UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2008

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

For the transition period from                          to                         

SERVICE CORPORATION INTERNATIONAL

(Exact name of registrant as specified in its charter)

Texas		74-1488375
(State or other jurisdiction of incorporation or organization)		(I. R. S. employer identification number)
1929 Allen Parkway, Houston, Texas		77019
(Address of principal executive offices)		(Zip code)

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

None
(Former name, former address, or former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). YES o NO þ

The number of shares outstanding of the registrant’s common stock as of November 5, 2008 was 255,602,747 (net of treasury shares).

 

 

SERVICE CORPORATION INTERNATIONAL

INDEX

		Page
Glossary
Part I. Financial Information
Item 1. Financial Statements
Unaudited Condensed Consolidated Statement of Operations — Three and Nine Months Ended September 30, 2008 and 2007			4
Unaudited Condensed Consolidated Balance Sheet — September 30, 2008 and December 31, 2007			5
Unaudited Condensed Consolidated Statement of Cash Flows — Nine Months Ended September 30, 2008 and 2007			6
Unaudited Condensed Consolidated Statement of Stockholders’ Equity — Nine Months Ended September 30, 2008			7
Notes to Unaudited Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			32
The Company			32
Strategies for Growth			32
Financial Condition, Liquidity, and Capital Resources			32
Results of Operations — Three Months Ended September 30, 2008 and 2007			36
Results of Operations — Nine Months Ended September 30, 2008 and 2007			39
Critical Accounting Policies			43
Cautionary Statement on Forward-Looking Statements			43
Item 3. Quantitative and Qualitative Disclosures About Market Risk			44
Item 4. Controls and Procedures			45
Part II. Other Information
Item 1. Legal Proceedings			46
Item 1A. Risk Factors			46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			47
Item 6. Exhibits			47
Signature			49
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

GLOSSARY

The following terms are common to the deathcare industry, are used throughout this report, and have the following meanings:

Atneed — Funeral and cemetery arrangements after the death has occurred.

Burial Vaults — A reinforced outer burial container intended to protect the casket against the weight of the earth.

Cremation — The reduction of human remains to bone fragments by intense heat.

General Agency (GA) Revenues — Commissions paid to the General Agency (GA) for life insurance policies or annuities sold to preneed customers for the purpose of funding funeral arrangements. The commission rate paid is determined based on the product type sold, the length of payment terms, and the age of the insured/annuitant.

Interment — The burial or final placement of human remains in the ground.

Lawn Crypt — An outer burial receptacle constructed of concrete and reinforced steel, which is usually pre-installed in predetermined designated areas.

Marker — A method of identifying the remains in a particular burial space, crypt, or niche. Permanent burial markers are usually made of bronze, granite, or stone.

Maturity — At the time of death. This is the point at which preneed contracts are converted to atneed contracts.

Mausoleum — An above ground structure that is designed to house caskets and cremation urns.

Cemetery Perpetual Care or Endowment Care Fund — A trust fund used for the maintenance and upkeep of burial spaces within a cemetery in perpetuity.

Preneed — Purchase of products and services prior to use.

Preneed Backlog — Future revenues from unfulfilled preneed funeral and cemetery contractual arrangements.

Production — Sales of preneed funeral and preneed or atneed cemetery contracts.

As used herein, “SCI”, “Company”, “we”, “our”, and “us” refer to Service Corporation International and companies owned directly or indirectly by Service Corporation International, unless the context requires otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SERVICE CORPORATION INTERNATIONAL

		Three months ended								Nine months ended
		September 30,								September 30,
		2008				2007				2008				2007
Revenues		$	516,439			$	539,334			$	1,638,672			$	1,712,381
Costs and expenses			(434,370	)			(436,819	)			(1,311,646	)			(1,365,644	)
Gross profit			82,069				102,515				327,026				346,737
General and administrative expenses			(16,107	)			(32,069	)			(62,840	)			(97,456	)
(Loss) gain on divestitures and impairment charges, net			(12,819	)			4,886				(28,723	)			6,949
Hurricane expense, net			(4,313	)			—				(4,313	)			—
Other operating income, net			—				—				585				—
Operating income			48,830				75,332				231,735				256,230
Interest expense			(33,222	)			(38,090	)			(100,602	)			(111,852	)
Loss on early extinguishment of debt			—				—				—				(14,480	)
Interest income			996				4,254				4,369				8,324
Equity in earnings of unconsolidated subsidiaries			—				2,460				—				8,730
Other expense, net			(805	)			(1,049	)			(1,061	)			(3,981	)
Income from continuing operations before income taxes			15,799				42,907				134,441				142,971
Provision for income taxes			(1,160	)			(14,062	)			(46,524	)			(66,500	)
Income from continuing operations			14,639				28,845				87,917				76,471
(Loss) income from discontinued operations (net of income tax provision (benefit) of $0, $2,223, $(195), and $4,183, respectively)			—				(675	)			(362	)			4,459
Net income		$	14,639			$	28,170			$	87,555			$	80,930
Basic earnings per share:
Income from continuing operations		$	.06			$	.10			$	.34			$	.26
Income from discontinued operations, net of tax			—				—				—				.02
Net income		$	.06			$	.10			$	.34			$	.28
Diluted earnings per share:
Income from continuing operations		$	.06			$	.10			$	.33			$	.26
Income from discontinued operations, net of tax			—				—				—				.01
Net income		$	.06			$	.10			$	.33			$	.27
Basic weighted average number of shares			256,788				284,511				258,868				289,437
Diluted weighted average number of shares			259,835				289,597				262,482				294,848
Dividends declared per share		$	.04			$	.03			$	.12			$	.09

(See notes to unaudited condensed consolidated financial statements)

