Service Corporation International Announces Fourth Quarter 2008 Financial Results and Comments on Outloo...(arter which was below the Company's expe...),Health

Date:2/25/2009

arter, which was below the Company's expectations. An unfavorable currency impact from businesses in Canada reduced average revenue per funeral service by 250 basis points. This was substantially offset by reductions in Canadian expenses due to currency and had a negligible effect on gross margins. Additionally, declines in trust fund income recognized on matured preneed contracts decreased $4.8 million resulting in a 130 basis point decline in average revenue per funeral service. Excluding these items, our average revenue per funeral service increased 4.0% for the quarter.

Despite the decline in revenues, funeral gross profit increased $3.1 million, or 4.3%, due to declines in variable costs, employee-related costs, and general liability insurance expenses. The gross margin percentage increased to 21.6% compared to 20.0% in 2007.

Preneed funeral sales production decreased $4.7 million, or 4.8%. Total funeral contracts sold were reduced by 11% as discretionary purchases were impacted by the uncertain economic conditions; however, the average revenue per contract sold increased 6.9%. Preneed funeral sales are deferred and recognized in the future when the funeral service is performed.

The cremation rate increased 70 basis points to 42.1% in the fourth quarter of 2008 compared to 41.4% for the same period of 2007.

Comparable Cemetery Results

The table below details comparable cemetery results of operations ("same store") for the three months ended December 31, 2008 and 2007. We consider comparable operations as those owned for the entire period beginning January 1, 2007 and ending December 31, 2008.

    (In millions)                    Three months ended
                                        December 31,
                                      ----------------
                                        20
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SOURCE  Service Corporation International
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