Service Corporation International

Service Corporation International

Celebrating Life with Dedication Excellence & Innovation
Type	Public
Traded as	NYSE: SCI
Industry	Death care
Founded	1962
Headquarters	Houston, Texas, USA
Number of locations	1,613 (2006)
Key people	Robert L. Waltrip, Chairman & Founder; Thomas L. Ryan, CEO
Products	Funerals, Cremations, Pre-planning,
Revenue	$2.285 billion USD (2007)[1]
Net income	$248 million USD (2007)[1]
Total assets	US$ 12.90607 billion (2013) [2] US$ 9.683568 billion (2012) [2]
Number of employees	13,499 (2008)[1]
Website	www.sci-corp.com

Headquarters

Service Corporation International is an American provider of funeral goods and services as well as cemetery property and services. It is headquartered in Neartown, Houston, Texas.^[3][4] SCI operates more than 1500 funeral homes and 400 cemeteries in 43 states, eight Canadian provinces, and Puerto Rico.

Company history

Robert L. Waltrip, a licensed funeral director who grew up in his family’s funeral business, founded the company in 1962.^[5] SCI began as a small network of funeral homes and cemeteries in the Houston area.

As SCI grew its offshore presence, it continued to acquire businesses in North America—a marketplace that, by the late 1990s, had become extremely competitive among companies seeking to buy death care businesses. SCI, Alderwoods Group and Stewart Enterprises emerged from this period as the three largest companies in the industry. On December 31, 1999, SCI owned and operated 3,823 funeral service locations, 525 cemeteries, 198 crematoria and two insurance operations located in 20 countries on five continents.^[6]

In 1999, SCI also introduced Dignity Memorial,^[7] the first transcontinental brand of death care services and products in North America. By unifying its network of funeral homes and cemeteries under one brand name, SCI believed it could establish recognizable and communicable brand values.

In 2000, poor market conditions forced SCI to reevaluate operations. While foreign operations had once shown promise, nearly 70 percent of SCI’s revenue was generated by operations in the United States and Canada. The company decided to divest many of its offshore businesses, in addition to many North American funeral homes and cemeteries.^[8] The UK arm now operates as Dignity plc.

Between 2002 and 2006, SCI reduced its net debt (total debt minus cash) by more than $1.0 billion, increased operating cash flow, and simplified its field management organization to enhance efficiency, performance, and accountability. It also changed business and sales processes, tightened internal controls following the protocols, strengthened corporate governance standards, and established a new training and development system. For its shareholders, SCI returned value through more than $335 million in share repurchases, and it resumed payment of a regular quarterly dividend in early 2005, the first since 1999.^[9]

Recent acquisitions

In 2006, SCI merged with Alderwoods Group, its nearest competitor in terms of size. The Federal Trade Commission (FTC) blocked the merger, citing concerns over consumer choice. After agreeing to divest funeral home and cemetery locations in several markets and end licensing agreements with other funeral homes, the FTC allowed the merger to continue. By 2007, the integration of Alderwoods's locations and operations was complete.

In 2009 SCI put in a bid to purchase Keystone North America for $208 million. The purchase was completed in 2010 and added about 200 locations.

In May 2013 SCI signed a $1.4 billion deal to purchase Stewart Enterprises, the second-largest death care company.^[10] In December 2013, the FTC imposed conditions on the acquisition, requiring the two companies to sell 53 funeral homes and 38 cemeteries in 59 local markets, and requiring the merged company to be subject to a ten-year period during which the FTC will review any attempt by the company to acquire funeral or cemetery assets in those local markets.^[10]

Brands

SCI operates the following brands in the United States and Canada:^[11]

• Dignity Memorial: Founded in 1999, provides services in 41 states and seven Canadian provinces.
• Dignity Planning: Dignity Planning provides funeral planning and arrangements through Dignity Memorial North America locations.
• Advantage: Advantage provides basic funeral services and products.
• Funeraria del Angel: Funeraria del Angel provides specialized services for Hispanic customers.
• Memorial Plan: Memorial Plan currently manages six funeral homes and five cemeteries in South Florida.
• National Cremation Society: Founded in 1972, National Cremation Society is the oldest and largest cremation service in the United States.
• Neptune Society: In June 2011, SCI announced the purchase of a 70% interest in Neptune Society, a national cremation services company founded in 1973.^[12]

Business model

SCI's network of funeral homes consists almost entirely of existing businesses that the company acquired. SCI tends to buy successful funeral homes that are firmly settled and already well known in their community. SCI then retains the funeral home's original name, often along with former owners who are kept on as management. A typical funeral home that is owned by SCI will not contain advertisements or logos for SCI, with the exception, perhaps, of employee pins on staff lapels. As a consequence, most North American consumers are unfamiliar with the company itself. Instead, SCI places strong emphasis on their Dignity Memorial brand. The "Dignity" logo can be seen throughout SCI's funeral homes and cemeteries, on staff, signage, paperwork, vehicles, etc.