SERVICE CORPORATION INTERNATIONAL

		September 30, 2008				December 31, 2007
Assets
Current assets:
Cash and cash equivalents		$	171,903			$	168,594
Receivables, net			90,469				113,793
Inventories			32,635				36,203
Income tax receivable			95,303				1,426
Deferred tax asset			73,018				73,182
Current assets held for sale			1,747				2,294
Other			15,205				25,835
Total current assets			480,280				421,327
Preneed funeral receivables and trust investments			1,342,211				1,434,403
Preneed cemetery receivables and trust investments			1,301,873				1,428,057
Cemetery property, at cost			1,456,199				1,451,666
Property and equipment, net			1,566,689				1,569,534
Non-current assets held for sale			123,312				122,626
Goodwill			1,216,748				1,198,153
Deferred charges and other assets			455,499				400,734
Cemetery perpetual care trust investments			813,857				905,744
		$	8,756,668			$	8,932,244
Liabilities & Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities		$	333,201			$	343,392
Current maturities of long-term debt			56,271				36,594
Current liabilities held for sale			258				149
Income taxes			—				46,305
Total current liabilities			389,730				426,440
Long-term debt			1,835,838				1,820,106
Deferred preneed funeral revenues			575,558				526,668
Deferred preneed cemetery revenues			778,861				753,876
Deferred income taxes			237,481				140,623
Non-current liabilities held for sale			96,265				91,928
Other liabilities			369,779				383,642
Non-controlling interest in funeral and cemetery trusts			2,192,401				2,390,288
Non-controlling interest in cemetery perpetual care trusts			829,348				906,590
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $1 per share par value, 500,000,000 shares authorized, 257,823,110 and 262,858,169 issued and outstanding (net of 8,905,863 and 1,961,300 treasury shares, at par, respectively)			257,823				262,858
Capital in excess of par value			1,810,368				1,874,600
Accumulated deficit			(736,284	)			(797,965	)
Accumulated other comprehensive income			119,500				152,590
Total stockholders’ equity			1,451,407				1,492,083
		$	8,756,668			$	8,932,244

(See notes to unaudited condensed consolidated financial statements)

SERVICE CORPORATION INTERNATIONAL

		Nine months ended
		September 30,
		2008				2007
Cash flows from operating activities:
Net income		$	87,555			$	80,930
Adjustments to reconcile net income to net cash provided by operating activities:
Loss (income) from discontinued operations, net of tax			362				(4,459	)
Loss on early extinguishment of debt			—				14,480
Premiums paid on early extinguishment of debt			—				(11,368	)
Depreciation and amortization			102,350				109,526
Amortization of cemetery property			23,824				24,983
Amortization of loan costs			2,718				5,202
Provision for doubtful accounts			6,768				7,753
Provision for deferred income taxes			94,107				20,798
Loss (gain) on divestitures and impairment charges, net			28,723				(6,949	)
Share-based compensation			7,626				7,898
Excess tax benefits from share-based awards			(3,219	)			(5,159	)
Equity in earnings of unconsolidated subsidiaries			—				(8,730	)
Change in assets and liabilities, net of effects from acquisitions and divestitures:
Decrease (increase) in receivables			7,786				(7,027	)
Increase in other assets			(71,977	)			(4,299	)
(Decrease) increase in payables and other liabilities			(92,603	)			33,436
Effect of preneed funeral production and maturities:
Decrease in preneed funeral receivables and trust investments			8,605				27,236
Increase in deferred preneed funeral revenue			23,229				38,854
Decrease in funeral non-controlling interest			(25,284	)			(50,013	)
Effect of cemetery production and deliveries:
Decrease in preneed cemetery receivables and trust investments			29,734				41,811
Increase in deferred preneed cemetery revenue			23,186				32,092
Decrease in cemetery non-controlling interest			(19,596	)			(36,228	)
Other			(578	)			580
Net cash provided by operating activities from continuing operations			233,316				311,347
Net cash provided by operating activities from discontinued operations			—				17,279
Net cash provided by operating activities			233,316				328,626
Cash flows from investing activities:
Capital expenditures			(108,324	)			(113,607	)
Proceeds from divestitures and sales of property and equipment			19,221				314,255
Acquisitions			(8,545	)			(3,308	)
Net deposits of restricted funds and other			(21,476	)			(236	)
Net cash (used in) provided by investing activities from continuing operations			(119,124	)			197,104
Net cash provided by (used in) investing activities from discontinued operations			858				(8,546	)
Net cash (used in) provided by investing activities			(118,266	)			188,558
Cash flows from financing activities:
Proceeds from the issuance of long-term debt			72,807				398,996
Debt issuance costs			—				(6,443	)
Payments of debt			(54,403	)			(3,043	)
Principal payments on capital leases			(18,550	)			(22,060	)
Early extinguishment of debt			—				(422,545	)
Purchase of Company common stock			(79,470	)			(211,082	)
Proceeds from exercise of stock options			6,097				19,373
Excess tax benefits from share-based awards			3,219				5,159
Payments of dividends			(31,166	)			(26,265	)
Bank overdrafts and other			(8,624	)			(829	)
Net cash used in financing activities from continuing operations			(110,090	)			(268,739	)
Net cash used in financing activities from discontinued operations			—				(2,113	)
Net cash used in financing activities			(110,090	)			(270,852	)
Effect of foreign currency on cash and cash equivalents			(1,651	)			1,526
Net increase in cash and cash equivalents			3,309				247,858
Cash and cash equivalents at beginning of period			168,594				39,880
Cash and cash equivalents at end of period		$	171,903			$	287,738

(See notes to unaudited condensed consolidated financial statements)

SERVICE CORPORATION INTERNATIONAL

																							Accumulated
											Treasury				Capital in								other
		Outstanding					Common				stock, par				excess of				Accumulated				comprehensive
		shares					stock				value				par value				deficit				income				Total
Balance at December 31, 2007			262,858				$	264,819			$	(1,961	)		$	1,874,600			$	(797,965	)		$	152,590			$	1,492,083
Cumulative effect of accounting change																				(3,265	)							(3,265	)
Net income																				87,555								87,555
Dividends declared on common stock ($.12 per share)																(30,921	)											(30,921	)
Other comprehensive loss																								(33,090	)			(33,090	)
Employee share-based compensation earned																6,917												6,917
Stock option exercises			1,617					1,617								4,480												6,097
Restricted stock awards, net of forfeitures and other			354					293				61				355												709
Tax benefit related to share-based awards																4,792												4,792
Purchase of Company stock			(7,006	)								(7,006	)			(49,855	)			(22,609	)							(79,470	)
Balance at September 30, 2008			257,823				$	266,729			$	(8,906	)		$	1,810,368			$	(736,284	)		$	119,500			$	1,451,407

(See notes to unaudited condensed consolidated financial statements)

SERVICE CORPORATION INTERNATIONAL

1. Nature of Operations

     We are a provider of deathcare products and services, with a network of funeral service locations and cemeteries primarily operating in the United States and Canada. Our operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses.

