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

                                 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 March 31, 1997

                                       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 
May 12, 1997 was 20,697,983.

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

<PAGE> 

                       EQUITY CORPORATION INTERNATIONAL
                                     INDEX

                                                                          Page
Part I.  Financial Information                                            ----

         Item 1. Financial Statements (Unaudited)

                 Consolidated Balance Sheet
                    March 31, 1997 and December 31, 1996.....................3

                 Consolidated Statement of Operations
                    Three Months Ended March 31, 1997 and 1996...............4

                 Consolidated Statement of Cash Flows
                    Three Months Ended March 31, 1997 and 1996...............5

                 Consolidated Statement of Stockholders' Equity
                    Three Months Ended March 31, 1997........................6

                 Notes to the Consolidated Financial Statements..............7

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

Part II. Other Information

         Item 6. Exhibits and Reports on Form 8-K...........................16

Signature...................................................................17


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 and the 
Company's annual report on Form 10-K, 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>
                                                         March 31,   Dec. 31,
(In thousands, except share data)                          1997        1996
------------------------------------------------------------------------------
<S>                                                      <C>         <C>
                      ASSETS
Current assets:
   Cash and cash equivalents..........................   $   4,803   $  12,654
   Receivables, net of allowances.....................       9,288       9,050
   Inventories........................................       6,360       6,029
   Other..............................................       1,474       1,825
                                                         ---------   ---------
      Total current assets............................      21,925      29,558

Preneed funeral contracts.............................     168,539     156,028
Cemetery properties, at cost..........................      92,976      84,706
Long-term receivables, net of allowances..............      45,427      37,226
Property, plant and equipment, at cost (net)..........      64,111      57,263
Deferred charges and other assets.....................       8,566       7,986
Names and reputations (net)...........................      85,498      71,124
                                                         ---------   ---------
      Total assets....................................   $ 487,042   $ 443,891
                                                         =========   =========

        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities...........   $   7,746   $   6,943
   Income taxes payable...............................       1,795         294
   Deferred income taxes..............................       2,994       2,605
   Current maturities of long-term debt...............         536         537
                                                         ---------   ---------
      Total current liabilities.......................      13,071      10,379

Deferred preneed funeral contract revenues............     173,452     161,153
Long-term debt........................................      41,700      49,197
Deferred cemetery costs...............................      26,412      21,268
Deferred income taxes.................................      23,180      22,799
Other liabilities.....................................       1,775       1,631
Commitments and contingencies.........................                        
Stockholders' equity:
   Preferred stock....................................          --          --
   Common stock, $.01 par value; 50,000,000 shares
      authorized; 20,695,983 and 19,322,723 shares issued
      and outstanding in 1997 and 1996, respectively..         207         193
   Capital in excess of par value.....................     182,952     157,468
   Retained earnings..................................      24,293      19,803
                                                         ---------   ---------
      Total stockholders' equity......................     207,452     177,464
                                                         ---------   ---------
      Total liabilities and stockholders' equity......   $ 487,042   $ 443,891
                                                         =========   =========

</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>

                                            Three months ended March 31,
(In thousands, except per share data)           1997           1996  
---------------------------------------------------------------------
<S>                                          <C>            <C>
Net revenues:
   Funeral.................................. $   20,449     $   12,746
   Cemetery.................................     10,131          8,249
   Other....................................      1,674          2,085
                                             ----------     ----------
                                                 32,254         23,080

Cost and expenses:
   Funeral..................................     14,294          8,795
   Cemetery.................................      7,036          5,764
   Other....................................        924          1,135
                                             ----------     ----------
                                                 22,254         15,694
                                             ----------     ----------
Total gross profit..........................     10,000          7,386

General and administrative
   expenses.................................      1,735          1,585
                                             ----------     ----------

Operating income............................      8,265          5,801

Interest expense, net.......................        781          1,092
                                             ----------     ----------

Income before income taxes..................      7,484          4,709

Provision for income taxes..................      2,994          2,472
                                             ----------     ----------

Net income.................................. $    4,490     $    2,237
                                             ==========     ==========

Earnings per share.......................... $     0.22     $     0.15
                                             ==========     ==========

