SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 11-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 30, 2001
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-6402-1
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THE SCI 401(k) RETIREMENT SAVINGS PLAN
(Full title of the plan)
SERVICE CORPORATION INTERNATIONAL
(Name of issuer of the securities held pursuant to the plan)
1929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
(Address of the plan and address of issuer's principal executive offices)
THE SCI 401(k) RETIREMENT SAVINGS PLAN
INDEX
Financial Statements
Independent Auditor's Report............................................ 3
Statements of Net Assets Available for Benefits as of
December 30, 2001 and 2000............................................ 4
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 30, 2001.................................. 5
Notes to Financial Statements........................................... 6-8
Supplemental Schedules
Schedule of Assets (Held at End of Year)................................ 9
Schedule of Reportable Transactions..................................... 10
Other Information
Signature................................................................ 11
Independent Auditor's Consent
2
INDEPENDENT AUDITOR'S REPORT
To the Administrative Committee
The SCI 401(k) Retirement Savings Plan
Houston, Texas
We have audited the accompanying Statements of Net Assets Available for Benefits
of The SCI 401(k) Retirement Savings Plan as of December 30, 2001 and 2000 and
the related Statement of Changes in Net Assets Available for Benefits for the
year ended December 30, 2001. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. 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 net assets available for benefits of The SCI 401(k)
Retirement Savings Plan as of December 30, 2001 and 2000 and the changes in net
assets available for benefits for the year ended December 30, 2001 in conformity
with generally accepted accounting principles in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The Supplemental Schedules of Assets (Held at End
of Year) and Reportable Transactions are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and are not
a required part of the basic financial statements. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
HARPER & PEARSON COMPANY
Houston, Texas
June 14, 2002
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THE SCI 401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 30,
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2001 2000
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Investments:
Pooled separate accounts .............. $22,346,589 $ 5,211,681
SCI common stock ...................... 14,054,306 825,839
Interest bearing cash ................. 336,808 --
Participant loans ..................... 827,027 23,021
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Total assets .............................. 37,564,730 6,060,541
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Net assets available for benefits ......... $37,564,730 $ 6,060,541
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See notes to financial statements.
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THE SCI 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended
December 30, 2001
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Additions to net assets attributed to:
Contributions:
Employer .......................................................... $13,122,247
Participants ...................................................... 19,093,306
Rollovers from other qualified plans .............................. 407,580
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Total contributions ............................................ 32,623,133
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Investment income:
Interest income ................................................... 31,745
Net depreciation in the fair value of pooled separate accounts .... (640,273)
Net appreciation in the fair value of Company stock ............... 505,249
Realized gain on sale of Company stock ............................ 455,916
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Total investment income ........................................... 352,637
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Total additions ................................................ 32,975,770
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Deductions to net assets attributed to:
Distributions to participants ........................................ 1,404,713
Administrative expenses .............................................. 66,868
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Total deductions ................................................. 1,471,581
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Net increase ............................................................. 31,504,189
Net assets available for benefits:
Beginning of period .................................................. 6,060,541
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End of period ........................................................ $37,564,730
===========
See notes to financial statements.
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THE SCI 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
GENERAL
The following description of The SCI 401(k) Retirement Savings Plan (the Plan)
is provided for general information purposes only. Participants should refer to
the Summary Plan Description or the Plan Document for a more complete
description of the Plan's provisions.
The Plan, established July 1, 2000, is a defined contribution plan for the
exclusive benefit of Service Corporation International's (SCI or the Company)
United States employees. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Plan's assets are held by
Massachusetts Mutual Life Insurance Company and participant accounts are
maintained by MassMutual Retirement Services. Investors Bank & Trust Company
serves as the trustee for the SCI Common Stock Fund.
