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 Preliminary Second Quarter 2005 Earnings of $.05 Per Diluted Share and $.07 Before Special Items; Announces Restatement of Financial Results
  - Conference Call to Be Webcast on Tuesday, August 30, 2005, at 9:00 a.m.
                                 Central Time

HOUSTON, Aug. 29 /PRNewswire-FirstCall/ -- Service Corporation International (NYSE: SCI), the world's largest funeral and cemetery company, today reported preliminary second quarter earnings. The financial information provided herein with respect to the quarter and six months ended June 30, 2005 is preliminary and has not been reviewed by our independent auditor. This financial information remains subject to the completion and review of certain procedures being performed by the Company and review by our independent auditor. Therefore, the financial information presented in this press release is subject to change prior to the filing of the Company's Form 10-Q for the quarterly period ended June 30, 2005.

SCI preliminarily reported net income for the second quarter 2005 of $14.0 million or earnings per diluted share of $.05 which compared to net income of $43.0 million or $.14 per diluted share in the same period of 2004. For the first six months of 2005, the Company preliminarily reported a net loss of $141.4 million or a loss of $.45 per diluted share which compared to net income of $72.8 million or $.22 per diluted share in the same period of 2004. All of the above results included litigation expenses, gains and impairment losses on dispositions, early extinguishments of debt, discontinued operations and cumulative effects of accounting changes.

SCI's preliminary second quarter 2005 earnings from continuing operations excluding special items were $22.1 million or $.07 per diluted share which compared to $16.7 million or $.05 per diluted share in the second quarter of 2004. Preliminary earnings from continuing operations excluding special items in the first half of 2005 were $59.8 million or $.19 per diluted share which compared to $62.1 million or $.19 per diluted share in the first half of 2004. Preliminary earnings from continuing operations excluding special items in the first half of 2005 were negatively impacted by $.02 per diluted share as a result of the Company's first quarter 2005 change in accounting to expense direct preneed selling costs as they are incurred. Earnings from continuing operations excluding special items is a non-GAAP financial measure. See a reconciliation of earnings from continuing operations before special items to GAAP measures included in Appendix B to this press release.

At June 30, 2005, total debt was $1.26 billion and cash on hand was $320.0 million, which resulted in net debt (which we define as total debt less cash on hand) of $943.3 million at June 30, 2005 compared to $966.2 million at December 31, 2004. Free cash flow was $62.1 million for the second quarter of 2005, an increase of $36.7 million over the same period of 2004. In the first half of 2005, free cash flow was $147.0 million compared to $120.5 million in the same period of 2004 and is on target to meet our expectations of $200 million to $220 million for the year. Free cash flow is a non-GAAP financial measure. See our definition of free cash flow and reconciliation of cash flows from operating activities to free cash flow included in a separate section later in this press release.

We are restating our results for the first quarter of 2005, each of the five years ended December 31, 2004, and each of the interim periods of 2004 and 2003. This restatement is primarily related to adjustments resulting from the Company's review of the reconciliations of its preneed funeral and cemetery trust accounts. The Company concluded the effect of the adjustments is not material to any of its previously issued financial statements; however, the aggregate impact of these adjustments is material to the Company's second quarter 2005 financial statements and therefore has led to the restatement of the previously issued financial statements. For a further discussion of this restatement, see "Restatement of Previously Issued Financial Statements" later in this press release.

"I am pleased with our second quarter performance as our North America comparable funeral and cemetery gross profits grew approximately 6% and 30%, respectively," said Tom Ryan, President and Chief Executive Officer. "We believe our performance in the first half of 2005 is on pace to meet our annual forecast. As a result, we confirm our annual guidance for 2005 for diluted earnings per share from continuing operations excluding special items given in April of this year. Free cash flow generated in the first six months of 2005 was strong and our cash on hand is currently over $350 million. This financial flexibility has allowed us to continue to deliver shareholder value as evidenced by the previously announced expansion of our share repurchase program. For the remainder of 2005, we will continue to focus our efforts on developing institutional excellence throughout the organization and maintaining our focus on reducing our overall cost structure."

North America Comparable Operating Results

We regard comparable results of operations as analogous to our "same store" results of operations. For purposes of the following presentation, we consider comparable operations as operations that were not acquired or constructed after January 1, 2004 or divested prior to June 30, 2005. Therefore, in the following presentation, we are providing results of operations for the same funeral and cemetery locations in each of the periods presented. We believe this presentation provides greater clarity for comparison purposes of our results of operations for each of the periods presented.

Effective January 1, 2005, the Company began expensing direct preneed selling costs in the period incurred. Comparable results of operations from 2004 as shown below are on a pro forma basis as if $2.2 million of additional direct selling costs in our funeral segment and $4.7 million of additional direct selling costs in our cemetery segment were expensed during the second quarter of 2004, and as if $2.7 million of additional direct selling costs in our funeral segment and $8.6 million of additional direct selling costs in our cemetery segment were expensed during the six month period ended June 30, 2004.



     (In millions, except funeral services
      performed, average revenue per funeral
      service and gross margin percentage)

                                   Three Months Ended      Six Months Ended
                                       June 30,                 June 30,
                                  --------------------    -------------------
                                             Pro forma              Pro forma
                                    2005        2004        2005       2004
                                  -------    ---------    -------   ---------
                                             (Restated)             (Restated)
    Funeral
    Funeral atneed revenue        $ 180.7     $ 169.9     $ 380.8     $ 363.8
    Funeral recognized preneed
     revenue                         85.0        88.7       181.5       179.8
    General agency revenue (A)        7.5         8.0        14.2        15.8
    Kenyon revenue (B)                5.3         1.5        13.4         2.5
                                  -------    ---------    -------   ---------
       Total funeral revenues     $ 278.5     $ 268.1     $ 589.9     $ 561.9

    Gross profits                 $  49.6     $  47.0     $ 128.8     $ 120.4
    Gross margin percentage          17.8%       17.5%       21.8%       21.4%

    Total funeral services
     performed                     61,537      60,095     130,633     128,703
    Average revenue per
     funeral service (C)          $ 4,318     $ 4,303     $ 4,304     $ 4,224

    Cemetery
    Cemetery atneed revenue       $  53.3     $  48.0     $ 103.9     $  90.6
    Cemetery recognized
     preneed revenue                 74.0        79.6       132.3       161.0
    Other revenue (D)                15.2        13.4        35.2        34.6
                                  -------    ---------    -------   ---------
       Total cemetery revenues    $ 142.5     $ 141.0     $ 271.4     $ 286.2

    Gross profits                 $  19.7     $  15.2     $  39.9     $  38.8
    Gross margin percentage          13.8%       10.8%       14.7%       13.6%


     (A)  General Agency ("GA") revenue represents commissions we receive from
          third-party insurance companies when customers purchase insurance
          contracts from such third-party insurance companies to fund funeral
          services and merchandise at a future date.
     (B)  Kenyon International Emergency Services ("Kenyon") is our disaster
          response subsidiary that engages in mass fatality and emergency
          response services.  Revenues and gross profits associated with
          Kenyon are subject to significant variation due to the nature of
          their operations.
     (C)  Average revenue per funeral service is calculated as total funeral
          revenues (less GA revenue and Kenyon revenue) divided by total
          funeral services performed.  In the calculation of average revenue
          per funeral service, GA revenue and Kenyon revenue are excluded from
          total funeral revenues to avoid distorting our averages of normal
          funeral services performed.
     (D)  Other cemetery revenue is primarily related to endowment care trust
          fund income and interest and finance charges earned from customer
          receivables on preneed installments contracts.