Weighted average number
   of common and equivalent
      shares outstanding....................     20,412         15,085
                                             ==========     ==========
</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>
                                                  Three months ended March 31,
(In thousands)                                            1997         1996
------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Cash flows from operating activities:
   Net income.........................................  $  4,490     $  2,237
   Adjustments to reconcile net income                                       
    to net cash provided by operating activities:                            
      Depreciation and amortization...................     1,557        1,084
      Provision for bad debts and contract                                    
       cancellations..................................     1,272        1,023
      Gain on sale of assets..........................      (765)        (892)
      Deferred income taxes...........................       770          774
   Changes in assets and liabilities, net of effects                         
    from acquisitions:                                                       
     Receivables......................................    (3,751)      (2,903)
     Inventories......................................       (32)          33
     Other current assets.............................       369          272
     Other long-term assets...........................      (546)        (377)
     Accounts payable and accrued liabilities.........       284          780
     Income taxes payable.............................     1,501          472
     Preneed funeral contracts and associated
      deferred revenues...............................      (171)           1
                                                        --------     -------- 

        Net cash provided by operating activities.....     4,978        2,504
                                                        --------     -------- 

Cash flows from investing activities:
   Capital expenditures...............................    (2,247)      (1,978)
   Proceeds from sale of assets.......................        50          810
   Acquisitions, net of cash used.....................   (14,610)      (1,027)
   Other..............................................        --           36
                                                        --------     --------
        Net cash used in investing activities.........   (16,807)      (2,159) 
                                                        --------     --------
Cash flows from financing activities:
   Net proceeds from issuance of common stock.........    22,131           22
   Borrowings on long-term debt.......................        --          331
   Payments on debt...................................   (18,153)      (2,481)
                                                        --------     -------- 

        Net cash provided by (used in) financing 
         activities...................................     3,978       (2,128)
                                                        --------     -------- 

Decrease in cash and cash equivalents.................    (7,851)      (1,783)
Cash and cash equivalents at beginning of period......    12,654        6,233
                                                        --------     -------- 

Cash and cash equivalents at end of period............  $  4,803     $  4,450
                                                        ========     ======== 
</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>

                          Common Stock     Capital in
(In thousands, except   -----------------  excess of   Retained  Stockholders'
 number of shares)      Shares     Amount  par value   earnings  equity
------------------------------------------------------------------------------
<S>                     <C>         <C>     <C>         <C>       <C>
Balance,
 December 31, 1996..... 19,322,723  $  193  $157,468    $ 19,803  $177,464

   Net income..........         --      --        --       4,490     4,490

   Common stock issued:
     Equity offering...  1,199,178      12    22,089                22,101
     Acquisitions......    171,082       2     3,365          --     3,367
     Option exercises..      3,000      --        30          --        30
                        ----------  ------  --------    --------  --------

Balance,
 March 31, 1997........ 20,695,983  $  207  $182,952    $ 24,293  $207,452
                        ==========  ======  ========    ========  ========
</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 
the notes to the consolidated financial statements normally included in 
financial statements prepared in accordance with generally accepted accounting 
principles has 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. Capitalized terms 
not defined herein have the meanings as defined in the notes to the 
consolidated financial statements included in the Company's annual report on 
Form 10-K for the year ended December 31, 1996. 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, 1996.

The Company's statutory Federal income tax rate increased from 34% to 35% as 
the Company exceeded the taxable income threshold requiring the higher tax 
rate during 1996.  As a result, the Company recorded through the provision for 
income taxes for the three months ended March 31, 1996 a one-time charge of 
$565,000 to revalue the deferred tax liability accounts to appropriately 
reflect the higher statutory rate.

2. ACQUISITIONS
The following table is a summary of acquisitions made during the three months 
ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
                        1997            1996
---------------------------------------------------
<S>                     <C>             <C>
Number acquired:
   Funeral homes........         19              10
   Cemeteries...........          3               1
Purchase price..........$29,752,000     $ 9,100,000
</TABLE>

The purchase price for these acquisitions consisted of cash, Common Stock and 
debt issued or assumed. Also included in the 1997 purchase price is $924,000 
which represents the net book value of funeral home assets exchanged for one 
of the acquired cemeteries (Note 5). 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 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 $62,000 and 
$170,000 for noncompetition agreements which were prepaid to individuals 
related to businesses acquired in 1997 and 1996, respectively. The 
acquisitions have been accounted for as purchases and their operating results 
have been included since their respective dates of acquisition.

