Debbie Young – Director, IR Tom Ryan – President and CEO Eric Tanzberger – CFO

Clint Fendley – Davenport Robert Willoughby – Bank of America A. J.

Rice – Susquehanna

Hi and good morning. This is Debbie Young, Director of Investor Relations, and I’ll just walk you through the Safe Harbor real quick.

In our comments today, we will make statements that are not historical facts and are forward-looking. These statements are based on assumptions that we believe are reasonable.

However, there are many important factors that could cause our actual results in the future to differ materially from these forward-looking statements. For more information related to these statements and other risk factors, please review our periodic filings with the SEC that are available on our website.

Also on the call today, we may use terms such as normalized EPS or normalized or adjusted operating cash flow. These are non-GAAP financial terms.

Please see our press release and 8-K that were issued yesterday where we have provided a detailed reconciliation for each of these measures to the appropriate GAAP term. With that, we’ll get started with comments from Tom Ryan, our President and CEO.

Thank you, Debbie and thanks everybody for being on the call again. As is customary, I’m going to start off with a global view of the quarter, kind of the primary drivers touch a little bit on overview and dig down a little deeper into funeral operations and cemetery operations, then I have some closing comments to just kind of provide some clarity for the back half of the year.

So as far as earnings per share, our normalized earning per share were $0.15, which compares to $0.15 that we reported in the prior year quarter. We had some currency gains in last year’s results, we had some reimbursements for legal settlements that benefited both period.

When you net it all out, we’re essentially flat for the quarter. Funeral profits were flat just as we had anticipated, but we really knocked out of the park for cemetery segment performance.

The primary driver for cemetery profits, outstanding pre-need production in the United States, particularly as it relates to property sales. This is especially in light of surge in sales we had to replicate from second quarter of 2010 in Canada that was driven, if you’ll remember, by the tax code change, which basically incentivized consumers to prearrange prior to July 1, 2010.

We believe that the incremental sales that we made in the second quarter of 2010 probably drew $1.52 per share for that second quarter of last year, and this was more than made up by increased sales production from the U.S. operations in the current quarter without the benefit of any kind of tax collection.

This wouldn’t be possible if it weren’t for the collective efforts of all 20,000 employees turn up towards the mine, and I want to thank everybody for their efforts on the quarter. Now, I’d like to shift to a more detailed discussion of funeral operations.

Overall the funeral segment performed as anticipated. The growth in average sales generally offset the decline in volume, and the increase in general agency revenue on increased production, basically covered the incremental sales cost incurred in the quarter to drive pre-need sales.

As we said before, our funeral segment is mature steady business it generates a lot of cash flow. Meaningful profit growth is challenging, as long there is no meaningful increase in the number of debts.

We believe the increase is coming someday, and our strategy is to grow future share through strategic acquisitions at reasonable prices and through growing pre-need funeral segment. Comparable funeral revenues for the quarter grew by $5.5 million or 1.6%.

This growth was primarily from a $6.3 million increase in general agency revenue during the quarter on higher sales production and an increasing general agency rate, which accounted for about $5 million of the growth, as well as a continuing shift to an insurance-funded product from trust particularly in the state of Florida, which generated an additional $1.3 million, which added up to 6.3. The mix of insurance funded product grew about 79% this quarter which compares to about 74% of production in the second quarter of 2010.

Our same-store volumes this quarter were done 2.7%, and we believe this is a reflection of the number of deaths that are occurring in our relevant markets. Year-to-date our same-store volumes are down 0.8%, which is slightly better than our forecast assumptions of downward single digit percentages.

We continue to believe that the modeling volume is down 1 to 2% for the year to be appropriate. The sales average grew 2.5% which basically offset the impact of the volume decline.

The growth includes the impact of higher trust on income and a positive Canadian currency effect. If you exclude the Canadian currency effect, we experienced a growth of about 1.8% and if you exclude trust income it drops it done to about 1.3.

