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                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                                   FORM 10-Q
                           -------------------------

     /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the period ended September 30, 1996

                                       or

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

                 For the transition period from         to 

                       Commission file number:  0-24728

                           -------------------------
                       EQUITY CORPORATION INTERNATIONAL
            (Exact name of registrant as specified in its charter)

                                    DELAWARE
                        (State or other jurisdiction of
                         incorporation or organization)

                                   75-2521142
                    (I.R.S. employer identification number)

                       415 SOUTH FIRST STREET, SUITE 210
                                  LUFKIN, TEXAS
                    (Address of principal executive offices)

                                     75901
                                  (Zip Code)

                                 (409) 631-8700
              (Registrant's telephone number, including area code)
                           -------------------------

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 /X/      No

The number of shares of the registrant's Common Stock outstanding as of 
November 14, 1996 was 19,216,334.

------------------------------------------------------------------------------


<PAGE> 

                       EQUITY CORPORATION INTERNATIONAL
                                     INDEX

                                                                          Page
Part I.  Financial Information                                            ----

         Item 1. Financial Statements

                 Consolidated Balance Sheet (Unaudited)-
                    September 30, 1996 and December 31, 1995.................3

                 Consolidated Statement of Operations (Unaudited)-
                    Three Months Ended September 30, 1996 and 1995
                    Nine Months Ended September 30, 1996 and 1995............4

                 Consolidated Statement of Cash Flows (Unaudited)-
                    Nine Months Ended September 30, 1996 and 1995............5

                 Consolidated Statement of Stockholders' Equity (Unaudited)-
                    Nine Months Ended September 30, 1996.....................6

                 Notes to the Consolidated Financial Statements (Unaudited)..7

         Item 2. Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.....................11

Part II. Other Information

         Item 1. Legal Proceedings..........................................17

         Item 6. Exhibits and Reports on Form 8-K...........................17

Signature...................................................................18


FORWARD-LOOKING-STATEMENTS
This Form 10-Q includes "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.  All statements other than 
statements of historical facts included in this Form 10-Q are forward-looking 
statements.  The expectations reflected in the forward-looking statements are 
based on the Company's current views with respect to future events as well as 
assumptions made by and information currently available to management.  
Important factors that could cause actual results to differ materially from 
expectations ("Cautionary Statements") are disclosed in this Form 10-Q, 
including without limitation in conjunction with the forward-looking 
statements included in this Form 10-Q.  All subsequent written and oral 
forward-looking statements attributable to the Company or persons acting on 
its behalf are expressly qualified in their entirety by the Cautionary 
Statements.

                                       2


<PAGE>

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

                       EQUITY CORPORATION INTERNATIONAL
                          CONSOLIDATED BALANCE SHEET
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                         Sept. 30,   Dec. 31,
(In thousands, except share data)                        1996        1995
------------------------------------------------------------------------------
<S>                                                      <C>         <C>
                      ASSETS
Current assets:
   Cash and cash equivalents..........................   $   4,900   $   6,233
   Receivables, net of allowances.....................       7,337       5,490
   Inventories........................................       6,008       5,060
   Other..............................................       1,532       1,177
                                                         ---------   ---------
      Total current assets............................      19,777      17,960

Preneed funeral contracts.............................     145,046     102,889
Cemetery properties, at cost..........................      77,245      75,103
Long-term receivables, net of allowances..............      34,338      30,767
Property, plant and equipment, at cost (net)..........      52,836      36,417
Deferred charges and other assets.....................       7,603       7,352
Names and reputations (net)...........................      63,532      32,339
                                                         ---------   ---------
      Total assets....................................   $ 400,377   $ 302,827
                                                         =========   =========

        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities...........   $   5,907   $   5,532
   Income taxes payable...............................         446       1,108
   Deferred income taxes..............................       1,753       1,692
   Current maturities of long-term debt...............         750         535
                                                         ---------   ---------
      Total current liabilities.......................       8,856       8,867

Deferred preneed funeral contract revenues............     150,082     107,969
Long-term debt........................................      28,902      54,518
Deferred cemetery costs...............................      16,936      17,580
Deferred income taxes.................................      22,575      21,340
Other liabilities.....................................       1,146         888
Commitments and contingencies.........................                        
Stockholders' equity:
   Preferred stock....................................          --          --
   Common Stock, $.01 par value; 50,000,000 shares
      authorized; 19,216,334 and 14,847,251 shares 
      issued and outstanding in 1996 and 1995, 
      respectively....................................         192         148
   Capital in excess of par value.....................     155,217      82,040
   Retained earnings..................................      16,471       9,477
                                                         ---------   ---------
      Total stockholders' equity......................     171,880      91,665
                                                         ---------   ---------
      Total liabilities and stockholders' equity......   $ 400,377   $ 302,827
                                                         =========   =========


</TABLE>

The accompanying notes are an integral part of the consolidated financial 
statements.

