News

Printer Friendly Version Print Version
Service Corporation International Announces Fourth Quarter 2007 Financial Results and Outlook for 2008
- Conference call on Friday, February 29, 2008, at 9:00 a.m. Central Standard Time.

HOUSTON, Feb 28, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Service Corporation International (NYSE: SCI), a provider of deathcare products and services, today reported results for the fourth quarter and fiscal year 2007 and provided its outlook for fiscal year 2008. Our consolidated financial statements can be found at the end of this press release. The table below summarizes our key financial results:


    (In millions, except         Three Months Ended     Twelve Months Ended
     for per share amounts)         December 31,            December 31,
                                -------------------    -------------------
                                 2007         2006       2007         2006
                                ------       ------    --------   --------
    Revenues                    $572.9       $479.1    $2,285.3   $1,752.9
    Operating income             $89.9        $52.8      $346.2     $196.7
    Net income                  $166.8         $0.8      $247.7      $56.5
    Diluted earnings per
     share                        $.60         $.00        $.85       $.19
    Earnings from continuing
     operations excluding
     special items(1)            $38.8        $33.6      $151.5     $121.6
    Diluted earnings per share
     from continuing operations
     excluding  special items(1)  $.14         $.11        $.52       $.41

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


    Highlights:

    -- Diluted earnings per share from continuing operations excluding special
       items increased to $0.14 in the fourth quarter of 2007 compared to
       $0.11 in the fourth quarter of 2006, primarily reflecting strong
       cemetery performance and the acquisition of Alderwoods.  For fiscal
       year 2007, diluted earnings per share from continuing operations
       excluding special items was $0.52, which was at the top of our guidance
       range and up 26.8% from $0.41 in 2006.

    -- Revenues increased $532.4 million, or 30.4% in 2007, even with
       significant divestiture activity throughout the year.

    -- Comparable average revenue per funeral service increased 5.2% in the
       fourth quarter of 2007 and 5.3% for the full year 2007.  These
       increases in average revenue per funeral service more than offset
       declines of 3.9% and 4.0% in comparable funeral services performed in
       the three and twelve months ended December 31, 2007, respectively.

    -- During 2007, SCI divested of more than 300 locations and our equity
       interest in France generating approximately $555 million of cash
       proceeds.

    -- Cash flow from operating activities in fiscal year 2007 exceeded our
       guidance range and grew to $356.2 million compared to $324.2 million in
       2006.

    -- SCI returned more than $300 million in capital to shareholders in the
       fourth quarter through a combination of dividends and share
       repurchases, bringing the year-to-date total capital returned to
       shareholders to approximately $540 million in 2007.


Tom Ryan, the Company's President and Chief Executive Officer, commented on the fourth quarter of 2007:

"This year was a significant success for SCI. We successfully completed the integration of Alderwoods, the largest acquisition in our company's history. We also completed the divestiture of non-strategic properties which resulted in over $550 million in cash proceeds. These cash proceeds coupled with our strong operating cash flow have allowed us to reinvest in our businesses and return capital to our shareholders.

We are also encouraged by our 2007 operating results, particularly in our cemetery segment where our margin percentage increased nearly 300 basis points over 2006. As we capitalize on our strength as the industry leader, we continue to make progress in further implementing initiatives focused on making our business stronger and adding value for our shareholders."

2008 OUTLOOK

Also commenting on the Company's 2008 outlook is Tom Ryan, the Company's President and Chief Executive Officer:

"For 2008, we are confident about our competitive position, our financial strength and our ability to further grow our business. This is illustrated by an approximate 10% to 20% range of expected growth in our diluted earnings per share from continuing operations," said Tom Ryan, President and CEO.

The following table summarizes our fiscal year 2008 outlook for anticipated results from continuing operations:

    (In millions, except for per share amounts)

    Funeral revenues                                        $1,450 to $1,500
    Funeral gross margin percentage                            20% to 24%
    Cemetery revenues                                         $710 to $750
    Cemetery gross margin percentage                           18% to 22%
    General & administrative expenses                          $85 to $95
    Interest expense                                          $130 to $140
    Diluted earnings per share excluding
     special items(1)                                        $0.57 to $0.63
    Capital improvements at existing facilities
     and cemetery development expenditures                    $140 to $155
    Total capital expenditures                                $165 to $195
    Depreciation and amortization                             $155 to $170
    Net cash provided by operating activities                 $280 to $310
    Net cash provided by operating activities
     excluding a one-time cash tax payment(2)                 $380 to $410

