SERVICE CORP INTERNATIONAL

Service Corporation International (SCI) is North America’s largest provider of funeral and cemetery services, with shares traded on the New York Stock Exchange under the symbol SCI. It was founded in 1962 by Robert L. Waltrip, a licensed funeral director who grew up in his family’s funeral business and who still serves as chairman of the Company’s board of directors. The Company’s original business plan was based on efficiencies of scale specifically, reducing overhead costs by sharin... g resources such as embalming, accounting, transportation and personnel among three or four funeral homes in a business “cluster.” After proving the plan’s effectiveness in Houston in the early 1960s, the founder and a small group of associates set out to apply this operating strategy through ownership of death care businesses in other markets. It was the beginning of a three-decade period of expansion that would create a North American network of nearly 1,400 funeral homes and cemeteries by the end of 1992. In 1993, the Company reached beyond North American shores and acquired major deathcare companies in Australia, the United Kingdom and France, plus smaller holdings in other European countries and South America. At the end of 1999, the Company’s global network numbered more than 4,500 funeral service locations, cemeteries and crematories in 20 countries. 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. Purchase prices became inflated, corporate debt levels grew, access to financial markets disappeared and it became apparent to all players that the dynamics of the business expansion model had changed. Facing these facts, SCI realigned its priorities and, over the next few years, implemented numerous initiatives to reduce overhead, pay down debt and increase cash flow. In the process, the Company reassessed the value of its global expansion. While foreign operations had once shown promise, it was clear that nearly 70 percent of SCI’s revenues were generated by operations in the United States and Canada. Beginning in 2000, SCI went through a period of change during which it divested most of its offshore businesses and many North American funeral homes and cemeteries that were either underperforming or did not fit SCI’s long-term strategy. As it refined its network and introduced name brand funeral services in the early years of the new century, the Company also made significant improvements to its financial condition and infrastructure. Between 2002 and 2006, SCI reduced its net debt (total debt minus cash) by more than $1 billion, increased operating cash flow and simplified its field management organization to enhance efficiency, performance and accountability. It also improved business and sales processes, tightened internal controls, strengthened corporate governance standards and established the finest training and development system in its industry. 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. By the beginning of 2006, SCI was a noticeably different organization than that of five years earlier. The Company was operating at a profit, with robust cash flows and resources and the most efficient infrastructure in its history. It was from this new position of strength that SCI took a giant step toward future success by acquiring its biggest competitor, Alderwoods Group, in November 2006. The addition of more than 600 funeral homes and cemeteries in the Alderwoods network provided an expanded geographic footprint that enables SCI to serve families in 44 states, the District of Columbia and eight Canadian provinces. In early 2010, SCI acquired another large competitor, Keystone North America. As SCI looks to the future, the acquisition of 70 percent of the outstanding shares of The Neptune Society, Inc. in 2011 brought with it the resources of the nation's largest direct cremation organization. In late 2013, SCI completed the acquisition of Stewart Enterprises, Inc., growing the company’s footprint to more than 2,000 funeral homes and cemeteries in 45 states, eight Canadian provinces, the District of Columbia and Puerto Rico.More