Service Corporation International SCI NYSE financial earnings Tom Ryan
Service Corporation International Announces Second Quarter 2006 Financial
Results
- Conference call to be webcast on Thursday, August 10, 2006, at 9:00 a.m.
central time.
HOUSTON, Aug. 9 -- Service Corporation
International (NYSE: SCI), which owns and operates funeral service
locations and cemeteries, today reported results for the second quarter and
first half of 2006. Our consolidated financial statements (statement of
operations, balance sheet and statement of cash flows) can be found at the
end of this press release. The table below summarizes our key GAAP
financial results:
Three Months Six Months
(In millions, except for per share Ended Ended
amounts) June 30, June 30,
--------------- ---------------
2006 2005 2006 2005
--------------- ---------------
(Restated) (Restated)
Revenues $431.3 $431.8 $873.1 $879.3
Operating income 59.3 55.1 120.4 127.4
Net income (loss) 25.5 13.8 52.4 (141.1)
Diluted earnings (loss) per share .09 .05 .18 (.45)
Net cash provided by operating
activities 71.4 63.3 151.6 190.4
2006 Highlights
-- Earnings from continuing operations excluding special items were $28.6
million, or $.10 per diluted share, in the second quarter of 2006
compared to $19.1 million, or $.06 per diluted share in the second
quarter of 2005. In the first half of 2006, earnings from continuing
operations excluding special items were $59.3 million, or $.20 per
diluted share compared to $55.1 million, or $.18 per diluted share in
the first half of 2005. Earnings from continuing operations excluding
special items is a non-GAAP financial measure. See a reconciliation of
this measure to net income computed in accordance with GAAP included in
a separate section later in this press release.
-- On April 3, 2006, we announced an agreement to acquire the Alderwoods
Group, combining two of the leading providers of funeral and cemetery
services in North America.
-- North America comparable funeral and cemetery revenues increased 3.5%
in the second quarter and 3.2% in the first half of 2006 to $425.3
million and $860.6 million, respectively.
-- Comparable average revenue per funeral service increased 9.3% to $4,737
in the second quarter of 2006 and increased 8.0% to $4,669 in the first
half of 2006 compared to the same periods last year, which helped to
offset declines of 5.5% in comparable funeral services performed in
both the three and six months ended June 30, 2006.
-- In the second quarter of 2006, we received and recognized $7.9 million
of cemetery endowment care trust fund income as a result of the
resolution of disputes over ownership rights to the funds.
-- Cash flow from operating activities in the first half of 2006 was
$151.6 million.
-- Cash on hand was just under $530 million at June 30, 2006.
-- In the second quarter of 2006, we repurchased 3.4 million of SCI common
shares, totaling $27.9 million.
-- On August 9, 2006, the Company's Board of Directors approved a dividend
of $.025 per common share.
Tom Ryan, the Company's President and Chief Executive Officer,
commented on the second quarter of 2006:
"I am pleased with the second quarter performance in both our funeral
and cemetery segments, as our combined gross margin percentages improved to
19.3%," said Tom Ryan, President and Chief Executive Officer. "Cash flow
from operations continues to be strong, generating $151.6 million in the
first six months of 2006. These improvements were driven by the impact of
our strategic pricing initiatives along with our continued focus to control
discounts."
"We are excited about the pending merger with Alderwoods Group and look
forward to welcoming their employees to our organization. By combining the
best practices of the two companies, we will be able to enhance the value
and leadership position of SCI," Ryan added.
North America Comparable Results of Operations
We regard comparable results of operations as analogous to our "same
store" results of operations. For purposes of the following presentation,
we consider comparable operations as those owned for the entire period
beginning January 1, 2005 and ending June 30, 2006. Therefore, in the
following presentation, we are providing results of operations for the same
funeral and cemetery locations in each of the periods presented. We believe
this presentation provides greater clarity for comparison purposes of our
results of operations for each of the periods presented.
(In millions, except funeral services
performed, average revenue per funeral
service or per contract sold and total
preneed funeral contracts)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------------- ----------------
(Restated) (Restated)
---------------- -----------------
Funeral
Funeral atneed revenue $179.4 $174.1 $372.1 $366.6
Funeral recognized preneed revenue 85.6 82.3 181.0 175.5
General agency revenue 8.6 7.4 16.7 13.8
Kenyon revenue 0.7 5.3 1.9 13.4
------- ------ ------ -------
Total funeral revenues $274.3 $269.1 $571.7 $569.3
(1) 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.