    (1) Diluted earnings per share excluding special items is a non-GAAP
        financial measure.  We normally reconcile this non-GAAP financial
        measure to diluted earnings per share; however, diluted earnings per
        share calculated in accordance with GAAP is not currently accessible
        on a forward-looking basis.  Our outlook for 2008 excludes the
        following because this information is not currently available:  Gains
        or losses associated with asset dispositions; gains or losses
        associated with the early extinguishment of debt; any potential tax
        adjustments to reserves, payments, credits or refunds resulting from
        the Company's pending Internal Revenue Service audit; and any
        potential costs associated with settlements of litigation or the
        recognition of receivables for insurance recoveries associated with
        litigation.

    (2) Net cash provided by operating activities excluding a one-time cash
        tax payment is a non-GAAP financial measure.  The reconciliation to
        our anticipated net cash provided by operating activities calculated
        in accordance with GAAP is as follows:

          Net cash provided by operating activities     $280 to $310 million
          Estimated one-time expected cash tax payment      $100 million
                                                        --------------------
          Net cash provided by operating activities
           excluding a one-time cash tax payment        $380 to $410 million



    Highlights:

    -- We expect to increase our revenues in 2008 primarily through continued
       strategic pricing initiatives, enhancing discounting guidelines, and
       developing additional cemetery products and services.  We expect to
       grow preneed sales production through improved marketing and sales
       processes.  We will continue to invest in marketing infrastructure and
       in our target customer segments, which we believe will drive
       incremental volume growth over time.  We will also pursue acquisitions
       and new site growth at attractive prices.  We expect to continue to
       reduce costs by improving the standardization of our staffing and other
       metrics, utilizing our purchasing power, and rationalizing our market
       footprints.  We expect that these actions will result in growth in our
       diluted earnings per share from continuing operations excluding special
       items from $0.52 in 2007 to a range of $0.57 to $0.63, representing
       expected growth of approximately 10% to 20%.

    -- In 2008, we expect net cash provided by operating activities to range
       from $280 to $310 million.  This includes $100 million for a one-time
       expected cash tax payment to be paid in early 2008 primarily related to
       the sale of our equity investment in France and other major
       dispositions in late 2007.  Net cash provided by operating activities
       excluding this one-time cash tax payment is expected to range from
       $380 to $410 million.

    -- We expect total capital expenditures in 2008 to range from $165 to
       $195 million. This range consists of $85 to $95 million for capital
       improvements at existing facilities, $55 to $60 million for capital
       expenditures to develop cemetery property, and approximately $25 to
       $40 million for new construction and expansion of market footprint
       projects.

    -- The guidance range for diluted earnings per share from continuing
       operations excluding special items in 2008 assumes an effective tax
       rate of 38% and assumes the fully diluted weighted average shares
       outstanding will be approximately 260 to 265 million.


REVIEW OF FOURTH QUARTER AND FISCAL YEAR ENDED 2007 RESULTS

The following table represents consolidated results of operations, including the properties acquired in the Alderwoods transaction.

    (In millions, except
     funeral services
     performed, average
     revenue per funeral
     service or per contract        Three Months Ended   Twelve Months Ended
     sold and total preneed            December 31,          December 31,
     funeral contracts)            ------------------   --------------------
                                    2007        2006       2007        2006
                                   ------      ------   --------    --------
    Funeral
    -------
    Funeral atneed revenue         $244.0      $207.5   $1,015.6      $754.5
    Funeral recognized
     preneed revenue                115.1        97.0      452.5       359.9
    General agency
     revenues(1)                      9.3         6.9       44.8        35.1
    Other revenue                     2.5         3.6       12.4        12.3
                                   ------      ------   --------    --------
      Total funeral revenues       $370.9      $315.0   $1,525.3    $1,161.8

    Gross profit                    $72.1       $68.4     $308.6      $242.0
    Gross margin percentage         19.4%       21.7%      20.2%       20.8%

    Funeral services
     performed                     70,773      63,465    299,801     235,384
    Average revenue per
     funeral service               $5,030      $4,798     $4,897      $4,734