                                       3


<PAGE>

                       EQUITY CORPORATION INTERNATIONAL
                     CONSOLIDATED STATEMENT OF OPERATIONS 
                                 (Unaudited)
<TABLE>
<CAPTION>

(In thousands, except per share data)
--------------------------------------------------------------------------
                             Three months              Nine months
                             ended September 30,       ended September 30,
                             -----------------------   ------------------- 
<S>                          <C>         <C>           <C>         <C>
                             1996        1995          1996        1995
Net revenues:
   Funeral.................. $ 13,161    $  8,663      $ 40,232    $ 25,321
   Cemetery.................    7,891       7,009        25,426      19,662
                             --------    --------      --------    --------

                               21,052      15,672        65,658      44,983

Costs and expenses:
   Funeral..................    9,828       6,997        28,770      19,477
   Cemetery.................    5,981       4,931        18,125      13,653

                             --------    --------      --------    --------
                               15,809      11,928        46,895      33,130
                             --------    --------      --------    --------

Total gross profit..........    5,243       3,744        18,763      11,853

General and administrative
   expenses.................    1,490       1,207         4,370       3,442
                             --------    --------      --------    --------

Operating income............    3,753       2,537        14,393       8,411

Interest expense............      203         573         1,690       1,297
                             --------    --------      --------    --------

Income before income taxes..    3,550       1,964        12,703       7,114

Provision for income taxes..    1,438         776         5,709       2,810
                             --------    --------      --------    --------

Net income.................. $  2,112    $  1,188      $  6,994    $  4,304
                             ========    ========      ========    ========

Earnings per share.......... $   0.11    $   0.08      $   0.40    $   0.29
                             ========    ========      ========    ========

Weighted average number
   of common and equivalent
   shares outstanding.......   19,447      14,902        17,583      14,807
                             ========    ========      ========    ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial 
statements.

                                       4


<PAGE> 
                        EQUITY CORPORATION INTERNATIONAL
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   Nine months ended Sept. 30,
(In thousands)                                         1996          1995
------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Cash flows from operating activities:
   Net income.........................................  $  6,994     $  4,304 
   Adjustments to reconcile net income                                        
    to net cash provided by operating activities:                             
      Depreciation and amortization...................     3,543        2,449 
      Provision for bad debts and contract                                    
       cancellations..................................     2,832        2,227 
      Gain on sale of assets..........................      (909)         (32)
      Deferred income taxes...........................       835          314 
   Changes in assets and liabilities, net of effects                          
    from acquisitions:                                                        
      Receivables.....................................    (7,823)      (4,991)
      Inventories.....................................        17          (37)
      Other current assets............................      (351)        (190)
      Other long-term assets..........................      (724)      (3,428)
      Accounts payable and accrued liabilities........      (460)      (1,577)
      Income taxes payable............................      (663)       1,127 
      Preneed funeral contracts and associated
       deferred revenues..............................       (29)         168 
                                                        --------     -------- 

        Net cash provided by operating activities.....     3,262          334 
                                                        --------     -------- 

Cash flows from investing activities:
   Capital expenditures...............................    (5,829)      (3,076)
   Proceeds from sale of assets.......................     3,037           44
   Acquisitions, net of cash acquired.................   (21,012)        (787)
   Other..............................................       162           60
                                                        --------     --------

        Net cash used in investing activities.........   (23,642)      (3,759)
                                                        --------     --------

Cash flows from financing activities:
   Net proceeds from issuance of Common Stock.........    73,071           --
   Borrowings on long-term debt.......................     2,278        5,573 
   Payments on debt...................................   (56,302)      (6,364)
                                                        --------     --------

        Net cash provided by (used in) financing 
         activities...................................    19,047         (791)
                                                        --------     -------- 

Decrease in cash and cash equivalents.................    (1,333)      (4,216)
Cash and cash equivalents at beginning of period......     6,233        5,832 
                                                        --------     -------- 

Cash and cash equivalents at end of period............  $  4,900     $  1,616 
                                                        ========     ======== 

</TABLE>

The accompanying notes are an integral part of the consolidated financial 
statements.

                                       5


<PAGE> 
                       EQUITY CORPORATION INTERNATIONAL
             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except number of shares)

                          Common Stock     Capital in
                        -----------------  excess of   Retained  Stockholders'
                        Shares     Amount  par value   earnings  equity
                        ------------------------------------------------------
<S>                     <C>        <C>     <C>         <C>       <C>
Balance,
 December 31, 1995..... 14,847,251  $  148  $ 82,040    $  9,477  $ 91,665

   Net income..........         --      --        --       6,994     6,994

   Common Stock issued:
     Option exercises..      1,999      --        22          --        22
     Equity offering...  4,335,000      43    72,977          --    73,020
     Acquisitions......      7,066      --       150          --       150
     Other.............     25,018       1        28          --        29
                        ----------  ------  --------    --------  --------

Balance,
 September 30, 1996.... 19,216,334  $  192  $155,217    $ 16,471  $171,880
                        ==========  ======  ========    ========  ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial 
statements.