                                       7


<PAGE> 
The net effect of acquisitions (including the exchange discussed above) on the 
Consolidated Balance Sheet was as follows:
<TABLE>
<CAPTION>
                                                  Three months ended March 31,
(In thousands)                                              1997        1996
------------------------------------------------------------------------------
<S>                                                     <C>         <C>
Current assets........................................  $   1,341   $     335
Preneed funeral contracts.............................     12,424       8,201
Long-term receivables, net of allowances..............      5,708         209
Cemetery properties...................................      7,804       1,315
Property, plant and equipment.........................      5,601       2,843
Deferred charges and other assets.....................       (168)        194
Names and reputations.................................     14,885       4,689
Current liabilities...................................       (790)       (179)
Deferred preneed funeral contract revenues............    (12,383)     (8,248)
Long-term debt........................................    (10,653)     (8,004)
Deferred cemetery costs...............................     (5,018)        (33)
Deferred income taxes.................................         --        (236)
Common stock issued...................................     (3,367)         --
                                                        ---------   ---------
   Total..............................................     15,384       1,086
   Less cash acquired.................................        774          59
                                                        ---------   ---------
   Cash used for acquisitions.........................  $  14,610   $   1,027
                                                        =========   =========
</TABLE>

The following represents the unaudited pro forma results of operations for the 
three months ended March 31, 1997 and 1996, assuming the above noted 
acquisitions and exchange had occurred as of January 1, 1996:
<TABLE>
<CAPTION>
(In thousands, except per share data)                   1997         1996
------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Net revenues..........................................  $  33,883    $  26,241
Income before income taxes............................      7,708        4,890
Net income............................................      4,625        2,345
Earnings per common and equivalent share..............  $    0.23    $    0.15
</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 
$73,064,000 and $67,364,000 will be funded by trusts and approximately 
$95,475,000 and $88,664,000 will be funded by insurance policies as of March 
31, 1997 and December 31, 1996, respectively. Accumulated earnings from trust 
funds and increasing insurance benefits have been included to the extent that 
they have accrued through March 31, 1997 and December 31, 1996, 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 March 31, 1997 and December 31, 1996, the amounts collected and 
held in trusts, at cost, which approximates market, were approximately 
$65,040,000 and $59,246,000, 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
The Company maintains an uncollateralized revolving credit agreement with a 
group of banks that provides for a $100,000,000 line of credit to be used for 
acquisition financing and general corporate purposes. The Company's Credit 
Facility, as amended, provides for a revolving credit period expiring in 
October 1999 and 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 
weighted average interest rates on amounts borrowed under the Credit Facility 
were 6.49% and 6.39% at March 31, 1997 and December 31, 1996, respectively. In 
addition, the Company pays a commitment fee on unused funds ranging from 0.20% 
to 0.32%, depending on the Company's leverage ratio, as defined. The Credit 
Facility also supports letters of credit totaling $3,152,000 related to one of 
the Company's acquisitions in 1996. The Credit Facility 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. Balances 
outstanding under the Credit Facility totaled $27,207,000 and $35,000,000 at 
March 31, 1997 and December 31, 1996, respectively.


                                       9

<PAGE> 
5. DISPOSITIONS
During January 1997, the Company acquired one cemetery from Service 
Corporation International ("SCI"), a former significant stockholder of the 
Company (Note 6), in exchange for one of the Company's funeral home 
facilities. This was a strategic business decision as the acquired cemetery is 
in close proximity to one of the Company's existing funeral home facilities. 
In connection with the transaction, the Company received consideration of 
$1,674,000, including $250,000 in cash, and recognized a gain of approximately 
$750,000.

During March 1996, the Company conveyed to SCI the licensing and lease 
agreements related to three funeral home operations which had been previously 
operated by an unaffiliated third party for an aggregate purchase price of 
$2,085,000. This amount and $1,135,000 of related costs and expenses are 
included in net revenues and costs and expenses, respectively, for the three 
months ended March 31, 1996.