    Preneed Funeral Production:
      Sales                         $98.5       $73.9     $434.3      $314.0
      Total preneed funeral
       contracts sold              18,330      13,220     80,929      63,214
      Average revenue per
       contract sold               $5,374      $5,590     $5,366      $4,967



                                    Three Months Ended   Twelve Months Ended
                                       December 31,          December 31,
                                    -------------------    -----------------
                                     2007         2006      2007       2006
                                    ------       ------    ------     ------
    Cemetery
    --------
    Cemetery atneed revenue          $62.5        $58.6    $274.5     $220.0
    Cemetery recognized preneed
     revenue                         113.9         84.2     381.0      284.8
    Other revenue (2)                 25.6         21.3     104.4       86.3
                                    ------       ------    ------     ------
      Total cemetery revenues       $202.0       $164.1    $759.9     $591.1

    Gross profit                     $49.4        $35.9    $159.9     $108.3
    Gross margin percentage          24.4%        21.9%     21.0%      18.3%

    Preneed and Atneed Cemetery
     Production:
      Preneed and Atneed Sales      $154.5       $130.0    $672.1     $527.8
      Recognition rate (3)          114.2%       109.8%     97.5%      95.6%

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

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

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


    Funeral Results for the Fourth Quarter 2007

    -- Funeral revenues increased $55.9 million, or 17.7%, primarily
       reflecting the acquisition of Alderwoods offset by significant
       divestiture activity.

    -- Funeral gross profit increased $3.7 million, or 5.4%.  The gross margin
       percentage decreased to 19.4% compared to 21.7% due to the lower margin
       percentages contributed from Alderwoods locations.

    -- Average revenue per funeral service increased 5.8%.  Funeral services
       performed increased 7,308, or 11.5%.

    -- Preneed funeral production increased $24.6 million, or 33.3% primarily
       due to the acquisition of Alderwoods.


Comparable Funeral Results for the Fourth Quarter 2007

The table below details comparable funeral results of operations ("same store") for the three months ended December 31, 2007 and 2006. We consider comparable operations as those owned for the entire period beginning January 1, 2006 and ending December 31, 2007. Comparable revenue increased 2.3% primarily due to increased average revenue. Comparable gross profit decreased 4.7% due to increased property taxes and higher trust selling costs from increased production.


    (In millions, except funeral
     services performed and
     average revenue per funeral    Three months ended
     service)                          December 31,
                                    -----------------
                                     2007       2006      Change   Change %
                                    ------     ------     ------   --------
    Comparable revenue              $268.1     $262.1       $6.0      2.3%
    Comparable gross profit          $55.1      $57.8      $(2.7)    (4.7%)
    Comparable gross margin
     percentage                      20.6%      22.1%

    Comparable funeral services
     performed:
      Preneed                       17,380     17,757       (377)    (2.1%)
      Atneed                        32,252     33,874     (1,622)    (4.8%)
                                    ------     ------     ------   --------
      Total                         49,632     51,631     (1,999)    (3.9%)

    Comparable average revenue
     per funeral service            $5,160     $4,903       $257      5.2%



    Cemetery Results for the Fourth Quarter 2007

    -- Cemetery revenues increased $37.9 million, or 23.1%, primarily due to
       the acquisition of Alderwoods.  Comparable cemetery revenues increased
       $5.8 million, or 4.1%, primarily related to our tiered-product
       strategy, which focuses on the development of high-end cemetery
       property.

    -- Cemetery gross profit increased $13.5 million, or 37.6%, and the gross
       margin percentage increased to 24.4% compared to 21.9%.  Comparable
       gross profit increased $2.6 million, or 8.3% and the gross margin
       percentage increased to 23.4% compared to 22.5% driven by strong
       property sales described above.

    -- Cemetery preneed and atneed production increased $24.5 million, or
       18.8% primarily due to the acquisition of Alderwoods.


    Other Fourth Quarter 2007 Financial Results

    -- General and administrative expenses increased $8.6 million primarily
       due to $6.1 million of costs incurred to terminate and settle our SCI
       Cash Balance Defined Benefit Plan and transition costs related to the
       acquisition of Alderwoods.

    -- We received and recognized $158.1 million in distributions in
       connection with the liquidation of our French subsidiary.  Also our
       equity in earnings related to this French investment prior to
       liquidation increased $28.2 million over the fourth quarter of 2006.


