UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

SERVICE CORPORATION INTERNATIONAL

(Exact name of registrant as specified in its charter)

Texas		1-6402-1		74-1488375
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
1929 Allen Parkway, Houston, TX (Address of principal executive offices)				77019 (Zip Code)

Registrant’s telephone number, including area code: (713) 522-5141

Not Applicable
(Former name or former address, if changed since
last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13.e-4(c))

 

 

On November 28, 2006, Service Corporation International (“SCI”) completed its acquisition of Alderwoods Group, Inc. (“Alderwoods”). At the effective time of the acquisition, all of the outstanding shares of Alderwoods common stock and restricted stock units were converted into the right to receive $20.00 per share in cash, without interest. Each outstanding option or warrant to purchase Alderwoods’ common stock was converted into the right to receive, for each share of common stock issuable upon exercise of such option or warrant, cash in the amount of the excess, if any, of $20.00 over the exercise price per share of such option or warrant. The aggregate cash consideration paid as a result of the acquisition was approximately $880.7 million.

On November 29, 2006, SCI filed a Current Report on Form 8-K (the “Report”) stating that the required historical financial statements and other financial information with respect to Alderwoods and the required pro forma financial information with respect to the acquisition would be filed by an amendment to that Report. This Report replaces Item 9.01 of that filing:

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a)		Financial Statements of Business Acquired.
		The following information is included as an exhibit to this report as noted in (c) below:

1. Alderwoods’s interim unaudited consolidated financial statements as of October 7, 2006 and for the forty and sixteen week periods ended October 7, 2006 and October 8, 2005 (see Exhibit 99.A); and

2. Alderwoods’s audited consolidated financial statements as of and for the 52 weeks ended December 31, 2005 and January 1, 2005, and the 53 weeks ended January 3, 2004 and related notes to the financial statements (see Exhibit 99.B).

(b)		Pro Forma Financial Information.
		The following unaudited pro forma combined condensed financial statements reflect the combination of the historical consolidated balance sheet and income statements of SCI and Alderwoods, adjusted for certain effects of the acquisition, the related financings, and the planned divestitures.

Unaudited Pro Forma Condensed Combined Balance Sheet			A-3
Notes to the Unaudited Pro Forma Condensed Combined Balance Sheet			A-4
Unaudited Pro Forma Condensed Combined Statements of Operations			A-7
Notes to the Unaudited Pro Forma Condensed Combined Statements of Operations			A-9

(c)

Exhibits.

EXHIBIT NO.		DESCRIPTION OF EXHIBIT
99.A		Alderwoods Group, Inc. Interim Unaudited Consolidated Financial Statements as of October 7, 2006.
99.B		Alderwoods Group, Inc. Audited Consolidated Financial Statements as of December 31, 2005.

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
Unaudited pro forma combined financial information

On November 28, 2006, Service Corporation International (“SCI”) acquired Alderwoods Group, Inc. (“Alderwoods”) for $20.00 per share in cash, resulting in a total purchase price of $1.2 billion, which includes Alderwoods’ debt, of which $357.7 million was refinanced and $2.2 million was assumed. The acquisition was financed from:

•		$888.4 million of cash on hand, including $490 million in proceeds, net of issuance costs, from the issuance of senior notes in October 2006;
•		borrowings under a new $450 million senior credit facility, consisting of a $150 million 3-year term loan, all of which was borrowed in connection with the acquisition, and a $300 million 5-year revolving credit facility, none of which was drawn in connection with the acquisition; and
•		the issuance of $200 million of debt securities in a private placement.

In connection with the acquisition, SCI and Alderwoods commenced tender offers to purchase certain outstanding notes. These offers expired on November 28, 2006 and SCI and Alderwoods purchased the notes that had been validly tendered.

SCI has executed a consent order with the staff of the FTC in connection with the acquisition, which identifies certain properties the FTC has required us to divest as a result of the acquisition. We have entered into or are currently negotiating agreements to sell these properties. These agreements are subject to review and approval by the FTC. We believe that divestiture of the assets, together with the divestiture of other assets that we have identified for sale, will generate proceeds of approximately $230 million in the near future, which we expect to use to repay debt. There can be no assurance that the divestitures described above will be consummated, or if consummated will generate the proceeds described above.