6. EQUITY OFFERING
In February 1997, the Company completed the registration and sale of 7,994,522 
shares of Common Stock owned by SCI which represented SCI's total investment 
in the Company. SCI received all proceeds and paid all expenses related to the 
sale of these shares. In addition, the Company received net proceeds of 
approximately $22,101,000 (after selling commissions and related expenses) in 
connection with the issuance and sale by the Company of 1,199,178 shares of 
Common Stock at $19.25 per share pursuant to the underwriters' exercise of an 
overallotment option granted by the Company. Approximately $13,000,000 of 
these proceeds was used to pay down a portion of the Company's Credit Facility 
and the remainder was used for general corporate purposes, including 
acquisitions.

7. RECENT FASB PRONOUNCEMENTS
In February 1997, the FASB issued Statement of Financial Accounting Standards 
("SFAS") No. 128 "Earnings Per Share" which simplifies the standards for 
computing and presenting earnings per share ("EPS") and makes them comparable 
to international EPS standards. This statement is effective for the year 
ending December 31, 1997. Earlier application is not permitted and restatement 
of prior period EPS data is required. The Company does not believe 
implementation of SFAS No. 128 will have a material impact on its EPS.


                                       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 death care 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 death care 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 death care 
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 
three month periods ended March 31, 1997 and 1996.  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.

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED 
MARCH 31, 1996:
Total net revenues for the three months ended March 31, 1997 increased 39.7% 
to $32,254,000 from $23,080,000 for the three months ended March 31, 1996.  
The increase in net revenues reflects an $8,034,000 increase in net revenues 
attributable to acquired operations and a $1,789,000, or 8.9% 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 
59 funeral homes and three cemeteries acquired in 1996 and the partial quarter 
results of the 19 funeral homes and three cemeteries acquired during the three 
months ended March 31, 1997.  Included in net revenues for the three months 
ended March 31, 1997 are proceeds of $1,674,000 received in connection with 
the 1997 acquisition of a cemetery in exchange for one of the Company's 
funeral homes. Included in net revenues for the three months ended March 31, 
1996 is $2,085,000 resulting 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 three months ended March 31, 1997 increased 35.4% to 
$10,000,000 from $7,386,000 for the three months ended March 31, 1996.  The 
increase in gross profit is due primarily to a $2,265,000 increase 
attributable to acquired operations and $648,000, or 10.4% increase from 
existing operations.  The increase in gross profit from existing operations 
was attributable to increased revenues at both funeral home and cemetery 
operations and operational efficiencies at funeral home operations.

                                       11

<PAGE> 

FUNERAL HOME SEGMENT. The following table sets forth certain information 
regarding the net revenues and gross profit of the Company from its funeral 
home operations during the three months ended March 31, 1997 and 1996.

<TABLE>
<CAPTION>
                                          Three months
                                         ended March 31,          Change
(Dollars in thousands)                   1997      1996      Amount    Percent
------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>       <C>
Net revenues:
   Existing operations.................. $ 12,734  $ 11,945  $    789     6.6%
   Acquired operations..................    7,715       563     7,152       *
   Disposed operations..................       --       238      (238)      *
                                           ------    ------    ------
      Total funeral net revenues........ $ 20,449  $ 12,746  $  7,703    60.4%
                                           ======    ======    ======

Gross profit:
   Existing operations.................. $  4,063  $  3,700  $    363     9.8%
   Acquired operations..................    2,092       152     1,940       *
   Disposed operations..................       --        99       (99)      *
                                           ------    ------    ------
      Total funeral gross profit........ $  6,155  $  3,951  $  2,204    55.8%
                                           ======    ======    ======

------
*Not meaningful


Total funeral net revenues for the three months ended March 31, 1997 increased 
60.4% to $20,449,000 from $12,746,000 for the prior year quarter, due 
primarily to the full quarter results of the Company's 1996 acquisitions. The 
increase in revenues from existing operations is primarily attributable to a 
2.9% inflationary increase in the average revenue per regular funeral service 
performed, along with a 2.2% increase in the number of regular funeral 
services performed. 

