News Release

SCI Corporate Communications
Phone: 1-844-220-4408
Email: Press.Room@sci-us.com
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Service Corporation International Announces Second Quarter 2010 Financial Results and Increases Cash Flow Outlook for 2010
Conference call on Thursday, July 29, 2010, at 9:00 a.m. Central Time.

HOUSTON, July 28, 2010 /PRNewswire via COMTEX/ --

Service Corporation International (NYSE: SCI), the largest provider of deathcare products and services in North America, today reported results for the second quarter 2010. Our unaudited condensed consolidated financial statements can be found at the end of this press release. The table below summarizes our key financial results:


    (In millions, except for
     per share amounts)
                         Three Months Ended            Six Months Ended
                              June 30,                     June 30,
                              --------                     --------
                          2010          2009         2010           2009
                          ----          ----         ----           ----
    Revenues            $555.3        $513.9     $1,086.1       $1,024.5
    Operating income     $95.9         $69.1       $181.6         $154.6
    Net income
     attributable
     to common
     stockholders        $40.3         $23.1        $71.2          $57.6
    Diluted earnings per
     share                $.16          $.09         $.28           $.23
    Earnings from
     continuing
     operations
     excluding special
     items(1)            $37.7         $30.0        $72.1          $60.9
    Diluted
     earnings per
     share from
     continuing
     operations
     excluding
     special items(1)     $.15          $.12         $.28           $.24
    Diluted
     weighted
     average
     shares
     outstanding         253.6         251.1        254.9          250.7
    Net cash
     provided by
     operating
     activities          $77.1         $69.7       $186.0         $211.1
    Net cash
     provided by
     operating
     activities
     excluding
     special
     items(1)            $78.6         $69.7       $187.5         $211.1

    (1) Earnings from continuing operations excluding special items, diluted
    earnings per share from continuing operations excluding special items, and
    net cash provided from operating activities are non-GAAP financial
    measures. A reconciliation to net income, diluted earnings per share, and
    net cash provided from operating activities computed in accordance with
    GAAP can be found later in this press release under the headings "Cash
    Flow and Capital Spending" and "Non-GAAP Financial Measures".

Highlights:

  • Diluted earnings per share from continuing operations excluding special items was $0.15 in the second quarter 2010 compared to $0.12 in the prior year second quarter. The increase was primary attributable to higher revenues and gross profit, particularly in the funeral segment, reflecting the Keystone and Palm Mortuaries acquisitions.
  • Funeral gross profit increased $6.4 million, or 9.0%, and the funeral gross margin percentage declined marginally to 20.5%. On a comparable or same-store basis, funeral gross profits were relatively flat; however, increased funeral case volume and profits from the Keystone and Palm Mortuaries acquisitions delivered an overall increase in funeral gross profit.
  • Cemetery gross profit increased $1.1 million, or 3.6%, led by higher preneed revenues, particularly merchandise deliveries, while cemetery gross margin percentage was consistent with the prior year at 17.9%.
  • Net cash provided by operating activities excluding special items for the quarter increased $8.9 million to $78.6 million primarily as a result of higher pretax income.

Tom Ryan, the Company's President and Chief Executive Officer, commented on the second quarter of 2010:

"We are very pleased with the operating performance of our Company for the second quarter. Earnings and free cash flow exceeded our internal expectations as strong comparable business performance was enhanced by the accretive contribution from the acquisitions of Keystone and Palm Mortuaries. We are also excited about our ability to grow comparable preneed funeral sales production, which increased 23% for the quarter and 17% on a year to date basis. While these sales do not have a material impact on current earnings, they increase our ability to deliver future growth in operating results and enhance shareholder value."



