News Release

SCI Corporate Communications
Phone: 1-844-220-4408
Email: Press.Room@sci-us.com
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Service Corporation International Announces Fourth Quarter 2002 Results and
Comments on 2003 Outlook

HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- Service Corporation International (NYSE: SRV), the world's largest funeral and cemetery company, today announced results for the fourth quarter and full year of 2002.

    GAAP Results

    (In millions, except per share
     amounts)                               Fourth Quarter       Full Year
                                            2002      2001     2002      2001
    Total Revenues                        $576.5    $630.9  $2,272.4 $2,510.3
    Total Gross Profits                    $78.1     $94.9    $363.9   $359.4
    Net Loss                               $(4.2)  $(591.8)  ($231.9)  (597.8)
    Diluted Loss Per Share                 $(.01)   $(2.03)    $(.79)  $(2.10)
    Cash Flows from Operating Activities  $100.0     $51.0    $352.2   $383.3
    Cash and Cash Equivalents                 --        --    $200.6    $29.3
    Total Debt                                --        --  $1,984.8 $2,534.6

    Highlights of GAAP Results

     * 2002 revenues and gross profits for the fourth quarter and full year
       were reduced by the Company's asset disposition/joint venture programs.
       Approximately $430 million of annualized revenues have been eliminated
       as a result of asset sales and joint ventures executed by the Company
       in the last two fiscal years.
     * 2002 revenues and gross profits for the fourth quarter and full year
       were positively affected by operating improvements in the Company's
       French operations as a result of additional and incremental products
       and services offered to client families and increases in burial
       monument sales.
     * Cash flows from operating activities increased 96% in the fourth
       quarter of 2002 primarily as a result of less cash interest paid,
       working capital improvements and significant changes positively
       impacting the Company's funeral and cemetery sales structure and
       processes in North America.
     * The Company continued to improve its balance sheet and liquidity during
       the fourth quarter of 2002.  The Company's total debt less cash and
       cash equivalents decreased by approximately $77 million and
       $721 million for the fourth quarter and full year of 2002,
       respectively.

    Management's Analysis and Non-GAAP Financial Measures

The Company is reporting in this press release the operating measures earnings and diluted earnings per share for the fourth quarters and full years of 2002 and 2001 that exclude certain non-recurring items. The Company is also reporting in this press release the liquidity measures EBITDA before non-recurring items and recurring operating free cash flow for the fourth quarters and full years of 2002 and 2001. These measures should be considered non-GAAP financial measures and are provided to more clearly present the financial results that management uses to manage its funeral and cemetery businesses. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures reported in accordance with GAAP are presented in a separate section at the end of this press release. The Company has also adjusted the results of operations in 2001 to be consistent with the accounting presentation in 2002, as further detailed in the separate section at the end of this press release.

Excluding non-recurring items and including pro forma adjustments to 2001, the Company reported $3.0 million ($.01 per diluted share) and $36.8 million ($.12 per diluted share) of earnings before non-recurring items in the fourth quarters of 2002 and 2001, respectively. For the full year of 2002, the Company reported earnings before non-recurring items of $92.1 million ($.31 per diluted share) compared to $114.7 million ($.39 per diluted share) for the full year of 2001.

The Company reported EBITDA before non-recurring items of $81.5 million and $126.2 million for the fourth quarters of 2002 and 2001, respectively, and $421.7 million and $498.0 million for the full years of 2002 and 2001, respectively.

The Company's recurring operating free cash flow for the fourth quarters and full years of 2002 and 2001 were as follows.

    (In millions)                         Fourth Quarter        Full Year
                                           2002      2001     2002      2001
    Recurring Operating Free Cash Flow    $55.1      $6.1    $210.0   $170.5

For the full year of 2002, the Company reported results within its previously issued guidance range relating to North America funeral and cemetery comparable gross margin percentages and reported results that were better than previously issued guidance ranges related to net debt and recurring operating free cash flow.

Commenting on the Company's 2002 financial results, SCI President and Chief Operating Officer, Tom Ryan, said:

"We are extremely pleased with the progress and changes that are occurring within SCI today. Our organization is acutely focused on teamwork, accountability and execution of the Company's initiatives, which we believe in time, will drive increased shareholder value. This focus has resulted in a healthy improvement in our cash flows for 2002, particularly in the fourth quarter of the year. While reduced payments of cash interest play a role in the improvement in our cash flows, a significant portion of these cash savings was offset by lost cash flows from businesses sold. Therefore, the preponderance of our improvement comes from cash earnings and working capital improvements within our comparable businesses. These improvements were from the continued success of our French business, the timing of cash receipts related to prearranged funeral contracts and improvements in North America receivable balances. Lastly, and perhaps most importantly, significant changes implemented by our Company's North America Sales Leadership with a focus on improving the organizational structure, processes and quality of our sales efforts had a favorable impact on our cash flows particularly in November and December of 2002.

