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SCI Corporate Communications
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Email: Press.Room@sci-us.com
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Service Corporation International Reports Net Income Up 27% and EPS Up 22% For Third Quarter

HOUSTON, Oct. 22 /PRNewswire/ -- Service Corporation International (NYSE: SRV)(SCI), the world's largest funeral and cemetery company, today reported record third quarter revenues and earnings. For the three months ended September 30, 1997, the company reported revenues of $584.8 million, net income of $72.7 million and fully diluted earnings per share of $.28 (primary of $.28). This represents a 7.4 percent increase in revenues, a 26.7 percent increase in net income and a 21.7 percent increase in fully diluted earnings per share (16.7 percent increase in primary) over the third quarter of 1996.

For the nine months ended September 30, 1997, the company reported revenues of $1.82 billion, net income of $241.9 million and fully diluted earnings per share of $.95 (primary of $.97), representing an increase in revenues of 8.3 percent, an increase in net income of 26.3 percent and a 23.4 percent increase in fully diluted earnings per share (21.3 percent increase in primary) over the same period of 1996.

SCI Chairman and Chief Executive Officer Robert L. Waltrip said, "These record results were attained due to the efforts of more than 33,000 dedicated employees worldwide. Our ability to achieve these results is a testament to the effectiveness of SCI's business strategy and proven operating practices."

Acquisition Activity

As of October 17, 1997, SCI had acquired, or received signed letters of intent to acquire, 434 funeral service, cemetery and crematory locations for an aggregate purchase price of approximately $672 million. These businesses are expected to produce approximately $297 million in annualized revenues, including $186 million from North American operations and $111 million from operations outside North America. As a result, 1997 is expected to be the largest acquisition year in SCI's history, excluding 1994 and 1995 which included the large strategic acquisitions in the United Kingdom and France.

During the first nine months of 1997, SCI acquired 226 funeral service locations, 34 cemeteries and 13 crematoria at a cost of $426 million, businesses expected to produce approximately $172 million in annualized revenues. During the third quarter of 1997, SCI completed 48 transactions and acquired 89 funeral service locations, 11 cemeteries and 4 crematoria at a cost of approximately $121 million. These businesses are expected to produce approximately $63 million in annualized revenues. International acquisitions completed during the third quarter and included above added 57 funeral service locations and 3 crematoria which are expected to produce $25 million in annualized revenues.

1997 Third Quarter Highlights

Revenues from existing business clusters in North America, Europe and the Pacific Rim owned for both periods increased 6.2 percent to $566.8 million, contributing $150.3 million to existing cluster operating profit, a 12.5 percent increase over last year. SCI performed approximately 126,100 funeral services worldwide, 58,700 in North America, 58,800 in Europe and 8,600 on the Pacific Rim, during the quarter.

Compared to the third quarter of 1996, Funeral segment revenues increased 2.3 percent to $397.8 million. Growth in Funeral revenues was limited by a reduced number of mortalities in markets served by SCI in the U.S., Europe, and Australia, and by the strengthening of the U.S. dollar relative to the French franc, compared to the same period last year. The adverse effect on reported revenues from the company's French operations due to changes in the currency exchange rate was approximately $22 million this quarter. Funeral segment profits rose $3.8 million to $82.1 million, an increase of 4.8 percent. Funeral segment margins increased to 20.6%, compared to 20.1% in the same period of 1996.

During the third quarter of 1997, sales of prearranged funeral contracts were approximately $151 million, which expanded the backlog of prearranged funeral contracts to be serviced in future periods to approximately $3.0 billion. Revenues and associated investment earnings from such contracts are deferred, and will be recognized during the periods in which the funeral services are actually performed.

Compared to third quarter of 1996, Cemetery segment revenues increased 21.3 percent to $182.6 million. Cemetery segment profits rose $17.4 million to $67.5 million, an increase of 34.6 percent, reflecting the results of recently acquired cemeteries, increased sales of preneed property and merchandise at existing cemeteries, as well as investment returns associated with the larger asset base from the cemetery merchandise and endowment care trust funds. Cemetery segment margins expanded to 37.0 percent, compared to 33.3 percent for third quarter of 1996.

General and administrative costs were $16.8 million, or 2.9 percent of revenues, during the third quarter of 1997, compared to $12.3 million, or 2.3 percent of revenues, for the prior year.

Interest expense for the third quarter of 1997 was approximately $3.3 million lower than 1996 benefiting from reduced interest rates on indebtedness resulting from the company's recent refinancing of certain long term debt and hedging programs associated with its international investments. This benefit was offset in part by increased indebtedness related to acquisitions.

As of September 30, 1997, SCI operated 3,048 funeral service locations, 376 cemeteries and 160 crematoria. SCI provides funeral and cemetery services in North America, Europe and the Pacific Rim. SCI's stock is traded on the New York Stock Exchange. The company's ticker symbol is SRV.