     For the Three Months Ended June 30, 2005
     *  North America comparable funeral gross profits increased 5.5% to
        $49.6 million.
        --  Funeral revenues were up $10.4 million (including $3.8 million in
            revenues from Kenyon) due to increases in funeral volume and
            average revenue per funeral service.
        --  Funeral gross profits increased $2.6 million compared to the same
            period last year.  The increase in revenues described above and
            continued reduction in overhead expenses were partially offset by
            an increase in pension costs.
        --  The number of funeral services performed increased 2.4% in the
            second quarter of 2005 primarily attributable to increased volumes
            in April and May over the prior year period.
        --  Average revenue per funeral service was up 0.3% in the second
            quarter of 2005 compared to the prior year period.
        --  The cremation rate increased to 41.1% versus 40.3% in the same
            period of 2004.

     *  North America comparable cemetery gross profits increased 29.6% to
        $19.7 million.
        --  Cemetery revenues increased $1.5 million from the second quarter
            of 2004 primarily due to an increase in cemetery production
            revenues partially offset by a decline of $4.5 million in legacy
            revenues associated with constructed property, reflecting a recent
            shift in our focus to shorten the time between when property is
            sold and when it is constructed.
        --  Cemetery gross profits increased $4.5 million from the second
            quarter of 2004 primarily due to the increase in revenues and
            decreases in selling compensation and overhead expenses.

     *  Overhead expenses from our field management, market support centers
        and corporate office, which are included in the funeral and cemetery
        operating results above, were reduced by $3.0 million or 10.1% in the
        second quarter of 2005 compared to 2004 primarily as a result of
        continued improvement in our field management structure and reductions
        of fixed costs.

     Other Consolidated Results
     *  General and administrative expenses were $21.5 million in the three
        months ended June 30, 2005 compared to $24.0 million in the same
        period of 2004.
        --  In the second quarter of 2004, we recognized $5.0 million in
            expense associated with the settlement of outstanding litigation
            matters.
        --  Excluding the $5.0 million of 2004 litigation expense, general and
            administrative expenses were $21.5 million in 2005 compared to
            $19.0 million in the same period of 2004.  This increase is
            primarily related to increased professional fees associated with
            Sarbanes-Oxley compliance, external audit fees, and costs
            associated with our funeral and cemetery verification projects.
            During 2005, the Company has spent a significant amount of money
            to improve internal controls to comply with Section 404 of the
            Sarbanes Oxley Act.  The Company believes that these improvements
            will continue to help increase the effectiveness of the
            organization.

     *  Gains and impairment (losses) on dispositions, net was a net gain of
        $3.7 million in the second quarter of 2005 compared to a net gain of
        $1.5 million in the same period of 2004.  The net gain in the second
        quarter of 2005 is primarily associated with gains on dispositions of
        real estate in North America and the resolution of a contingency
        associated with the sale of our operations in the United Kingdom.
        These gains were offset by losses associated with the disposition of
        underperforming funeral and cemetery businesses in North America.  The
        2004 net gain includes a gain on the sale of our equity and debt
        holdings in the United Kingdom offset by net losses associated with
        certain dispositions in North America and a purchase price adjustment
        related to the sale of our funeral operations in France during the
        first quarter of 2004.

     *  Interest expense was $6.0 million lower in the second quarter of 2005
        compared to the second quarter of 2004 primarily due to retirement of
        debt during 2004.

     *  Other income (expense), net increased by $5.9 million of income in the
        second quarter of 2005 compared to the same period of 2004.  The
        components of other income for the periods presented were as follows:
        --  Interest income on notes receivable and commercial paper was
            $3.9 million and $2.3 million in the second quarter of 2005 and
            2004, respectively.
        --  Cash overrides received from a third party insurance provider
            related to the sale of insurance funded preneed funeral contracts
            were $1.6 million in the second quarter of 2005 compared to
            $1.7 million in the second quarter of 2004.
        --  Surety bond premium costs were $1.0 million in the second quarter
            of 2005 compared to $1.1 million in the second quarter of 2004.
        --  The remaining income of $0.9 million in the second quarter of 2005
            and expense of $3.4 million in the second quarter of 2004 are
            primarily related to net gains and losses from foreign currency
            transactions, respectively.

     *  The consolidated effective tax rate in the quarter was an expense of
        43.0% compared to a benefit of 400.7% in 2004.  The tax rate in 2005
        was negatively impacted by permanent differences between book and tax
        bases of North America asset dispositions.  The tax rate in 2004 was
        favorably impacted by non-cash tax benefits realized from the sale of
        our minority interest in our former United Kingdom company.

     For the Six Months Ended June 30, 2005
     *  North America comparable funeral gross profits increased 7.0% to
        $128.8 million.
        --  Funeral revenues were up $28.0 million (including an increase of
            $10.9 million in revenues from Kenyon) due to increases in funeral
            volume and average revenue per funeral service partially offset by
            a decline in GA revenues.
        --  Funeral gross profits increased $8.4 million compared to the same
            period last year.  The increase in revenues described above and
            continued reduction in overhead expenses was partially offset by
            an increase in pension costs.
        --  The number of funeral services performed increased 1.5% in the
            first half of 2005 primarily attributable to increased volumes in
            the months of February through May.
        --  Average revenue per funeral service was up 1.9% compared to the
            prior year period.
        --  The cremation rate increased to 40.8% compared to 39.7% in the
            same period of 2004.

     *  North America comparable cemetery gross profits increased 2.8% to
        $39.9 million.
        --  Cemetery revenues decreased $14.8 million from 2004 primarily due
            to a decline in legacy revenues associated with constructed
            property, reflecting a recent shift in our focus to shorten the
            time between when property is sold and when it is constructed.
        --  Cemetery gross profits increased $1.1 million from the prior
            period primarily due to increases in cemetery sales production
            coupled with decreases in selling compensation and overhead
            expenses.  These improvements were partially offset by declines in
            legacy revenues described above and lower consumer finance
            charges.

     *  Overhead expenses from our field management, market support centers
        and corporate office, which are included in the funeral and cemetery
        operating results above, were reduced by $6.9 million or 11.4% in the
        first half of 2005 compared to 2004 primarily as a result of continued
        improvement in our field management structure and reductions of fixed
        costs.