The unaudited pro forma combined financial information reflects the combination of the historical consolidated balance sheet and statements of operations for SCI and Alderwoods, adjusted for certain effects of the acquisition, the related financings, and the planned divestitures.

The unaudited pro forma combined balance sheet gives effect to the transactions as if they had occurred on September 30, 2006. The unaudited pro forma combined statements of operations for the year ended December 31, 2005 and for the nine months ended September 30, 2006 give effect to the transactions as if they had occurred on January 1, 2005.

For purposes of the pro forma information, the asset groups to be sold pursuant to the divestitures have been reclassified on the pro forma balance sheet as assets held for sale and the results of operations of these asset groups have been eliminated from the pro forma statements of operations. No pro forma adjustments have been made to reflect any anticipated gain or loss from the divestitures and no adjustment has been made to reflect any earnings benefit from the reinvestment of any proceeds from the divestiture or any reduction of debt from the application of sale proceeds.

The unaudited pro forma adjustments are based upon currently available information and certain assumptions that we believe to be reasonable under the circumstances. The acquisition will be accounted for, and the pro forma combined financial information has been prepared, using the purchase method of accounting. The pro forma adjustments reflect our preliminary estimates of the purchase price allocation, which are subject to revision as more detailed analysis is completed and additional information on the fair value of Alderwoods’ assets and liabilities becomes available. Additionally, the pro forma adjustments reflect the actual financing transactions that occurred and the impact of those transactions based on estimated interest rates for floating rate financing.

These pro forma results should not be construed to be indicative of future results or results that actually would have occurred had the transactions occurred at the dates presented. In addition, we have not assumed any cost savings or synergies that might occur related to these transactions.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2006
(dollars in thousands)

										Adjustments				Adjustments				Adjustments
		SCI				Alderwoods				for the				for the				for the
		historical				historical(a)				acquisition				divestitures(l)				financing				Pro forma
Assets
Current assets:
Cash and cash equivalents		$	636,633			$	8,616			$	(880,698	)(b)		$	(408	)		$	306,966	(m)		$	71,109
Receivables, net			59,114				56,796				—				(5,753	)			—				110,157
Inventories			47,747				14,583				—				(541	)			—				61,789
Current assets held for sale			3,657				—				—				6,763				—				10,420
Other			29,664				7,631				—				(61	)			—				37,234
Total current assets			776,815				87,626				(880,698	)			—				306,966				290,709
Preneed funeral receivables and trust investments			1,198,324				329,462				—				(46,838	)			—				1,480,948
Preneed cemetery receivables and trust investments			1,245,726				322,200				—				(39,481	)			—				1,528,445
Cemetery property, at cost			1,316,934				117,193				90,807	(c)			(11,616	)			—				1,513,318
Property and equipment, at cost, net			1,014,161				544,343				169,823	(d)			(45,858	)			—				1,682,469
Insurance invested assets			—				322,154				—				(322,154	)			—				—
Non-current assets held for sale			68,188				—				—				520,695				—				588,883
Deferred charges and other assets			258,203				38,216				2,243	(e)			(73	)			11,330	(n)			309,919
Identifiable intangible assets			—				20,856				154,681	(f)			(23,714	)			—				151,823
Goodwill			1,083,563				296,211				(94,878	)(g)			—								1,284,896
Cemetery perpetual care trust investments			681,924				248,919				—				(30,961	)			—				899,882
Total		$	7,643,838			$	2,327,180			$	(558,022	)		$	—			$	318,296			$	9,731,292
Liabilities & Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities		$	241,853			$	118,012			$	22,264	(g)(1)		$	(2,706	)		$	(2,773	)(o)		$	376,650
Current maturities of long-term debt			30,629				2,185				—				(8	)			—				32,806
Current liabilities held for sale			336				—				—				2,714				—				3,050
Income taxes			22,491				—				—				—				—				22,491
Total current liabilities			295,309				120,197				22,264				—				(2,773	)			434,997
Long-term debt			1,265,213				362,282				—				(165	)			360,842	(p)			1,988,172
Deferred preneed funeral revenues			517,341				58,694				(9,640	)(g)(1)			(8,112	)			—				558,283
Deferred preneed cemetery revenues			726,125				12,036				34,142	(h)			(6,240	)			—				766,063
Insurance policy liabilities			—				302,298				—				(302,298	)							—
Deferred income taxes			167,497				12,436				6,011	(i)							(14,686	)(q)			171,258
Non-current liabilities held for sale			43,523				—				—				426,692				—				470,215
Other liabilities			319,155				29,232				(5,408	)(j)			(772	)			—				342,207
Non-controlling interest in funeral and cemetery trusts			2,026,258				575,634				—				(78,144	)			—				2,523,748
Non-controlling interest in cemetery perpetual care trust investments			676,832				248,980				—				(30,961	)			—				894,851
Total stockholders’ equity			1,606,585				605,391				(605,391	)(k)			—				(25,087	)(r)			1,581,498
Total		$	7,643,838			$	2,327,180			$	(558,022	)		$	—			$	318,296			$	9,731,292

