News Release

SCI Corporate Communications
Phone: 1-844-220-4408
Email: Press.Room@sci-us.com
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Service Corporation International Announces Results for the Second Quarter Of 2001 of $.05 Per Diluted Share Before Non-Recurring Items, Cash Flow Improvement and Continued Debt Reduction

HOUSTON, Aug. 7 /PRNewswire/ -- Service Corporation International (NYSE: SRV), the world's largest funeral and cemetery company, today announced earnings from continuing operations for the second quarter of 2001 of $.05 per diluted share ($.05 basic) versus a loss of $.03 per diluted share ($.03 basic) for the second quarter of 2000, excluding non-recurring items in both periods. For the six months ended June 30, 2001, the Company reported earnings from continuing operations of $.13 per diluted share ($.13 basic) versus $.05 per diluted share ($.05 basic) for the six months ended June 30, 2000, excluding non-recurring items in both periods.

Highlights of the Company's financial results from continuing operations are detailed below. For the second quarter of 2001 compared to the same period of 2000, the Company's total revenues and gross profits were negatively affected by approximately $14.0 million and $2.0 million, respectively, from effects of foreign currency translation primarily related to the Euro. The Company's comparable results in all periods presented in this press release represent financial results excluding operations that were acquired or constructed after January 1, 2000 or divested by the Company prior to June 30, 2001.

     (In millions, except per
      share amounts)               Three Months            Six Months
                                       Ended                 Ended
                                     June 30,               June 30,
                                  2001       2000*      2001       2000*
    Total Revenues               $618.7     $636.5   $1,296.5    $1,320.0
    Comparable Revenues          $608.2     $596.3   $1,258.2    $1,242.5
    Comparable Revenues,
     Excluding Negative
     Currency Translation
     Effect                      $621.4     $596.3   $1,285.5    $1,242.5
    Earnings (Loss) Before
     Non-Recurring Items          $15.4      $(8.0)     $36.8       $12.9
    EBITDA Before
     Non-Recurring Items         $128.8     $118.7     $274.9      $277.6
    Net Income (Loss)            $(10.6)      $4.5     $(10.3)    $(872.1)
    Diluted EPS Before
     Non-Recurring Items           $.05      $(.03)      $.13        $.05
    Diluted Earnings (Loss)
     Per Share                    $(.04)      $.02      $(.04)     $(3.20)
    Total Operating
     Free Cash Flow               $63.9      $50.5     $249.2      $131.4
    Recurring Operating
     Free Cash Flow               $57.7     $(27.0)    $118.5       $49.9
    Total Debt                                       $2,776.4    $3,291.3**

     *  Prior year amounts reflect results from continuing operations for
        comparison purposes.
     ** As of December 31, 2000.

Commenting on the results of the second quarter of 2001, SCI Chairman and Chief Executive Officer, Robert L. Waltrip, said:

"We are pleased to report this quarter's financial results showing increases in our comparable revenues, gross profits and gross margin percentages compared to the same period of 2000. Excluding the negative impact of foreign currency, our comparable revenues increased 4.2% primarily driven by more funeral services performed and higher funeral sales averages reflecting the success of our operational initiatives. The improvement in our international gross profits and gross margin percentages was very encouraging and attributable to the positive results of operational growth, cash flow and cost rationalization initiatives from our France and United Kingdom operations. We continue to believe our Company is uniquely positioned to grow on a long-term basis in this stable industry."

     Funeral Segment

     (In millions)          Three Months Ended          Six Months Ended
                                 June 30,                   June 30,
                          2001    2000    % Change   2001     2000  % Change
    Total North America
     Funeral Revenues   $286.0    $279.1     2.5%   $601.5  $602.4    (0.1%)
    Total International
     Funeral Revenues   $160.6    $179.2   (10.4%)  $345.7  $390.3   (11.4%)
      Total Funeral
       Revenues         $446.6    $458.3    (2.6%)  $947.2  $992.7    (4.6%)
    Comparable North
     America Funeral
     Revenues           $282.0    $270.4     4.3%   $588.7  $584.2     0.8%
    Comparable
     International
     Funeral Revenues   $157.6    $164.1    (4.0%)  $332.1  $359.0    (7.5%)
      Comparable Funeral
       Revenues         $439.6    $434.5     1.2%   $920.8  $943.2    (2.4%)
    North America Funeral
     Gross Profits       $50.7     $44.1    15.0%   $119.1  $123.6    (3.6%)
    International Funeral
     Gross Profits       $12.2      $3.5   248.6%    $27.7   $31.3   (11.5%)
      Funeral Gross
       Profits           $62.9     $47.6    32.1%   $146.8  $154.9    (5.2%)
    North America Funeral
     Gross Margin
     Percentage          17.7%     15.8%             19.8%   20.5%
    International Funeral
     Gross Margin
     Percentage           7.6%      2.0%              8.0%    8.0%
      Funeral Gross
       Margin Percentage 14.1%     10.4%             15.5%   15.6%