This was the bottom line with expectations, maybe slightly higher. And the growth in the overall averages is encouraging to us because it occurred despite a 250 basis point increase in the cremation mix.

All of the cremation mix shift went into direct cremation. The cremation mix in the second quarter was 44.1%, which was similar to the levels that we saw in the first quarter of this year.

It did surprise us a little bit, as you generally don’t see that big of an increase within a year. If you go back to 2009, 2010, we experienced increases of 140 and then 70 basis point.

So again, this is somewhat accelerated, but you know, we thought 70 basis points was right last year. So something we’ll continue to monitor and it’s a nice part of the story is that we’re beginning to see nice increases in the average spend even as it relates to direct cremation.

Remember this is a market that is growing, and we’re getting better at serving certain of these customers who have a location preference through our traditional network. Additionally, with our recent investment in Neptune Society, we can serve a new segment of the direct cremation consumer that is price-sensitive and prone to pre-arrange.

Neptune – remember Neptune is the largest direct cremation organization in the U.S. with annual revenues of more than $55 million and a network of 30 locations in nine states.

So we’ve closed this transaction in June and haven’t felt any of the financial impact yet in our results, but it will be impacting the back half of the year obviously, some growth, growth as you think about 2012. So from a profitability standpoint for the quarter, comparable funeral profits were flat and the margin dropped about 30 basis points.

The revenue growth of $5.5 million was offset by increased advertising and selling related costs that drove pre-need sales initiatives of $4.7 million as well as other inflationary costs. Remember pre-need selling costs are expenses incurred, but the revenues are generally deferred.

So when you have an increased production you’ll see some pressure on your margins. The increase in advertising and selling costs were driven primarily by higher marketing and lead generation costs and by three sales force compensation nuance.

First, a shift of production from Canada to the U.S. Remember last year, we had the surge in Canadian sales, increases our sales cost by 300 basis points on that production.

Secondly, an increase in the production and shift in mix to insurance from trusts also produces a higher cost, as our compensation pays more for insurance product. Now, keep in mind that this is more than offset by the general agency revenues that we’re generating, but, again, would cause a growth in cost.

And lastly as we expand through community service sales force and so these are outside forces when you think about it in sales lingo widening the net outside the radius of the funeral home. These are typically commission-based, that are lead generation dependent and, therefore, a little more costly.

In addition it tends towards younger ages and as we move out in the community and drop the age, the cost to the sales force goes up. But again this is more than offset by the general agency revenue that we generate for selling that younger age cliental.

So, pre-need funeral sales increased $3.1 million for the quarter or 2.1% against a very strong quarter last year. And on the surface you might say 2% isn’t that impressive, but remember in the second quarter of last year, we had the benefit of the tax changes in Canada.

So, if you calculate the U.S. this quarter, we are up $23 million or to20.5%.

So, great job by the sales force. I want to thank them again for driving that performance in the second quarter.

Now, I’m going to shift to an overview of cemetery operations. Our comparable cemetery revenue increased $14 million or 8% quarter-over-quarter.

This is mainly attributable to increased cemetery sales production, again predominantly property sales and higher trust fund income. Our comparable pre-need sales, remember this is pre-need not at need, because pre-need we can really drive with sales performance, that production grew $12.9 million quarter-over-quarter or 11.8%.

And again, because of the strange nature of the revenue last year in Canada, if you isolate the U.S. we’re up $21.6 million or 23.3% on pre-need U.S.

sales. So again, outstanding performance.

Cemetery trust fund income increased $5.6 million quarter-over-quarter and came in ahead of our expectations. $3.1 million of this increase is related to a one-time distribution from a long-term alternative investment.

The remainder of the increase was due to the positive returns earned in our trust over the prior 12-month period. Therefore, cemetery profits grew $8.1 million for the quarter and margins increased 300 basis point to 20.8%.

If you exclude the one-time distribution of $3.1 million of trust fund income, revenues grew by about $11 million, $10 million of which came from operations and $1 million of which came from trust fund. And, therefore, gross profit dropped the bottom-line from that $11 million was $5 million and the margins still grew to about 19.5%.

