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Service Corporation International Announces Third Quarter 2009 Financial Results
Date:11/4/2009

HOUSTON, Nov. 4 /PRNewswire-FirstCall/ -- Service Corporation International (NYSE: SCI), the largest provider of deathcare products and services in North America, today reported results for the third quarter 2009. Our unaudited condensed consolidated financial statements can be found at the end of this press release. The table below summarizes our key financial results:

                                    Three Months Ended      Nine Months Ended
    (In millions, except for          September 30,           September 30,
     per share amounts)
                                    ------------------      -----------------
                                    2009          2008      2009       2008
                                    ----          ----      ----       ----
    Revenues                      $497.2        $516.4  $1,521.8   $1,638.7
    Operating income               $78.0         $49.0    $232.6     $231.7
    Net income attributable to
     common stockholders           $31.2         $14.6     $88.8      $87.6
    Diluted earnings per share      $.12          $.06      $.35       $.33
    Earnings from
     continuing operations
     excluding special items(1)    $32.4         $23.9     $93.3     $112.1
    Diluted earnings per
     share from continuing
     operations excluding
     special items(1)               $.13          $.09      $.37       $.43
    Diluted weighted average
     shares outstanding            253.0         260.4     251.3      263.0
    Net cash provided by
     operating activities          $94.2        $116.9    $305.3     $233.4
    Net cash provided by
     operating activities
     excluding special items(1)    $94.2        $116.9    $305.3     $326.7

(1) Earnings from continuing operations excluding special items, diluted earnings per share from continuing operations excluding special items, and net cash provided by operating activities excluding special items are non-GAAP financial measures. A reconciliation to net income, diluted earnings per share, and net cash provided by operating activities computed in accordance with GAAP can be found later in this press release under the headings "Non-GAAP Financial Measures" and "Cash Flow and Capital Spending."

Quarter Highlights:

  • Diluted earnings per share from continuing operations excluding special items was $0.13 in the third quarter 2009 compared to $0.09 in the prior year third quarter. These results exceeded our internal expectations as cost reduction initiatives, better than expected trust fund performance, and better than expected preneed cemetery production more than offset lower funeral services performed in the quarter.
  • Funeral gross profit increased $9.5 million, or 16.0%, and funeral gross margin percentage improved to 20.9% from 16.9% as significant efficiencies obtained from cost control initiatives more than offset declines in funeral services performed.
  • Cemetery gross profit increased $9.4 million, or 40.7%, and cemetery gross margin percentage improved to 19.3% from 13.9% due to an increase in preneed cemetery property sales, higher cemetery trust fund income and reductions in costs compared to prior year levels, which were partially offset by lower atneed revenues in the third quarter.
  • Net cash provided by operating activities excluding special items for the quarter was $94.2 million, a decrease of $22.7 million compared to the prior year, reflecting the impact of partially funding an October payroll in the current quarter, disbursements for mid-year incentive compensation and lower receipts on preneed receivables, which were partially offset by higher earnings.

Tom Ryan, the Company's President and Chief Executive Officer, commented on the third quarter of 2009:

"Our financial performance for the quarter was very encouraging, and continued the trend of strong financial results for the year, and I want to thank all of our associates for their efforts and hard work in achieving these results. We believe our proactive response to the challenging economic climate, which included realigning our cost structure to promote sustainable operating efficiency and investing in our sales production channel, has been validated by the results achieved, as operating income surpassed prior year results for the quarter. Moreover, our fundamentally sound business model and efficient cost structure will provide the basis for high margin growth as we expand the organization both organically and through acquisition."

"We recently announced the acquisition of Keystone North America Inc., the fifth largest provider of deathcare products and services in North America. The transaction is anticipated to close in the first quarter of 2010 and is expected to be immediately accretive to earnings and cash flow. Looking forward, we intend to continue to capitalize on our leading market position, utilizing our strength as the industry leader to make our business stronger and to enhance shareholder value."

