-------- --------
Deferred revenue prearranged funeral service contracts,
principally due to earnings from trust funds.................. (45,833) --
Accrued liabilities............................................. (11,644) (13,238)
Carry-forwards and other, principally related to acquired
subsidiaries.................................................. (5,239) (11,566)
-------- --------
Deferred tax assets........................................... (62,716) (24,804)
-------- --------
Net deferred income taxes..................................... $158,378 $ 99,207
-------- --------
-------- --------
</TABLE>
Current refundable income taxes and foreign current deferred tax assets are
included in other current assets, with current taxes payable and current
deferred taxes being reflected as "Income taxes" on the Consolidated Balance
Sheet.
United States income taxes have not been provided on $51,765,000 of
undistributed earnings of foreign subsidiaries since it is the Company's
intention to reinvest such earnings indefinitely.
As of December 31, 1993, the Company has United States federal net
operating loss carry-forwards of $12,375,000 principally related to acquired
subsidiaries which will expire in the years 1998 through 2008.
26
<PAGE> 28
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Various subsidiaries have state operating loss carry-forwards of
$72,375,000 with expiration dates through 2008. Included in "Carry-forwards and
other" is a valuation allowance of $1,748,000 which has been provided primarily
for loss carry-forwards not expected to be realized.
Actual cash disbursements for income taxes and other tax assessments during
the three years ended December 31, 1993, totaled $46,557,000, $33,973,000 and
$25,845,000, respectively.
During the third quarter of 1991, the Company settled certain United States
federal tax audits resulting in a $4,800,000 credit to the provision for income
taxes. All of the Company's United States federal tax audits for years ended
through April 30, 1988 have now been completed.
NOTE SEVEN
DEBT
Debt at December 31, was as follows:
<TABLE>
<CAPTION>
1993 1992
---------- --------
(THOUSANDS)
<S> <C> <C>
Bank revolving credit agreements, $215,000 available at
December 31, 1993.......................................... $ 385,000 $347,500
Medium term notes, maturity through 2019, fixed average
interest rate of 9.7%...................................... 248,000 250,000
6.5% convertible subordinated debentures, due in 2001,
conversion price of $20.74 per common share, redeemable
after August, 1995......................................... 172,500 172,500
7.875% debentures, due in 2013............................... 150,000 --
8% convertible debentures, due in 2006, conversion price is
$18 per common share....................................... 16,082 16,082
6.5% debentures, converted into common shares at $17.33 per
share in February, 1993.................................... -- 100,000
5.0% convertible debentures, due in 2003, conversion price
ranges from $22.50-$32.16.................................. 12,897 3,000
Mortgage notes payable with maturities through 2013, average
interest rate is 8.5%...................................... 63,769 67,923
Variable-interest rate note payable to a bank, current
interest rate of 3.22% maturity date April, 1996........... 10,676 10,776
Other........................................................ 28,280 22,850
---------- --------
Total debt................................................... 1,087,204 990,631
Less current maturities...................................... (24,982) (10,602)
---------- --------
Total long-term debt............................... $1,062,222 $980,029
---------- --------
---------- --------
</TABLE>
Under terms of the bank revolving credit agreements, the Company may borrow
up to $600,000,000. One agreement for $350,000,000 expires on November 8, 1994
and contains provisions for renewals. At the end of any term, the outstanding
balance may be converted into a two year term loan. Another agreement for
$250,000,000 expires November 3, 1996. The Company may in November of each year,
commencing in 1994, extend the term of the $250,000,000 agreement for a year
with the consent of all the banks. The interest rates are based generally on
various indices determined by the Company. In addition, the Company pays a
quarterly facility fee ranging from .125% to .1875% on the commitment amount.
The terms of the revolving credit agreements include various covenants which
provide, among other things, for the maintenance of a certain level of
consolidated net worth, the maintenance of certain ratios and restrictions on
certain payments. These
27
<PAGE> 29
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
credit agreements are to be used for general corporate purposes, including
acquisitions, and support for the Company's selling of commercial paper.
The Company has outstanding $248,000,000 in medium term notes with
maturities from 6 months to 26 years which are not callable prior to maturity.
The average remaining maturity for the notes is approximately 13 years.
In October 1991, the Company issued $172,500,000 of convertible
subordinated debentures with a conversion price of $20.74 and subordinated to
certain present and future indebtedness of the Company.
The $150,000,000 of debt was issued in February 1993 and is considered
senior debt and is not redeemable prior to maturity.
In 1988, the Company assumed $16,082,000 of convertible subordinated
debentures from an acquired company, with a conversion price of $18.
In 1986, the Company issued $100,000,000 of convertible debentures. In
February 1993, $97,164,000 of these debentures were converted into 5,607,000
common shares at $17.33 per share pursuant to a redemption call. The remaining
$2,836,000 of debentures were redeemed for cash plus a 2.6% call premium and
interest through the redemption date.
The Company also has two bank lines of credit, one for $75,000,000 and one
for $15,000,000 (both of these lines were available at December 31, 1993) at
rates similar to the revolving credit agreement. The $75,000,000 line may be
withdrawn at any time at the option of the bank. The $15,000,000 line requires
the payment of a .25% commitment fee on the unused balance and expires in July,
1995.
Some of the Company's facilities and cemetery properties are pledged as
collateral for the mortgage notes. Additionally, at December 31, 1993, the
Company had $34,595,000 letters of credit outstanding primarily to guarantee
funding of certain insurance claims.
The aggregate principal payments on debt for the five years subsequent to
December 31, 1993, excluding amounts due to banks under revolving credit loan
agreements are: 1994 -- $24,982,000; 1995 -- $57,731,000; 1996 -- $18,845,000;
1997 -- $47,945,000; and 1998 -- $13,961,000. Cash interest payments for the
three years ended December 31, 1993 totaled $61,062,000, $60,590,000 and
$47,692,000, respectively.
28
<PAGE> 30
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE EIGHT
DEFERRED PREARRANGED FUNERAL CONTRACT REVENUES
"Deferred prearranged funeral contract revenues" on the Consolidated
Balance Sheet includes the contract amount of all price guaranteed prearranged
funeral service contracts as well as the accrued trust earnings and increasing
insurance benefits earned through December 31, 1993. The Company will continue
to defer additional accruals of trust earnings and insurance benefits as they
are earned until the performance of the funeral service. Upon performance of the
funeral service, the Company will recognize the fixed contract price as well as
total accumulated trust earnings and increasing insurance benefits as funeral
service revenues.
The recognition in future funeral revenues is estimated to occur in the
following years based on actuarial assumptions as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
-----------
<S> <C>
1994............................................................. $ 110,990
1995............................................................. 103,690
1996............................................................. 96,546
1997............................................................. 89,602
1998............................................................. 82,908
1999 and through 2003............................................ 317,878
2004 and thereafter.............................................. 461,793
-----------
$1,263,407
-----------
-----------
</TABLE>
NOTE NINE
COMMITMENTS AND CONTINGENCIES
The annual payments for operating leases (primarily for funeral home
facilities and transportation equipment) are as follows:
<TABLE>
<CAPTION>
(THOUSANDS)
-----------
<S> <C>
1994............................................................. $23,858
1995............................................................. 19,960
1996............................................................. 16,566
1997............................................................. 13,705
1998............................................................. 9,607
Thereafter....................................................... 30,795
</TABLE>
The majority of these leases contain one of the following options: (a)
purchase the property at the fair value at date of exercise, (b) purchase the
property for a value determined at the inception of the lease or (c) renew for
the fair rental value at end of the primary term of the lease. Some of the
equipment leases contain residual value exposures. For the three years ended
December 31, 1993, rental expense was $33,590,000, $25,583,000 and $22,531,000,
respectively.
The Company has entered into management, consultative and noncompetition
agreements (generally for five to 10 years) with certain officers of the Company
and former owners and key employees of businesses acquired. During the three
years ended December 31, 1993, $31,957,000, $27,594,000 and $21,662,000,
respectively, were charged to expense. At December 31, 1993, the maximum
estimated future expense under all remaining agreements is $139,887,000
including $4,693,000 with certain officers of the Company.
In 1990, the Company entered into a five year minimum purchase agreement
with a major casket manufacturer. The agreement contains provisions to increase
the minimum annual purchases for normal price
29
<PAGE> 31
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
increases and the maintenance of product quality. The agreement was amended in
1992 to provide for an extension to 1998 with a cumulative minimum purchase
commitment of $228,000,000 required. During the three years ended December 31,
1993, the Company purchased $41,200,000, $36,656,000 and $35,149,000,
respectively, under this agreement.
NOTE TEN
STOCKHOLDERS' EQUITY
The Company is authorized to issue 1,000,000 shares of preferred stock, $1
par value. No shares were issued as of December 31, 1993. At December 31, 1993,
200,000,000 common shares of $1 par value were authorized, 84,859,110 shares
were issued and outstanding (76,904,954 at December 31, 1992), net of 18,830
shares held, at cost, in treasury (521,455 at December 31, 1992).
During the two years ended December 31, 1993, the Company purchased 66,319
and 398,400 shares of its common stock for $1,637,000 and $6,569,000,
respectively.
The fully diluted earnings per share calculation assumes full conversion
into common stock of the Company's various convertible debenture issues.
The Company has a stockholder approved plan whereby shares of the Company's
common stock may be issued pursuant to the exercise of stock options granted to
officers and key employees. The plan allows for options to be granted as either
non-qualified or incentive stock options. The options are granted with an
exercise price equal to the then current market price of the Company's common
stock and are generally exercisable at a rate of 33 1/3% each year (generally
starting one year from grant date). At December 31, 1993 and 1992, 729,267 and
971,515 shares, respectively, were reserved for future option grants under this
existing plan.
On November 10, 1993, the Board of Directors approved the 1993 Long-Term
Incentive Stock Option Plan (maximum of 4,650,000 shares) and granted options
for 4,000,000 shares of common stock at an exercise price of $25.75 per share
(fair market value at date of grant). This plan is subject to stockholder
approval at the annual meeting of stockholders on May 12, 1994. Such shares are
excluded in the table below.
30
<PAGE> 32
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following tabulation sets forth certain stock option information:
<TABLE>
<CAPTION>
OPTION PRICE
OPTIONS PER SHARE
-------- ------------
<S> <C> <C>
Outstanding at December 31, 1990................................... 1,813,707 $ 3.75-23.95
Granted.......................................................... 273,936 13.75-17.17
Exercised........................................................ (293,679) 3.75-23.95
Cancelled........................................................ (267,919) 9.14-23.95
-------- ------------
Outstanding at December 31, 1991................................... 1,526,045 8.00-18.17
-------- ------------
Granted.......................................................... 58,410 8.75-17.06
Exercised........................................................ (214,637) 9.25-16.67
Cancelled........................................................ (104,224) 10.08-18.17
-------- ------------
Outstanding at December 31, 1992................................... 1,265,594 8.00-17.17
-------- ------------
Granted.......................................................... 267,250 14.17-26.00
Exercised........................................................ (401,387) 9.25-18.81
Cancelled........................................................ (25,002) 14.17-18.81
-------- ------------
Outstanding at December 31, 1993................................... 1,106,455 $ 8.00-26.00
-------- ------------
-------- ------------
Exercisable at December 31, 1993................................... 697,452 $ 8.00-18.81
-------- ------------
-------- ------------
</TABLE>
At December 31, 1993, the Company has reserved 1,480,731 shares of its
common stock under stockholder approved plans for restricted stock grants to be
awarded to key employees and non-employee directors. These plans contain a
restriction period of not less than six months and not more than five years,
during which time the recipient will be prohibited from disposition of the
awarded common stock and also a requirement that the employee recipient remain
employed by the Company and the non-employee director continue to serve as a
director prior to lapse of the restricted period. For the three years ended
December 31, 1993, 652,481, 405,925 and 16,500 shares were awarded under these
plans, respectively.
In July 1988, the Board of Directors adopted a preferred share purchase
rights plan and also declared a dividend of one preferred share purchase right
for each share of common stock. The rights become exercisable in the event of
certain attempts to acquire 20% or more of the common stock of the Company and
entitle the rights holders to purchase certain securities of the Company or the
acquiring company. The rights, which are redeemable by the Company for $.01 per
right, expire in July, 1998 unless extended. Holders of the medium term notes
and 6.5% subordinated debentures may accelerate repayment or redemption in
certain circumstances involving a change in control.
NOTE ELEVEN
EMPLOYEE RETIREMENT PLANS
The Company has a noncontributory defined benefit pension plan covering
substantially all employees, a supplemental retirement plan for certain
executives (SERP), a supplemental retirement plan for officers and certain
executives (Senior SERP), and a retirement plan for non-employee directors
(Directors' Plan).
For the pension plan, retirement benefits are generally based on years of
service and compensation for the current year. The Company annually contributes
to the pension plan an actuarially determined amount consistent with the funding
requirements of the Employee Retirement Income Security Act of 1974. Assets of
the pension plan consist primarily of bank money market funds, fixed income
investments, marketable equity securities and mortgage notes. The marketable
equity securities include shares of Company common stock with a value of
$3,534,000 at December 31, 1993.
31
<PAGE> 33
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Retirement benefits under the SERP are based on years of service and
average monthly compensation, reduced by benefits under the pension plan and
Social Security. The Senior SERP provides retirement benefits for officers and
certain executives based on their years of service and position. The Directors'
Plan will provide an annual benefit to directors following their retirement,
based on a vesting schedule. The Company purchased various life insurance
policies on the participants in the SERP, Senior SERP and Directors' Plan with
the intent to use the proceeds and any cash value buildup from such policies to
fund, at least to the extent of such assets, these plans' funding requirements.
The net cost for all plans was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
------- ------- -------
(THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the period.......... $ 6,719 $ 5,737 $ 4,886
Interest cost on projected benefit obligation........... 6,886 5,753 4,674
Return on plan assets................................... (4,311) (3,945) (7,885)
Net amortization and deferral of gain................... 1,201 1,315 5,260
------- ------- -------
$10,495 $ 8,860 $ 6,935
------- ------- -------
------- ------- -------
</TABLE>
The plans' funded status at December 31, was as follows:
<TABLE>
<CAPTION>
1993 1992
--------------------- ---------------------
FUNDED NON-FUNDED FUNDED NON-FUNDED
PLAN PLANS PLAN PLANS
------- ---------- ------- ----------
(THOUSANDS)
<S> <C> <C> <C> <C>
Vested benefit obligation.................. $58,229 $ 25,902 $43,141 $ 14,611
------- ---------- ------- ----------
------- ---------- ------- ----------
Accumulated benefit obligation............. $63,556 $ 26,099 $47,997 $ 17,267
------- ---------- ------- ----------
------- ---------- ------- ----------
Projected benefit obligation............... $71,223 $ 26,310 $59,617 $ 18,949
Plans' assets at fair value................ 67,993 -- 53,225 --
------- ---------- ------- ----------
Plans' assets in deficit of projected
benefit obligation....................... (3,230) (26,310) (6,392) (18,949)
Unrecognized net loss from past experience
and effects of changes in assumptions.... 10,271 4,128 6,804 4,903
Prior service cost not yet recognized in
net periodic pension cost................ (2,966) 12,685 2,673 7,448
Unrecognized net asset..................... -- -- (487) --
------- ---------- ------- ----------
Accrued pension cost....................... 4,075 (9,497) 2,598 (6,598)
Adjustment for additional minimum
liability................................ -- (16,602) -- (10,669)
------- ---------- ------- ----------
Retirement plan asset (liability).......... $ 4,075 $(26,099) $ 2,598 $(17,267)
------- ---------- ------- ----------
------- ---------- ------- ----------
</TABLE>
The following assumed rates were used in the determination of the plans'
funded status:
<TABLE>
<CAPTION>
1993 1992
------------------- -------------------
FUNDED NON-FUNDED FUNDED NON-FUNDED
PLAN PLANS PLAN PLANS
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Discount rate used to determine obligations...... 7.5% 7.5% 8.5% 8.5%
Assumed rate of compensation increase............ 4.5 4.5 6.0 6.0
Assumed rate of return on plan assets............ 4.5 -- 8.0 --
</TABLE>
32
<PAGE> 34
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE TWELVE
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
Swap agreements:
The Company periodically enters into swap agreements to hedge exposure to
fluctuations in interest and foreign exchange rates. Such agreements are with
major financial institutions and the Company does not anticipate any credit risk
from these transactions because of nonperformance. The amounts to be paid or
received are accrued in accordance with terms of the agreement and market
interest rates.
On August 31, 1993, the Company entered a currency swap agreement with a
bank that hedged the borrowings for the Company's initial investment in its
Australian subsidiary. As part of this agreement, the Company pays the bank a
blended interest rate (6.28% at December 31, 1993) on $110,000,000 Australian
dollars and receives a floating interest rate (3.5% at December 31, 1993) on
$73,590,000 United States dollars. This agreement expires December 29, 2000.
The Company has entered into an interest rate swap agreement with a bank
having a notional amount of $150,000,000 effective February 1, 1994. Under this
agreement, the Company will pay a floating interest rate on $150,000,000 and
will receive a 5.36% fixed interest rate on $150,000,000. This agreement
terminates February 1, 1999 subject to an option, exercisable by the bank, to
terminate on August 1, 1994.
Credit risk:
Provident is a party to financial instruments with off-balance sheet risk.
The financial instruments result from loans made in the normal course of
business to meet the financing needs of borrowers who are principally
independent funeral home and cemetery operators. These financial instruments
also include loan commitments of $19,499,000 at December 31, 1993 ($33,656,000
at December 31, 1992) to extend credit. Provident evaluates each borrower's
credit worthiness and the amount loaned and collateral obtained, if any, is
determined by this evaluation.
The Company grants customers credit in the normal course of business and
the credit risk with respect to these trade receivables are generally considered
minimal because of the wide geographic area served. Procedures are in effect to
monitor the credit worthiness of customers and bad debts have not been
significant in relation to the volume of revenues.
Prearranged funeral contracts generally do not subject the Company to
collection risk because customer payments are either placed in state supervised
trusts or used to pay premiums on life insurance contracts. Insurance funded
contracts are subject to supervision by state insurance departments and are
protected in the majority of states by insurance guaranty acts.
Fair Value of Financial Instruments:
The following disclosure of the estimated fair value of financial
instruments was made in accordance with the requirements of FAS 107. The
estimated fair value amounts have been determined by the Company using available
market information and appropriate valuation methodologies.
33
<PAGE> 35
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The carrying amounts of cash and cash equivalents, receivables and accounts
payable approximate fair values due to the short term maturities of these
instruments. The carrying amounts and fair values of the Company's fixed rate
long-term borrowings are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-------------------
CARRYING FAIR
AMOUNT VALUE
-------- --------
(THOUSANDS)
<S> <C> <C>
Medium term notes................................................ $248,000 $305,215
-------- --------
-------- --------
Debentures....................................................... $351,479 $451,146
-------- --------
-------- --------
Mortgage notes payable........................................... $ 63,769 $ 63,769
-------- --------
-------- --------
</TABLE>
The fair value of the above long-term borrowings was estimated by
discounting the future cash flows, including interest payments, using rates
currently available for debt of similar terms and maturity, based on the
Company's credit standing and other market factors. The carrying value of the
revolving credit agreements approximate fair value because the rates on such
agreements are variable, based on current market. Substantially all of the
Company's remaining long-term debt and receivables carry variable interest rates
and their carrying amount approximates fair value. It is not practicable to
estimate the fair value of the installment contracts receivable.
34
<PAGE> 36
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE THIRTEEN
SUPPLEMENTARY INFORMATION
The detail of certain balance sheet accounts at December 31, was as
follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS)
<S> <C> <C>
Cash and cash equivalents:
Cash......................................................... $ 6,393 $ 13,465
Commercial paper and temporary investments................... 13,481 17,237
Certificates of deposit...................................... 948 551
-------- --------
$ 20,822 $ 31,253
-------- --------
-------- --------
Receivables and allowances:
Current:
Trade accounts............................................ $ 85,924 $ 69,612
Installment contracts..................................... 101,954 53,259
Notes..................................................... 81,216 74,272
-------- --------
269,094 197,143
-------- --------
-------- --------
Less:
Allowance for contract cancellations and doubtful
accounts................................................ 14,786 7,778
Unearned finance charges and valuation discounts.......... 17,522 7,093
-------- --------
32,308 14,871
-------- --------
$236,786 $182,272
-------- --------
-------- --------
Long-term:
Installment contracts..................................... $126,389 $ 80,401
Loans and other notes..................................... 277,149 210,507
Trusted cemetery merchandise and service sales............ 133,583 --
-------- --------
537,121 290,908
-------- --------
-------- --------
Less:
Allowance for contract cancellations and doubtful
accounts................................................ 14,054 5,001
Unearned finance charges and valuation discounts.......... 23,005 11,114
-------- --------
37,059 16,115
-------- --------
$500,062 $274,793
-------- --------
-------- --------
</TABLE>
Interest rates on installment contracts and notes receivable range from
3.0% to 12.5% at December 31, 1993. Included in loans and other notes receivable
are $12,479,000 in notes with officers and employees of the Company, the
majority of which are collateralized by real estate, and $25,548,000 in notes
with other related parties.
35
<PAGE> 37
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
(THOUSANDS)
<S> <C> <C>
Cemetery property:
Undeveloped land (including capitalized interest and
development expenditures)............................... $ 299,520 $ 202,147
Developed land and lawn crypts............................. 88,722 61,489
Mausoleums................................................. 28,808 34,611
--------- ---------
$ 417,050 $ 298,247
--------- ---------
Property, plant and equipment:
Land....................................................... $ 186,521 $ 169,189
Buildings and improvements................................. 461,539 356,989
Operating equipment........................................ 104,921 105,022
Leasehold improvements..................................... 17,715 15,615
--------- ---------
770,696 646,815
--------- ---------
Less: accumulated depreciation............................. (163,870) (142,344)
--------- ---------
$ 606,826 $ 504,471
--------- ---------
--------- ---------
Accounts payable and accrued liabilities:
Trade payables............................................. $ 22,220 $ 13,574
Dividends.................................................. 8,913 7,724
Payroll.................................................... 9,319 14,224
Interest................................................... 14,903 11,592
Insurance.................................................. 13,115 5,761
Accrued purchase price for December, 1992 acquisition...... -- 12,357
Other...................................................... 28,411 23,772
--------- ---------
$ 96,881 $ 89,004
--------- ---------
--------- ---------
</TABLE>
NON-CASH TRANSACTIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1993 1992 1991
------- ------ ------
(THOUSANDS)
<S> <C> <C> <C>
Common stock issued under restricted stock plans.......... $14,393 $6,938 $ 287
Notes receivable exchanged for preferred stock
investment.............................................. $ 2,520 $3,830 $8,868
Common stock issued in lieu of cash contribution to
retirement plans........................................ $ -- $ -- $2,281
Minimum liability under retirement plans.................. $12,642 $ 187 $ --
Debenture conversion...................................... $97,164 $ -- $ --
Cumulative effect of change in accounting principles...... $ 2,031 $ -- $ --
</TABLE>
36
<PAGE> 38
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE FOURTEEN
MAJOR SEGMENTS OF BUSINESS
SCI conducts funeral and cemetery operations in the United States, Canada
and Australia and offers financial services in the United States.