     Other Consolidated Results
     *  General and administrative expenses were $41.2 million in the six
        months ended June 30, 2005 compared to $75.0 million in the same
        period of 2004.
        --  In the first six months of 2004, we recognized $40.0 million in
            expense associated with the settlement of outstanding litigation
            matters including $35.0 million related to a securities class
            action lawsuit.
        --  Excluding the $40.0 million of 2004 litigation expense, general
            and administrative expenses were $41.2 million in 2005 compared to
            $35.0 million in the same period of 2004.  This increase is
            primarily related to increased professional fees associated with
            Sarbanes-Oxley compliance, external audit fees, and costs
            associated with our funeral and cemetery verification projects.
        --  General and administrative expenses were $1.3 million above
            expectations for the first half of 2005 primarily related to an
            increase in professional fees associated with Sarbanes-Oxley
            compliance, external audit fees, and costs associated with our
            funeral and cemetery verification projects.

     *  Gains and impairment (losses) on dispositions, net was a net loss of
        $2.7 million in the first six months of 2005 compared to a net gain of
        $36.3 million in the same period of 2004.  The net loss in 2005 is
        primarily associated with losses on the dispositions of
        underperforming funeral and cemetery businesses in North America
        partially offset by the resolution of a contingency associated with
        the sale of our operations in the United Kingdom.  The 2004 net gain
        includes a gain on the sale of our equity and debt holdings in the
        United Kingdom and a net gain on the sale of our funeral operations in
        France partially offset by net losses associated with various
        dispositions in North America.

     *  Interest expense was $14.0 million lower in the first six months of
        2005 compared to the same period of 2004 primarily due to the
        retirement of debt during 2004.

     *  Other income (expense), net increased by $2.1 million of income in the
        first half of 2005 compared to the same period of 2004.  The
        components of other income for the periods presented were as follows:
        --  Interest income was $7.9 million and $8.6 million in the first
            half of 2005 and 2004, respectively.  Included in 2005 was
            $2.4 million of interest income on preferred equity certificates
            and convertible preferred equity certificates from our former
            funeral operations in France.  The first half of 2004 included the
            receipt of $4.5 million of interest income related to a note
            receivable collected from our former United Kingdom company.
        --  Cash overrides received from a third party insurance provider
            related to the sale of insurance funded preneed funeral contracts
            were $3.1 million in 2005 compared to $3.3 million in 2004.
        --  Surety bond premium costs were $2.0 million in 2005 compared to
            $2.3 million in 2004.
        --  The remaining expense of $1.0 million in 2005 and $3.7 million in
            2004 are primarily related to net gains and losses from foreign
            currency transactions.

     *  The consolidated effective tax rate in 2005 was 37.6% compared to a
        benefit of 13.8% in 2004.  The tax rate in 2005 was negatively
        impacted by permanent differences between book and tax bases of North
        America asset dispositions.  The tax rate in 2004 was favorably
        impacted by non-cash tax benefits realized from the sale of our
        minority interest in our former United Kingdom Company and the sale of
        our funeral operations in France.

    Free Cash Flow

Free cash flow is a non-GAAP financial measure. We define free cash flow as cash flows from operating activities (excluding certain special items such as any possible payments that could be made associated with the settlement of litigation matters, any potential tax refunds, or potential contributions to our frozen cash balance pension plan, etc) less capital improvements at our existing facilities. The Company defines capital improvements at existing facilities as capital improvements deemed reasonably necessary to maintain our existing facilities in a condition consistent with Company standards and extend their useful lives. Free cash flow is not reduced by mandatory debt service requirements or by growth-oriented capital expenditures. The Company defines growth-oriented capital expenditures as capital expenditures intended to grow revenues and profits such as the acquisition of funeral service locations or cemeteries in large or strategic North America markets, construction of high-end cemetery property (such as private family estates) or the construction of funeral home facilities on Company-owned cemeteries, and the investment in contemporary merchandising displays in our funeral homes.

We believe that free cash flow provides useful information to investors regarding our financial condition and liquidity as well as our ability to generate cash for purposes such as reducing debt, growing our business through strategic investments and repurchasing stock or paying dividends. While we believe free cash flow, as defined, is helpful in managing our business and provides useful information to investors, certain events may arise, financial or otherwise, which could require the use of free cash flow so that it would not be available for the purposes described above, or as more fully described in our public filings with the Securities and Exchange Commission. Furthermore, free cash flow should be reviewed in addition to, but not as a substitute for, the information provided in our consolidated statement of cash flows.

The following table provides a reconciliation between cash flows from operating activities and free cash flow, as defined.



    (In millions)                         Three Months Ended  Six Months Ended
                                                June 30,          June 30,
                                          ------------------  ----------------
                                             2005     2004     2005     2004
                                          --------- --------  -------  -------
    Cash Flows from Operating Activities    $ 75.0   $ 44.2   $202.6   $132.8
    Less:  Unusual Tax Refund                  ---      ---    (29.0)     ---
    Add:  Cash Balance Pension Plan
     Contribution                              ---      ---      ---     20.0
                                          --------- --------  -------  -------
    Adjusted Cash Flows from Operating
     Activities                             $ 75.0   $ 44.2   $173.6   $152.8

    Less:  Capital Improvements to
     Maintain Existing Facilities            (12.9)   (18.8)   (26.6)   (32.3)
                                          --------- --------  -------  -------
    Free Cash Flow                          $ 62.1   $ 25.4   $147.0   $120.5
                                          ========= ========  =======  =======

Cash flows from operating activities increased by $30.8 million in the second quarter of 2005 compared to the second quarter of 2004. In the second quarter of 2005, cash flow from operating activities was positively affected by an increase in customer receipts of approximately $14.6 million over the second quarter of 2004. This was directly impacted by our strong operating performance and increased volume in both the first and second quarter of 2005. In 2004, the Company experienced lower volume in the first and second quarter which negatively impacted cash receipts in the second quarter of 2004. Cash receipts related to Kenyon increased over prior year by $7.9 million. Additionally, the Company paid $11.8 million less in cash interest for the second quarter of 2005 and received approximately $4.0 million more in net trust fund withdrawals than in the same period of 2004. Negatively affecting cash flows from operating activities in the second quarter of 2005 compared to the second quarter of 2004 was $4.1 million of cash outflows for funding the matching contribution of our 401(k) plan with cash (previously funded by stock in 2004); an approximate $5.0 million increase in cash outflows for professional fees associated with Sarbanes-Oxley compliance, external audit fees, and our preneed cemetery backlog verification project; and an approximate $4.5 million increase in cash operating expense associated with Kenyon.

For the three months ended June 30, 2005 and 2004, the Company reported total capital expenditures of $23.3 million and $23.6 million respectively. Included in total capital expenditures were capital improvements at existing facilities of $12.9 million and $18.8 million for the second quarter of 2005 and 2004, respectively. The remaining capital expenditures were related to growth-oriented capital expenditures. As expected, growth-oriented capital spending increased to $10.4 million in the second quarter of 2005 compared to $4.8 million in the second quarter of 2004. Included in the $10.4 million of growth-oriented capital expenditures incurred in the second quarter of 2005 was $3.3 million related to new construction of funeral home facilities, $6.4 million of construction of high-end cemetery property, and $0.7 million associated with Dignity merchandising displays.