Cash Flow and Capital Spending

Cash flows from operating activities were $356.2 million in 2007 compared to $324.2 million in 2006. Included in 2007 are one-time transition costs related to the Alderwoods acquisition of $38.6 million, $11.7 million of premiums paid on the early extinguishment of debt, a $17.0 million distribution from our French equity investment, and pension termination costs of $40.9 million. Included in 2006 are transition costs related to the Alderwoods acquisition of $3.2 million and $15.7 million of premiums paid on the early extinguishment of debt.

Excluding the above items, cash flow from operating activities in 2007 increased by approximately $87 million to $430 million in 2007 compared to $343 million in 2006. This increase reflects additional cash flow and synergies achieved related to the Alderwoods acquisition as well as approximately $26 million in trust proceeds arising from our recent reconciliations of the preneed funeral and cemetery backlogs of Alderwoods. These increases were partially offset by $42.4 million in additional interest payments resulting from increased borrowings to finance the Alderwoods acquisition and $29 million in additional cash tax payments.

    A summary of our capital expenditures is set forth below:

    (In millions)                                 Capital Expenditures
                                             -------------------------------
                                                  Twelve Months Ended
                                             -------------------------------
                                             December 31,       December 31,
                                                2007                2006
                                             ------------       ------------

    Capital improvements at existing
     locations                                   79.7               57.8
    Development of cemetery property             55.0               32.9
    Construction of new funeral home
     facilities and other growth capital         22.3                6.8
                                             ------------       ------------
    Total capital expenditures                 $157.0              $97.5
                                             ============       ============



NON-GAAP FINANCIAL MEASURES

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

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



                                            Three Months Ended
   (In millions, except     -----------------------------------------------
    diluted EPS)                December 31, 2007       December 31, 2006
                            -----------------------  ----------------------
                            Net Income  Diluted EPS  Net Income Diluted EPS
                            ----------  -----------  ---------- -----------
    Net income reported         $166.8       $.60         $0.8          $-

    After-tax reconciling
     items:
      (Gains) losses on
       dispositions and
       impairment charges, net   (19.3)      (.07)        21.3         .07
      Loss on early
       extinguishment of debt      0.3          -         10.7         .04
      Financing cost for
       bridge facility               -          -            -           -
      Alderwoods transition
       and other costs             4.9        .02          4.3         .01
      Pension termination
       costs                       3.5        .01            -           -
      Income from French
       equity investment        (117.4)      (.42)           -           -
      Discontinued operations        -          -         (3.5)       (.01)
                            ----------  -----------  ---------- -----------
    Earnings from continuing
     operations excluding
     special items               $38.8       $.14        $33.6        $.11
                            ==========  ===========  ========== ===========

    Diluted weighted average
     shares outstanding
     (in thousands)                       276,798                  297,306



                                           Twelve Months Ended
                             ----------------------------------------------
                                December 31, 2007       December 31, 2006
                             ----------------------  ----------------------
                             Net Income Diluted EPS  Net Income Diluted EPS
                             ---------- -----------  ---------- -----------
    Net income reported         $247.7       $.85        $56.5        $.19

    After-tax reconciling
     items:
      (Gains) losses on
       dispositions and
       impairment charges, net    (6.0)      (.02)        50.1         .17
      Loss on early
       extinguishment of debt      8.7        .03         10.7         .04
      Financing cost for
       bridge facility               -          -          3.9         .01
      Alderwoods transition
       and other costs            16.4        .06          4.3         .01
      Pension termination
       costs                       6.5        .02            -           -
      Income from French equity
       investment               (117.4)      (.40)           -           -
      Discontinued operations     (4.4)      (.02)        (3.9)       (.01)
                             ---------- -----------  ---------- -----------
    Earnings from continuing
     operations excluding
     special items              $151.5       $.52       $121.6        $.41
                             ========== ===========  ========== ===========

    Diluted weighted average
     shares outstanding
     (in thousands)                       290,444                  297,371



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



    (In millions)                                     Twelve Months Ended
                                                          December 31,
                                                      --------------------
                                                       2007           2006
                                                      ------        ------
    Cash flows from operating activities reported     $356.2        $324.2