Notable properties

• Rose Hills Memorial Park in Whittier, California, the largest single-site operating cemetery in the world at 2,500 acres (10 km²).^[13]
• Frank E. Campbell Funeral Chapel in Manhattan, New York City.^[14]
• Westwood Village Memorial Park in Westwood, Los Angeles, California
• Pierce Brothers Mortuary in Los Angeles
• Riverside Memorial Chapel, Manhattan, New York City.
• Sparkman-Hillcrest Memorial Park Cemetery in Dallas

Controversies

Costs

Writing in an 24 October 2013 issue of Bloomberg Businessweek, journalist Paul M. Barrett found, despite its lower overhead, SCI has higher prices than independent funeral home operators. Barrett quoted "data compiled" by a "'concierge' funeral planning service" Everest Funeral Package, which found that for "traditional funerals, SCI charges $6,256 on average (excluding casket and cemetery plot), 42 percent more than independents."^[15] In reply, SCI points to "overwhelmingly positive responses" on customer surveys, below market wages paid to staff and management, and states they provide "top value" at a variety of funeral price points.^[15]

Texas

In the late 1990s, SCI was involved in a controversy involving alleged violations of Texas State embalming laws. The proceedings took a political slant due to Robert Waltrip’s friendship with the family of then-governor George W. Bush and Waltrip's campaign contributions to various members of the Bush family.^[16]

Referred to as "Funeralgate" or "Formaldegate" in the media, the controversy was widely publicized when Eliza May, a director with the Texas Funeral Service Commission (TFSC), was fired while investigating SCI. May alleged in a civil suit that she was fired because she refused to halt her investigation despite pressure to do so from Governor Bush.

May's lawyers subpoenaed President Bush to testify at the trial,^[17] but Texas Judge John K. Dietz threw out the subpoena on the grounds that the then-governor was not in a position to have enough specialized information to require his involvement.^[18]

The lawsuit was settled in 2001 for more than $200,000. SCI and the state of Texas were required to jointly pay the decision.^[19] On January 23, 2004, the TFSC fined SCI an additional $21,000 for administrative penalties.^[19]

Florida

In 2001, it was reported that employees of the Memorial Gardens cemetery near Ft. Lauderdale, Florida had oversold the cemetery, so bodies were buried in the wrong places, separating husbands from wives; vaults were cracked open by a backhoe; bodies were exhumed, with bones, skulls and shrouds thrown into nearby woods; bodies were stacked on top of each other; and remains were relocated without notifying relatives.

The allegations were particularly appalling to the Jewish cemetery's more religiously observant customers, The Miami Herald reported. Traditional Jewish law requires bodies to be buried intact and prohibits disturbing the dead. SCI reached a $14 million agreement with the Florida attorney general's office in 2003 that required it to repair plots and reorganize the cemeteries to ensure all graves were properly marked and the grounds could accommodate all plots sold. SCI also settled a separate class-action lawsuit on behalf of 350 families for $100 million.

Virginia

On April 26, 2007, the Washington Post reported that an SCI cemetery in Alexandria, Virginia, had improperly buried the remains of the stillborn daughter of Nsombi Hale in a grave too shallow (in a grave about 8 inches deep). Nsombi Hale is filing suit against SCI.^[20]

After an internal investigation by SCI, attorneys working for SCI denied the charges against the company in a letter to Virginia funeral regulators,^[21] and a few days later, the Post reported that Robert Ranghelli, one of the SCI employees who had corroborated the initial reports of improper handing of corpses, was fired for "exercising his first amendment rights/speaking with the media" after having been on administrative leave for several months following the initial reports in the newspaper.^[22]