CONTRIBUTIONS
Eligible employees can participate in the Plan after completing three months of
service and attaining age 21. Employees covered by a collective bargaining
agreement in which retirement benefits are provided are not eligible under the
Plan. The election to contribute to the Plan is voluntary. Employees are
initially enrolled in the Plan, after meeting eligibility requirements, to
contribute 3% of pretax annual compensation, unless participation is
specifically rejected. Participants may contribute from 1% to 15% of pretax
annual compensation. Total individual participant contributions were limited to
$10,500 in 2001. Subsequent to December 30, 2001, the Plan was amended to allow
participant contributions up to 50% of annual pretax compensation.
The Company contributes a matching amount up to 6% of the participant's pretax
annual compensation, generally in Company common stock. The percentage of the
match is based on years of service with the Company and ranges from 75% to 135%
of the employee's eligible contribution. Additional amounts may be contributed
at the Company's discretion. Company contributions were made in Company stock
during the period ended December 30, 2001. There were no discretionary Company
contributions in 2001.
PARTICIPANT ACCOUNTS
Participant account balances are valued based upon the number of units of each
investment fund owned by the participants. Each participant's account is
credited with the participant's contribution and allocations of the Company's
contributions and plan earnings or losses. Forfeited balances of terminated
participant's non-vested accounts are used to reduce administrative expenses and
future Company contributions. Forfeited balances were $154,764 during the year
ended December 30, 2001.
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VESTING
Participants are fully vested in their deferred salary and rollover
contributions. Participants are fully vested in Company contributions after
completing three years of vesting service with the Company.
PARTICIPANT LOANS
Participants may borrow from their accounts up to one half of the vested account
balance to a maximum of $50,000. The minimum amount that may be borrowed is
$1,000. Loans are to be repaid within five years, unless the loan is used to
purchase a primary residence. The loans are secured by the balance in the
participant's account and bear interest at 1% above the prime rate. A
participant may have no more than two loans outstanding at any one time.
PARTICIPANT DISTRIBUTIONS
The Plan provides for several different types of participant withdrawals.
Participants who have reached age 59 1/2 may make in-service withdrawals.
Participants may make withdrawals before age 59 1/2 if they qualify for certain
hardship withdrawals. Upon termination of service with the Company or death, the
participant or beneficiary may receive a lump-sum amount equal to the vested
amount in the participant's account. A participant whose account balance exceeds
$5,000 may elect a deferred distribution up until age 70 1/2. As of December 30,
2001, total deferred vested benefits related to terminated employees were
$414,930.
PLAN TERMINATION
The Company expects the Plan to continue indefinitely, however, it reserves the
right to terminate or amend the Plan to eliminate future benefits. If the Plan
is terminated, participants will become 100% vested and account balances will be
distributed by a lump-sum payment.
2. SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF REPORTING
The financial statements and schedules have been prepared in accordance with
accounting principles generally accepted in the United States and the financial
reporting requirements of ERISA and are maintained on an accrual basis except
for participant distributions, which are reported when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires Plan management to make
estimates and assumptions that may affect the amounts reported in the financial
statements and accompanying notes. As a result, actual results could differ from
those estimates.
INVESTMENTS
Investments are stated at fair value, which is determined by quoted market
prices. Participant loans are valued at their outstanding balances, which
approximates fair value.
Net appreciation (depreciation) in the fair value of the pooled separate
accounts, which consists of net realized and unrealized appreciation
(depreciation), is presented in the Statement of
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Changes in Net Assets Available for Benefits. This appreciation (depreciation)
is allocated to participants based upon their proportionate share of assets in
each investment fund.
RISKS AND UNCERTAINTIES
The Plan provides for several investment options, which are exposed to various
risks, such as interest rate risk, market risk and credit risk. Due to the level
of risk associated with certain investment securities and the level of
uncertainty related to changes in the value of investment securities, it is at
least reasonably possible that changes in risks in the near term could
materially affect participants' account balances and the amounts reported in the
Statement of Net Assets Available for Benefits and the Statement of Changes in
Net Assets Available for Benefits.