See notes to unaudited pro forma condensed combined balance sheet.

Notes to the unaudited pro forma condensed combined balance sheet
(dollars in thousands)

Trademarks and tradenames(1)		$	40,000
Cemetery customer relationships (2)			12,600
Funeral trust preneed deferred revenue and insurance funded preneed revenue (3)			51,255
Cemetery preneed deferred revenue (4)			46,282
Water rights			6,800
Licenses & permits			2,600
Adjustment to fair value of insurance subsidiary’s in force insurance policies			(4,856	)
		$	154,681

Equity purchase price		$	861,235
SCI acquisition costs			19,463
Aggregate purchase price			880,698
Fair value of liabilities assumed(1)			1,769,158
Fair value of assets acquired(2)			(2,448,523	)

Goodwill arising from the transaction			201,333
Alderwoods historical goodwill			(296,211	)
Adjustment to goodwill		$	(94,878	)

Historical total liabilities		$	1,721,789
Adjustment to fair value preneed funeral deferred revenue			(9,640	)
Adjustment to fair value preneed cemetery deferred revenue (See note (h))			34,142
Adjustment to deferred income taxes (See note (i))			6,011
Adjustment to record certain severance obligations triggered by change of control provisions			22,264
Adjustment to other liabilities (See note (j))			(5,408	)
Fair value of liabilities assumed		$	1,769,158

Historical total assets		$	2,327,180
Eliminate historical goodwill			(296,211	)
Adjustment to conform recognition of sales of undeveloped cemetery property (See note (e))			2,243
Adjustment to fair value cemetery property (See note (c))			90,807
Adjustment to fair value property and equipment (See note (d))			169,823
Adjustment to fair value identifiable intangible assets (See note (f))			154,681
Fair value of assets assumed		$	2,448,523

Adjustment to fair value preneed cemetery deferred revenue		$	21,365
Adjustment to conform recognition of sales of undeveloped cemetery property (See note (e))			12,777
Adjustment to preneed cemetery deferred revenue		$	34,142

Deferred taxes related to adjustments to the fair market value of assets acquired and liabilities assumed (See notes (c), (d), (e), (f), (g), (h) and (j))		$	162,490
Elimination of valuation allowances on certain federal and state deferred tax assets based on the expected combined operations of Alderwoods and SCI			(125,767	)
Elimination of deferred taxes related to previously recorded goodwill (See note (g))			(30,712	)
		$	6,011

Adjustment to reclassify certain severance obligations previously accrued		$	(7,313	)
Adjustment to fair value pension liability			1,905
Adjustment to other liabilities		$	(5,408	)

Amounts extinguished:
Repayment of existing Alderwoods indebtedness(1)		$	358,683
Repayment of SCI Senior Notes due 2009			139,047
Total amounts extinguished			497,730
Financing costs			18,342
Payment of accrued interest (see note (o))			2,773
Tender premiums			24,189
Total amounts paid		$	543,034
Debt issuance:
Senior notes		$	500,000
Credit facility			150,000
Privately placed debt securities			200,000
Total sources of cash			850,000
Total cash provided		$	306,966