We ended 2002 with a much improved capital structure and with approximately $170 million more in cash on hand compared to the beginning of the year. We now begin 2003 keenly focused on showing operating improvements in our funeral and cemetery businesses, which we believe coupled with our improved capital structure and strong cash flows, should result in increased shareholder value."

Detailed Operating Results

The following table and segment analysis summarizes the Company's comparable results for the fourth quarters and full years of 2002 and 2001. Comparable financial information excludes operations that have been acquired or constructed after January 1, 2001 and operations that have been divested or joint ventured by the Company prior to the end of 2002. Comparable financial results are meant to be reflective of the Company's "same store" results of operations.

    (Dollars in millions,
     except funeral services
     performed and average
     revenue per funeral
     service)                          Fourth Quarter           Full Year
                                              Pro Forma            Pro Forma
                                       2002      2001       2002     2001

    North America Funeral Revenues   $281.4     $279.3   $1,111.8   $1,099.8
    International Funeral Revenues   $138.6     $120.5     $486.8     $442.6
      Funeral Revenues               $420.0     $399.8   $1,598.6   $1,542.4

    North America Funeral Gross
     Profits                          $48.7      $64.5     $227.4     $236.7
    International Funeral Gross
     Profits                           $8.9       $8.0      $50.2      $39.2
      Funeral Gross Profits           $57.6      $72.5     $277.6     $275.9

    North America Funeral Services
     Performed                       68,307     68,967    272,792    274,684
    France Funeral Services
     Performed                       34,185     33,871    134,216    134,840
    North America Average Revenue
     Per Funeral Service             $4,063     $4,012     $4,042     $3,976
    France Average Revenue Per
     Funeral Service
     Excluding Currency Effect       $2,241     $2,161     $2,214     $2,123

    North America Cemetery
     Revenues                        $146.3     $155.1     $602.4     $590.1
    International Cemetery
     Revenues                          $7.2      $11.9      $27.8      $49.9
      Cemetery Revenues              $153.5     $167.0     $630.2     $640.0

    North America Cemetery Gross
     Profits                          $18.4      $22.5      $77.4      $90.0
    International Cemetery Gross
     Profits                           $1.7       $2.5       $4.7      $12.4
      Cemetery Gross Profits          $20.1      $25.0      $82.1     $102.4

    Funeral Segment Analysis -- Fourth Quarter 2002

     * The increase in North America funeral revenues quarter over quarter was
       a result of a 1.3% increase in the average revenue per funeral service,
       partially offset by a .9% decrease in funeral services performed.  The
       average revenue per funeral service in North America continues to be
       positively impacted by the Company's Dignity Memorial(R) packaged
       funeral plans.
     * The North America funeral gross margin was 17.3% versus 23.1% in the
       prior year quarter.  This gross margin comparison was affected by
       higher full-time personnel costs and funeral trust administration costs
       in the fourth quarter of 2002.  Also affecting this gross margin
       comparison were reductions in the allowance for doubtful accounts in
       both the fourth quarter of 2002 and 2001 and higher levels of net
       general agency insurance commissions in the fourth quarter of 2001.
     * North America funeral locations had a cremation rate of 38.7% compared
       to 37.3% in the prior year quarter.  The increase in the cremation rate
       continues to weigh against the Company's initiatives to grow comparable
       funeral revenues, as the average revenue for a cremation is
       substantially less than the average revenue for a traditional funeral
       service.
     * In North America, 32.0% of funeral services performed were previously
       prearranged compared to 30.5% in the prior year quarter.  Revenues from
       the performance of prearranged funeral contracts had an average revenue
       per funeral service of approximately 7.9% less than the Company's
       average revenue per funeral service from atneed funeral contracts.
     * The increase in international funeral revenues was driven by a 16.6%
       increase in France's funeral revenues.  Excluding the favorable effect
       of currency, France's funeral revenues increased 4.3% as a result of
       additional and incremental products and services offered to client
       families, increases in the average revenue per funeral service, and
       increases in the delivery and average revenue for burial monuments.