<TABLE>
<CAPTION>
FINANCIAL
FUNERAL CEMETERY SERVICES CORPORATE CONSOLIDATED
--------- -------- --------- --------- ------------
(THOUSANDS, EXCEPT FOR NUMBER OF OPERATING LOCATIONS)
<S> <C> <C> <C> <C> <C>
Revenues:
1993............................... $ 603,099 $280,421 $ 15,658 $ -- $899,178
1992............................... 551,940 209,796 10,741 -- 772,477
1991............................... 445,367 183,058 14,823 -- 643,248
Operating expenses:
1993............................... 426,008 200,682 9,168 43,706 679,564
1992............................... 379,823 163,967 6,632 38,693 589,115
1991............................... 307,690 146,384 10,666 35,448 500,188
Income from operations:
1993............................... 177,091 79,739 6,490 (43,706) 219,614
1992............................... 172,117 45,829 4,109 (38,693) 183,362
1991............................... 137,677 36,674 4,157 (35,448) 143,060
Identifiable assets:
1993............................... 2,299,177 952,844 253,314 177,969 3,683,304
1992............................... 1,351,066 908,012 191,695 160,350 2,611,123
1991............................... 1,148,103 692,438 109,420 173,491 2,123,452
Depreciation and amortization:
1993............................... 37,130 8,506 197 12,381 58,214
1992............................... 33,214 7,701 429 6,025 47,369
1991............................... 25,559 7,414 243 1,774 34,990
Capital expenditures:(1)
1993............................... 107,046 165,408 -- 5,241 277,695
1992............................... 78,519 101,887 -- 7,060 187,466
1991............................... 145,765 31,186 -- 4,106 181,057
Number of operating locations at year
end:
1993............................... 792 192 -- -- 984
1992............................... 674 176 -- -- 850
1991............................... 655 163 -- -- 818
</TABLE>
- ---------------
(1) Includes $218,110,000, $120,646,000 and $142,568,000 for the three years
ended December 31, 1993, respectively, for purchases of property, plant and
equipment and cemetery property of acquired businesses.
37
<PAGE> 39
SERVICE CORPORATION INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE FIFTEEN
PROSPECTIVE ACCOUNTING CHANGES
In 1994, FAS 112 "Employer's Accounting for Postemployment Benefits"
becomes effective. This FAS requires the Company to accrue for estimated future
postemployment benefits during the years employees are working and earning these
benefits. Also in 1994, FAS 115 "Accounting for Certain Investments in Debt and
Equity Securities" becomes effective. This FAS addresses the accounting for
investments in equity and debt securities held by the Company. In 1995, FAS 114
"Accounting by Creditors for Impairment of a Loan" becomes effective. This FAS
requires present value computations for impaired loans when determining
allowances for loan losses. Adoption of these three standards is not expected to
materially affect the Company's financial position or results of operations.
NOTE SIXTEEN
QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH YEAR
-------- -------- -------- -------- --------
(THOUSANDS, EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C>
Revenues:
1993.............................. $224,371 $217,049 $211,432 $246,326 $899,178
1992.............................. 200,746 187,099 183,940 200,692 772,477
1991.............................. 153,479 156,077 152,513 181,179 643,248
Gross profit:
1993.............................. $ 71,471 $ 61,920 $ 56,597 $ 73,332 $263,320
1992.............................. 63,700 50,972 46,426 60,957 222,055
1991.............................. 45,790 43,655 37,970 51,093 178,508
Net income
1993(1)........................... $ 27,217 $ 24,333 $ 19,807 $ 29,704 $101,061
1992.............................. 25,170 19,872 17,096 24,398 86,536
1991.............................. 18,739 16,287 18,117 20,229 73,372
Primary earnings per share:
1993(1)........................... $ .34 $ .29 $ .23 $ .35 $ 1.21
1992.............................. .33 .26 .22 .32 1.13
1991.............................. .28 .23 .25 .27 1.03
</TABLE>
- ---------------
(1) The first quarter of 1993 includes a charge to net income of $2,031,000 or
$.03 per share for the cumulative effect of the change in accounting
principles.
38
<PAGE> 40
SERVICE CORPORATION INTERNATIONAL
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
THREE YEARS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
LONG-TERM
BALANCE CURRENT LONG-TERM CURRENT
AT BALANCE AT BALANCE BALANCE
BEGINNING BEGINNING COLLECTED AT END AT END
OF PERIOD OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD OF PERIOD
--------- ---------- --------- ---------- --------- ---------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
R. L. Waltrip(1)............... $ -- $ -- $ 1,700 $ -- $ 1,700 $ --
W. B. Waltrip(1)............... -- -- 600 -- 600 --
D. J. Anderson(6).............. 596 3 -- 251 344 4
L. C. Bolton(6)................ -- -- 117 1 111 5
J. A. Brandenburg(6)........... 133 1 -- 1 132 1
A. J. Brown(6)................. 151 1 -- 1 150 1
G. L. Cauthen(6)............... 210 5 -- 9 196 10
G. R. Champagne(6)(7).......... 270 3 -- 168 -- 105
R. A. Chesler(6)............... 141 1 -- 6 130 6
A. L. Coelho(6)................ 652 -- 220 6 858 8
D. M. Dettling(6).............. 118 3 -- 5 110 6
L. J. Dyer(6).................. 127 1 -- 1 126 1
V. M. Evans(6)................. 224 2 -- 226 -- --
J. D. Garrison(6).............. 154 1 10 2 161 2
J. A. Gordon(6)................ 160 -- 147 1 302 4
R. S. Gregory(6)............... 191 1 -- 5 182 5
K. R. Griffith(6).............. 240 3 -- 243 -- --
G. K. Guinn(4)................. 382 235 -- 235 378 4
W. M. Hamilton(6).............. -- -- 182 -- -- 182
L. W. Heiligbrodt(6)(1)........ 475 2 1,119 4 1,587 5
S. K. Kennedy(6)............... 196 2 -- 198 -- --
L. A. Kirkpatrick(6)........... 138 3 325 143 319 4
W. T. McRae(6)................. 120 2 -- 3 116 3
J. W. Morrow(6)(1)............. 394 20 525 414 525 --
R. E. Morrow(6)................ 172 1 -- 2 157 14
H. M. Nelly(6)(7).............. 228 5 -- 6 117 110
E. K. Payne(3)................. -- 99 -- -- -- 99
E. E. Poynter(6)............... -- -- 173 1 170 2
G. A. Pullins(8)............... -- 250 -- -- -- 250
S. W. Rizzo(6)(1).............. 637 6 625 644 620 4
J. D. Rottman(6)............... 253 2 -- 2 251 2
R. T. Sells(6)................. 268 5 -- 11 251 11
M. J. Shipley(6)............... 146 -- -- 1 144 1
J. E. Stieneker(6)............. 437 3 45 140 341 4
J. L. Stoner(6)................ 248 1 -- 10 229 10
W. H. Truscott(6).............. 175 1 -- 2 172 2
M. R. Webb(6).................. 220 2 -- 2 218 2
M. K. Wick(6).................. 149 1 -- 150 -- --
A. W. Yerty(6)................. 248 1 -- 10 228 11
</TABLE>
39
<PAGE> 41
SERVICE CORPORATION INTERNATIONAL
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES -- (CONTINUED)
<TABLE>
<CAPTION>
LONG-TERM
BALANCE CURRENT LONG-TERM CURRENT
AT BALANCE AT BALANCE BALANCE
BEGINNING BEGINNING COLLECTED AT END AT END
OF PERIOD OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD OF PERIOD
--------- ---------- --------- ---------- --------- ---------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
R. L. Waltrip(2)............... $ -- $1,500 $ -- $1,500 $ -- $ --
E. K. Payne(3)................. -- 157 -- 58 -- 99
G. K. Guinn(4)................. 386 235 -- 4 382 235
D. J. Anderson(6).............. 248 1 353 3 596 3
J. A. Brandenburg(6)........... 134 1 -- 1 133 1
A. J. Brown(6)................. 152 1 -- 1 151 1
G. L. Cauthen(6)............... -- -- 220 5 210 5
G. R. Champagne(6)(7).......... 169 3 105 4 270 3
R. A. Chesler(6)............... -- -- 143 1 141 1
A. L. Coelho(6)................ -- -- 652 -- 652 --
D. M. Dettling(6).............. 97 1 26 3 118 3
L. J. Dyer(6).................. 128 1 -- 1 127 1
V. M. Evans(6)................. 227 1 -- 2 224 2
J. D. Garrison(6).............. 139 1 155 140 154 1
J. A. Gordon(6)................ -- -- 160 -- 160 --
R. S. Gregory(6)............... -- -- 193 1 191 1
K. R. Griffith(6).............. 244 2 -- 3 240 3
L. W. Heiligbrodt(6)........... 97 1 479 100 475 2
S. K. Kennedy(6)............... 199 1 -- 2 196 2
L. A. Kirkpatrick(6)........... 143 1 -- 3 138 3
B. G. Leo(6)................... 154 1 -- 155 -- --
W. T. McRae(6)................. -- -- 124 2 120 2
J. W. Morrow(6)................ 419 15 -- 20 394 20
R. E. Morrow(6)................ -- -- 174 1 172 1
H. M. Nelly(6)(7).............. 129 5 105 6 228 5
S. W. Rizzo(6)................. 644 5 -- 6 637 6
J. D. Rottman(6)............... 256 1 -- 2 253 2
R. T. Sells(6)................. 277 1 -- 5 268 5
M. J. Shipley(6)............... -- -- 146 -- 146 --
J. E. Stieneker(6)............. 441 2 -- 3 437 3
J. L. Stoner(6)................ -- -- 250 1 248 1
W. H. Truscott(6).............. 176 1 -- 1 175 1
M. R. Webb(6).................. 223 1 -- 2 220 2
M. K. Wick(6).................. 150 1 -- 1 149 1
A. W. Yerty(6)................. -- -- 250 1 248 1
G. A. Pullins(8)............... -- -- 250 -- -- 250
</TABLE>
40
<PAGE> 42
SERVICE CORPORATION INTERNATIONAL
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES -- (CONTINUED)
<TABLE>
<CAPTION>
LONG-TERM
BALANCE CURRENT LONG-TERM CURRENT
AT BALANCE AT BALANCE BALANCE
BEGINNING BEGINNING COLLECTED AT END AT END
OF PERIOD OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD OF PERIOD
--------- ---------- --------- ---------- --------- ---------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
B. D. Hunter(9)................ $ 5,000 $3,700 $ -- $8,700 $ -- $ --
R. L. Waltrip(2)............... -- 545 1,955 1,000 -- 1,500
E. K. Payne(3)................. -- 237 20 100 -- 157
G. K. Guinn(4)................. -- 231 390 -- 386 235
W. E. Mercer(5)................ 800 200 -- 1,000 -- --
D. J. Anderson(6).............. -- -- 250 1 248 1
J. A. Brandenburg(6)........... 135 1 -- 1 134 1
A. J. Brown(6)................. 133 1 153 134 152 1
G. R. Champagne(6)............. 173 3 -- 4 169 3
D. M. Dettling(6).............. 98 1 -- 1 97 1
L. J. Dyer(6).................. 129 1 -- 1 128 1
V. M. Evans(6)................. -- -- 229 1 227 1
J. D. Garrison(6).............. -- -- 140 -- 139 1
K. R. Griffith(6).............. 246 2 -- 2 244 2
L. W. Heiligbrodt(6)........... 98 1 -- 1 97 1
S. K. Kennedy(6)............... -- -- 200 -- 199 1
L. A. Kirkpatrick(6)........... 145 1 -- 2 143 1
B. G. Leo(6)................... 156 1 -- 2 154 1
W. C. McNamara(6).............. 148 2 -- 150 -- --
J. W. Morrow(6)................ 434 15 -- 15 419 15
H. M. Nelly(6)................. 134 5 -- 5 129 5
S. W. Rizzo(6)................. -- -- 650 1 644 5
J. D. Rottman(6)............... 258 1 -- 2 256 1
R. T. Sells(6)................. -- -- 279 1 277 1
J. E. Stieneker(6)............. -- -- 445 2 441 2
W. H. Truscott(6).............. -- -- 178 1 176 1
M. R. Webb(6).................. -- -- 224 -- 223 1
M. K. Wick(6).................. 151 1 -- 1 150 1
</TABLE>
- ---------------
(1) On August 10, 1993, the Company loaned: R. L. Waltrip, Chairman of the
Board and Chief Executive Officer of the Company, $1,700,000; L. W.
Heiligbrodt, President and Chief Operating Officer of the Company,
$1,000,000; W. B. Waltrip, Executive Vice President/Operations of the
Company, $600,000; S. W. Rizzo, Executive Vice President, Chief Financial
Officer/Treasurer of the Company, $525,000; and J. W. Morrow, Jr.,
Executive Vice President/Corporate Development, $525,000. Such loans were
made to enable such officers to pay the estimated federal income taxes
resulting from their receipt of Company stock on August 10, 1993 pursuant
to a grant of restricted stock under the Company's Amended 1987 Stock Plan.
Each of the loans is due August 10, 2003, bears interest at 6.5% per annum
and is supported by the restricted stock. In the event that the fair market
value of all restricted stock held by an officer is less than his
outstanding loan balance as of any loan anniversary date, the officer will
be obligated to provide acceptable collateral for the difference between
such loan balance and such fair market value.
(2) Provident had provided a line of credit of $2,500,000 to R. L. Waltrip for
personal use. The line of credit matured, and the outstanding balance was
repaid by Waltrip in 1992.
41
<PAGE> 43
SERVICE CORPORATION INTERNATIONAL
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES -- (CONTINUED)
(3) Provident has provided secured loans to E. K. Payne, former Senior Vice
President of the Company, in connection with the exercise of Company stock
options, the purchase of a home and personal use. The loans provide for
interest at the prime rate (6% at December 31, 1993) and are collateralized
by shares of Company common stock. The stock option loan matures in
November 1994. The home and personal use loan was repaid in 1992.
(4) Provident has provided secured loans to G. K. Guinn, former Senior Vice
President and Treasurer of the Company, to finance the exercise of Company
stock options and for the purchase of a home. The loans are collateralized
by the stock purchased and a deed of trust on the home, and bear interest
at the prime rate and 7.55%, respectively. The stock option loan matured
and was repaid in 1993 and the home loan matures in 2021.
(5) In December 1989, the Company sold its trust subsidiary, Southwest Guaranty
Trust Company and its investment services department to W. E. Mercer for
$1,000,000. Mercer is a former director and Executive Vice President
Finance and Administration of the Company. Mercer executed a promissory
note in payment of the purchase price of $1,000,000 with interest at 10%
payable quarterly. During 1991, Mercer repaid the balance of the note.
(6) Provident offers employees and directors of the Company mortgage loans.
These loans have been issued at fixed rates ranging from 6.5% to 9.6%,
which are comparable to current market rates. These loans mature 15 to 30
years from date of issuance and are collateralized by a deed of trust on
the real estate and for one individual, Company stock and other publicly
traded securities.
(7) In addition to mortgage loans discussed in note 6 above, Provident has
provided secured loans to finance the exercise of Company stock options to
the individuals noted. These loans are collateralized by the stock
purchased, bear interest at the prime rate and mature in 1994.
(8) Provident has provided financing to G. A. Pullins, Senior Vice President /
Corporate Development of the Company, to finance the purchase of a home.
The loan is collateralized by Company stock, bears interest at the prime
rate and matures in 1994.
(9) B. D. Hunter is a director of the Company and former Chairman of AMEDCO
Inc. (AMEDCO) which was acquired by the Company on September 26, 1986. In
connection with the Company's purchase of AMEDCO certain operations of
AMEDCO were purchased by a company controlled by Hunter immediately before
the acquisition of AMEDCO by the Company. Part of the consideration paid by
the Hunter controlled company to AMEDCO were promissory notes of $8,000,000
and $5,000,000. During 1990, Hunter repaid $4,300,000 of the $8,000,000
promissory note. During 1991, Hunter repaid the remaining balances of the
two notes.
(10) In its normal course of business, primarily through Provident, the Company
has made loans to certain entities in which the Company has equity
investments. These loans had a balance of $25,548,000 at December 31, 1993.
All of these loans carry interest rates ranging from a defined savings rate
plus 2% (5.22% at December 31, 1993) up to 12% and mature in 1994 through
2000. These loans are collateralized by combinations of common stock of the
debtor entities, deeds of trust on the debtors' real estate and certain
other collateral.
42
<PAGE> 44
SERVICE CORPORATION INTERNATIONAL
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(2) DEDUCTIONS(1) OF PERIOD
----------- ---------- ---------- ----------- ------------- ---------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current --
Allowance for contract
cancellations and doubtful
accounts:
Year ended December 31, 1993.... $7,778 $9,983(3) $1,725 $(4,700) $14,786
Year ended December 31, 1992.... 5,143 4,456 2,815 (4,636) 7,778
Year ended December 31, 1991.... 3,345 3,203 2,344 (3,749) 5,143
Due After One Year --
Allowance for contract
cancellations and doubtful
accounts:
Year ended December 31, 1993.... $5,001 $6,858(3) $3,935 $(1,740) $14,054
Year ended December 31, 1992.... 8,764 191 660 (4,614) 5,001
Year ended December 31, 1991.... 2,877 79 6,172 (364) 8,764
</TABLE>
- ---------------
(1) Uncollected receivables written off, net of recoveries
(2) Primarily acquisitions and dispositions of operations
(3) Includes the cumulative effect of changing accounting principles effective
January 1, 1993.
43
<PAGE> 45
SERVICE CORPORATION INTERNATIONAL
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
THREE YEARS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(THOUSANDS)
<S> <C> <C> <C>
Maintenance and repairs....................................... $19,750 $17,561 $14,731
------- ------- -------
------- ------- -------
Depreciation and amortization:
Property, plant and equipment............................... $26,757 $24,497 $21,139
Deferred charges............................................ 21,118 13,271 9,066
Names and reputations....................................... 10,339 9,601 4,785
------- ------- -------
$58,214 $47,369 $34,990
------- ------- -------
------- ------- -------
Taxes:
Property.................................................... $12,833 $12,711 $10,483
Payroll..................................................... 21,041 17,766 14,808
Other....................................................... 1,703 1,850 2,730
------- ------- -------
$35,577 $32,327 $28,021
------- ------- -------
------- ------- -------
Advertising................................................... $13,044 $ 9,260 $ 7,519
------- ------- -------
------- ------- -------
</TABLE>
44
<PAGE> 46
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Ernst & Young, Certified Public Accountants ("E&Y"), served as the
independent accountants for the Company for the fiscal year ended December 31,
1992. E&Y was dismissed as the independent accounting firm for the Company
effective March 25, 1993, with Coopers & Lybrand, Certified Public Accountants
("Coopers"), having been so engaged as of that date. The decision to change the
independent accounting firm for the Company was recommended by management and by
the Audit Committee of the Board of Directors of the Company and was approved by
the Board of Directors.
The report of E&Y dated February 8, 1993 on the consolidated financial
statements of the Company as of December 31, 1992 and 1991 and for the three
years in the period ended December 31, 1992 contained no adverse opinion or a
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principle. Similarly, the report of Coopers dated
February 8, 1994 on the consolidated financial statements of the Company as of
December 31, 1993 and for the year then ended contained no adverse opinion or a
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principle.
From time to time during the several years preceding January 1, 1993,
meetings were held between members of senior management of the Company and local
and national office partners of E&Y regarding potential accounting policies for
reporting pre-need funeral and cemetery sales. As previously reported by the
Company in, among other places, its Form 8-K dated March 31, 1993, the Company
and E&Y did not reach agreement on any new method of accounting for such sales.
In the Company's opinion, such meetings did not result in a "disagreement"
between it and E&Y within the meaning of the rules promulgated by the Securities
and Exchange Commission (the "SEC"). Thus, as previously reported by the Company
in, among other places, such Form 8-K, while there was a failure to reach
agreement, in the Company's opinion, during the two years ended December 31,
1992, there was no reportable "disagreement" between the Company and E&Y
regarding any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreement, if not resolved
to the satisfaction of E&Y, would have caused E&Y to make reference to the
subject of the disagreement in connection with its report.
As also previously reported by the Company in, among other places, an
amendment, dated April 6, 1993, to the Company's Form 8-K, dated March 31, 1993,
E&Y, however, has stated that it believes that a reportable "disagreement"
occurred between it and the Company. Accordingly, at the request of E&Y, the
Company included the following (references to E&Y and the Company have been
conformed to the usage in this Form 10-K) in its proxy statement dated April 12,
1993 for the last annual meeting of stockholders.
"On several occasions over the years, the Company has proposed that
its accounting policy for pre-need funeral services be changed to a method
whereby revenue would be recognized at the date a pre-need funeral contract
is signed, accompanied by appropriate provision for the estimated cost of
providing such services. E&Y's consistent position has been that the
Company's proposed accounting policy would not be acceptable under
generally accepted accounting principles.
"At a meeting on April 1, 1992 held to discuss this issue, a
reportable disagreement occurred in that Company management stated that if
E&Y would not support the Company's proposed accounting they would find
another firm that would. This disagreement was communicated to the
Company's Audit Committee at its August 13, 1992 meeting.
"Moreover, on February 19, 1993 (after completion of the 1992 audit),
Company management presented the accounting proposal set forth in a
December 28, 1992 'Invitation to Comment' prepared by Patrick B. Collins,
CPA, and asked E&Y to support this proposed accounting method. That
'Invitation to Comment' advocates recognition of revenue for pre-need
funeral services at the time of sale rather than when the services are
performed, and solicits comments from interested parties concerning this
and other matters. On February 26, 1993 and again on March 2, 1993, E&Y
informed Company management that it would be unable to support the proposal
presented in the 'Invitation to Comment.'
"On March 16, 1993, management informed E&Y that the Company was no
longer pursuing the accounting method advocated in the 'Invitation to
Comment' but rather was considering a modified
45
<PAGE> 47
approach. E&Y informed management that at least one element of the modified
approach -- amortization of a portion of deferred revenue that would be
associated with the fixed cost of maintaining funeral homes -- was, in
E&Y's view, not acceptable under generally accepted accounting principles."
The modified approach referred to above by E&Y is also referred to in the next
to last paragraph of this Item 9, except that at the time of its discussion with
Coopers the element E&Y noted as being objectionable was no longer being
considered.
As indicated above, E&Y's position was also disclosed in an amendment dated
April 6, 1993 to a Form 8-K dated March 31, 1993 filed by the Company. Following
such disclosure, the Company filed a second amendment to such Form 8-K, in which
the Company set forth its belief that the references to "disagreements" by E&Y,
as well as other matters, were factually inaccurate. Further, the Company
disputes that a reportable "disagreement" was communicated by E&Y to the Audit
Committee on August 13, 1992. In response to the second amendment to such Form
8-K, E&Y responded (which response was included in a third amendment) that there
was nothing in the second amendment of which E&Y was unaware at the time it
stated its position disclosed in the April 6, 1993 amendment.