    Reconciling items:
      Distribution from French equity investment       (17.0)            -
      Premiums paid on extinguishment of debt           11.7          15.7
      Pension termination contribution                  40.9             -
      Alderwoods transition and other costs             38.6           3.2
                                                      ------        ------
    Net cash from operating activities excluding
     special items                                    $430.4        $343.1
                                                      ======        ======


Conference Call and Webcast

We will host a conference call on Friday, February 29, 2008, at 9:00 a.m. Central Standard Time. A question and answer session will follow a brief presentation made by management. The conference call dial-in number is (617) 614-2714 with the passcode of 83569262. 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 March 7, 2008 and can be accessed at (617) 801-6888 with the passcode of 16561385. 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.
    -- The amounts payable by us with respect to our outstanding legal matters
       exceed our established reserves.
    -- The outcome of a pending Internal Revenue Service audit.  We maintain
       accruals for tax liabilities which relate to uncertain tax matters.  If
       these tax matters are unfavorably resolved, we will be required to 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 primarily be reversed through the tax
       provision at the time of resolution.
    -- Our ability to manage changes in consumer demand and/or pricing for our
       products and services due to several factors, such as changes in
       numbers of deaths, cremation rates, competitive pressures and local
       economic conditions.
    -- Changes in domestic and international political and/or regulatory
       environments in which we operate, including potential changes in tax,
       accounting and trusting policies.
    -- Changes in credit relationships impacting the availability of credit
       and the general availability of credit in the marketplace.
    -- Our ability to successfully access surety and insurance markets at a
       reasonable cost.
    -- Our ability to successfully leverage our substantial purchasing power
       with certain of our vendors.
    -- The effectiveness of our internal control over financial reporting, and
       our ability to certify the effectiveness of the internal controls and
       to obtain an unqualified attestation report of our auditors regarding
       the effectiveness of our internal control over financial reporting.
    -- Our credit agreement and privately placed debt securities contain
       covenants that may prevent us from engaging in certain transactions.
    -- Our ability to buy our common stock under our share repurchase programs
       which could be impacted by, among others, restrictive covenants in our
       bank agreements, unfavorable market conditions, the market price of our
       common stock, the nature of other investment opportunities presented to
       us from time to time, and the availability of funds necessary to
       continue purchasing common stock.


For further information on these and other risks and uncertainties, see our Securities and Exchange Commission filings, including our 2007 Annual Report on Form 10-K, which is expected to be filed today. 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.

About Service Corporation International

Service Corporation International (NYSE: SCI), headquartered in Houston, Texas, is North America's leading provider of deathcare products and services. At December 31, 2007, we owned and operated more than 1,300 funeral homes and 350 cemeteries (of which over 200 are combination locations) in 43 states, eight Canadian provinces, the District of Columbia and Puerto Rico. Through our businesses, we market the Dignity Memorial(R) brand which offers assurance of quality, value, caring service, and exceptional customer satisfaction. For more information about Service Corporation International, please visit our website at http://www.sci-corp.com. For more information about Dignity Memorial(R), please visit http://www.dignitymemorial.com.

     For additional information contact:

     Investors:
     Debbie Young -- Director / Investor Relations
     (713) 525-9088

     Media:
     Lisa Marshall -- Managing Director / Corporate Communications
     (713) 525-3066




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

                          Three Months Ended         Twelve Months Ended
                             December 31,                December 31,
                         ----------------------   ------------------------
                           2007         2006          2007          2006
                         ---------    ---------   -----------   -----------

    Revenues             $572,922     $479,098    $2,285,303    $1,752,888
    Costs and expenses   (451,457)    (374,767)   (1,816,803)   (1,402,627)
                         ---------    ---------   -----------   -----------
    Gross profit          121,465      104,331       468,500       350,261


    General and
     administrative
     expenses             (39,652)     (31,015)     (137,406)      (94,900)
    Gains (losses) on
     dispositions and
     impairment charges,
     net                    9,971      (20,542)       16,920       (58,683)
    Other operating
     expense               (1,848)           -        (1,848)            -
                         ---------    ---------   -----------   -----------
    Operating income       89,936       52,774       346,166       196,678

