SCI: One Foot in the Grave?
By Robert Bryce, Fri., Jan. 21, 2000
Financial issues are only part of the picture. SCI also faces major problems in court. Company shareholders have filed a class-action lawsuit, alleging that SCI officials withheld troubling earnings data that caused the stock price to dip. Plaintiff's lawyers in Florida are also suing SCI, claiming the company sold an exorbitantly expensive funeral to an elderly, mentally incompetent widow. In Washington state, lawyers are suing the firm, maintaining it has mishandled corpses. The company also faces suits here in Texas, including one filed by survivors of Tres Hood, a Wichita Falls man whose body was allegedly mishandled during the embalming process. It also faces a suit from Eliza May, the former director of the Texas Funeral Service Commission, who alleges that SCI tried to intimidate her while she was investigating the company's operations. More on that in a moment.
Consumer advocates continue to make sport of SCI's image and its domination of the death business. Karen Leonard, the head of the California-based Redwood Funeral Society, who worked as the late Jessica Mitford's research assistant on her last book, The American Way of Death Revisited, has become one of the leading critics of SCI. She claims SCI has "made price gouging state of the art. They've been able to take the emotions that make people spend more -- guilt and fear of death -- and have played those like an orchestra and have made tremendous amounts of money. They are taking advantage of consumers on all fronts, by secrecy, by their ability to control regulations and their ability to give money to politicians."
SCI's CEO and founder, Robert Waltrip, long impervious to criticism, appears to be feeling the heat. Last week, Waltrip, who is also the chairman of the company's board, announced that his son, Blair Waltrip, long one of SCI's top executives, was being forced out. According to the company's most recent proxy statement, the younger Waltrip is the second largest individual shareholder in the company with more than 2.3 million shares. He was one of eight top SCI executives who were part of last week's purge.
In a conference call with Wall Street analysts last Thursday, the company did not offer an explanation for the younger Waltrip's dismissal. Instead, the focus was on the company's plan to take a $312 million charge against earnings in the fourth quarter. The charge includes $151 million worth of severance costs associated with the firing of 1,141 company employees, a $74 million reduction in the valuation of some assets to their fair values, and $87 million in other items. The company expects the charge will allow it to save up to $60 million per year beginning in 2001. The company has also initiated a round of cost-cutting that includes getting rid of their Austin PR man, Bill Miller, who was making about $8,000 a month to deal with media inquiries on the company's legal problems, including the Eliza May lawsuit.
Unfortunately for May, the lawsuit appears to be moving at a snail's pace. According to her attorneys, no depositions have been taken in the case, and discovery is going slowly. No trial date has been set. Meanwhile, the suit brought by the Hood family is pending.
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