Share Repurchase Program

In June 2005, the Company announced an increase of $100 million in our authorization to repurchase our common stock, which brought our total authorization to $400 million including the previously announced authorizations in August and November of 2004 and February of 2005. As of today, we have repurchased 43.6 million shares at a total cost of $301.5 million under these programs and the remaining dollar value of shares that may be purchased under our share repurchase programs is $98.5 million. Our total shares outstanding are approximately 298.1 million as of August 29, 2005.

We have made and intend to make purchases from time to time in the open market or through privately negotiated transactions, subject to acceptable market conditions and normal trading restrictions. There can be no assurance that we will buy our common stock under our share repurchase programs. Important factors that could cause us not to repurchase our shares include, among others, 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.

Quarterly Cash Dividend

On August 10, 2005, our Board of Directors approved a cash dividend of two and one-half cents per share of common stock. The quarterly cash dividend is payable on October 31, 2005 to shareholders of record at the close of business on October 14, 2005. While we intend to pay regular quarterly cash dividends for the foreseeable future, all subsequent dividends, and the establishment of record and payment dates, are subject to final determination by the Board of Directors each quarter after its review of our financial performance.

In February 2005, we announced the initiation of a quarterly cash dividend of two and one-half cents per share of common stock. This cash dividend totaling $7.7 million was paid during the second quarter of 2005. In May 2005, our Board of Directors approved a cash dividend of two and one-half cents per share of common stock totaling $7.5 million which was paid during the third quarter of 2005.

Direct Selling Costs

Effective January 1, 2005, we changed our method of accounting for direct selling costs related to the acquisition of preneed funeral and preneed cemetery contracts. Prior to this change, we capitalized such direct selling costs. As contracts were delivered, we amortized these deferred selling costs in proportion to the revenue recognized. Under the new method of accounting, we expense direct selling costs as incurred. As of January 1, 2005, we recorded a cumulative effect of $187.5 million net of tax of $117.4 million. This amount represents the cumulative balance of deferred selling costs recorded on the Company's consolidated balance sheet in Deferred charges and other assets at the time the accounting change was adopted.

Restatement of Previously Issued Financial Statements

We are restating our financial results for the first interim period of 2005, each of the five years ended December 31, 2004, and each of the interim periods of 2004 and 2003. As a result, you should not rely on our previously issued financial statements for these periods. This restatement is primarily related to (1) the Company's review of the reconciliations that were performed to reconcile its preneed funeral and cemetery trust accounts, (2) preneed funeral trust income that was previously understated as a result of a point- of-sale system error, (3) a loss on a property disposition recognized in April 2005 which should have been recognized in the Company's first quarter 2005 consolidated financial statements and (4) other adjustments including an impairment of covenant-not-to-compete agreements which should have been recognized in the Company's 2002 consolidated financial statements. Also included in this restatement are previously reflected adjustments to consolidated financial statements issued prior to January 1, 2004, which relate to deferred cemetery contract revenues, operating leases, and other reconciliation projects.

Management has concluded the effect of the above adjustments on our previously issued financial statements is not material to any of these prior periods, however, the aggregate impact of these adjustments ($10.0 million charge to pretax income) is material to the Company's second quarter 2005 financial statements and, therefore, has led to the restatement of the previously issued financial statements. The $10.0 million of aggregate adjustments is preliminary and is subject to change pending the completion and review of certain procedures being performed by the Company and review by our independent auditor. The following table details the preliminary adjustments for each of these periods.



     Increase (decrease)             First     Year        Year       Year
     to pretax income               Quarter    Ended       Ended      Ended
                                     2005    12/31/04    12/31/03   12/31/02
     -------------------           --------  --------    --------   --------

     Effect of preneed
      funeral and cemetery
      trust verification and
      reconciliation                $1,909       $30     $(8,217)   $(1,506)
     Effect of understated
      funeral trust income           2,700     1,570         ---        ---
     Effect of loss on
      disposition                   (2,458)      ---         ---        ---
     Effect of other adjustments    (1,010)     (260)       (892)    (1,667)

     Cemetery deferred
      revenue adjustments              ---       ---       2,132      1,410
     Effect of operating lease
      adjustments                      ---       ---        (201)      (282)
     Effect of other
      verification matters             ---       ---       6,406     (1,421)
                                   --------  --------    --------   --------
            Total                   $1,141    $1,340       $(772)   $(3,466)
                                   ========  ========    ========   ========



     Increase (decrease)             Year        Year
     to pretax income               Ended       Ended      Pre-
                                  12/31/01    12/31/00     2000       Total
     -------------------          ---------   --------   --------   --------

     Effect of preneed
      funeral and cemetery
      trust verification and
      reconciliation               $(632)      $(722)   $(14,614)  $(23,752)
     Effect of understated
      funeral trust income           ---         ---         ---      4,270
     Effect of loss on
      disposition                    ---         ---         ---     (2,458)
     Effect of other adjustments    (517)        (41)        634     (3,753)

     Cemetery deferred
      revenue adjustments          1,345       2,888      13,021     20,796
     Effect of operating lease
      adjustments                   (313)       (315)     (2,667)    (3,778)
     Effect of other
      verification matters          (122)       (188)     (6,028)    (1,353)
                                  ---------   --------   --------   --------
            Total                  $(239)     $1,622     $(9,654)  $(10,028)
                                  =========   ========   ========  =========


The effect of these adjustments on each of the respective prior period consolidated statement of operations (including the quarterly periods for 2004) is detailed in Appendix A to this press release. As a result of the adjustments, management believes it is possible that the Company will identify and report additional material weaknesses in its internal control over financial reporting related to the above matters.

Conference Call and Webcast

We will host a conference call on Tuesday, August 30, 2005, 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 (719) 457-2696. The conference call will also be broadcast live via the Internet and can be accessed through our website at http://www.sci-corp.com . A replay of the conference call will be available through September 13, 2005 and can be accessed at (719) 457-0820 with the confirmation code of 4052837. Additionally, a replay of the conference call will be available on our website for approximately ninety days on the Investors page under the subheading "Conference Calls" at http://www.sci-corp.com/ConfCalls.html . This earnings release will also be available on our website on the Investor Relations page under the subheading "News" at http://www.sci-corp.com/InvestorsMenu.html .

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, 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, pension expense and
        negative currency translation effects.
     *  The outcomes of pending lawsuits and proceedings 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.
     *  Amounts payable by us with respect to our outstanding legal matters
        exceeding our established reserves.
     *  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.  If these tax matters are
        favorably resolved, the accruals maintained by us will no longer be
        required and these amounts will be reversed through the tax provision
        at the time of resolution.
     *  Our ability to successfully implement our strategic plan related to
        producing operating improvements and strong cash flows.
     *  Our ability to successfully implement our plan to reduce costs and
        increase cash flows associated with significant changes being made to
        our organization structure, process and quality of our sales efforts.
     *  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 demographic or
        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 complete our ongoing process improvement
        projects, particularly related to the implementation of new processes
        and internal controls.
     *  Our ability to successfully access surety and insurance markets at a
        reasonable cost.
     *  Our ability to successfully exploit our substantial purchasing power
        with certain of our vendors.
     *  The outcome of a pending Internal Revenue Service audit.
     *  The extent and time periods involved in the restatement of our prior
        periods' financial results.
     *  Any further changes to our financial results upon our review and our
        independent auditor's review.
     *  Any consequences under our indentures or credit agreement if we
        continue to be unable to file our Form 10-Q for the 2005 second
        quarter.
     *  The possibility that we will identify and report additional material
        weaknesses in our internal control over financial reporting.
     *  The effectiveness of our internal controls over financial reporting,
        and our ability to certify the effectiveness of the internal controls
        and to obtain a favorable attestation report of our auditors regarding
        our assessment of our internal controls.