    Interest expense      (35,002)     (36,732)     (146,854)     (123,399)
    Interest income         3,401       10,149        11,725        31,171
    Loss on early
     extinguishment of
     debt                    (506)     (17,532)      (14,986)      (17,532)
    Equity in earnings
     (losses) of
     unconsolidated
     subsidiaries          27,877         (299)       36,607         1,052
    Gain on redemption
     of securities        158,133            -       158,133        10,932
    Other income
     (expense), net           177       (1,697)       (3,804)       (1,453)
                         ---------    ---------   -----------   -----------
                          154,080      (46,111)       40,821       (99,229)
                         ---------    ---------   -----------   -----------
    Income from
     continuing
     operations
     before income
     taxes                244,016        6,663       386,987        97,449
    Provision for
     income taxes         (77,170)      (8,999)     (143,670)      (44,845)
                         ---------    ---------   -----------   -----------
    Income (loss)
     from continuing
     operations           166,846       (2,336)      243,317        52,604
    (Loss) income from
     discontinued
     operations
     (net of income
     tax (provision)
     benefit of $(635),
     $2,430, $(4,818),
     and $2,548,
     respectively)            (47)       3,106         4,412         3,907
                         ---------    ---------   -----------   -----------
        Net income       $166,799         $770      $247,729       $56,511
                         =========    =========   ===========   ===========
    Basic earnings
     (loss) per share:
      Income (loss)
       from continuing
       operations            $.61        $(.01)         $.85          $.18
      Income from
       discontinued
       operations, net
       of tax                   -          .01           .02           .01
                         ---------    ---------   -----------   -----------
        Net income           $.61           $-          $.87          $.19
                         =========    =========   ===========   ===========
    Diluted earnings
     (loss) per share:
      Income (loss)
       from continuing
       operations            $.60        $(.01)         $.83          $.18
      Income from
       discontinued
       operations, net
       of tax                   -          .01           .02           .01
                         ---------    ---------   -----------   -----------
        Net income           $.60           $-          $.85          $.19
                         =========    =========   ===========   ===========

    Basic weighted
     average number of
     shares               271,698      292,092       284,966       292,859
                         =========    =========   ===========   ===========
    Diluted weighted
     average number of
     shares               276,798      297,306       290,444       297,371
                         =========    =========   ===========   ===========
    Dividends declared
     per share               $.04         $.03          $.13         $.105
                         =========    =========   ===========   ===========



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

                                               December 31,    December 31,
                                                    2007            2006
                                                ----------      ----------
    Assets
    Current assets:
      Cash and cash equivalents                   $168,594         $39,880
      Receivables, net                             113,793         107,194
      Inventories                                   36,203          39,535
      Current assets of discontinued
       operations                                        -           2,236
      Current assets held for sale                   2,294           6,330
      Other                                         27,261          43,162
                                                ----------      ----------
        Total current assets                       348,145         238,337
                                                ----------      ----------
    Preneed funeral receivables and
     trust investments                           1,434,403       1,516,676
    Preneed cemetery receivables and
     trust investments                           1,428,057       1,522,584
    Cemetery property, at cost                   1,451,666       1,495,248
    Property and equipment, at cost, net         1,569,534       1,641,353
    Goodwill                                     1,198,153       1,264,272
    Non-current assets of discontinued
     operations                                          -         371,132
    Non-current assets held for sale               122,626         349,311
    Deferred charges and other assets              400,734         436,545
    Cemetery perpetual care trust
     investments                                   905,744         893,931
                                                ----------      ----------
                                                $8,859,062      $9,729,389
                                                ==========      ==========

    Liabilities & Stockholders' Equity
    Current liabilities:
      Accounts payable and accrued
       liabilities                                $343,392        $341,173
      Current maturities of long-term debt          36,594          46,176
      Current liabilities of discontinued
       operations                                        -           2,351
      Current liabilities held for sale                149             419
      Income taxes                                  46,305          17,828
                                                ----------      ----------
        Total current liabilities                  426,440         407,947
                                                ----------      ----------
    Long-term debt                               1,820,106       1,912,696
    Deferred preneed funeral revenues              526,668         537,792
    Deferred preneed cemetery revenues             753,876         754,193
    Deferred income taxes                           67,441         177,341
    Non-current liabilities of discontinued
     operations                                          -         311,498
    Non-current liabilities held for sale           91,928         239,800
    Other liabilities                              383,642         357,418
    Non-controlling interest in funeral and
     cemetery trusts                             2,390,288       2,548,743
    Non-controlling interest in cemetery
     perpetual care trusts                         906,590         887,186