     Funeral service locations provide professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles and preparation and embalming services. Funeral related merchandise, including caskets, burial vaults, cremation receptacles, flowers, and other ancillary products and services, is sold at funeral service locations. Cemeteries provide cemetery property interment rights, including mausoleum spaces, lots, and lawn crypts, and sell cemetery related merchandise and services, including stone and bronze memorials, markers, casket and cremation memorialization products, merchandise installations, and burial openings and closings. We also sell preneed funeral and cemetery products and services whereby a customer contractually agrees to the terms of certain products and services to be provided in the future.

     We divested 70% of Kenyon International Emergency Services (Kenyon), a company that specializes in providing disaster management services in mass fatality incidents, in the fourth quarter of 2007. Kenyon’s results are included in our funeral operations segment through the date of the sale. In the fourth quarter of 2006, as part of our strategy to enhance our position as North America’s premier funeral and cemetery provider, we acquired Alderwoods Group, Inc. (Alderwoods). As part of the Alderwoods transaction, we acquired an insurance business that we sold in the third quarter of 2007. The operations of this business through the date of sale are presented as discontinued operations in our condensed consolidated statement of operations.

2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

     Our condensed consolidated financial statements include the accounts of Service Corporation International and all subsidiaries in which we hold a controlling financial interest. Our financial statements also include the accounts of the funeral trusts, cemetery merchandise and services trusts, and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair presentation of our results for these periods. Our condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our annual report on Form 10-K for the year ended December 31, 2007, unless otherwise disclosed herein, and should be read in conjunction therewith. The accompanying year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period.

Reclassifications and Prior Period Items

     Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation with no effect on our previously reported results of operations, financial condition, or cash flows.

     In connection with our ongoing efforts to remediate our previously reported material weaknesses and other internal control deficiencies, we recorded several immaterial adjustments related to prior accounting periods during the three and nine months ended September 30, 2008. These adjustments were not quantitatively or qualitatively material to our condensed consolidated financial statements for the three or nine months ended September 30, 2008, nor were such items quantitatively or qualitatively material to any of our prior annual or quarterly financial statements. The net impact of these adjustments was a decrease to our pre-tax income in the amount of $2.1 million and $4.4 million for the three and nine months ended September 30, 2008, respectively.

Use of Estimates in the Preparation of Financial Statements

     The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in our Form 10-K for the year ended December 31, 2007. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. As a result, actual results could differ from these estimates.

Goodwill

     We test goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there might be impairment. We will perform our annual review of goodwill during the fourth quarter of 2008 in accordance with our accounting policy. If market conditions continue to deteriorate, this could increase the likelihood of recording an impairment charge in the future to the extent that the book value, including goodwill, exceeds the estimated fair value of a reporting unit.

3. Recently Issued Accounting Standards

Disclosures about Credit Derivatives

In September 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position Statement of Financial Accounting Standards (SFAS) No. 133-1 and FASB Interpretation (FIN) No. 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of SFAS No. 133 and FIN No. 45; and Clarification of Effective Date of SFAS No. 161” (FSP 133-1). FSP 133-1 requires disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instruments and requires additional disclosure about the current status of the payment/performance risk of a guarantee. The provisions of this FSP that amend SFAS No. 133 and FIN No. 45 are effective for reporting periods ending after November 15, 2008. The adoption of this statement is not expected to have a material impact on our consolidated financial statements.

Sales of Real Estate

In July 2008, the FASB ratified the consensus reached by the Emerging Issues Task Force (EITF) on Issue No. 07-06 “Accounting for Sale of Real Estate Subject to the Requirements of SFAS No. 66” (EITF 07-06). EITF 07-06 provides clarification whether a buy-sell clause is a prohibited form of continuing involvement that would preclude partial sales treatment under SFAS No. 66, “Accounting for Sales of Real Estate.” The provisions of EITF 07-06 are effective for new arrangements entered into and assessments performed in fiscal years beginning after December 15, 2007. The adoption of this statement has not had a material impact on our consolidated financial statements. The future impact of adopting EITF 07-06 will be dependent on sales of real estate, if any, that we may pursue.

Determination of the Useful Life of Intangible Assets

     In April 2008, the FASB issued SFAS No. 142-3, “Determination of the Useful Life of Intangible Assets” (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, “Goodwill and Other Intangible Assets” and requires enhanced related disclosures. FSP 142-3 must be applied prospectively to all intangible assets acquired as of and subsequent to fiscal years beginning after December 15, 2008. We are currently evaluating the impact of adopting FSP 142-3 on our consolidated financial statements.

Derivative Instruments and Hedging Activities

     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — An Amendment of FASB Statement No. 133” (SFAS 161). SFAS 161 amends and expands the disclosures required by SFAS 133 to provide an enhanced understanding of the reasons an entity engages in derivate instruments and hedging activities. It also requires disclosures about how such items are accounted for under SFAS 133 and how they impact the entity’s financial statements. The provisions of SFAS 161 are effective for us beginning January 1, 2009. The adoption of this statement is not expected to have a material impact on our consolidated financial statements.