                                       6


<PAGE> 
                       EQUITY CORPORATION INTERNATIONAL
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the 
accounts of Equity Corporation International and all majority owned 
subsidiaries ("the Company") and have been prepared pursuant to the rules and 
regulations of the Securities and Exchange Commission. Certain information in 
footnote disclosures normally included in financial statements prepared in 
accordance with generally accepted accounting principles have been condensed 
or omitted pursuant to these rules and regulations. In the opinion of 
management, only adjustments consisting of normal recurring accruals 
considered necessary for a fair presentation have been included. Operating 
results for the interim periods are not necessarily indicative of the results 
that may be expected for the year. For further information, refer to the 
consolidated financial statements and footnotes thereto included in the 
Company's annual report on Form 10-K for the year ended December 31, 1995.
The Company's statutory Federal income tax rate has been increased from 34% to 
35% as the Company expects to exceed the taxable income threshold requiring 
the higher tax rate during 1996.  As a result, the Company has recorded 
through the provision for income taxes for the nine months ended September 30, 
1996 a one-time charge of $565,000 to revalue the deferred tax liability 
accounts to appropriately reflect the higher statutory rate.
On September 10, 1996, the Company's Board of Directors declared a three-for-
two split of the Company's Common Stock to be effected as a stock dividend.  
The record date for purposes of the dividend was September 23, 1996, and was 
distributed on October 2, 1996.  All share and per share information in the 
accompanying consolidated financial statements reflect the effects of the 
stock split.

2. ACQUISITIONS
The following table is a summary of acquisitions made during the nine month 
periods ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
                         1996             1995
-----------------------------------------------------
<S>                      <C>              <C>
Number acquired:
   Funeral homes........           44              21
   Cemeteries...........            1              11
Purchase price.......... $ 49,915,000     $35,592,000
</TABLE>

The purchase price for these acquisitions consisted of cash, Common Stock and 
debt issued or assumed. The excess of purchase price over the fair value of 
assets acquired and liabilities assumed is included in Names and reputations 
(net) on the Consolidated Balance Sheet and will be amortized over a 40-year 
period. In connection with these acquisitions, the Company enters into 
customary employment, consulting and noncompetition agreements with certain 
employees and former owners of the businesses acquired. In certain situations, 
the Company will prepay a portion of the noncompetition agreements and 
amortize such prepayments on a straight-line basis over the terms of the 
agreements. The purchase prices indicated above do not include $832,000 and 
$1,805,000 for noncompetition agreements which were prepaid to individuals 
related to businesses acquired in the nine month periods ended September 30, 
1996 and 1995, respectively. The acquisitions have been accounted for as 
purchases and their operating results have been included since their 
respective dates of acquisition.

Included in the summary of acquisitions for the 1996 period are 11 funeral 
homes and related assets that were acquired from Service Corporation 
International (SCI), a significant stockholder of the Company, in September 
1996 for an aggregate purchase price of approximately $10,625,000 in cash.

                                       7



<PAGE> 
The effect of acquisitions on the Consolidated Balance Sheet was as follows:
<TABLE>
<CAPTION>

                                                   Nine months ended Sept. 30,
(In thousands)                                         1996         1995
------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Current assets........................................  $   3,166   $   1,445
Preneed funeral contracts.............................     35,358      18,610
Cemetery properties...................................      2,349      10,805
Long-term receivables, net of allowances..............     (1,075)      1,858
Property, plant and equipment.........................     13,684       7,006
Deferred charges and other assets.....................        773       1,805
Names and reputations.................................     32,422      16,890
Current liabilities...................................     (3,207)       (998)
Deferred preneed funeral contract revenues............    (35,458)    (19,432)
Long-term debt........................................    (25,515)    (31,857)
Deferred cemetery costs...............................        121      (1,188)
Deferred income taxes.................................       (462)       (874)
Other liabilities.....................................       (336)     (3,053)
Common Stock issued...................................       (150)       (119)
                                                        ---------   ---------
   Total..............................................     21,670         898
   Less cash acquired.................................        658         111
                                                        ---------   ---------
   Cash used for acquisitions.........................  $  21,012   $     787
                                                        =========   =========
</TABLE>

The following represents the unaudited pro forma results of operations for the 
nine month periods ended September 30, 1996 and 1995, assuming the above noted 
acquisitions had occurred as of January 1, 1995:

<TABLE>
<CAPTION>
                                                   Nine months ended Sept. 30,
(In thousands, except per share data)                  1996         1995
------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Net revenues..........................................  $  75,789    $  66,685
Income before income taxes............................     13,883        9,032
Net income............................................      7,696        5,464
Earnings per common and equivalent share..............  $    0.44    $    0.37
</TABLE>