REVIEW OF RESULTS FOR THIRD QUARTER 2009

Consolidated Segment Results

    (In millions, except funeral services performed
     and average revenue per funeral service)              Three Months Ended
                                                              September 30,
                                                              -------------
                                                             2009       2008
                                                             ----       ----
    Funeral
    -------
    Funeral atneed revenue                                 $211.7     $229.6
    Funeral recognized preneed revenue                       99.6      103.7
    Other funeral revenue(1)                                 17.6       17.1
                                                             ----       ----
        Total funeral revenues                             $328.9     $350.4

    Gross profit                                            $68.7      $59.2
    Gross margin percentage                                  20.9%      16.9%

    Funeral services performed                             60,494     65,177
    Average revenue per funeral service                    $5,146     $5,114

    Cemetery
    --------
    Cemetery atneed revenue                                 $59.2      $65.1
    Cemetery recognized preneed revenue                      89.1       79.5
    Other cemetery revenue (2)                               20.0       21.4
                                                             ----       ----
        Total cemetery revenues                            $168.3     $166.0

    Gross profit                                            $32.5      $23.1
    Gross margin percentage                                  19.3%      13.9%

(1) Other funeral revenue consists primarily of General Agency (GA) revenues, which 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 cemetery merchandise and service trust fund income, endowment care trust fund income, and interest and finance charges earned from customer receivables on preneed installment contracts.

Comparable Funeral Results

The table below details comparable funeral results of operations ("same store") for the three months ended September 30, 2009 and 2008. We consider comparable operations to be those owned for the entire period beginning January 1, 2008 and ending September 30, 2009.

    (Dollars in millions, except average
     revenue per funeral service and average
     revenue per contract sold)             Three Months Ended
                                               September 30,
                                               -------------
                                               2009      2008     Change
                                               ----      ----     ------
    Comparable funeral revenue:
      Atneed revenue                         $207.8    $218.7     $(10.9)
      Recognized preneed revenue               98.5     102.0       (3.5)
      Other funeral revenue(1)                 17.7      17.0        0.7
                                               ----      ----        ---
    Total comparable funeral revenues        $324.0    $337.7     $(13.7)

    Comparable gross profit                   $69.9     $59.9      $10.0
    Comparable gross margin percentage         21.6%     17.7%

    Comparable funeral services performed:
      Preneed                                20,723    20,946       (223)
      Atneed                                 38,543    41,172     (2,629)
                                             ------    ------     -------
      Total                                  59,266    62,118     (2,852)

    Comparable average revenue per funeral
     service                                 $5,168    $5,163         $5

    Comparable preneed funeral production:
      Sales                                  $122.7    $126.5      $(3.8)
      Total preneed funeral contracts sold   21,572    22,125       (553)
      Average revenue per contract sold      $5,688    $5,718       $(30)

(1) Other funeral revenue consists primarily of General Agency (GA) revenues, which 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.

  • Comparable funeral services performed decreased 4.6%, primarily related to soft demand experienced in our markets. We believe this decline is consistent with trends experienced by other funeral service providers and industry vendors.
  • The comparable average revenue per funeral service grew 0.1% over the prior year quarter. Excluding an unfavorable Canadian currency impact and lower funeral trust fund income, the average revenue per funeral service grew approximately 1.9%.
  • The cremation rate increased 50 basis points to 42.8% in the third quarter of 2009 compared to 42.3% for the same period of 2008.
  • Comparable funeral gross profit increased $10.0 million, or 16.7%, and gross margin percentage increased to 21.6% compared to 17.7% in 2008 due to lower variable merchandise costs, a decline in personnel costs related to work force initiatives and a reduction in our self-insurance reserves, which were partially offset by the impact of lower funeral services performed.
  • Preneed funeral sales production decreased $3.8 million, or 3.0%. Total funeral contracts sold decreased 2.5% while the average revenue per contract sold decreased 0.5%. Preneed funeral sales are deferred and recognized as revenues in the future when the funeral service is performed.

Comparable Cemetery Results

The table below details comparable cemetery results of operations ("same store") for the three months ended September 30, 2009 and 2008. We consider comparable operations to be those owned for the entire period beginning January 1, 2008 and ending September 30, 2009.

