Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations
For purposes of the following discussion, funeral homes and cemeteries owned and operated for the entirety of both periods being compared are referred to as "Existing Operations." Correspondingly, funeral homes and cemeteries acquired or opened during either period being compared are referred to as "Acquired Operations."

Comparisons between fiscal years 1999 and 1998 reflect the pro forma effects of applying the new accounting principle as if the change had occurred on November 1, 1997; whereas, comparisons between fiscal years 1998 and 1997 are presented as originally reported. The following table presents the results as reported for the fiscal year ended October 31, 1999 and the pro forma results for the year ended October 31, 1998:

(1) Includes a nonrecurring, noncash charge of $76.8 million ($50.3 million, after tax) recorded during the second quarter of fiscal year 1998 in connection with the vesting of performance-based stock options. Excluding that charge, for fiscal year 1998: (a) earnings before income taxes and cumulative effect of change in accounting principle would have been $128.3 million; and (b) earnings before cumulative effect of change in accounting principle would have been $83.5 million.