                                       8


<PAGE>
3. PRENEED FUNERAL CONTRACTS AND DEFERRED PRENEED FUNERAL CONTRACT REVENUES
The Company sells preneed funeral contracts through various programs providing 
for future funeral services at prices prevailing when the agreement is signed. 
These contracts are included in the Consolidated Balance Sheet as Preneed 
funeral contracts. Payments on these contracts are generally placed in trust 
(pursuant to state law) or are used to pay premiums on life insurance policies 
issued by third party insurers. When the services are performed, approximately 
$63,250,000 and $38,063,000 will be funded by trusts and approximately 
$81,796,000 and $64,826,000 will be funded by insurance policies as of 
September 30, 1996 and December 31, 1995, respectively. Accumulated earnings 
from trust funds and increasing insurance benefits have been included to the 
extent they have accrued through September 30, 1996 and December 31, 1995, 
respectively. The cumulative total has been reduced by allowable cash 
withdrawals for trust earning distributions and amounts retained by the 
Company pursuant to various state laws. At September 30, 1996 and December 31, 
1995, the amounts collected and held in trusts, at cost, which approximates 
market, were approximately $55,129,000 and $32,176,000, respectively. The 
amounts in trusts and all life insurance policies are generally transferred to 
the customer upon contract cancellation.

Deferred preneed funeral contract revenues includes the contract amount of all 
price guaranteed funeral services and accumulated trust earnings and 
increasing insurance benefits earned.  The Company defers recognition of trust 
earnings and insurance benefits until performance of the funeral service.  
Upon performance of the funeral service, the Company will recognize the fixed 
contract price and related accumulated trust earnings or increasing insurance 
benefits as funeral service revenues.

4. DEBT
In October 1994, the Company entered into an uncollateralized revolving credit 
agreement with a group of banks to be used for acquisition financing and 
general corporate purposes.  The Credit Facility, as amended ("Credit 
Facility"), provides for a line of credit up to $100,000,000 and expires in 
October 1999.  The Credit Facility bears interest, at the Company's option, at 
either (i) the prime rate plus up to 0.25% or (ii) the London Interbank 
Offered Rate plus 0.75% up to 1.50%, depending on the Company's leverage 
ratio, as defined.  The Credit Facility also contains customary restrictive 
covenants requiring the Company to maintain certain financial ratios and is 
guaranteed by all of the Company's subsidiaries.  The Credit Facility will 
permit the payment of dividends on the Company's Common Stock only to the 
extent the Company maintains a specified net worth.


                                       9


<PAGE> 
5. DISPOSITIONS
During March 1996, the Company conveyed to SCI three funeral home operations 
which had been previously operated by an unaffiliated third party for an 
aggregate purchase price of $2,085,000.  The three funeral homes had 
originally been acquired by the Company from SCI in May 1990.  In January 
1993, the Company entered into long-term agreements with the third party, 
under which the third party operated the three funeral homes.  In February 
1996, a subsidiary of SCI acquired the operations of the third party and 
assumed the long-term agreements with the Company.  Included in net funeral 
service revenues and related funeral costs and expenses is the $2,085,000 and 
$1,135,000, respectively, related to the transaction.  Proceeds from the sale 
were remitted to the Company in April 1996.

6. EQUITY OFFERING
On May 1, 1996 the Company completed a public offering of 4,335,000 shares of 
its Common Stock at $18.00 per share, including 585,000 shares sold to the 
underwriters pursuant to the overallotment option granted to them, for net 
proceeds of approximately $73,000,000 (after selling commissions and estimated 
related expenses of $5,000,000).  The net proceeds were used to pay off 
amounts outstanding under the Credit Facility and will be used for general 
corporate purposes, including current and future acquisitions.


                                       10


<PAGE> 
           ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

The Company provides services and products in both the funeral home and 
cemetery segments of the deathcare industry.  The Company has a growth 
strategy which emphasizes an aggressive acquisition program and the 
implementation of revenue enhancement and cost-containment programs. As part 
of this growth strategy, the Company maintains a separate corporate 
development department headed by a senior management executive with 
substantial deathcare experience. The department is responsible for 
identifying, evaluating, negotiating and closing acquisitions of funeral homes 
and cemeteries. With the Company's knowledge of non-metropolitan markets and 
experienced management team, the Company believes that it is well positioned 
to take advantage of the continuing consolidation trend in the deathcare 
industry. The Company's future results of operations will depend in large part 
on the Company's ability to continue to make acquisitions on attractive terms 
and to successfully integrate and manage the acquired properties.