Recall that in the first quarter we experienced some unusual items that reduced cemetery gross margin percentage. We told you that we thought that would correct itself during the rest of the year, and you can see that they have, as our margins have returned to more of the expected range.

As I communicated to you previously, we should expect operating revenue growth to drop to about 60% cemetery margin and trust income dropped about 100%. So by my math we’re about $2 million short of what we would have expected in cemetery margins.

Similar to what we saw in the funeral segment, this was caused primarily by an increase in advertising and selling related costs, which were beyond historical percentage increase associated with cemetery sales production growth. This was driven primarily by three items.

First, higher marketing and lead generation costs, secondly, the fact that the majority of the growth is coming from heritage property sales, about $10 million, and this carries a higher sales cost on purpose. We pay more for property sales than we do other cemetery products and that generates about 300 to 400 basis point increase when you think about incremental sales.

Lastly, increased counselor productivity, which was one of our number one goals in sales this year, drove some of the cost increase, because as we move the middle production counselors up, the incremental sales by these counselors pushes bonus money into our higher payout band. So, again, as we grow and as we expand into community service, you would expect that these costs would go up slightly, we will do it all day for results that we are experiencing today.

So now for some final thoughts as you think about the back half of the year. We’re obviously very pleased with our performance for the quarter and really for the first half of the year.

Based on these results, we now believe we are on pace to achieve the high-end of our guidance range for earnings per share which was $0.56 to $0.64. We also believe we will be on the high-end of our cash flow range and Eric will talk a little bit more about that later.

As we look ahead to the back half of 2011, we see some challenges, but we are generally very optimistic about finishing the year on a high note. In the funeral segment, we would expect soft funeral volumes and a continuing increase in direct cremations that will put some pressure on funeral margins, but we believe we will continue to grow the average sales and manage our costs effectively to minimize that impact.

One area on the cost side that could cause a minor concern is the level of energy prices. Specifically, for us it would be fuel and utility related costs.

We expect that pre-need funeral sales productions will grow in the high single-digit percentage range in the back half of the year. Setting on a comparable basis from the Canadian tax hangover effect, if you will that we saw in the third quarter of 2010.

As we accelerate stuff in the second, some things weren’t around for third quarter performance. So again we would expect to be able to beat that pretty soundly.

With the anticipated growth in pre-need funeral sales, we would suspect that a commensurate growth in sales force compensation, while holding to about a 14% or 14.5% as a percent of production. Advertising and selling cost should maintain the pace of some $12 million a quarter that we would experience since the fourth quarter of 2010 and, therefore probably be about $2 million higher year-over-year for the third quarter.

Keep in mind, we’re still turning the dials and a lot of this – and we’ll find the right mix of promotion effectively and efficiently drive pre-need sales leads. These increased costs should keep funeral profits relatively flat for the second half of 2011.

As for the cemetery segment, we would expect a continued focus on pre-need selling efforts with a good momentum on results posted in the first half of the year. Pre-need cemetery is up 13.8% for the first half versus an internal expectation that we had that was about 7%, so really great momentum there.

So for the back half of the year, expect cemetery pre-need sales to grow in the low to mid single-digit percentage range, with normalized sales force compensation of around 18% to 19% of sales production. And this would be consistent with the cost we experienced in the back half of 2010.

The cash flow characteristics of this business remain strong and we plan to continue to capitalize on value enhancing opportunities for you in 2011 by utilizing our current capital deployment priorities. First of which is reinvesting in our core strategies, which provides high returns and very low risks.

This would be hike cemetery property development that has very high double-digit returns – internal terms for us. Secondarily, by investing in strategic acquisitions and new builds at the appropriate returns.

Third, returning value to shareholders through share repurchases and strategy of increasing our dividend over time. And lastly, managing our debt and liquidity profile, and managing cash levels, credit facility availability and near-term debt securities to minimize risk.