For further information on these and other risks and uncertainties, see our Securities and Exchange Commission filings, including our 2004 Annual Report on Form 10-K, as amended. Copies of this document as well as other SEC filings can be obtained from our website at http://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.

Service Corporation International, headquartered in Houston, Texas, owns and operates funeral service locations and cemeteries. We have an extensive network of businesses including 1,126 funeral service locations and 388 cemeteries in North America as of June 30, 2005. For more information about Service Corporation International, please visit our website at http://www.sci-corp.com .

     For additional information contact:

     Investors:  Eric Tanzberger - Vice President and Corporate Controller
                 (713) 525-7768

     Media:      Terry Hemeyer - Managing Director / Corporate Communications
                 (713) 525-5497

    Preliminary Unaudited Financial Results

The following condensed consolidated statement of operations, balance sheet and statement of cash flows are preliminary with respect to financial results related to the three and six months ended June 30, 2005. These preliminary financial statements are unaudited and have not been reviewed by our independent auditor. This financial information remains subject to the completion and review of certain procedures being performed by the Company and review by our independent auditor. Therefore, the financial information presented in this press release is subject to change prior to the filing of the Company's Form 10-Q for the quarterly period ended June 30, 2005.



                        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,
                              --------------------       -------------------
                                2005         2004          2005        2004
                              --------     --------      --------    --------
                                          (Restated)                (Restated)

    Revenues:
    Funeral                   $284,444     $279,502     $603,907     $714,033
    Cemetery                   156,352      152,877      291,772      307,055
                              --------     --------      --------    --------
                               440,796      432,379      895,679    1,021,088
    Gross profit:
    Funeral                     50,064       50,321      129,698      136,890
    Cemetery                    25,883       23,039       46,035       52,109
                              --------     --------      --------    --------
                                75,947       73,360      175,733      188,999

    General and administrative
     expenses                  (21,494)     (24,028)     (41,210)     (75,049)
    Gains and impairment
     (losses) on
     dispositions, net           3,697        1,517       (2,723)      36,299
                              --------     --------      --------    --------
    Operating income            58,150       50,849      131,800      150,249

    Interest expense           (25,875)     (31,843)     (50,531)     (64,501)
    Loss on early extinguishment
     of debt                   (13,051)     (16,770)     (14,258)     (16,770)
    Other income
     (expense), net              5,360         (514)       8,047        5,910
                              --------     --------      --------    --------
                               (33,566)     (49,127)     (56,742)     (75,361)
                              --------     --------      --------    --------
    Income from continuing
     operations before
     income taxes and
     cumulative effects of
     accounting changes         24,584        1,722       75,058       74,888
    Provision (benefit)
     for income taxes           10,572       (6,900)      28,237      (10,355)
                              --------     --------      --------    --------
    Income from continuing
     operations before
     cumulative effects
     of accounting changes     $14,012       $8,622      $46,821      $85,243
    Income (loss) from
     discontinued operations
     (net of income tax
     (benefit) expense of
     ($49,097), $594, and
     ($48,956), respectively)      ---       34,337         (650)      35,091
    Cumulative effects of
     accounting changes (net of
     income tax benefits of
     $117,428 and $20,982,
     respectively)                 ---          ---     (187,538)     (47,556)
                              --------     --------      --------    --------
          Net income (loss)    $14,012      $42,959    $(141,367)     $72,778
                              ========     ========      ========    ========
    Basic earnings (loss)
     per share:
      Income from continuing
       operations before
       cumulative effects
       of accounting changes      $.05         $.03         $.15         $.28
      Income from discontinued
       operations, net of tax      ---          .11          ---          .12
      Cumulative effects of
       accounting changes,
       net of tax                  ---          ---         (.61)        (.16)
                              --------     --------      --------    --------
          Net income (loss)       $.05         $.14        $(.46)        $.24
                              ========     ========      ========    ========
    Diluted earnings (loss)
     per share:
      Income from continuing
       operations before
       cumulative effects of
       accounting changes         $.05         $.03         $.15         $.26
      Income from discontinued
       operations, net of tax      ---          .11          ---          .10
      Cumulative effects of
       accounting changes,
       net of tax                  ---          ---         (.60)        (.14)
                              --------     --------      --------    --------
          Net income (loss)       $.05         $.14        $(.45)        $.22
                              ========     ========      ========    ========
    Basic weighted average
     number of shares          302,363      307,988      307,896      305,290
                              ========     ========      ========    ========
    Diluted weighted average
     number of shares          306,404      312,725      311,986      353,438
                              ========     ========      ========    ========



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


                                                      June 30,       Dec. 31,
                                                       2005            2004
    --------------------------------------------------------------------------
                                                                    (Restated)
    Assets
    Current assets:
       Cash and cash equivalents                     $319,955        $287,785
       Receivables, net                               115,063         102,622
       Inventories                                     82,987          81,526
       Current assets of discontinued operations          ---          11,085
       Other                                           39,616          50,945
                                                    ---------       ---------
         Total current assets                         557,621         533,963
                                                    ---------       ---------
    Preneed funeral receivables and trust
     investments                                    1,237,501       1,264,915
    Preneed cemetery receivables and trust
     investments                                    1,352,644       1,399,778
    Cemetery property, at cost                      1,481,202       1,506,782
    Property, plant and equipment, at cost, net       947,450         970,547
    Non-current assets of discontinued operations         ---           4,367
    Deferred charges and other assets                 274,604         617,234
    Goodwill                                        1,150,143       1,169,040
    Cemetery perpetual care trust investments         730,804         729,048
                                                    ---------       ---------
                                                   $7,731,969      $8,195,674
                                                   ==========      ==========
    Liabilities & Stockholders' Equity
    Current liabilities:
       Accounts payable and accrued liabilities      $218,925        $221,877
       Current maturities of long-term debt            90,770          75,075
       Current liabilities of discontinued operations     ---           7,111
       Income taxes                                     2,948           7,850
                                                    ---------       ---------
         Total current liabilities                    312,643         311,913
                                                    ---------       ---------
    Long-term debt                                  1,172,525       1,178,885
    Deferred preneed funeral revenues                 524,988         495,501
    Deferred preneed cemetery revenues                839,135         803,144
    Deferred income taxes                             199,911         275,018
    Non-current liabilities of discontinued
     operations                                           ---          58,225
    Other liabilities                                 401,555         429,102
    Non-controlling interest in funeral
     and cemetery trusts                            2,002,670       2,092,881
    Non-controlling interest in perpetual
     care trusts                                      707,815         704,912