    Stockholders' equity:
      Common stock, $1 per share par value,
       500,000,000 shares authorized, 262,858,169
       and 293,222,114, issued and outstanding
       (net of 1,961,300 and 10,000 treasury
       shares, at par, respectively)               262,858         293,222
      Capital in excess of par value             1,874,600       2,135,649
      Accumulated deficit                         (797,965)       (906,394)
      Accumulated other comprehensive income       152,590          72,298
                                                ----------      ----------
        Total stockholders' equity               1,492,083       1,594,775
                                                ----------      ----------
                                                $8,859,062      $9,729,389
                                                ==========      ==========



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

                                                  Year Ended December 31,
                                                  ------------------------
                                                    2007             2006
                                                  --------        --------
    Cash flows from operating activities:
      Net income                                  $247,729         $56,511
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
          Net income from discontinued
           operations, net of tax                   (4,412)         (3,907)
          Equity in earnings of unconsolidated
           subsidiaries, net of cash received      (19,566)         (1,052)
          Loss on early extinguishment of debt      14,986          17,532
          Premiums paid on early extinguishment
           of debt                                 (11,650)        (15,725)
          Depreciation and amortization            130,429          96,684
          Amortization of cemetery property         35,824          28,263
          Amortization of loan costs                 6,261          16,328
          Provision for doubtful accounts           10,754           9,156
          Provision for deferred income taxes       34,652          38,257
          (Gains) losses on dispositions and
           impairment charges, net                 (16,920)         58,683
          Gain on redemption of securities        (158,133)              -
          Share-based compensation                   8,787           7,035
          Excess tax benefits from share based
           awards                                  (10,469)              -
      Change in assets and liabilities, net
       of effects from acquisitions and
       dispositions:
          Increase in receivables                  (24,650)           (362)
          Increase in other assets                    (660)         (7,938)
          Increase (decrease) in payables and
           other liabilities                        51,407         (10,607)
          Net effect of preneed funeral production
           and maturities                           27,918           8,629
          Net effect of cemetery production and
           deliveries                               16,610          26,728
          Other                                          6          (2,027)
                                                  --------        --------
      Net cash provided by operating activities
       from continuing operations                  338,903         322,188
      Net cash provided by operating activities
       from discontinued operations                 17,279           2,031
                                                  --------        --------
      Net cash provided by operating activities    356,182         324,219
      Cash flows from investing activities:
        Capital expenditures                      (157,011)        (97,527)
        Acquisitions, net of cash acquired          (8,355)     (1,301,359)
        Proceeds from divestitures and sales
         of property and equipment                 410,689          83,146
        Proceeds from sale of investments          144,564               -
        Net (deposits) withdrawals of restricted
         funds and other                            (3,220)          8,639
                                                  --------        --------
      Net cash provided by (used in) investing
       activities from continuing operations       386,667      (1,307,101)
      Net cash (used in) provided by investing
       activities from discontinued operations      (8,546)          9,599
                                                  --------        --------
      Net cash provided by (used in) investing
       activities                                  378,121      (1,297,502)
      Cash flows from financing activities:
        Proceeds from issuance of long-term debt   398,996         850,000
        Debt issuance costs                         (6,443)        (24,716)
        Payments of debt                           (29,234)        (26,053)
        Principal payments on capital leases       (27,057)        (21,346)
        Early extinguishment of debt              (472,545)       (181,543)
        Proceeds from exercise of stock options     52,938           5,946
        Excess tax benefits from share-based
         awards                                     10,469               -
        Purchase of Company common stock          (505,121)        (27,870)
        Payments of dividends                      (34,629)        (29,431)
        Bank overdrafts and other                    7,209          20,480
                                                  --------        --------
      Net cash (used in) provided by financing
       activities from continuing operations      (605,417)        565,467
      Net cash used in financing activities
       from discontinued operations                 (2,113)           (254)
                                                  --------        --------
      Net cash (used in) provided by financing
       activities                                 (607,530)        565,213
      Effect of foreign currency                     1,941           1,168
                                                  --------        --------
      Net increase (decrease) in cash and cash
       equivalents                                 128,714        (406,902)
      Cash and cash equivalents at beginning
       of period                                    39,880         446,782
                                                  --------        --------
      Cash and cash equivalents at end of period  $168,594         $39,880
                                                  ========        ========

SOURCE Service Corporation International

http://www.sci-corp.com