And finally, you know, speaking to acquisitions, in June we made a strategic investment in the Neptune Society, which I mentioned before is about $55 million in annualized revenues. We are very excited about the opportunity in this segment and mutual learning opportunities that we’re currently exploring will explore.

I would like to welcome Marco Markin and his entire team to the SCI family. We spent a lot of time with Marco and the management team.

I must say we are very impressed and excited about the future. In addition, we close on another three acquisition transactions with combined revenues of about $6 million, and I would tell you that as far as the pipeline goes, we continue to see deals out there at reasonable prices and are excited about the opportunities to continue to grow.

This conclude my prepared comments, and I’ll turn the call over now to Eric.

Good morning, everybody. As usual the topics that I’m going to cover relate to cash flow and G&A expenses for the quarter.

I’m also going to talk a little bit about the second half of the year in terms of the outlook for these two items. Also briefly discuss our trust fund performance and then our current position and liquidity and then we’ll end the call before we go to questions and comments about capital deployment.

So, let’s start with cash flow. First of all, pleased with cash flow results for the quarter, the operating cash flow was $67.5 million and this is better than what we anticipated internally for the second quarter.

It was primarily a result of cash receipts there were produced from the substantial increase in pre-need cemetery production during the quarter. For the second quarter and the first half of this year, the operating cash flow was below 2010 levels by about $10 million.

This was primarily result of working capital of timing differences that we had anticipated for 2011, which is substantially at least for the quarter a result of strong receivable collection efforts in the second quarter of 2010 that I had mentioned last year. As I look forward to the second half of 2011, I believe we’re going to end the year with strong cash flows.

But a couple of items I want to first mention to you in relation to the cash flows for the second half of 2011. First, let’s talk about capital expenditures.

Total CapEx for the quarter was about $32 million. The recurring maintenance and cemetery development CapEx was about $29 million of this amount.

So in the first half of 2011, our recurring capital expenditures again the maintenance of cemetery development CapEx totaled about $52 million, but that amount is running a little bit higher than we’ve originally expect. So recall for the full year 2011, we originally expected a range of $85 million to $95 million, but based on the current trends, we now believe we’ll be in the $95 million to $105 million range in total for the full year of to 2011 as it relates to maintenance in cemetery development CapEx.

So this increase in the recurring CapEx of roughly $10 million is primarily coming from two areas that we believe are pertinent investments. First, it’s about $4 million to $5 million more to purchase client sale technology for our pre-need Sales Counselor to continue to improve our sales productivity.

Second, it’s $5 million to $7 million more in cemetery development projects that we believe will yield favorable cash returns we are excited about. The second thing I want to mention to you relates to cash taxes.

Our cash taxes are continuing to trend lower than what we originally anticipated. Cash taxes in the first half of this year were about $8 million and to remind you, we originally expected a full year 2011 range of cash taxes of $20 million to $30 million.

We now believe our full-year 2011 cash taxes will approximate lower than that, probably in the $15 million to $20 million range. Also quickly while we are discussing taxes, we also believe our normalized effective tax rate in the remaining two quarters will be around 37%, which is roughly what it was, in this quarter as well in normalized basis.

So, stepping back to discuss cash flow in the second half of 2011, we believe we’ll continue our momentum and produce operating cash flow in the high end of our guidance range, which is $330 million to $380 million for the full year of 2011. This translates to an expectation for us to grow our operating cash flow in the second half of this year versus the second half of 2010.

And using the recurring CapEx guidance that I just mentioned, this calculates there are free cash flow we’ll calculate to a range of $250 million to $285 million. This represents a free cash flow yield in excess of 10% at the midpoint of this range.

As shifting to G&A expenses, G&A expenses were just under $25 million during the second quarter. Included in this amount was a $3.1 million reimbursement for legal settlements and about $600,000 of acquisition and transition costs.