The staff of the SEC is conducting an informal private investigation
relating to the change in the Company's independent accountants, and the
Company's Form 8-K dated March 31, 1993, as amended in April 1993, reporting
such change, as well as the Company's current accounting and reporting of
pre-need sales. The staff has advised the Company that the investigation should
not be construed as an indication by the Commission or its staff that any
violations of law have occurred, or as a reflection upon any person, entity or
security. The investigation is continuing.
On March 25, 1993, the Company's Board of Directors approved the
recommendation of management and the Audit Committee that Coopers be engaged as
the Company's new independent accountants. During the two fiscal years ended
December 31, 1992 and the interim period of 1993, Coopers was not consulted by
the Company on the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the financial statements of the Company. During the interim
period of 1993, as part of the proposal process, Coopers indicated its general
agreement with the Company's desire to modify its accounting policies for
pre-need funeral and cemetery sales so that such policies more accurately
reflect the economics of these sales. In this connection, the Company expressed
to Coopers its desire to improve the financial reporting for pre-need funeral
sales by including in the balance sheet, as a long term asset and corresponding
deferred revenue, all pre-need funeral contracts whether funded by insurance or
trust funds. Revenue from funeral services would be recognized when the services
are performed, which is consistent with the Company's then and current policy.
The Company also discussed with Coopers deferring funeral trust earnings until
the service is performed. Under the Company's prior policy, these trust earnings
were recognized in current income. Additionally, the Company expressed its views
that accounting for pre-need cemetery sales using the accounting principles
prescribed for sales of real estate may not be the most appropriate method of
accounting. Coopers orally expressed their general agreement with these concepts
but were not asked to and did not express an opinion on any specific transaction
or accounting change, either orally or in writing.
The accounting principles adopted by the Company in 1993 for reporting
pre-need funeral and cemetery sales are set forth, among other places, in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993
filed with the SEC. Coopers has issued a preferability letter with respect to
such principles. A copy of such letter is filed as an Exhibit to the Company's
Form 10-Q for the quarter ended March 31, 1993. As indicated above, Coopers has
issued an unqualified opinion with respect to the Company's consolidated
financial statements as at and for the period ended December 31, 1993.
46
<PAGE> 48
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information called for by PART III (Items 10, 11, 12 and 13) has been
omitted as the Company intends to file with the Securities and Exchange
Commission not later than 120 days after the close of its fiscal year a
definitive Proxy Statement pursuant to Regulation 14A. Such information is set
forth in such Proxy Statement (i) with respect to Item 10 under the captions
"Election of Directors" and "Compliance with Section 16(a) of the Exchange Act",
(ii) with respect to Items 11 and 13 under the captions "Cash Compensation",
"Stock Options", "Retirement Plans", "Executive Employment Agreements", "Other
Compensation", "Director Compensation", "Compensation Committee Interlocks and
Insider Participation" and "Certain Transactions" and (iii) with respect to Item
12 under the caption "Voting Securities and Principal Holders." The information
as specified in the preceding sentence is incorporated herein by reference.
Notwithstanding anything set forth in this Form 10-K, the information under the
caption "Compensation Committee Report on Executive Compensation" and under the
captions "Overview of Executive Compensation" and "Performance Graphs" in such
Proxy Statement are not incorporated by reference into this Form 10-K.
The Information regarding the Company's executive officers called for by
Item 401 of Regulation S-K has been included in PART I of this report.
47
<PAGE> 49
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1)-(2) Financial Statements and Schedules:
The financial statements and schedules are listed in the accompanying
Index to Financial Statements and Related Schedules at page 14 of this
report.
(3) Exhibits:
The exhibits listed on the accompanying Exhibit Index at pages 50-52
are filed as part of this report.
(b) Reports on Form 8-K:
During the quarter ended December 31, 1993, the Company filed a Form
8-K dated December 21, 1993 reporting under "Item 7. Financial Statements
and Exhibits" certain exhibits being filed concerning an amendment to the
Company's Employee Stock Purchase Plan.
(c) Included in (a) above.
(d) Included in (a) above.
48
<PAGE> 50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Service Corporation International, has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SERVICE CORPORATION INTERNATIONAL
Dated: March 30, 1994 By: JAMES M. SHELGER
(James M. Shelger,
Senior Vice President, General
Counsel and Secretary)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------- --------------------------------- ---------------
<S> <C> <C>
R. L. WALTRIP* Chairman of the Board and Chief
(R. L. Waltrip) Executive Officer
SAMUEL W. RIZZO Executive Vice President and
(Samuel W. Rizzo) Chief Financial
Officer/Treasurer (Principal
Financial Officer) and Director
VINCENT L. VISOSKY Vice President Finance (Principal
(Vincent L. Visosky) Accounting Officer)
ANTHONY L. COELHO*
(Anthony L. Coelho)
DOUGLAS M. CONWAY*
(Douglas M. Conway)
JACK FINKELSTEIN*
(Jack Finkelstein)
A. J. FOYT, JR.*
(A. J. Foyt, Jr.)
JAMES J. GAVIN, JR.*
March 30, 1994
(James J. Gavin, Jr.)
JAMES H. GREER*
(James H. Greer)
L. WILLIAM HEILIGBRODT*
Directors
(L. William Heiligbrodt)
B. D. HUNTER*
(B. D. Hunter)
JOHN W. MECOM, JR.*
(John W. Mecom, Jr.)
CLIFTON H. MORRIS, JR.*
(Clifton H. Morris, Jr.)
E. H. THORNTON, JR.*
(E. H. Thornton, Jr.)
W. BLAIR WALTRIP*
(W. Blair Waltrip)
EDWARD E. WILLIAMS*
(Edward E. Williams)
*By JAMES M. SHELGER
(James M. Shelger, as Attorney-In-Fact
for each of the Persons indicated)
</TABLE>
49
<PAGE> 51
EXHIBIT INDEX
PURSUANT TO ITEM 601 OF REG. S-K
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1 -- Restated Articles of Incorporation, as amended. (Incorporated by
reference to Exhibit 3.1 to Registration Statement No. 2-50721 on
Form S-1).
3.2 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit (4)(i)l to Form 10-Q for the
fiscal quarter ended July 31, 1982).
3.3 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.1 to Form 10-Q for the fiscal
quarter ended July 31, 1983).
3.4 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 4.7 to Registration Statement
No. 33-8727 on Form S-3).
3.5 -- Articles of Amendment to Restated Articles of Incorporation, dated
September 11, 1987. (Incorporated by reference to Exhibit 4.1 to
Amendment No. 3 to Registration Statement No. 33-16678 on Form S-4).
3.6 -- Statement of Resolution Establishing Series of Shares of Series C
Junior Participating Preferred Stock, dated August 5, 1988.
(Incorporated by reference to Exhibit 3.1 to Form 10-Q for the fiscal
quarter ended July 31, 1988).
3.7 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.8 to Registration Statement
No. 33-47097 on Form S-4).
3.8 -- Bylaws, as amended. (Incorporated by reference to Exhibit 3.7 to Form
10-K for the fiscal year ended December 31, 1991).
4.1 -- Rights Agreement dated as of July 18, 1988 between the Company and
Texas Commerce Bank National Association. (Incorporated by reference
to Exhibit 1 to Form 8-K dated July 18, 1988).
4.2 -- Amendment, dated as of May 10, 1990, to the Rights Agreement, dated
as of July 18, 1988, between the Company and Texas Commerce Bank
National Association. (Incorporated by reference to Exhibit 1 to Form
8-K dated May 10, 1990).
4.3 -- Agreement Appointing a Successor Rights Agent under Rights Agreement,
dated as of June 1, 1990, by the Company and Ameritrust Company
National Association. (Incorporated by reference to Exhibit 4.1 to
Form 10-Q for the fiscal quarter ended June 30, 1990).
4.4 -- Undertaking to furnish instruments related to long-term debt.
10.1 -- Retirement Plan For Non-Employee Directors. (Incorporated by
reference to Exhibit 10.1 to Form 10-K for the fiscal year ended
December 31, 1991).
10.2 -- Supplemental Executive Retirement Plan, and form of Supplemental
Executive Retirement Plan Trust. (Incorporated by reference to
Exhibit 19.1 to Form 10-Q for the fiscal quarter ended March 31,
1989).
10.3 -- First Amendment to the Supplemental Executive Retirement Plan; Second
Amendment to the Supplemental Executive Retirement Plan; and Third
Amendment to the Supplemental Executive Retirement Plan.
(Incorporated by reference to Exhibit 10.3 to Form 10-K for the
fiscal year ended December 31, 1991).
10.4 -- Agreement dated May 14, 1992 between the Company, R. L. Waltrip and
related parties relating to life insurance. (Incorporated by
reference to Exhibit 10.4 to Form 10-K for the fiscal year ended
December 31, 1992).
</TABLE>
50
<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.5 -- Employment Agreement, dated November 11, 1991, as amended and
restated as of August 12, 1992, and further amended as of May 12,
1993, between the Company and R. L. Waltrip. (Incorporated by
reference to Exhibit 10.1 to Form 10-Q for the fiscal quarter ended
September 30, 1993).
10.6 -- Non-Competition Agreement and Amendment to Employment Agreement,
dated November 11, 1991, among the Company, R. L. Waltrip and Claire
Waltrip. (Incorporated by reference to Exhibit 10.8 to Form 10-K for
the fiscal year ended December 31, 1992).
10.7 -- Employment Agreement, dated November 11, 1991, as amended and
restated as of August 12, 1992, and further amended as of May 12,
1993, between the Company and L. William Heiligbrodt. (Incorporated
by reference to Exhibit 10.2 to Form 10-Q for the fiscal quarter
ended September 30, 1993).
10.8 -- Employment Agreement, dated November 11, 1991, as amended and
restated as of August 12, 1992, and further amended as of May 12,
1993, between the Company and Samuel W. Rizzo. (Incorporated by
reference to Exhibit 10.3 to Form 10-Q for the fiscal quarter ended
September 30, 1993).
10.9 -- Employment Agreement, dated November 11, 1991, as amended and
restated as of August 12, 1992, and further amended as of May 12,
1993, between the Company and W. Blair Waltrip. (Incorporated by
reference to Exhibit 10.4 to Form 10-Q for the fiscal quarter ended
September 30, 1993).
10.10 -- Employment Agreement, dated November 11, 1991, as amended and
restated as of August 12, 1992, and further amended as of May 12,
1993, between the Company and John W. Morrow, Jr. (Incorporated by
reference to Exhibit 10.5 to Form 10-Q for the fiscal quarter ended
September 30, 1993).
10.11 -- Form of Employment Agreement pertaining to officers (other than the
officers referenced in the five preceding exhibits). (Incorporated by
reference to Exhibit 10.6 to Form 10-Q for the fiscal quarter ended
September 30, 1993).
10.12 -- Salary Continuation Agreement dated April 1, 1991 between the Company
and Robert L. Waltrip. (Incorporated by reference to Exhibit 10.17 to
Form 10-K for the fiscal year ended December 31, 1991).
10.13 -- Forms of two Salary Continuation Agreements applicable to officers of
the Company (other than the officer referenced in the preceding
exhibit). (Incorporated by reference to Exhibit 10.19 to Form 10-K
for the fiscal year ended December 31, 1991).
10.14 -- Executive Liability and Indemnification Policy of insurance.
(Incorporated by reference to Exhibit 10.17 to Form 10-K for the
fiscal year ended December 31, 1992).
10.15 -- Form of 1986 Stock Option Plan. (Incorporated by reference to Exhibit
10.21 to Form 10-K for the fiscal year ended December 31, 1991).
10.16 -- Amended 1987 Stock Plan. (Incorporated by reference to Appendix A to
Proxy Statement dated April 1, 1991).
10.17 -- Service Corporation International (Canada) Limited Stock Option Plan.
</TABLE>
51
<PAGE> 53
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.18 -- Agreement for Reorganization, dated August 15, 1989 among Morrow
Partners, Inc., J. W. Morrow Investment Company, John W. Morrow, Jr.,
Billy Dee Davis and the Company; Agreement-Not-To-Compete, dated
August 15, 1989, between John W. Morrow, Jr., Morrow Partners, Inc.
and the Company, and; Lease dated August 15, 1989, by John W. Morrow,
Jr. and Crawford-A. Crim Funeral Home, Inc. (Incorporated by
reference to Exhibit 10.27 to Form 10-K for the fiscal year ended
December 31, 1989).
10.19 -- Stock Sale Agreement, dated November 13, 1992, among IFC-YP, Inc.,
Huntco Acquisitions Holding, Inc., Huntco Steel, Inc. and B. D.
Hunter, and; Promissory Note dated November 30, 1992 from Huntco
Acquisitions Holding, Inc. to
IFC-YP, Inc. (Incorporated by reference to Exhibit 10.26 to Form 10-K
for the fiscal year ended December 31, 1992).
10.20 -- Casket Supply and Requirements Agreement, dated October 31, 1990,
between York Acquisition Corp. and SCI Funeral Services, Inc., and;
First Amendment to Casket Supply and Requirements Agreement, dated
December 30, 1992. (Incorporated by reference to Exhibit 10.27 to
Form 10-K for the fiscal year ended December 31, 1992).
10.21 -- Supplemental Executive Retirement Plan for Senior Officers (as
Amended and Restated Effective as of December 31, 1993).
10.22 -- ISDA Master Agreement dated February 4, 1993; Amendment to the Master
Agreement dated August 12, 1993; Confirmation dated August 13, 1993;
Confirmation dated November 1, 1993 and Notice of Exercise; all of
which are between Morgan Guaranty Trust Company of New York and the
Company.
10.23 -- First Amendment to Amended 1987 Stock Plan
11.1 -- Computation of Earnings Per Share.
12.1 -- Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Company.
23.1 -- Consent of Independent Accountants (Coopers & Lybrand).
23.2 -- Consent of Independent Auditors (Ernst & Young).
24.1 -- Directors' Powers of Attorney.
</TABLE>
In the above list, the management contracts or compensatory plans or
arrangements are set forth in Exhibits 10.1 through 10.13, 10.15 through 10.17,
10.21 and 10.23.
52
<PAGE> 1
EXHIBIT 4.4
AGREEMENT TO FURNISH INSTRUMENTS
WITH RESPECT TO LONG-TERM DEBT
Pursuant to Item 601(b)(4) of Regulation S-K, there is not
filed with this report certain instruments with respect to long-term debt under
which the total amount of securities authorized thereunder does not exceed 10
per cent of the total assets of Registrant and its subsidiaries on a
consolidated basis. Registrant agrees to furnish a copy of any such instrument
to the Commission upon request.
SERVICE CORPORATION INTERNATIONAL
By: /s/ JAMES M. SHELGER
James M. Shelger
Senior Vice President
Date: March 30, 1994
<PAGE> 1
Exhibit 10.17
SERVICE CORPORATION INTERNATIONAL (CANADA) LIMITED
STOCK OPTION PLAN
I
Purpose of the Plan
The Service Corporation International (Canada) Limited Stock Option
Plan (the "Plan") is intended to provide a means whereby certain employees,
senior officers and directors of Service Corporation International (Canada)
Limited (the "Corporation") and its subsidiaries and senior officers of the
Corporation's affiliates may develop a sense of proprietorship and personal
involvement in the development and financial success of the Corporation, and to
encourage them to remain with and devote their best efforts to the business of
the Corporation, thereby advancing the interests of the Corporation and its
stockholders. Accordingly, the Corporation may grant to eligible optionees the
option ("Option") to purchase shares of the common stock of the Corporation
("Stock") as hereinafter set forth.
II
Administration
The Plan shall be administered by the Compensation Committee of the
Board of Directors (the "Committee") in compliance with all regulatory
requirements. The Committee shall have authority to make recommendations to the
Board of Directors regarding the following matters:
(a) the selection of optionees who are to be granted Options from among
those eligible hereunder;
(b) the number of shares which may be issued under each Option;
(c) the duration of any options;
(d) the interpretation to be given to the Plan; and
(e) the enactment of such rules and regulations, consistent with the
provisions of the Plan, as are advisable to carry out the Plan.
III
Option Agreements
Each Option shall be evidenced by an Option Agreement and shall
contain such terms and conditions, and may be exercisable for such periods (up
to ten years from the date of grant), as may be approved by the Board of
Directors upon recommendation of the Committee. The terms and conditions of the
respective Option Agreements need not be identical. Specifically, an Option
Agreement may provide the right ("Right") to surrender the Option to purchase
any Stock subject to the Option in return for a payment in cash and/or shares
of Stock equal to the excess of the fair market value of the Stock with respect
to which the Option is surrendered over the option price therefor, on such
terms and conditions as the Board of Directors may prescribe upon
recommendation of the Committee. In addition, an Option Agreement may provide
for the payment of the option price by the delivery of a number of shares of
Stock plus cash, if any, having a fair market value
<PAGE> 2
-2-
equal to such option price. Each Option and all Rights granted thereunder shall
not be transferable other than by will or the laws of descent and distribution,
and shall be exercisable during the optionee's lifetime only by the optionee.
IV
Eligibility of Optionees
Options may be granted to individuals who are employees, senior
officers and directors (including those senior officers and directors who are
not employees) of the Corporation or any holding body corporate or subsidiary
body corporate or senior officers of an affiliated body corporate (as defined
in subsections 2(2), 2(4) and 2(5) respectively of the Canada Business
Corporations Act, as amended from time to time) of the Corporation at the time
the Option is granted. Options may be granted to the same optionee on more than
one occasion.
V
Shares Subject to the Plan
The aggregate number of common shares which may be issued under
Options or pursuant to Rights granted under the Plan shall not exceed 10% of
the outstanding common shares from time to time (on a non-diluted basis) and
the aggregate number of shares so reserved for issuance to any one person must
not exceed 5% of the outstanding common shares (on a non-diluted basis). Such
shares may consist of authorized but unissued shares of Stock or previously
issued shares reacquired by the Corporation. Any of such shares which remain
unissued and which are not subject to outstanding Options at the termination
of the Plan shall cease to be subject to the Plan, but until termination of the
Plan, the Corporation shall at all times make available a sufficient number of
shares to meet the requirements of the Plan. Should any Option hereunder expire
prior to its exercise in full, or should an Option to purchase shares be
surrendered in return for the payment of a lesser number of shares, the
remaining number of shares theretofore subject to such Option may again be
subject to an Option granted under the Plan. The aggregate number of shares
which may be issued under the Plan may be adjusted to reflect a change in the
capitalization of the Corporation, such as a stock dividend or stock split.
VI
Option Price
The purchase price of Stock issued under each Option shall be
determined by the Committee, but shall not be less than the fair market value
(as determined by the Committee), if the shares of the Corporation are not
listed on The Toronto Stock Exchange and if they are so listed then the
purchase price shall be not less than the market price of the Stock on The
Toronto Stock Exchange minus any appropriate discount as permitted pursuant to
the rules of The Toronto Stock Exchange, at the time of grant.
<PAGE> 3
-3-
VII
Term of the Plan
The Plan shall be effective upon the date of its adoption by the
Board of Directors, provided that the Plan is approved by the stockholders of
the Corporation within 12 months thereafter and provided further that no shares
shall be issued under the Plan prior to its approval by the stockholders of the
Corporation. Except with respect to Options then outstanding, if not sooner
terminated under the provisions of paragraph IX, the Plan shall terminate upon
and no further Options shall be granted after the expiration of ten years from
the effective date of the Plan.
VIII
Recapitalization or Reorganization
(a) The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board of Directors or the
stockholders of the Corporation to make or authorize any adjustment,
recapitalization, reorganization or other change in the Corporation's capital
structure or its business, any merger or consolidation of the Corporation, any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting Stock or the rights thereof, the dissolution or liquidation of the
Corporation or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding.
(b) The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Corporation shall effect a
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Corporation, the
number of shares of Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.
(c) If the Corporation recapitalizes or otherwise changes its
capital structure, thereafter upon any exercise of an Option theretofore
granted the optionee shall be entitled to purchase under such Option, in lieu
of the number of shares of Stock as to which such Option shall then be
exercisable, the number and class of shares of stock and securities to which
the optionee would have been entitled pursuant to the terms of such
recapitalization if, immediately prior to such recapitalization, the optionee
had been the holder of record of the number of shares of Stock as to which such
Option is then exercisable. If the Corporation shall not be the surviving
corporation in any merger or consolidation (or survives only as a subsidiary of
another corporation), if the Corporation is to sell all or substantially all of
its assets, if the ownership of more than 45% of the outstanding shares of
stock shall change as a result of a concerted action by one or more persons or
corporations, or if an attempt is so made to effect such a change of ownership,
or if the Corporation is to be dissolved and liquidated (each such event is
referred to as a "Corporate Change"), then the Board of Directors, in order to
protect the rights of holders of outstanding Options, may upon recommendation
of the Committee (i) accelerate the time at which Options may be exercised in
full on or before a date (before or after such Corporate Change) fixed by the
Committee, (ii) provide that outstanding Options be exercisable in the manner
provided for Rights in Paragraph III (regardless of whether the option
otherwise provides for Rights), which provision may be given or withheld on an
individual basis, and such outstanding Option remaining unexercised as of a
date fixed by the
<PAGE> 4
-4-
Committee shall be surrendered by the holder to the Corporation for
cancellation, and the holder shall receive a cash payment in an amount equal to
the excess of the aggregate fair market value of the shares of Stock subject to
such Option (which in the event of a change in the ownership of more than 45%
of the outstanding shares of Stock shall nor be less per share than the amount
of cash and the fair market value of other consideration tendered for such
outstanding shares) over the aggregate option price of such shares, and/or
(iii) cause Options then outstanding to be assumed, or new options substituted
therefor, by any surviving corporation in such Corporate Change. For purposes
of this Paragraph VIII, the Corporation shall not be considered to be the
surviving corporation in a merger the result of which is a change in ownership
of more than 45% of the outstanding shares of Stock.
(d) Except as hereinbefore expressly provided, the issuance by the
Corporation of shares of stock of any class or securities convertible into
shares of stock of any class, for cash, property, labour or services, upon
direct sale, upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Corporation convertible into
such shares or other securities, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to Options theretofore
granted or the purchase price per share.
IX
Amendment or Termination of the Plan
The Board of Directors in its discretion may terminate the Plan at any
time with respect to any shares for which Options have not theretofore been
granted. The Board of Directors shall have the right to alter or amend the Plan
or any part thereof from time to time; provided, that no change in any Option
theretofore granted may be made which would impair the rights of the optionee
without the consent of such optionee; and provided, further, that the Board may
not make any alteration or amendment which would materially increase the
benefits accruing to participants under the Plan, change the class of employees
eligible to receive Options under the Plan, or extend the term of the Plan,
without the approval of the stockholders of the Corporation.
