<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 1999
Service Corporation International (Exact name of Registrant as
specified in Charter)
Texas 1-6402-1 74-1488375
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1929 Allen Parkway
Houston, Texas 77019
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-5141
<PAGE> 2
Item 5. Other Events.
On January 26, 1999, Service Corporation International, a Texas
corporation (the "Company"), announced that its diluted earnings per share for
the fourth quarter of 1998 and for the year ended December 31, 1998 would be
lower than analyst expectations, as more fully described in the press release
filed as Exhibit 99.1 to this Current Report on Form 8-K. In addition, on
January 26, 1999, the Company announced the expansion of its share repurchase
program, as more fully described in the press release filed as Exhibit 99.2 to
this Current Report on Form 8-K. The contents of such Exhibits are incorporated
herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release dated January 26, 1999 issued by the
Company regarding the Company's diluted earnings per
share.
99.2 Press release dated January 26, 1999 issued by the
Company regarding the Company's share repurchase
program.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SERVICE CORPORATION INTERNATIONAL
Date: January 28, 1999 By: /s/ James M. Shelger
-------------------------------------------
James M. Shelger
Senior Vice President, General Counsel
and Secretary
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
99.1 Press release dated January 26, 1999 issued by the Company regarding
the Company's diluted earnings per share.
99.2 Press release dated January 26, 1999 issued by the Company regarding
the Company's share repurchase program.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
[LOGO]
[SERVICE CORPORATION INTERNATIONAL LETTERHEAD]
FOR IMMEDIATE RELEASE
SERVICE CORPORATION INTERNATIONAL
ANNOUNCES REVISED EARNINGS ESTIMATES
FOR 1998 AND OUTLOOK FOR 1999
HOUSTON, TEXAS, January 26, 1999...Service Corporation International (NYSE:SRV),
the world's largest funeral and cemetery company, announced today that it
expects diluted earnings per share for the fourth quarter of 1998 to be lower
than current analyst expectations.
For the three months ended December 31, 1998, the Company anticipates diluted
earnings per share in the range of $.22-$.24 as compared to $0.36 for the three
months ended December 31, 1997. The First Call consensus earnings estimate is
$0.42 per share.
For the year ended December 31, 1998, the Company anticipates diluted earnings
per share in the range of $1.30-$1.32 as compared to $1.31 for the year ended
December 31, 1997. The First Call consensus earnings estimate for the year is
$1.51 per share.
Reasons for lower than expected earnings
Several factors have adversely affected results during the fourth quarter and
these include:
o Reduced mortality rates in the Company's major markets resulting in fewer
funerals performed at the Company's locations.
o Cemetery revenues below anticipated levels.
o Increased operating costs and field overhead expenses associated with
necessary investment in newly acquired operations, information technology
systems and training programs.
--more--
<PAGE> 2
SCI Revised Earnings Estimate
Page 2
o Fewer acquisitions during the quarter than were previously expected due to
higher than anticipated acquisition pricing.
o Disappointing results from selected foreign operations.
Management action
o Improved Efficiency
At the operational level, the Company will continue to implement training
programs to improve regional management's ability to run their business
units more efficiently. In addition, management will conduct a full cost
review and implement a cost rationalization program that will enable the
Company's cost base to better reflect the overhead demands of revised
revenue projections.
o Securing Future Market Share
The Company will continue to grow prearranged funeral sales and expects
to double annual prearranged funeral sales to approximately $1.3 billion by
the end of 2003. In addition, the Company will continue to acquire or
build funeral and cemetery operations when returns on such businesses are
expected to exceed the Company's weighted average cost of capital.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, ROBERT L. WALTRIP, SAID:
"While we are disappointed that 1998 earnings did not meet our targets, we are
confident that the fundamentals of our business will allow us to continue to
grow and deliver shareholder value."