3. INVESTMENTS
Investments that comprised 5% or more of the Plan's net assets available for
benefits are as follows:
December 30,
---------------------------------
2001 2000
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JCC Balanced Fund (Janus)........................................... $ 2,999,414 $ 931,030
MassMutual Small Cap Growth Fund.................................... 3,126,159 988,335
MassMutual International Equity Fund................................ 1,995,676 716,761
MassMutual Core Bond Fund........................................... 3,025,163 331,543
MassMutual Government Money Market.................................. 4,871,479 258,234
MassMutual Ultra Fund (American Century)............................ 3,326,862 1,113,203
MassMutual Large Cap Value Fund..................................... 3,001,836 872,575
SCI Common Stock(1)................................................. 14,054,306 825,839
(1) Includes both participant and non-participant directed common stock.
4. INCOME TAXES
A determination letter is pending from the Internal Revenue Service declaring
that the Plan qualifies under Section 401(a) of the Internal Revenue Code as
exempt from income taxes. The Plan administrator believes the Plan is designed
and being operating in compliance with the requirements of Section 401(a) of the
Internal Revenue Code.
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THE SCI 401(k) RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 30, 2001
EIN: 74-1488375 PIN: 002
Identity of issue, borrower, lessor or
similar party Description of investment Current value
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*Massachusetts Mutual Life
Insurance Co.............................. JCC Balanced Fund (Janus) $2,999,414
*Massachusetts Mutual Life
Insurance Co.............................. MassMutual Small Cap Growth Fund 3,126,159
*Massachusetts Mutual Life MassMutual
Insurance Co.............................. International Equity Fund 1,995,676
*Massachusetts Mutual Life
Insurance Co.............................. MassMutual Core Bond Fund 3,025,163
*Massachusetts Mutual Life MassMutual
Insurance Co.............................. Government Money Market 4,871,479
*Massachusetts Mutual Life MassMutual
Insurance Co.............................. Ultra Fund (American Century) 3,326,862
*Massachusetts Mutual Life
Insurance Co.............................. MassMutual Large Cap Value Fund 3,001,836
*Service Corporation
International............................. SCI Common Stock 14,054,306
*Investors Bank & Trust
Company................................... Interest Bearing Cash 336,808
Loans with interest
*Participant Loans............................ rates of 5.75% to 10.5% 827,027
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$37,564,730
Cost value of SCI Common Stock and Interest Bearing Cash was $13,549,057 and
$336,808, respectively, at December 30, 2001.
*Denotes a party-in-interest as defined by ERISA.
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THE SCI 401(k) RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 30, 2001
EIN: 74-1488375 PIN: 002
(b)
(a) Description of Assets (i)
Identity of (Include Interest Rate and (c) (d) (g) Net Gain or
Party Involved Maturity in Case of a Loan) Purchase Price Selling Price Cost of Asset (Loss)
---------------- ---------------------------- -------------- ------------- ------------- ------------
Series Transactions
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(A) SCI Common Stock* $13,122,244 $ -- $13,122,244 $ --
A reportable transaction is any purchase or sale (or series of purchases or
sales) of an investment security that exceeds 5% of net assets available for
plan assets at the beginning of the plan year, excluding participant directed
activity.
*Identified party in interest transactions.
(A) All transactions were with Investors Bank & Trust Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee
(or other persons who administer the employee benefit plan) have duly caused
this annual report to be signed by the undersigned here unto duly authorized.
The SCI 401(k) Retirement Savings Plan
Date: June 26, 2002 By: SCI Management L.P., a Delaware
limited partnership (and administrator
of the Plan)
By: SCI Administrative Services, LLC,
a Delaware limited liability
company, General Partner to SCI
Management L.P.
By: /s/ Helen Dugand
---------------------------------
Helen Dugand
President of SCI Administrative
Services, LLC
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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23.1 Independent Auditors Consent