<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
-----------------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
COMMISSION FILE NUMBER _____________
---------------------
PRIME SUCCESSION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------
DELAWARE 13-3904211
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3940 OLYMPIC BLVD., SUITE 300 41018
ERLANGER, KENTUCKY, U.S.A. (POSTAL CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(606) 746-6800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of outstanding shares of Common Stock as of May 13, 1997,
was 100.
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<PAGE> 2
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS
as of March 31, 1997 and December 31, 1996 1
CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three Months Ended March 31, 1997 and March 31, 1996 3
CONSOLIDATED STATEMENTS of CASH FLOWS
for the Three Months Ended March 31, 1997 and March 31, 1996 4
NOTES to CONSOLIDATED FINANCIAL STATEMENTS 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 10
(i)
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
PRIME SUCCESSION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 997,472 $ 2,985,704
Restricted cash 502,500 4,388,837
Receivables:
Trade, less allowance of $3,023,863 and $2,834,438 11,233,677 11,286,384
Other 1,336,563 785,586
------------ ------------
Total receivables 12,570,240 12,071,970
------------ ------------
Inventories:
Merchandise 3,379,189 2,951,913
Cemetery lots and mausoleum spaces 1,255,392 1,115,342
------------ ------------
Total inventories 4,634,581 4,067,255
------------ ------------
Prepaids and other current assets 281,610 354,576
Prepaid fees to shareholders 250,000 375,000
Deferred income taxes 371,249 371,249
------------ ------------
Total current assets 19,607,652 24,614,591
------------ ------------
Property and equipment:
Land and land improvements 16,088,256 16,101,845
Buildings and improvements 45,807,779 45,664,076
Equipment, furniture and fixtures 7,671,651 7,363,265
Accumulated depreciation (1,325,584) (741,179)
------------ ------------
Net property and equipment 68,242,102 68,388,007
------------ ------------
Developed cemetery properties 13,407,635 12,951,162
Undeveloped cemetery properties 30,897,471 30,616,355
Goodwill, less accumulated amortization of $3,228,409 and $1,789,876 227,598,592 228,215,892
Other intangible assets, less accumulated amortization of
$2,685,395 and $1,548,680 26,616,589 27,621,587
Long-term receivables, less allowance of $2,808,848 and $2,731,216 6,479,327 5,584,119
Other assets 619,948 796,489
------------ ------------
$393,469,316 $398,788,202
============ ============
</TABLE>
See accompanying notes to interim consolidated financial statements.
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PRIME SUCCESSION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 2,813,874 $ 2,695,283
Other accrued expenses 9,131,155 11,255,743
Bank indebtedness under revolving loan 3,000,000 --
Current installments of obligations under agreements with
former owners 3,326,127 3,326,127
Current installments of long-term debt 1,483,740 5,253,936
------------ ------------
Total current liabilities 19,754,896 22,531,089
------------ ------------
Deferred merchandise liabilities and revenues, less trust fund deposits 19,859,834 19,612,190
Obligations under agreements with former owners, less current
installments 16,027,737 17,568,971
Long-term debt, less current installments 190,010,548 189,752,128
Deferred income taxes 18,316,831 18,316,831
Other long-term liabilities 3,844,228 4,402,013
Shareholders' equity:
Common stock, par value $.01 per share, 1,000 shares authorized;
100 issued and outstanding shares 1 1
Additional paid-in capital 129,554,499 129,554,499
Accumulated deficit (3,899,258) (2,949,520)
------------ ------------
Total shareholders' equity 125,655,242 126,604,980
------------ ------------
$393,469,316 $398,788,202
============ ============
</TABLE>
See accompanying notes to interim consolidated financial statements.
