Dear Shareholders:

Fiscal 2000 was a year of transition for our company. While we have gone through many such periods in our 91-year history, last year was the first since becoming a public company in 1991. At the beginning of fiscal 2000, with new leadership installed, we recognized the need for a fundamental shift in the business model for our industry and our company. Accordingly, we reported to you that we would discontinue making acquisitions, focus on improving the operations of the businesses we own and improve cash flow from those operations.

Even during this period of significant change, we achieved financial results that were solid and aligned with the commitments that management outlined at the beginning of the year:

•	Revenues totaled $734.8 million, including funeral revenue of $451.9 million and cemetery revenue of $282.9 million.
•	Gross profit was $179.0 million.
•	Earnings before interest, taxes, depreciation and amortization were $220.9 million.
•	Net earnings amounted to $66.8 million, or $.63 per share.
•	Operating cash flow was $87.2 million—a considerable improvement from fiscal 1999.
•	The Company’s funeral backlog at the end of the fiscal year exceeded 446,000 prearranged funerals, which we expect to generate approximately $1.5 billion in future funeral revenue.

ACHIEVEMENTS
Our foremost accomplishments last year consisted of improving our cash flow, staying within projected cost parameters, strengthening our funeral business and restructuring our preneed sales program.

Our cash flow performance improved significantly. While the goal for the year was $70-$75 million in cash flow from operations, we recorded $87.2 million. By comparison, operating cash flow for fiscal 1999 was $16.4 million. For free cash flow (operating cash flow less maintenance capital expenditures and prearranged funeral activity), the goal for fiscal 2000 was $40 million; we achieved $53.0 million.