News Release

SCI Corporate Communications
Phone: 1-844-220-4408
Email: Press.Room@sci-us.com
Printer Friendly Version  View printer-friendly version
<< Back
Service Corporation International Reports Net Income Up 27% And EPS Up 24% For Second Quarter

HOUSTON, July 21 /PRNewswire/ -- Service Corporation International (NYSE: SRV) (SCI), the world's largest funeral and cemetery company, today reported record second quarter revenues and earnings. For the three months ended June 30, 1997, the company reported revenues of $601.1 million, net income of $78.8 million and fully diluted earnings per share of $.31 (primary of $.32). This represents a 6.4 percent increase in revenues, a 26.6 percent increase in net income and a 24.0 percent increase in fully diluted earnings per share (23.1 percent increase in primary) over the second quarter of 1996.

For the six months ended June 30, 1997, the company reported revenues of $1.2 billion, net income of $169.1 million and fully diluted earnings per share of $.67 (primary of $.69), representing an increase in revenues of 8.7 percent, an increase in net income of 26.1 percent and a 24.1 percent increase in fully diluted earnings per share (23.2 percent increase in primary) over the same period of 1996.

SCI Chairman and Chief Executive Officer Robert L. Waltrip said, "These record results were generated despite a period of more than normal seasonal softness in our industry. Our U.S. operations, which account for nearly 80 percent of consolidated operating income, responded admirably to this challenge and controlled costs to produce these excellent results. Internationally, we continue to expand and improve our businesses by offering a wider range of quality products and services appropriate for those markets."

Acquisition Activity

As of July 15, 1997, SCI had acquired or received signed letters of intent to acquire 324 funeral service, cemetery and crematory locations for an aggregate purchase price of approximately $540 million, which are expected to produce approximately $220 million in annualized revenues, $142 million from North American operations and $78 million from operations outside North America. Included in the above are newly acquired operations in Spain and the Netherlands which together perform more than 6,000 funerals annually.

During the first six months of 1997, SCI acquired 136 funeral service locations, 22 cemeteries and 7 crematoria at a cost of $307 million, businesses expected to produce approximately $109 million in annualized revenues. During the second quarter of 1997, SCI closed 28 transactions and acquired 78 funeral service locations, 10 cemeteries and 6 crematoria at a cost of approximately $117 million. These businesses are expected to produce approximately $46 million in annualized revenues, excluding approximately $19 million in annualized revenues related to the acquisition of Marsellus Casket Company. International acquisitions closed during the second quarter and included above added 51 funeral service locations and 2 crematoria in France, England, Spain and Australia which are expected to produce $17 million in annualized revenues.

1997 Second Quarter Highlights

Revenues from existing business clusters in North America, Europe and the Pacific Rim owned for both periods increased 6.4 percent to $585.6 million, contributing $163.1 million to existing cluster operating profit, a 13.5 percent increase over last year. SCI performed approximately 126,400 funeral services worldwide, 61,500 in North America, 57,900 in Europe and 7,000 on the Pacific Rim, during the quarter.

Compared to the second quarter of 1996, Funeral segment revenues increased 3.5 percent to $419.3 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 $15 million this quarter. Funeral segment profits rose $7.5 million to $94.5 million, an increase of 8.7 percent. Funeral segment operating margins increased to 22.5 percent compared to 21.5 percent in the same period of 1996.

During the second quarter of 1997, sales of prearranged funeral contracts were approximately $149 million which expanded the backlog of prearranged funeral contracts to be serviced in future periods to approximately $2.8 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 second quarter of 1996, Cemetery segment revenues increased 15.4 percent to $177.7 million. Cemetery segment profits rose $12.3 million to $66.9 million, an increase of 22.5 percent, reflecting the results of recently acquired cemeteries as well as increased sales of preneed property and merchandise at existing cemeteries. Cemetery segment operating margins expanded to 37.6 percent, compared to 35.4 percent for second quarter of 1996.

General and administrative costs were $15.8 million or 2.6 percent of revenues during the second quarter of 1997, compared to $14.8 million, or 2.6 percent of revenues for the prior year.