(2) Represents the ratio of current period revenue recognition stated as a
percentage of current period sales production.
For the Three Months Ended June 30, 2006
Funeral Results
North America comparable funeral revenue increased $5.2 million, or
1.9%, in the second quarter of 2006 compared to the second quarter of 2005
reflecting higher average revenue per funeral service and an increase of
floral revenues. General agency revenue increased $1.2 million, or 16.2%,
as we continue to see a favorable shift in the types of insurance contracts
we have sold. These improvements were partially offset by a decline in
comparable funeral volume, coupled with a decrease in Kenyon's revenue (our
subsidiary that specializes in providing disaster management services in
mass fatality incidents) of $4.6 million because Kenyon was not involved in
any catastrophic events in the second quarter of 2006.
North America comparable funeral gross profit increased $3.3 million in
the second quarter of 2006 versus the same period of 2005 as we continue to
see improvements in our infrastructure due to more centralization and
standardization within our organization partially offset by increases in
floral and merchandise costs. Also impacting funeral results were the
following:
-- The average revenue per funeral service increased 9.3%, or $404 per
service, as a result of our initiative to align resources with our
customer segmentation strategy and to focus on strategic pricing, which
places less emphasis on traditional funeral merchandise and more focus
on service offerings.
-- The number of comparable funeral services performed declined 3,238, or
5.5%, due to a decline in the number of deaths within our markets. In
addition, we attribute a portion of the decline to certain local
business decisions to exit unprofitable immediate disposition
activities. These decisions were made locally with the understanding
of the Company's customer segmentation strategy which will focus
resources on market share opportunities within certain customer
segments.
-- The cremation rate for SCI in the three months ended June 30, 2006 and
2005 was 41.1%.
-- The gross margin percentage increased from 18.3% to 19.1% due primarily
to higher average revenue per funeral service.
-- Kenyon's operations negatively impacted gross profit by $0.5 million
compared to prior year.
Cemetery Results
North America comparable cemetery revenues increased $9.1 million, or
6.4%, in the second quarter of 2006 compared to the same period of 2005.
This increase was primarily attributable to the receipt and recognition of
$7.9 million of endowment care income as a result of the resolution of
disputes over ownership rights to the funds. The receipts represent
investment income which was not distributed during the dispute period,
which began in late 2004. Atneed revenues combined with recognized preneed
revenues in the three months ended June 30, 2006 were flat compared to
prior year.
North America comparable cemetery gross profit increased $8.4 million,
or 37.8%, in the second quarter of 2006 compared to the second quarter of
2005, as a result of the increase in trust fund income described above and
lower sales and commission expense partially offset by higher maintenance
and administrative costs within our cemetery operations.
Other Results
-- General and administrative expenses declined to $20.9 million in the
second quarter of 2006 compared to $22.5 million in the second quarter
of 2005. Increased costs associated with the expensing of stock
options, which totaled $1.1 million (pretax) were more than offset by
decreases in salaries and bonuses. We expect stock option expense in
the remaining quarters of 2006 to be approximately $1.6 million
(pretax).
-- Interest expense increased to $26.6 million in the second quarter of
2006, compared to $26.2 million in the second quarter of 2005. The
increases reflect incremental penalty interest expense related to our
senior unsecured notes due 2017 and the modification of certain
transportation leases in January 2006, which resulted in their
classification as capital leases in the first half of 2006.
-- Interest income increased $2.9 million in the second quarter of 2006 to
$6.8 million primarily as a result of increases in our cash balance and
higher interest rates during 2006.
-- Other income (expense), net was a $1.6 million gain in the second
quarter of 2006, compared to a gain of $0.6 million in the second
quarter of 2005. The components of other income for the periods
presented are as follows:
- Cash overrides received from a third party insurance provider
related to the sale of insurance funded preneed funeral contracts
were $1.5 million in the second quarter of 2006 compared to $1.6
million in the same period of 2005.
- Surety bond premium costs were $1.0 million in the second quarters
of 2006 and 2005.
- The remaining income of $1.1 million in the second quarter of 2006
is primarily attributable to net gains and losses related to foreign
currency transactions.
-- The consolidated effective tax rate in the second quarter of 2006
resulted in a provision of 37.7%, compared to 47.1% in the same period
of 2005. The 2006 and 2005 tax rates were both negatively impacted by
permanent differences between the book and tax bases of North American
asset dispositions.