<PAGE> 1
EXHIBIT 10.21
SERVICE CORPORATION INTERNATIONAL
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR SENIOR OFFICERS
(AS AMENDED AND RESTATED EFFECTIVE
AS OF DECEMBER 31, 1993)
<PAGE> 2
SERVICE CORPORATION INTERNATIONAL
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR SENIOR OFFICERS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION
<S> <C>
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SCI Cash Balance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II - ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - RETIREMENT BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . 9
(a) Amount of Retirement Benefit . . . . . . . . . . . . 9
(b) Post-1991 Cost-of-Living Increases for Certain
Participants . . . . . . . . . . . . . . . . . . . . 9
(c) Post-1993 Cost-of-Living Increases for Certain
Participants . . . . . . . . . . . . . . . . . . . . 10
3.2 Form and Time of Payment . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV - BENEFITS IN THE EVENT OF A CHANGE OF CONTROL . . . . . . . . . . . . . . . 11
ARTICLE V - DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Benefits in the Event of Participant's Death . . . . . . . . . 12
5.2 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI - PROVISIONS RELATING TO ALL BENEFITS . . . . . . . . . . . . . . . . . . . 14
6.1 Effect of This Article . . . . . . . . . . . . . . . . . . . . 14
6.2 Benefits Upon Re-employment . . . . . . . . . . . . . . . . . . 14
6.3 Forfeiture For Cause . . . . . . . . . . . . . . . . . . . . . 14
6.4 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Provisions Applicable To a Participant . . . . . . . . . . . . 16
ARTICLE VII - ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Committee Appointment . . . . . . . . . . . . . . . . . . . . . 17
7.2 Committee Organization and Voting . . . . . . . . . . . . . . . 17
7.3 Powers of the Committee . . . . . . . . . . . . . . . . . . . . 17
7.4 Committee Discretion . . . . . . . . . . . . . . . . . . . . . 19
7.5 Reimbursement of Expenses and Indemnification . . . . . . . . . 19
ARTICLE VIII - AMENDMENT AND/OR TERMINATION . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Amendment or Termination of the Plan . . . . . . . . . . . . . 21
8.2 No Retroactive Effect on Accrued Benefits . . . . . . . . . . . 21
ARTICLE IX - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1 Payments Under This Plan are the Obligation of
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2 Plan May Be Funded Through a Rabbi Trust . . . . . . . . . . . 22
9.3 Participants Must Rely Only on General Credit of
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE X - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Responsibility for Distributions and Withholding
of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Limitation of Rights . . . . . . . . . . . . . . . . . . . . . 24
10.3 Distributions to Incompetents or Minors . . . . . . . . . . . . 24
10.4 Nonalienation of Benefits . . . . . . . . . . . . . . . . . . . 25
10.5 Reliance Upon Information . . . . . . . . . . . . . . . . . . . 25
10.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.7 Survival of Terms . . . . . . . . . . . . . . . . . . . . . . . 26
10.8 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.9 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . 26
10.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
ii
<PAGE> 4
SERVICE CORPORATION INTERNATIONAL
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR SENIOR OFFICERS
WHEREAS, Service Corporation International has established an unfunded
deferred compensation plan for certain management personnel so as to retain
their loyalty and to offer a further incentive to them to maintain and increase
their standard of performance, which plan is entitled the Service Corporation
International Supplemental Executive Retirement Plan for Senior Officers (the
"Prior Plan"); and
WHEREAS, in Section 8.1 of the Prior Plan, Service Corporation
International reserves the right to amend the plan from time to time; and
WHEREAS, it has been determined that the Prior Plan should be
completely amended, restated and continued in the form of this Plan ("Plan")
without a gap or lapse in coverage, time, or effect, in order to reflect
certain amendments to the Plan.
NOW, THEREFORE, Service Corporation International hereby amends,
restates and continues the Prior Plan in the form of this Plan, without a gap
or lapse in coverage, time, or effect, the terms of which Plan are as follows:
<PAGE> 5
ARTICLE I
DEFINITIONS
"ACCRUED BENEFIT" means as of any given time the amount of a
Participant's unpaid Retirement Benefit as described in Section 3.1. The
mortality and interest rate assumptions used to determine the present value of
lump sum payments of the Accrued Benefit will be the same assumptions as are
then currently being used in computing benefits under the SCI Cash Balance
Plan. If there is no SCI Cash Balance Plan or successor qualified defined
benefit plan, then the actuarial factors to be used will be those actuarial
factors as are selected by the actuarial firm that last serviced the SCI Cash
Balance Plan prior to its termination or merger, as being then appropriate had
the SCI Cash Balance Plan remained in existence at its last level of benefits
and with its last participant census.
"BENEFICIARY" means a person or entity designated by the Participant
under the terms of this Plan to receive any amounts distributed under the Plan
upon the death of the Participant.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CHANGE OF CONTROL" means an event listed in subparagraph (a), (b),
(c) or (d) below.
(a) The acquisition by a Person of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities
Act) of 20% or more of either (1) the then outstanding shares of Stock
or (2) the combined voting power of the then outstanding Voting
Securities.
However, the following acquisitions shall not constitute a
Change of Control: (1) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion
privilege), (2) any acquisition by any
2
<PAGE> 6
employee benefit plan (or related trust) sponsored or maintained by
any corporation controlled by the Company or (3) any acquisition by a
corporation pursuant to a reorganization, merger or consolidation, if,
following the reorganization, merger or consolidation, the conditions
described in clauses (1), (2) and (3) of subsection (c) of this
definition are satisfied.
(b) Individuals who, as of January 1, 1992, constitute
the Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors.
However, any individual becoming a director subsequent to
January 1, 1992, whose election, or nomination for election by the
shareholders of the Company, was approved by (1) a vote of at least a
majority of the directors then constituting the Incumbent Board, or
(2) a vote of at least a majority of the directors then composing the
Executive Committee of the Board of Directors at a time when that
committee was composed of at least five members and all members of the
committee were either members of the Incumbent Board or considered as
being members of the Incumbent Board under clause (1) of this
subsection (b), shall be considered as though that individual were a
member of the Incumbent Board, but excluding, for this purpose, any
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as those terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors.
3
<PAGE> 7
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
immediately following the reorganization, merger or consolidation (1)
more than 60% of, respectively, the then outstanding shares of common
stock of the corporation resulting from that reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of the corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
outstanding Stock and outstanding Voting Securities immediately prior
to the reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to the
reorganization, merger or consolidation, of the outstanding Stock and
outstanding Voting Securities, as the case may be, (2) no Person
(excluding any employee benefit plan or related trust) of the
corporation resulting from the reorganization, merger or consolidation
and any Person beneficially owning, immediately prior to the
reorganization, merger or consolidation, directly or indirectly, 20%
or more of the outstanding Stock or outstanding Voting Securities, as
the case may be, beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from the reorganization, merger or
consolidation or the combined voting power of the then outstanding
voting securities of the corporation entitled to vote generally in the
election of directors and (3) at least a majority of the members of
the board of
4
<PAGE> 8
directors of the corporation resulting from the reorganization, merger
or consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement providing for the
reorganization, merger or consolidation.
(d) Approval by the shareholders of the Company of (1) a
complete liquidation or dissolution of the Company or (2) the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which
immediately following the sale or other disposition, (x) more than 60%
of, respectively, the then outstanding shares of common stock of the
corporation and the combined voting power of the then outstanding
voting securities of the corporation entitled to vote generally in the
election of directors is then beneficially owned directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively of the
outstanding Stock and outstanding Voting Securities immediately prior
to that sale or other disposition in substantially the same proportion
as their ownership, immediately prior to the sale or other
disposition, of the outstanding Stock and outstanding Voting
Securities, as the case may be, (y) no Person (excluding any employee
benefit plan or related trust) of the corporation and any Person
beneficially owning, immediately prior to the sale or other
disposition, directly or indirectly, 20% or more of the outstanding
Stock or outstanding Voting Securities, as the case may be,
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation and the combined voting power of the then outstanding
voting
5
<PAGE> 9
securities of the corporation entitled to vote generally in the
election of directors and (z) at least a majority of the members of
the board of directors of the corporation were members of the
Incumbent Board at the time of the execution of the initial agreement
or action of the Board providing for that sale or other disposition of
assets of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMPANY" means Service Corporation International.
"COMMITTEE" means the persons who are from time to time serving as
members of the committee administering this Plan.
"CREDITED SERVICE" means service with the Company and its Subsidiaries
for which the Participant is awarded credited service under the SCI Cash
Balance Plan for benefit accrual purposes.
"EMPLOYEE" means a full time common law employee of the Company who
receives salary remuneration from the Company.
"PARTICIPANT" means an Employee or former Employee of the Company who
is participating in the Plan or a former Employee of the Company whose
Retirement Benefit has not been completely distributed.
"PERSON" means any individual, entity or group within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Act, excluding the Company and
any employee benefit plan or related trust maintained by the Company.
"PLAN" means the Service Corporation International Supplemental
Executive Retirement Plan For Senior Officers set forth in this document, as
amended from time to time.
6
<PAGE> 10
"PLAN YEAR" means a one year period that coincides with the fiscal year
of the Company.
"PRIOR PLAN" means the Service Corporation International Supplemental
Executive Retirement Plan for Senior Officers as in effect prior to its
amendment, restatement and continuation under the form of this Plan, and/or its
predecessor, the Service Corporation International Supplemental Executive
Retirement Plan established by the Company effective as of June 6, 1988.
"RETIREMENT" means the Participant's separation from service with the
Company.
"RETIREMENT BENEFIT" means the monthly benefit payable to a qualifying
Participant at Retirement, as described in Section 3.1 and paid under Section
3.2.
"RETIREMENT DATE" means the later of the date on which the Participant
attains age 55 or terminates employment with the Company.
"SCI CASH BALANCE PLAN" means the SCI Cash Balance Plan, a defined
benefit plan qualified under Section 401(a) of the Code, as it is amended from
time to time.
"SECURITIES ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"SPOUSE" means the person to whom the Participant is married in a
marriage that is valid under applicable state law.
"STOCK" means the common stock of the Company.
"SUBSIDIARY" means any subsidiary of the Company that is in the
Company's controlled group of corporations as defined in Section 1563(a) of the
Code.
7
<PAGE> 11
"VOTING SECURITIES" means any security of the Company that ordinarily
possesses the power to vote in the election of the Board of Directors without
the happening of any precondition or contingency.
ARTICLE II
ELIGIBILITY
Those Employees who are selected by the Committee will be eligible to
participate in the Plan. The Committee will select those Employees who it
believes are in a select group of officers of the Company in a position to
contribute materially to the continued growth and financial success of the
Company. The Committee shall notify, in writing, each Employee selected as a
Participant. In addition, each selected Employee will be given the opportunity
to enter into an individual written agreement with the Company, which agreement
will constitute a part of this Plan and will set forth the amount of Retirement
Benefits provided to such Employee as a Participant hereunder.
8
<PAGE> 12
ARTICLE III
RETIREMENT BENEFIT
3.1 RETIREMENT BENEFITS.
(a) AMOUNT OF RETIREMENT BENEFIT. The monthly amount of
Retirement Benefit that is provided hereunder to any Participant shall
be such amount as is determined by the Committee in its sole
discretion. Such amount will be set forth in an individual
participation agreement entered into, in writing, by and between the
Company and each Participant hereunder. Such written agreement shall
include a provision that the Retirement Benefits provided by this
amended and restated Plan are provided in lieu of, and not in addition
to, the benefits provided by any Prior Plan. However, in no event
shall the amount of monthly Retirement Benefits provided under this
Plan be less than the amount of monthly benefits to which a
Participant was entitled under the Prior Plan as of December 31, 1993.
(b) POST-1991 COST-OF-LIVING INCREASES FOR CERTAIN
PARTICIPANTS. In addition to the Retirement Benefits described in
subsection (a) immediately above, certain Participants who are
selected by the Committee in its sole discretion shall accrue, as of
the last day of 1992 and as of the last day of 1993, cost-of-living
increases in such Retirement Benefits. For each such calendar year
the increase in the selected Participant's monthly Retirement Benefit
shall be an amount equal to (i) such Participant's monthly Retirement
Benefit as of his Retirement Date, his date of death, or the date of
Change of Control, whichever event triggered the commencement of
Retirement Benefits to the Participant, times (ii) the percentage of
increase in the
9
<PAGE> 13
"Consumer Price Index" (as defined herein) for the twelve-month period
ending on the last day of such calendar year (but in no event more
than seven percent (7%)). For purposes of this Section 3.1(b), the
"Consumer Price Index" shall mean the CPI - All Urban Consumers, U.S.
City Average, All Items - Series A (1982 - 1984 = 100). The Committee
will advise selected Participants, in writing, of their selection for
any cost-of-living increase granted under this Section 3.1(b).
(c) POST-1993 COST-OF-LIVING INCREASES FOR CERTAIN
PARTICIPANTS. In addition to the Retirement Benefits described in
subsection (a) above, certain Participants in the Plan who are
selected by the Committee in its sole discretion shall accrue, as of
the last day of 1994 and of each succeeding calendar year,
cost-of-living increases in such Retirement Benefits. The amount of
such cost-of-living increases will be determined under the method
described in subsection (b) immediately above. The Committee will
advise selected Participants of their selection for any cost-of-
living increase granted under this Section 3.1(c).
3.2 FORM AND TIME OF PAYMENT. Except as provided in Article IV,
the monthly Retirement Benefit will begin on the first day of the month
coincident with or next following the Participant's Retirement Date. The
Participant will receive a Retirement Benefit under this Plan for the lesser of
180 months or his lifetime. If he dies before 180 payments have been made to
him, no further Retirement Benefit shall be payable to him; instead his
Beneficiary shall receive the death benefit, if any, due under Article V.
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<PAGE> 14
ARTICLE IV
BENEFITS IN THE EVENT OF A CHANGE OF CONTROL
Notwithstanding any other provision of this Plan, within five days
after the date of any Change of Control of the Company, the Company shall pay
to (i) each Participant who is an Employee of the Company on the date of the
Change of Control, a lump sum cash payment equal to the present value, as of
the date of such Change in Control, of the Accrued Benefit to which the
Participant would have been entitled if he had continued to earn Credited
Service from the date of the Change of Control to the date of his 65th
birthday; and (ii) each Participant whose Retirement Date occurred before a
Change of Control; (or his Beneficiary, if the Participant has died) a lump sum
payment equal to the present value, as of the date of the Change of Control, of
any remaining Accrued Benefit of such Participant.
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<PAGE> 15
ARTICLE V
DEATH BENEFIT
5.1 BENEFITS IN THE EVENT OF PARTICIPANT'S DEATH. If the
Participant dies after Retirement, his Beneficiary shall receive a lump sum
cash payment of the present value, as of such Participant's date of death, of
the Participant's Accrued Benefit. If the Participant dies before Retirement,
his Beneficiary shall receive a lump sum cash payment of the present value, as
of such Participant's date of death, of the greater of the Participant's actual
Accrued Benefit or the Accrued Benefit to which the Participant would have been
entitled if he had continued to earn Credited Service from the date of his
death to the date of his 65th birthday.
5.2 BENEFICIARY DESIGNATION. Each Participant upon entering the
Plan shall file with the Committee a designation of one or more Beneficiaries
to whom the death benefit provided by this Article V shall be paid in the event
of the Participant's death. The designation will be effective upon receipt by
the Committee of a properly executed form that the Committee has approved for
that purpose. The Participant may from time to time revoke or change any
designation of Beneficiary by filing another approved Beneficiary designation
form with the Committee. If there is no valid designation of Beneficiary on
file with the Committee at the time of the Participant's death or if all of the
Beneficiaries designated in the last Beneficiary designation have predeceased
the Participant (or, in the case of one or more trusts, have ceased to exist)
the Beneficiary will be the Participant's spouse if the spouse survives the
Participant; or otherwise the Participant's estate. If any Beneficiary
survives the Participant but dies (or, in the case of a trust, ceases to exist)
before receiving all payments due under this Article V, the balance of the
payments that would have been paid to that Beneficiary will, unless the
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<PAGE> 16
Participant's designation provides otherwise, be distributed to the deceased
individual Beneficiary's estate or to the Participant's estate in the case of a
Beneficiary that is not an individual.
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ARTICLE VI
PROVISIONS RELATING TO ALL BENEFITS
6.1 EFFECT OF THIS ARTICLE. The provisions of this Article will
control over all other provisions of this Plan.
6.2 BENEFITS UPON RE-EMPLOYMENT. If a former Participant who is
receiving benefit payments under this Plan is reemployed by the Company, the
payment of the Retirement Benefit hereunder will continue during his period of
reemployment. The re- employed former Participant's benefit will not be
changed as a result of his reemployment.
6.3 FORFEITURE FOR CAUSE. If the Committee finds, after full
consideration of the facts presented on behalf of both the Company and a
Participant, that the Participant was discharged by the Company for fraud,
embezzlement, theft, commission of a felony, proven dishonesty in the course of
his employment by the Company that damaged the Company, or for disclosing trade
secrets of the Company, the Participant's entire Accrued Benefit will be
forfeited and neither such Participant nor his Beneficiary shall have any
further claim to benefits under this Plan. The decision of the Committee as to
the cause of a Participant's discharge and the damage done to the Company will
be final. No decision of the Committee will affect the finality of the
discharge of the Participant by the Company in any manner. Notwithstanding the
foregoing, the forfeiture created by this Section will not apply to a
Participant discharged during the Plan Year in which a Change of Control
occurs, or during the next three succeeding Plan Years following the Plan Year
in which a Change of Control occurs, unless an arbitrator selected to review
the Committee's findings agrees with the Committee's determination to apply the
forfeiture. The arbitrator will be selected by permitting the Company and the
Participant each
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to strike one name from a panel of three names obtained from the American
Arbitration Association. The person whose name is remaining will be the
arbitrator.
6.4 CLAIMS PROCEDURE. When a benefit is due, the Member or
Beneficiary should submit his claim to the person or office designated by the
Committee to receive claims. Under normal circumstances, a final decision will
be made as to a claim within 90 days after receipt of the claim. If the
Committee notifies the claimant in writing during the initial 90 day period, it
may extend the period up to 180 days after the initial receipt of the claim.
The written notice must contain the circumstances necessitating the extension
and the anticipated date for the final decision. If a claim is denied during
the claims period, the Committee must notify the claimant in writing. The
denial must include the specific reasons for it, the Plan provisions upon which
the denial is based, and the claims review procedure. If no action is taken
during the claims period, the claim is treated as if it were denied on the last
day of the claims period.
If a Participant's or Beneficiary's claim is denied and he wants a
review, he must apply to the Committee in writing. That application may
include any comment or argument the claimant wants to make. The claimant may
either represent himself or appoint a representative, either of whom has the
right to inspect all documents pertaining to the claim and its denial. The
Committee may schedule any meeting with the claimant or his representative that
it finds necessary or appropriate to complete its review.
The request for review must be filed within 90 days after the denial.
If it is not, the denial becomes final. If a timely request for review is
made, the Committee must make its decision, under normal circumstances, within
60 days of the receipt of the request for review. However, if the Committee
notifies the claimant prior to the expiration of the initial 60 day
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<PAGE> 19
review period, it may extend the period of review up to 120 days following the
initial receipt of the request for a review. All decisions of the Committee
must be in writing and must include the specific reasons for its action and the
Plan provisions on which its decision is based. If a decision is not given to
the claimant within the review period, the claim is treated as if it were
denied on the last day of the review period.
6.5 PROVISIONS APPLICABLE TO A PARTICIPANT. The provisions of the
Plan applicable to any Participant hereunder shall be those provisions that are
in effect on the date of the Participant's termination of employment with the
Company unless a subsequent amendment of the Plan by its express terms (but
subject to Section 3.1(a)) applies to Participants who have previously
terminated employment with the Company.
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ARTICLE VII
ADMINISTRATION
7.1 COMMITTEE APPOINTMENT. The Committee will be the compensation
committee of the Company unless the Board of Directors appoints other
individuals. Each Committee member will serve until his or her resignation or
removal. The Board of Directors will have the sole discretion to remove any
one or more Committee members and appoint one or more replacement or additional
Committee members from time to time.
7.2 COMMITTEE ORGANIZATION AND VOTING. The Committee will select
from among its members a chairman who will preside at all of its meetings and
will select a secretary without regard to whether that person is a member of
the Committee. The secretary will keep all records, documents and data
pertaining to the Committee's supervision and administration of this Plan. A
majority of the members of the Committee will constitute a quorum for the
transaction of business and the vote of a majority of the members present at
any meeting will decide any question brought before the meeting. In addition,
the Committee may decide any question by vote, taken without a meeting, of a
majority of its members. A member of the Committee who is also a Participant
will not vote or act on any matter relating solely to himself.
7.3 POWERS OF THE COMMITTEE. The Committee shall have the
exclusive responsibility for the general administration of this Plan according
to the terms and provisions of this Plan and shall have all powers necessary to
accomplish those purposes, including, but not by way of limitation, the
complete discretionary right, power and authority:
(a) to make rules and regulations for the administration
of this Plan;
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(b) to select all Participants in this Plan (including
the eligibility of any Participant to receive cost-of-living
adjustments pursuant to Sections 3.1(b) and/or 3.1 (c));
(c) to determine the monthly amount of Retirement
Benefits, or any other benefit to which a Participant (or Beneficiary)
is entitled under the Plan;
(d) to construe all terms, provisions, conditions and
limitations of this Plan;
(e) to correct any defect, supply any omission or
reconcile any inconsistency that may appear in this Plan in the manner
and to the extent it deems expedient to carry this Plan into effect
for the greatest benefit of all parties at interest;
(f) to determine all controversies relating to the
administration of this Plan, including but not limited to:
(1) differences of opinion arising between the
Company and a Participant except when the difference of
opinion relates to the entitlement to, the amount of, or the
method or timing of payment of a benefit as a result of a
Change of Control; and
(2) any question it deems advisable to determine
in order to promote the uniform administration of this Plan
for the benefit of all parties at interest; and
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<PAGE> 22
(g) to delegate by written notice those clerical and
recordation duties of the Committee, as it deems necessary or
advisable for the proper and efficient administration of this Plan.
7.4 COMMITTEE DISCRETION. The Committee in exercising any power
or authority granted under this Plan or in making any determination under this
Plan shall perform or refrain from performing those acts using its sole
discretion and judgment. Any decision made by the Committee or any refraining
to act or any act taken by the Committee in good faith shall be final and
binding on all parties. The Committee's decision shall never be subject to de
novo review. Notwithstanding the foregoing, the Committee's decisions in
refraining to act or acting is to be subject to judicial review for benefits
resulting from a Change of Control.
