|
|
  |
Total funeral revenues declined $15.2 million from fiscal year 2000 to 2001, primarily due to a decrease in revenue from Closed and Held for Sale Operations, which was partially offset by an increase in revenue from Operations to be Retained. This decrease in revenue from Closed and Held for Sale Operations resulted from the sale of operations in Mexico, Australia, New Zealand, Belgium and the Netherlands in the fourth quarter of 2001 and changes in foreign currency exchange rates (due in part to the Euro).
Funeral revenue from Operations to be Retained increased $7.8 million, or 3 percent, for the year ended October 31, 2001, compared to the corresponding period in 2000. The average revenue per funeral service performed by these businesses increased 1.4 percent, and the number of funeral services performed by these businesses increased 1.1 percent (821 events).
The Company experienced a $1.7 million, or 1 percent, increase in funeral revenue from Existing Operations primarily due to a 1.7 percent increase in the average revenue per funeral service partially offset by a 1.2 percent decline (905 events) in the number of funeral services performed by these businesses. About 40 percent of the decline in the number of funeral services performed by Existing Operations was attributable to a decline in low-priced services that the Company elected to stop performing. Excluding these low-priced services, the number of funeral services performed by the Company’s existing funeral homes declined less than one percent, or one to two funerals per location. These low-priced services consist primarily of services performed in the ordinary course of business in the industry on behalf of another funeral home or institution, and the Company believes they are not indicative of a loss in market share.
The Company experienced a $6.1 million increase in funeral revenue and a $6.2 million increase in funeral costs from Opened Operations primarily due to the opening of the Archdiocese of Los Angeles facilities which were not open for the entirety of both periods presented.
Funeral profit margin from Existing Operations decreased from 28.0 percent in 2000 to 25.0 percent in 2001 primarily due to upward pressure on funeral costs, including labor costs, of approximately $6.8 million as well as an increase in overhead costs allocated to the funeral segment of approximately $2.9 million. The Company allocates common overhead between its segments based on revenue. Due to the moderation in preneed cemetery sales discussed above, the allocation has shifted a higher amount of those costs to the funeral segment and a corresponding lower amount to the cemetery segment.
In fiscal year 2000, the Company sold approximately two domestic funerals for every one it delivered. Throughout fiscal year 2000 the Company changed the terms and conditions of its preneed sales contracts and commissions as described above in the section entitled “Year Ended October 31, 2001 Compared to Year Ended October 31, 2000 — Cemetery Segment.” In fiscal year 2001, the Company further moderated its preneed sales strategy in order to improve its cash flow and modified its goal to begin selling four funerals for every three it delivered, which it achieved. The result was improved cash flow as described in “Liquidity and Capital Resources.” In fiscal year 2001, the Company’s preneed funeral service and merchandise sales, which are deferred and are not included in the results described above, decreased from the sale of 37,987 domestic preneed funerals with contract amounts representing $134.7 million in fiscal year 2000 to 28,579 domestic preneed funerals with contract amounts representing $102.2 million in fiscal year 2001.
|
|
|
|