Business Combinations

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (SFAS 141(R)), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired (including goodwill), the liabilities assumed and any non-controlling interest in the acquiree. SFAS 141(R) also establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The provisions of SFAS 141(R) are effective for us for business combinations for which the acquisition date is on or after January 1, 2009, with the exception of certain income tax effects related to our prior business combinations, which will be accounted for pursuant to the provisions of SFAS 141(R). The impact of adopting SFAS 141(R) will be dependent on future business combinations, if any, that we may pursue after its effective date.

Non-controlling Interests

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (SFAS 160), which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, SFAS 160 requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. The provisions of SFAS 160 are effective for us on January 1, 2009. We are currently evaluating the impact of adopting SFAS 160 on our consolidated financial statements.

Split-Dollar Life Insurance Agreements

     In March 2007, the FASB ratified the consensus reached by the EITF on Issue No. 06-10 "Accounting for Collateral Assignment Split-Dollar Life Insurance Agreements” (EITF 06-10). EITF 06-10 provides guidance for determining the liability for the postretirement benefit obligation as well as recognition and measurement of the associated asset on the basis of the terms of a collateral assignment agreement. We adopted the provisions of EITF 06-10 effective January 1, 2008. As a result of our adoption, we recorded a $3.3 million cumulative-effect adjustment which increased our Accumulated deficit as of January 1, 2008.

Fair Value Option

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 permits entities to choose to measure various financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The fair value option may be elected on an instrument-by-instrument basis, as long as it is applied to the instrument in its entirety. The election is irrevocable, unless an event specified in SFAS 159 occurs that results in a new election date. We adopted the provisions of SFAS 159 effective January 1, 2008. The adoption of SFAS 159 had no impact on our consolidated financial statements as we elected not to measure any additional financial instruments at fair value as of the date of adoption.

Fair Value Measurements

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157). The statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, establishes a framework for measuring fair value, and expands disclosures about instruments measured at fair value. SFAS 157 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

	•		Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;
	•		Level 2 — inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;
	•		Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

     An asset’s or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

     The provisions of SFAS 157 have not been applied to our non-financial assets and liabilities. The major categories of assets and liabilities that are subject to non-recurring fair value measurement, for which we have not yet applied the provisions of SFAS 157, are as follows: reporting units measured at fair value in the first step of a goodwill impairment test under SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS 142); indefinite-lived intangible assets measured at fair value for impairment assessment under SFAS 142; non-financial assets measured at fair value for an impairment assessment under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” and non-financial assets and liabilities initially measured at fair value in a business combination under SFAS No. 141, “Business Combinations”.

     In February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-1. “Application of FASB Statement No. 157 to FASB Statement 13 and Other Accounting Pronouncements that Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (FSP 157-1) and FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157” (FSP 157-2). FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, “Accounting for Leases” and its related accounting pronouncements that

address leasing transactions. FSP 157-2 provides a one-year deferral of the effective date of SFAS 157 for non-financial assets and liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. In accordance with FSP 157-2, we adopted the provisions of SFAS 157 for our financial assets and liabilities that are measured on a recurring basis at fair value, effective January 1, 2008. These financial assets include the investments of our funeral, cemetery, and cemetery perpetual care trusts. For additional disclosures required by SFAS 157 for these assets, see Notes 4 through 6 to our condensed consolidated financial statements.

     In October 2008, the FASB issued FSP No. SFAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (FSP SFAS 157-3), which clarifies the application of SFAS No. 157, “Fair Value Measurements,” in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP SFAS 157-3 is effective immediately, including prior periods for which financial statements have not been issued. We adopted FSP SFAS 157-3 effective with the preparation of our financial statements for the quarter ended September 30, 2008. The adoption of FSP SFAS 157-3 had no impact on our consolidated results of operations, financial position or cash flows.

4. Preneed Funeral Activities

     Preneed funeral receivables and trust investments, net of allowance for cancellation, represent trust investments, including investment earnings, and customer receivables, net of unearned finance charges, related to unperformed, price-guaranteed preneed funeral contracts. When we, as the primary beneficiary, receive payments from the customer, we deposit the amount required by law into the trust and reclassify the corresponding amount from Deferred preneed funeral revenues into Non-controlling interest in funeral and cemetery trusts. Amounts are withdrawn from the trusts after the contract obligations are performed. Cash flows from preneed funeral contracts are presented as operating cash flows in our condensed consolidated statement of cash flows.

     The table below sets forth the investment-related activities associated with our preneed funeral trusts:

		Three months ended								Nine months ended
		September 30,								September 30,
		2008				2007				2008				2007
		(In thousands)								(In thousands)
Deposits		$	26,187			$	20,753			$	70,959			$	66,118
Withdrawals			24,528				37,821				95,039				111,971
Purchases of available-for-sale securities			116,264				341,986				306,035				653,921
Sales of available-for-sale securities			76,922				379,659				311,517				575,127
Realized gains from sales of available-for-sale securities			7,535				54,926				37,844				87,677
Realized losses from sales of available-for-sale securities			8,078				10,781				34,968				22,851

     The components of Preneed funeral receivables and trust investments in our condensed consolidated balance sheet at September 30, 2008 and December 31, 2007 are as follows:

		September 30, 2008				December 31, 2007
		(In thousands)
Trust investments, at market		$	787,585			$	848,195
Cash and cash equivalents			125,850				194,728
Insurance-backed fixed income securities			222,298				201,258
Receivables from customers			242,558				225,905
Unearned finance charge			(6,212	)			(5,961	)
			1,372,079				1,464,125
Allowance for cancellation			(29,868	)			(29,722	)
Preneed funeral receivables and trust investments		$	1,342,211			$	1,434,403

     The cost and market values associated with our funeral trust investments recorded at fair market value at September 30, 2008 and December 31, 2007 are detailed below. Cost reflects the investment (net of redemptions) of control holders in common trust funds, mutual funds, and private equity investments. Fair market value represents the value of the underlying securities and cash held by the common trust funds, mutual funds at published values, and the estimated market value of private equity investments (including debt as

well as the estimated fair value related to the contract holder’s equity in majority-owned real estate investments). The fair market value of our funeral trust investments, in the aggregate, was 87% and 101% of the related cost basis of such investments as of September 30, 2008 and December 31, 2007, respectively.