RESULTS OF OPERATIONS

The following is a discussion of the Company's results of operations for the 
nine and three month periods ended September 30, 1996 and 1995.  For purposes 
of this discussion, funeral homes and cemeteries owned and operated for the 
entirety of each period being compared are referred to as existing operations. 
Correspondingly, operations acquired or opened during either period being 
compared are referred to as acquired operations.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 30, 1995:
Total net revenues for the nine months ended September 30, 1996 increased 
46.0% to $65,658,000 from $44,983,000 for the nine months ended September 30, 
1995.  The increase in net revenues reflects a $16,787,000 increase in net 
revenues attributable to acquired operations and a $1,803,000, or 4.3% 
increase in net revenues from existing operations.  The substantial increase 
in net revenues from acquired operations is due primarily to the full period 
results of the 27 funeral homes and 13 cemeteries acquired in 1995 and the 
partial period results of the 44 funeral homes and one cemetery acquired 
during the nine months ended September 30, 1996.  The remainder of the 
increase in net revenues of $2,085,000 results from the buyout of several 
long-term licensing and lease agreements related to three funeral homes which 
had been previously operated by a third party since January 1993.

Gross profit for the nine months ended September 30, 1996 increased 58.3% to 
$18,763,000 from $11,853,000 for the nine months ended September 30, 1995.  
The increase in gross profit reflects a $4,649,000 increase attributable to 
acquired operations and $1,311,000, or 11.4% increase from existing 
operations.  The increase in gross profit from existing operations was 
attributable primarily to increased revenues at both funeral home and cemetery 
operations as well as improved operational efficiencies at funeral home 
operations.  The remainder of the increase in gross profit of $950,000 relates 
to the gain recognized on the buyout of the long-term licensing and lease 
agreements.


                                       11


<PAGE> 

Total funeral net revenues for the nine months ended September 30, 1996 
increased 58.9% to $40,232,000 from $25,321,000 for the nine months ended 
September 30, 1995.  The increase in funeral net revenues reflects a 
$11,380,000 increase from acquired operations, a $1,446,000, or 6.4% increase 
from existing operations and $2,085,000 related to the buyout of the long-term 
licensing and lease agreements.  Funeral gross profit for the nine months 
ended September 30, 1996 increased 96.1% to $11,462,000 from $5,844,000 for 
the nine months ended September 30, 1995.  The increase in funeral gross 
profit reflects a $3,125,000 increase from acquired operations, a $1,543,000, 
or 28.1% increase from existing operations and $950,000 related to the gain on 
the aforementioned buyout. Excluding the effects of the gain on the buyout, 
funeral gross margin improved to 27.6% from 23.1%.  Funeral gross margin at 
existing operations improved to 29.2% from 24.3% primarily as a result of 
volume improvement, sales price increases exceeding the cost increases in 
merchandising and salaries as well as achieving a better merchandising mix and 
maximizing the leverage off of allocable fixed operating costs.  Funeral gross 
margin at acquired operations improved to 24.7% from 12.9% primarily due to 
volume improvement, profitability enhancements and cost efficiencies beginning 
to be implemented.

Total cemetery net revenues for the nine months ended September 30, 1996 
increased 29.3% to $25,426,000 from $19,662,000 for the nine months ended 
September 30, 1995. The increase in cemetery net revenues reflects a 
$5,407,000 increase from acquired operations and a $357,000, or 1.9% increase 
from existing operations. Cemetery gross profit for the nine months ended 
September 30, 1996 increased 21.5% to $7,301,000 from $6,009,000 for the nine 
months ended September 30, 1995.  The increase reflects a $1,524,000 increase 
from acquired operations offset by a $232,000, or 3.8% decrease from existing 
operations. Cemetery gross margin at existing operations decreased to 30.3% 
from 32.1%, primarily as a result of higher interment rights/merchandise costs 
and maintenance expense as a percentage of revenue offset partially by lower 
selling and fixed operating costs as a percentage of net revenues.  Cemetery 
gross margin at acquired operations were 23.9% primarily because they had not 
been operated by the Company long enough to fully implement its preneed 
marketing programs to enable leveraging off of the maintenance and fixed 
operating costs which generally start being incurred immediately after the 
acquisition.

General and administrative expenses for the nine months ended September 30, 
1996 increased $928,000, or 27.0% over the nine months ended September 30, 
1995.  This increase resulted primarily from increased personnel costs as well 
as professional fees and insurance necessary to support a higher rate of 
growth and, to a lesser extent, increased facility and travel expense as a 
result of consolidating the cemetery corporate operations from Georgia to the 
Company's corporate headquarters in Lufkin, Texas.  General and administrative 
expenses as a percentage of net revenues, excluding the effects of the gain on 
the aforementioned buyout, decreased to 6.9% in the nine months ended 
September 30, 1996 from 7.7% in the corresponding period in 1995, reflecting 
economies of scale realized by the Company as expenses are spread over a 
larger revenue base.