Excluding these items, G&A expenses would have been about $27 million in the quarter. So as we look forward, we believe that G&A expenses will trend in this $26 million to $27 million range for each of the remaining two quarters of 2011.

The slight increase from the original expectations is mainly due to higher incentive compensation costs, which primarily relate to our long-term incentive comp plan that is tied to total shareholder return that we discussed on last quarter’s conference call. As you know, our stock price has risen from the $8 to $9 range in 2010 to the $10 to $12 range in 2011, and that resulted in an increase to G&A expenses underneath this plan.

Now, let’s shift to trust funds. Our combined trust fund returns were positive 0.4% during the quarter.

This compares in the S&P of roughly flat and the partly is aggregate about 2.3% in the quarter. In the first half of 2011, our trust fund returns were positive 4.1%, which is on the high end of our expectations that we communicated that our trust fund assets will realize an annual positive return in the low single digit percentage range.

Total trust fund income recognized in our income statement during the quarter was $27.1 million, which is $7 million more in the second quarter of 2010. This is ahead of our expectations on good trust fund performance over the last 12 months, as well as the $3.1 million distribution from a long-term alternative investment that we mentioned in the press release.

From a financial position liquidity standpoint, our cash balance at the end of the quarter was $133 million. Today we roughly have the same amount on hand, about $130 million, so while we have deployed some amounts of capital in July.

It was generally offset by positive operating cash flows during the month as well. In terms of credit capacity, we have a $500 million credit facility that have no amounts outstanding on it, but that facility is used to support about $33 million in letters of credit.

Our total debt at the end of the quarter was just over $1.8 billion, hasn’t moved that much since the last time we discussed it. Our debt maturity profile positions us so well to explore value enhanced opportunities as most importantly, we’d have no meaningful debt maturities until October 2014.

And when you look at these near-term maturities through 2016, we believe they are manageable within the levels of our normalized free cash flow that the company we have consistently generated. Our current leverage continues to be favorable and at the low end of our net debt to EBITDA targeted range, which is 3 to 3.5 times.

And at the end of the quarter, we are approximately 3.1 times. Now let’s talk about capital deployment during the quarter.

As we made some prudent investments in the quarter and as you could see, we continue to follow what we describe as a balanced approach of capital deployment between acquisitions and share repurchases, while we still are managing our near-term debt maturity profile. As Tom mentioned earlier, we closed the Neptune society acquisition during the quarter as well as three other smaller transactions for a total spend of about $36 million which was reported in cash flows from investing activities during the quarter.

Also during the quarter, we also continued our share repurchase program and repurchased about 2.3 million shares for a total investment of just over $25 million. Subsequent to the end of the quarter, we bought another 750,000 shares for a little over $8 million.

As of today, we currently have about $115 million remaining on our existing share repurchase authorization, and our current shares outstanding are now down to about 237 million shares. Debt repurchases during the quarter totaled $23 million, as we continue to proactively manage our near-term maturities.

Remember, we consider debt repurchases in the open market when we can improve our near-term maturity profile and when the fair market values are deemed appropriate. So, in conclusion, we are pleased with the first half with the performance with the first half of 2011 and most importantly excited about the remainder of 2011.

We continue to have a strong balance sheet with great liquidity, a favorable debt maturity profile, and most importantly, a very attractive free cash flow. We’ll keep evaluating opportunities to deploy our capital wisely and to enhance our shareholder value.

So, with that, that concludes our prepared remarks, and operator, we will now turn it over to questions at this time.

Thank you. Good morning guys.

Good morning Clint.

A couple questions here. I guess first off, on the cemetery margins, I know last quarter they were a bit lower than what we were expecting due to customers that hadn’t provided the 10% down payment.

How much of the improvement this quarter was due to the collection of those earlier sales?

I think, again, it depends on where you’re comparing to, Clint. For instance, if you compare second quarter this year to second quarter last year, our recognition percentages were both 91%.

So theoretically you’ve got not a lot of benefit quarter-over-quarter. So you’re really seeing what’s happening this quarter on that comparison is all driven by sales and not recognition.