Total funeral gross profit for the three months ended March 31, 1997 increased 
55.8% to $6,155,000 from $3,951,000 for the three months ended March 31, 1996. 
Excluding the effects of the disposed funeral home operations, funeral gross 
margin decreased to 30.1% from 30.8% due primarily to acquired operations, 
which generally have lower gross margins as compared to the Company's existing 
operations. Depending on numerous factors including the size of an acquired 
operation, the proximity to other Company operations and market sensitivity, 
it may take 12 to 36 months before margin improvement is realized at an 
acquired operation as a result of new policies and procedures implemented by 
the Company. Funeral gross margin at existing operations improved to 31.9% 
from 31.0% for the prior year first quarter primarily as a result of revenue 
and volume improvements discussed above, coupled with the relatively fixed 
cost nature of funeral home operating costs.




                                       12

<PAGE> 

CEMETERY SEGMENT. The following table sets forth certain information regarding 
the net revenues and gross profit of the Company from its cemetery operations 
during the three months ended March 31, 1997 and 1996.


</TABLE>
<TABLE>
<CAPTION>
                                          Three months
                                          ended March 31,         Change
(Dollars in thousands)                     1997      1996      Amount  Percent
------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>       <C>
Net revenues:
   Existing operations.................. $  9,194  $  8,194  $  1,000   12.2%
   Acquired operations..................      937        55       882      *
                                           ------    ------    ------
      Total cemetery net revenues....... $ 10,131  $  8,249  $  1,882   22.8%
                                           ======    ======    ======

Gross profit:
   Existing operations.................. $  2,826  $  2,541  $    285   11.2%
   Acquired operations..................      269       (56)      325      *
                                           ------    ------    ------
      Total cemetery gross profit....... $  3,095  $  2,485  $    610   24.5%
                                           ======    ======    ======

------
*Not meaningful


Cemetery net revenues attributable to existing operations for the three months 
ended March 31, 1997 increased 12.2% to $9,194,000 from $8,194,000 for the 
prior year quarter, due primarily to increases in preneed sales. The increase 
in net revenues for acquired operations reflects the full quarter results of 
the three cemeteries acquired in 1996 along with the partial quarter results 
of the three cemeteries acquired in 1997. Cemetery gross margin at existing 
operations decreased slightly to 30.7% from 31.0% in 1996 due primarily to 
higher selling costs associated with the increase in preneed sales. Cemetery 
gross margin for acquired operations were 28.7% for the three months ended 
March 31, 1997. Gross margin for acquired operations have historically been 
lower than gross margin for the Company's existing operations until they have 
been operated by the Company long enough to fully implement the preneed 
marketing programs to leverage off of the maintenance and fixed operating 
costs which start being incurred immediately after acquisition.

General and administrative expenses for the three months ended March 31, 1997 
increased $150,000, or 9.5% over the three months ended March 31, 1996.  This 
increase resulted primarily from increased personnel costs and professional 
fees necessary to support a higher rate of growth.  General and administrative 
expenses as a percentage of net revenues, excluding the effects of the gains 
on the aforementioned asset exchange and buyout, decreased to 5.7% in the 
three months ended March 31, 1997 from 7.5% in the corresponding period in 
1996, reflecting economies of scale realized by the Company as expenses are 
spread over a larger revenue base.

Interest expense for the three months ended March 31, 1997 decreased $311,000, 
or 28.5% from the three months ended March 31, 1996.  The decrease was 
primarily the result of lower debt levels as average indebtedness outstanding 
for the 1997 quarter decreased to $46.0 million from $58.0 million for the 
same period in 1996. Interest income of approximately $41,000 related to 
temporary investment of the Company's February 1997 offering proceeds has been 
netted against interest expense.



                                       13

<PAGE> 
The Company's effective tax rate for the three months ended March 31, 1997 was 
40.0% compared to 52.5% for the comparable three months in 1996.  The higher 
rate in 1996 was due primarily to a one-time charge of $565,000 to revalue the 
Company's deferred tax liability accounts to appropriately reflect an increase 
in the Company's statutory Federal income tax rate from 34% to 35% as the 
Company exceeded the taxable income threshold requiring the higher tax rate 
during 1996.  The Company expects the effective tax rate for income generated 
in the remainder of 1997 will be approximately 40.0%.