Write-off of Alderwoods deferred financing costs for extinguished debt		$	(6,525	)
Write-off of SCI’s deferred financing costs for extinguished debt			(487	)
Financing costs			18,342
Total adjustment to deferred charges and other assets		$	11,330

Payment of Alderwoods accrued interest on extinguished debt		$	(1,494	)
Payment of SCI’s accrued interest on extinguished debt			(1,279	)
Total adjustment to accounts payable and accrued liabilities			(2,773	)

Amounts extinguished:
Existing Alderwoods debt		$	358,683
Existing SCI debt			130,475
Total amounts extinguished			489,158
Debt issuance:
Senior Notes			500,000
Credit facility			150,000
Privately placed notes			200,000
Total debt issuance			850,000
Total adjustment to long-term debt		$	360,842

Tender premiums		$	24,189
Write-off of SCI’s original issuance discount for extinguished debt			8,572
Write-off of Alderwoods’ deferred financing fees for extinguished debt			6,525
Write-off of SCI’s deferred financing fees for extinguished debt			487
Tax benefit			(14,686	)
Total adjustments to stockholders’ equity		$	25,087

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the year ended December 31, 2005
(Dollars in thousands, except per share data)

										Adjustments				Adjustments				Adjustments
		SCI				Alderwoods				for the				for the				for the
		historical				historical(a)				acquisition				divestitures(g)				financing				Pro forma
Revenues		$	1,715,737			$	748,914			$	(892	)(b)		$	(159,601	)		$	—			$	2,304,158
Costs and expenses			(1,417,592	)			(634,395	)			(10,417	)(c)			141,610				—				(1,920,794	)
Gross profit			298,145				114,519				(11,309	)			(17,991	)			—				383,364
General and administrative expenses			(84,834	)			(42,815	)			7,751	(d)			—				—				(119,898	)
Gains (loss) on dispositions and impairment charges, net			(26,093	)			1,379				4,964	(e)			404				—				(19,346	)
Operating income			187,218				73,083				1,406				(17,587	)			—				244,120
Interest expense			(103,733	)			(30,069	)			—				174				(23,021	)(i)			(156,649	)
Loss on early extinguishment of debt			(14,258	)			—				—				—				—				(14,258	)
Interest income			16,706				—				—				—				—				16,706
Other income (expense), net			2,774				4,662				(4,964	)(e)			—				—				2,472
Income from continuing operations before income taxes			88,707				47,676				(3,558	)			(17,413	)			(23,021	)			92,391
(Provision) benefit for income taxes			(33,233	)			(4,815	)			(12,801	)(f)			6,778	(h)			8,434	(j)			(35,637	)
Income from continuing operations		$	55,474			$	42,861			$	(16,359	)		$	(10,635	)		$	(14,587	)		$	56,754
Income from continuing operations per share:
Basic		$	0.19																			$	0.19
Diluted		$	0.18																			$	0.19
Average common shares outstanding:
Basic			302,213																				302,213
Diluted			306,745																				306,745

See notes to unaudited pro forma condensed combined statement of operations.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the nine months ended September 30, 2006
(Dollars in thousands, except per share data)