                                               Three Months Ended
    (Dollars in millions)                         September 30,
                                                  -------------
                                                 2009      2008     Change
                                                 ----      ----     ------
    Comparable cemetery revenue:
      Atneed revenue                            $58.1     $61.6     $(3.5)
      Recognized preneed revenue                 88.6      79.3       9.3
      Other cemetery revenue(1)                  19.7      21.0      (1.3)
                                                 ----      ----      ----
    Total comparable cemetery revenues         $166.4    $161.9      $4.5

    Comparable gross profit                     $32.2     $22.4      $9.8
    Comparable gross margin percentage           19.4%     13.8%

    Comparable preneed and atneed cemetery
     sales production:
        Property                                $87.3     $75.3     $12.0
        Merchandise and services                 87.2      83.9       3.3
          Discounts                             (16.8)    (13.9)     (2.9)
                                                ------    ------     -----
      Preneed and atneed cemetery sales
       production                              $157.7    $145.3     $12.4
      Recognition rate (2)                         93%       97%

(1) Other cemetery revenue is primarily related to cemetery merchandise and service trust fund income, endowment care trust fund income and interest and finance charges earned from customer receivables on preneed installment contracts.

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

  • Comparable atneed cemetery revenues declined $3.5 million, or 5.7%, which we believe was primarily driven by a decline in deaths in our markets.
  • Comparable recognized preneed cemetery revenues increased $9.3 million, primarily as a result of strong cemetery property sales production in the current period.
  • Cemetery gross profit increased $9.8 million, and gross margin percentage increased to 19.4% compared to 13.8% in 2008 due to the higher preneed revenues described above, a decline in personnel costs related to work force initiatives, and a reduction in our self-insurance reserves, partially offset by lower atneed revenues.
  • Preneed and atneed cemetery sales production increased $12.4 million, or 8.5%, primarily due to higher property sales resulting from new company sales initiatives coinciding with an overall improvement in the general economic climate.

Other Financial Results

  • General and administrative expenses of $21.0 million in the third quarter of 2009 increased $4.9 million compared to the third quarter of 2008 primarily because the prior year quarter reflected a $4.0 million reduction in corporate bonuses and long-term incentive plans.
  • We recognized a $2.2 million net pretax loss on divestitures and impairment charges in the third quarter of 2009 compared to $12.8 million in 2008. These losses were due primarily to impairment charges on various locations in North America.
  • Prior year results included Hurricane expenses of $4.3 million reflecting estimated property damages incurred at various locations caused by Hurricane Ike in September 2008, net of estimated insurance recoveries.
  • Interest expense decreased to $29.4 million in the third quarter of 2009, compared to $33.2 million in the third quarter of 2008. The decrease was primarily due to lower average levels of debt.
  • During the third quarter of 2009, we purchased $17.2 million of our senior notes and debentures on the open market. As a result of these transactions, we recognized a gain of $0.5 million, which represents a $0.8 million discount to early extinguish the debt, partially offset by the write-off of unamortized deferred loan costs of $0.3 million.
  • Our income tax rate was 38.8% in the third quarter of 2009 compared to 7.3% in the third quarter of 2008. The low tax rate in 2008 reflects discrete items, including the release of tax reserves due to the expiration of statutory limitations and state tax planning.

Cash Flow and Capital Spending

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 liquidity prepared in accordance with GAAP.

                                          Three Months      Nine Months
                                             Ended             Ended
    (In millions)                         September 30,     September 30,
                                          -------------     -------------
                                          2009     2008     2009     2008
                                          ----     ----     ----     ----
    Net cash provided by operating
     activities, as reported             $94.2   $116.9   $305.3   $233.4
    Federal tax payment                      -        -        -     90.0
    One-time Alderwoods transition
     and other costs                         -        -        -      3.3
                                           ---      ---      ---      ---
    Net cash provided by operating
     activities, excluding special
     items                               $94.2   $116.9   $305.3   $326.7
                                         =====   ======   ======   ======


Net cash provided by operating activities, excluding special items, was $94.2 million for the third quarter of 2009, down from $116.9 million in the prior year quarter. The decrease reflected the impact of partially funding an October payroll in the current quarter, disbursements for mid-year incentive compensation, and lower receipts on preneed receivables, which were partially offset by our cost control initiatives mentioned above. Although our cash flow was lower than the prior year quarter, it did exceed our expectations for the current period due to favorable working capital initiatives.