7.5 REIMBURSEMENT OF EXPENSES AND INDEMNIFICATION. The members of
the Committee will serve without compensation for their services but will be
reimbursed by the Company for all expenses properly and actually incurred in
the performance of their duties under this Plan. The Company shall indemnify
the Committee members against, and hold the Committee members harmless from,
any and all loss, damage, penalty, liability, cost and expense (including,
without limitation, attorneys' fees and disbursements) that may be incurred by,
imposed upon, or asserted against the Committee members by reason of any claim,
regulatory proceeding, or litigation arising from any act done or omitted to be
done by any member of the Committee with respect to the Plan, excepting only
losses, claims, damages, liabilities, costs and expenses arising from the
Committee member's bad faith or gross negligence. Each affected member of the
Committee shall promptly notify the Company of any claim, action or proceeding
for which he may seek indemnification. The indemnification of
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Committee members provided for in this Section will survive the resignation or
removal of the Committee member and the termination of the Plan.
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<PAGE> 24
ARTICLE VIII
AMENDMENT AND/OR TERMINATION
8.1 AMENDMENT OR TERMINATION OF THE PLAN. Subject to Section 8.2,
the Board of Directors may amend or terminate this Plan at any time by an
instrument in writing.
8.2 NO RETROACTIVE EFFECT ON ACCRUED BENEFITS. No amendment or
the termination of this Plan shall affect the rights of any Participant to the
Retirement Benefit provided in Article III previously accrued by the
Participant, or to the death benefit provided his Beneficiary in Article V, if
the Participant completes the requirements for the benefit, and no amendment
hereto shall change, without his written consent, a Participant's rights under
any provision relating to a Change of Control after a Change of Control has
occurred.
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ARTICLE IX
FUNDING
9.1 PAYMENTS UNDER THIS PLAN ARE THE OBLIGATION OF THE COMPANY.
The Company will pay the benefits due the Participants under this Plan.
9.2 PLAN MAY BE FUNDED THROUGH A RABBI TRUST. It is specifically
recognized by both the Company and the Participants that the Company may, but
is not required to, contribute any amount it finds desirable to a trust
established to accumulate assets sufficient to fund the obligations of the
Company under this Plan. However, under all circumstances, the rights of the
Participants to the assets held in the trust will be no greater than the rights
expressed in this agreement. Nothing contained in the trust agreement that
creates the funding trust will constitute a guarantee by the Company that
assets of the Company transferred to the trust will be sufficient to pay any
benefits under this Plan or would place the Participant in a secured position
ahead of general creditors should the Company become insolvent or bankrupt.
Any trust agreement prepared to fund the Company's obligations under this Plan
must specifically set out these principles so it is clear in that trust
agreement that the Participants in this Plan are only unsecured general
creditors of the Company in relation to their benefits under this Plan.
9.3 PARTICIPANTS MUST RELY ONLY ON GENERAL CREDIT OF THE COMPANY.
It is also specifically recognized by both the Company and the Participants
that this Plan is only a general corporate commitment and that each Participant
must rely upon the general credit of the Company for the fulfillment of its
obligations under this Plan. Under all circumstances the rights of
Participants to any asset held by the Company will be no greater than the
rights expressed in this Plan. Nothing contained in this Plan will constitute
a guarantee by the
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<PAGE> 26
Company that the assets of the Company will be sufficient to pay any benefits
under this Plan or would place the Participant in a secured position ahead of
general unsecured creditors of the Company. Though the Company may establish
or become a signatory to a rabbi trust, as indicated in Section 9.2, to
accumulate assets to fulfill its obligations, the Plan and that trust will not
create any lien, claim, encumbrance, right, title or other interest of any kind
in any Participant in any asset held by the Company, contributed to the trust
or otherwise designated to be used for payment of any of its obligations
created in this Plan. No specific asset of the Company has been or will be set
aside, or will in any way be transferred to the trust or will be pledged for
the performance of the Company's obligations under this Plan in any way that
would remove the asset from being subject to the creditors of the Company.
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<PAGE> 27
ARTICLE X
MISCELLANEOUS
10.1 RESPONSIBILITY FOR DISTRIBUTIONS AND WITHHOLDING OF TAXES.
The Committee will furnish to the Company information concerning the amount and
form of distribution to any Participant entitled to a distribution so that the
Company may make or cause any rabbi trust established to make the distribution
required. It will also calculate the deductions from the amount of the benefit
paid under this Plan for any taxes required to be withheld by federal, state or
local government and will cause them to be withheld.
10.2 LIMITATION OF RIGHTS. Nothing in this Plan will be construed:
(a) to give a Participant any right with respect to any
benefit except in accordance with the terms of this Plan;
(b) to limit in any way the right of the Company to
terminate a Participant's employment with the Company at any time;
(c) to evidence any agreement or understanding, expressed
or implied, that the Company will employ a Participant in any
particular position or for any particular remuneration; or
(d) to give a Participant or any other person claiming
through him any interest or right under this Plan other than that of
any unsecured general creditor of the Company.
10.3 DISTRIBUTIONS TO INCOMPETENTS OR MINORS. Should a Participant
become incompetent or should a Participant designate a Beneficiary who is a
minor or incompetent, the Committee is authorized to pay the funds due to the
parent of the minor or to the guardian of
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<PAGE> 28
the minor or incompetent or to apply those funds for the benefit of the minor
or incompetent in any manner the Committee determines in its sole discretion.
The application of those funds under this provision will relieve the Company of
any further liability to the Participant or his Beneficiary to the extent of
the application of those funds.
10.4 NONALIENATION OF BENEFITS. No right or benefit provided in
this Plan will be transferable by the Participant except, upon his death, to a
named Beneficiary as provided in this Plan. No right or benefit under this
Plan will be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge the same will be void. No right or benefit under
this Plan will in any manner be liable for or subject to any debts, contracts,
liabilities or torts of the person entitled to the benefit. If any Participant
or any Beneficiary becomes bankrupt or attempts to anticipate, alienate, sell,
assign, pledge, encumber or charge any right or benefit under this Plan, that
right or benefit will, in the sole discretion of the Committee, cease. In that
event, the Committee may have the Company hold or apply the right or benefit or
any part of it to the benefit of the Participant or Beneficiary, his or her
spouse, children or other dependents or any of them in any manner and in any
proportion the Committee believes to be proper in its sole and absolute
discretion, but is not required to do so.
10.5 RELIANCE UPON INFORMATION. The Committee will not be liable
for any decision or action taken in good faith in connection with the
administration of this Plan. Without limiting the generality of the foregoing,
any decision or action taken by the Committee when it relies upon information
supplied it by any officer of the Company, the Company's legal counsel, the
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<PAGE> 29
Company's actuary, the Company's independent accountants or other advisors in
connection with the administration of this Plan will be deemed to have been
taken in good faith.
10.6 SEVERABILITY. If any term, provision, covenant or condition
of this Plan is held to be invalid, void or otherwise unenforceable, the rest
of this Plan will remain in full force and effect and will in no way be
affected, impaired or invalidated.
10.7 SURVIVAL OF TERMS. The provisions of this Plan will bind the
successors of the Company.
10.8 NOTICE. Any notice or filing required or permitted to be
given to the Committee or a Participant will be sufficient if in writing and
hand delivered or sent by U.S. mail to the principal office of the Company or
to the residential mailing address of the Participant. Notice will be deemed
to be given as of the date of hand delivery or if delivery is by mail, as of
the date shown on the postmark.
10.9 GENDER AND NUMBER. If the context requires it, words of one
gender when used in this Plan will include the other genders, and words used in
the singular or plural will include the other.
10.10 GOVERNING LAW. The Plan will be construed, administered and
governed in all respects by the laws of the State of Texas.
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IN WITNESS WHEREOF, the Company has executed this amended and restated
Plan document as of this ___ day of _________, 1993, effective as of December
31, 1993.
SERVICE CORPORATION INTERNATIONAL
By:______________________________
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<PAGE> 1
EXHIBIT 10.22
(MULTICURRENCY-CROSS BORDER)
ISDA
INTERNATIONAL SWAP DEALERS ASSOCIATIONS, INC.
MASTER AGREEMENT
dated as of February 4, 1993
Morgan Guaranty Trust Company Service Corporation International
of New York ("Morgan") and (the "Counterparty")
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(a) Definitions. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) Single Agreement. All Transactions are entered in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) General Conditions.
(i) Each party will make each payment or deliver specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date
for value on that date in the place of the account specified in
the relevant Confirmation or otherwise pursuant to this Agreement in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is
subject to (1) the condition precedent that no Event of Default or
Potential Event of Default with respect to the other party has
occurred and is continuing, (2) the condition precedent that no Early
Termination Date in respect of the relevant Transaction has occurred
or been effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
Copyright 1992 by International Swap Dealers Association, Inc.
<PAGE> 2
(b) Change of Account. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:
(i) in the same currency: and
(ii) in respect of the same Transaction.
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one
party exceeds the aggregate amount that would otherwise have been payable by
the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess of
the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable
law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full amount
required to be deducted or withheld (including the full
amount required to be deducted or withheld from any
additional amount paid by X to Y under this Section 2(d))
promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to an official receipt (or a
certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities: and
(4) if such Tax is an Indemnifiable Tax, pay to Y,
in addition to the payment to which Y is otherwise entitled
under this Agreement, such additional amount as is
necessary to ensure that the net amount actually received
by Y (free and clear of Indemnifiable Taxes, whether
assessed against X or Y) will equal the full amount Y would
have received had no such deduction or withholding been
required. However, X will not be required to pay any
additional amount to Y to the extent that it would not be
required to be paid but for:
(A) the failure by Y to comply with or
perform any agreement contained in Section
4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation
made by Y pursuant to Section 3(f) to be
accurate and true unless such failure would not
have occurred but for (1) any action taken by a
taxing authority, or brought in a court of
competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless
of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a
Change in Tax Law.
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<PAGE> 3
(ii) Liability, if:
(1) X is required by any applicable law, as
modified by the practice of any relevant governmental
revenue authority, to make any deduction or withholding in
respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed
directly against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect to the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay
interest (before as well as after judgment) on the overdue amount to the other
party on demand in the same currency as such overdue amount, for the period
from (and including) the original due date for payment to (but excluding) the
date of actual payment, at the Default Rate. Such interest will be calculated
on the basis of daily compounding and the actual number of days elapsed. If,
prior to the occurrence or effective designation of an Early Termination Date
in respect of the relevant Transaction, a party defaults in the performance of
any obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under
the laws of the jurisdiction of its organisation or incorporation and,
if relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any
other documentation relating to this Agreement to which it is a party,
to deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorise such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;
(iv) Consents. All governmental and other consents that are
required to have been obtained by it with respect to this Agreement or
any Credit Support Document to which it is a party have been obtained
and are in full force and effect and all conditions of any such
consents have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement
and any Credit Support Document to which it is a party constitute its
legal, valid and binding obligations, enforceable in accordance with
their respective terms (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law.))
3
<PAGE> 4
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator that is likely to affect the legality, validity
or enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
(f) Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:
(a) Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to make
a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate (so long
as the completion, execution, or submission of such form or document
would not materially prejudice the legal or commercial position of the
party in receipt of such demand), with any such form or document to
be accurate and completed in a manner reasonably satisfactory to such
other party and to be executed and to be delivered with any reasonably
required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this Agreement
or any Credit Support Document to which it is a party and will use all
reasonable efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) Payment of Stamp Tax. Subject to Section II, it will pay any Stamp
Tax levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated,
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organised, managed and controlled, or considered to have its seat, or in which
a branch or office through which it is acting for the purpose of this Agreement
is located ("Stamp Tax Jurisdiction") and will indemnify the other party
against any Stamp Tax levied or imposed upon the other party or in respect of
the other party's execution or performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to make,
when due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) Breach of Agreement. Failure by the party to comply with
or perform any agreement or obligation (other than an obligation to
make any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) or to give notice of a Termination Event or any
agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d) to be
complied with or performed by the party in accordance with this
Agreement if such failure is not remedied on or before the thirtieth
day after notice of such failure is failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party of any credit
Support Provider of such party to comply with
or perform any agreement of obligation to be
complied with or performed by it in accordance
with any Credit Support Document if such
failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of
such Credit Support Document or the failing or
ceasing of such Credit Support Document to be
in full force and effect for the purpose of
this Agreement (in either case other than in
accordance with its terms) prior to the
satisfaction of all obligations of such party
under each Transaction to which such Credit
Support Document relates without the written
consent of the other party; or
(3) the party or such Credit Support
Provider disaffirms, disclaims , repudiates or
rejects, in whole or in part, or challenges
the validity of such Credit Support Document;
(iv) Misrepresentation. A representation (other
than a representation under Section 3(e) or (f)) made or
repeated or deemed to have been made or repeated by the
party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have
been incorrect or misleading in any material respect when
made or repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The
party, any Credit Support Provider of such party or any
applicable Specified Entity of such party (1) defaults under
a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs
a liquidation of, an acceleration of obligations under, or
an early termination of, that Specified Transaction, (2)
defaults, after giving effect to any applicable notice
requirement or grace period, in making any payment or
delivery due on the last payment, delivery or exchange date
of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims,
repudiates or rejects, in whole or in part, a Specified
Transaction (or such action is taken by any person or
entity appointed or empowered to operate it or act on its
behalf);
(vi) Cross Default. If "Cross Default" is specified
in the Schedule as applying to the party, the occurrence or
existence of (1) a default, event of default or other
similar condition or event (however
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described) in respect of such party, any Credit Support
Provider of such party or any applicable Specified Entity
of such party under one or more agreements or instruments
relating to Specified Indebtedness of any of them
(individually or collectively) in an aggregate amount of not
less than the applicable Threshold Amount (as specified in
the Schedule) which has resulted in such Specified
Indebtedness becoming, or becoming capable at such time of
being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support
Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due
date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice
requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support
Provider of such party or any applicable Specified Entity
of such party:
(1) is dissolved (other than pursuant to a
consolidation, amalgamation or merger);
(2) becomes insolvent or is unable to pay its
debts or fails or admits in writing its
inability generally to pay its debts as they
become due; (3) makes a general assignment,
arrangement or composition with or for the
benefit of its creditors; (4) institutes or
has instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency
law or other similar law affecting creditors'
rights, or a petition is presented for its
winding-up or liquidation and, in the case of
any such proceeding or petition instituted or
presented against it, such proceeding or
petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an
order for relief or the making of an order for
its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in
each case within 30 days of the institution or
presentation thereof; (5) has a resolution
passed for its winding-up, official management
or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6)
seeks or becomes subject to the appointment of
an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or
other similar official for it or for all or
substantially all its assets; (7) has a
secured party take possession of all or
substantially all its assets or has a distress,
execution, attachment, sequestration or other
legal process levied, enforced or sued on or
against all or substantially all its assets and
such secured party maintains possession, or any
such process is not dismissed, discharged,
stayed or restrained, in each case within 30
days thereafter; (8) causes or is subject to
any event with respect to it which, under the
applicable laws of any jurisdiction, has an
analogous effect to any of the events specified
in clauses (1) or (7) (inclusive); or (9) takes
any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in,
any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any
Credit Support Provider of such party consolidates or
amalgamates with, or merges with or into, or transfers all
or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or
transfer:
(1) the resulting, surviving or
transferee entity fails to assume all the
obligations of such party or such Credit
Support Provider under this Agreement or any
Credit Support Document to which it or its
predecessor was a party by operation of law or
pursuant to an agreement reasonably
satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support
Document fail to extend (without the consent of
the other party) to the performance by such
resulting, surviving or transferee entity of
its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes an
Illegality if the event is specified in (i) below, a Tax Event if the event is
specified in (ii) below or a Tax Event Upon Merger if the event is specified in
(iii) below, and, if specified to be applicable, a Credit Event.
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:
(i) ILLEGALITY. Due to the adoption of, or any change in any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes
unlawful (other than as a result of a breach by the party of Section
4(b)) for such party (which will be the affected Party);
(1) to perform any absolute or contingent obligation to
make a payment or delivery or to receive a payment or
delivery in respect of such Transaction or to comply with
any other material provision of this Agreement relating to
such Transaction; or
(2) to preform or for any Credit Support Provider or such
party to perform, any contingent or other obligation which
the party ( or such Credit Support Provider) has under any
Credit Support Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing
authority, or brought in a court of competent jurisdiction on or after
the date on which a Transaction is entered into regardless of whether
such action is taken or brought with respect to a party to this
Agreement) or (y) a Change in Tax Law, the party (which will be the
Affected Party will, or there is a substantial likelihood that it
will, on the next succeeding Schedule Payment Date (1) be required to
pay to the other party an additional amount in respect of an
Indemnifiable Tax under Section 2(d)(i)(4)(except in respect of
interest under Section 2(e), 6(d)(ii) or (2) receive a payment from
which an amount is required to be deducted or withheld for or on
account of Tax (except in respect of interest under Section
2(e),6(d)(ii) or 6(e)) and no additional amount is required to be paid
in respect of such Tax under Section 2(d)(i)(4)(other than by reason
of Section 2(d)(i)(4(A) or (B)):
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on
the next succeeding Scheduled Payment Date will either (1) be required
to pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4)(except in respect of interest under Section
2(d),6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
has been deducted or withheld for or on account of any Indemnifiable
Tax in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional
Termination Event" is specified in the Schedule or any Confirmation as
applying, the occurrence of such event (and, in such event, the
Affected Party or Affected Parties shall be as specified for such
Additional Termination Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
any Illegality, it will be treated as an Illegality and will not constitute any
Event of Default.
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6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has occurred
and is then continuing, the other party (the "Non-defaulting Party") may, by
not more than 20 days notice to the Defaulting Party specifying the relevant
Event of Default, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all outstanding
Transactions. If, however, "Automatic Early Termination" is specified in the
Schedule as applying to a party, then an Early Termination Date in respect of
all outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section 5(a)(vii)(1),
(3), (5), (6) or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(4) or, to the
extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party
will, promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an
illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is
only one Affected Party, or if a Tax Event Upon Merger occurs and the
Burdened Party is the Affected Party, the Affected Party will, as a
condition to its right to designate an Early Termination Date under
Section 6(b)(iv) all its rights and obligations under this Agreement in
respect of the Affected Transactions to another of its Offices or
Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
each party will use all reasonable efforts to reach agreement within
30 days after notice thereof is given under Section 6(b)(i) on
action to avoid that Termination Event.
(iv) RIGHT TO TERMINATE. IF:
(1) a transfer under Section 6(b)(ii) or an
agreement under Section 6(b)(iii), as the case may be, has
not been effected with respect to all Affected Transactions
within 30 days after an Affected Party gives under Section
6(b)(i);
(2) an illegality under Section 5(b)(i)(2), a
Credit Event Upon Merger or an Additional Termination Event
occurs, or a Tax Event Upon Merger occurs and the Burdened
Party is not the Affected Party.
either party in the case of an illegality, the Burdened Party in the
case of the Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation
(i) If notice designating an Early Termination Date is given
under Section 6(a) or (b), the Early Termination Date will occur on
the date so designated, whether or not the relevant Event of Default
or Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect to the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable
following the occurrence of an Early Termination Date, each party will
make the calculations on its part, if any, contemplated by Section
6(e) and will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e)) and
(2) giving details of the relevant account to which any amount payable
to it is to be paid. In the absence of written confirmation from the
source of a quotation obtained in determining a Market Quotation, the
records of the party obtaining such quotation will be conclusive
evidence of the existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect
of any Early Termination Date under Section 6(e) will be payable on
the day that notice of the amount payable is effective (in the case of
an Early Termination Date which is designated or occurs as a result of
an Event of Default and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before as
well as after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.
(e) Payments on Early Termination. If any Early Termination Date occurs,
the following provisions shall apply based on the parties election in
the Schedule of a payment measure, either "Market Quotation" or
"Loss", and a payment method, either the "First Method" or the "Second
Method". If the parties fail to designate a payment measure or
payment method in the Schedule, it will be deemed that "Market
Quotation" of the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results
from an Event of Default:
(1) First Method and Market Quotation. If the First Method
and Market Quotation apply, the Defaulting Party will pay
to the Non-defaulting Party the excess, if a positive
number, of (A) the sum of the Settlement Amount (determined
by the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B)
the Termination Currency Equivalent of the Unpaid Amounts
owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's
Loss in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second
Method and Market Quotation apply, an amount will be
payable equal to (A) the sum of the Settlement Amount
(determined by the
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Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B)
the Termination Currency Equivalent of the Unpaid Amounts
owing to the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the
Non-defaulting Party: if it is a negative number, the
Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-
defaulting Party's Loss in respect of this Agreement. If
that amount is a positive number, the Defaulting Party will
pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results
from a Termination Event:
(1) One Affected Party. If there is one Affected Party,
the amount payable will be determined in accordance with
Section 6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the
Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected
Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected
Parties:--
(A) if Market Quotation applies, each party
will determine a Settlement Amount in respect
of the Terminated Transactions, and an amount
will be payable equal to (I) the sum of (a)
one-half of the difference between the
Settlement Amount of the party with the higher
Settlement Amount ("X") and the Settlement
Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent
of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine
its Loss in respect of this Agreement (or, if
fewer than all the Transactions are being
terminated, in respect of all Terminated
Transactions) and an amount will be payable
equal to one-half of the difference between the
Loss of the party with the higher Loss ("X")
and the Loss of the party with the lower Loss
("Y").
If the amount payable is a positive number, Y will pay it
to X; if it is a negative number, X will pay the absolute
value of that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. CONTRACTUAL CURRENCY
(a) Payment in the Contractual Currency. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so tendered into
the Contractual Currency, of the full amount in the Contractual Currency of all
amounts payable in respect of this Agreement. If for any reason the amount in
the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required
to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual Currency
payable in respect of this Agreement, the party receiving the payment will
refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such
party. The term "rate of exchange" includes, without limitation, any premiums
and costs of exchange payable in connection with the purchase of or conversion
into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
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9. MISCELLANEOUS
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging
system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver
in respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed an
original.
(ii) The parties intend that they are legally bound by the terms
of each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES: MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the
Transaction through its head or home office. This representation will be deemed
to be repeated by such party on each date on which a Transaction is entered
into.
(b) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction without the
prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
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<PAGE> 13
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if
overseas) or the equivalent (return receipt requested), on the date
that mail is delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received.
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change
the address, telex or facsimile number or electronic messaging system details
at which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan
in New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any
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<PAGE> 14
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suite, (ii) jurisdiction of
any court, (iii) relief by way of injunction, order for specific performance or
for recovery of property, (iv) attachment of its assets (whether before or
after judgment) and (v) execution or enforcement of any judgment to which it or
its revenues or assets might otherwise be entitled in any Proceedings in the
courts of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(III)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non- defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has th meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
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<PAGE> 15
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be
imposed in respect of a payment under this Agreement but for a present or
former connection between the jurisdiction of the government or taxation
authority imposing such Tax and the recipient of such payment or a person
related to such recipient (including, without limitation, a connection arising
from such recipient or related person being or having been a citizen or
resident of such jurisdiction, or being or having been organised, present or
engaged in a trade or business in such jurisdiction, or having or having had a
permanent establishment of fixed place of business in such jurisdiction, but
excluding a connection arising solely from such recipient or related person
having executed, delivered, performed its obligations or received a payment
under, or enforced, this Agreement or a Credit Support Document).