    Cemetery Segment Analysis -- Fourth Quarter 2002

     * North America cemetery revenues decreased quarter over quarter as a
       result of the following:
        * Decreases in cemetery trust income related to financial market
          conditions.
        * Decreases in cemetery property sales primarily related to a decrease
          in the completion of cemetery property development projects and the
          cancellation of one large cemetery property contract.
        * Reduction in levels of revenues recognized related to changes in
          estimates of deferred preneed cemetery contract revenues.
        * Partially offset by increases in cemetery merchandise sales.
     * The North America cemetery gross margin was 12.6% versus 14.5% in the
       prior year quarter as a result of the following:
        * Reduction in levels of revenues and gross profits recognized related
          to changes in estimates of deferred preneed cemetery contract
          revenues.  These revenues had very high gross margin percentages.
        * A change in mix of revenues towards cemetery property sales.
        * Partially offset by reductions in selling and commission costs as a
          result of significant changes to the Company's sales structure and
          processes.
     * International cemetery revenues and gross profits decreased primarily
       as a result of unfavorable currency effects in South America in the
       fourth quarter of 2002 compared to the fourth quarter of 2001.

    Other Costs and Expenses

The Company has three components of overhead costs in North America: general and administrative expenses, home office overhead and field overhead. Home office and field overhead costs are allocated to funeral and cemetery operations in North America while general and administrative expenses are disclosed in a separate line item of the income statement. For the full year of 2002, general and administrative expenses included approximately $13.5 million of accelerated non-cash amortization expense for existing capitalized system costs as a result of the Company's decision to implement new information systems. In the fourth quarter of 2002, general and administrative expenses included $4.6 million of this accelerated non-cash amortization expense described above. The full year and fourth quarter of 2001 did not include any such accelerated non-cash amortization expense. Excluding this accelerated non-cash amortization expense, the sum of all three overhead components described above increased by $4.7 million and $12.8 million for the full year and fourth quarter of 2002, respectively. Increases in the Company's overhead during 2002 resulted from costs incurred related to the Company's system implementation projects, changes in the Company's general reserve for litigation matters and increases in professional fees.

The Company recognized $24.5 million of Impairment losses and other operating expenses of a non-recurring nature during the fourth quarter of 2002 and $289.1 million for the full year of 2002. Included in the $24.5 million recognized in the fourth quarter of 2002 is a previously announced charge of $21.2 million as a result of the final settlement of certain options associated with the Company's senior notes due 2020 (putable in 2003). The remaining components of the $24.5 million primarily relate to net amounts associated with the Company's ongoing programs to dispose of certain North American operating assets.

2003 Outlook

The following outlook for 2003 provided by the Company contains amounts and statements that are forward-looking in nature. These forward-looking amounts and statements are resulting from the Company's current plans, estimates, strategies and beliefs and should not be considered historical facts. These statements may be accompanied by words such as "believe," "estimate," "project," "expect," "may," "anticipate," "forecast," "predict" and words of similar meaning in relation to a discussion by the Company of future operating or financial performance. Actual reported results could differ materially from these forward-looking amounts and statements. See the Cautionary Statement on Forward-Looking Statements in a separate section of this press release for further discussion of amounts and statements made in this press release that are not historical facts.

The Company's 2003 outlook contains only operating and liquidity measures that are calculated in accordance with GAAP. The Company's results to be reported publicly in the future will primarily contain financial results that are GAAP figures. The Company will continue to report results from comparable or "same store" North America funeral and cemetery operations.

Commenting on the Company's 2003 outlook, SCI President and Chief Operating Officer, Tom Ryan, said:

"Our 2003 outlook projects strong cash flows and further improvements in our capital structure compared to 2002. Generally, we view 2003 as a critical year to shift our focus away from managing our capital structure towards running and improving our funeral and cemetery businesses.

As announced last quarter, we have completed the analysis of our funeral and cemetery sales structure and processes to improve our business model. Actions have been taken as a result of this analysis which may negatively affect our reported GAAP revenues and gross profits in 2003 compared to 2002. However, we ultimately believe we are shifting our North America funeral and cemetery businesses to a much higher quality and more predictable cash earnings model that will be the foundation on which we can grow our revenues and earnings. Particularly in our North America cemetery segment, we believe we are trading a significant amount of GAAP reported non-cash earnings for higher quality cash earnings projected in 2003.

We are also examining other opportunities to improve and grow our North America funeral and cemetery operations primarily using our strong and predictable cash flows from operations. These potential growth opportunities could include acquisitions of high-quality funeral homes and cemeteries in large or strategic North America markets, additional construction of funeral homes on Company-owned cemeteries and the construction of high-end cemetery property development projects."

Due to the uncertain timing of the Company's expectation to joint venture its French operations during 2003, the Company's 2003 outlook includes its French operating results for the full year of 2003. If the Company executes such a transaction during 2003, the Company's 2003 outlook would be affected accordingly. The Company's French operations are projected to have gross profits of approximately $55-$65 million, cash flows from operating activities of approximately $40-$50 million and capital expenditures of approximately $15-$20 million.

