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Cemetery revenue decreased $31.2 million, or 11 percent, for the year ended October 31, 2001, compared to the corresponding period in 2000. The Company experienced a $26.3 million, or 10 percent, decrease in revenue from Operations to be Retained due to a decline in revenue from Existing Operations resulting primarily from a decrease in cemetery merchandise deliveries and reduced preneed cemetery property sales. The reduction in preneed sales was anticipated due to the changes made to the Company’s preneed sales program in fiscal year 2000, as discussed above in the section entitled “Year Ended October 31, 2001 Compared to Year Ended October 31, 2000 — Cemetery Segment.” In addition, the Company experienced an average yield of 7.1 percent in its perpetual care trust funds, which was below the Company’s goal of 8.0 percent to 9.0 percent, compared to 8.0 percent in fiscal year 2000.
Cemetery profit margin from Existing Operations increased from 22.9 percent in 2000 to 25.9 percent in 2001. The increase was principally due to cost savings resulting from the changes the Company made in its preneed sales organization and additional cost savings at its cemeteries arising from increased scrutiny of expenses by local managers. Additionally, the cemetery margins benefited from the reduction in common overhead allocation mentioned in “Year Ended October 31, 2001 Compared to Pro Forma Year Ended October 31, 2000 — Funeral Segment.”
The Company’s domestic preneed cemetery merchandise and service sales, which are deferred and are not included in the results described above, decreased from $90.0 million in fiscal year 2000 to $65.3 million in fiscal year 2001. The reduction in sales was due to the Company’s strategy of moderating its preneed sales to improve cash flow, as described above.
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