For the Six Months Ended June 30, 2006
Funeral Results
North America comparable funeral revenue increased $2.4 million, in the
first half of 2006 compared to the first half of 2005. These results were
favorably impacted by higher average revenue per funeral service and an
increase of floral revenues. General agency revenue also increased $2.9
million, or 21.0%, in the first half of 2006 compared to the same period
last year as a result of a mix shift in the types of insurance contracts
sold. These improvements were partially offset by a decline in comparable
funeral volume coupled with an $11.5 million decrease in Kenyon's revenue
as Kenyon was not involved in any mass fatality incidents in the second
quarter of 2006.
North America comparable funeral gross profit decreased $9.4 million in
the first half of 2006 versus the same period of 2005 as revenue increases
were more than offset by increases in floral and merchandise costs.
Additional details related to the funeral segment are as follows:
-- The average revenue per funeral service increased 8.0%, or $345 per
service, as a result of our initiative to align resources with our
strategy and to focus on strategic pricing, which places less emphasis
on traditional funeral merchandise and more focus on service offerings.
-- The number of comparable funeral services performed declined 6,910, or
5.5%, primarily due to a decline in the number of deaths within our
markets, particularly in the northeast as they experienced an unusually
warm winter during the first quarter of 2006. Also impacting the
decline in volume were certain local business decisions to exit
unprofitable immediate disposition activities as described above in
Funeral Results for the three months ended June 30, 2006.
-- The cremation rate for SCI in the first half of 2006 was 41.3% compared
to 40.7% in the same period of 2005.
-- Kenyon's operations negatively impacted gross profit by $3.5 million
compared to prior year.
Cemetery Results
North America comparable cemetery revenues increased $23.9 million, or
9.0%, in the first half of 2006 compared to the same period of 2005. The
increase primarily resulted from higher atneed revenues and increased
recognition of preneed merchandise and service sales in the first half of
2006 compared to the prior year period. Also contributing to the increase
was the receipt and recognition of $7.9 million of endowment care income as
a result of the resolution of disputes over ownership rights to the funds
as further described above in Cemetery Results for the three months ended
June 30, 2006.
North America comparable cemetery gross profit increased $13.5 million,
or 33.7%, in the first half of 2006 compared to the first half of 2005, as
a result of the increase in trust fund income described above and lower
sales and commission expense partially offset by higher maintenance and
administrative costs within our cemetery operations.
Other Results
-- General and administrative expenses were $42.9 million in the first
half of 2006 compared to $42.2 million in the first half of 2005.
Increased costs associated with the expensing of stock options, which
totaled $2.5 million (pretax) were offset by a decrease in salaries and
bonuses. We expect stock option expense to be approximately $1.6
million (pretax) in the last six months of 2006.
-- Interest expense increased to $53.3 million in the first half of 2006,
compared to $51.2 million in the first half of 2005. The increase
reflects incremental penalty interest expense related to our senior
unsecured notes due 2017 and the modification of certain transportation
leases in January 2006, which resulted in their classification as
capital leases in the first half of 2006.
-- Interest income increased $4.8 million in the first half of 2006 to
$12.8 million primarily as a result of increases in our cash balance
and higher interest rates during 2006.
-- Other income (expense), net was a $4.0 million gain in the first half
of 2006, compared to an expense of $0.6 million in the first half of
2005. The components of other income for the periods presented are as
follows:
- Cash overrides received from a third party insurance provider
related to the sale of insurance funded preneed funeral contracts
were $3.1 million in the first half of 2006 compared to $3.1 million
in the same period of 2005.
- Surety bond premium costs were $2.0 million in the first half of
2006 and 2005.
- Favorable adjustments to our allowance on notes receivable were $1.9
million in the first half of 2006.
- The remaining income of $1.0 million in the first half of 2006 and
expense of $1.7 million in the same period of 2005 are primarily
attributable to net gains and losses related to foreign currency
transactions.
-- The consolidated effective tax rate in the first half of 2006 resulted
in a provision of 37.3%, compared to 39.1% in the same period of 2005.
The 2006 and 2005 tax rates were both negatively impacted by permanent
differences between the book and tax bases of North American asset
dispositions.
