(Exact name of registrant as specified in is charter)

Delaware		1-11961		76-0423828
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
(Address, including zip code, of principal executive offices)

Registrant’s telephone number, including area code:
(713) 332-8400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

ITEM 2.02.		RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     In the press release dated November 4, 2008, the Company announced and commented on its financial results for its fiscal quarter ended September 30, 2008. A copy of the press release issued by the Company is attached hereto as Exhibit 99.1 and incorporated by this reference. The information being furnished under Item 9.01 Financial Statements and Exhibits, including the press release attached hereto as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.

     The Company’s press release dated November 4, 2008 contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States generally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided quantitative reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

ITEM 9.01.		FINANCIAL STATEMENTS AND EXHIBITS.

(d)

Exhibits. The following exhibits are furnished as part of this current report on Form 8-K:

99.1

Press Release dated November 4, 2008.

     Pursuant to the requirements of the Securities Exchange Act of 1934, Carriage Services, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit				Description
	99.1			Press release dated November 4, 2008.

		Press Release

		Contacts:		Terry Sanford, SVP & CFO
				Carriage Services, Inc.
FOR IMMEDIATE RELEASE				713-332-8400
				Ken Dennard / ksdennard@drg-e.com
				Kip Rupp / krupp@drg-e.com
				DRG&E / 713-529-6600

HOUSTON – NOVEMBER 4, 2008 – Carriage Services, Inc. (NYSE: CSV) today announced results for the third quarter ended September 30, 2008. Highlights from continuing operations for the third quarter of 2008 compared to the third quarter of 2007 were as follows:

     Third Quarter Selected Financial Results
     (amounts in millions, except per share amounts)

		Q3				Q3
		2007				2008				Change
Total Revenues		$	40.4			$	43.2			$	2.8
Consolidated EBITDA		$	8.1			$	7.4			$	(0.7	)
Diluted Earnings per Share		$	0.04			$	0.01			$	(0.03	)

     Melvin C. Payne, Chairman and Chief Executive Officer, stated, “Net income from continuing operations was $158,000, or $0.01 diluted earnings per share, compared to $703,000, or $0.04 diluted earnings per share, in the third quarter of 2007. While revenues for our third quarter increased as a result of increases in both volumes and average revenue per contract, we experienced a decline in Consolidated EBITDA, Consolidated EBITDA Margin and Net Income due to higher costs and expenses.

     “Consolidated EBITDA Margin was 17.1% compared to 20% in the third quarter last year, largely due to higher self-insurance costs, labor costs and bad debt expense. We are diligently working to lower our costs as well as improve the leadership and sales staff at several of our cemeteries to drive good quality sales and increase margins.”