The Company's funeral segment experienced growth in its comparable revenues, gross profits and gross margin percentages in the second quarter of 2001 compared to the same period of 2000. While comparable funeral revenues grew 1.2% in the second quarter of 2001, the Company's comparable funeral revenues grew 3.8% in the second quarter of 2001 compared to the same period of 2000 when excluding the negative impact of foreign currency. Funeral revenues, gross profits and gross margin percentages were positively impacted in the second quarter of 2001 by increases in funeral services performed and higher average revenues per funeral service in both the Company's North America and International funeral service markets, coupled with the positive effects of the Company's cost rationalization programs.

The Company is continuing the implementation of its strategic revenue growth initiatives, designed to expand its market share and generate future revenue growth without the outlay of significant additional capital. The revenue growth initiatives positively impacting North America funeral operating results in the second quarter of 2001 include the Company's Dignity Memorial(TM) packaged funeral plans and a focus on training our funeral service personnel in customer satisfaction and various other initiatives. The Company's international funeral operating results were also positively impacted by training, as well as by an increase in monument sales in the Company's French operations and an increase in the selection of packaged funeral plans in the Company's United Kingdom operations. Details of the Company's funeral operating results are presented in the following table.

                          Three Months Ended          Six Months Ended
                               June 30,                   June 30,
                        2001      2000   % Change  2001      2000   % Change
    Funeral Services
     Performed:
    Total North
     America            72,947   72,093    1.2%  153,326   156,674    (2.1%)
    Comparable North
     America            71,873   69,737    3.1%  150,040   151,828    (1.2%)
    Total France        32,984   33,205   (0.7%)  68,801    73,936    (6.9%)
    Comparable France   32,984   32,982    0.0%   68,801    73,486    (6.4%)
    Total United
     Kingdom            17,645   17,602    0.2%   38,059    41,854    (9.1%)
    Comparable United
     Kingdom            17,612   16,712    5.4%   38,005    39,761    (4.4%)
    Average Revenue Per
     Funeral Service:
    North America       $3,920   $3,871    1.3%   $3,923    $3,845     2.0%
    France, Excluding
     Currency Effect    $1,866   $1,774    5.2%   $1,854    $1,760     5.3%
    United Kingdom,
     Excluding Currency
     Effect             $1,672   $1,635    2.3%   $1,682    $1,641     2.5%

    Percentage of
     Cremation Cases
     Performed in
     North America       37.3%    36.8%            37.0%     35.9%
    Percentage of
     Funeral Services
     Performed in
     North America
     Previously
     Prearranged         29.9%    27.8%            29.7%     28.1%


     Cemetery Segment

     (In millions)          Three Months Ended         Six Months Ended
                                 June 30,                  June 30,
                           2001     2000  % Change   2001    2000   % Change
    Total North
     America Cemetery
     Revenues            $151.8   $144.6     5.0%   $307.9  $261.5    17.7%
    Total International
     Cemetery Revenues    $20.3    $29.4   (31.0%)   $41.4   $57.2   (27.6%)
      Total Cemetery
       Revenues          $172.1   $174.0    (1.1%)  $349.3  $318.7     9.6%
    Comparable North
     America Cemetery
     Revenues            $149.5   $141.9     5.4%   $302.6  $257.7    17.4%
    Comparable
     International
     Cemetery Revenues    $19.1    $19.9    (4.0%)   $34.8   $41.6   (16.3%)
      Comparable Cemetery
       Revenues          $168.6   $161.8     4.2%   $337.4  $299.3    12.7%
    North America
     Cemetery Gross
     Profits              $20.1    $16.6    21.1%    $43.2   $19.3   123.8%
    International Cemetery
     Gross Profits         $3.6     $7.0   (48.6%)    $7.5   $13.2   (43.2%)
      Cemetery Gross
       Profits            $23.7    $23.6     0.4%    $50.7   $32.5    56.0%
    North America Cemetery
     Gross Margin
     Percentage           13.2%    11.5%             14.0%    7.4%
    International Cemetery
     Gross Margin
     Percentage           17.6%    23.7%             18.1%   23.1%
      Cemetery Gross
       Margin Percentage  13.8%    13.6%             14.5%   10.2%