Due to the uncertainty surrounding the possibility or timing of certain events during 2003, the Company's 2003 outlook does not contain earnings per share guidance calculated in accordance with GAAP. Events which the Company believes could possibly occur during 2003 and could have an effect on the Company's 2003 earnings per share include, among others, the following:

     * The possibility of the completion of a joint venture transaction with
       the Company's French operations.
     * The possibility of gains or losses related to the Company disposing of
       funeral homes, cemeteries or undeveloped cemetery property associated
       with previously announced asset disposition programs or in the normal
       course of its business.
     * The possibility of gains or losses from early extinguishments of debt.
     * The possibility of the recognition of a cumulative effect of an
       accounting change from the adoption of newly required accounting
       pronouncements.
     * The possibility of the recognition of costs associated with settlements
       of litigation to which the Company is currently a party.

    2003 Full Year Forecasted GAAP Measures
    (In millions)

    Operating Measures

                                                  2003 Full Year Forecast
    North America Comparable Operations
        Funeral Revenues                              $1,090 - $1,150
        Cemetery Revenues                               $500 - $550
        Funeral Gross Margin Percentage                  18% - 22%
        Cemetery Gross Margin Percentage                  9% - 13%
    International Operations
        Revenues                                        $500 - $550
        Gross Margin Percentage                          10% - 14%
    General and Administrative Expenses                  $75 - $85
    Interest Expense                                    $140 - $155
    Other Income                                         $10 - $20
    Consolidated Effective Tax Rate                      36% - 38%

    Liquidity Measures

    Depreciation and Amortization                       $145 - $165
    Cash Flows From Operating Activities                $350 - $400
    Capital Expenditures                                $110 - $130

The following qualitative commentary describes the Company's assumptions, estimates and beliefs supporting its 2003 outlook.

    Operating Measures

     * The Company's 2003 outlook for North America comparable funeral
       revenues assumes an equivalent amount to slightly fewer funeral
       services performed offset by projected increases in the average revenue
       per funeral service compared to 2002 levels.  The North America
       comparable funeral gross margin percentage should be positively
       impacted in 2003 by reductions in costs related to changes in the
       Company's sales structure and processes.  This positive impact will be
       somewhat offset by increased personnel (including pension) and
       insurance costs.
     * The Company's 2003 outlook for North America comparable cemetery
       revenues is projected to be below 2002 levels resulting from more
       normalized levels of completion of cemetery property development
       projects in 2003 compared to 2002 as well as from projected reductions
       in revenues resulting from changes in the Company's sales structure and
       processes.  The North America comparable cemetery gross margin
       percentage should be flat to slightly down in 2003 as a result of the
       lower projected cemetery revenues as well as from higher expected
       cemetery maintenance costs.  These negative impacts should be partially
       offset by cash savings resulting from the changes in the Company's
       sales structure and processes described earlier.
     * Revenues and the gross margin percentage from international operations
       are expected to be flat to above 2002 levels primarily related to a
       projected improvement in operating performance in 2003 from the
       Company's French operations.  In addition to projected operating
       improvement, the Company's French operations will not incur
       depreciation expense in 2003 in anticipation of the completion of the
       joint venture of such operations in 2003.  Approximately $8.9 million
       of depreciation expense was recognized in 2002 related to the Company's
       French operations.  Significant movements in foreign currency,
       particularly the Euro, could affect these projected results from the
       Company's international operations.
     * General and administrative expenses in 2003 are projected to be below
       2002 levels.  This projection includes approximately $4 million of new
       expenses anticipated in 2003 resulting from the Company's decision to
       utilize a new long-term incentive compensation program, which will
       recognize expenses currently as compared to the utilization of stock
       options in previous periods.  As in 2002, the Company will incur in
       2003 approximately $13.5 million of accelerated non-cash amortization
       expense related to existing capitalized system costs as a result of the
       Company's decision to implement new information systems.
     * Interest expense is projected to be lower in 2003 compared to 2002
       levels as the Company believes it will continue to reduce its debt
       levels.
     * Other income in 2003 is projected to primarily consist of interest
       income and income from the Company's cash override agreement with a
       third party insurance company that funds prearranged funeral contracts
       for consumers.
     * The Company's consolidated effective tax rate is projected to increase
       to approximately 37% in 2003 primarily related to the utilization in
       previous years of the Company's net operating loss carry-forwards
       related to its French operations.

