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Change
in Accounting Principle
Effective November 1, 1998,
the Company changed its method of accounting for earnings realized by
irrevocable prearranged funeral trust funds and escrow accounts. The Company
now defers all of the earnings realized by irrevocable prearranged funeral
trust funds and escrow accounts until the underlying funeral service is
delivered. Previously, the Company recognized a portion of these earnings
and deferred the remainder to offset the estimated future effects of inflation.
The accounting change was made principally to match revenue recognition
more closely with cash receipts and also to improve the comparability
of its earnings with those of its principal competitors. The new method
will allow the Company to take a longer-term view and increase its flexibility
in managing the funeral trust funds. See Note 3 to the consolidated financial
statements.
This change generally will
result in reduced near-term funeral revenue and gross profit, due to the
deferral of all of the earnings from funeral trust funds and escrow accounts
until the funeral is performed.
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