1016281--3/9/2007--CARRIAGE_SERVICES_INC

related topics
{capital, credit, financial}
{product, market, service}
{regulation, government, change}
{cost, regulation, environmental}
{condition, economic, financial}
{debt, indebtedness, cash}
{acquisition, growth, future}
{personnel, key, retain}
{regulation, change, law}
{loan, real, estate}
Price competition could also reduce our market share or cause us to reduce prices to retain or recapture market share, either of which could reduce revenues and margins. Our ability to execute our growth strategy is highly dependent upon our ability to successfully identify suitable acquisition candidates and negotiate transactions on favorable terms. Increased or unanticipated costs, such as insurance, taxes and new computer systems implementations, may have a negative impact on our earnings and cash flows. Improved performance in our funeral and cemetery segments is highly dependent upon successful execution of our standards-based Being the Best operating model. Smaller businesses are typically dependent upon one or a few key employees for success. Earnings from and principal of trust funds and insurance contracts could be reduced by changes in financial markets and the mix of securities owned. Covenant restrictions under our debt instruments may limit our flexibility in operating our business. RISKS RELATED TO THE DEATH CARE INDUSTRY Declines in the number of deaths in our markets can cause a decrease in revenues. Changes in the number of deaths are not predictable from market to market or over the short term. The increasing number of cremations in the United States could cause revenues to decline because we could lose market share to firms specializing in cremations. In addition, direct cremations produce minimal revenues for cemetery operations and lower funeral revenues. If we are not able to respond effectively to changing consumer preferences, our market share, revenues and profitability could decrease. Because the funeral and cemetery businesses are high fixed-cost businesses, changes in revenue can have a disproportionately large effect on cash flow and profits. Changes or increases in, or failure to comply with, regulations applicable to our business could increase costs or decrease cash flows.

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