In North America, the Company is continuing programs that were initiated in the second quarter of 2000 concentrating on sales of cemetery property and sales of cemetery merchandise that can be delivered, as defined by applicable state trusting laws. These actions have enhanced the cash flows of the North America cemetery operations and have also generally allowed for revenue recognition under the Company's cemetery accounting policies. The Company's changes to cemetery compensation plans have also been additive to the cash flows and gross margin percentages of these operations. All of the above actions have stabilized the Company's North America cemetery segment and have contributed to its comparable revenue growth for the three and six months ended June 30, 2001.

The decrease in the international cemetery financial performance in the second quarter of 2001 compared to the same period of 2000 is due to the Company's loss of revenues and gross profits from the sale of an eighty percent interest in the Company's Australian operations in May 2001. The Company also experienced reduced preneed cemetery sales activities in the second quarter of 2001 in its South America cemetery operations as a result of the current instability of the economy in Argentina.

Other Expenses

General and administrative expenses were $18.4 million for the second quarter of 2001 compared to $19.7 million for the same period of 2000. The 6.6% decrease in general and administrative expenses primarily relates to the reduction in costs after the Company completed the implementation of its North America proprietary point of sale systems in 2000 and due to the completion of the initial roll-out of the Company's Central Processing Centers in its North America operating clusters.

Interest expense was $54.2 million for the three months ended June 30, 2001, compared to $73.6 million for the same period of 2000. The 26.4% decrease in interest expense related to a reduction of over $940 million in the Company's average debt balance, coupled with the effect of lower interest rates in the second quarter of 2001 compared to the second quarter of 2000.

     Operating Free Cash Flow
                                                 Six Months Ended
                                                     June 30,
                                           2001         2000        Change
    Total Operating Free Cash Flow       $249.2       $131.4       $117.8
    Recurring Operating Free Cash Flow   $118.5        $49.9        $68.6

The Company's initiatives to increase operating free cash flow continue to exceed expectations. Included in total operating free cash flow of $249.2 million for the six months ended June 30, 2001 is $130.7 million of non-recurring receipts of funds comprised of an approximate $116 million income tax refund received in the first quarter of 2001 and the collection of receivables from funeral and cemetery trust funds. The improvement of $68.6 million in recurring operating free cash flow for the six months ended June 30, 2001 compared to the same period of 2000 is primarily a result of (i) less cash taxes paid, (ii) reductions in capital expenditure levels, (iii) increases in funds received as a result of the Company's surety bonding programs for prearranged funeral and preneed cemetery activities, and (iv) increases in the Company's cash flows from operating activities.

     Debt Reduction
                                   June 30,      December 31,       Debt
                                     2001            2000        Reduction
    Current Maturities of
     Long-Term Debt                  $444.6          $176.8
      Long-Term Debt               $2,331.8        $3,114.5
       Total Debt                  $2,776.4        $3,291.3      ($514.9)

The Company's successful reduction of debt continued in the first six months of 2001 with total debt decreasing $514.9 million. During the second quarter of 2001, the Company reduced total debt by $255.9 million. Funds available to achieve this debt reduction in the second quarter of 2001 were primarily generated from (i) the completion of the joint venture of the Company's Australian operations, (ii) proceeds from sales of certain non-strategic funeral and cemetery operations in North America, (iii) the extinguishment of certain debt obligations using the Company's common stock in transactions with third parties, and (iv) the Company's total operating free cash flow.

Commenting on the Company's operating free cash flow and debt reduction, SCI Senior Vice President and Chief Financial Officer, Jeffrey E. Curtiss, said:

"We continue to be exceptionally pleased with the execution of strategic initiatives to increase our operating free cash flow and reduce our total debt. With the completion announced yesterday of the joint venture and sales of certain European operations producing approximately $125 million in net after tax cash proceeds, our debt balance will be approximately $2.65 billion. This represents a 19.5% reduction in our total debt from the beginning of 2001 and a 36.9% reduction from our peak debt level at September 30, 1999."