    Stockholders' equity:
      Common stock, $1 per share par value,
       500,000,000 shares authorized, 298,148,521
       and 323,225,352, issued and outstanding
       (net of 44,747,591 and 18,502,478 treasury
       shares, at par)                                298,149         323,225
      Capital in excess of par value                2,224,940       2,395,057
      Unearned compensation                            (4,702)         (2,022)
      Accumulated deficit                            (973,214)       (831,847)
      Accumulated other comprehensive income (loss)    25,554         (38,320)
                                                    ---------       ---------
       Total stockholders' equity                   1,570,727       1,846,093
                                                    ---------       ---------
                                                   $7,731,969      $8,195,674
                                                   ==========      ==========



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

                                                         Six Months Ended
                                                              June 30,
                                                    --------------------------
                                                        2005           2004
                                                    ----------     -----------
                                                                    (Restated)
    Cash flows from operating activities:
      Net (loss) income                             $(141,367)        $72,778
      Adjustments to reconcile net (loss) income
       to net cash provided by operating activities:
        Net loss (income) from discontinued
         operations                                       650         (35,091)
        Loss on early extinguishments of debt          14,258          16,770
        Cumulative effects of accounting changes,
         net of tax                                   187,538          47,556
        Depreciation and amortization                  42,395          71,344
        Provision (benefit) for deferred income taxes  26,668         (11,781)
        (Gains) and impairment losses on
         dispositions, net                              2,723         (36,299)
        Other non-cash adjustments                        ---             251
      Change in assets and liabilities, net of
       effects from acquisitions and dispositions:
        Decrease in receivables                        14,496          25,370
        Decrease in other assets                       29,421           4,774
        Decrease in payables and other liabilities    (14,611)         (2,944)
        Net effect of preneed funeral production
         and maturities                                (3,058)         (9,770)
        Net effect of cemetery production
         and deliveries                                43,922         (14,094)
        Other                                            (217)          1,654
                                                    ----------     -----------
    Net cash provided by operating activities
     from continuing operations                       202,818         130,518
    Net cash (used in) provided by operating
     activities from discontinued operations             (241)          2,278
                                                    ----------     -----------
    Net cash provided by operating activities         202,577         132,796
    Cash flows from investing activities:
      Capital expenditures                            (43,907)        (41,289)
      Proceeds from divestitures and sales
       of property and equipment                       34,463          19,477
      Proceeds and distributions from dispositions
       of businesses, net of cash retained             53,667         337,049
      Indemnity payments related to the sale
       of former funeral operations in France          (1,602)            ---
      Net deposits of restricted funds and other       (9,026)       (158,632)
                                                    ----------     -----------
    Net cash provided by investing activities
     from continuing operations                        33,595         156,605
    Net cash used in investing activities
     from discontinued operations                         ---            (117)
                                                    ----------     -----------
    Net cash provided by investing activities          33,595         156,488
    Cash flows from financing activities:
      Proceeds from issuance of long-term debt        291,472         242,850
      Payments of debt                                 (3,047)       (121,139)
      Early extinguishments of debt                  (298,401)       (313,527)
      Proceeds from exercise of stock options           4,556           5,254
      Purchase of Company common stock               (189,809)            ---
      Payments of dividends                            (7,729)            ---
      Purchase of subsidiary stock                       (844)            ---
                                                    ----------     -----------
    Net cash used in financing activities            (203,802)       (186,562)
    Effect of foreign currency                           (200)         (1,269)
                                                    ----------     -----------
    Net increase in cash and cash equivalents          32,170         101,453
    Cash and cash equivalents at beginning of period  287,785         239,431
                                                    ----------     -----------
    Cash and cash equivalents at end of period       $319,955        $340,884
                                                    ==========     ===========


                                  APPENDIX A

As described earlier in this press release, the Company is restating its results for the first interim period of 2005, each of the five years ended December 31, 2004, and each of the interim periods of 2004 and 2003. Detailed below are the preliminary results of this restatement for each of the interim periods of 2005 and 2004, and each of the five years ended December 31, 2004. These financial results are preliminary and are subject to the completion and review of certain procedures being performed by the Company and review by our independent auditor. Therefore, these financial results are subject to change prior to the filing of the Company's Form 10-Q for the quarterly period ended June 30, 2005.

Certain periods in this appendix have been previously restated for adjustments to deferred preneed cemetery contract revenues (for each of the three years ended December 31, 2002) and adjustments related to certain reconciliations and verifications of our funeral and cemetery trust assets and deferred revenue, operating leases, and other adjustments (each of the first three interim periods of 2004). See the Company's 2004 Form 10-K, as amended, for details related to these adjustments. The caption "As Restated" reflects the Company's currently announced restatement presented in this press release related to the adjustments described herein.



                             Three Months Ended          Three Months Ended
                                March 31, 2005           December 31, 2004
                           ----------------------      ----------------------
                               As           As            As            As
                            Reported     Restated      Reported      Restated
                           ---------    ---------      --------      --------
    Revenues               $452,923      $454,883      $433,226      $435,076
    Costs and expenses      355,136       355,097       358,180       358,141
    Gross profits            97,787        99,786        75,046        76,935
    Operating income         72,509        73,650        37,107        38,996
    Income from continuing
     operations before income
     taxes and cumulative
     effects of
     accounting changes      49,333        50,474        16,939        18,828
    Provision (benefit)
     for income taxes        17,266        17,665          (560)          147
    Net (loss) income     $(156,121)    $(155,379)      $25,886       $27,068
    Earnings (loss)
     per share:
       Basic - EPS            $(.50)        $(.50)         $.08          $.08
       Diluted - EPS          $(.49)        $(.49)         $.08          $.08
    Earnings per share
     from continuing
     operations excluding
     special items:
       Diluted - EPS           $.12          $.12          $.07          $.07



                             Three Months Ended          Three Months Ended
                             September 30, 2004            June 30, 2004
                           ----------------------      ----------------------
                              As            As            As            As
                           Reported      Restated      Reported      Restated
                           --------      --------      --------      --------
    Revenues               $404,557      $404,742      $432,103      $432,379
    Costs and expenses      334,463       334,422       359,058       359,019
    Gross profits            70,094        70,320        73,045        73,360
    Operating income         41,515        41,741        50,534        50,849
    Income from continuing
     operations before
     income taxes and
     cumulative effects of
     accounting changes      18,196        18,422         1,407         1,722
    Provision (benefit)
     for income taxes         4,739         4,823        (7,017)       (6,900)
    Net income              $13,741       $13,883       $42,761       $42,959
    Earnings per share:
       Basic - EPS             $.04          $.04          $.14          $.14
       Diluted - EPS           $.04          $.04          $.14          $.14
    Earnings per share from
     continuing operations
     excluding special items:
    Diluted - EPS              $.06          $.06          $.05          $.05



