Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction Trust and Escrow Investments Results of Operations Year Ended October 31, 2001 Compared to Year Ended October 31, 2000 Funeral Segment, 2001 compared to 2000 Cemetery Segment, 2001 compared to 2000 Other Year Ended October 31, 2000 Compared to Year Ended October 31, 1999 Funeral Segment, 2000 compared to 1999 Cemetery Segment, 2000 compared to 1999 Other Year Ended October 31, 2001 Compared to Pro Forma Year Ended October 31, 2000 Funeral Segment, 2001 compared to 2000 Cemetery Segment, 2001 compared to 2000 Other Liquidity and Capital Resources Inflation Recent Accounting Standards Forward-Looking Statements Cautionary Statements Quantitative and Qualitative Disclosures about Market Risks Consolidated Statements of Earnings Consolidated Balance Sheets Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statement (1) The Company (2) Summary of Significant Accounting Policies (3) Change in Accounting Principles (4) Acquisition of Subsidiaries (5) Prearranged Receivables and Prearranged Deferred Revenue (6) Prearranged Funeral Services (7) Cemetery Trust Funds and Escrow Accounts (8) Cash and Cash Equivalent Investments (9) Marketable Securities and Long-Term Investments (10) Receivables (11) Inventories and Cemetery Property (12) Condensed Consolidating Financial Statements of Guarantors of Senior Subordinated Notes (13) Loss on Assets Held for Sale and Other Charges (14) Long-Term Debt (15) Consolidated Comprehensive Income (Loss) (16) Reconciliation of Basic and Diluted Per Share Data (17) Income Taxes (18) Benefit Plans (19) Commitments, Contingencies and Related Party Transactions (20) Segment Data (21) Quarterly Financial Data (Unaudited) (22) Subsequent Events (Unaudited) Selected Consolidated Financial and Operating Data Selected Consolidated Operating Data Report of Independent Accountants