                      SERVICE CORPORATION INTERNATIONAL
                       CONSOLIDATED STATEMENT OF INCOME


                           Three Months Ended        Nine Months Ended
                              September 30,             September 30,
    (Thousands, except per
      share amounts)        1997         1996        1997         1996

     Revenues:
      Funeral           $397,810      $389,031   $ 1,274,165    $ 1,219,031
      Cemetery           182,624       150,584       538,153        450,200
      Financial services   4,384         4,885        12,090         15,471
                         584,818       544,500     1,824,408      1,684,702

     Cost and expenses:
      Funeral            315,670       310,646       977,825        947,533
      Cemetery           115,135       100,456       337,021        293,741
      Financial services   2,241         2,020         6,455          7,819
                         433,046       413,122     1,321,301      1,249,093

                         151,772       131,378       503,107        435,609

     General and
      administrative
      expense            (16,775)      (12,296)      (49,215)       (40,837)
     Income from
      operations         134,997       119,082       453,892        394,772
     Interest expense    (32,734)      (35,995)     (100,365)      (102,926)
     Dividends on
      preferred
      securities
      of SCI
      Finance LLC            ---        (2,695)       (4,382)        (8,086)
     Other income          9,330         8,382        21,185         15,805
     Gain on sale
      of investment          ---           ---        68,077            ---
                         (23,404)      (30,308)      (15,485)       (95,207)
     Income before
      income taxes       111,593        88,774       438,407        299,565
     Provision for
      income taxes        38,869        31,379       155,735        108,023

     Net income
      before extra-
      ordinary loss       72,724        57,395       282,672        191,542
     Extraordinary loss
      on early
      extinguishment
      of debt
      (net of $23,383
      income taxes)         ---           ---       (40,802)           ---
     Net income          $72,724       $57,395      $241,870       $191,542

     Earnings per share:
      Primary:
       Income before
        extraordinary loss $0.28         $0.24         $1.14          $0.80
       Extraordinary loss
        on early
        extinguishment
        of debt              ---           ---         (0.17)           ---
       Net income          $0.28         $0.24         $0.97          $0.80

      Fully diluted:
       Income before
        extraordinary loss $0.28         $0.23         $1.11          $0.77
       Extraordinary loss
        on early
        extinguishment
        of debt              ---           ---         (0.16)           ---
       Net income          $0.28         $0.23         $0.95          $0.77

    Weighted average number
     of common shares    258,970       241,875       250,642        240,843


     (Dollars in thousands)

                      United                 Other     Other
                     States      France     European   Foreign   Consolidated

    Revenues:
    Nine months ended
     September 30:
     1997           $1,178,470   $356,040   $162,931   $126,967   $1,824,408
     1996           $1,034,226   $393,595   $135,337   $121,544   $1,684,702
     Change from
      prior year    $  144,244   $(37,555)  $ 27,594   $  5,423   $  139,706
     Percentage change
      from prior year     13.9%      (9.5)%     20.4%       4.5%         8.3%

    Three months ended
     September 30:
     1997           $  384,358   $103,950   $ 51,579   $ 44,931   $  584,818
     1996           $  338,677   $121,162   $ 41,386   $ 43,275   $  544,500
     Change from
      prior year    $   45,681   $(17,212)  $ 10,193   $  1,656   $   40,318
     Percentage change
      from prior year     13.5%     (14.2)%     24.6%       3.8%         7.4%

     Income from operations:
     Nine months ended
      September 30:
      1997           $ 346,672   $ 34,783   $ 32,831   $ 39,606   $  453,892
      1996           $ 292,633   $ 33,188   $ 29,091   $ 39,860   $  394,772
      Change from
       prior year    $  54,039   $  1,595   $  3,740   $   (254)  $   59,120
      Percentage change
       from prior year    18.5%       4.8%      12.9%      (0.6)%       15.0%

     Three months ended
      September 30:
      1997           $ 104,085   $  7,331   $  7,733    $ 15,848   $ 134,997
      1996           $  89,915   $  7,227   $  7,664    $ 14,276   $ 119,082
      Change from
       prior year    $  14,170   $    104    $    69    $  1,572   $  15,915
      Percentage change
       from prior year    15.8%       1.4%       0.9%       11.0%       13.4%

     Operating income margin:
     Nine months ended
      September 30:
      1997                29.4%       9.8%      20.2%       31.2%       24.9%
      1996                28.3%       8.4%      21.5%       32.8%       23.4%

     Three months ended
      September 30:
      1997                27.1%       7.1%      15.0%       35.3%       23.1%
      1996                26.5%       6.0%      18.5%       33.0%       21.9%

    Funeral services performed:
     Nine months ended
      September 30:
      1997             171,910    111,548     76,451      38,122     398,031
      1996             160,186    112,050     69,719      37,697     379,652

     Three months ended
      September 30:
      1997              53,675     35,062     23,692      13,644     126,073
      1996              51,009     34,403     20,809      13,571     119,792

    Number of locations
     at September 30:
     1997                1,528      1,093        679         284       3,584
     1996                1,392      1,101        609         244       3,346

SOURCE Service Corporation International
CONTACT: Todd Matherne, Vice President Investor Relations of Service Corporation International, 713-525-5243