		September 30, 2008
						Unrealized				Unrealized				Fair market
		Cost				gains				losses				value
		(In thousands)
Fixed income securities:
U.S. Treasury		$	60,504			$	180			$	(7,777	)		$	52,907
Foreign government			103,003				617				(638	)			102,982
Corporate			19,246				98				(468	)			18,876
Mortgage-backed			18,594				60				(2,990	)			15,664
Asset-backed			20				—				—				20
Equity securities:
Common stock			383,861				4,978				(61,674	)			327,165
Mutual funds:
Equity			111,327				227				(19,428	)			92,126
Fixed income			166,758				732				(22,609	)			144,881
Private equity and other			43,016				2,152				(7,642	)			37,526
Trust investments		$	906,329			$	9,044			$	(123,226	)		$	792,147
Less: Assets associated with businesses held for sale															(4,562	)
														$	787,585

		December 31, 2007
						Unrealized				Unrealized				Fair market
		Cost				gains				losses				value
		(In thousands)
Fixed income securities:
U.S. Treasury		$	79,430			$	630			$	(378	)		$	79,682
Foreign government			60,330				344				(440	)			60,234
Corporate			14,937				206				(233	)			14,910
Mortgage-backed			2,670				53				(17	)			2,706
Asset-backed			33				—				—				33
Equity securities:
Preferred stock			1,581				36				(23	)			1,594
Common stock			378,628				12,415				(6,131	)			384,912
Mutual funds:
Equity			127,606				3,991				(2,246	)			129,351
Fixed income			140,857				3,005				(1,612	)			142,250
Private equity and other			43,820				2,815				(5,297	)			41,338
Trust investments		$	849,892			$	23,495			$	(16,377	)		$	857,010
Less: Assets associated with businesses held for sale															(8,815	)
														$	848,195

     Where quoted prices are available in an active market, securities held by the common trust funds and mutual funds are classified as Level 1 investments pursuant to the three-level valuation hierarchy provided in SFAS 157. Our investments classified as Level 1 securities include common stock and mutual funds.

     Where quoted market prices are not available for the specific security, then fair values are estimated by using either quoted prices of securities with similar characteristics or a fair value model with observable inputs that include a combination of interest rates, yield curves, credit risks, prepayment speeds, rating, and tax exempt status. These securities are United States (U.S.) Treasury, foreign government, corporate, mortgage-backed and asset-backed fixed income securities, and preferred stock equity securities, all of which are classified within Level 2 of the SFAS 157 valuation hierarchy.

     The valuation of private equity and other investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. The fair value of these investments is estimated based on the market value of the underlying real estate and private equity investments. The underlying real estate value is determined using the most recent available appraisals. Private equity investments are valued using market appraisals or a discounted cash flow

methodology depending on the nature of the underlying assets. The appraisals assess value based on a combination of replacement cost, comparative sales analysis, and discounted cash flow analysis. As a result of the adoption of SFAS 157 in the first quarter of 2008, we recorded a $3.5 million decrease in the fair value of our private equity investments held by the funeral trusts to reflect time-based restrictions on the exit from the investments. As a result of the adoption we recorded the decrease and a corresponding increase for the non-controlling interest in funeral trust investments in Other Comprehensive Income in our condensed consolidated balance sheet. Such private equity and other investments are included within Level 3 of the SFAS 157 valuation hierarchy. We further reviewed our private equity and other investments in accordance with the guidance included in FSP SFAS 157-3 (see Recently Issued Accounting Standards above) and determined that no additional adjustments to fair value were required.

     The inputs into the fair value of our market-based funeral trust investments are categorized as follows:

		September 30, 2008
		Quoted				Significant
		market prices				other				Significant
		in active				observable				unobservable				Fair market
		markets (Level 1)				inputs (Level 2)				inputs (Level 3)				value
		(In thousands)
Trust investments		$	564,172			$	190,449			$	37,526			$	792,147
The change in our market-based funeral trust investments with significant unobservable inputs (Level 3) is as follows (in thousands):
Fair market value, January 1, 2008														$	37,865
Total unrealized losses included in other comprehensive income (a)															(229	)
Purchases, sales, contributions, and distributions, net															(110	)
Fair market value, September 30, 2008														$	37,526

     Maturity dates of our fixed income securities range from 2008 to 2038. Maturities of fixed income securities included in trust investments, at market, at September 30, 2008 are estimated as follows:

		Market
		(In thousands)
Due in one year or less		$	81,593
Due in one to five years			45,527
Due in five to ten years			40,183
Thereafter			23,146
		$	190,449

     Earnings from all trust investments are recognized in current funeral revenues when a service is performed, merchandise is delivered, or upon cancellation of the funeral contract. Only the amount we are entitled to retain is recognized when a contract is canceled. Recognized earnings (realized and unrealized) related to these trust investments were $10.1 million and $11.2 million for the three months ended September 30, 2008 and 2007, respectively. Recognized earnings (realized and unrealized) related to these trust investments were $31.2 million and $33.3 million for the nine months ended September 30, 2008 and 2007, respectively.

     We assess our trust investments for other-than-temporary declines in fair value on a quarterly basis. Impairment charges, if any, as a result of this assessment are recognized as investment losses and offset by the non-controlling interest in funeral trust investments in Other income, net in our condensed consolidated statement of operations. As a result of our most recent review at September 30, 2008, we recorded a $1.3 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain equity securities. In the second quarter of 2007, we recorded a $3.5 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain private equity and other investments. See Note 7 to the condensed consolidated financial statements for further information related to our non-controlling interest in funeral trust investments.