COMMENTING ON THE ANNOUNCEMENT, PRESIDENT AND CHIEF OPERATING OFFICER,
L. WILLIAM HEILIGBRODT, SAID:
"Declining death rates pose a challenge for the industry. If current market
conditions continue to prevail in the funeral industry, earnings for 1999 could
approximate 1998 earnings. The expansion of our Financial Services Division and
the generation of additional prearranged
--more--
<PAGE> 3
SCI Revised Earnings Estimate
Page 3
funeral revenue through the acquisition of American Memorial Life will further
diversify SCI's earnings stream. Cross-marketing efforts in these areas will
enable us to generate additional revenues in our funeral and cemetery
operations. In addition, continued success in prearranged funeral sales will
further secure future market share, and with the ongoing investment in our
businesses, training and systems, we expect to grow earnings in the medium
term."
During the week commencing February 8, 1999, the Company will announce earnings
for the three months and year ended December 31, 1998.
Cautionary Statement on Forward-looking Statements
The statements contained in this release that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements may be accompanied by words
such as "believe," "expect," "anticipate," or "predict," that convey the
uncertainty of future events or outcomes. These statements are based on
assumptions that the Company believes are reasonable; however many important
factors could cause the Company's 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, or on behalf of, the Company.
Important factors which could cause actual results to differ materially from
those in forward-looking statements include, among others, the following:
1) 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).
2) Changes in domestic and international political and/or regulatory
environments in which the Company operates, including tax and accounting
policies. Changes in regulations may impact the Company's ability to enter
or expand new markets.
3) Changes in consumer demand for the Company's services caused by several
factors such as changes in local death rates, cremation rates, competitive
pressures and local economic conditions.
--more--
<PAGE> 4
SCI Revised Earnings Estimate
Page 4
4) The Company's ability to identify and complete additional acquisitions on
terms that are favorable to the Company, to successfully integrate
acquisitions into the Company's business and to realize expected cost
savings in connection with such acquisitions. The Company's future results
may be materially impacted by changes in the level of acquisition activity.
The Company assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking statements
made by the Company.
For additional information contact:
<TABLE>
<CAPTION>
<S> <C> <C>
SCI: Todd A. Matherne - Vice President & Treasurer Tel: (713) 525-5243
George R. Champagne - Senior Vice President and CFO Tel: (713) 525-5546
Media: Kate Inverarity, Brunswick Group Tel: (212) 333-3810
</TABLE>
Other Service Corporation International and press releases are available
through Company News On-Call by fax, (800) 758-5804, extension 104532, or at
http://www.prnewswire.com or SCI's homepage: http://www.sci-corp.com.
<PAGE> 1
EXHIBIT 99.2
[LOGO]
[SERVICE CORPORATION INTERNATIONAL LETTERHEAD]
FOR IMMEDIATE RELEASE
SERVICE CORPORATION INTERNATIONAL
AUTHORIZES STOCK REPURCHASE
HOUSTON, TEXAS, January 26, 1999...Service Corporation International ("SCI"
NYSE:SRV), the world's largest funeral and cemetery company, announced today
that it has increased its previously authorized share repurchase program. The
increased authorization allows the Company to purchase an additional 5 million
shares of its own common stock from time to time in the open market or in
privately negotiated transactions, bringing the total authorization to 10
million shares.
In making the announcement, R. L. Waltrip, Chairman of the Board, said that the
Board of Directors believes that the shares of the Company's common stock are a
good value and represent an attractive investment opportunity.
For additional information contact:
SCI: Todd A. Matherne-Vice President & Treasurer Tel: (713)525-5243
George R. Champagne-Senior Vice President and CFO Tel: (713)525-5546
Media: Kate Inverarity, Brunswick Group Tel: (212)333-3810
Other Service Corporation International and press releases are available through
Company News On-Call by fax, (800)758-5804, extension 104532, or at
http://www.prnewswire.com or SCI's homepage: http://www.sci-corp.com.