Cash Flow
(In millions) Six Months Ended June 30,
------------------------------
2006 2005 Decrease
------- -------- --------
Net cash provided by operating
activities $151.6 $190.4 $(38.8)
Net cash provided by operating activities in the first half of 2006
were $151.6 million, a decrease of $38.8 million compared to the first half
of 2005. The first half of 2005 included a federal income tax refund of
$29.0 million. The first half of 2006 included $16.5 million of long-term
incentive cash compensation payments related to a 2003 award program as
previously disclosed in our 2006 annual guidance. Excluding these items,
cash flow from continuing operations increased $6.7 million compared to the
first half of 2005 primarily as a result of the receipt of $7.9 million of
trust fund income described in Cemetery Results and improvements in the
Company's DSO for the first half of 2006.
A summary of our capital expenditures is set forth below:
(In millions) Capital Expenditures
------------------------
Six Months Ended
-------------------------
June 30, June 30,
2006 2005
-------- --------
Capital improvements at existing locations $23.7 $21.2
Development of cemetery property 14.7 15.9
Construction of new funeral home facilities and
other growth capital 2.1 6.6
Total capital expenditures $40.5 $43.7
Other investing and financing activities in the six months ended June
30, 2006 include:
-- payments of $14.7 million for acquisitions of new businesses as we
begin to focus on growth initiatives;
-- the receipt of $11.0 million of proceeds (of an expected $15.0 million
receivable) related to the 2005 sale of our Chilean operations; and
-- payments of $27.9 million for the repurchase of 3.4 million shares of
our common stock.
Restatement of Previously Issued Financial Statements
We have restated our previously issued condensed consolidated financial
statements for the first quarter of 2006, each of the five years ended
December 31, 2005, and each of the interim periods of 2005 and 2004. This
restatement corrects errors related to 1) the miscalculation of the
Company's actuarially determined pension benefit obligation, 2) the
accounting for certain leases related to funeral home properties which were
previously accounted for as operating leases, but should have been
accounted for as capital leases (as previously disclosed in our March 31,
2006 Form 10-Q), and 3) other out-of-period adjustments previously
identified by the Company but deemed to be not material either individually
or in the aggregate. We evaluated the materiality of these adjustments to
our previously issued interim and annual consolidated financial statements
including our interim financial statements as of and for the three months
ended March 31, 2006. We determined that the impact of these errors was not
material to the Company's previously issued consolidated financial
statements; however, we further determined that the cumulative correction
of the errors in the second quarter of 2006 would have been material to the
current period. Therefore we have restated our previously issued financial
statements to reflect the corrections of the errors in each of the periods
affected. For more information related to the underlying details of the
restatement and the effect on previously issued financial statements,
please see the Company's December 31, 2005 Form 10-K/A (Amendment No. 1)
and the Company's June 30, 2006 Form 10-Q filed with the Securities and
Exchange Commission today. These documents are available on our website at
http://www.sci-corp.com.
NON-GAAP FINANCIAL MEASURES
Earnings from Continuing Operations Excluding Special Items
Earnings from continuing operations excluding special items is a
non-GAAP financial measure. We believe this non-GAAP financial measure
provides a consistent basis for comparison between quarters and better
reflects the performance of our core operations, as it is not influenced by
certain income and expenses not affecting continuing operations. We also
believe this measure helps facilitate comparisons to competitors' operating
results.
Set forth below is a reconciliation of non-GAAP financial measures to
the most directly comparable GAAP financial measures. We do not intend for
the information to be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
Three Months Ended Six Months Ended
---------------------- -----------------------
(In millions, except June 30, June 30, June 30, June 30,
diluted EPS) 2006 2005 2006 2005
---------------------- -----------------------
(Restated) (Restated)
Net Diluted Net Diluted Net Diluted Net Diluted
Income EPS Income EPS Income EPS Income EPS
--------------- ------------ ------------ --------------
Net income
reported $25.5 $.09 $13.8 $.05 $52.4 $.18 $(141.1) $(.45)
After-tax
reconciling
items:
(Gains) losses
on dispositions
and impairment
charges,net 2.9 .01 (.01) - 6.7 .02 3.7 .01
Loss on early
extinguishment
of debt - - 8.5 .02 - - 9.3 .03
Discontinued
operations 0.2 - (3.1) (.01) 0.2 - (4.3) (.01)
Cumulative
effect of
accounting
change - - - - - - 187.5 .60
--------------- ------------ ------------ --------------
Earnings from
continuing
operations
excluding
special
items $28.6 $.10 $19.1 $.06 $59.3 $.20 $55.1 $.18
=============== ============ ============= =============
Diluted weighted
average shares
outstanding
(in thousands) 297,501 306,404 297,784 311,986
Conference Call and Webcast
We will host a conference call on Thursday, August 10, 2006, at 9:00
a.m. central time. A question and answer session will follow a brief
presentation made by management. The conference call dial-in number is
(719) 785-9442. 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 August 24, 2006 and can be accessed at (719) 457-0820 with the
confirmation code of 7638264. 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 outcome of the acquisition of Alderwoods and the possibility that
certain closing conditions may not be satisfied that will result in the
acquisition not being completed.