    REVIEW OF RESULTS FOR SECOND QUARTER 2010

    Consolidated Segment Results
    ----------------------------


    (In millions, except funeral services
     performed and average revenue per funeral
     service)                                    Three Months Ended
                                                       June 30,
                                                       --------
                                                 2010            2009
                                                 ----            ----
    Funeral
    -------
    Funeral atneed revenue                     $241.2          $222.9
    Funeral recognized preneed revenue          116.3           102.6
    Other revenues(1)                            20.3            17.2
       Total funeral revenues                  $377.8          $342.7


    Gross profit                                $77.5           $71.1
    Gross margin percentage                      20.5%           20.8%

    Funeral services performed                 68,220          63,749
    Average revenue per funeral service        $5,240          $5,106


    Cemetery
    --------
    Cemetery atneed revenue                     $62.2           $61.3
    Cemetery recognized preneed revenue          94.9            89.5
    Other revenue (2)                            20.4            20.4
                                                 ----            ----
       Total cemetery revenues                 $177.5          $171.2

    Gross profit                                $31.8           $30.7
    Gross margin percentage                      17.9%           17.9%

    (1) Other funeral revenue consists primarily of General Agency (GA)
    revenues, which are commissions we receive from third-party insurance
    companies for life insurance policies or annuities sold to preneed
    customers for the purpose of funding preneed funeral arrangements.

    (2) Other cemetery revenue is primarily related to cemetery
    merchandise and service trust fund income, endowment care trust fund
    income, and interest and finance charges earned from customer receivables
    on preneed installment contracts.

Comparable Funeral Results

The table below details comparable funeral results of operations ("same store") for the three months ended June 30, 2010 and 2009. We consider comparable operations to be those owned for the entire period beginning January 1, 2009 and ending June 30, 2010.



    (Dollars in millions, except average revenue per
     funeral service and average revenue per contract
     sold)                                            Three Months Ended
                                                           June 30,
                                                           --------
                                                        2010          2009
                                                        ----          ----
    Comparable funeral revenue:
       Atneed revenue                                 $215.9        $220.4
       Recognized preneed revenue                      108.8         101.7
       Other funeral revenue(1)                         19.3          17.1
                                                        ----          ----
    Total comparable funeral revenues                 $344.0        $339.2

    Comparable gross profit                            $69.1         $70.8
    Comparable gross margin percentage                  20.1%         20.9%

    Comparable funeral services performed:
       Preneed                                        21,995        21,860
       Atneed                                         39,570        41,107
                                                      ------        ------
       Total                                          61,565        62,967

    Comparable average revenue per funeral service    $5,274        $5,115

    Comparable preneed funeral production:
       Sales                                          $147.3        $120.0
       Total preneed funeral contracts sold           27,283        22,728
       Average revenue per contract sold              $5,400        $5,278

    (1) Other funeral revenue consists primarily of General Agency (GA)
    revenues, which are commissions we receive from third-party insurance
    companies for life insurance policies or annuities sold to preneed
    customers for the purpose of funding preneed funeral arrangements.

  • Comparable funeral revenues increased $4.8 million, as higher average revenues per funeral service and higher General Agency revenues and trust fund income more than offset a decline in funeral services performed.
  • Comparable funeral gross profit was $1.7 million below the prior year and gross margin percentage decreased slightly to 20.1%, primarily reflecting the impact of higher selling compensation from increased preneed funeral sales production. The revenues associated with these selling costs are deferred until the funeral service is performed.
  • Comparable funeral services performed decreased 2.2%, primarily related to soft demand in our relevant markets. We believe this decline is consistent with trends experienced by other funeral service providers and industry vendors.
  • The comparable average revenue per funeral service grew 3.1% over the prior year quarter. Excluding a favorable Canadian currency impact and higher funeral trust fund income, the average revenue per funeral service grew approximately 0.9%.
  • Preneed funeral sales production increased $27.3 million, or 22.8%. Total funeral contracts sold increased 20.0% while the average revenue per contract sold increased 2.3%. A large percentage of the increase was from the performance of our Canadian operations as the implementation of a sales tax effective July 1, 2010, resulted in an increase in preneed funeral sales activity for the quarter. Preneed funeral sales are deferred and recognized as revenues in the future when the funeral service is performed.
  • The cremation rate increased to 41.1% in the second quarter of 2010 compared to 40.4% for the same period of 2009.

