Service Corporation International Reports Record Third Quarter Results

HOUSTON, Oct. 17, /PRNewswire/ -- Service Corporation International (NYSE: SRV)(SCI), the world's largest funeral and cemetery company, today reported record third quarter revenues and earnings. For the three months ended September 30, 1996, the company reported revenues of $544.5 million, net income of $57.4 million and primary earnings per share of $.24 (fully diluted of $.23). This represents a 34.9 percent increase in revenues, a 46.7 percent increase in net income and a 20.0 percent increase in primary earnings per share (27.8 percent increase in fully diluted) over the third quarter of 1995.

For the nine months ended September 30, 1996, the company reported revenues of $1.685 billion, net income of $191.5 million and primary earnings per share of $.80 (fully diluted of $.77). This represents a 52.4 percent increase in revenues, a 50.6 percent increase in net income and a 23.1 percent increase in primary earnings per share (26.2 percent increase in fully diluted) over the same period in 1995.

Observing these results, SCI Chairman Robert L. Waltrip said, "These impressive operating results continue to validate the effectiveness of SCI's strategy and its proven business practices. This performance was made possible by more than 29,000 dedicated employees who strive to exceed the expectations of our client families."

During the third quarter of 1996, SCI acquired 33 funeral service locations and 5 cemeteries at a cost of approximately $46 million. These businesses are expected to produce annualized revenues of approximately $28 million. During the first nine months of 1996, SCI acquired 153 funeral service locations, 25 cemeteries, and 1 crematory at a cost of approximately $250 million. These businesses are expected to produce approximately $127 million in annualized revenues. Of these amounts, international acquisitions were completed at a cost of nearly $22 million.

1996 Third Quarter Highlights:

Revenues from existing business clusters in North America, the United Kingdom and Australia owned for all of the third quarters of 1996 and 1995 increased 14.3 percent to $395.7 million, contributing $116.5 million to existing cluster operating profit, a 14.1 percent increase over the same period last year. During the third quarter of 1996, SCI operations performed approximately 120,000 funeral services worldwide, 56,000 in North America, 55,000 in Europe and 9,000 on the Pacific Rim.

Compared to the third quarter of 1995, Funeral segment revenues increased 38.3 percent to $389.0 million, reflecting the impact of recently acquired properties, particularly those in Europe. Funeral segment profits rose $17.4 million to $78.4 million, an increase of 28.6 percent. Operating margins averaged 20.1 percent for the third quarter of 1996, compared to 21.7 percent for the same period in 1995, reflecting the expected impact of the traditionally lower margins associated with the businesses acquired in Europe.

During the third quarter of 1996, sales of prearranged funeral contracts were approximately $146 million or 59 percent more than 1995. At the end of third quarter of 1996, the backlog of prearranged funeral contracts to be serviced in future periods was approximately $2.6 billion. Revenues from such contracts will be recognized during the periods in which the services are performed.

Compared to the third quarter of 1995, Cemetery segment revenues increased 28.6 percent to $150.6 million. Cemetery segment profits rose $7.4 million to $50.1 million, an increase of 17.4 percent, reflecting the results of recently acquired cemeteries, offset in part by the planned increase in administrative overhead associated with cemetery operations. Operating margins averaged 33.3 percent for the third quarter of 1996, compared to 36.5 percent for the same period in 1995.

General and administrative costs increased approximately one percent during the third quarter of 1996 to $12.3 million, or 2.3 percent of revenues, as compared to $12.2 million, or 3.0 percent of revenues for the same period in 1995.

Interest expense was $3.7 million higher than the same period last year due to increased indebtedness related to acquisitions.

Service Corporation International is the largest funeral and cemetery organization in the world, with 2,864 funeral service locations, 335 cemeteries and 147 crematoria as of September 30, 1996. SCI provides funeral and cemetery services in North America, Europe and the Pacific Rim. SCI's stock is traded on the New York Stock Exchange. The company's ticker symbol is SRV.