-- Our ability to successfully integrate Alderwoods or that the
anticipated benefits of the acquisition are not fully realized.
-- 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 exploit our substantial purchasing power
with certain of our vendors.
For further information on these and other risks and uncertainties, see
our Securities and Exchange Commission filings, including our 2005 Annual
Report on Form 10-K. Copies of this document as well as other SEC filings
can be obtained from our website at http://www.sci-corp.com. We assume no
obligation to publicly update or revise any forward-looking statements made
herein or any other forward-looking statements made by us, whether as a
result of new information, future events or otherwise.
Service Corporation International (NYSE: SCI), headquartered in
Houston, Texas, owns and operates funeral service locations and cemeteries.
We have an extensive network of businesses including 1,026 funeral service
locations and 351 cemeteries in North America as of June 30, 2006. For more
information about Service Corporation International, please visit our
website at http://www.sci-corp.com.
For additional information contact:
Investors: Debbie Young - Director / Investor Relations (713) 525-9088
Media: Greg Bolton - Director / Corporate Communications (713) 525-5235
SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
------- -------- ------- -------
(Restated) (Restated)
Revenues $431,345 $431,842 $873,143 $879,284
Costs and expenses (348,208) (358,798)(702,399) (708,440)
------- ------- ------- ---------
Gross profit 83,137 73,044 170,744 170,844
------- ------- ------- ---------
General and administrative expenses (20,922) (22,485) (42,929) (42,192)
Gains (losses) on dispositions and
impairment charges, net (2,881) 4,528 (7,391) (1,213)
------- ------- ------- ---------
Operating income 59,334 55,087 120,424 127,439
Interest expense (26,609) (26,224) (53,337) (51,229)
Loss on early extinguishment of
debt - (13,051) - (14,258)
Interest income 6,782 3,894 12,763 7,950
Other income (expense), net 1,632 571 4,046 (637)
------- ------- ------- ---------
(18,195) (34,810) (36,528) (58,174)
------- ------- ------- ---------
Income from continuing operations
before income taxes and cumulative
effect of accounting change 41,139 20,277 83,896 69,265
Provision for income taxes (15,506) (9,553) (31,282) (27,073)
------- ------- ------- --------
Income from continuing operations
before cumulative effect of
accounting change 25,633 10,724 52,614 42,192
(Loss) income from discontinued
operations (net of income
tax benefit (provision) of $115,
$(826), $150, and $(1,981),
respectively) (183) 3,113 (238) 4,288
Cumulative effect of accounting
change (net of income tax benefit
of $117,428) - - - (187,538)
------- ------- ------- ---------
Net income (loss) $25,450 $13,837 $52,376 $(141,058)
======= ======= ======= =========
Basic earnings (loss) per share:
Income from continuing
operations before cumulative
effect of accounting change $.09 $.04 $.18 $.14
Income from discontinued
operations, net of tax - .01 - .01
Cumulative effect of accounting
change, net of tax - - - (.61)
------- ------- ------- ---------
Net income (loss) $.09 $.05 $.18 $(.46)
======= ======= ======= =========
Diluted earnings (loss) per share:
Income from continuing
operations before
cumulative effect of
accounting change $.09 $.04 $.18 $.14
Income from discontinued
operations, net of tax - .01 - .01
Cumulative effect of accounting
change, net of tax - - - (.60)
------- ------- ------- ---------
Net income (loss) $.09 $.05 $.18 $(.45)
======= ======= ======= =========
Basic weighted average number of
shares 293,409 302,363 293,580 307,896
======= ======= ======= ========
Diluted weighted average number of
shares 297,501 306,404 297,784 311,986
======= ======= ======= ========
Dividends declared per share $.025 $.025 $.050 $.050
======= ======= ======= ========
SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
June 30, December 31,
2006 2005
------------------------------
(Unaudited) (Restated)
Assets
Current assets:
Cash and cash equivalents $529,171 $446,782
Receivables, net 62,439 97,747
Inventories 64,938 68,327
Other 30,847 37,527
----------- -----------
Total current assets 687,395 650,383
----------- -----------
Preneed funeral receivables and trust
investments 1,227,144 1,226,192
Preneed cemetery receivables and trust
investments 1,285,832 1,288,515
Cemetery property, at cost 1,365,712 1,355,654