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PRIME SUCCESSION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
---- ----
SUCCESSOR PREDECESSOR
COMPANY COMPANY
------- -------
<S> <C> <C>
Revenues:
Funeral services $ 19,459,911 $ 19,215,497
Cemetery sales 4,735,379 3,304,298
------------- -------------
24,195,290 22,519,795
Costs and expenses:
Funeral homes 12,100,651 12,470,802
Cemetery 3,413,840 2,550,382
------------- -------------
15,514,491 15,021,184
Corporate and regional general and administrative
expenses 877,788 1,766,613
Depreciation and amortization 2,731,659 1,927,251
Legal settlement -- 6,273,985
------------- -------------
Operating income (loss) 5,071,352 (2,469,238)
------------- -------------
Other expenses:
Interest expense, including amortization of
deferred loan costs of $438,473 and $209,231 5,991,748 3,778,107
Other -- 148,258
------------- -------------
5,991,748 3,926,365
------------- -------------
Loss before income taxes (920,396) (6,395,603)
Income tax expense (29,342) (187,083)
------------- -------------
Net loss (949,738) (6,582,686)
Redeemable Preferred Stock dividend requirements -- (103,917)
------------- -------------
Net loss attributable to common shareholders $ (949,738) $ (6,686,603)
============= =============
Net loss per share attributable to
common shareholders $ 9,497.38 $ --
============= =============
</TABLE>
See accompanying notes to interim consolidated financial statements.
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PRIME SUCCESSION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
---- ----
SUCCESSOR PREDECESSOR
COMPANY COMPANY
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (949,738) $(6,582,686)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,170,132 2,136,482
Provision for doubtful accounts 176,367 290,273
Provision for deferred income taxes -- 44,896
Legal settlement -- 6,273,985
Changes in operating assets and liabilities
net of effects of acquisition of subsidiaries:
Receivables (1,089,661) 2,318,402
Inventories (780,272) (45,413)
Accounts payable and accrued expenses (2,486,103) 69,085
Deferred merchandise and revenue (net) 221,574 458,146
Other (1,047,602) (505,289)
----------- -----------
Net cash provided by (used in) operating activities (2,785,303) 4,457,881
----------- -----------
Cash flows from investing activities:
Proceeds from the disposal of assets 27,956 102,500
Purchases of property and equipment (498,571) (327,175)
Net cash paid for purchase of business (506,542) (675,000)
----------- -----------
Net cash used in investing activities (977,157) (899,675)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt -- 618,000
Proceeds from short-term debt 3,000,000 --
Payments on long-term debt (3,570,875) (1,563,558)
Payments on obligations under agreements with former owners (1,541,234) (551,043)
Decrease in restricted cash 3,886,337 --
----------- -----------
Net cash provided by (used in) financing activities 1,774,228 (1,496,601)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,988,232) 2,061,605
Cash and cash equivalents at beginning of period 2,985,704 766,349
----------- ------------
Cash and cash equivalents at end of period $ 997,472 $ 2,827,954
=========== ============
</TABLE>
See accompanying notes to interim consolidated financial statements.
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PRIME SUCCESSION, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) On August 26, 1996, Prime Succession, Inc.'s (Predecessor Company) capital
stock was purchased (the Acquisition) by Blackstone Capital Partners II
Merchant Banking Fund L.P. and affiliates, Loewen Group International,
Inc. and PSI Management Direct L.P. A new entity, Prime Succession, Inc.
(Successor Company), was formed and became a wholly-owned subsidiary of
the Predecessor Company. In connection with the Acquisition, all of the
assets and liabilities of the Predecessor Company were transferred to the
Successor Company. Collectively, the Predecessor Company and Successor
Company are herein referred to as "the Company". Since purchase accounting
was reflected in the opening balance sheet of the Successor Company on
August 26, 1996, the financial statements of the Successor Company are not
comparable to the financial statements of the Predecessor Company.
Accordingly, a vertical black line is shown to separate the Successor
Company financial statements from those of the Predecessor Company for the
periods ended prior to August 26, 1996.
(2) Footnote disclosure which would substantially duplicate the disclosure
contained in the Annual Report on Form 10-K for the year ended December
31, 1996 has not been included. The unaudited interim consolidated
financial statements reflect all adjustments which, in the opinion of
management, are necessary to reflect a fair statement of the results for
the periods presented and to present fairly the consolidated financial
position of Prime Succession, Inc. and subsidiaries as of March 31, 1997.