"Law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where th relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains) in
respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(I) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section II. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have
15
<PAGE> 16
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as
of the same day and time (without regard to different time zones) on or as soon
as reasonably practicable after the relevant Early Termination Date. The day
and time as of which those quotations are to be obtained will be selected in
good faith by the party obliged to make a determination under Section 6(e),
and, if each party is so obliged, after consultation with the other. If more
than three quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the highest and
lowest values. If exactly three such quotations are provided, the Market
Quotation will be the quotation remaining after disregarding the highest and
lowest quotations. For this purpose, if more than one quotation has the same
highest value or lowest value, then one of such quotations shall be
disregarded. If fewer than three quotations are provided, it will be deemed
that the Market Quotation in respect of such Terminated Transaction or group of
Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
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<PAGE> 17
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party) and the other
party to this Agreement (or any Credit Support Provider of such other party or
any applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, currrency swap transaction,
cross-currency rate swap transaciton, currency option or any other similar
transaction (including any option with respect to any of these transactions).
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTION" means with respect to any Early Termination Date (a) if
resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a
rate for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The Foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under
Section 2(a)(i) which was (or would have been but for Section 2(a)(iii))
required to be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled by delivery to such party on
or prior to such Early Termination Date and which has not been so settled as at
such Early Termination Date, an amount equal to the fair market
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<PAGE> 18
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding) such
Early Termination Date, at the Applicable Rate. Such amounts of interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
MORGAN GUARANTY TRUST SERVICE CORPORATION
COMPANY OF NEW YORK INTERNATIONAL
- --------------------------- ----------------------------
(Name of Party) (Name of Party)
By: /s/ MICHAEL C. MAUER By: /s/ SAMUEL W. RIZZO
- --------------------------- ----------------------------
Name: MICHAEL C MAUER Name: Samuel W. Rizzo
Title: VICE PRESIDENT Title: Executive Vice President
and Chief Financial
Officer
Date: Date: February 4, 1993
18
<PAGE> 19
SCHEDULE
to the
Master Agreement
dated as of February 4, 1993
between Morgan Guaranty Trust and Service Corporation
Company of New York International
("Morgan") (the "Counterparty")
Part 1
Termination Provisions
In this Agreement:-
(1) "Specified Entity" means:
(a) in relation to Morgan, any Affiliate of Morgan for
purposes of Section 5(a)(v) and shall not apply for purposes of any
other provision; and
(b) in relation to the Counterparty, any Affiliate of the
Counterparty for purposes of Sections 5(a)(v), (vi), (vii) and
5(b)(iv) and shall not apply for purposes of any other provision.
(2) "Specified Transaction" will have the meaning specified in Section 14.
(3) The "Cross Default" provisions of Section 5(a)(vi) will not apply to
Morgan. The "Cross Default" provisions of Section 5(a)(vi) will apply
to the Counterparty and any applicable Specified Entity, and, for such
purpose:
(a) "Specified Indebtedness" means the Credit Agreement as defined
in Paragraph (8) of Part 1 of this Schedule; provided,
however, that if the Credit Agreement is terminated for any
reason other than the occurrence of an Event of Default (as
defined therein), then the term "Specified Indebtedness"
shall have the meaning set forth in Section 14 hereof.
(b) "Threshold Amount" means U.S.$1; provided, however, that if
the Credit Agreement is terminated for any reason other than
the occurrence of an Event of Default (as defined therein),
then the term "Threshold Amount" shall be U.S.$25,000,000 (or
its equivalent in any other currency or currencies).
(c) If the credit Agreement is terminated for any reason other
than the occurrence of an Event of Default (as defined
therein), then section 5(a)(vi) will be deemed to be amended
to include the following Clause "(3)":
<PAGE> 20
-2-
"or (3) a default or event of default (however described)
occurs and is continuing which entitles any person or entity
to terminate its commitment under any agreement to lend or
advance or make available funds to a party (or any applicable
Specified Entity) in respect of an aggregate amount in excess
of the Threshold Amount."
(4) "Termination Currency" means United States Dollars.
(5) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to Morgan, the Counterparty or any applicable Specified Entity.
(6) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Morgan or the Counterparty.
(7) For purposes of computing amounts payable on early termination:
(a) Market Quotation will apply to this Agreement; and
(b) The Second Method will apply to this Agreement.
(8) Section 5(a) of the Agreement is amended with respect to the
Counterparty by adding the following Subsections (ix) and (x) thereto:
"(ix) The Counterparty shall fail to perform or comply with,
for the benefit of Morgan, its agreements, covenants and
obligations contained in Article V, Section 5.02 of the Credit
Agreement. For purposes of Sections 5 and 14 of the Agreement,
"Credit Agreement" shall initially mean the Credit Agreement
dated as of Competitive Advance and Revolving Credit Facility
Agreement dated as of October 16, 1992, among the
Counterparty, the banks listed therein, Texas Commerce Bank
National Association as Agent, and Chemical Bank as Auction
Administration Agent and thereafter shall mean:
(a) in the event that provisions of the Credit Agreement
as in effect on the date of this Agreement are waived
or amended pursuant to the terms thereof, the Credit
Agreement as in effect on the date of this Agreement,
to the extent modified by each such waiver or
amendment;
(b) in the event that the Credit Agreement as in effect
on the date hereof is terminated for a reason other
than the occurrence of an Event of Default (as
defined in the Credit Agreement) and is replaced by a
subsequent credit facility to which Morgan is a party
(a "Refinanced Morgan
<PAGE> 21
-3-
Facility"), the Refinanced Morgan Credit Facility as
and to the extent modified by any waiver or amendment
of the Refinanced Morgan Facility pursuant to the
terms thereof; and
(c) in the event that the Credit Agreement as in effect
on the date hereof is terminated for a reason other
than the occurrence of an Event of Default (as
defined in the Credit Agreement) and is not replaced
by a Refinanced Morgan Facility, the Credit
Agreement, including any waivers or amendments
thereof, as in effect immediately prior to its
termination.
In the event that the Credit Agreement is replaced by a
Refinanced Morgan Facility, the above-specified provisions
incorporated herein by reference shall be deemed to refer to
those covenants similar to the above-referenced Article V,
Section 5.02, however denominated, in the Refinanced Morgan
Facility, as and to the extent modified by any waiver or
amendment of the Refinanced Morgan Facility pursuant to the
terms thereof, with the result that any similar provisions in
the Refinanced Morgan Facility will he incorporated herein, as
and to the extent modified by any such waiver or amendment.
The above-specified provisions of the Credit Agreement
together with related definitions and ancillary provisions are
hereby incorporated herein by reference, in each case as and
to the extent modified by any waiver or amendment of the
Credit Agreement pursuant to the terms thereof. Each reference
in the provisions of the Credit Agreement incorporated herein
by reference to (i) "Majority Banks", "each Bank" and "Bank"
shall refer to Morgan and (ii) "Default" and "Event of
Default" shall refer to Potential Event of Default and Event
of Default respectively, and (iii) the terms "this
Agreement", "hereto" and "hereof" when used in the provisions
of the Credit Agreement incorporated herein by reference shall
refer to this Agreement."
<PAGE> 22
-4-
Part 2
Tax Representations
Representations of Morgan
(1) Payer Tax Representation. For the purpose of Section 3(e), Morgan
hereby makes the following representation:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to the Counterparty under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representations made by the
Counterparty pursuant to Section 3(f);
(ii) the satisfaction of the agreement of the
Counterparty contained in Section 4(a)(i) or
4(a)(iii) and the accuracy and effectiveness of any
document provided by the Counterparty pursuant to
Section 4(a)(i) or 4(a)(iii) ; and
(iii) the satisfaction of the agreement of the Counterparty
contained in Section 4(d), provided that it shall not
be a breach of this representation where reliance is
placed on clause (ii) and the Counterparty does not
deliver a form or document under Section 4(a)(iii)
by reason of material prejudice to its legal or
commercial position.
(2) Payee Tax Representation. For the purpose of Section 3(f), Morgan
makes the representation specified below:
The following representation will apply with respect to each
Transaction between Morgan's London Office and the
Counterparty:
It is a Bank organized under the laws of the State of New
York and is not a foreign corporation within the meaning of
Section 7701(A)(5) of the United States Internal Revenue Code.
Representations of the Counterparty
(1) Payer Tax Representation. For the purpose of Section 3(e), the
Counterparty hereby makes the following representation:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of
<PAGE> 23
-5-
any Relevant Jurisdiction to make any deduction or withholding for or
on account of any Tax from any payment (other than interest under
Section 2(e), 6(d)(ii) or 6(e)) to be made by it to Morgan under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representation made by Morgan
pursuant to Section 3(f);
(ii) the satisfaction of the agreement of Morgan contained
in Section 4(a)(i) or 4(a)(iii) and the accuracy
and effectiveness of any document provided by Morgan
pursuant to Section 4(a)(i) or 4(a)(iii); and
(iii) the satisfaction of the agreement of Morgan contained
in Section 4(d), provided that it shall not be a
breach of this representation where reliance is
placed on clause (ii) and Morgan does not deliver a
form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial
position.
(2) Payee Tax Representation. For the purpose of Section 3(f),
the Counterparty makes the representation specified below:
The following representation will apply with respect to each
Transaction between Morgan's London Office and the
Counterparty:
It is a corporation organized under the laws of the State of
Texas.
Part 3
Agreement to Deliver Documents
For the purpose of Sections 4(a)(i) and (ii), each party agrees to deliver the
following documents, as applicable:
(1) Morgan will, on demand, deliver a certificate (or, if available, the
current authorized signature book of Morgan) specifying the names,
title and specimen signatures of the persons authorized to execute
this Agreement and each Confirmation on its behalf.
(2) The Counterparty will, on demand, deliver a certificate (or, if
available, the current authorized signature book of the Counterparty)
specifying the names, title and specimen signatures of the persons
authorized to execute this Agreement and each Confirmation on its
behalf.
<PAGE> 24
-6-
(3) The Counterparty will, no later than February 15, 1993, deliver a
certified resolution of its Executive Committee authorizing the
entering into, execution and delivery of this Agreement and each
Transaction subject hereto.
Each of the foregoing documents, other than the legal opinion required pursuant
to subsection (3) above, is covered by the representation contained in Section
3(d) of this Agreement.
Part 4
Miscellaneous
(1) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
choice of law doctrine.
(2) Notices.
(a) In connection with Section 12(a), all notices to Morgan shall,
with respect to any particular Transaction, be sent to the
address, telex number or facsimile number specified in the
relevant Confirmation and any notice for purposes of Sections
5 or 6 of the Agreement shall be sent to the address, telex
number or facsimile number specified below:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Attention: Global Swaps Unit
Telex: WUD 649216
Answerback: MGT UI
Telecopy No.: (212) 648-5922
(b) In connection with Section 12(a), all notices to the
Counterparty shall, with respect to any particular Transaction,
be sent to the address, telex number or facsimile number
specified in the relevant Confirmation and any notice for
purposes of Sections 5 or 6 of the Agreement shall be sent to
the address, telex number or facsimile number specified below:
Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Attention: Treasurer
Telecopy No.: (713) 525-9005
With copy to the Secretary
Telecopy No.: (713) 525-9067
(3) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply
for the purpose of Section 2(c) with respect to
<PAGE> 25
-7-
all Transactions under this Agreement with effect from the date of
this Agreement.
(4) Multibranch Party. For the purpose of Section 10:
Morgan is a Multibranch Party and may act through its London and New
York Offices.
The Counterparty is not a Multibranch Party.
(5) Credit Support Documents. None.
(6) Credit Support Provider. None.
Part 5
Other Provisions
(1) ISDA Definitions. Reference is hereby made to the 1991 ISDA
Definitions (the "1991 Definitions") and the 1992 ISDA FX and Currency
Option Definitions (the "FX Definitions"), each as published by the
International Swap Dealers Association, Inc., which are hereby
incorporated by reference herein. Any terms used and not otherwise
defined herein which are contained in the 1991 Definitions or the FX
Definitions shall have the meaning set forth therein.
(2) Scope of Agreement. Notwithstanding anything contained in the
Agreement to the contrary, if the parties enter into any Specified
Transaction, such Specified Transaction shall be subject to, governed
by and construed in accordance with the terms of this Agreement unless
the Confirmation relating thereto shall specifically state to the
contrary. Each such Specified Transaction shall be a Transaction for
the purposes of this Agreement.
(3) Inconsistency. In the event of any inconsistency between any of the
following documents, the relevant document first listed below shall
govern: (i) a Confirmation; (ii) the Schedule; (iii) the 1991
Definitions or the FX Definitions; and (iv) the printed form of ISDA
Master Agreement.
(4) Right of Setoff. Without affecting the provisions of this Agreement
requiring the calculation of certain net payment amounts, all payments
under this Agreement shall be made without setoff or counterclaim and
will not be subject to any conditions except as provided in Section 2
of this Agreement and except as provided in the following clauses (i)
through (iv):
(i) if there is a Defaulting Party, the Non-Defaulting Party will
have the right to setoff, counterclaim or withhold payment in
respect of any default by the
<PAGE> 26
-8-
Defaulting Party or any Affiliate of the Defaulting Party
under this Agreement or any other agreement, whether matured
or unmatured, between the parties or their Affiliates,
regardless in each case of the office or branch through which
a party is acting, and the Non-Defaulting Party's obligations
hereunder to the Defaulting Party shall be deemed to be
satisfied and discharged to the extent of such setoff,
counterclaim or withholding;
(ii) upon the occurrence and during the continuance of an Event of
Default or Potential Event of Default with respect to the
Defaulting Party (a) the Defaulting Party hereby guarantees,
and shall be deemed to have guaranteed and be the guarantor of,
any obligation of any Affiliate of the Defaulting Party to the
Non-Defaulting Party or any Affiliate of the Non-Defaulting
Party, and (b) to the extent of any obligation of the
Non-Defaulting Party to make a payment to the Defaulting Party
hereunder, the obligation of any Affiliate of the Defaulting
Party to make a payment to the Non-Defaulting Party or an
Affiliate of the Non-Defaulting Party shall be deemed to be
satisfied and discharged to the extent of such guaranty, and
it is further agreed that the obligations of the Defaulting
Party under this Clause (ii) shall be deemed a guaranty of
payment and not merely a guaranty of collection of the
obligations of the Defaulting Party's Affiliates to the Non-
Defaulting Party or the Non-Defaulting Party's Affiliates;
(iii) upon the occurrence and during the continuance of an Event of
Default or a Potential Event of Default, the right of an
Affiliate of the Non-Defaulting Party to receive payment from
the Defaulting Party or any Affiliate of the Defaulting Party
may be assigned to the Non-Defaulting Party and the
Non-Defaulting Party's obligations hereunder shall be deemed
to be satisfied and discharged to the extent of such
assignment; and
(iv) any obligation of a Non-Defaulting Party to make a payment to
a Defaulting Party hereunder shall in any event be conditioned
upon and subject to the condition precedent that and shall
arise only upon the date that all indebtedness and obligations,
whether matured or unmatured, of the Defaulting Party or any
Affiliate of the Defaulting Party to the Non-Defaulting Party
or any Affiliate of the Non-Defaulting Party shall have been
paid in full.
<PAGE> 27
-9-
(5) Affiliate. "Affiliate" will have the meaning specified in Section 14
except that such term shall not be deemed to include any direct or
indirect subsidiary of J.P. Morgan & Co. Incorporated, other than
Morgan and its direct and indirect subsidiaries.
(6) Calculation Agent. The Calculation Agent will be Morgan.
(7) Waiver of Right to Trial by Jury. The Counterparty and Morgan hereby
irrevocably waive any and all right to trial by jury with respect to
any legal proceeding arising out of or relating to this Agreement or
any transaction contemplated hereby.
(8) Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal, or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor, in good faith
negotiations, to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable
provisions.
Please confirm your agreement to the terms of the foregoing Schedule
by signing below.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ MICHAEL C. MAUER
Name: Michael C. Mauer
Title: Vice President
SERVICE CORPORATION INTERNATIONAL
By: /s/ SAMUEL W. RIZZO
Name: Samuel W. Rizzo
Title: Executive Vice President
and Chief Financial Officer
<PAGE> 28
AMENDMENT TO THE MASTER AGREEMENT
Dated as of August 12, 1993
Morgan Guaranty Trust Service Corporation
Company of New York and International
("Morgan") (the "Counterparty")
Morgan and the Counterparty are parties to an Master Agreement dated
February 4, 1993 (the "Agreement") and the Schedule to the Master Agreement
dated February 4, 1993 (the "Schedule"). Morgan and the Counterparty wish to
amend the Agreement and accordingly agree as follows:
(1) Cross Default. Part 1(3) of the Schedule is deleted and
replaced in its entirety by the following:
"(3) The "Cross Default" provisions of Section 5(a)(vi)
will apply to Morgan, the Counterparty and any
applicable Specified Entity, and, for such purpose:
(a) "Specified Indebtedness" shall have the
meaning set forth in Section 14 hereof.
(b) "Threshold Amount" means U.S.$25,000,000 (or
its equivalent in any other currency or
currencies).
(c) Section 5(a)(vi) will be deemed to be amended
to include the following Clause "(3)":
"or (3) a default or event of default
(however described) occurs and is continuing
which entitles any person or entity to
terminate its commitment under any agreement
to lend or advance or make available funds to
a party (or any applicable Specified Entity)
in respect of an aggregate amount in excess of
the Threshold Amount."
(2) Part 1 clause (8) of the Schedule is deleted.
(3) Section 5(a) of the Agreement is amended with respect to the
Counterparty (such that the Counterparty shall be a Defaulting
Party upon the occurrence of any such event) by adding the
following Subsections (ix) through (xi) thereto:
<PAGE> 29
-2-
"(ix) Net Worth. The Counterparty's Net Worth shall
at any time be less than the Required Minimum Net
Worth. As used herein, Required Minimum Net Worth
means
(a) From the date of this Amendment
until December 31, 1993,
U.S.$650,000,000;
(b) From January 1, 1994 until December
31, 1994, U.S.$650,000,000 plus 25%
of Consolidated Net Income for the
immediately preceding fiscal year;
provided, however, if Consolidated
Net Income in the preceding fiscal
year is less than zero, the amount
to be added for the fiscal year
shall be zero; and
(c) From January 1, 1995 onward, the
amount under paragraph (b)
immediately above plus 50% of
Consolidated Net Income for such
immediately preceding fiscal year;
provided, however, if Consolidated
Net Income in any such preceding
fiscal year is less than zero,
the amount to be added for such
fiscal year shall be zero.
(x) Debt. The ratio of Consolidated Debt to Total
Capitalization shall at any time be greater than .65
to 1.0 at any time.
(xi) Cash Flow. The ratio of Consolidated Cash Flow
to consolidated Fixed Charges shall be less than 1.5
to 1.0 at the end of any fiscal quarter of the
Counterparty."
(4) Documents to be delivered. Part 3 clause (3) of the Schedule
is deleted and replaced in its entirety by the following:
"(3) The Counterparty will, within 30 days of written
request, deliver a certified resolution of its
Executive Committee authorizing the entering into,
execution and delivery of this Agreement or each
Transaction subject hereto."
Each of the foregoing documents is covered by the
representation contained in Section 3 (d) of this
Agreement."
<PAGE> 30
-3-
(5) Offices; Multibranch Party. Part 4 clause (4) of the Schedule
is deleted and replaced in its entirety by the following:
"Offices; Multibranch Party. For purposes of Section
10:
(a) Section 10(a) shall apply to Morgan; and
(b) For the purpose of Section 10(c):
(i) Morgan is a Multibranch Party and may act
through its London and New York Offices.
(ii) The Counterparty is not a Multibranch
Party."
(6) Definitions. Section 14 of the Agreement is amended to include
the following:
"Credit Agreement" means, the Competitive Advance and
Revolving Credit Facility Agreement dated as of October 16,
1992, among the Counterparty, the banks listed herein, Texas
Commerce Bank National Association as Agent, and Chemical
Bank, as Auction Administration Agent a copy of which is
attached as Exhibit A hereto.
"Consolidated Fixed Charges" means, for any period,
without duplication, the sum of (i) the aggregate amount of
principal that was paid or required to be paid by the
Counterparty or any of its Consolidated Subsidiaries during
such period with respect to any Funded Debt of the
Counterparty and its Consolidated Subsidiaries (including the
principal portion of rentals under Capital Leases but
excluding the principal amount of any loan outstanding under
the Credit Agreement or under the Provident Credit Agreement,
as either or both of such agreements are amended or modified
from time to time, or under their respective successor or
replacement credit agreements) or with respect to any other
indebtedness or obligation payable more than one year from the
date of the creation thereof, plus (ii) the aggregate amount
of interest that was paid or required to be paid by the
Counterparty or any of its Consolidated Subsidiaries during
such period with respect to any Debt (including the interest
portion of rentals under Capital Leases) plus (iii) the
aggregate amount of all Operating Lease Obligations paid or
that was required to be paid by the Counterparty or any of
its Consolidated Subsidiaries during such period. The
principal payable with respect
<PAGE> 31
-4-
to any Funded Debt of the Counterparty and its Consolidated
Subsidiaries shall include the amount payable on account of
any sinking, purchase or other analogous fund relating to such
Debt, the amount payable on account of principal of such Debt
which matures serially and the amount payable at the final
maturity date of such Debt. If the amount payable on account
of any contingent sinking, purchase or other analogous fund or
any contingent portion of the amount payable to any such fund
for such period shall be based upon the operating results of
the Counterparty and its Consolidated Subsidiaries during such
period, the contingent amount (or contingent portion) payable
to such fund shall, for purposes of this definition, be
computed on the basis of the operating results of the
Counterparty and its Consolidated Subsidiaries for its last
fiscal year (or comparable portion thereof) ended prior to the
date of any determination of Consolidated Fixed Charges. If
the amount payable for interest or on account of any sinking,
purchase or other analogous fund shall be subject to variation
on the basis of circumstances that exist at some future date,
the amount payable for interest or to such fund for such
period shall, for purposes of this definition, be computed on
the basis of circumstances as they exist at the date of any
determination of Consolidated Fixed Charges.
"Consolidated Net Income" means consolidated net
income (after taxes) of the Counterparty and its Consolidated
Subsidiaries determined in accordance with generally accepted
accounting principles consistently applied from the date
hereof (except for changes in accounting principles which do
not have a material effect on financial results or position of
the Counterparty).
"Consolidated Subsidiary" means, with respect to any
Person, each Subsidiary of such Person the accounts of which
are or should be consolidated with the accounts of such Person
in reporting the consolidated financial statements of such
Person in accordance with generally accepted accounting
principles consistently applied from the date hereof (except
for changes in accounting principles which do not have a
material effect on financial results or position of the
Counterparty).