5. Preneed Cemetery Activities

     Preneed cemetery receivables and trust investments, net of allowance for cancellation, represent trust investments, including investment earnings, and customer receivables, net of unearned finance charges, for contracts sold in advance of when the property

interment rights, merchandise, or services are needed. When we, as the primary beneficiary, receive payments from the customer, we deposit the amount required by law into the trust and reclassify the corresponding amount from Deferred preneed cemetery revenues into Non-controlling interest in funeral and cemetery trusts. Amounts are withdrawn from the trusts when the contract obligations are performed. Cash flows from preneed cemetery contracts are presented as operating cash flows in our condensed consolidated statement of cash flows.

     The table below sets forth the investment-related activities associated with our preneed cemetery trusts:

		Three months ended								Nine months ended
		September 30,								September 30,
		2008				2007				2008				2007
		(In thousands)								(In thousands)
Deposits		$	29,602			$	30,077			$	84,914			$	89,314
Withdrawals			30,360				40,108				103,099				121,313
Purchases of available-for-sale securities			119,727				448,334				754,276				805,364
Sales of available-for-sale securities			94,052				461,269				341,284				664,846
Realized gains from sales of available-for-sale securities			11,462				65,959				34,876				102,296
Realized losses from sales of available-for-sale securities			8,561				10,874				38,372				23,290

     The components of Preneed cemetery receivables and trust investments in our condensed consolidated balance sheet at September 30, 2008 and December 31, 2007 are as follows:

		September 30, 2008				December 31, 2007
		(In thousands)
Trust investments, at market		$	898,433			$	759,215
Cash and cash equivalents			140,716				399,301
Receivables from customers			347,243				351,409
Unearned finance charges			(49,274	)			(47,527	)
			1,337,118				1,462,398
Allowance for cancellation			(35,245	)			(34,341	)
Preneed cemetery receivables and trust investments		$	1,301,873			$	1,428,057

     The cost and market values associated with our cemetery merchandise and service trust investments recorded at fair market value at September 30, 2008 and December 31, 2007 are detailed below. Cost reflects the investment (net of redemptions) of control holders in common trust funds, mutual funds, and private equity investments. Fair market value represents the value of the underlying securities and cash held by the common trust funds, mutual funds at published values, and the estimated market value of private equity investments (including debt as well as the estimated fair value related to the contract holder’s equity in majority-owned real estate investments). The fair market value of our cemetery trust investments, in the aggregate, was 87% and 104% of the related cost basis of such investments as of September 30, 2008 and December 31, 2007, respectively.

		September 30, 2008
						Unrealized				Unrealized				Fair market
		Cost				gains				losses				value
		(In thousands)
Fixed income securities:
U.S. Treasury		$	51,627			$	39			$	(7,246	)		$	44,420
Foreign government			14,783				47				(159	)			14,671
Corporate			11,176				73				(369	)			10,880
Mortgage-backed			16,206				12				(2,276	)			13,942
Equity securities:
Common stock			536,945				7,142				(78,368	)			465,719
Mutual funds:
Equity			235,536				1,573				(34,677	)			202,432
Fixed income			212,308				396				(27,059	)			185,645
Private equity and other			27,351				942				(5,141	)			23,152
Trust investments		$	1,105,932			$	10,224			$	(155,295	)		$	960,861
Less: Assets associated with businesses held for sale															(62,428	)
														$	898,433

		December 31, 2007
						Unrealized				Unrealized				Fair market
		Cost				gains				losses				value
		(In thousands)
Fixed income securities:
U.S. Treasury		$	19,371			$	899			$	(205	)		$	20,065
Foreign government			14,016				296				—				14,312
Corporate			17,297				452				(90	)			17,659
Equity securities:
Preferred stock			2,979				144				(33	)			3,090
Common stock			402,028				20,923				(5,956	)			416,995
Mutual funds:
Equity			182,214				12,905				(2,861	)			192,258
Fixed income			126,728				5,535				(1,185	)			131,078
Private equity and other			26,124				2,103				(3,493	)			24,734
Trust investments		$	790,757			$	43,257			$	(13,823	)		$	820,191
Less: Assets associated with businesses held for sale															(60,976	)
														$	759,215

     Where quoted prices are available in an active market, securities held by the common trust funds and mutual funds are classified as Level 1 investments pursuant to the three-level valuation hierarchy provided in SFAS 157. Our investments classified as Level 1 securities include common stock and mutual funds.

     Where quoted market prices are not available for the specific security, then fair values are estimated by using either quoted prices of securities with similar characteristics or a fair value model with observable inputs that include a combination of interest rates, yield curves, credit risks, prepayment speeds, rating, and tax exempt status. These securities are U.S. Treasury, foreign government, corporate, mortgage-backed and asset-backed fixed income securities, and preferred stock equity securities, all of which are classified within Level 2 of the SFAS 157 valuation hierarchy.

     The valuation of private equity and other investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. The fair value of these investments is estimated based on the market value of the underlying real estate and private equity investments. The underlying real estate value is determined using the most recent available appraisals. Our private equity investments are valued using market appraisals or a discounted cash flow methodology depending on the nature of the underlying assets. The appraisals assess value based on a combination of replacement cost, comparative sales analysis, and discounted cash flow analysis. As a result of the adoption of SFAS 157 in the first quarter of 2008, we recorded a $2.9 million decrease in the fair value of our private equity investments held by the cemetery merchandise and service trusts to reflect time-based restrictions on the exit from the investments. As a result of the adoption we recorded the decrease and a corresponding increase for the non-controlling interest in cemetery trust investments in Other Comprehensive Income in our condensed consolidated balance sheet. Such private equity and other investments are included within Level 3 of the SFAS 157 valuation hierarchy. We further reviewed our private equity and other investments in accordance with the guidance included in FSP SFAS 157-3 (see Recently Issued Accounting Standards above) and determined that no additional adjustments to fair value were required.

