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

Year Ended October 31, 1999 Compared to Year Ended October 31, 1998
Cemetery Segment

Cemetery revenue increased $40.9 million, or 15 percent, for the year ended October 31, 1999, compared to the corresponding period in 1998. The $13.1 million, or 5 percent, increase in revenue from Existing Operations resulted primarily from an increase in preneed cemetery sales, price increases and improved merchandising, coupled with an increase in the revenue realized from the Company's cemetery trust funds and escrow accounts. The revenue from the cemetery trust funds and escrow accounts increased $3.6 million, or 14 percent, to $29.4 million due to a 20 percent growth in the average balance in the funds, resulting from current year customer payments deposited into the funds and funds added through acquisitions, coupled with an increase in the average yield on the funds. The yield was in line with the Company's goal of 8.5 percent to 9.0 percent.

Cemetery profit margin from Existing Operations decreased from 28.8 percent in 1998 to 28.5 percent in 1999. This decline was attributable principally to a savings rebate received by the Company from contract negotiations with a primary vendor in 1998 which was not obtained in 1999.

The increase in revenue and costs from Acquired Operations resulted primarily from the Company's acquisition of cemeteries during fiscal year 1999, which are not reflected in the 1998 period presented above.