RESULTS OF OPERATIONS
For purposes of the following discussion, funeral homes and cemeteries owned and operated at the beginning of the earliest year presented in each comparison are referred to as “Existing Operations.” Correspondingly, funeral homes and cemeteries acquired or opened during either period being compared are referred to as “Acquired/Opened Operations.” Acquired operations include businesses purchased through the Company’s earlier acquisition strategies, and opened operations include constructed businesses or those developed through the implementation of the Alternative Service Firm strategy.

Comparisons between fiscal years 2000 and 1999 are presented as originally reported; whereas, comparisons between fiscal years 1999 and 1998 are presented as if the change in accounting principle had occurred November 1, 1997. The following table presents the results as reported for the fiscal years ended October 31, 2000 and 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.