Comparable Cemetery Results

The table below details comparable cemetery results of operations ("same store") for the three months ended June 30, 2010 and 2009. We consider comparable operations to be those owned for the entire period beginning January 1, 2009 and ending June 30, 2010.



                                                      Three Months Ended
    (Dollars in millions)                                  June 30,
                                                           --------
                                                      2010            2009
                                                      ----            ----
    Comparable cemetery revenue:
       Atneed revenue                                $60.5           $60.3
       Recognized preneed revenue                     92.8            88.5
       Other cemetery revenue(1)                      20.0            19.9
                                                      ----            ----
    Total comparable cemetery revenues              $173.3          $168.7

    Comparable gross profit                          $30.6           $30.3
    Comparable gross margin percentage                17.7%           18.0%

    Comparable preneed and atneed cemetery sales
     production:
          Property                                   $92.5           $86.3
          Merchandise and services                    94.4            93.3
          Discounts                                  (19.2)          (16.3)
       Preneed and atneed cemetery sales production $167.7          $163.3
       Recognition rate (2)                             91%             91%

    (1) Other cemetery revenue is primarily related to cemetery
    merchandise and service trust fund income, endowment care
    trust fund income and interest and finance charges earned from
    customer receivables on preneed installment contracts.

    (2) Represents the ratio of current period revenue recognition stated
    as a percentage of current period sales production.


  • Comparable recognized preneed cemetery revenues increased $4.3 million, or 4.9%, primarily as a result of increased cemetery property sales production and higher merchandise deliveries in the current period.
  • Cemetery gross profit increased $0.3 million, or 1.0%, and gross margin percentage decreased slightly to 17.7% compared to 18.0%. The increased revenues associated with the cemetery sales production growth was substantially offset by higher selling expenses. Part of the increased selling expenses relates to selling costs recognized in association with an increase in deferred preneed cemetery revenue. We expect this increase in deferred revenues to positively impact cemetery operating results in future periods.
  • Preneed and atneed cemetery sales production increased $4.4 million, or 2.7%, primarily attributable to higher property sales in the current quarter.

Other Financial Results

  • General and administrative expenses were $27.0 million in the second quarter of 2010, an increase of $0.5 million compared to the second quarter of 2009. The current quarter included acquisition and transition expenses of $3.8 million, which were largely offset by other net overhead expense reductions.
  • Other income, net, was $4.3 million for the current quarter, reflecting the favorable foreign currency exchange impact from liability settlements between U.S. and Canadian subsidiaries.

Cash Flow and Capital Spending

Set forth below is a reconciliation of net cash provided by operating activities excluding special items to our reported net cash provided by operating activities prepared in accordance with GAAP. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP.



                                   Three Months Ended      Six Months Ended
    (In millions)                        June 30,              June 30,
                                         --------              --------
                                    2010        2009     2010           2009
                                       -           -        -              -
    Net cash provided by operating
     activities, as reported       $77.1       $69.7   $186.0         $211.1
    Transition costs                 1.5           -      1.5              -
    Net cash provided by operating
     activities excluding special
     items                         $78.6       $69.7   $187.5         $211.1
                                   =====       =====   ======         ======

  • Net cash provided by operating activities excluding special items for the quarter was $78.6 million, an increase of $8.9 million compared to the prior year. In the second quarter of 2010, cash flow benefited by $15.7 million from funding an April payroll on March 31, 2010. This was largely offset by $14.9 million of proceeds received in the second quarter of 2009 from liquidating certain life insurance assets. Excluding these items, cash flow increased $8.1 million primarily as a result of higher pretax income in the current quarter compared to the prior year. We also benefited from higher atneed cash receipts resulting from initiatives that improved collection rates in the current period which was offset by higher payments for trade payables.