Interest expense for the nine months ended September 30, 1996 increased 
$393,000, or 30.3% from the nine months ended September 30, 1995.  The 
increase was the result of higher debt levels as the Company increased its 
borrowings to finance acquisitions through April 1996.  Subsequent to April 
1996, the Company completely paid off amounts borrowed under the Credit 
Facility, substantially reducing the average level of indebtedness from May 
through September 1996.  Interest income of approximately $276,000 related to 
temporary investment of the May 1996 equity offering proceeds has been netted 
against interest expense.



                                       12


<PAGE> 
The Company's effective tax rate for the nine months ended September 30, 1996 
was 44.9% compared to 39.5% for the comparable nine months in 1995.  The 
higher rate in 1996 was due primarily to an increase in the Company's 
statutory Federal income tax rate from 34% to 35% as the Company expects to 
exceed the taxable income threshold requiring the higher tax rate during 1996, 
and a one-time charge of $565,000 to revalue the Company's deferred tax 
liability accounts to appropriately reflect the higher statutory rate.  The 
Company expects the effective tax rate for income generated in the remainder 
of 1996 will be 40.5%.


THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1995:
Total net revenues for the three months ended September 30, 1996 increased 
34.3% to $21,052,000 from $15,672,000 for the three months ended September 30, 
1995.  The increase in net revenues reflects a $5,147,000 increase in net 
revenues attributable to acquired operations and a $233,000, or 1.5% increase 
in net revenues from existing operations.  The substantial increase in net 
revenues from acquired operations is due primarily to the full quarter results 
of the 37 funeral homes and 9 cemeteries acquired since June 30, 1995 and the 
partial quarter results of the 22 funeral homes acquired during the three 
months ended September 30, 1996.

Gross profit for the three months ended September 30, 1996 increased 40.0% to 
$5,243,000 from $3,744,000 for the three months ended September 30, 1995.  The 
increase in gross profit reflects a $1,235,000 increase attributable to 
acquired operations and $264,000, or 6.7% increase from existing operations.  
The increase in gross profit from existing operations was attributable to 
increased revenues and operational efficiencies at funeral home operations 
offset to a lesser extent by decreased revenues and operational inefficiencies 
at cemetery operations.

Total funeral net revenues for the three months ended September 30, 1996 
increased 51.9% to $13,161,000 from $8,663,000 for the three months ended 
September 30, 1995.  The increase in funeral net revenues reflects a 
$3,858,000 increase from acquired operations and a $640,000, or 7.5% increase 
from existing operations.  Funeral gross profit for the three months ended 
September 30, 1996 increased 100.0% to $3,333,000 from $1,666,000 for the 
three months ended September 30, 1995.  The increase in funeral gross profit 
reflects an $887,000 increase from acquired operations and a $780,000, or 
47.7% increase from existing operations.  Funeral gross margin improved to 
25.3% from 19.2%.  Funeral gross margin at existing operations improved to 
26.3% from 19.1% primarily as a result of volume improvement, sales price 
increases exceeding the cost increases in merchandising and salaries, as well 
as achieving a better merchandising mix and maximizing the leverage off of 
allocable fixed operating costs.  Funeral gross margin at acquired operations 
was 23.0%.



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<PAGE>
Total cemetery net revenues for the three months ended September 30, 1996 
increased 12.6% to $7,891,000 from $7,009,000 for the three months ended 
September 30, 1995.  The increase in cemetery net revenues reflects a 
$1,289,000 increase from acquired operations offset by a $407,000, or 5.8% 
decrease from existing operations.  The decrease in cemetery net revenues from 
existing operations was attributable to a decrease in preneed net revenues 
partially offset by an increase in at need net revenues.  Cemetery gross 
profit for the three months ended September 30, 1996 decreased 8.1% to 
$1,910,000 from $2,078,000 for the three months ended September 30, 1995.  The 
decrease reflects a $516,000, or 22.5% decrease from existing operations 
partially offset by a $348,000 increase from acquired operations. Cemetery 
gross margin at existing operations decreased to 27.0% from 32.8%, primarily 
as a result of higher fixed operating, maintenance and selling costs as a 
percentage of revenues partially offset by lower interment 
rights/merchandising costs as a percentage of net revenues.  Cemetery gross 
margin at acquired operations were 10.0% primarily because they had not been 
operated by the Company long enough to fully implement its preneed marketing 
programs to enable leveraging off of the maintenance and fixed operating costs 
which generally start being incurred immediately after the acquisition.

General and administrative expenses for the three months ended September 30, 
1996 increased $283,000, or 23.4% over the three months ended September 30, 
1995.  This increase resulted primarily from increased personnel costs and 
insurance necessary to support a higher rate of growth as well as increased 
facility and travel expense as a result of consolidating the cemetery 
corporate operations from Georgia to the Company's corporate headquarters in 
Lufkin, Texas.  General and administrative expenses as a percentage of net 
revenues decreased to 7.1% in the three months ended September 30, 1996 from 
7.7% in the corresponding period in 1995, reflecting economies of scale 
realized by the Company as expenses are spread over a larger revenue base.