    Liquidity Measures

     * As stated earlier, the Company's 2003 outlook for depreciation and
       amortization assumes no depreciation expense related to the Company's
       French operations in anticipation by the Company of the completion of
       the joint venture of such operations in 2003.  Approximately
       $8.9 million of depreciation expense was recognized in 2002 related to
       the Company's French operations.  Amortization expense of approximately
       $40 million is included in the Company's 2003 outlook related to
       preneed cemetery deferred selling costs in North America.  Prior to
       2003, these deferred preneed cemetery selling costs were not classified
       as amortization expense.
     * Cash flows from operating activities in 2003 is expected to be above
       2002 levels.  Approximately $85-$95 million of net non-recurring
       sources of cash flows, primarily related to an expected cash tax
       refund, is projected to be included in cash flows from operating
       activities during 2003.  In 2002, the Company had net non-recurring
       sources of cash flows of $82.1 million included in cash flows from
       operating activities.  The Company also does not expect to pay U.S.
       federal income taxes for the next several years due to tax loss
       carry-forwards.
     * Capital expenditures are projected to be slightly higher in 2003 as the
       Company expects to invest more growth capital into projects that are
       expected to increase future revenues.  Of the Company's total projected
       capital expenditures in 2003 of $110-$130 million, the Company
       expects to spend approximately $75-$85 million in capital
       expenditures deemed reasonably necessary to maintain the Company's
       funeral homes, cemeteries, crematoria and other facilities in a
       condition consistent with Company standards.

    Conference Call

The Company will host a conference call this morning (Thursday, February 27, 2003) at 10:00 a.m. Central time. A question and answer session will follow a brief presentation made by the Company. The conference call dial-in number is (913) 981-5571. The conference call will also be broadcast live via the Internet at http://www.firstcallevents.com/service/ajwz373072931GF12.html After the completion of the live conference call today, a replay can be accessed at (719) 457-0820 with the confirmation code of 531699 through March 13, 2003.

Cautionary Statement on Forward-Looking Statements

The statements in this press release that are not historical facts are forward-looking statements made in reliance on the "safe harbor" protections provided under the Private Securities Litigation Reform Act of 1995. These statements may be accompanied by words such as "believe," "estimate," "project," "expect," "may," "anticipate," "forecast," "predict" and words of similar meaning that convey the uncertainty of future events or outcomes. These statements are based on assumptions that the Company believes are reasonable; however, many important factors could cause the Company's actual results in the future to differ materially from the forward-looking statements made herein and in any other documents or oral presentations made by, or on behalf of, the Company. Important factors which could cause actual results of the Company to differ materially from those in forward-looking statements include, among others, the following:

      1) Changes in general economic conditions, both domestically and
         internationally, impacting financial markets (e.g., marketable
         security values, as well as currency and interest rate fluctuations)
         that could negatively affect the Company, particularly, but not
         limited to, levels of interest expense and negative currency
         translation effects.
      2) Changes in credit relationships impacting the availability of credit
         and the general availability of credit in the marketplace.
      3) The Company's ability to successfully implement its strategic plan as
         defined in the Company's Form 10-K for the year ended December 31,
         2001, including:
         * the interest of third parties to enter into and consummate
           alliances and joint ventures with the Company, including with
           respect to its operations in France,
         * the continuation of cost reduction initiatives,
         * the continuation of actions to improve cash flows,
         * the continuation of debt reduction initiatives, including the sale
           of certain funeral and cemetery operations,
         * the implementation of strategic revenue and marketing initiatives
           resulting in increased volume through its existing facilities, and
         * the continuation of operating improvements in France.
      4) The Company's ability to successfully implement its plan to reduce
         costs and increase cash flows associated with significant changes
         being made to the Company's organizational structure, process and
         quality of its sales efforts.
      5) Changes in consumer demand and/or pricing for the Company's products
         and services caused by several factors, such as changes in local
         number of deaths, cremation rates, competitive pressures and local
         economic conditions.
      6) Changes in domestic and international political and/or regulatory
         environments in which the Company operates, including potential
         changes in tax and accounting policies.
      7) The Company's ability to successfully access at a reasonable cost
         surety and insurance markets.
      8) The Company's ability to successfully exploit its substantial
         purchasing power with certain of the Company's vendors.
      9) The outcomes of pending lawsuits against the Company involving
         alleged violations of securities laws.
     10) The outcomes of pending lawsuits in Florida involving certain
         cemetery locations, including the possibility of criminal charges or
         other civil claims being filed against the Company, its subsidiaries
         or its employees.

For further information on these and other risks and uncertainties, see the Company's Securities and Exchange Commission filings, including the Company's 2001 Annual Report on Form 10-K. The Company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the Company, whether as a result of new information, future events or otherwise. The Company's results for the fourth quarter and full year of 2002 are subject to the completion of the Company's audit and the filing of the Company's 2002 Annual Report on Form 10-K.