Consistent with our financial objectives, we were successful in prudently managing our capital expenditures during the three and nine month periods ended September 30, 2009. A summary of our capital expenditures is set forth below:

                                        Three Months Ended   Nine Months Ended
    (In millions)                          September 30,       September 30,
                                           -------------       -------------
                                          2009       2008     2009      2008
                                          ----       ----     ----      ----
    Capital improvements at existing
     locations                            $9.9      $21.9    $27.0     $59.0
    Development of cemetery property       7.7       14.2     23.8      37.2
    Construction of new funeral home
     facilities and other growth           2.4        4.2     11.7      12.1
                                           ---        ---     ----      ----
    Total capital expenditures           $20.0      $40.3    $62.5    $108.3
                                         =====      =====    =====    ======


TRUST FUND RETURNS

Total trust fund returns include realized and unrealized gains and losses and dividends. A summary of our U.S. trust fund returns for the three and nine months ended September 30, 2009 is set forth below:

                                  Three Months      Nine Months
                                  ------------      -----------
    Preneed Funeral                   11.1%            18.2%
    Preneed Cemetery                  12.9%            22.1%
    Cemetery Perpetual Care           10.5%            18.6%
        Combined Trust Funds          11.6%            19.9%

NON-GAAP FINANCIAL MEASURES

Earnings from continuing operations excluding special items, diluted earnings per share from continuing operations excluding special items, and net cash provided by operating activities excluding special items shown above are all 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, as they are not influenced by certain income, expense and cash items not impacting 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 attributable to common stockholders and diluted earnings per share from continuing operations excluding special items to our GAAP diluted earnings per share. 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 September 30,
    (In millions, except                --------------------------------
     diluted EPS)                          2009                  2008
                                           ----                  ----
                                       Net      Diluted      Net     Diluted
                                      Income      EPS      Income      EPS
                                      ------      ---      ------      ---
    Net income attributable to
     common stockholders, as
     reported                         $31.2      $.12      $14.6       $.06

    After-tax reconciling items:
      Losses on divestitures and
       impairment charges, net          2.3       .01        8.3        .03
      Gain on extinguishment of debt   (0.3)        -          -          -
      Change in certain tax reserves   (0.8)        -        1.0          -
                                       -----      ---        ---        ---
    Earnings from continuing
     operations excluding
     special items                    $32.4      $.13      $23.9       $.09
                                      =====      ====      =====       ====
    Diluted weighted average
     shares outstanding (in
     thousands)                               253,048               260,370

                                        Nine Months Ended September 30,
    (In millions, except                -------------------------------
     diluted EPS)                          2009                  2008
                                           ----                  ----
                                       Net      Diluted      Net     Diluted
                                      Income      EPS      Income      EPS
                                      ------      ---      ------      ---
    Net income attributable to
     common stockholders, as
     reported                         $88.8      $.35      $87.6       $.33

    After-tax reconciling items:
      Losses on divestitures and
       impairment charges, net          5.3       .02       19.8        .09
      Gain on early
       extinguishment of debt          (2.4)     (.01)         -          -
      One-time Alderwoods
       transition and other costs         -         -        0.7          -
      Change in certain tax
       reserves                         1.6       .01        3.6        .01
      Discontinued operations             -         -        0.4          -
                                        ---       ---        ---        ---
    Earnings from continuing
     operations excluding
     special items                    $93.3      $.37     $112.1       $.43
                                      =====      ====     ======       ====
    Diluted weighted average
     shares outstanding (in
     thousands)                               251,272               263,002


OUTLOOK FOR REMAINDER OF 2009 AND 2010

Our outlook for potential earnings and cash flow in the fourth quarter and full year of 2009 as well as fiscal 2010 is as follows:


                                     4th Qtr 2009   Updated 2009      2010
    (In millions except per share      Guidance      Guidance       Guidance
     amounts)                          --------      --------       --------
    Diluted earnings per share
     from continuing operations
     excluding special items (1)    $.09 to $.11   $.46 to $.48   $.45 to $.53
    Net cash provided by
     operating activities
     excluding special items (1)      $45 to $60   $350 to $365   $300 to $350
    Capital improvements at existing
     facilities and cemetery
     development expenditures        Approx. $20    Approx. $70     $85 to $95