Non-Recurring Items

In the second quarter of 2001, the Company recognized a one-time, non-cash charge of $26.2 million on a pretax basis, of which $25.7 million related to the completion of the joint venture of the Company's Australian operations. The $25.7 million charge represented the earnings recognition of the cumulative foreign currency translation effect for the Australian operations previously included as a separate component of the Company's consolidated stockholders' equity.

The Company reported restructuring and non-recurring charges of $13.3 million during the second quarter of 2000. These charges were related to changes in estimates of certain items included in the Company's fourth quarter 1999 restructuring charge.

During the second quarter of 2000, the Company reported extraordinary gains on early extinguishments of debt of $15.4 million, net of taxes of $8.8 million. The extraordinary gains were a result of the Company repurchasing certain bonds in the open market during the second quarter of 2000.

Cautionary Statement on Forward-Looking Statements

The statements contained in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be accompanied by words such as "believe", "estimate", "project", "expect", "anticipate" or "predict", 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 as of December 31, 2000,
         including the interest of third parties to purchase certain funeral
         and cemetery operations and to enter into and consummate alliances
         and joint ventures with the Company.
     4)  Changes in consumer demand and/or pricing for the Company's products
         and services caused by several factors, such as changes in local
         death rates, cremation rates, competitive pressures and local
         economic conditions.
     5)  The Company's ability to successfully implement ongoing cost
         reduction initiatives, as well as changes in domestic and
         international economic, political and/or regulatory environments,
         which could negatively effect the implementation of the Company's
         cost reduction initiatives.
     6)  Changes in domestic and international political and/or regulatory
         environments in which the Company operates, including tax and
         accounting policies.
     7)  The Company's ability to successfully exploit its substantial
         purchasing power with certain of the Company's vendors.

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.

As of June 30, 2001, SCI affiliates operated 3,385 funeral service locations, 506 cemeteries and 185 crematoria. SCI provides funeral and cemetery services in 17 countries on four continents.

     For additional information contact:

     Investor Relations:  Debbie E. Fisher               Tel:  (713) 525-9088
                          - Director / Investor Relations
                          Eric D. Tanzberger             Tel:  (713) 525-7768
                          - Vice President / Investor Relations
                          Assistant Corporate Controller
     Media Relations:     Terry Hemeyer                  Tel:  (713) 525-5497
                          - Managing Director / Corp. Communications

Other Service Corporation International information and news releases are available through SCI's corporate website at: http://www.sci-corp.com .

                      SERVICE CORPORATION INTERNATIONAL
                     CONSOLIDATED STATEMENT OF OPERATIONS

                               Three Months Ended         Six Months Ended
                                    June 30,                  June 30,
     (In thousands, except
      per share amounts)
                                 2001        2000         2001        2000
    Revenues:
     Funeral                  $446,571    $458,292     $947,188    $992,732
     Cemetery                  172,140     173,976      349,299     318,695
     Other services                ---       4,277          ---       8,611
                               618,711     636,545    1,296,487   1,320,038
    Gross profit:
     Funeral                    62,886      47,565      146,797     154,948
     Cemetery                   23,684      23,589       50,661      32,511
     Other services                ---         914          ---       1,674
                                86,570      72,068      197,458     189,133

    General and administrative
     expenses                  (18,423)    (19,734)     (36,402)    (39,847)
    Restructuring and
     non-recurring charges     (26,223)    (13,281)     (51,246)    (13,281)
    Operating income            41,924      39,053      109,810     136,005

    Interest expense           (54,152)    (73,565)    (114,958)   (143,114)
    Other income                10,727       7,647       13,681      11,453
                               (43,425)    (65,918)    (101,277)   (131,661)
    Income from continuing
     operations before income
     taxes, extraordinary
     gains and cumulative
     effect of accounting
     change                     (1,501)    (26,865)       8,533       4,344
    Income tax (expense)
     benefit                    (9,155)     10,422      (15,870)        150
    Income from continuing
     operations before
     extraordinary gains and
     cumulative effect of
     accounting change         (10,656)    (16,443)      (7,337)      4,494
    Income from discontinued
     operations (net of
     income taxes of
     $3,885 and $7,568)            ---       5,611          ---      10,763
    Extraordinary gains on
     early extinguishments
     of debt (net of income
     taxes of $45, $8,845,
     $2,952 and $12,630,
     respectively)                  71      15,388        4,618      21,973
    Cumulative effect of
     accounting change
     (net of income taxes
     of $5,318 and
     $522,491, respectively)       ---         ---       (7,601)   (909,315)
    Net income (loss)         $(10,585)     $4,556     $(10,320)  $(872,085)