     The inputs into the fair value of our market-based cemetery trust investments are categorized as follows:

September 30, 2008

Quoted

market prices

Significant

Significant

in active

other observable

unobservable inputs

Fair market

markets (Level 1)

inputs (Level 2)

(Level 3)

value

(In thousands)

Trust investments

$

853,796

$

83,913

$

23,152

$

960,861

     The change in our market-based cemetery trust investments with significant unobservable inputs (Level 3) is as follows (in thousands):

Fair market value, January 1, 2008		$	21,809
Total unrealized gains included in other comprehensive income (a)			2,994
Purchases, sales, contributions, and distributions, net			(1,651	)
Fair market value, September 30, 2008		$	23,152

     Maturity dates of our fixed income securities range from 2008 to 2038. Maturities of fixed income securities at September 30, 2008 are estimated as follows:

		Market
		(In thousands)
Due in one year or less		$	2,646
Due in one to five years			28,568
Due in five to ten years			27,766
Thereafter			24,933
		$	83,913

     Earnings from all trust investments are recognized in current cemetery revenues when the service is performed, the merchandise is delivered, or upon cancellation of the cemetery contract. Only the amount we are entitled to retain is recognized when a contract is canceled. Recognized earnings (realized and unrealized) related to these trust investments were $1.4 million and $8.9 million for the three months ended September 30, 2008 and 2007, respectively. Recognized earnings (realized and unrealized) related to these trust investments were $11.0 million and $18.7 million for the nine months ended September 30, 2008 and 2007, respectively.

     We assess our trust investments for other-than-temporary declines in fair value on a quarterly basis. Impairment charges, if any, as a result of this assessment are recognized as investment losses and offset by the non-controlling interest in cemetery trust investments in Other income, net in our condensed consolidated statement of operations. As a result of our most recent review at September 30, 2008, we recorded a $2.3 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain equity securities. In the second quarter of 2007, we recorded a $3.2 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain private equity and other investments. See Note 7 to the condensed consolidated financial statements for further information related to our non-controlling interest in cemetery trust investments.

6. Cemetery Perpetual Care Trusts

     We are required by state or provincial law to pay into cemetery perpetual care trusts a portion of the proceeds from the sale of cemetery property interment rights. As the primary beneficiary of the trusts, we consolidate the cemetery perpetual care trust investments and record a corresponding amount into Non-controlling interest in cemetery perpetual care trusts. Cash flows from cemetery perpetual care contracts are presented as operating cash flows in our condensed consolidated statement of cash flows.

     The table below sets forth the investment-related activities associated with our cemetery perpetual care trusts:

		Three months ended								Nine months ended
		September 30,								September 30,
		2008				2007				2008				2007
		(In thousands)								(In thousands)
Deposits		$	5,715			$	5,738			$	17,650			$	20,317
Withdrawals			8,696				4,247				23,153				22,947
Purchases of available-for-sale securities			43,055				405,592				159,923				632,891
Sales of available-for-sale securities			52,899				247,279				178,648				341,411
Realized gains from sales of available-for-sale securities			1,529				6,558				11,881				30,990
Realized losses from sales of available-for-sale securities			2,591				5,718				16,222				11,935

     The components of Cemetery perpetual care trust investments in our condensed consolidated balance sheet at September 30, 2008 and December 31, 2007 are as follows:

		September 30, 2008				December 31, 2007
		(In thousands)
Trust investments, at market		$	744,307			$	817,228
Cash and cash equivalents			69,550				88,516
Cemetery perpetual care trust investments		$	813,857			$	905,744

     The cost and market values associated with our market-based trust investments held in cemetery perpetual care trusts recorded at fair market value at September 30, 2008 and December 31, 2007 are detailed below. Cost reflects the investment (net of redemptions) of control holders in common trust funds, mutual funds, and private equity investments. Fair market value represents the value of the underlying securities and cash held by the common trust funds, mutual funds at published values, and the estimated market value of private equity investments (including debt as well as the estimated fair value related to the contract holder’s equity in majority-owned real estate investments). The fair market value of our cemetery perpetual care trust investments, in the aggregate, was 89% and 100% of the related cost basis of such investments as of September 30, 2008 and December 31, 2007, respectively.

		September 30, 2008
						Unrealized				Unrealized				Fair market
		Cost				Gains				Losses				Value
		(In thousands)
Fixed income securities:
U.S. Treasury		$	5,275			$	720			$	(415	)		$	5,580
Foreign government			24,342				71				(269	)			24,144
Corporate			44,194				138				(3,761	)			40,571
Mortgage-backed			3,749				9				(425	)			3,333
Equity securities:
Preferred stock			3,229				344				(443	)			3,130
Common stock			128,702				2,386				(15,195	)			115,893
Mutual funds:
Equity			98,658				115				(12,719	)			86,054
Fixed income			513,588				488				(60,970	)			453,106
Private equity and other			35,919				1,528				(4,776	)			32,671
Cemetery perpetual care trust investments		$	857,656			$	5,799			$	(98,973	)		$	764,482
Less: Assets associated with businesses held for sale															(20,175	)
														$	744,307

		December 31, 2007
						Unrealized				Unrealized				Fair market
		Cost				Gains				Losses				Value
		(In thousands)
Fixed income securities:
U.S. Treasury		$	2,647			$	703			$	(1	)		$	3,349
Foreign government			25,065				789				(13	)			25,841
Corporate			42,437				225				(555	)			42,107
Mortgage-backed			348				7				—				355
Equity securities:
Preferred stock			2,403				13				(58	)			2,358
Common stock			128,815				3,501				(2,840	)			129,476
Mutual funds:
Equity			44,221				1,208				(1,003	)			44,426
Fixed income			555,509				3,256				(10,714	)			548,051
Private equity and other			34,894				3,145				(542	)			37,497
Cemetery perpetual care trust investments		$	836,339			$	12,847			$	(15,726	)		$	833,460
Less: Assets associated with businesses held for sale															(16,232	)
														$	817,228

     Where quoted prices are available in an active market, securities held by the common trust funds and mutual funds are classified as Level 1 investments pursuant to the three-level valuation hierarchy provided in SFAS 157. Our investments classified as Level 1 securities include common stock and mutual funds.