Service Corporation International (NYSE: SRV), headquartered in Houston, Texas, is the world's largest funeral and cemetery company. The Company has an extensive nationwide network of providers, including 2,393 funeral service locations, 451 cemeteries and 189 crematoria providing funeral and cemetery services in 8 countries as of December 31, 2002. For more information about Service Corporation International, please visit our website at http://www.sci-corp.com

     For additional information contact:

     Investors:  Debbie Young -- Director of Investor Relations

                 (713) 525-9088

     Media:      Terry Hemeyer -- Managing Director / Corporate Communications

                 (713) 525-5497


                      SERVICE CORPORATION INTERNATIONAL
                     CONSOLIDATED STATEMENT OF OPERATIONS


    (In thousands, except
     per share amounts)          Fourth Quarter             Full Year
                                2002        2001*       2002        2001*
    Revenues:
       Funeral               $ 422,695  $ 452,177  $ 1,635,395  $ 1,821,430
       Cemetery                153,834    178,700      637,028      688,913
                               576,529    630,877    2,272,423    2,510,343
    Gross Profit:
       Funeral                  57,615     70,873      279,568      265,163
       Cemetery                 20,454     24,036       84,347       94,223
                                78,069     94,909      363,915      359,386
    General and
     administrative expenses   (31,937)   (16,858)     (89,752)     (70,309)
    Impairment losses and
     other operating expenses  (24,544)  (586,716)    (289,054)    (644,147)
       Operating income (loss)  21,588   (508,665)     (14,891)    (355,070)
    Interest expense           (38,481)   (47,236)    (161,494)    (211,626)
    Other (expense) income        (150)     2,396       19,021       15,044
    Gains from dispositions      8,532      4,681       16,401       16,224
       Loss from continuing
        operations before
        income taxes,
        extraordinary items and
        cumulative effects of
        accounting changes      (8,511)  (548,824)    (140,963)    (535,428)
    Income tax benefit
     (expense)                   2,124    (44,648)      39,740      (61,199)
       Loss from continuing
        operations before
        extraordinary items
        and cumulative effects
        of accounting changes   (6,387)  (593,472)    (101,223)    (596,627)
    Income from discontinued
     operations
     (net of income tax
      expense of $936)              --      1,701           --        1,701
    Extraordinary gains on
     early extinguishments of
     debt (net of income tax
     expense of $1,310, $9,
     $2,880 and $3,024,
     respectively)               2,172         14        4,903        4,731
    Cumulative effects of
     accounting changes
     (net of income tax
     benefit of $11,234 and
     $5,318, respectively)          --         --     (135,560)      (7,601)
     Net loss                $  (4,215) $(591,757) $  (231,880) $  (597,796)
    Basic and diluted
     income (loss)
     per share:
     Loss from continuing
      operations before
      extraordinary
      items and cumulative
      effects of accounting
      changes                $    (.02) $   (2.03) $      (.34) $     (2.09)
     Income from discontinued
      operations                    --        .00           --          .00
     Extraordinary gains on
      early extinguishments
      of debt                      .01        .00          .01          .02
     Cumulative effects of
      accounting changes            --         --         (.46)        (.03)
     Net loss                $    (.01) $   (2.03) $      (.79) $     (2.10)
    Basic and diluted
     weighted average
     number of shares          296,457    291,760      294,533      285,127

     * Operating results for 2001 have been reclassified to recognize, as part
       of funeral operations instead of cemetery operations, those revenues
       associated with delivered caskets previously prearranged on cemetery
       contracts.


                      SERVICE CORPORATION INTERNATIONAL
                          CONSOLIDATED BALANCE SHEET

                                                            December 31,
    (In thousands, except share and per share amounts)  2002          2001

    Assets
    Current assets:
      Cash and cash equivalents                   $    200,625   $     29,292
      Receivables, net of allowances                   291,765        386,479
      Inventories                                      135,529        168,975
      Other                                            126,980        245,207
       Total current assets                            754,899        829,953

    Prearranged funeral contracts                    4,273,790      4,109,195
    Long-term receivables, net of allowances         1,156,458      1,249,492
    Cemetery property, at cost                       1,567,584      1,924,773
    Property, plant and equipment, at cost (net)     1,188,340      1,357,410
    Deferred charges and other assets                  598,536        699,805
    Goodwill (net)                                   1,184,178      1,409,309
                                                  $ 10,723,785   $ 11,579,937
    Liabilities & Stockholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities    $    361,910   $    484,150
      Current maturities of long-term debt             100,330        220,640
      Income taxes                                       2,043          5,812
       Total current liabilities                       464,283        710,602