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 $4.8 million at March 31, 1997, representing 
a decrease of $7.9 million from December 31, 1996.  For the three months ended 
March 31, 1997, net cash flow from operating activities was approximately $5.0 
million, cash used in investing activities totaled approximately $16.8 million 
and cash provided by financing activities amounted to approximately $4.0 
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 $3.8 million primarily attributable to a 31.5% 
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 $0.4 million of capital expenditures related to 
additions and improvements at several funeral home facilities, $0.8 million 
related to the acquisition of professional vehicles and maintenance equipment 
and $0.4 million for upgrades to computer systems and peripheral equipment.  
Additionally, the Company utilized approximately $14.6 million of internal 
funds, including funds drawn on the Credit Facility at December 31, 1996, to 
consummate funeral home and cemetery acquisitions during the three months 
ended March 31, 1997. Significant components of cash provided by financing 
activities included $22.1 million of net proceeds received in connection with 
the sale of the Company's Common Stock and the use of a portion of these 
proceeds to pay $13.0 million outstanding under the Company's Credit Facility, 
lump sum payments totaling approximately $4.9 million to extinguish certain 
seller financed notes and normal scheduled debt payments.

Long-term debt, including current maturities, at March 31, 1997 totaled $42.2 
million as compared to $49.7 million at December 31, 1996.  The decrease was 
principally attributable to the payoff of $13.0 million outstanding under the 
Credit Facility with a portion of the proceeds from the issuance of Common 
Stock in February 1997, as described below. Long-term debt at March 31, 1997 
consisted of $27.2 million drawn under the Credit Facility and $15.0 million 
owed under various notes payable to sellers of funeral homes and cemeteries. 
As of March 31, 1997, the Credit Facility also supported letters of credit 
totaling $3.2 million related to one of the Company's 1996 acquisitions. At 
March 31, 1997, $69.6 million was available for borrowings under the Credit 
Facility. Any amounts repaid under the Credit Facility are available for 
future borrowings under the terms of the Credit Facility.




                                       14

<PAGE> 
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 weighted average interest rates on 
amounts borrowed under the Credit Facility were 6.49% and 6.39% at March 31, 
1997 and December 31, 1996, respectively. The Credit Facility, which 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.

In February 1997, the Company received net proceeds of approximately $22.1 
million (after selling commissions and related expenses) in connection with 
the issuance and sale by the Company of 1,199,178 shares of Common Stock at 
$19.25 per share pursuant to the underwriters' exercise of an overallotment 
option granted by the Company in the registration and sale of shares of Common 
Stock owned by SCI.

The Company currently expects to acquire funeral homes and cemeteries for 
purchase prices aggregating $80 million in 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 1,000,000 shares of Common Stock to be used to fund 
acquisitions.  As of March 31, 1997, approximately 712,000 shares of Common 
Stock remained available for issuance pursuant to this registration statement.  
The Company anticipates making ongoing capital expenditures of approximately 
$7.9 million in 1997.  Additionally, the Company approved the authorization to 
expend approximately $6.1 million to construct two new funeral home facilities 
and perform significant renovations and improvements on certain of its 
existing funeral home facilities. These expenditures are expected to be 
incurred over the next 12 to 18 months.  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 and 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 death care 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.

RECENT FASB PRONOUNCEMENTS

In February 1997, the FASB issued Statement of Financial Accounting Standards 
("SFAS") No. 128 "Earnings Per Share" which simplifies the standards for 
computing and presenting earnings per share ("EPS") and makes them comparable 
to international EPS standards. This statement is effective for the year 
ending December 31, 1997. Earlier application is not permitted and restatement 
of prior period EPS data is required. The Company does not believe 
implementation of SFAS No. 128 will have a material impact on its EPS.

                                      15

<PAGE> 

PART II. OTHER INFORMATION

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 did not file any reports on Form 8-K during the quarter ended 
     March 31, 1997.

                                      16

<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:  May 15, 1997

EQUITY CORPORATION INTERNATIONAL

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


                                      17



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