		Actual				Actual				Actual				Actual
		Qtr 3				Qtr 3				YTD				YTD
		2007				2008				2007				2008
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts			3,897				3,994				12,156				12,737
Preneed Contracts			974				922				3,348				3,055
Total Same Store Funeral Contracts			4,871				4,916				15,504				15,792
Acquisition Contracts
Atneed Contracts			410				671				870				2,194
Preneed Contracts			187				187				414				656
Total Acquisition Funeral Contracts			597				858				1,284				2,850
New Store Openings			132				190				378				632
Total Funeral Contracts			5,600				5,964				17,166				19,274
Same Store Revenue
Funeral Operations Revenue		$	25,884			$	26,657			$	83,066			$	84,685
Preneed Commission and Other Revenue			502				626				1,754				2,053
Total Funeral Same Store Revenue			26,386				27,283				84,820				86,738
Cemetery Operations Revenue			8,360				8,903				26,535				24,586
Cemetery Financial Revenue			1,321				1,020				2,983				3,028
Total Cemetery Same Store Revenue			9,681				9,923				29,518				27,614
Total Same Store Revenue			36,067				37,206				114,338				114,352
Acquisition Revenue
Funeral Operations Revenue			3,092				4,313				6,805				14,026
Cemetery Operations Revenue			1,193				1,623				2,579				4,524
Cemetery Financial Revenue			50				70				158				190
Total Acquisition Revenue			4,335				6,006				9,542				18,740
Total Revenue from Continuing Operations		$	40,402			$	43,212			$	123,880			$	133,092
Field EBITDA from Continuing Operations
Same Store Funeral Field EBITDA		$	9,081			$	8,807			$	31,799			$	31,586
Same Store Funeral Field EBITDA Margin			34.4	%			32.3	%			37.5	%			36.4	%
Same Store Cemetery Field EBITDA			3,159				2,600				10,339				7,180
Same Store Cemetery Field EBITDA Margin			32.6	%			26.2	%			35.0	%			26.0	%
Total Same Store Field EBITDA			12,240				11,407				42,138				38,766
Total Same Store Field EBITDA Margin			33.9	%			30.7	%			36.9	%			33.9	%
Acquisition Funeral Field EBITDA			1,195				1,260				2,444				4,353
Acquisition Funeral Field EBITDA Margin			38.6	%			29.2	%			35.9	%			31.0	%
Acquisition Cemetery Field EBITDA			212				542				603				1,533
Acquisition Cemetery Field EBITDA Margin			17.9	%			33.5	%			23.4	%			33.9	%
Total Acquisition Field EBITDA			1,407				1,802				3,047				5,886
Total Acquisition Field EBITDA Margin			32.5	%			30.0	%			31.9	%			31.4	%
Total Field EBITDA from Continuing Operations			13,647				13,209				45,185				44,652
Total Field EBITDA Margin from Continuing Operations			33.8	%			30.6	%			36.5	%			33.5	%
Overhead
Total Variable Overhead			1,135				1,544				3,426				5,109
Total Regional Fixed Overhead			886				831				2,396				2,497
Total Corporate Fixed Overhead			3,553				3,461				10,354				10,112
Total Overhead			5,574				5,836				16,176				17,718
			13.8	%			13.5	%			13.1	%			13.3	%
Consolidated EBITDA from Continuing Operations		$	8,073			$	7,373			$	29,009			$	26,934
Consolidated EBITDA Margin from Continuing Operations			20.0	%			17.1	%			23.4	%			20.2	%
Total Depreciation & Amortization			2,398				2,670				7,153				7,744
Interest, Net			4,388				4,442				12,719				13,477
Pretax Income			1,287				261				9,137				5,713
Income tax			584				103				3,607				2,256
Net income from Continuing Operations		$	703			$	158			$	5,530			$	3,457
			1.7	%			0.4	%			4.5	%			2.6	%
Diluted EPS-from continuing operations		$	0.04			$	0.01			$	0.28			$	0.18
Net income from Discontinued Operations			(9	)			—				538				(1,390	)
Diluted EPS-from discontinued operations		$	—			$	—			$	0.03			$	(0.07	)

FUNERAL OPERATIONS

     Same store Funeral Operations Revenue increased $0.8 million or 3.0% as a result of a 0.9% increase in contracts and a 2.1% increase in the average revenue per contract. Funeral operations revenue from acquired businesses contributed an additional increase of $1.2 million. The cremation rate for the third quarter of 2008 was 39.8% compared to 37.0% in the third quarter of 2007 and the growth in the volumes came in the form of cremation contracts. Increased operating costs across the portfolio worked against us, resulting in a decline of $0.3 million in our same store Funeral Field EBITDA and a decline of $0.1 million in our Acquisition Funeral Field EBITDA.

CEMETERY OPERATIONS

     Same store Cemetery Operating Revenue increased $0.5 million or 6.5% from last year, while financial revenue was down $0.3 million or 22.8%. Same store Cemetery Field EBITDA declined $0.6 million to $2.6 million, while acquired cemeteries added $0.3 million in Acquisition Cemetery Field EBITDA. The decline in same store Cemetery Field EBITDA and Cemetery Field EBITDA Margin to 26.2% from 32.6% was due to higher bad debt, labor and transportation costs. We are making good progress in rebuilding the sales leadership and teams at our larger parks and expect this process to be complete by year end. General economic weakness in some of our key markets is having a negative impact on our revenues, particularly preneed sales, where customers may not have the confidence or the discretionary income, which has also impacted collection efforts on outstanding contracts. Therefore, we do not expect a return to our 2007 performance levels until economic conditions in some of our local markets improve.