    Long-term debt                                   1,884,508      2,313,973
    Deferred prearranged funeral contract revenues   4,659,994      4,596,116
    Deferred preneed cemetery contract revenues      1,672,661      1,756,041
    Deferred income taxes                              522,453        546,747
    Other liabilities                                  216,115        223,597
    Stockholders' equity:
      Common stock, $1 per share par value,
       500,000,000 shares authorized,
       297,010,237 and 292,153,765, issued
       and outstanding (net of 2,516,396 and
       2,502,190 treasury shares, at par)              297,010        292,154
      Capital in excess of par value                 2,259,936      2,246,055
      Accumulated deficit                           (1,046,029)      (814,149)
      Accumulated other comprehensive loss            (207,146)      (291,199)
       Total stockholders' equity                    1,303,771      1,432,861
                                                  $ 10,723,785   $ 11,579,937


                      SERVICE CORPORATION INTERNATIONAL
                     CONSOLIDATED STATEMENT OF CASH FLOWS

    (In thousands)                                            Full Year
                                                          2002         2001
    Cash flows from operating activities:
    Net loss                                         $(231,880)     $(597,796)
    Adjustments to reconcile net loss to net cash
     provided by operating activities:
       Income from discontinued operations, net of          --         (1,701)
        taxes
       Extraordinary gains on early                     (4,903)        (4,731)
        extinguishments of debt, net of taxes
       Cumulative effects of accounting changes,       135,560          7,601
        net of taxes
       Depreciation and amortization                   128,546        193,937
       Provision for deferred income taxes             104,345         72,695
       Impairment losses and other operating           289,054        644,147
        expenses
       Payments on restructuring and non-recurring     (12,806)       (22,794)
        charges
       Gains from dispositions                         (16,401)       (16,224)
       Changes in assets and liabilities, net of
        effects from acquisitions and dispositions:
          Decrease in receivables                       27,972         50,360
          Decrease in other assets                      88,587        100,516
          Decrease in payables and other liabilities  (178,126)      (106,409)
          Other                                          2,619         17,755
       Net effect of prearranged funeral production
        and maturities                                  19,605         45,979
    Net cash provided by operating activities          352,172        383,335

    Cash flows from investing activities:
       Capital expenditures                           (100,045)       (74,164)
       Proceeds from divestitures and sales of          76,292        126,792
         property and equipment
       Proceeds from joint ventures and sales of       291,795        285,688
         equity investments, net of cash retained
       Net withdrawals (deposits) of restricted         58,035        (12,874)
        funds
       Other                                               848            (32)
    Net cash provided by investing activities          326,925        325,410

    Cash flows from financing activities:
       Net decrease in borrowings under credit         (29,061)      (734,186)
        agreements
       Proceeds from long-term debt issued                  --        345,000
       Payments of debt                                (75,857)      (166,262)
       Early extinguishments of debt                  (307,232)      (155,545)
       Settlement of options                           (57,000)            --
       Bank overdrafts and other                       (36,332)       (16,445)
    Net cash used in financing activities             (505,482)      (727,438)
    Effect of foreign currency                          (2,282)            76
    Net increase (decrease) in cash and cash           171,333        (18,617)
     equivalents
    Cash and cash equivalents at beginning of
     period                                             29,292         47,909
    Cash and cash equivalents at end of period        $200,625        $29,292


       Reconciliations of Non-GAAP Financial Measures to GAAP Measures

The Company is reporting in this press release the operating measures earnings and diluted earnings per share for the fourth quarters and full years of 2002 and 2001 that exclude certain non-recurring items. The Company is also reporting in this press release the liquidity measures EBITDA before non-recurring items and recurring operating free cash flow for the fourth quarters and full years of 2002 and 2001. These figures should be considered non-GAAP financial measures and are provided to more clearly present the financial results that management uses to manage its funeral and cemetery businesses. The Company has also adjusted the results of operations in 2001 to be consistent with the accounting presentation in 2002.

In 2002 and 2001, non-recurring items excluded from GAAP measures to create certain non-GAAP financial measures included in this press release consist of charges included in the line item, Impairment losses and other operating expenses, related to sales of businesses or joint venture transactions, severance costs, market adjustments to certain derivative financial instruments and the termination of certain contractual agreements; Gains from dispositions; Extraordinary gains and losses on early extinguishments of debt; and Cumulative effects of accounting changes. The cumulative effect of accounting changes primarily relate to the adoption in 2002 of SFAS No. 142, "Goodwill and Other Intangible Assets." This standard requires goodwill to no longer be amortized but instead tested for impairment annually. As a result of the adoption of SFAS No. 142, the Company recognized a charge in the first quarter of 2002 reflected as a cumulative effect of accounting change of $146.8 million on a pretax basis and $135.6 million on an after tax basis.