(1) Diluted earnings per share from continuing operations excluding special items and net cash provided by operating activities excluding special items are non-GAAP financial measures. We normally reconcile these non-GAAP financial measures to diluted earnings per share and net cash provided by operating activities; however, these measures calculated in accordance with GAAP are not currently accessible on a forward-looking basis. Our updated outlook for 2009 and preliminary guidance for 2010 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, potential tax reserve adjustments and/or potential cash tax payments, and potential costs associated with settlements of litigation or the recognition of receivables for insurance recoveries associated with litigation. The foregoing items, especially gains or losses associated with asset dispositions and tax adjustments, could materially impact our forward-looking diluted earnings per share and cash flow calculated in accordance with GAAP, consistent with the historical disclosures found earlier in this press release under the headings "Non-GAAP Financial Measures" and "Cash Flow and Capital Spending".

This outlook reflects management's current views and estimates regarding future economic and financial market conditions, company performance and financial results, business prospects, the competitive environment and other events. This outlook is subject to a number of risks and uncertainties, many of which are beyond the control of SCI, which could cause actual results to differ materially from the potential results highlighted above. A further list and description of these risks and uncertainties and other matters can be found later in this press release under "Cautionary Statement on Forward-Looking Statements".

Conference Call and Webcast

We will host a conference call on Thursday, November 5, 2009, at 8:00 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) 801-9715 with the passcode of 63815855. The conference call will also be broadcast live via the Internet and can be accessed through our website at www.sci-corp.com. A replay of the conference call will be available through November 10, 2009 and can be accessed at (617) 801-6888 with the passcode of 30304932. Additionally, a replay of the conference call will be available on our website for approximately ninety days.

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, access to capital markets, 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, and negative currency translation effects.
  • Changes in operating conditions such as supply disruptions and labor disputes.
  • Our inability to achieve the level of cost savings, productivity improvements or earnings growth anticipated by management, whether due to significant increases in energy costs (e.g., electricity, natural gas and fuel oil), costs of other materials, employee-related costs or other factors.
  • Inability to complete acquisitions, divestitures or strategic alliances as planned or to realize expected synergies and strategic benefits.
  • The outcomes of pending lawsuits, proceedings, and claims 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.
  • Allegations regarding compliance with laws, regulations, industry standards, and customs regarding funeral or burial procedures and practices.
  • The amounts payable by us with respect to our outstanding legal matters exceeding our established reserves.
  • Amounts that we may be required to replenish into our affiliated funeral and cemetery trust funds in order to meet minimal funding requirements.
  • The outcome of pending Internal Revenue Service audits. 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. While such payments would affect our cash flow, we do not believe they would impair our ability to service debt or our overall liquidity. If these tax matters are favorably resolved, the accruals maintained by us will no longer be required, and these amounts will be released through our 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 from our auditors regarding the effectiveness of our internal control over financial reporting.
  • The possibility that restrictive covenants in our credit agreement and privately placed debt securities 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.
  • The financial conditions of third-party insurance companies that fund our preneed funeral contracts may impact our future revenues.
  • Continued economic crisis and financial and stock market declines could reduce future potential earnings and cash flows and could result in future goodwill impairments.
  • The weakened economy may cause customers to reassess preneed funeral or cemetery arrangements or decrease the amounts atneed customers are willing to pay or consider cremation as opposed to burial.
  • Changes in our funeral and cemetery trust funds, investments in equity securities, fixed income securities, and mutual funds could be significantly negatively impacted by the weakened economy.

For further information on these and other risks and uncertainties, see our Securities and Exchange Commission filings, including our 2008 Annual Report on Form 10-K. Copies of this document as well as other SEC filings can be obtained from our website at 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 September 30, 2009, we owned and operated 1,250 funeral homes and 364 cemeteries (of which 206 are combination locations) in 43 states, eight Canadian provinces, the District of Columbia and Puerto Rico. Through our businesses, we market the Dignity Memorial® 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 www.sci-corp.com. For more information about Dignity Memorial®, please visit www.dignitymemorial.com.