Consistent with our financial objectives, we were successful in prudently managing our capital expenditures during the three and six month periods ended June 30, 2010. The increase in capital spending in 2010 primarily reflects the additional properties owned as a result of the Keystone acquisition. A summary of our capital expenditures is set forth below:



                                Three Months Ended      Six Months Ended
    (In millions)                     June 30,               June 30,
                                      --------               --------
                                 2010           2009    2010         2009
                                 ----           ----    ----         ----
    Capital improvements at
     existing locations         $14.7           $8.2   $24.9        $17.1
    Development of cemetery
     property                     7.7            6.9    14.7         16.1
    Construction of new funeral
     home facilities and other
     growth                       0.9            3.9     2.0          9.3
                                  ---            ---     ---          ---
    Total capital expenditures  $23.3          $19.0   $41.6        $42.5
                                =====          =====   =====        =====

2010 OUTLOOK

Eric Tanzberger, the Company's Senior Vice President and Chief Financial Officer, commented on the Company's outlook for 2010:

"SCI continues to generate strong cash flow, even during the recent recession and ongoing weak economic times. During 2010 we have had particularly good success with working capital initiatives that have contributed to cash flow, including improved collection rates, especially in our atneed accounts. We now believe that cash flow for the year will be higher than our previous guidance range provided. While our guidance ranges for earnings and capital spending remain unchanged, we do believe that it is more likely we will report earnings in the middle to upper end of the earnings per share range below."

Our outlook for potential earnings and cash flow in 2010 is as follows:


    (In millions except per share
     amounts)
                                                 Original      Updated
                                                 Guidance      Guidance
                                                 --------      --------
    Diluted earnings per share from
     continuing operations excluding
     special items (1)                         $.48 to $.56   $.48 to $.56
    Net cash provided by operating
     activities excluding special items
     (1)                                       $300 to $350   $330 to $360
    Capital improvements at existing
     facilities and cemetery development
     expenditures                                $85 to $95    $85 to $95

    (1) Diluted earnings per share excluding special items and Net cash
    provided by operating activities excluding special items are non-GAAP
    financial measures.  We normally reconcile these non-GAAP financial
    measures to diluted earnings per share and net cash provided by operating
    activities; however, diluted earnings per share and net cash provided by
    operating activities calculated in accordance with GAAP are not currently
    accessible on a forward-looking basis.  Our guidance for 2010 excludes the
    following because this information is not currently available for the
    remainder of 2010:  Gains or losses associated with asset divestitures,
    gains or losses associated with the early extinguishment of debt,
    potential tax reserve adjustments and/or cash taxes, acquisition and
    transition costs, and potential costs associated with settlements of
    litigation or the recognition of receivables for insurance
    recoveries associated with litigation.  The foregoing items, especially
    gains or losses associated with asset divestitures, could materially
    impact our forward-looking diluted EPS and net cash provided by operating
    activities calculated in accordance with GAAP, consistent with the
    historical disclosures found in this press release under the headings
    "Cash Flow and Capital Spending" and "Non-GAAP financial measures".

This outlook reflects management's current views and estimates regarding future economic and financial market conditions, company performance and financial results, business prospects, the competitive environment and other events. This outlook is subject to a number of risks and uncertainties, many of which are beyond the control of SCI, that could cause actual results to differ materially from the potential results highlighted above. A further list and description of these risks and uncertainties and other matters can be found later in this press release under "Cautionary Statement on Forward-Looking Statements".

TRUST FUND RETURNS

Total trust fund returns include realized and unrealized gains and losses and dividends. A summary of our consolidated trust fund returns for the three and six months ended June 30, 2010 is set forth below:


                                Three      Six
                                Months    Months
                                ------    ------
    Preneed Funeral             (5.9%)    (2.7%)
    Preneed Cemetery            (6.4%)    (3.0%)
    Cemetery Perpetual Care     (0.4%)      3.9%
        Combined Trust Funds    (4.3%)    (0.6%)

NON-GAAP FINANCIAL MEASURES

Earnings from continuing operations excluding special items, diluted earnings per share from continuing operations excluding special items, and net cash provided by operating activities excluding special items shown above are all non-GAAP financial measures. We believe these non-GAAP financial measures provide a consistent basis for comparison between quarters and better reflect the performance of our core operations, as they are not influenced by certain income, expense, and cash items not affecting continuing operations. We also believe these measures help facilitate comparisons to our competitors' operating results.