TREND REPORTING

     Management monitors consolidated same store and acquisition field operating and financial results both on a year over year and most recent rolling four quarters (“Trend Reports”) basis to reflect long term and short term trends and seasonality. The Trend Reports highlight trends in volumes, revenues, Field EBITDA (controllable profit), Field EBITDA Margin (controllable profit margin) and the components of our overhead. Trend reporting allows us to focus on the key operational and financial drivers relevant to the longer term performance and valuation of our portfolio of deathcare businesses. Please go to the Investor Relations homepage of Carriage’s web site at www.carriageservices.com for a link to our consolidated Annual and Quarterly Trend Reports.

SHARE REPURCHASE PROGRAM

     During June 2008 the Board of Directors approved the repurchase of up to an aggregate of $5 million of the Company’s common stock. The repurchases were executed in the open market and through privately negotiated transactions. Through September 30, 2008, the Company repurchased 854,700 shares of common stock at an aggregate cost of $3,381,631 and an average cost per share of $3.93. During October 2008 Carriage completed its $5.0 million repurchase program by acquiring an additional 492,769 shares for a total of 1,347,469 shares of common stock and an average cost per share of $3.68.

OVERHEAD

     Total overhead increased $0.3 million to $5.8 million as the Company experienced an increase in legal costs and termination costs in the quarter of $0.2 million each.

CASH FLOW

     Carriage experienced negative free cash flow (defined as cash flow from continuing operations less maintenance capital expenditures) of $1.0 million during the third quarter of 2008 compared to negative free cash flow of $3.3 million during the same period in 2007. In addition to being seasonally the lowest quarter for deaths, the semiannual interest payments on the Senior debt of $5.1 million are payable in the third quarter. The elements of Cash Flow for the first nine months of 2008 consisted of the following (in millions):

Cash flow from continuing operations		$	12.1
Cash used for maintenance capital expenditures			(4.6	)
Free Cash Flow for first nine months of 2008			7.5
Cash and liquid investments at beginning of year			3.4
Cash flow from discontinued operations			0.2
Proceeds from sales of businesses			1.0
Cash used for growth capital expenditures – funeral homes			(2.4	)
Cash used for growth capital expenditures – cemeteries			(2.6	)
Financing activities, primarily share repurchases			(3.8	)
Cash at September 30, 2008		$	3.3

     The Rolling Four Quarter Outlook ranges for the period ending September 30, 2009 are intended to approximate what the Company believes will be the sustainable earning power of its portfolio of deathcare assets over the next four quarters as the three models are effectively executed. Performance drivers include funeral contract volumes, cremation mix, preneed sales, preneed maturities and deliveries, average revenue per service and sale, Field EBITDA Margins, acquisition size, timing and performance, and variable overhead items. In the Four Quarter Outlook ending September 30, 2009, the Company has assumed no additional acquisitions.

ROLLING FOUR QUARTER OUTLOOK – Period Ending September 30, 2009
(amounts in millions, except per share amounts)

		Range
Revenues			$175.0 - $181.0
Field EBITDA			$63.0 - $65.0
Field EBITDA Margin			34.8% - 37.1%
Total Overhead			$22.5 - $23.5
Consolidated EBITDA			$39.5 - $42.5
Consolidated EBITDA Margin			21.8% - 24.3%
Interest			$18.0
Depreciation & Amortization			$10.0
Cash Taxes			$1.0
Net Earnings from Continuing Operations			$7.5 – $8.3
Diluted Earnings Per Share			$0.38 - $0.42
Free Cash Flow			$12.0 - $14.0

     Carriage Services has scheduled a conference call for tomorrow, Wednesday, November 5, 2008 at 10:30 a.m. Eastern Time. To participate in the call, dial 303-228-2960 at least ten minutes before the conference call begins and ask for the Carriage Services conference call. A telephonic replay of the conference call will be available through November 12, 2008 and may be accessed by dialing 303-590-3000 and using pass code 11121172#. An audio archive will also be available on the company’s website at www.carriageservices.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Karen Roan at DRG&E at 713-529-6600 or email kcroan@drg-e.com.

     Carriage Services is a leading provider of death care services and products. Carriage operates 136 funeral homes in 25 states and 32 cemeteries in 11 states.