"Net Worth" means, in relation to the Counterparty
and its Subsidiaries, Consolidated Assets of the Counterparty
less total consolidated liabilities of the Counterparty and
its Consolidated Subsidiaries, as
<PAGE> 32
-5-
determined in accordance with generally accepted accounting
principals consistently applied from the date hereof (except
for changes in accounting principles which do not have a
material effect on financial results or position of the
Counterparty) excluding the effect of the foreign translation
adjustment up to U.S.$25,000,000.
(5) Defined Terms. Any terms used herein and not defined herein or
in the Agreement have the meaning set forth in the Credit
Agreement as it exists as of the date hereof and without
regard to any future amendments or changes to the Credit
Agreement.
(6) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York
without reference to choice of law doctrine.
Please confirm your agreement to the terms of the foregoing Amendment
by signing below.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ LAURA E. REIM
Name: Laura E. Reim
Title: Vice President
SERVICE CORPORATION
INTERNATIONAL
By: /s/ SAMUEL W. RIZZO
Name: Samuel W. Rizzo
Title: Executive Vice President
Chief Financial Officer/
Treasurer
<PAGE> 33
JP Morgan
Telecopier No (713)-525-5475
Attn: Sam Rizzo
SERVICE CORPORATION INTERNATIONAL, INC.
Houston, Texas
August 13, 1993
We hereby confirm the terms and conditions of the Swap Transaction entered into
between us on the Trade Date referred to below.
The terms of this Swap Transaction between:
Morgan Guaranty Trust Company of New York
('Morgan' or 'MGT')
acting through its MGT LONDON Office
and
Service Corporation International, Inc.
(the 'Company', 'Counterparty' or 'SCI')
acting through its Houston Office
are as follows
SWAP AGREEMENT: This Swap Transaction supplements and is subject to the
ISDA-MASTER AGREEMENT
(MGT Master# NYO-5136)
dated as of February 4, 1993
between Morgan and the Counterparty.
This document constitutes a Confirmation/Rate Swap Agreement to the Swap
Agreement (as defined herein) and supplements forms a part of and is subject to
the Swap Agreement. All provisions set forth in the Swap Agreement (or
contained in any document incorporated by reference in the Swap Agreement)
shall govern this Swap Transaction unless expressly modified below. The Swap
Transaction evidenced by this Confirmation is subject to the 1991 ISDA
Definitions (the '1991 Definitions') published by the International Swap
Dealers Association, Inc.('ISDA'). It is our intention to have this
confirmation serve as final documentation for this trade and accordingly, no
other confirmation will follow.
MGT, together with other U.K. listed institutions, is subject to the Bank of
England's Code of Conduct. Therefore, this and certain future wholesale money
market transactions will be outside the Financial Services Act but you will
have the benefit of the Code.
MGT DEAL NUMBER : LON-084975 (MGT Version# 001)
TRADE DATE : August 13, 1993
SWAP EFFECTIVE DATE : August 31, 1993
TERMINATION DATE : December 29, 2000
TERM : 7 Years, 4 Months
<PAGE> 34
Payments by Morgan to the Company. Morgan will make payments to the Company on
the basis of the following:
CURRENCY AMOUNT : 73,590,000.00 DOLLAR-U.S.
PAYMENT DATES : Jun 30, Dec 31
RATE TYPE : FLOATING
FLOATING RATE OPTION : USD-LIBOR-BBA
TELERATE PAGE '3750'
DESIGNATED MATURITY : 6 MONTH
INITIAL RATE : TO BE DETERMINED
SPREAD (+/-) : NONE
DAY COUNT FRACTION : ACTUAL/360
RESET DATES : Jun 30, Dec 31
COMPOUNDING : INAPPLICABLE
METHOD OF ROUNDING : Rounding OFF to 5 Decimal Places
INITIAL STUB PERIOD : From Aug 31, 1993 to Dec 31, 1993
rate: 4 month libor rate set
on Aug 26, 1993
FINAL STUB PERIOD : From Jun 30, 2000 to Dec 29, 2000
rate: to be determined
INITIAL EXCHANGE
AMOUNT AND DATE : 110,000,000.00 AUD August 30, 1993
FINAL EXCHANGE
AMOUNT AND DATE : 73,590,000.00 USD December 29, 2000
Payments by the Company to Morgan. The Company will make payments to Morgan on
the basis of the following:
CURRENCY AMOUNT : 66,000,000.00 DOLLAR-AUSTRALIA
PAYMENT DATES : June 30, Dec 31
RATE TYPE : FIXED
FIXED RATE : 7.2350%
DAY COUNT FRACTION : ACTUAL/365 FXD
INITIAL STUB PERIOD : From Aug 31, 1993 to Dec 31, 1993
rate: 7.2350%
FINAL STUB PERIOD : From Jun 30, 1993 to Dec 29, 2000
rate: 7.2350%
- --------------------------------------------------------------------------------
CURRENCY AMOUNT : 44,000,000.00 DOLLAR-AUSTRALIA
PAYMENT DATES : Jun 30, Dec 31
RATE TYPE : FLOATING
FLOATING RATE OPTION : AUD-BBR-BBSW
REUTER'S 'BBSW' SCREEN
2
<PAGE> 35
DESIGNATED MATURITY : 6 MONTH
INITIAL RATE : 4.7000%
SPREAD (+/-) : NONE
DAY COUNT FRACTION : ACTUAL/360
RESET DATES : Jun 30, Dec 31
COMPOUNDING DATES : INAPPLICABLE
METHOD OF ROUNDING : Rounding UP to 4 Decimal Places
RATE COMMENTS : FOR THE PERIOD DEC 31, 1993 TO JUN 30, 1994 THE
FLOATING IS 4.8500%
INITIAL STUB PERIOD : From Aug 31, 1993 to Dec 31, 1993
rate: 4.7000%
FINAL STUB PERIOD : From Jun 30, 2000 to Dec 29, 2000
rate: to be determined
INITIAL EXCHANGE
AMOUNT AND DATE : 73,590,000.00 USD August 30, 1993
FINAL EXCHANGE
AMOUNT AND DATE : 110,000,000.00 AUD December 29, 2000
Miscellaneous Provisions
MORGAN PAYMENT
CONVENTION : If a Specified Payment Date Date, Reset Date is
not a Banking/Business Day in NEW YORK, LONDON
and SYDNEY such date will be adjusted in
accordance with the MODIFIED FOLLOWING Banking/
Business Day Convention and there will be an
adjustment to the calculation period.
COMPANY PAYMENT
CONVENTION : If a Specified Payment Date is not a Banking/
Business Day in NEW YORK, LONDON AND SYDNEY
such date will be adjusted in accordance with
the MODIFIED FOLLOWING Banking/Business Day
Convention and there will be an adjustment to
the calculation period.
PAYMENTS WILL BE : Gross
CALCULATION AGENT : Morgan
3
<PAGE> 36
<TABLE>
<S> <C>
Morgan Payment
Instructions All confirmations/Inquiries regarding
PAYMENTS AND/OR RATE RESETTINGS ONLY
should be sent to:
Morgan Guaranty Trust Company of New York
LONDON OFFICE
60 Victoria Embankment
London EC4Y OJP
Attention: Michaela Ludbrook
Telephone No: (071)325-4282
Telefax No: (071)325-8201
Telefax No: 896631 Cable Morganbank
quoting the MGT deal number indicated above.
MGT AUD ACCOUNT
Australia & New Zealand Banking Corporation
Martin Place and George Street
Sydney, Australia
Favour: Morgan Guaranty Trust Company of
New York-London Office
Account No. 218172/001
MGT USD ACCOUNT
Morgan Guaranty Trust Company of New York
ABA 021000238
New York, New York
Account: Morgan Guaranty Trust Company of
New York-London Office
Account No. 670-07-054
Reference Interest Rate Swap Lon-084975
COUNTERPARTY PAYMENT INSTRUCTIONS
USD ACCOUNT
TEXAS COMMERCE BANK N.A.
Houston, Texas
ABA #113000609
Account: Service Corporation International, Inc.
Account No. 00101266337
Reference:
AUD ACCOUNT
Please Provide
</TABLE>
4
<PAGE> 37
EACH PARTY HEREBY AGREES TO MAKE PAYMENTS TO THE OTHER IN ACCORDANCE WITH THIS
CONFIRMATION AND THE SWAP AGREEMENT. PLEASE CONFIRM YOUR AGREEMENT BY SIGNING
AND RETURNING ONE OF THE TWO EXECUTED COUNTER-PARTS OF THIS CONFIRMATION WHICH
WILL BE SENT TO YOU WHEN REFERRING TO THIS CONFIRMATION. PLEASE INDICATE:
MGT DEAL NUMBER: LON-084975. VERSION NUMBER: 001
J.P. Morgan Securities, Inc. SERVICE CORPORATION
As Agent For Morgan Guaranty INTERNATIONAL, INC.
Trust Company of New York
/s/ RAJAN SEKARAN /s/ SAMUEL W. RIZZO
Rajan Sekaran Samuel W. Rizzo
Vice President Executive Vice
President
Chief Financial
Officer/Treasurer
5
<PAGE> 38
JP MORGAN
60 Wall Street
New York, NY 10260
CLIENT: Service Coporation International
ADDRESS: Houston, Texas
FAX#: (713)525-5475
CONTACT: Sam Rizzo
PHONE: (713)525-5266
SUBJECT: INTEREST RATE SWAP OPTION (MGT REFERENCE #480)
DATE: November 1, 1993
The purpose of this letter agreement is to confirm the terms and conditions of
The Swap Transaction entered into between us on the Trade Date specified below
(the "Swap Transaction"). This letter agreement constitutes a "Confirmation" as
referred to in the Interest Rate and Currency Exchange Agreement specified
below.
The definitions and provisions contained in the 1991 ISDA Definitions (the
"Definitions") as published by the International Swap Dealers Association, Inc.
("ISDA") are incorporated into this Confirmation. In the event of any
inconsistency between the definitions and provisions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement (MGT #5136) dated as of February 4, 1993 as the same may be
amended, modified or supplemented from time to time, (the "Agreement"), between
Service Corporation International ("Counterparty") and Morgan Guaranty Trust
Company of New York ("MGT"). All provisions contained in the Agreement govern
except as expressly modified below.
The particular Swap Transaction to which this Confirmation relates is an
Option, the terms of which are as follows:
<TABLE>
<S> <C>
TYPE OF TRANSACTION: PUT-Buyer has the right to pay fixed rate
and receive floating rate, as referred to
in the contingent swap section
TRADE DATE: November 1, 1993
OPTION START DATE: November 3, 1993
OPTION MATURITY DATE: December 31, 1993
BUYER: MGT
SELLER: Service Corporation International
</TABLE>
<PAGE> 39
<TABLE>
<S> <C>
PREMIUM: A Premium of 77.3 bps or US
$1,160,000 will be paid by MGT if,
and only if, the Swap is not
exercised.
PREMIUM PAYMENT DATE: December 31, 1993
PHYSICAL SETTLEMENT: Applicable
PROCEDURES FOR EXERCISE:
EXERCISE TERMS: MGT has the right to exercise this
option by notifying Service Corporation
International by phone (followed by fax
notification-see attached appendix I) on
the date and during the time of day specified
below.
OPTION STYLE: European
EXERCISE PERIOD: Notice of exercise must be given between the
hours of 9:00 am and 3:00 pm New York time on
December 31, 1993.
</TABLE>
The particular terms of the Underlying Swap Transaction to which the Option
relates are as follows:
<TABLE>
<S> <C>
NOTIONAL AMOUNT: US $150,000,000.00
EFFECTIVE DATE: February 1, 1994
TERMINATION DATE: February 1, 1999
FIXED AMOUNTS:
FIXED RATE PAYER: MGT
FIXED RATE: 5.360%
FIXED RATE
PAYER PAYMENT DATES: Each February 1, and August 1, from August 1, 1994
to and including the Termination Date, subject to
adjustment in accordance with the Modified Following
Business Day Convention.
FIXED RATE DAY
COUNT FRACTION: 30/360
FLOATING AMOUNTS:
FLOATING RATE PAYER: Service Corporation International
</TABLE>
<PAGE> 40
FLOATING RATE
PAYMENT DATES: Each February 1, and August 1, 1994
to the Termination Date, subject to
adjustment in accordance with the
Modified Following Business Day
Convention.
FLOATING RATE OPTION: USD-LIBOR/BBA
Telerate pg. 3750
DESIGNATED MATURITY: 6 Months
SPREAD: None
FLOATING RATE
DAY COUNT FRACTION: Actual/360
RESET DATES: Two London business days prior to
the commencement of each period. The
first repricing shall take place on
2 London business days prior to
February 1, 1994. The final
repricing shall take place on 2
London business days prior to August
1, 1998.
COMPOUNDING: Inapplicable
COMPOUNDING DATES: Inapplicable
BUSINESS DAY CONVENTION: Modified Following
CALCULATION AGENT: MGT
MORGAN PAYMENT INSTRUCTIONS: MGT, NY
A/C Treasury Operations
A/C #999-97-979
Attn: Sandra Petri
SERVICE CORPORATION INTERNATIONAL
PAYMENT INSTRUCTIONS:
PLEASE ADVISE
Page 3 of 5
<PAGE> 41
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to the attention of Mr. Bob Dillon, Facsimile #212-648-5106
(Phone # 212-648-4148), or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Swap Transaction to which this Confirmation relates and indicates agreement
to those terms. When referencing this Confirmation, please indicate: MGT
Reference #480.
We are very pleased to have executed this transaction with Service Corporation
International.
Regards,
JP Morgan Securities as an Agent for
Morgan Guaranty Trust Company of New York
/s/ RAJARAN SEKARAN
Name: Rajaran Sekaran
Title: Vice President
Morgan Guaranty Trust Company of New York
/s/ JEFF KLEALMAN
Name: Jeff Klealman
Title: Vice President
Confirmed and agreed upon
this the 18th day of Nov., 1993
Service Corporation International
/s/ SAMUEL W. RIZZO
Name: Samuel W. Rizzo
Title: Executive Vice President
Chief Financial
Officer/Treasurer
Page 4 of 5
<PAGE> 42
APPENDIX I
NOTICE OF EXERCISE
Service Corporation International
Houston, Texas
Attn:
The undersigned, the holder of the option granted in the confirmation
dated November 1, 1993 (MGT Reference #480) a copy of which is enclosed
herewith hereby elects to exercise its option on the swap transaction described
in the confirmation.
Very truly yours,
----------------------------
Name:
Title:
Page 5 of 5
<PAGE> 43
NOTICE OF EXERCISE
Service Corporation International
Houston, Texas
Attn: Samuel W. Rizzo -- Chief Financial Officer
The undersigned, the holder of the option granted in the Confirmation
dated November 1, 1993 (MGT Reference #480, hereinafter the "Confirmation")
hereby elects to exercise its option on the swap transaction described in the
Confirmation, subject to the modifications described in the following three
sentences which are hereby incorporated into the Confirmation. In exchange for
US$714,000.00 to be paid by MGT to Service Corporation International ("SCI")
for value January 5, 1994, SCI hereby sells to MGT and MGT hereby purchases
from SCI the option to cancel the swap described in the Original Confirmation
as of either February 1, 1994, or August 1, 1994 (each a "Cancellation Date").
MGT can only exercise its option by notifying SCI by phone (followed by
facsimile notification) between the hours of 9:00 AM and 3:00 PM, EST, on the
day that is 2 New York Business Days prior to a Cancellation Date.
If MGT exercised the option on either Cancellation Date, the swap will be
terminated as of that Cancellation Date and, other than payment of accrued
amounts, neither party will have any further obligation pursuant to the swap.
Very truly yours,
Morgan Guaranty Trust Company of New York
/s/ RAJARAN SEKARAN
Name: Rajaran Sekaran
Title: V.P.
Agreed by,
Service Corporation International
/s/ SAMUEL W. RIZZO
Name: Samuel W. Rizzo
Title: Chief Financial Officer
Page 5 of 5
<PAGE> 1
Exhibit 10.23
FIRST AMENDMENT TO AMENDED 1987 STOCK PLAN
WHEREAS, on March 13, 1991, the Board of Directors of Service
Corporation International (the "Company") adopted, and, and May 9, 1991, the
shareholders of the Company approved, the Service Corporation International
1987 Stock Plan (the "Plan"); and
WHEREAS, the Company desires to amend certain provision of the Plan
relating to the expiration of Forfeiture Restriction Periods (as defined
therein);
W I T N E S E T H
Effective as of August 12, 1993, Section 7(a) of the Plan is amended
to read as follows in its entirety:
"(a) Restriction Period to be Established by the Committee. At
the time an Award is made, the Committee shall establish the
Forefeiture Restriction Period and the Forfeiture Restrictions
applicable to such Award. The Forfeiture Restriction Period with
respect to any Award shall be not more than ten years and not less than
six months from the date of the Award. In the discretion of the
Committee each Award may have different Forfeiture Restrictions and
Forfeiture Restriction Periods and parts of an Award may have different
Forfeiture Restrictions and Forfeiture Restriction Periods. Without
limiting the generality of the foregoing, at the time of the grant of
an Award, the Forfeiture Restriction Period with respect to all or part
of an Award may be subject to reduction (but not less than six months
from the date of the grant of the Award) in the event financial targets
for the Company specified in the Award are achieved. After the grant of
an Award, the Forfeiture Restriction Period applicable to such Award
shall not be changed except as permitted by Paragraph 8, unless a
Change of Control occurs. If a Change of Control occurs, the Forfeiture
Rstriction Period for all Awards shall expire and the Forfeiture
Restrictions imposed with respect to all awards shall lapse immediately
upon occurrence of the Change of Control."
SERVICE CORPORATION INTERNATIONAL
August 12, 1993
<PAGE> 1
Exhibit 11.1
SERVICE CORPORATION INTERNATIONAL
COMPUTATION OF EARNINGS PER SHARE
(Thousands, except per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
PRIMARY:
Income before cumulative effect of
change in accounting principles . . . . . . . . . . . . . . . $103,092 $86,536 $73,372
Cumulative effect of change in
accounting principles (net of tax) . . . . . . . . . . . . . (2,031) -- --
-------- ------- -------
$101,061 $86,536 $73,372
======== ======= =======
Average number of common shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . . 82,992 76,592 71,177
Common stock equivalents applicable to options outstanding
resulting from application of the "treasury stock method"
using average stock price . . . . . . . . . . . . . . . . . 380 264 249
-------- ------- -------
Average common and common equivalent shares
used in earnings per share . . . . . . . . . . . . . . . . 83,372 76,856 71,426
======== ======= =======
Primary Earnings Per Common Share:
Income before cumulative effect of change in
accounting principles . . . . . . . . . . . . . . . . . . . $ 1.24 $ 1.13 $ 1.03
Cumulative effect of change in accounting
principles (net of tax) . . . . . . . . . . . . . . . . . . (.03) -- --
--------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.21 $ 1.13 $ 1.03
======== ======= =======
FULLY DILUTED:
Income before cumulative effect of change in
accounting principles . . . . . . . . . . . . . . . . . . . $103,092 $86,536 $73,372
Add after tax interest expense applicable to
convertible debentures . . . . . . . . . . . . . . . . . . 8,412 11,935 6,451
--------- ------- -------
Income as adjusted . . . . . . . . . . . . . . . . . . . . . . . 111,504 98,471 79,823
Cumulative effect of change in accounting
principles (net of tax) . . . . . . . . . . . . . . . . . . (2,031) -- --
--------- ------- -------
$109,473 $98,471 $79,823
======== ======= =======
Average number of common shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . 82,992 76,592 71,177
Common stock equivalents applicable to options outstanding
resulting from application of the "treasury stock method"
using end of period stock price (if greater than average
stock price for period) . . . . . . . . . . . . . . . . . . 401 293 282
Assuming conversion of convertible debentures . . . . . . . . . . 10,485 15,179 8,484
-------- ------- -------
Average shares used in fully diluted earnings per share . . . . . 93,878 92,064 79,943
======== ======= =======
FULLY DILUTED EARNINGS PER COMMON SHARE:
Income before cumulative effect of change in
accounting principles . . . . . . . . . . . . . . . . . . . $ 1.19 $ 1.07 $ 1.00
Cumulative effect of change in accounting
principles (net of tax) . . . . . . . . . . . . . . . . . . (.02) -- --
-------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.17 $ 1.07 $ 1.00
======== ======= =======
</TABLE>
<PAGE> 1
Exhibit 12.1
SERVICE CORPORATION INTERNATIONAL
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands, except ratio amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $173,492 $139,336 $108,872 $99,432 $ 84,618
Undistributed income of less than 50% owned equity investees . . . . . (325) (718) (252) (146) --
Minority interest in income of majority owned subsidiaries
with fixed charges . . . . . . . . . . . . . . . . . . . . . . . 1,938 1,798 1,752 1,334 886
Add fixed charges as adjusted (from below) . . . . . . . . . . . . . . 78,841 68,584 59,508 52,845 42,437
-------- -------- -------- ------- --------
$253,946 $209,000 $169,880 $153,465 $127,941
======== ======== ======== ======== ========
Fixed charges:
Interest expense:
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,631 $ 53,902 $ 42,429 $ 36,095 $ 32,514
Financial services . . . . . . . . . . . . . . . . . . . . . . . 7,725 5,826 9,453 10,171 3,982
Capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . 705 481 701 467 445
Amortization of debt costs . . . . . . . . . . . . . . . . . . . . 288 328 116 126 138
1/3 of rental expense . . . . . . . . . . . . . . . . . . . . . . 11,197 8,528 7,510 6,453 5,803
Preferred dividends (pretax) . . . . . . . . . . . . . . . . . . -- -- -- 5,186 10,879
-------- -------- -------- ------- --------
Fixed charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,546 69,065 60,209 58,498 53,761
Fixed charges as adjusted:
Less: Capitalized interest . . . . . . . . . . . . . . . . . . (705) (481) (701) (467) (445)
Preferred dividend (pretax) . . . . . . . . . . . . . . . -- -- -- (5,186) (10,879)
-------- -------- -------- ------- --------
Fixed charges as adjusted . . . . . . . . . . . . . . . . . . . . $ 78,841 $ 68,584 $ 59,508 $52,845 $ 42,437
-------- -------- -------- ------- --------
Ratio (earnings divided by fixed charges) . . . . . . . . . . . . . . . 3.19 3.03 2.82 2.62 2.38
======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 21.1
March 22, 1994
<TABLE>
<S> <C>
ALABAMA
- -------
SCI Funeral Services, Inc. (Iowa Corp) Alabama subsidiary
SCI Alabama Funeral Services, Inc...............................100%
EC Land Company, Inc...................................100%
Mobile Memorial Gardens Funeral Home, Inc..............100%
ALASKA
- ------
SCI Funeral Services, Inc. (Iowa Corp.) Alaska subsidiary
Alaskan Memorial Parks, Inc.....................................100%
Alaska Memorial Services, Inc..........................100%
Moll Enterprises, Inc..................................100%
SCI Alaska Funeral Services, Inc................................100%
ARIZONA
- -------
SCI Funeral Services, Inc. (Iowa Corp.)