Interest expense for the second quarter of 1997 was approximately $1.1 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 June 30, 1997, SCI operated 3,012 funeral service locations, 365 cemeteries and 156 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 (Thousands, except per share amounts)

                               Three Months Ended          Six Months Ended
                                   June 30,                    June 30,
                                1997         1996           1997       1996

    Revenues:
    Funeral                  $419,284   $ 405,300      $  876,355  $  830,000
    Cemetery                  177,739     154,054         355,529     299,616
    Financial services          4,118       5,395           7,706      10,586
    Total revenues            601,141     564,749       1,239,590   1,140,202

    Cost and expenses:
    Funeral                   324,787     318,346         662,155     636,887
    Cemetery                  110,889      99,472        221,886    193,285
    Financial services          2,282       2,868          4,214      5,799
    Total costs and expenses  437,958     420,686        888,255    835,971
    Gross margin              163,183     144,063        351,335    304,231

    General and
     administrative expense   (15,812)    (14,786)       (32,440)   (28,541)

    Income from operations    147,371     129,277        318,895    275,690
    Interest expense          (33,093)    (34,245)       (67,631)   (66,931)
    Dividends on preferred
     securities of
    SCI Finance LLC            (1,753)     (2,696)        (4,382)    (5,391)
    Other income                8,765       5,232         11,855      7,423
    Gain on sale of
     investment                     0           0         68,077          0
    Total other               (26,081)    (31,709)         7,919    (64,899)
    Income before income
     taxes                    121,290      97,568        326,814    210,791
    Provision for income
     taxes                     42,489      35,318        116,866     76,644

    Net income before
     extraordinary loss        78,801      62,250        209,948    134,147
    Extraordinary loss on
     early extinguishment
      of debt (net of $23,383
       income taxes)                0           0        (40,802)         0
    Net income               $ 78,801    $ 62,250       $169,146   $134,147

    Earnings per share:
    Primary:
    Income before
     extraordinary loss      $   0.32    $   0.26       $   0.86   $   0.56
    Extraordinary loss on
     early extinguishment
      of debt                       0           0          (0.17)         0
    Net income               $   0.32    $   0.26       $   0.69   $   0.56

    Fully diluted:
     Income before
      extraordinary loss     $   0.31    $   0.25       $   0.83   $   0.54
    Extraordinary loss
     on early extinguishment
      of debt                       0           0          (0.16)         0
    Net income               $   0.31    $   0.25       $   0.67   $   0.54


    Weighted average
     number of common
      shares                  248,562     241,112        246,478    240,294

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


                        United             Other     Other
                        States    France   European  Foreign     Consolidated
    Revenues:
    Six months ended
     June 30:
      1997             $794,112  $252,090  $111,352  $82,036    $1,239,590
      1996             $695,549  $272,433   $93,951  $78,269    $1,140,202
    Three months ended
     June 30:
      1997             $390,830  $118,983   $50,136  $41,192    $  601,141
      1996             $345,815  $135,708   $42,548  $40,678    $  564,749


    Income from
     operations:
      Six months ended
       June 30:
        1997           $242,587  $ 27,452   $25,098  $23,758    $  318,895
        1996           $202,718  $ 25,961   $21,427  $25,584    $  275,690
    Three months ended
     June 30:
      1997             $115,947  $ 12,544   $ 8,000  $10,880    $  147,371
      1996             $ 95,978  $ 13,218   $ 6,689  $13,392    $  129,277


    Funeral services
     performed:
      Six months ended
       June 30:
        1997            118,235    76,486      52,759   24,478       271,958
        1996            109,177    77,647      48,910   24,126       259,860
    Three months ended
     June 30:
      1997               56,271    34,899      22,987   12,238       126,395
      1996               52,584    36,636      22,106   12,235       123,561


    Number of locations at
     June 30:
      1997                1,514     1,087         647      285         3,533
      1996                1,381     1,078         607      243         3,309


SOURCE Service Corporation International
CONTACT: Todd Matherne, Vice President Investor Relations, 713-525-5243, e-mail, 102121.2653@compuserve.com; SCI's homepage: http:// www.sci-corp.com