Set forth below is a reconciliation of earnings from continuing operations excluding special items to our reported net income attributable to common stockholders and diluted earnings per share from continuing operations excluding special items to our GAAP diluted earnings per share. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP.



                                            Three Months Ended June 30,
                                            ---------------------------
    (In millions, except diluted
     EPS)                                 2010                  2009
                                          ----                  ----
                                       Net    Diluted        Net    Diluted
                                     Income      EPS       Income      EPS
                                     ------      ---       ------      ---
    Net income attributable to
     common stockholders, as
     reported                          $40.3      $.16       $23.1      $.09
    After-tax reconciling items:
        (Gains) losses on
         divestitures and impairment
         charges, net                   (5.8)     (.02)        5.7       .02
       Acquisition and transition
        costs                            2.3       .01           -         -
       Losses (gains) on early
        extinguishment of debt           0.2         -        (1.2)        -
     Change in certain tax
      reserves                           0.7         -         2.4       .01
    Earnings from continuing
     operations excluding special
     items                             $37.7      $.15       $30.0      $.12
                                       =====      ====       =====      ====

    Diluted weighted average
     shares outstanding (in
     thousands)                                253,583               251,130



                                           Six Months Ended June 30,
                                           -------------------------
    (In millions, except
     diluted EPS)                        2010                   2009
                                         ----                   ----
                                     Net     Diluted        Net     Diluted
                                   Income      EPS        Income      EPS
                                   ------      ---        ------      ---
    Net income attributable to
     common stockholders, as
     reported                       $71.2      $.28        $57.6      $.23
    After-tax reconciling
     items:
      (Gains) losses on
       divestitures and
       impairment charges, net       (5.3)     (.02)         3.0       .01
       Acquisition and transition
        costs                         4.5       .02            -         -
       Losses (gains) on early
        extinguishment of debt        0.2         -         (2.1)     (.01)
        Change in certain tax
         reserves                     1.5         -          2.4       .01
    Earnings from continuing
     operations excluding
     special items                  $72.1      $.28        $60.9      $.24
                                    =====      ====        =====      ====

    Diluted weighted average
     shares outstanding (in
     thousands)                             254,862                250,672

Conference Call and Webcast

We will host a conference call on Thursday, July 29, 2010, at 9:00 a.m. Central Time. A question and answer session will follow a brief presentation made by management. The conference call dial-in number is (617) 786-2905 with the passcode of 91118618. The conference call will also be broadcast live via the Internet and can be accessed through our website at www.sci-corp.com. A replay of the conference call will be available through August 5, 2010 and can be accessed at (617) 801-6888 with the passcode of 70013657. Additionally, a replay of the conference call will be available on our website for approximately ninety days.

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," "anticipate" or "predict," that convey the uncertainty of future events or outcomes. These statements are based on assumptions that we believe are reasonable; however, many important factors could cause our 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 us, or on our behalf. Important factors, which could cause actual results to differ materially from those in forward-looking statements include, among others, the following:

  • Changes in general economic conditions, both domestically and internationally, impacting financial markets (e.g., marketable security values, access to capital markets, as well as currency and interest rate fluctuations) that could negatively affect us, particularly, but not limited to, levels of trust fund income, interest expense, and negative currency translation effects.
  • Changes in operating conditions such as supply disruptions and labor disputes.
  • Our inability to achieve the level of cost savings, productivity improvements or earnings growth anticipated by management, whether due to significant increases in energy costs (e.g., electricity, natural gas and fuel oil), costs of other materials, employee-related costs or other factors.
  • Our inability to complete acquisitions, divestitures or strategic alliances as planned or to realize expected synergies and strategic benefits.
  • The outcomes of pending lawsuits, proceedings, and claims against us and the possibility that insurance coverage is deemed not to apply to these matters or that an insurance carrier is unable to pay any covered amounts to us.
  • Allegations regarding compliance with laws, regulations, industry standards, and customs regarding funeral or burial procedures and practices.
  • The amounts payable by us with respect to our outstanding legal matters exceeding our established reserves.
  • Amounts that we may be required to replenish into our affiliated funeral and cemetery trust funds in order to meet minimum funding requirements.
  • The outcome of pending Internal Revenue Service audits. We maintain accruals for tax liabilities which relate to uncertain tax matters. If these tax matters are unfavorably resolved, we will make any required payments to tax authorities. While such payments would affect our cash flow, we do not believe it would impair our ability to service debt or our overall liquidity. If these tax matters are favorably resolved, the accruals maintained by us will no longer be required, and these amounts will be released through the tax provision at the time of resolution.
  • Our ability to manage changes in consumer demand and/or pricing for our products and services due to several factors, such as changes in numbers of deaths, cremation rates, competitive pressures, and local economic conditions.
  • Changes in domestic and international political and/or regulatory environments in which we operate, including potential changes in tax, accounting, and trusting policies.
  • Changes in credit relationships impacting the availability of credit and the general availability of credit in the marketplace.
  • Our ability to successfully access surety and insurance markets at a reasonable cost.
  • Our ability to successfully leverage our substantial purchasing power with certain of our vendors.
  • The effectiveness of our internal control over financial reporting, and our ability to certify the effectiveness of the internal controls and to obtain an unqualified attestation report of our auditors regarding the effectiveness of our internal control over financial reporting.
  • The possibility that restrictive covenants in our credit agreement may prevent us from engaging in certain transactions.
  • Our ability to buy our common stock under our share repurchase programs, which could be impacted by, among others, restrictive covenants in our bank agreements, unfavorable market conditions, the market price of our common stock, the nature of other investment opportunities presented to us from time to time, and the availability of funds necessary to continue purchasing common stock.
  • The financial conditions of third-party insurance companies that fund our preneed funeral contracts may impact our future revenues.
  • Declines in overall economic conditions beyond our control could reduce future potential earnings and cash flows and could result in future goodwill impairments.
  • Our funeral and cemetery trust funds' investments in equity securities, fixed income securities, and mutual funds may be impacted by market conditions that are beyond our control.
  • Failure to realize the anticipated benefits and/or successful implementation of the acquisition of Keystone, which could prove to be disruptive and could result in the combined business failing to meet our expectations.

For further information on these and other risks and uncertainties, see our Securities and Exchange Commission filings included in our 2009 Annual Report on Form 10-K, which was filed February 25, 2010. Copies of this document as well as other SEC filings can be obtained from our website at www.sci-corp.com. We assume no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events or otherwise.

About Service Corporation International

Service Corporation International (NYSE: SCI), headquartered in Houston, Texas, is North America's leading provider of deathcare products and services. At June 30, 2010, we owned and operated 1,412 funeral homes and 382 cemeteries (of which 218 are combination locations) in 44 states, eight Canadian provinces, the District of Columbia and Puerto Rico. Through our businesses, we market the Dignity Memorial(R) brand which offers assurance of quality, value, caring service, and exceptional customer satisfaction. For more information about Service Corporation International, please visit our website at www.sci-corp.com. For more information about Dignity Memorial(R), please visit www.dignitymemorial.com.