Interest expense for the three months ended September 30, 1996 decreased 
$370,000, or 64.6% from the three months ended September 30, 1995.  The 
decrease was primarily attributable to the Company completely paying down 
amounts borrowed under the Credit Facility from the proceeds of the equity 
offering in May 1996.  Interest income of approximately $106,000 related to 
temporary investment of the equity offering proceeds has been netted against 
interest expense.

The Company's effective tax rate for the three months ended September 30, 1996 
was 40.5% compared to 39.5% for the comparable three months in 1995.  The 
higher rate in 1996 was due primarily to an increase in the Company's 
statutory Federal income tax rate from 34% to 35% as the Company expects to 
exceed the taxable income threshold requiring the higher tax rate during 1996.




                                       14


<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The Company has historically relied on cash flow from operations and third 
party borrowings to finance its operations, and on third party borrowings, the 
issuance of notes payable and, in certain situations, the issuance of shares 
of Common Stock to sellers of funeral homes and cemeteries to finance its 
acquisition program.  Recently acquired funeral homes typically generate 
positive cash flow immediately following acquisition.  In contrast, recently 
acquired cemeteries typically generate negative cash flow during an 
approximately three to nine month start-up period following the introduction 
of an aggressive preneed cemetery sales effort, although in some cases this 
period has exceeded nine months.  This negative cash flow is typically offset 
by positive cash flow from mature cemetery operations.

Cash and cash equivalents totaled $4.9 million at September 30, 1996, 
representing a decrease of $1.3 million from December 31, 1995.  For the nine 
months ended September 30, 1996, net cash flow from operating activities was 
approximately $3.3 million. Cash used in investing activities totaled 
approximately $23.6 million. Cash provided by financing activities amounted to 
approximately $19.0 million.  Significant components of cash flow generated 
from operating activities include net income adjusted for non-cash items 
partially offset by an increase in receivables of $7.8 million primarily 
attributable to a 23.1% increase in preneed cemetery sales which are usually 
financed on an installment basis over 36 months. Significant components of 
cash used in investing activities included $961,000 of capital expenditures 
related to additions and improvements at several funeral home and cemetery 
facilities, $1,501,000 related to the acquisition of professional vehicles and 
cemetery maintenance equipment, $552,000 related to a new telephone system and 
furnishings to accommodate the consolidation of cemetery corporate operations 
at the Company's corporate headquarters in Lufkin, Texas, and the purchase for 
$333,000 of a funeral home operation that was previously leased.  
Additionally, the Company utilized approximately $21.0 million of internal 
funds to consummate funeral home and cemetery acquisitions during the nine 
months ended September 30, 1996.  Partially offsetting these investing 
activities' uses of cash was approximately $2.1 million of proceeds received 
in April 1996 related to the buyout of several long-term licensing and lease 
agreements.  Significant components of cash provided by financing activities 
included the proceeds of approximately $73.0 million from the issuance of 
Common Stock in connection with the Company's equity offering consummated in 
May 1996 offset by payoffs of $52.7 million borrowed under the Company's 
Credit Facility, lump sum payments of $2.2 million to extinguish seller 
financed notes and normal scheduled payments on debt.

Long-term debt, including current maturities, at September 30, 1996 totaled 
$29.7 million as compared to $55.1 million at December 31, 1995.  The decrease 
was principally attributable to the payoff of $50.0 million outstanding under 
the Credit Facility with proceeds from the Company's equity offering in May 
1996. Long-term debt at September 30, 1996 consisted of $16.0 million drawn 
under the Credit Facility and $13.7 million owed under various notes payable 
to sellers of funeral homes and cemeteries.  The total amount available to be 
borrowed under the Credit Facility was increased from $60 million to $100 
million in February 1996.  Any amounts repaid under the Credit Facility are 
available for future borrowings under the terms of the Credit Facility.  



                                       15


<PAGE> 
The Company's capital resources consist of cash flow from operations and 
available borrowing capacity under the Credit Facility.  Borrowings under the 
Credit Facility bear interest, at the Company's option, at either (i) the 
prime rate plus up to 0.25% per annum or (ii) the London Interbank Offered 
Rate plus 0.75% up to 1.50% per annum, depending on the Company's leverage 
ratio, as defined. The Credit Facility was extended in September 1996 and is 
due October 1999, contains customary restrictive covenants, permits the 
payment of dividends only to the extent the Company maintains a specified net 
worth and requires the Company to maintain certain financial ratios.  The 
Credit Facility is guaranteed by all of the Company's subsidiaries.