What I will tell you is that we expected some of the less than 10% down sales to convert in the second quarter of this year and that happened as we anticipated. And some of that’s going to fall into the third quarter as well.

I’d also point out that again, part of this has to do with the economy and what consumers are dealing with today. We are seeing more people wanting to finance and receive more people with slightly lower down payment.

I think we got into a little detail last time we’re not doing that with a blind eye. We’re doing it with some incentives to get people put on board and we’re doing direct drive their accounts and things like that then ensure that we do get to that above 10% and therefore becomes recognizable under gap.

So about what we expected. I would say quarter-over-quarter from an annual basis it doesn’t have a lot of impact.

Okay, thanks. That’s helpful.

And then secondly here, I know as far as volume, the CDC number showed some weakness during the month of April. I wondered if you -- if the softness that you had seen was pretty consistent across all of your locations, and just why you’re expecting the softer volumes going forward?

Okay. First of all, I think we generally – you’re going to see different things in different parts of the country, weather pattern, things like that.

That happens all the time. I would generally say this wasn’t an isolated issue of volume.

We tend to see it in multiple pockets throughout the U.S. and as far as guidance scored, the real answer – and I think I’ve said this before as we don’t have a clue.

Nobody knows how many people are going to die in the back half of the year. Wish I can tell you.

What I’m really trying to communicate to you is we model slightly down volumes, because that’s what we’ve experienced. Based on the studies we’ve done.

We’ve seen it happening in markets. Now it’s our belief that that will turn around one day and hopefully in the not too distant future and you’re going to have quarters where that happens.

And that could happen in the back half of the year. We’re just telling you we’re preparing our cost structure for the fact that it could be slightly down in the back half of the year.

So again, that’s the way we model, but not necessarily what we necessarily predict.

Okay. Thanks.

And then the last question here on the cremation. It’s been up for two quarters now, I’m wondering the way you’re reporting Neptune, I mean it did -- was the second impacted at all by their numbers?

No. Neptune is not in our numbers yet, so again, the 250 basis point spike is really within our existing business today, and again, one of the things I wanted to point out to people is we kind of dissect the spending levels for direct cremation, cremation with service burial, basically anyway you want to look at it.

And the good news is that a lot of this incremental volume is coming in at higher prices and we’re seeing direct cremations on average now and pushing close to $2,100 and not too long ago that was $1,900. So, that’s the good news.

And I think that along with other pricing strategies are allowing us to continue to grow average spend with consumers by offering a wider variety of products to those customers. And so we feel good even with the 250 basis point and we feel even better that we now have Neptune, you know, on our team, and we’ll be able to service a broader array of direct cremation consumers through different medium.

And then going forward do you intend to breakout the Neptune cremations from your traditional because I would expect that would impact the spend levels that you would be reporting?

Yeah. I think in some way, we will.

I think one of the things – we’re still playing with a bunch of different ideas on how to do that. But I think you’re probably right, we will have a Neptune segment.

You can make an argument it takes some of the direct cremation business and puts it there, too. So it’s, just trying to be helpful to the investor and understand what’s happening, because you’re exactly right, we get Neptune’s volume.

When you blend it in our averages are going to go down pretty significantly and the volume is going to go up significantly, and that’s helpful to know, but I think it’s probably better for you guys to understand here’s the business that’s chasing through the traditional infrastructure and here’s a business that goes at it slightly differently. So we’ll definitely provide you some insight and don’t think we’ve come down finalized on how exactly we’re going to do that.

Okay. Great.

Thanks, guys.

Hi, Tom, I think you mentioned that the general agency rates that you’re receiving for the funeral business has actually increased the amount itself. And I was just curious why would that be, why would you suddenly begetting better terms?

Am I under that record?

Yeah, yeah. It’s actually a bunch of things Bob, but I’ll give you a couple of them.