     Where quoted market prices are not available for the specific security, then fair values are estimated by using either quoted prices of securities with similar characteristics or a fair value model with observable inputs that include a combination of interest rates, yield curves, credit risks, prepayment speeds, rating, and tax exempt status. Examples of such securities are U.S. Treasury, foreign government, corporate, mortgage-backed and asset-backed fixed income securities, and preferred stock equity securities, all of which are classified within Level 2 of the SFAS 157 valuation hierarchy.

     The valuation of private equity and other investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. The fair value of these investments is estimated based on the market value of the underlying real estate and private equity investments. The underlying real estate value is determined using the most recent available appraisals. Our private equity investments are valued using market appraisals or a discounted cash flow methodology depending on the nature of the underlying assets. The appraisals assess value based on a combination of replacement cost, comparative sales analysis, and discounted cash flow analysis. As a result of the adoption of SFAS 157 in the first quarter of 2008, we recorded a $4.9 million decrease in the fair value of our private equity investments held by the cemetery perpetual care trusts to reflect time-based restrictions on the exit from the investments. As a result of the adoption we recorded the decrease and a corresponding increase for the non-controlling interest in cemetery perpetual care trust investments in Other Comprehensive Income in our condensed consolidated balance sheet. Such private equity and other investments are included within Level 3 of the SFAS 157 valuation hierarchy. We further reviewed our private equity and other investments in accordance with the guidance included in FSP SFAS 157-3 (see Recently Issued Accounting Standards above) and determined that no additional adjustments to fair value were required.

     The inputs into the fair value of our market-based cemetery perpetual care trust investments are categorized as follows:

September 30, 2008

Quoted

market prices

Significant

Significant

in active

other observable

unobservable inputs

Fair market

markets (Level 1)

inputs (Level 2)

(Level 3)

value

(In thousands)

Trust investments

$

655,053

$

76,758

$

32,671

$

764,482

     The change in our market-based cemetery perpetual care trust investments with significant unobservable inputs (Level 3) is as follows (in thousands):

Fair market value, January 1, 2008		$	32,644
Total unrealized gains included in other comprehensive income (a)			4,341
Purchases, sales, contributions, and distributions, net			(4,314	)
Fair market value, September 30, 2008		$	32,671

(a)

All gains (losses) recognized in other comprehensive income for cemetery perpetual care trust investments are attributable to non-controlling interest holders and are offset by a corresponding increase (decrease) in Non-controlling interest in cemetery perpetual care trusts. See Note 7 to the condensed consolidated financial statements for further information related to our non-controlling interest in cemetery perpetual care trust investments.

     Maturity dates of our fixed income securities range from 2008 to 2038. Maturities of fixed income securities at September 30, 2008 are estimated as follows:

		Market
		(In thousands)
Due in one year or less		$	3,165
Due in one to five years			38,001
Due in five to ten years			14,369
Thereafter			18,093
		$	73,628

     Distributable earnings from these cemetery perpetual care trust investments are recognized in current cemetery revenues to the extent we incur qualifying cemetery maintenance costs. Recognized earnings related to these cemetery perpetual care trust investments were $9.5 million and $10.3 million for the three months ended September 30, 2008 and 2007, respectively. Recognized earnings related to these cemetery perpetual care trust investments were $29.5 million and $35.6 million for the nine months ended September 30, 2008 and 2007, respectively.

     We assess our trust investments for other-than-temporary declines in fair value on a quarterly basis. Impairment charges, if any, as a result of this assessment are recognized as investment losses and offset by the non-controlling interest in cemetery perpetual care trust investments in Other income, net in our condensed consolidated statement of operations. As a result of our most recent review at September 30, 2008, we recorded a $0.3 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain equity securities. In the second quarter of 2007, we recorded a $1.2 million impairment charge for other-than-temporary declines in fair value related to unrealized losses on certain private equity and other investments. See Note 7 to the condensed consolidated financial statements for further information related to our non-controlling interest in cemetery perpetual care trust investments.

7. Non-Controlling Interest in Funeral and Cemetery Trusts and in Cemetery Perpetual Care Trusts

     We consolidate in our balance sheet the merchandise and service trusts associated with our preneed funeral and cemetery activities in accordance with FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities (revised December 2003 — an interpretation of ARB No. 51” (FIN 46R). Although FIN 46R requires the consolidation of the merchandise and service trusts, it does not change the legal relationships among the trusts, us, or our customers. The customers are the legal beneficiaries of these merchandise and service trusts, and therefore, their interests in these trusts represent a non-controlling interest in subsidiaries.

     The components of Non-controlling interest in funeral and cemetery trusts and Non-controlling interest in cemetery perpetual care trusts in our condensed consolidated balance sheet at September 30, 2008 and December 31, 2007 are detailed below.

		September 30, 2008												September 30, 2008
		Preneed				Preneed								Cemetery
		funeral				cemetery				Total				perpetual care
		(In thousands)
Trust investments, at market value		$	787,585			$	898,433			$	1,686,018			$	744,307
Cash and cash equivalents			125,850				140,716				266,566				69,550
Insurance-backed fixed income securities			222,298				—				222,298				—
Accrued trust operating payable, deferred tax assets, and other			8,415				9,104				17,519				15,491
Non-controlling interest		$	1,144,148			$	1,048,253			$	2,192,401			$	829,348

		December 31, 2007												December 31, 2007
		Preneed				Preneed								Cemetery
		funeral				cemetery				Total				perpetual care
		(In thousands)
Trust investments, at market value		$	848,195			$	759,215			$	1,607,410			$	817,228
Cash and cash equivalents			194,728				399,301				594,029				88,516
Insurance-backed fixed income securities			201,258				—				201,258				—
Accrued trust operating payable, deferred tax assets, and other			(3,737	)			(8,672	)			(12,409	)			846
Non-controlling interest		$	1,240,444			$	1,149,844			$	2,390,288			$	906,590