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

                                Three Months Ended       Nine Months Ended
                                   September 30,            September 30,
                                   -------------            -------------
                                  2009       2008         2009         2008
                                  ----       ----         ----         ----
    Revenues                    $497,217   $516,439   $1,521,761   $1,638,672
    Costs and expenses          (396,054)  (434,171)  (1,218,653)  (1,311,646)
                                ---------  ---------  -----------  -----------
    Gross profit                 101,163     82,268      303,108      327,026
                                 -------     ------      -------      -------

    General and administrative
     expenses                    (20,961)   (16,110)     (69,213)     (62,840)
    Loss on divestitures and
     impairment charges, net      (2,221)   (12,819)      (1,280)     (28,723)
    Hurricane expense, net             -     (4,313)           -       (4,313)
    Other operating income             -          -            -          585
                                     ---        ---          ---          ---
    Operating income              77,981     49,026      232,615      231,735

    Interest expense             (29,383)   (33,222)     (93,439)    (100,602)
    Gain on early
     extinguishment of debt          482          -        3,922            -
    Interest income                  584      1,128        1,872        4,502
    Other income (expense), net      301     (1,000)        (442)      (1,061)
                                     ---     -------        -----      -------
    Income from continuing
     operations before income
     taxes                        49,965     15,932      144,528      134,574
    Provision for income taxes   (19,403)    (1,160)     (56,006)     (46,524)
                                 --------    -------     --------     --------
    Income from continuing
     operations                   30,562     14,772       88,522       88,050
    Loss from discontinued
     operations                        -          -            -         (362)
                                     ---        ---          ---         -----
      Net income                  30,562     14,772       88,522       87,688
      Net gain attributable
       to noncontrolling
       interests                     600       (133)         274         (133)
                                     ---       -----         ---         -----
      Net income
       attributable to
       common stockholders       $31,162    $14,639      $88,796      $87,555
                                 =======    =======      =======      =======

    Basic earnings per share:
      Income from continuing
       operations attributable
       to common stockholders       $.12       $.06         $.35         $.34
      Net income attributable
       to common stockholders       $.12       $.06         $.35         $.34
    Diluted earnings per share:
      Income from continuing
       operations attributable
       to common stockholders       $.12       $.06         $.35         $.33
      Net income attributable
       to common stockholders       $.12       $.06         $.35         $.33

    Basic weighted average
     number of shares            251,765    257,408      250,858      259,505
                                 =======    =======      =======      =======
    Diluted weighted average
     number of shares            253,048    260,370      251,272      263,002
                                 =======    =======      =======      =======



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

                                                September 30,   December 31,
                                                    2009           2008
                                                ------------    ------------
    Assets
    Current assets:
      Cash and cash equivalents                   $233,485      $128,397
      Receivables, net                              71,829        96,145
      Inventories                                   30,717        31,603
      Deferred tax asset                            79,571        79,571
      Current assets held for sale                   1,512         1,279
      Other                                         20,189        18,515
                                                    ------        ------
        Total current assets                       437,303       355,510
                                                   -------       -------
    Preneed funeral receivables, net and trust
     investments                                 1,313,363     1,191,692
    Preneed cemetery receivables, net and
     trust investments                           1,310,989     1,062,952
    Cemetery property, at cost                   1,459,350     1,458,981
    Property and equipment, net                  1,546,670     1,567,875
    Non-current assets held for sale               103,242        97,512
    Goodwill                                     1,175,528     1,178,969
    Deferred charges and other assets              368,593       452,634
    Cemetery perpetual care trust investments      848,159       744,758
                                                   -------       -------
                                                $8,563,197    $8,110,883
                                                ==========    ==========
    Liabilities & Stockholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities    $299,934      $294,859
      Current maturities of long-term debt          26,061        27,104
      Current liabilities held for sale                625           465
      Income taxes                                   1,623         4,354
                                                     -----         -----
        Total current liabilities                  328,243       326,782
                                                   -------       -------
    Long-term debt                               1,717,507     1,821,404
    Deferred preneed funeral revenues              600,653       588,198
    Deferred preneed cemetery revenues             812,390       771,117
    Deferred income taxes                          329,956       288,677
    Non-current liabilities held for sale           80,181        75,537
    Other liabilities                              321,992       356,090
    Deferred preneed funeral and cemetery
     receipts held in trust                      2,103,825     1,817,665
    Care trusts' corpus                            849,459       772,234