One is because we’ve been able to grow the entire business to levels that we have over the last few years. We incrementally as it gets higher enjoy better rates.

And so that’s had some impact, just the raw level of what we’re selling and the tiers that we’re eating into now. Secondarily, I think I’ve mentioned before, we’re driving the average age down slightly.

And when you do that for younger people the insurance companies pay you higher general liability fees. So on a relative basis that would make you go up.

The third item which probably doesn’t have as much of an impact is the type of product that you write. So for instance if there’s a multi-pay life product that’s going to pay more than a single pay and its going to pay more than what we call a TIO.

And so as you again write high quality product for the insurance company, they’re going to pay you back. Those are the primary reasons.

Another one is just a technical reason, and I won’t even get much in the details. But I think the levels we’re at now are correct.

And that is in the sense that as we write product that mature very quickly, that’s an unusual product for insurance companies. And the way we handle that last year it was different than this year and that cause little bit difference in the rate.

But the rate you’re looking at right now, which is high 19s if you will is very consistently achievable as we look at the future. As we drive age down and we drive people into higher quality product and that can even go up.

So we’re excited about our ability to continue to drive that performance.

And is that something north of the CPI based type increase then given all those metrics?

Yeah, yeah. I think we’re definitely above the CPI index now.

And I think the challenge going forward, how do you do it better each year.

Okay. And just I probably overestimated Neptune’s impact on the quarter.

I thought you had it in there for a month and that that skewed the cremation things. But it sounds like that all in front of you.

Can you speak more anecdotally just where you see some revenue opportunities, how you could drive that growth faster for that business? And then your expectations from a margin front what you can cut out or what you could add to really improve that margin profile?

Yeah. You’re talking specifically Neptune?

Yes on Neptune.

Yeah. I think on Neptune its going be a couple of things.

One is what Neptune has been able to do is pretty quickly establish a beachhead in a market and get to a mature state of sales probably within a three-year period, Mike, two to three year period. And we believe that we’re going to have growth opportunities to expand in to markets and quickly kind of ramp up and be significant and that’s going to drive some of that.

One thing I want to point out about that growth is, it’s not all of that capital intensive under their model. So it is not going be a requirement for us to spend a lot of money.

And that’s going to be able to drive the top line of this. The second piece of township line is really synergies.

When you think about the market Neptune may go into, there may be some cross selling opportunities with some of our cemeteries, with other funeral homes and product offering and learning that we’re going to have amongst each other. And the lastly, as far as profitability goes I think we mentioned this, when we talked about the opportunity before.

What they’ve generally had to do as Neptune is predominantly outsourcing the fulfillment of service on this. And what we’re going to be able to do because of our large footprint is provide that and affectively at a lower cost because of our infrastructure, and because of our logistics and expertise, we can deliver the services at a lower cost which then should enhance the margins of the business.

And that’s helpful. Just lastly, obviously with debt ceiling issues in D.C., are you guys doing anything differently or preparing any type of Armageddon here coming, I mean what things do you focus on as it relates to that?

Well, I think, Bob, that all of this stuff is temporary. I think people in my personal opinion.

People are going to overreact to debt ceiling and credit downgrades and all that kind of stuff. And from our perspective I think we look at it and say this is a long-term problem that somebody with courage is going to have come out and fix around entitlement reform, around tax code reform and regulatory reform and, I think that stuff will resolve itself over time.

I think our opinion is it’s going to be tough slugging economy for the foreseeable future and the nice thing about it is – it’s been a point to bring people together to focus on the long-term issues. I don’t think we get so exercised things about treasuries, we hold some treasuries in our portfolio.

We’re not overly concerned about interest payments on those, and a credit downgrade again is not going to dramatically impact our portfolio, our thinking. We’re more concerned about some of these longer-term issues and having some leadership in Washington to begin to apply some solutions to these obvious problems for those of us with us on the beltway.

I think I believe it when I see there. So I guess last years no major changes to then to your portfolio, the trust funds, our allocations then?

