News Release

SCI Corporate Communications
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Service Corporation International Reports 14.4% Increase in Net Income and 14.3% Increase in EPS for Third Quarter 1998

HOUSTON, Oct. 22 /PRNewswire/ -- Service Corporation International (NYSE: SRV), the world's largest funeral and cemetery company, today reported results for the three month and nine month periods ended September 30, 1998.

    Three Months Ended September 30, 1998 (Compared to same period 1997)
      Revenues                     $712.5 million up 18.6% from $601.0 million
      Net Income                   $83.2 million up 14.4% from $72.7 million
      Diluted earnings per share   $0.32 up 14.3%  from $0.28

    Nine Months Ended September 30, 1998 (Compared to same period 1997)
      Revenues                     $2.10 billion up 12.4% from $1.87 billion
      Net Income                   $282.9 million up 17.0% from $241.9 million
      Diluted earnings per share   $1.08 up 14.9% from $0.94(A)

    (A) Excluding the 1997 gain on sale of ECI stock of $0.17 and
        extraordinary loss on early extinguishment of debt ($0.16)

    Strategic Highlights
    -- Completed the acquisition of American Memorial Life Insurance Company
       (AML) for $164 million.
    -- Announced the business combination with Equity Corporation
       International for $830 million, including assumed indebtedness.
    -- Formed a new financial services subsidiary, SCI Financial Services,
       Inc. to facilitate expansion of pre-need businesses and financial
       activities worldwide.

Commenting on the results, Robert Waltrip, Chairman and Chief Executive Officer, said:

"I am pleased to report another quarter of increased profitability for SCI despite the widely publicized reduced number of deaths reported by our industry. While SCI was not insulated from this experience, the strategic acquisitions and initiatives announced this summer will add value to SCI today and long-term."

SCI's President and Chief Operating Officer, L. William Heiligbrodt, added:

"Since 1990, SCI's North American market share has nearly doubled to approximately 11% today, mainly through acquisitions, new construction and prearranged funerals. SCI's market share is expected to increase as we accelerate the sales of prearranged funerals. We plan to double the annual sales of prearranged funerals within five years. Further, SCI will sharpen its focus on appropriate uses of capital, working with Stern Stewart & Co. on our global implementation of EVA in 1999."

Acquisition Activity

Effective July 1, 1998, SCI acquired AML, the pre-need funeral services division of American Annuity Group Inc., for $164 million cash. AML offers a variety of pre-need and final expense life insurance and annuity products to finance prearranged funerals. To facilitate the expansion of SCI's pre-need businesses and financial activities worldwide, SCI formed a new financial services subsidiary, SCI Financial Services, Inc.

In August, SCI reached an agreement with Equity Corporation International (ECI) to enter into a business combination between the two companies. The combined company will have operations throughout metropolitan and rural North America and will consist of approximately 3,600 funeral homes, 500 cemeteries and 200 crematoria worldwide, with annualized revenues approaching $3 billion.

Excluding ECI, as of September 30, 1998, SCI had acquired, or received signed letters of intent to acquire, 372 funeral service locations, 55 cemeteries and 16 crematoria for an aggregate purchase price of $855 million. These businesses are expected to produce approximately $334 million in annualized revenues, including $129 million from North American operations and $205 million from operations outside North America.

Third Quarter Results

Compared to the third quarter of 1997, funeral segment revenues increased 9.1% to $432.8 million. During the third quarter of 1998, SCI operations performed approximately 133,200 funeral services worldwide, an increase of 5.6% over 1997. Funeral segment margins declined to 19.7%, compared to 20.4% in 1997, due primarily to a reduced number of funerals in many of the major markets served by the Company, and increased promotional and training expenses.

During the third quarter of 1998, sales of prearranged funeral contracts were approximately $145.6 million, which expanded the backlog of prearranged funeral contracts to be serviced in future periods to approximately $3.4 billion. Revenues and associated investment earnings from such contracts (which are excluded from current results) are deferred, and will be recognized during the periods in which the funeral services are actually performed.

Compared to the third quarter of 1997, cemetery segment revenue increased 17.1% to $213.9 million. Cemetery segment profits rose $10.9 million to $78.4 million, an increase of 16.1%, reflecting improvements at existing North American cemeteries, the results of recently acquired cemeteries, and offset by a slight decrease in investment returns associated with cemetery trust funds. Cemetery segment margins were 36.7%, compared to 37.0% for the third quarter of 1997.

Financial Services results include American Memorial Life, Auxia and Provident operations since July 1, 1998. AML contributed approximately $38.7 million in revenues and $4.1 million in operating income during the third quarter of 1998. Amounts related to Auxia for 1997 have been reclassified from the funeral segment to financial services.

Interest expense increased by $15.1 million, to $47.8 million related principally to acquisitions, including AML.

During the third quarter, other income increased by $8.8 million compared to 1997, due to net gains on sales of selected businesses and increased equity in earnings associated with the company's investments.

As of September 30, 1998, SCI affiliates operated 3,370 funeral service locations, 430 cemeteries and 180 crematoria. SCI provides funeral and cemetery services in 18 countries on five continents.

Certain matters discussed in this release are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, the following: The company maintaining its high level of acquisition activity and achieving expected performance from these acquired businesses, and the ability to manage internal growth of existing operations; the economy, competition and death rates in the company's geographic areas of operations; and sufficient availability of capital resources to fund future acquisitions and planned levels of capital expenditures which will depend on prevailing market conditions, interest rates, and the financial condition of the company.