The Company expects to acquire funeral homes and cemeteries for purchase 
prices aggregating $55 million in each of 1996 and 1997. The Company 
anticipates that the consideration for future acquisitions will consist of a 
combination of cash, long-term notes, the assumption of existing indebtedness 
of the acquired businesses, and, in some cases, the issuance of additional 
shares of the Company's Common Stock.  In June 1995, the Company filed a shelf 
registration statement relating to shares of Common Stock to be used to fund 
acquisitions.  The Company anticipates making ongoing capital expenditures of 
approximately $6 million in each of 1996 and 1997.  Additionally, the Company 
approved the authorization to expend approximately $4.2 million to construct 
two new funeral home operations.  On May 1, 1996, the Company completed a 
public offering of 4,335,000 shares of its Common Stock at $18.00 per share, 
including 585,000 shares sold to the underwriters pursuant to the 
overallotment option granted to them, for net proceeds of $73.0 million (after 
selling commissions and estimated related expenses of $5.0 million).  A 
portion of the net proceeds was used to payoff amounts borrowed under the 
Credit Facility and the remainder was used for general corporate purposes, 
including acquisitions.  As a result, management believes that cash flow from 
operations and the borrowing capacity available under the Credit Facility 
should be sufficient to meet its anticipated capital expenditures and other 
operating requirements and to substantially fund acquisitions through the 
first quarter of 1998. However, because future cash flows and the availability 
of financing are subject to a number of variables, such as the number and size 
of acquisitions made by the Company, there can be no assurance that the 
Company's capital resources will be sufficient to maintain currently planned 
levels of capital expenditures, or to fund future acquisitions.  Additional 
debt and equity financings may be required in connection with future 
acquisitions. The availability of these capital sources will depend on 
prevailing market conditions and interest rates and the then-existing 
financial condition of the Company.

SEASONALITY

Although the deathcare business is relatively stable and fairly predictable, 
the Company's results of operations may periodically fluctuate due to limited 
seasonality and the timing of acquisitions. Revenues from the Company's 
funeral home operations tend to be somewhat greater in the first and fourth 
quarters of each calendar year while revenues from its cemetery operations 
tend to be somewhat greater in the second and fourth quarters of each calendar 
year.

INFLATION

Inflation has not had a significant impact on the results of operations of the 
Company.


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<PAGE> 

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On October 10, 1996, The Loewen Group, Inc., Loewen Group International, Inc. 
and Ridge Chapels, Inc. (collectively, the "Plaintiffs") brought an action 
against Equity Corporation International, Inc. ("ECI"), Service Corporation 
International, New Service Corporation International, Inc., and SCI Holdings 
Canada, Inc. (collectively, "SCI") in the United States District, Eastern 
District of New York.  The Plaintiffs have alleged that the actions of SCI and 
in combination with ECI are designed to eliminate Plaintiffs as a competitive 
factor in numerous markets across the United States.  The Plaintiffs have 
asked the court to adjudge that ECI and SCI have participated in a conspiracy 
to restrain trade in violation of Section 1 of the Sherman Act and that the 
Plaintiffs be granted such other and further relief as the court may deem just 
and proper, including recovery from ECI and SCI for the cost of this suit and 
reasonable attorney's fees incurred by the Plaintiffs.  While the outcome of 
this lawsuit cannot be predicted with certainty, ECI believes that it will not 
have a material adverse effect on its financial position. 


Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

     11.1 -  Statement regarding computation of per share earnings

     27   -  Financial Data Schedule

(b)  Reports on Form 8-K

The Company filed a Current Report on Form 8-K on September 11, 1996 with 
respect to the approval by the Company's Board of Directors of a three-for-two 
split of the Common Stock to be effected as a stock dividend, payable on 
October 2, 1996 to stockholders of record September 23, 1996.

The Company filed a Current Report on Form 8-K (dated September 18, 1996) on 
September 24, 1996 with respect to certain acquisitions completed in 1996, 
including (i) the acquisition of substantially all the operating assets of 
Carmony-Ewing Funeral Homes, Inc., the Common Stock of Carmony Funeral Homes, 
Inc. and certain real property of R.L. Ewing, (ii) the acquisition of 
substantially all the operating assets of Jones & Rich, Inc., (iii) the 
acquisition of substantially all the operating assets of the Whitehurst 
Funeral Home, (iv) the acquisition of substantially all the funeral home 
operating assets of Robert E. and Marjorie B. Lee as well as substantially all 
the operating assets of Ferguson-Lee, Inc., and (v) the acquisition of 
substantially all the operating assets of Weathersbee Funeral Home and certain 
real property of S.M. Weathersbee and J.D. Weathersbee.


                                      17


<PAGE> 

SIGNATURE

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

Date:  November 14, 1996

EQUITY CORPORATION INTERNATIONAL

By:  /s/ W. Cardon Gerner
     ------------------------
     Senior Vice President
     Chief Financial Officer
    (Principal Financial Officer and Duly Authorized Officer)


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