On April 5, 2009, The Washington Post reported that the National Funeral Home, a facility owned by SCI in the Falls Church area of Fairfax County, Virginia, which also acts as a centralized embalming and dressing station for embalming and body preparation for other nearby SCI-owned operations (Arlington Funeral Home, Danzansky-Goldberg Memorial Chapel and Demaine Funeral Home), was storing naked bodies in various stages of decomposition in conditions described as "disgusting, degrading and humiliating". The story went on to report that as many as 200 bodies were stored on "makeshift gurneys in the garage" and "at least half a dozen veterans destined for the hallowed ground at Arlington National Cemetery were left in their coffins on a garage rack". The Post reported that documentation describing these conditions had been reported to the Virginia Board of Funeral Directors and Embalmers.^[23]

A few days later, the Post reported that family members of a deceased Army veteran whose remains were stored in an unrefrigerated garage at National Funeral Home asked the Fairfax County Commonwealth's Attorney to investigate the actions of National and its parent company, SCI, as crimes.^[24]

The Post further reported that the family of retired U.S. Army Colonel Andrew DeGraff filed a lawsuit in Fairfax County alleging that SCI mishandled DeGraff's remains. According to the article, an SCI spokesman said that the company is conducting an internal investigation.^[25]

California

On September 14, 2009, a class-action lawsuit was filed against SCI and Eden Memorial Park, a Jewish cemetery managed by SCI in Mission Hills, charging that they were destroying graves to make room for new interments.^[26]

The Los Angeles Times reported that state officials found no evidence of mass grave disturbances. Russ Heimerich, a spokesman for the state Department of Consumer Affairs, said, "We have not seen any evidence of the kind of massive desecration that [is] being alleged...The kind of activity they're alleging [is] not easily hidden, especially on a willful, large-scale basis." The plaintiff's attorney rejected the findings of the state's investigation. The lawsuit remained ongoing as of late 2009.

Michael Avenatti, the plaintiff’s attorney, said more than 800 families have joined the class action suit. Avenatti claims the state's investigation was shoddy, saying, “Investigators from the state were told by various groundskeepers over a year ago that they had been repeatedly told to throw bones away, and yet for some reason, the state didn’t adequately follow up.”

SCI denied all charges. After the lawsuit was filed, the Consumer Affairs Department reviewed five to six years of the cemetery's annual inspection records and found no indication that graves had been disturbed. According to the Los Angeles Times article, "The agency also asked the dozens of families that contacted officials to look for signs of disturbances -- shifted or cracked gravestones or anything else that appeared different from previous visits -- and didn’t receive a single call back, he said".^[27] In January, 2012, the lawsuit against Eden Memorial Park was ruled to be a valid class action in Los Angeles Superior Court, with the trial scheduled to begin in May 2012.

In February 2014, a settlement in the amount of $80M was reached in this case.^[28]

Massachusetts

In 2010, the SCI-owned Stanetsky Chapel, a Jewish funeral home in Brookline, MA, was charged by the State Board of Registration with serious violations of state law and regulations in connection with an incident where a woman was buried in the wrong grave, then disinterred without a legal permit being obtained and reburied in the correct grave with the woman's family not being notified of the mistake and the corrective procedure. As a result, in December 2011, the State Board announced a Consent Agreement and levied the biggest fine in its history, $18,000, against Stanetsky and SCI, and suspended the license of the Stanetsky general manager for a year. Other staff members involved in the incident were subject to punitive actions ranging from additional professional training to license revocation. The incident received widespread local media coverage. The Board's action was also published on the Board's website.

In a case first reported on April 7, 2005, the Boston Globe reported J.S. Waterman's & Sons, also owned by SCI, was found by the Board to have accidentally cremated the body of a stillborn infant in 2003. The infant's body was apparently placed on a gurney that held an adult woman's body that was scheduled for cremation. As a result of a civil suit brought by the infant's family, Waterman's was ordered to pay the parents $325,000, with a pending legal claim that the mortuary violated the state's consumer protection law that could triple the damages, the Boston Globe reported. The family's lawyer, Gordon T. Walker, said SCI could be hit with additional costs, as there is a pending claim that the company violated the state's consumer protection law. The civil verdict was made in Suffolk Superior Court on March 4. The jury awarded $75,000 because of emotional distress and $250,000 because they found the funeral home was negligent and intentionally inflicted emotional harm.

References

External links

• Official website
• NYSE Group, Inc > Listed Securities
• Wrightreports – Wright Investor’s Service Company Profile Snapshot