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Year
Ended October 31, 1998 Compared to Year Ended October 31, 1997
Funeral Segment
Funeral revenue increased $87.5 million, or 30 percent, in fiscal year
1998, as compared with the prior fiscal year. The Company experienced
a $17.0 million, or 6 percent, increase in revenue from Existing Operations
as a result of a 6.0 percent increase in the average revenue per domestic
funeral service performed by Existing Operations (10.1 percent increase
worldwide, excluding the effect of foreign currency translation), due
primarily to price increases and improved merchandising. Also contributing
to the increase in revenue from Existing Operations was a $1.8 million
increase in the revenue recognized from prearranged funeral trust funds
and escrow accounts. This increase was attributable to a 21 percent growth
in the average balance in such trust funds and escrow accounts, resulting
primarily from current year customer payments deposited into the funds
and funds added through acquisitions, offset by a decrease in the yield
on the funds, which yield remained in line with the Company's goal of
8.5 percent to 9.0 percent. Slightly offsetting the increase in revenue
from Existing Operations was a 2.1 percent (897 events) decrease in the
number of domestic funeral services performed by Existing Operations (3.9
percent (2,579 events) decrease worldwide).
Funeral profit margin from
Existing Operations increased from 31.2 percent in 1997 to 37.9 percent
in 1998. The $7.0 million, or 4 percent, decrease in funeral costs from
Existing Operations resulted principally from the implementation of certain
cost control measures, including contract negotiations with certain vendors
and the Company's centralization and standardization of certain financial
and administrative functions through its Shared Services Center. Existing
Operations achieved improved profit margins resulting primarily from these
improved cost control measures and the increased average revenue per funeral
service mentioned above.
The increase in revenue and
costs from Acquired Operations resulted primarily from the Company's acquisition
or construction of funeral homes during fiscal year 1998 which is not
reflected in the 1997 period presented above.
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