No, sir.

Okay. Thank you.

Thanks. Hi, everybody.

Maybe a couple questions. First of all, just a little more color, you mentioned the acquisition pipeline looks good.

Is there anything to call out there and say we’re seeing it build because of this or that or it maybe the types of properties you’re seeing, any further color in prospects for how much activity you might see in the next six, 12 months?

I think A.J. we continue -- we really expect to see kind of what we’re seeing now.

Always hard to tell exactly why, but I think the best reason is there hasn’t been a lot of activity in this industry for a long period of time. And there is somewhat pinup -- supply that needed to come on the market.

I think there was a day of reckoning of what is an appropriate clearing price. I think the industry has seen that price come to a point.

We’ve seen some of the other consolidated begin to put their toe on the water as well because these are reasonably priced opportunities. As far as what we are seeing, it’s really all over the Board.

We’re seeing cemetery opportunities, we are seeing funerals opportunities, we’re seeing them on the East Coast, we’re seeing them on the West Coast. So there is no specific identity that’s I think is driving this.

I do think, again, there is a bit of skepticism about of what the future holds as it relates to regulatory packs and some people with the opportunity once the certainty of knowing what their statement look like so that probably helps. But generally I really think it’s the supply-demand and the supply is coming online, and I think the people that are buying them are being generally reasonable in how they’re pricing them.

And when you looking at these smaller deals I guess and I think you did three in the quarter, is -- are you they’re just negotiating with you or tend to be a competitive bid situation in almost every case?

A little of both. We’ve had some isolated situations where people say, ‘I’m ready.

Give me a fair price because again I think we know generally what these should clear for. We ought to tell people there are no selling deals in this industry.

People know the markets pretty clear on both sides. So you generally know what a fair price can be and so surprisingly we’ve seen a lot of deals where people will deal directly with us and say ‘give us a fair price because I want to work with SCI.

But we’ve been in competitive situations as well, and I think we’ve won every one that we’ve wanted to win so far. So not where….

Okay. The other thing I was going to ask about was obviously nice uptake in pre-need both on cemetery and funeral side.

I guess with all the talk about slowdown – renewed slowdown in the economy, possibility of a double dip, I was a little surprised that you had as much strength as you did there. I guess partly, do you have anything to account for that?

And second were you doing anything unusual in promotion activity or otherwise to try to spur growth and whatever the case? I mean, what’s your sense about the back half on the pre-need side?

Probably have three things I’d speak to. First and foremost is the leadership and the execution of our sales team and our marketing team.

We are just knocking on all cylinders. And I think people are focused on pre-need, I think from the market leadership level all the way to the sales counselor.

And that’s had a big impact. We spent a lot of money on training and we’re seeing the productivity counts, that’s really rise.

I mentioned a little bit of that that caused some of the percentage cost of sale to go up. So, I think that’s the number one reason.

The second thing I would tell you is we’re a unique product in the sense that while we are somewhat discretionary as to timing, I think people view this product as a planning opportunity. They view it as doing something for their family, and it’s a peace of mind product.

So even in difficult times; and I think severely difficult times, people pull up. But otherwise they kind of say, I’ve got to take care of this.

So I don’t think we’re as impacted as negatively as other discretionary purchases might be. The last thing to your point, because things are difficult and I always point to our consumers are generally retired.

So job picture doesn’t have as big an impact on us. But money market rates that are less than 1% on their savings, gasoline prices that approach $4, these begin to pinch the consumer.

And so we have done some things as it relates to financing terms, interest rates, things like that, but again, we’re trying to do it in a very, very responsible ways to ensure the quality of product. So we have done some of those things and spent some money to keep the sales going.

But I consider both of those kind of secondary things to the quality of our sales force and the quality of our market management and sales leadership.

Okay, all right. That sounds good.

I want to thank everybody for being on the call today. We look forward to speaking to you again in the, I guess the later part of October to discuss third quarter.

Everybody have a great week. Thanks again for participating.