                            Three Months Ended          For The Year Ended
                               March 31, 2004           December 31, 2004
                           ----------------------     ----------------------
                              As            As           As            As
                           Reported      Restated     Reported      Restated
                           --------      --------    ----------    ----------
    Revenues               $589,422      $588,709    $1,859,308    $1,860,906
    Costs and expenses      473,109       473,070     1,524,810     1,524,652
    Gross profits           116,313       115,639       334,498       336,254
    Operating income        100,490        99,400       229,646       230,986
    Income from continuing
     operations before income
     taxes and cumulative
     effects of
      accounting changes     74,256        73,166       110,798       112,138
    Benefit for income
     taxes                   (3,375)       (3,455)       (6,213)       (5,385)
    Net income              $31,311       $29,819      $113,699      $113,729
    Earnings per share:
       Basic - EPS             $.10          $.10          $.36          $.36
       Diluted - EPS           $.10          $.09          $.35          $.35
    Earnings per share from
     continuing operations
     excluding special items:
    Diluted - EPS              $.14          $.14          $.32          $.32



                           For The Year Ended          For The Year Ended
                            December 31, 2003           December 31, 2002
                         ------------------------    ------------------------
                             As            As            As            As
                          Reported      Restated      Reported      Restated
                         ----------    ----------    ----------    ----------
    Revenues             $2,328,425    $2,338,022    $2,312,439    $2,310,866
    Costs and expenses    1,966,460     1,976,503     1,950,430     1,950,681
    Gross profits           361,965       361,519       362,009       360,185
    Operating income        224,222       223,450        15,837        12,371
    Income (loss) from
     continuing operations
     before income taxes
     and cumulative
     effects of
     accounting changes     111,219       110,447      (119,850)     (123,316)
    Provision (benefit)
     for income taxes        28,666        28,366       (37,692)      (38,998)
    Net income (loss)       $85,082       $84,610     $(232,486)    $(234,646)
    Earnings (loss) per share:
       Basic - EPS             $.28          $.28         $(.79)        $(.80)
       Diluted - EPS           $.28          $.28         $(.79)        $(.80)
    Earnings per share from
     continuing operations
     excluding special items:
       Diluted - EPS           $.38          $.38          $.32          $.32



                           For The Year Ended          For The Year ended
                            December 31, 2001           December 31, 2000
                         ------------------------    ------------------------
                             As            As            As            As
                          Reported      Restated      Reported      Restated
                         ----------    ----------    ----------    ----------
    Revenues             $2,489,005    $2,489,113    $2,569,538    $2,571,527
    Costs and expenses    2,166,220     2,166,567     2,226,530     2,226,897
    Gross profits           322,785       322,546       343,008       344,630
    Operating income
     (loss)                (230,921)     (231,160)     (237,524)     (235,902)
    Income (loss) from
     continuing operations
     before income taxes
     and cumulative effects
     of accounting changes (418,617)     (418,856)     (465,933)     (464,311)
    Benefit for income
     taxes                  (45,333)      (45,247)      (77,552)      (76,912)
    Net loss              $(623,440)    $(623,593)  $(1,294,117)  $(1,293,135)
    Loss per share:
       Basic - EPS           $(2.19)       $(2.19)       $(4.75)       $(4.75)
       Diluted - EPS         $(2.19)       $(2.19)       $(4.75)       $(4.75)
    Earnings per share
     from continuing
     operations excluding
     special items:
    Diluted - EPS              $.12          $.12          $.10          $.10



                                  APPENDIX B

    NON-GAAP FINANCIAL MEASURES

Earnings from Continuing Operations Excluding Special Items Earnings from continuing operations excluding special items and earnings per share from continuing operations excluding special items are 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, they are not influenced by certain income and expenses not affecting continuing operations. We also believe these measures help facilitate comparisons to competitors' operating results.

Set forth below is a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. We do not intend for the information to be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Certain periods in this appendix have been previously restated for adjustments to deferred preneed cemetery contract revenues (for each of the three years ended December 31, 2002) and adjustments related to certain reconciliations and verifications of our funeral and cemetery trust assets and deferred revenue, operating leases, and other adjustments (each of the first three interim periods of 2004). See the Company's 2004 Form 10-K, as amended, for details related to these adjustments. The caption "As Restated" reflects the Company's currently announced restatement presented in this press release related to the adjustments described herein.


                                                     Three Months Ended
                                              --------------------------------
    (In millions, except diluted EPS)          June 30, 2005   June 30, 2004
                                                                (As Restated)
                                              ---------------  ---------------
                                                Net              Net
                                              Income  Diluted  Income  Diluted
                                              (Loss)    EPS    (Loss)    EPS
                                              ---------------  ---------------
    Net income reported                       $14.0    $.05    $43.0    $.14

     Settlement of significant legal matters    ---     ---      3.1     .01
     (Gains) and impairment losses
      on dispositions, net                     (0.4)    ---     (7.9)   (.03)
     Loss on early extinguishment of debt       8.5     .02     10.5     .03
     Other income/expense, net
       Foreign currency transaction loss        ---     ---      2.3     .01
     Discontinued operations                    ---     ---    (34.3)   (.11)
                                              ---------------  ---------------
    Earnings from continuing operations
     excluding special items                  $22.1    $.07    $16.7    $.05
                                              ===============  ===============

    Diluted weighted average shares
     outstanding (in thousands)                     306,404          312,725
    Interest add back                                  $---             $---



                                                Six Months Ended
                                  --------------------------------------------
     (In millions, except              June 30, 2005         June 30, 2004
       diluted EPS)                                           (As Restated)
                                  ---------------------  ---------------------
                                     Net                   Net
                                    Income     Diluted    Income      Diluted
                                    (Loss)       EPS      (Loss)        EPS
                                  ---------------------  ---------------------

    Net (loss) income reported   $ (141.4)  $    (.45)    $    72.8   $   .22

      Settlement of significant
       legal matters                  ---         ---          25.2       .07
      (Gains) and impairment
       losses on dispositions,
       net                            3.7         .01         (58.5)     (.16)
      Loss on early
       extinguishment of debt         9.3         .03          10.5       .03
      Other income/expense, net
        Interest income - United
         Kingdom note receivable      ---         ---          (2.7)     (.01)
        Foreign currency
         transaction loss             ---         ---           2.3       .01
      Discontinued operations         0.7         ---         (35.1)     (.10)
      Cumulative effect of
       accounting changes           187.5         .60          47.6       .13
                                  ---------------------  ---------------------
    Earnings from continuing
     operations excluding
     special items               $   59.8   $     .19     $    62.1   $   .19
                                  =====================  =====================
    Diluted weighted average
     shares outstanding (in
     thousands)                               311,986                 353,438
    Interest add back                       $     ---                 $   6.4



                                               Three Months Ended
                                  --------------------------------------------
                                    March 31, 2005          March 31, 2005
                                                             (As Restated)
                                  --------------------------------------------
                                      Diluted EPS             Diluted EPS
                                  ---------------------  ---------------------
    Net loss reported            $              (.49)    $              (.49)

     (Gains) and impairment
      losses on dispositions, net                .02                     .02
     Cumulative effect of
      accounting changes                         .59                     .59
                                  ---------------------  ---------------------
     Earnings from continuing
      operations excluding
      special items              $               .12     $               .12
                                  =====================  =====================
    Diluted weighted average
     shares outstanding
     (in thousands)                          317,751                 317,751
    Interest add back            $               ---     $               ---