                      SERVICE CORPORATION INTERNATIONAL
                       CONSOLIDATED STATEMENT OF INCOME
                                 (Unaudited)

                                             Three Months Ended
                                                September 30,
                                             1996        1995
                                   (Thousands, except per share amounts)

    Revenues:
    Funeral                              $ 389,031    $ 281,328
    Cemetery                               150,584      117,128
    Financial services                       4,885        5,035
    Total                                     544,500      403,491

    Cost and expenses:
    Funeral                                 310,646      220,373
    Cemetery                                100,456       74,425
    Financial services                        2,020        2,969
    Total                                      413,122      297,767
                                               131,378      105,724
    General and administrative
    expense                                 (12,296)     (12,206)

    Income from operations                  119,082       93,518

    Interest expense                        (35,995)     (32,254)
    Dividends on preferred
     securities of SCI
     Finance LLC                             (2,695)      (2,695)
    Other income                              8,382        3,453
                                               (30,308)     (31,496)
    Income before income taxes               88,774       62,022
    Provision for income taxes                  31,379       22,886
    Net income                              $   57,395   $   39,136

    Earnings per share:
    Primary                               $     0.24   $     0.20

    Fully diluted                         $     0.23   $     0.18

    Weighted average number of
     common shares                           241,875      197,094
                                             Nine Months Ended
                                             September 30,
                                           1996          1995
    Revenues:
    Funeral                               $1,219,031   $  761,297
    Cemetary                                 450,200      328,925
    Financial services                        15,471       15,031
    Total                                  1,684,702    1,105,253

    Cost and expenses:
    Funeral                                  947,533      556,251
    Cemetery                                 293,741      211,276
    Financial services                         7,819        9,345
    Total                                  1,249,093      776,872
                                             435,609      328,381

    General and administrative expense       (40,837)     (35,677)

    Income from operations                   394,772      292,704

    Interest expense                        (102,926)     (85,063)
    Dividends on preferred securities
     of SCI Finance LLC                       (8,086)      (8,086)
    Other income                              15,805        6,526
                                             (95,207)     (86,623)
    Income before income taxes               299,565      206,081
    Provision for income taxes               108,023       78,925
    Net income                            $  191,542    $ 127,156

    Earnings per share:
    Primary                               $    0.80   $     0.65

    Fully diluted                         $    0.77   $     0.61

    Weighted average number
     of common shares                       240,843      194,670

All share and per share data has been restated to reflect a 2 for 1 common stock split in August 1996.

    Geographic segment information:


                                   United         France
                                   States
    Revenues:
    Nine months ended
    September 30:
    1996                           $1,034,226   $ 393,595
    1995                              853,045      47,737

    Three months ended
    September 30:
    1996                             338,677     121,162
    1995                             285,825      47,737

    Income from operations:
    Nine months ended
    September 30:
    1996                         $  292,633   $  33,188
    1995                            231,267       2,005

    Three months ended
    September 30:
    1996                            89,915       7,227
    1995                            73,130       2,005

    Funeral services performed:
    Nine months ended
    September 30:
    1996                           160,186     112,050
    1995                           146,164      13,760

    Three months ended
    September 30:
    1996                            51,009      34,403
    1995                            46,943      13,760

    Number of locations at
    September 30:
    1996                            1,392       1,101
    1995                             1,163       1,067


    Geographic segment information
                                   Other       Other
                                   European**  Foreign *** Consolidated

    Revenues:
    Nine months ended September 30:
    1996                           $ 135,337   $ 121,544   $1,684,702
    1995                             107,301      97,170    1,105,253
    Three months ended September 30:
    1996                              41,386      43,275      544,500
    1995                              34,641      35,288      403,491

    Income from operations:
    Nine months ended September 30:
    1996                           $  29,091   $  39,860    $ 394,772
    1995                              26,224      33,208      292,704
    Three months ended September 30:
    1996                               7,664      14,276      119,082
    1995                               6,336      12,047       93,518

    Funeral services performed:
    Nine months ended September 30:
    1996                              69,719      37,697      379,652
    1995                              60,543      33,180      253,647

    Three months ended September 30:
    1996                              20,809      13,571      119,792
    1995                              18,327      11,806       90,836


    Number of locations at September 30:
    1996                                 609         244        3,346
    1995                                 611         227        3,068

    *   French operations from August 1995.

** Includes United Kingdom operations, and other European operations from August 1995.

*** Primarily Canadian and Australian operations.
SOURCE Service Corporation International
CONTACT: Todd Matherne, Vice President Investor Relations, 713-525-5243, or 102121.2653@compuserve.com -- of Service Corporation International