    For additional
     information contact:
                     Debbie Young -
                     Director /
                     Investor
    Investors:       Relations            (713) 525-9088
                  Lisa Marshall -
                  Managing
                  Director /
                  Corporate
    Media:        Communications    (713) 525-3066





                        SERVICE CORPORATION INTERNATIONAL
                  CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                 (UNAUDITED)
                    (In thousands, except per share amounts)

                              Three Months Ended             Six Months Ended
                                   June 30,                      June 30,
                                   --------                      --------
                               2010           2009          2010        2009
                               ----           ----          ----        ----
    Revenues               $555,273       $513,949    $1,086,136   $1,024,544
    Costs and
     expenses              (445,975)     (412,124)      (864,531)   (822,599)
                           --------       --------      --------    --------
    Gross profit            109,298        101,825       221,605     201,945
    General and
     administrative
     expenses               (26,974)       (26,466)      (53,175)    (48,252)
    Gains (losses) on
     divestitures and
     impairment
     charges, net            13,602         (6,289)       13,122         941
    Operating income         95,926         69,070       181,552     154,634
    Interest expense        (32,483)       (32,386)      (64,784)    (64,056)
    (Loss) gain on
     early extinguishment
     of debt                   (291)         1,830          (291)      3,440
    Other income, net         4,273          1,388         2,389         545
                                                           -----         ---
    Income from
     continuing
     operations
     before income
     taxes                   67,425        39,902        118,866   94,563
    Provision for
     income taxes           (27,198)       (16,322)      (47,314)    (36,603)
                            -------        -------       -------     -------
        Net income           40,227         23,580        71,552      57,960
        Net loss (income)
         attributable to
         noncontrolling
         interests               58           (476)         (355)       (326)
                                ---           ----          ----        ----
        Net income
         attributable to
         common
         stockholders       $40,285        $23,104       $71,197     $57,634
                            =======        =======       =======     =======

    Basic earnings
     per share                 $.16           $.09          $.28        $.23
    Diluted earnings
     per share                 $.16           $.09          $.28        $.23

    Basic weighted
     average number
     of shares              251,763        250,977       253,074     250,461
                            =======        =======       =======     =======
    Diluted weighted
     average number
     of shares              253,583        251,130       254,862     250,672
                            =======        =======       =======     =======


                           SERVICE CORPORATION INTERNATIONAL
                         CONDENSED CONSOLIDATED BALANCE SHEET
                                      (UNAUDITED)
                         (In thousands, except share amounts)

                                                      June 30,    December 31,
                                                        2010          2009
                                                        -----         ----

    Current assets:
      Cash and cash equivalents                      $152,242      $179,745
      Receivables, net                                 83,646        92,189
      Deferred tax asset                               52,270        51,534
      Inventories                                      33,155        31,117
      Current assets held for sale                        515         1,197
      Other                                            23,909        21,640
                                                       ------        ------
        Total current assets                          345,737       377,422
                                                      -------       -------
    Preneed funeral receivables, net and trust
     investments                                    1,335,778     1,356,353
    Preneed cemetery receivables, net and trust
     investments                                    1,362,650     1,382,717
    Cemetery property, at cost                      1,500,550     1,489,065
    Property and equipment, net                     1,657,873     1,591,074
    Non-current assets held for sale                      234        80,901
    Goodwill                                        1,284,114     1,201,332
    Deferred charges and other assets                 404,427       522,389
    Cemetery perpetual care trust investments         914,664       889,689
                                                      -------       -------
                                                   $8,806,027    $8,890,942
                                                   ==========    ==========

    Current liabilities:
      Accounts payable and accrued liabilities       $303,156      $314,277
      Current maturities of long-term debt             26,838        49,957
      Current liabilities held for sale                     -           501
      Income taxes                                      4,018         2,236
                                                        -----         -----
        Total current liabilities                     334,012       366,971
                                                      -------       -------
    Long-term debt                                  1,835,661     1,840,532
    Deferred preneed funeral revenues                 588,037       596,966
    Deferred preneed cemetery revenues                826,757       817,543
    Deferred income taxes                             293,969       246,730
    Non-current liabilities held for sale                 649        68,332
    Other liabilities                                 380,693       378,768
    Deferred preneed funeral and cemetery receipts
     held in trust                                  2,147,443     2,201,403
    Care trusts' corpus                               914,832       890,909