                                               Three Months Ended
                                  --------------------------------------------
                                    March 31, 2004          March 31, 2004
                                                             (As Restated)
                                  --------------------------------------------
                                      Diluted EPS             Diluted EPS
                                  ---------------------  ---------------------
    Net income reported          $               .10     $               .09

    Settlement of significant
     legal matters                               .06                     .06
    (Gains) and impairment
     losses on dispositions                     (.14)                   (.13)
    Other income                                (.01)                   (.01)
    Cumulative effect of
     accounting changes                          .13                     .13
                                  ---------------------  ---------------------
    Earnings from continuing
     operations excluding
     special items               $               .14     $               .14
                                  =====================  =====================
    Diluted weighted average
     shares outstanding
     (in thousands)                          353,088                 353,088
    Interest add back
     (in millions)               $               3.6     $               3.6



                                                        Three Months Ended
                                                  ----------------------------
                                                     Sept. 30,      Sept. 30,
                                                       2004           2004
                                                                 (As Restated)
                                                  ----------------------------
                                                    Diluted EPS   Diluted EPS
                                                  -------------  -------------
    Net income reported                                 $.04           $.04

    Settlement of significant legal matters              .02            .02
                                                  -------------  -------------
    Earnings from continuing operations excluding
     special items                                      $.06           $.06
                                                  =============  =============

    Diluted weighted average shares outstanding
     (in thousands)                                  340,215        340,215
    Interest add back                                   $---           $---



                                                         Three Months Ended
                                                  ----------------------------
                                                  Dec. 31, 2004  Dec. 31, 2004
                                                                 (As Restated)
                                                  ----------------------------
                                                   Diluted EPS    Diluted EPS
                                                  -------------  -------------
    Net income reported                                 $.08           $.08

    Settlement of significant legal matters              .02            .02
    (Gains) and impairment losses on dispositions        .02            .02
    State income tax                                    (.02)          (.02)
    Discontinued operations                             (.03)          (.03)
                                                  -------------  -------------
    Earnings from continuing operations excluding
     special items                                      $.07           $.07
                                                  =============  =============

                                                  =============  =============
    Diluted weighted average shares outstanding
     (in thousands)                                  332,366        332,366
    Interest add back                                   $---           $---



                                                           Year Ended
                                                  ----------------------------
                                                  Dec. 31, 2004  Dec. 31, 2004
                                                                 (As Restated)
                                                  ----------------------------
                                                   Diluted EPS    Diluted EPS
                                                  -------------  -------------
    Net income reported                                 $.35           $.35

      Settlement of significant legal matters            .11            .11
      (Gains) and impairment losses on dispositions     (.16)          (.16)
      Other income/expense, net                         (.01)          (.01)
      Loss on early extinguishment of debt               .03            .03
      Foreign currency transaction loss                  .01            .01
      State income tax                                  (.02)          (.02)
      Discontinued operations                           (.13)          (.13)
      Cumulative effect of accounting changes            .14            .14
                                                  -------------  -------------
      Earnings from continuing operations
       excluding special items                          $.32           $.32
                                                  =============  =============

    Diluted weighted average shares outstanding
     (in thousands)                                  344,675        344,675
    Interest add back (in millions)                     $6.4           $6.4



                                                         Year Ended
                                               -------------------------------
                                               Dec. 31, 2003     Dec. 31, 2003
                                                                 (As Restated)
                                               -------------------------------
                                                Diluted EPS        Diluted EPS
                                               --------------   --------------
    Net income reported                              $.28             $.28

      Settlement of significant legal matters         .20              .20
      (Gains) and impairment losses
       on dispositions                               (.11)            (.11)
      Other operating expense/income                  .02              .02
      Other income/expense, net                      (.01)            (.01)
                                               --------------   --------------
      Earnings from continuing operations
       excluding special items                       $.38             $.38
                                               ==============   ==============

    Diluted weighted average shares
     outstanding (in thousands)                   300,790          300,790
    Interest add back                                $---             $---



                                                         Year Ended
                                               -------------------------------
                                               Dec. 31, 2002     Dec. 31, 2002
                                                                 (As Restated)
                                               -------------------------------
                                                Diluted EPS        Diluted EPS
                                               --------------   --------------
    Net loss reported                               $(.79)           $(.80)

      (Gains) and impairment losses
       on dispositions                                .39              .40
      Other operating expenses                        .23              .23
      Loss on early extinguishment of debt           (.02)            (.02)
      Discontinued operations                         .05              .05
      Cumulative effect of accounting changes         .46              .46
                                               --------------   --------------
      Earnings from continuing operations
       excluding special items                       $.32             $.32
                                               ==============   ==============

    Diluted weighted average shares outstanding
     (in thousands)                               294,533          294,533
    Interest add back                                $---             $---



                                                         Year Ended
                                               -------------------------------
                                               Dec. 31, 2001     Dec. 31, 2001
                                                                 (As Restated)
                                               -------------------------------
                                                Diluted EPS       Diluted EPS
                                               --------------   --------------
    Net loss reported                              $(2.19)          $(2.19)

      (Gains) and impairment losses on
       dispositions                                  1.77             1.77
      Loss on early extinguishment of debt           (.02)            (.02)
      Discontinued operations                         .53              .53
      Cumulative effect of accounting changes         .03              .03
                                               --------------   --------------
      Earnings from continuing operations
       excluding special items                       $.12             $.12
                                               ==============   ==============

    Diluted weighted average shares outstanding
     (in thousands)                               285,127          285,127
    Interest add back                                $---             $---



                                                          Year Ended
                                               -------------------------------
                                                Dec. 31, 2000   Dec. 31, 2000
                                                                (As Restated)
                                               -------------------------------
                                                 Diluted EPS     Diluted EPS
                                               --------------   --------------
    Net loss reported                              $(4.75)          $(4.75)

     (Gains) and impairment losses on
      dispositions                                   1.52             1.52
     Discontinued operations                          .13              .13
     Cumulative effect of accounting changes         3.20             3.20
                                               --------------   --------------
     Earnings from continuing operations
      excluding special items                        $.10             $.10
                                               ==============   ==============

    Diluted weighted average shares outstanding
     (in thousands)                               272,172          272,172
    Interest add back                                $---             $---
SOURCE  Service Corporation International
    -0-                             08/29/2005
    /CONTACT:  investors, Eric Tanzberger, Vice President and Corporate
Controller, +1-713-525-7768, or media, Terry Hemeyer, Managing Director -
Corporate Communications, +1-713-525-5497, both of Service Corporation
International/
    /Web site:  http://www.sci-corp.com
                http://www.sci-corp.com/ConfCalls.html
                http://www.sci-corp.com/InvestorsMenu.html /
    (SCI)

CO:  Service Corporation International
ST:  Texas
IN:
SU:  ERN CCA DIV

CT-JS
-- DAM030 --
0198 08/29/2005 16:15 EDT http://www.prnewswire.com