Property and equipment, at cost, net 1,038,990 950,174
Goodwill 1,118,119 1,123,888
Deferred charges and other assets 253,727 249,581
Cemetery perpetual care trust investments 693,781 700,382
----------- ----------
$7,670,700 $7,544,769
=========== ==========
Liabilities & Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $196,977 $231,693
Current maturities of long-term debt 30,414 20,716
Income taxes 21,014 20,359
----------- ----------
Total current liabilities 248,405 272,768
----------- ----------
Long-term debt 1,265,263 1,186,485
Deferred preneed funeral revenues 539,178 535,384
Deferred preneed cemetery revenues 777,717 792,485
Deferred income taxes 168,925 138,677
Other liabilities 315,403 326,985
Non-controlling interest in funeral and
cemetery trusts 2,055,566 2,015,811
Non-controlling interest in cemetery
perpetual care trusts 691,385 694,619
Commitments and contingencies
Stockholders' equity:
Common stock, $1 per share par value,
500,000,000 shares authorized,
292,411,418 and 294,808,872, issued
and outstanding (net of 51,956,842
and 48,962,063 treasury shares, at par) 292,411 294,809
Capital in excess of par value 2,145,516 2,182,745
Unearned compensation - (3,593)
Accumulated deficit (910,529) (962,905)
Accumulated other comprehensive income 81,460 70,499
----------- -----------
Total stockholders' equity 1,608,858 1,581,555
----------- -----------
$7,670,700 $7,544,769
=========== ===========
SERVICE CORPORATION INTERNATIONAL
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
Six Months Ended June 30,
--------------------------
2006 2005
----------- ----------
(Restated)
Cash flows from operating activities:
Net income (loss) $ 52,376 $(141,058)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Net loss (income) from discontinued
operations, net of tax 238 (4,288)
Loss on early extinguishment of debt - 14,258
Premiums paid on early extinguishment of debt - (12,186)
Cumulative effect of accounting change,
net of tax - 187,538
Depreciation and amortization 45,670 36,525
Provision for doubtful accounts 4,718 4,494
Provision for deferred income taxes 25,063 25,573
Losses on dispositions and impairment
charges, net 7,391 1,213
Share-based compensation 3,856 996
Loan cost amortization 5,070 5,052
Change in assets and liabilities, net of effects
from acquisitions and dispositions:
Decrease in receivables 17,976 11,135
(Increase) decrease in other assets (3,639) 27,956
Decrease in payables and other liabilities (39,139) (12,091)
Net effect of preneed funeral production
and maturities 4,421 (3,054)
Net effect of cemetery production
and deliveries 27,866 45,967
Other (264) 4,086
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Net cash provided by operating activities
from continuing operations 151,603 192,116
Net cash used in operating activities
from discontinued operations - (1,688)
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Net cash provided by operating activities 151,603 190,428
Cash flows from investing activities:
Capital expenditures (40,547) (43,752)
Proceeds from divestitures, net of cash
retained and sales of property and
equipment 26,955 56,060
Proceeds from equity investments - 32,070
Indemnity payments related to the sale of
former funeral operations in France (412) (1,602)
Acquisitions, net of cash acquired (14,677) -
Net withdrawals (deposits) of restricted
funds and other 11,025 (9,026)
---------- ---------
Net cash (used in) provided by investing
activities from continuing operations (17,656) 33,750
Net cash provided by (used in) investing
activities from discontinued operations 10,958 (155)
---------- ---------
Net cash (used in) provided by investing
activities (6,698) 33,595
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 291,472
Payments of debt (13,713) (2,988)
Principal payments on capital leases (10,701) (156)
Early extinguishment of debt - (286,215)
Proceeds from exercise of stock options 2,402 4,556
Purchase of Company common stock (27,870) (189,809)
Payments of dividends (14,719) (7,729)
Purchase of subsidiary stock - (844)
---------- ---------
Net cash used in financing activities (64,601) (191,713)
Effect of foreign currency 2,085 (140)
---------- ---------
Net increase in cash and cash equivalents 82,389 32,170
Cash and cash equivalents at beginning of period 446,782 287,785
---------- ---------
Cash and cash equivalents at end of period $529,171 $319,955
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