The operating results for the fourth quarter and full year of 2001 are also presented in this press release in a pro forma format as if certain changes made in 2002 were implemented on January 1, 2001 to provide a more relevant comparison to the 2002 results. Such changes include (1) discontinuing amortization of goodwill pursuant to new accounting standards, (2) changing the amortization period related to deferred prearranged funeral obtaining costs from 20 to 12 years, (3) revising its estimated allocation of overhead costs between the funeral and cemetery segments, (4) recognizing as part of funeral operations instead of cemetery operations, those revenues associated with delivered caskets previously prearranged on cemetery contracts, and (5) discontinuing the depreciation of certain operating assets held for sale in 2002.

The following two tables reconcile the non-GAAP financial measures earnings before non-recurring items and diluted EPS before non-recurring items to net loss and diluted loss per share calculated under GAAP.

    (In millions)                           Fourth Quarter        Full Year
                                            2002      2001      2002      2001
    Earnings before non-recurring items    $ 3.0  $   36.8  $   92.1  $  114.7
    Adjust for 2001 pro forma items
     (after tax):
      Goodwill amortization                  --     (13.9)       --     (47.4)
      Amortization of deferred
       prearranged funeral obtaining costs   --       1.0        --       3.6
      Depreciation expense related to
       operations held for sale in 2002      --      (1.9)       --     (14.5)

    Adjust for 2002 and 2001 non-recurring
     items (after tax):
      Gains from dispositions,
       impairment losses and other
       operating expenses                  (9.4)   (615.5)   (193.3)   (653.0)
      Income from discontinued
       operations                            --       1.7        --       1.7
      Extraordinary gains on early
       extinguishments of debt              2.2        --       4.9       4.7
      Cumulative effects of accounting
       changes                               --        --    (135.6)     (7.6)
    Net loss                            $  (4.2) $ (591.8) $ (231.9) $ (597.8)


    (In millions)                           Fourth Quarter        Full Year
                                            2002      2001      2002      2001
    Diluted EPS before non-recurring
     items                                $ .01  $     .12  $   .31  $    .39
    Adjust for 2001 pro forma items
     (after tax):
      Goodwill amortization                  --      (.05)       --      (.17)
      Amortization of deferred
       prearranged funeral obtaining costs   --       .00        --       .01
      Depreciation expense related to
       operations held for sale in 2002      --      (.01)       --      (.05)
      Effect of dilution                     --       .01        --       .01
    Adjust for 2002 and 2001 non-recurring
     items (after tax):
      Gains from dispositions,
       impairment losses and other
       operating expenses                  (.03)    (2.10)     (.67)    (2.28)
      Income from discontinued
       operations                            --       .00        --       .00
      Extraordinary gains on early
       extinguishments of debt              .01        --       .01       .02
      Cumulative effects of accounting
       changes                               --        --      (.46)     (.03)
    Diluted loss per share              $  (.01) $  (2.03) $   (.79) $  (2.10)

The Company calculates the non-GAAP financial measure EBITDA before non-recurring items by adding interest, tax, depreciation and amortization expenses back to earnings before non-recurring items and then deducting gains from dispositions. The following table reconciles EBITDA before non-recurring items to operating income (loss) calculated under GAAP.

    (In millions)                         Fourth Quarter         Full Year
                                          2002      2001       2002      2001
    EBITDA before non-recurring items   $ 81.5   $ 126.2   $  421.7  $  498.0
    Less: Depreciation and amortization  (35.5)    (45.8)    (128.5)   (193.9)
          Impairment losses and
           other operating expense       (24.5)   (586.7)    (289.1)   (644.1)
          Other expense (income)           0.1      (2.4)     (19.0)    (15.1)
      Operating income (loss)           $ 21.6   $(508.7)  $  (14.9) $ (355.1)

The Company calculates the non-GAAP financial measure recurring operating free cash flow by adjusting cash flows from operating activities to exclude (i) cash payments associated with the Company's restructuring and non-recurring charges and (ii) other cash receipts or payments (included in cash flows from operating activities) which are of a non-recurring operational nature and then subtracting maintenance capital expenditures. The Company defines maintenance capital expenditures as capital expenditures considered reasonably necessary to maintain the Company's funeral homes, cemeteries, crematoria and other facilities in a condition consistent with Company standards. The following table reconciles recurring operating free cash flow to cash flows from operating activities calculated under GAAP.

    (In millions)                          Fourth Quarter        Full Year
                                            2002     2001      2002     2001
    Recurring operating free cash flow  $   55.1 $    6.1  $  210.0  $ 170.5
    Add back:  Net non-recurring items      11.7     29.0      54.9    161.5
    Total operating free cash flow          66.8     35.1     264.9    332.0
    Add back:  Capital expenditures         38.0     19.8     100.1     74.1
    Less:  Payments on restructuring
     charges                                (4.8)    (3.9)    (12.8)   (22.8)
    Cash flows from operating
     activities                         $  100.0 $   51.0  $  352.2  $ 383.3

SOURCE Service Corporation International