    Stockholders' Equity:
    Common stock, $1 per share par value,
     500,000,000 shares                               248,708       254,017
    authorized, 254,947,906 and 254,027,384 shares
     issued,
    respectively, 248,707,810 and 254,017,384
     shares outstanding, respectively
      Capital in excess of par value                1,672,942     1,735,493
      Accumulated deficit                            (532,679)     (603,876)
      Accumulated other comprehensive income           94,637        97,142
                                                       ------        ------
        Total common stockholders' equity           1,483,608     1,482,776
        Noncontrolling interests                          366            12
                                                          ---           ---
        Total Equity                                1,483,974     1,482,788
                                                    ---------     ---------
                                                   $8,806,027    $8,890,942
                                                   ==========    ==========


                              SERVICE CORPORATION INTERNATIONAL
                       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                         (UNAUDITED)
                                       (In thousands)

                                                         Six Months Ended
                                                              June 30,
                                                           2010      2009
                                                           ----      ----
    Cash flows from operating activities:
      Net income                                         $71,552   $57,960
      Adjustments to reconcile net income to net
       cash provided by operating activities:
        Loss (gain) on early extinguishment of
         debt, net                                           291    (3,440)
        Depreciation and amortization                     58,343    55,438
        Amortization of intangible assets                 12,136    10,855
        Amortization of cemetery property                 14,366    13,940
        Amortization of loan costs                         2,286     1,694
        Provision for doubtful accounts                    1,640     5,905
        Provision for deferred income taxes               32,420    32,924
        Gains on divestitures and impairment
         charges, net                                    (13,122)     (941)
        Share-based compensation                           4,545     5,168
        Excess tax benefits from share based awards         (695)        -
      Change in assets and liabilities, net of
       effects from acquisitions and
       divestitures:
        Decrease in receivables                           11,034    12,642
        Decrease in other assets                           5,255     9,183
             (Decrease) increase in payables and other
              liabilities                                 (7,925)    4,105
        Effect of preneed funeral production and
         maturities:
         Decrease in preneed funeral receivables and
          trust investments                               32,095    11,019
         (Decrease) increase in deferred preneed
          funeral revenue                                 (5,805)    4,752
         Decrease in funeral deferred preneed
          funeral receipts held in trust                 (26,897)  (15,838)
        Effect of preneed cemetery production and
         deliveries:
         Increase in preneed cemetery receivables
          and trust investments                          (20,321)   (5,369)
         Increase in deferred preneed cemetery
          revenue                                         17,536    20,794
         Decrease in cemetery deferred preneed
          cemetery receipts held in trust                 (2,227)   (9,673)
        Other                                               (477)        -
                                                            ----       ---
    Net cash provided by operating activities            186,030   211,118
    Cash flows from investing activities:
      Capital expenditures                               (41,614)  (42,470)
      Proceeds from divestitures and sales of
       property and equipment                             59,878    14,788
      Acquisitions                                     (281,792)      (219)
      Net deposits of restricted funds and other          26,441       129
                                                          ------       ---
    Net cash used in investing activities              (237,087)   (27,772)
    Cash flows from financing activities:
      Proceeds from the issuance of long term
       debt                                              175,000         -
      Debt issuance costs                                 (6,203)        -
      Payments of debt                                   (31,807)  (31,689)
      Early extinguishment of debt                       (23,091)  (69,540)
      Principal payments on capital leases               (11,867)  (13,045)
      Proceeds from exercise of stock options              1,456     2,363
      Excess tax benefits from share based awards            695         -
      Purchase of Company common stock                   (55,225)        -
      Payments of dividends                              (20,352)  (20,020)
      Bank overdrafts and other                           (7,336)  (13,394)
                                                          ------   -------
    Net cash provided by (used in) financing
     activities                                           21,270  (145,325)
    Effect of foreign currency                             2,284     3,971
                                                           -----     -----
    Net (decrease) increase in cash and cash
     equivalents                                         (27,503)   41,992
    Cash and cash equivalents at beginning of
     period                                              179,745   128,397
                                                         -------   -------
    Cash and cash equivalents at end of period          $152,242  $170,389
                                                        ========  ========

SOURCE Service Corporation International