     This press release uses the following Non-GAAP financial measures “free cash flow and EBITDA”.  Both free cash flow and EBITDA are used by investors to value common stock. The Company considers free cash flow to be an important indicator of its ability to generate cash for acquisitions and other strategic investments.  The Company has included EBITDA in this press release because it is widely used by investors to compare the Company’s financial performance with the performance of other deathcare companies.  The Company also uses Field EBITDA and Field EBITDA Margin to monitor and compare the financial performance of the individual funeral and cemetery field businesses.  EBITDA does not give effect to the cash the Company must use to service its debt or pay its income taxes and thus does not reflect the funds actually available for capital expenditures.  In addition, the Company’s presentation of EBITDA may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to, and not as an

alternative for, the Company’s reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP.

     The Company categorizes its general and administrative expenses into three categories of overhead: (1) variable overhead, (2) regional fixed overhead and (3) corporate fixed overhead. Variable overhead consists of cost and expense such as incentive compensation which will vary with profitability or legal expense unrelated to our day to day operations. Regional fixed overhead and corporate fixed overhead represent the cost and expenses of our regional operations leaders and the home office and will not vary as a result of profitability.

FORWARD-LOOKING STATEMENTS

     Certain statements made herein or elsewhere by, or on behalf of, the Company that are not historical facts are intended to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on assumptions that the Company believes are reasonable; however, many important factors, as discussed under “Forward-Looking Statements and Cautionary Statements” in the Company’s Annual Report and Form 10-K for the year ended December 31, 2007, could cause the Company’s results in the future to differ materially from the forward-looking statements made herein and in any other documents or oral presentations made by, or on behalf of, the Company. The Company assumes no obligation to update or publicly release any revisions to forward-looking statements made herein or any other forward-looking statements made by, or on behalf of, the Company. A copy of the Company’s Form 10-K, and other Carriage Services information and news releases, are available at www.carriageservices.com.

CARRIAGE SERVICES, INC.
Selected Financial Data
September 30, 2008
(unaudited)

Selected Balance Sheet Data:		12/31/2007				9/30/2008
Cash and short-term investments		$	3,446			$	3,257
Total Senior Debt (a)			138,913				137,935
Days sales in funeral accounts receivable			22.9				21.7
Senior Debt to total capitalization			40.9				40.7
Senior Debt to EBITDA from continuing operations (rolling twelve months)			3.53				3.74

     This press release includes the use of certain financial measures that are not GAAP measures. The non-GAAP financial measures are presented for additional information and are reconciled to their most comparable GAAP measures below.

		Three months				Three months				Twelve months
		ended				ended				ended
		9/30/2007				9/30/2008				9/30/2009 E
Net income from continuing operations		$	703			$	158			$	8,100
Provision for income taxes			584				103				4,900
Pre-tax earnings from continuing operations			1,287				261				13,000
Net interest expense, including loan cost amortization			4,388				4,443				18,000
Depreciation & amortization			2,398				2,670				10,000
EBITDA from continuing operations		$	8,073			$	7,374			$	41,000
Revenue from continuing operations		$	40,402			$	43,212			$	178,000
EBITDA margin from continuing operations			20.0	%			17.1	%			22.6	%

Reconciliation of Non-GAAP Financial Measures Continued:

Reconciliation of cash provided by operating activities from continuing operations to free cash flow (in 000’s):

		Three months				Three months
		ended				ended
		9/30/2007				9/30/2008
Cash provided by (used in) operating activities from continuing operations		$	(815	)		$	201
Less maintenance capital expenditures from continuing operations			(2,513	)			(1,212	)
Negative free cash flow from continuing operations		$	(3,328	)		$	(1,011	)

		Nine months				Nine months
		ended				ended
		9/30/2007				9/30/2008
Cash provided by operating activities from continuing operations		$	9,317			$	12,055
Less maintenance capital expenditures from continuing operations			(5,903	)			(4,597	)
Free cash flow from continuing operations		$	3,414			$	7,458

Reconciliation of estimated net income to free cash flow for the twelve months ending September 30, 2009(in 000’s):

Net income		$	8,100
Tax expense			4,900
Interest expense, net			18,000
Depreciation and amortization			10,000
EBITDA		$	41,000
Interest paid			18,000
Cash taxes			1,000
Maintenance capital expenditures			9,000
Free cash flow		$	13,000