    Earnings per share:
     Basic:
      Income from continuing
       operations before
       non-recurring items        $.05       $(.03)        $.13        $.05
      Income from
       discontinued operations     ---         .02          ---         .04
      Restructuring and
       non-recurring charges      (.09)       (.03)        (.16)       (.03)
      Extraordinary gains on
       early extinguishments
       of debt                     ---         .06          .02         .08
      Cumulative effect of
       accounting change           ---         ---         (.03)      (3.34)
      Net income (loss)          $(.04)       $.02        $(.04)     $(3.20)
     Diluted:
      Income from continuing
       operations before
       non-recurring items        $.05       $(.03)        $.13        $.05
      Income from
       discontinued operations     ---         .02          ---         .04
      Restructuring and
       non-recurring charges      (.09)       (.03)        (.16)       (.03)
      Extraordinary gains on
       early extinguishments
       of debt                     ---         .06          .02         .08
      Cumulative effect of
       accounting change           ---         ---         (.03)      (3.34)
      Net income (loss)          $(.04)       $.02        $(.04)     $(3.20)
    Basic weighted average
     number of shares          284,852     272,093      279,245     272,078
    Diluted weighted average
     number of shares          284,852     272,093      279,245     272,801


     Geographic segment information was as follows:
     (In thousands, except funeral services performed and number of locations)
                                       North                       Other
                                      America        Europe       Foreign

    Revenues from continuing
     operations:
      Three months ended June 30:
       2001                          $437,809       $158,880      $22,022
       2000                           427,998        168,266       40,281
       Change from prior period        $9,811        $(9,386)    $(18,259)

       Percentage change from
        prior period                     2.3%         (5.6)%      (45.3)%

      Six months ended June 30:
       2001                          $909,376       $336,543      $50,568
       2000                           872,607        371,924       75,507
       Change from prior period       $36,769       $(35,381)    $(24,939)

       Percentage change from
        prior period                     4.2%         (9.5)%      (33.0)%


    Operating income from
     continuing operations:
      Three months ended June 30
       (Excluding effects of
       restructuring and
       non-recurring charges):
        2001                          $52,969        $11,920       $3,258
        2000                           42,750          1,249        8,335
        Change from prior period      $10,219        $10,671      $(5,077)

        Percentage change from
         prior period                   23.9%         854.4%      (60.9)%

      Six months ended June 30
       (Excluding effects of
       restructuring and
       non-recurring charges):
        2001                         $126,770        $28,829       $5,457
        2000                          106,446         29,772       13,068
        Change from prior period      $20,324          $(943)     $(7,611)

        Percentage change from
         prior period                   19.1%         (3.2)%      (58.2)%


    Operating income margin from
     continuing operations:
      Three months ended June 30
       (Excluding effects of
       restructuring and
       non-recurring charges):
        2001                            12.1%           7.5%        14.8%
        2000                            10.0%           0.7%        20.7%

      Six months ended June 30
       (Excluding effects of
       restructuring and
       non-recurring charges):
        2001                            13.9%           8.6%        10.8%
        2000                            12.2%           8.0%        17.3%


    Funeral services performed:
     Three months ended June 30:
      2001                             72,947         62,197        2,878
      2000                             72,093         60,855        7,367

      Percentage change from
       prior period                      1.2%           2.2%      (60.9)%

     Six months ended June 30:
      2001                            153,326        131,104        9,923
      2000                            156,674        142,236       14,872

      Percentage change from
       prior period                    (2.1)%         (7.8)%      (33.3)%


    Number of locations at June 30:
     2001                               2,127          1,923           26
     2000                               2,339          2,063          189

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SOURCE Service Corporation International
Web site: http: //www.sci-corp.com
Company News On-Call: http: //www.prnewswire.com/comp/104532.html
CONTACT: investor relations, Debbie E. Fisher, Director - Investor Relations, +1-713-525-9088, or Eric D. Tanzberger, Vice President - Investor Relations, Assistant Corporate Controller, +1-713-525-7768, or media relations, Terry Hemeyer, Managing Director - Corp. Communications, +1-713-525-5497, all of Service Corporation International