National Cremation Society, Inc.................................100%
Resthaven Park Cemetery, Inc....................................100%
SCI Arizona Funeral Services, Inc...............................100%
ARKANSAS
- --------
SCI Funeral Services, Inc. (Iowa Corp)
SCI Arkansas Funeral Services, Inc..............................100%
The East Funeral Benefit Assurance Company......................100%
CALIFORNIA
- ----------
*EVMP Corporation....................................................... -0-
SCI Funeral Services, Inc. (Iowa Corp.) California subsidiaries
Biby and Belyea.................................................100%
Cemetery Management Company.....................................100%
Chapel of The Chimes Virgin Mortuary............................100%
Chung Wah Funeral Directors, Inc................................100%
EKP, Inc........................................................100%
Emmerson Mortuaries.............................................100%
Eternal Hills Cemetery Association..............................100%
Eternal Valley Memorial Park....................................100%
Eternal Valley Memorial Park - Endowment Care Fund.....100%
FCA Acquisition Corporation.....................................100%
Financial Capital of America...........................100%
CFR Corporation................................100%
Mount Vernon Memorial Park.............50%
DD & H Corporation.............................100%
Mount Vernon Memorial Park.............50%
MB Line........................................100%
RVL Properties.................................100%
Fremont Cemetery Corporation....................................100%
Fresno Memorial Gardens.........................................100%
Greenwood Memorial Park, Inc....................................100%
Hillcrest Memorial Park ........................................100%
Hillcrest Mortuary.....................................100%
Joshua Memorial Park...................................100%
World Funeral Home.....................................100%
Hong Kong Funeral Homes.........................................100%
Lake Elsinore Mortuary..........................................100%
Libo, Inc.......................................................100%
Lima-Salmon-Erickson, Inc.......................................100%
Lisle Funeral Home..............................................100%
International Funeral Parlours..................................100%
Maridon, Inc....................................................100%
Memorial Guardian Plans, Inc....................................100%
Mish Acquisition Corporation....................................100%
Mission Casket Co...............................................100%
Mt. View Cemetery of San Bernardino.............................100%
Green Acres Memorial Park and Mortuary.................100%
National Floral Service, Inc....................................100%
Oak Hill Improvement Company....................................100%
Ocean View Cemetery.............................................100%
Chapel of The Ferns, Inc...............................100%
Pierce Brothers.................................................100%
*Eternal Life Properties, Inc............................... -0-
Pierce Brothers Crematorium............................100%
Pierce Holdings (California), Inc......................100%
Aftercorp, Inc.................................100%
Cremcorp, Inc..................................100%
Ted M. Mayr Funeral Home, Inc. ........................100%
Redding Memorial Park...........................................100%
SCI California Funeral Services, Inc............................100%
Backs-Kaulbars Mortuary................................100%
John A. Mies, Inc......................................100%
Mirabal Mortuary, Inc..................................100%
</TABLE>
1
<PAGE> 2
<TABLE>
<S> <C>
Noble Chapel Funeral Directors ........................100%
RC/SC Funeral Chapels, Inc.............................100%
Service Corporation International of California.................100%
Sierra View Mausoleum Association...............................100%
*Sierra View Memorial Park............................. -0-
Sun City Mortuary...............................................100%
Acheson & Graham Mortuary, Inc.........................100%
*Eden Memorial Park Association......................... -0-
Malinow & Silverman, Inc...............................100%
Turner & Stevens Company........................................100%
C. Lewis Edwards Incorporated..........................100%
Live Oak Cemetery Association Endowment Care Fund......100%
COLORADO
- --------
SCI Funeral Services, Inc. (Iowa Corp.) Colorado subsidiary
SCI Colorado Funeral Services, Inc..............................100%
CONNECTICUT
- -----------
SCI Funeral Services, Inc. (Iowa Corp.) Connecticut subsidiary
SCI Connecticut Funeral Services, Inc...........................100%
DELAWARE
- --------
*Hillcrest Memorial Company.............................................. -0-
Provident Services, Inc.................................................100%
Franklin Funeral Services, Inc..................................100%
Provident Credit Corp...........................................100%
SCI Funeral Services, Inc. (Iowa Corp.) Delaware subsidiaries
First Memorial Funeral Services, Inc............................100%
IFC-Boyertown, Inc..............................................100%
Memorial Guardian Plans, Inc....................................100%
SCI Funeral Services, Inc.......................................100%
SCI Georgia Funeral Services, Inc...............................100%
SCIT Holdings, Inc..............................................100%
SCI Missouri Funeral Services, Inc. (Missouri Corp.)
Delaware subsidiary
IFC-York, Inc..........................................100%
SCI International Limited...............................................100%
SCI Special, Inc........................................................100%
SCI Capital Corporation.........................................100%
Investment Capital Corporation (Texas Corp.) Delaware
subsidiary
Equity Corporation International................68%
IFC-YP, Inc....................................100%
SCI Management Corporation......................................100%
International Funeral Services, Inc....................100%
DISTRICT OF COLUMBIA
- --------------------
SCI Funeral Services, Inc. (Iowa Corp.) DC subsidiary
SCI District of Columbia Funeral Services, Inc..................100%
FLORIDA
- -------
SCI Capital Corporation (Delaware corp)
Investment Capital Corporation (Texas Corp) Florida Subsidiary
Abigail Investment Capital Corporation
of Florida, Inc........................................100%
SCI Funeral Services, Inc. (Iowa Corp) Florida Subsidiary
SCI Funeral Services of Florida, Inc............................100%
Dorsey Funeral Home, Inc...............................100%
Eastern Gate Memorial Gardens Funeral Home, Inc........100%
Eastern Gate Memorial Gardens, Inc.....................100%
Zak of Jacksonville, Inc...............................100%
GEORGIA
- -------
SCI Funeral Services, Inc. (Iowa corp.) Georgia subsidiaries
SCI Georgia Funeral Services, Inc. (Delaware Corp.) Georgia
subsidiary
H.M. Patterson & Son, Inc..............................100%
SCI Georgia Land, Inc..................................100%
HAWAII
- ------
SCI Funeral Services, Inc. (Iowa Corp.) Hawaii subsidiaries
Memorial Guardian Plans, Inc....................................100%
SCI Hawaii Funeral Services, Inc................................100%
Garden Life Plan, Ltd...................................50%
Hawaiian Memorial Life Plan, Ltd.......................100%
Big Island Memorial Life Plan, Inc.............100%
Hawaii Funeral Home, Ltd........................79%
Hawaii Mortuaries, Ltd.........................100%
Kauai Mortuary, Inc.............................66%
Kauai Mortuary Funeral Plan, Inc......100%
*Hawaiian Memorial Park Cemetery........................100%
IDAHO
- -----
SCI Funeral Services, Inc. (Iowa Corp.) Idaho subsidiary
Memorial Guardian Plans, Inc....................................100%
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
ILLINOIS
- --------
SCI Funeral Services, Inc. (Iowa Corp.) Illinois subsidiaries
Rosehill Memorials, Inc.........................................100%
SCI Illinois Services, Inc......................................100%
Fortuna Bros. Funeral Home, Ltd........................100%
IFS Illinois, Inc......................................100%
M&SFH, Inc.............................................100%
Vault Company of Illinois, Inc.........................100%
INDIANA
- -------
SCI Funeral Services, Inc. (Iowa Corp.) Indiana subsidiary
SCI Indiana Funeral Services, Inc...............................100%
IOWA
- ----
SCI Funeral Services, Inc...............................................100%
Bunker's Eden Vale, Inc.........................................100%
Glen Abbey, Inc.................................................100%
SCI Funeral Services of Iowa, Inc...............................100%
KANSAS
- ------
SCI Funeral Services, Inc. (Iowa Corp.) Kansas subsidiaries
SCI Kansas Funeral Services, Inc................................100%
Services of Kansas, Inc.........................................100%
KENTUCKY
- --------
SCI Funeral Services, Inc. (Iowa Corp) Kentucky subsidiary
SCI Kentucky Funeral Services, Inc..............................100%
Resthaven Memorial Cemetery, Inc.......................100%
Resthaven Funeral Home, Inc....................100%
*Resthaven Memorial Park and Cemetery Association........... -0-
LOUISIANA
- ---------
SCI Funeral Services, Inc. (Iowa Corp) Louisiana subsidiary
SCI Louisiana Funeral Services, Inc.............................100%
Banner, Inc............................................100%
MAINE
- -----
SCI Funeral Services, Inc. (Iowa Corp) Maine subsidiary
SCI Maine Funeral Services, Inc.................................100%
MARYLAND
- --------
SCI Funeral Services, Inc. (Iowa Corp.) Maryland subsidiaries
Hubbard Funeral Home, Inc.......................................100%
Danzansky-Goldberg Memorial Chapels, Inc...............100%
George L. Schwab, Inc..................................100%
Rest Haven Funeral Chapel, Inc.........................100%
Tyson Wheeler Funeral Home, Inc........................100%
MASSACHUSETTS
- -------------
SCI Funeral Services, Inc. (Iowa Corp.) Massachusetts subsidiary
Stanetsky Holding Company, Inc..................................100%
Stanetsky Memorial Chapels, Inc.........................40%
MICHIGAN
- --------
SCI Funeral Services, Inc. (Iowa Corp) Michigan subsidiaries
Michigan Cemeteries, Inc........................................100%
SCI Michigan Funeral Services, Inc..............................100%
MINNESOTA
- ---------
SCI Funeral Services, Inc. (Iowa Corp.) Minnesota subsidiary
SCI Minnesota Funeral Services, Inc.............................100%
Scott Mueller Service Corp.............................100%
MISSISSIPPI
- -----------
SCI Funeral Services, Inc. (Iowa Corp.) Mississippi subsidiary
SCI Mississippi Funeral Services, Inc...........................100%
MISSOURI
- --------
SCI Funeral Services, Inc. (Iowa Corp) Missouri subsidiary
SCI Missouri Funeral Services, Inc..............................100%
Memorial Guardian Plans, Inc...........................100%
MONTANA
- -------
NO SUBSIDIARIES
NEBRASKA
- --------
SCI Funeral Services, Inc. (Iowa Corp) Nebraska subsidiary
SCI Funeral Services of Nebraska, Inc...........................100%
NEVADA
- ------
SCI Funeral Services, Inc. (Iowa Corp) Nevada subsidiary
Ross, Burke & Knobel Mortuary...................................100%
NEW HAMPSHIRE
- -------------
NO SUBSIDIARIES
NEW JERSEY
- ----------
SCI Funeral Services, Inc. (Iowa Corp) New Jersey subsidiary
SCI Funeral Services of New Jersey,Inc..........................100%
Garden State Crematory, Inc............................100%
Leber Funeral Home, Inc................................100%
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
NEW MEXICO
- ----------
SCI Funeral Services, Inc. (Iowa Corp) New Mexico subsidiaries
Memorial Guardian Plans, Inc. (Delaware Corp) New Mexico
subsidiary
Ensure Agency of New Mexico, Inc.......................100%
SCI New Mexico Funeral Services, Inc............................100%
Basin Mortuary, Inc....................................100%
Southwest Funeral Plans, Inc...........................100%
Vista Verde Memorial Park, Inc.........................100%
Vista Verde, Inc...............................100%
Vista Verde Memorial Association, Inc..........100%
NEW YORK
- --------
SCI Funeral Services, Inc. (Iowa Corp) New York subsidiary
SCI Funeral Services of New York, Inc...........................100%
Chas. Peter Nagel Inc..................................100%
Edward F. Becker Undertaking Co. Inc...................100%
Thomas M. Quinn & Sons, Inc............................100%
George Werst, Inc..............................100%
Werst Realty Co. Inc...........................100%
352 East 87th Street Company...........................100%
Walter B. Cooke, Inc...................................100%
E. C. Waldeck Home for Funerals, Inc...........100%
Fred Herbst Sons, Inc..........................100%
Hellman Memorial Chapels, Inc..................100%
Joseph T. Kennedy Funeral Chapel, Inc..........100%
NORTH CAROLINA
- --------------
SCI Funeral Services, Inc. (Iowa Corp) North Carolina subsidiary
E. F. Drum's Funeral Home, Inc..................................100%
SCI North Carolina Funeral Services, Inc........................100%
Adams Funeral Home, Inc................................100%
Drum Funeral Home, Inc.................................100%
Traditional Memorials, Inc.....................100%
Moodys Incorporated....................................100%
The P.E. Moody Funeral Home, Inc.......................100%
Swain Memorial Park, Inc.......................100%
Willis-Reynolds Funeral Home, Inc......................100%
NORTH DAKOTA
- ------------
SCI Funeral Services, Inc. (Iowa Corp) North Dakota subsidiary
Memorial Guardian Plans, Inc....................................100%
OHIO
- ----
SCI Funeral Services, Inc. (Iowa Corp.) Ohio subsidiaries
Memorial Guardian Plans, Inc. (Delaware Corp.) Ohio subsidiary
Ensure Agency of Ohio, Inc.............................100%
SCI Ohio Funeral Services, Inc..................................100%
*Miami Valley Memory Gardens Association, Inc............... -0-
*Sunset Hills Burial Park Association ...................... -0-
OKLAHOMA
- --------
SCI Funeral Services, Inc. (Iowa Corp.) Oklahoma subsidiaries
AED, Inc........................................................100%
Memorial Gardens Association...........................100%
RMG Trust..............................................100%
Resthaven Memory Gardens of Oklahoma
City Trust.....................................100%
Rose Hill Burial Park, a Trust.........................100%
IFC-YP, Inc. (Delaware Corp) Oklahoma subsidiary
IFC-Amedco, Inc. ......................................100%
SCI Oklahoma Funeral Services, Inc..............................100%
Memory Gardens, Inc....................................100%
Primrose Funeral Home, Inc.............................100%
SSP Limited Liability Company...........................50%
SSP Insurance Agency, Inc......................100%
Sunset Memorial Park Cemetery, Inc.....................100%
Woodland Memorial Company..............................100%
Sentinel Security Plans, Inc.(Virginia Corp.) Oklahoma
Subsidiary
SSP Limited Liability Company...........................50%
OREGON
- ------
SCI Funeral Services, Inc. (Iowa Corp) Oregon subsidiaries
Lincoln Memorial Park, Inc......................................100%
Service Corporation Oregon......................................100%
Colonial Mortuary, Inc.................................100%
Pearson-Allen Funeral Homes, Inc...............100%
PENNSYLVANIA
- ------------
SCI Funeral Services, Inc. (Iowa Corp) Pennsylvania subsidiaries
Grandview Cemetery Associates (a Pennsylvania Limited
Partnership)...................................................70%
Memorial Guardian Plans, Inc.( Delaware Corp) Pennsylvania
subsidiary
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
Ensure Agency of Pennsylvania, Inc.....................100%
SCI Pennsylvania Funeral Services, Inc..........................100%
Ed Melenyzer Co........................................100%
Frederick & Snowdon, Inc...............................100%
Theo. C. Auman, Inc....................................100%
Auman's, Inc...................................100%
Forest Hills Memorial Park, Inc................100%
Francis F. Seidel, Inc.........................100%
Memorial Services Planning Corporation.........100%
Westminster Cemetery Company...........................100%
PUERTO RICO
- -----------
SCI Funeral Services, Inc. (Iowa corp.) Puerto Rico subsidiary
Memorial Guardian Plans, Inc....................................100%
RHODE ISLAND
- ------------
NO SUBSIDIARIES
SOUTH CAROLINA
- --------------
SCI Funeral Services, Inc. (Iowa corp.) South Carolina subsidiary
SCI South Carolina Funeral Services, Inc........................100%
C. M. Gaffney Sales Agency.............................100%
Woodlawn Memorial Park.......................36.76%
Woodlawn Memorial Park...............................63.24%
Greenville Vault Co., Inc......................100%
SOUTH DAKOTA
- ------------
NO SUBSIDIARIES
TENNESSEE
- ---------
SCI Funeral Services, Inc. (Iowa Corp) Tennessee subsidiaries
*New Gray Cemetery.............................................. -0-
SCI Tennessee Funeral Services, Inc.............................100%
East Lawn Funeral Home and Memorial Park, Inc..........100%
Forest Lawn Funeral Home of Nashville, Inc.............100%
George A. Smith and Sons, Inc..........................100%
George E. Crone Monument Company, Inc..................100%
Legram, Inc............................................100%
Lily of the Valley, Inc................................100%
Lynnhurst Cemetery, Inc................................100%
Memorial Guardian Plans, Inc...........................100%
Memphis Memory Gardens, Inc............................100%
Woodlawn Funeral Home, Inc.............................100%
Woodlawn Memorial Park, Inc............................100%
TEXAS
- -----
*American Funeral Service Museum......................................... -0-
*Commonwealth Institute of Funeral Service............................... -0-
SCI Funeral Services, Inc. (Iowa Corp) Texas subsidiaries
Memorial Guardian Plans, Inc. (Delaware Corp.) Texas
subsidiary
Assured Security Life Insurance Company, Inc...........100%
SCI Michigan Funeral Services, Inc. (Michigan Corp. Texas
subsidiary)
Butts/Karpus, L.C.....................................99.8%
SCIT Holdings, Inc. (Delaware Corp.) Texas owned subsidiaries
Moore & Sons Funeral Home and Cemetery, Inc............100%
SCI Texas Funeral Services, Inc........................100%
EFH, Inc.......................................100%
Ellis Funeral Home of Midland, Inc.............100%
Hillcrest Memorial Park of Dallas, Inc.........100%
H. Wade Sheffield Funeral Homes, Inc...........100%
McDonald Acquisition Corp......................100%
Resthaven of Lubbock, Inc......................100%
Ted Dickey, Inc................................100%
Temple Sheffield Funeral Chapels, Inc..........100%
Shannon Funeral Chapels, Inc...........................100%
The New Rose Hill Memorial Park, Inc...........100%
Stillbrooke Corporation of Tennessee............................100%
SCI Special, Inc. (Delaware Corp.)
SCI Capital Corporation (Delaware Corp.) Texas subsidiaries
Great Lakes, Inc.......................................100%
Inscorp Special Risks, Inc.............................100%
Investment Capital Corporation.........................100%
UTAH
- ----
NO SUBSIDIARIES
VERMONT
- -------
NO SUBSIDIARIES
VIRGINIA
- --------
*Forest Lawn Cemetery Company............................................ -0-
SCI Funeral Services, Inc. (Iowa Corp.) Virginia subsidiaries
Memorial Guardian Plans, Inc. (Delaware Corp)
Sentinel Security Plans, Inc...........................100%
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
SCI Virginia Funeral Services, Inc..............................100%
Demaine Funeral Homes, Incorporated....................100%
National Mausoleum Corporation.........................100%
Whitten Funeral Home, Incorporated.....................100%
WASHINGTON
- ----------
SCI Funeral Services, Inc. (Iowa Corp.) Washington subsidiary
SCI Washington Funeral Services, Inc............................100%
WEST VIRGINIA
- -------------
SCI Funeral Services, Inc. (Iowa Corp.) West Virginia subsidiaries
Arlington Management Co. (West Virginia), Inc...................100%
Long and Fisher Funeral Home, Inc......................100%
Memorial Guardian Plans, Inc....................................100%
WISCONSIN
- ---------
**Appleton Highland Memorial Park, Inc..................................... **
SCI Funeral Services, Inc. (Iowa Corp.) Wisconsin subsidiary
Cemetery Services, Inc..........................................100%
West Lawn Memorial Park................................100%
SCI Wisconsin Funeral Services, Inc.............................100%
WYOMING
- -------
SCI Funeral Services, Inc. (Iowa Corp.) Wyoming subsidiary
Memorial Guardian Plans, Inc....................................100%
AUSTRALIA
- ---------
SCI International Limited (Delaware Corp.) Australia subsidiary
Service Corporation International Australia Pty., Ltd...........100%
New South Wales Cremation Company Pty., Ltd............100%
CANADA
- ------
S.C.I.C. Holdings Ltd.-(Federal)........................................100%
Glacier National Life Assurance Company-(Federal)...............100%
Service Corporation International (Canada) Limited-(Federal).....70%
Award Limousine Services, Inc. - (Ontario).............100%
Can Ensure Group, Inc.-(Federal).......................100%
Hong Kong Funeral Homes B.C. Ltd-(British Columbia)....100%
International Funeral Parlours B.C. Ltd-(B.C.).........100%
Kaye Funeral Home Limited-(Ontario)....................100%
Maison Funeraire Beauchamp Ltee-(Quebec)...............100%
Funeraire Beauchamp Ltee-(Quebec)..............100%
Les Services Thanatologiques D.
Beauchamp Inc.-(Q).............................100%
Markey Investments, Inc.-(Ontario).....................100%
Nault & Caron Inc.-(Quebec)............................100%
Rose Garden Ventures, Ltd.-(Alberta)...................100%
S.C.I.C. (B.C.) Holdings Limited-(British Columbia)....100%
Shadow Mountain Development Corporation-(B.C)..........100%
Sycamore Properties Limited (British Columbia).........100%
The Markey Family Funeral Homes Limited-(Ontario)......100%
The Thorpe Brothers Funeral Home Co. Limited-(Ontario).100%
World Funeral Home B.C. Ltd.-(British Columbia)........100%
</TABLE>
* State Law Not-For-Profit-Corporation - No stock issued
** State Law Not-For-Profit-Corporation - See Legal Database
6
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Service Corporation International on Form S-4 (File No. 33-
54996) and Form S-8 (File Nos. 33-9790, 33-17982, 33-53564 and 33-50987) of our
report dated February 8, 1994, on our audit of the consolidated financial
statements and financial statement schedules of Service Corporation
International as of December 31, 1993, and for the year then ended, which
report is included in this Annual Report on Form 10-K.
Coopers & Lybrand
Houston, Texas
March 30, 1994
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements on Form S-4 (Registration Number 33-54996), and Form S-8
(Registration Numbers 33-9790, 33-17982, 33-53564 and 33-50987) of Service
Corporation International and in the related Prospectuses of our report dated
February 8, 1993, with respect to the consolidated financial statements and
schedules of Service Corporation International for the years ended December 31,
1992 and 1991 included in this Annual Report (Form 10-K) for the year ended
December 31, 1993.
Ernst & Young
Houston, Texas
March 30, 1994
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ Anthony L. Coelho
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ Douglas M. Conway
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ Jack Finkelstein
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ A. J. Foyt, Jr.
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ James J. Gavin, Jr.
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ James H. Greer
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ L. William Heiligbrodt
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ B. D. Hunter
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ John W. Mecom, Jr.
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ Clifton H. Morris, Jr.
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ E. H. Thornton, Jr.
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ W. Blair Waltrip
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ R. L. Waltrip
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), with power and authority to sign for and on behalf of
the undersigned the name of the undersigned as officer or director, or both, of
the Company to the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year of the Company ending December 31,
1993 or to any amendments thereto filed with the Securities and Exchange
Commission, and to any instrument or document filed as a part of, as an exhibit
to or in connection with said Report or amendments; and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 17th day of February, 1994.
/s/ Edward E. Williams