    Stockholders' equity:
      Common stock, $1 per share par value,
       500,000,000 shares authorized,
       253,594,517, and 249,953,075 shares
       issued, respectively, 253,184,884 and
       249,472,075 shares outstanding,
       respectively
                                                   253,185       249,472
      Capital in excess of par value             1,721,253     1,733,814
      Accumulated deficit                         (637,960)     (726,756)
      Accumulated other comprehensive income        82,893        36,649
                                                    ------        ------
        Total common stockholders' equity        1,419,371     1,293,179
        Noncontrolling interests                      (380)            -
                                                     -----           ---
        Total equity                             1,418,991     1,293,179
                                                 ---------     ---------
                                                $8,563,197    $8,110,883
                                                ==========    ==========



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

                                                       Nine Months Ended
                                                         September 30,
                                                       -----------------
                                                      2009           2008
                                                      ----           ----
    Cash flows from operating activities:
      Net income                                     $88,522        $87,688
      Adjustments to reconcile net income to
       net cash provided by operating
       activities:
        Loss from discontinued operations, net
         of tax                                            -            362
        Gain on early extinguishment of debt,
         net                                          (3,922)             -
        Depreciation and amortization                 82,821         84,219
        Amortization of intangible assets             16,148         18,145
        Amortization of cemetery property             21,723         23,824
        Amortization of loan costs                     2,526          2,718
        Provision for doubtful accounts                8,606          6,768
        Provision for deferred income taxes           42,418         94,107
        Loss on divestitures and impairment
         charges, net                                  1,280         28,723
        Share-based compensation                       7,505          7,626
        Excess tax benefits from share-based
         awards                                            -         (3,219)
      Change in assets and liabilities, net of
       effects from acquisitions and
       divestitures:
        Decrease in receivables                       13,296          7,786
        Decrease (increase) in other assets           12,916        (71,977)
        Increase (decrease) in payables and
         other liabilities                            21,285        (92,603)
        Effect of preneed funeral production and
         maturities:
          Decrease in preneed funeral receivables
           and trust investments                      18,645          8,605
          Increase in deferred preneed funeral
           revenue                                     8,679         23,229
          Decrease in funeral deferred preneed
           funeral receipts held in trust            (24,858)       (25,284)
        Effect of preneed cemetery production
         and deliveries:
          (Increase) decrease in preneed cemetery
           receivables and trust investments         (27,019)        29,734
          Increase in deferred preneed cemetery
           revenue                                    20,590         23,186
          Decrease in cemetery deferred preneed
           cemetery receipts held in trust            (5,811)       (19,596)
        Other                                             (1)          (592)
                                                         ---          -----
    Net cash provided by operating
     activities                                      305,349        233,449
    Cash flows from investing activities:
      Capital expenditures                           (62,460)      (108,324)
      Proceeds from divestitures and sales of
       property and equipment                         20,984         19,221
      Acquisitions                                    (3,359)        (8,545)
      Net deposits of restricted funds and
       other                                          (1,023)       (21,476)
                                                      -------       --------
    Net cash used in investing activities
     from continuing operations                      (45,858)      (119,124)
    Net cash provided by investing
     activities from discontinued operations               -            858
                                                         ---            ---
    Net cash used in investing activities            (45,858)      (118,266)
    Cash flows from financing activities:
      Proceeds from the issuance of long-term
       debt                                                -         72,807
      Payments of debt                              (118,436)       (54,403)
      Principal payments on capital leases           (18,704)       (18,550)
      Purchase of Company common stock                     -        (79,470)
      Proceeds from exercise of stock options         13,405          6,097
      Excess tax benefits from share-based
       awards                                              -          3,219
      Payments of dividends                          (30,060)       (31,166)
      Bank overdrafts and other                       (9,240)        (8,757)
                                                      -------        -------
    Net cash used in financing activities           (163,035)      (110,223)
    Effect of foreign currency on cash and
     cash equivalents                                  8,632         (1,651)
                                                       -----         -------
    Net increase in cash and cash
     equivalents                                     105,088          3,309
    Cash and cash equivalents at beginning
     of period                                       128,397        168,594
                                                     -------        -------
    Cash and cash equivalents at end of
     period                                         $233,485       $171,903
                                                    ========       ========



    For additional information contact:

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

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

SOURCE Service Corporation International


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SOURCE Service Corporation International
Copyright©2009 PR Newswire.
All rights reserved


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