Other Service Corporation International information and press releases are available through Company News On-Call by fax, 800-758-5804, extension 104532, or at http://www.prnewswire.com or SCI's homepage: http://www.sci-corp.com

                        SERVICE CORPORATION INTERNATIONAL
                         CONSOLIDATED STATEMENT OF INCOME
                      (Thousands, except per share amounts)

                                 Three Months Ended         Nine Months Ended
                                    September 30,              September 30,
                                 1998          1997         1998        1997
    Revenues:
     Funeral                $  432,814    $  396,777   $1,351,603  $1,269,346
     Cemetery                  213,831       182,624      636,138     538,153
     Financial services         65,875        21,594      113,853      62,515
                               712,520       600,995    2,101,594   1,870,014
    Cost and expenses:
     Funeral                   347,698       315,670    1,042,981     977,825
     Cemetery                  135,446       115,135      385,773     337,021
     Financial services         55,670        18,418       95,316      52,061
                               538,814       449,223    1,524,070   1,366,907
                               173,706       151,772      577,524     503,107
    General and
     administrative expense    (15,422)      (16,775)     (49,681)    (49,215)

    Income from operations     158,284       134,997      527,843     453,892

    Interest expense           (47,816)      (32,734)    (125,990)   (100,365)
    Dividends on preferred
     securities of
     SCI Finance LLC               ---           ---          ---      (4,382)
    Other income                18,087         9,330       35,266      21,185
    Gain on sale of
     investment                    ---           ---          ---      68,077
                               (29,729)      (23,404)     (90,724)    (15,485)
    Income before income
     taxes and extraordinary
     loss                      128,555       111,593      437,119     438,407
    Provision for income
     taxes                      45,342        38,869      154,172     155,735

    Net income before
     extraordinary loss         83,213        72,724      282,947     282,672
    Extraordinary loss on
     early extinguishment
     of debt (net of $23,383
     income taxes)                 ---           ---          ---     (40,802)
    Net income               $  83,213     $  72,724   $  282,947   $ 241,870

    Earnings per share:
     Basic:
      Income before
       extraordinary loss   $     0.32     $    0.29   $     1.11   $    1.17
      Extraordinary loss
       on early extinguishment
       of debt                     ---           ---          ---       (0.17)
      Net income             $    0.32     $    0.29   $     1.11   $    1.00

     Diluted:
      Income before
       extraordinary loss    $    0.32     $    0.28   $     1.08   $    1.11
      Extraordinary loss on
       early extinguishment
       of debt                     ---           ---          ---       (0.16)
      Net income             $    0.32     $    0.28   $     1.08   $    0.95

    Basic weighted average
     number of shares          257,380       251,634      255,673     253,256
    Diluted weighted average
     number of shares          263,416       258,614      262,308     257,282


    Geographic segment information was as follows:
    (Dollars in thousands)

                                      North                   Other     Other
                                     America      France     European  Foreign
    Revenues:
     Three months ended
      September 30:
      1998                        $  471,032   $  147,970   $ 62,281  $31,237
      1997                           400,698      120,718     51,579   28,000
      Change from prior year      $   70,334   $   27,252   $ 10,702  $ 3,237
      Percentage change from
       prior year                       17.6%        22.6%      20.7%    11.6%

     Nine months ended
      September 30:
      1998                        $1,387,260   $  446,063   $188,757  $79,514
      1997                         1,229,212      403,194    162,931   74,677
      Change from prior year      $  158,048   $   42,869   $ 25,826  $ 4,837
      Percentage change from
       prior year                       12.9%        10.6%      15.9%     6.5%

    Income from operations:
     Three months ended
      September 30:
      1998                        $  120,803   $   21,324   $  5,126  $11,031
      1997                           107,912        8,684      7,556   10,845
      Change from prior year      $   12,891   $   12,640   $ (2,430) $   186
      Percentage change from
       prior year                       11.9%       145.6%     -32.2%     1.7%

     Nine months ended September 30:
      1998                        $  425,987   $   52,206   $ 28,331  $21,319
      1997                           360,797       37,084     32,211   23,800
      Change from prior year      $   65,190   $   15,122   $ (3,880) $(2,481)
      Percentage change from
       prior year                       18.1%        40.8%     -12.0%   -10.4%

    Operating income margin:
     Three months ended
      September 30:
      1998                              25.6%        14.4%       8.2%    35.3%
      1997                              26.9%         7.2%      14.6%    38.7%

     Nine months ended September 30:
      1998                              30.7%        11.7%      15.0%    26.8%
      1997                              29.4%         9.2%      19.8%    31.9%

     Funeral services performed:
      Three months ended September 30:
       1998                           61,186       35,085     28,283    8,619
       1997                           58,734       35,062     23,692    8,585
      Percentage change from
       prior year                        4.2%         0.1%      19.4%     0.4%

     Nine months ended September 30:
      1998                           196,363      111,182     85,819   22,690
      1997                           187,899      111,548     76,451   22,133
      Percentage change from
       prior year                        4.5%        -0.3%      12.3%     2.5%
    Number of locations at
     September 30:
      1998                             1,837        1,200        782      161
      1997                             1,664        1,093        679      148

SOURCE Service Corporation International
Web site: http: //www.sci-corp.com
Company News On-Call: http: //www.prnewswire.com/comp/104532.html or fax, 800-758-5804, ext. 104532
CONTACT: George Champagne, Sr. Vice President & CFO, 713-525-5546, or Todd Matherne, Vice President, Treasurer, 713-525-5243, both of Service Corporation International; or Kate Inverarity, Media Relations of Brunswick, 212-333-3810, for Service Corporation International