										Adjustments				Adjustments				Adjustments
		SCI				Alderwoods				for the				for the				for the
		historical				historical(a)				acquisition				divestitures(g)				financing				Pro forma
Revenues		$	1,273,477			$	581,684			$	2,344	(b)		$	(134,612	)		$	—			$	1,722,893
Costs and expenses			(1,030,707	)			(487,920	)			(8,119	)(c)			120,610				—				(1,406,136	)
Gross profit			242,770				93,764				(5,775	)			(14,002	)			—				316,757
General and administrative expenses			(63,885	)			(57,388	)			5,813	(d)			—				—				(115,460	)
Gain (loss) on dispositions and impairment charges, net			(38,141	)			(588	)			379	(e)			(12,411	)			—				(50,761	)
Operating income			140,744				35,788				417				(26,413	)			—				150,536
Interest expense			(86,667	)			(21,503	)			—				(4	)			(17,305	)(i)			(125,479	)
Interest income			21,022				—				—				—				—				21,022
Other income (expense), net			16,822				221				(379	)(e)			—				—				16,664
Income from continuing operations before income taxes			91,921				14,506				38				(26,417	)			(17,305	)			62,743
(Provision) benefit for income taxes			(35,910	)			(7,804	)			1,690	(f)			10,073	(h)			6,340	(j)			(25,611	)
Income from continuing operations		$	56,011			$	6,702			$	1,728			$	(16,344	)		$	(10,965	)		$	37,132
Income from continuing operations per share:
Basic		$	0.19																			$	0.13
Diluted		$	0.19																			$	0.12
Average Common Shares outstanding:
Basic			293,117																				293,117
Diluted			297,353																				297,353

See notes to unaudited pro forma condensed combined statement of operations.

Notes to unaudited pro forma condensed combined statement of operations
(dollars in thousands)

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Preneed funeral contracts (1)			(2,000	)			(1,500	)
Preneed cemetery contracts (2)			1,900				1,425
Cemetery revenue from the sale of unconstructed property (3)			(792	)			2,419
Adjustment to revenue		$	(892	)		$	2,344

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Intangible amortization expense (1)			(2,565	)			(1,924	)
Pension expense (2)			(415	)			71
Cemetery costs from the sale of unconstructed property (3)			(67	)			(738	)
Cemetery property cost of sales (4)			(1,470	)			(1,103	)
Preneed funeral contracts (5)			(2,000	)			(1,500	)
Preneed cemetery contracts (6)			(3,900	)			(2,925	)
Adjustment to costs and expenses		$	(10,417	)		$	(8,119	)

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Interest expense on new borrowings:
Senior notes due 2014 (1)		$	18,438			$	13,828
Senior notes due 2018 (2)			19,063				14,297
Senior credit facility term loan (3)			11,100				8,325
Private placement debt securities (4)			14,800				11,100
Amortization of deferred financing costs (5)		$	1,843			$	1,422
Total interest expense on new borrowings		$	65,244			$	48,972
Less: historical interest expense and related amortization of deferred financing costs on extinguished borrowings:
Alderwoods		$	29,221			$	21,915
SCI			13,002				9,752
Total historical interest expense and related amortization of deferred financing costs on extinguished borrowings		$	42,223			$	31,667
Adjustment to interest expense		$	23,021			$	17,305

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Outstanding balance		$	250,000			$	250,000
Interest rate			7.375	%			7.375	%
Portion of year outstanding			100	%			75	%
Calculated interest		$	18,438			$	13,828

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Outstanding balance		$	250,000			$	250,000
Interest rate			7.625	%			7.625	%
Portion of year outstanding			100	%			75	%
Calculated interest		$	19,063			$	14,297

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Outstanding balance		$	150,000			$	150,000
Assumed interest rate-3 month LIBOR (5.40% plus 2.00%)			7.40	%			7.40	%
Portion of year outstanding			100	%			75	%
Calculated interest		$	11,100			$	8,325
An increase or decrease of 25 basis points in interest rate would result in an interest expense increase or decrease of		$	375			$	281

						Nine months
		Year ended				ended
		December 31,				September 30,
		2005				2006
Outstanding balance		$	200,000			$	200,000
Assumed interest rate-3 month LIBOR (5.40% plus 2.00%)			7.40	%			7.40	%
Portion of year outstanding			100	%			75	%
Calculated interest		$	14,800			$	11,100
An increase or decrease of 25 basis points in interest rate would result in an interest expense increase or decrease of		$	500			$	375

EXHIBIT INDEX

EXHIBIT NO.		DESCRIPTION OF EXHIBIT
99.A		Alderwoods Group, Inc. Interim Unaudited Consolidated Financial Statements as of October 7, 2006.
99.B		Alderwoods Group, Inc. Audited Consolidated Financial Statements as of December 31, 2005.