All such adjustments are of a normal recurring nature.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The Company is an operator of funeral homes and cemeteries in the
United States. The Company owns 144 funeral homes and 18 cemeteries in 19
states as of May 13, 1997. The Company commenced operations in 1992 and
expanded rapidly through the aggressive acquisition of funeral homes and
cemeteries, primarily in non-urban areas of the United States. The Company's
consolidated revenues and operating income were approximately $24.2 million and
$5.1 million, respectively, for the quarter ended March 31, 1997. Sales of
funeral services and cemetery sales accounted for approximately 80% and 20%,
respectively, of total net sales for the quarter ended March 31, 1997.
The Company had no funeral homes when it began operations in 1992 and
grew to 146 funeral homes in 1996. In order to achieve this rapid growth,
former management was primarily focused on identifying funeral homes to be
acquired and consummating acquisitions of such homes rather than on maximizing
profitability of the funeral homes and cemeteries which it had acquired. As a
result, former management did not take advantage of certain opportunities to
improve the efficiency and performance of the funeral homes acquired by the
Company. New Management intends to substantially eliminate the Company's
acquisition program. In addition, in order to improve the Company's present
and long-term operating performance, new Management intends to take advantage
of (i) the quality and size of the Company's portfolio of properties, (ii) the
opportunity to operate more efficiently those properties located in close
proximity to one another, (iii) the shift in focus from acquisitions to profit
maximization at existing locations and (iv) the benefits at both local sites
and the corporate headquarters from an Administrative Services Agreement with
Loewen Group International, Inc. The Company's future results of operations
will depend largely upon the ability of Management to successfully implement
its business strategy.
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<PAGE> 9
RESULTS OF OPERATIONS
The Company's operations are detailed below for the three months ended
March 31, 1997 (Successor Company) and the corresponding period in the prior
year (Predecessor Company) expressed in dollar amounts as well as relevant
percentages. Revenue, gross margin, earnings (loss) from operations and
expenses other than income taxes are presented as a percentage of revenue.
Income taxes are presented as a percentage of losses before income taxes.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, March 31,
--------- ---------
1997 1996 1997 1996
---- ---- ---- ----
(millions of dollars) (percent)
--------------------- ---------
Successor Predecessor Successor Predecessor
Company Company Company Company
------- ------- ------- -------
<S> <C> <C> <C>
REVENUE
Funeral $19.5 $ 19.2 80.5% 85.3%
Cemetery 4.7 3.3 19.5 14.7
----- ------ ----- -----
Total 24.2 22.5 100.0% 100.0%
===== ====== ===== =====
GROSS MARGIN
Funeral $ 7.4 $ 6.7 37.9% 34.9%
Cemetery 1.3 0.8 27.7 24.2
----- ------
Total 8.7 7.5 36.0% 33.3%
EXPENSES
General and administrative 0.9 1.8 3.7% 8.0%
Cost of legal proceedings -- 6.3 -- 28.0
Depreciation and amortization 2.7 1.9 11.2 8.4
----- -------
EARNINGS (LOSS) FROM OPERATIONS 5.1 (2.5) 21.1 (11.1)
Interest on long-term debt 6.0 3.8 24.8 16.9
Other -- 0.1 -- --
Dividends on preferred securities -- 0.1 -- --
----- -------
LOSS BEFORE INCOME TAXES (0.9) (6.5) (3.7) (28.9)
Income taxes -- (0.2) -- (3.1)
----- -------
NET LOSS $(0.9) $ (6.7) (3.7)% (29.8)%
===== ======
</TABLE>
Consolidated revenues increased 7.6% to $24.2 million for the three months
ended March 31, 1997 compared to $22.5 million for the three months ended March
31, 1996. Funeral service revenues increased 1.6% to $19.5 million, and
cemetery revenues increased 42.4% to $4.7 million. Consolidated earnings from
operations increased to $5.1 million for the three months ended
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<PAGE> 10
March 31, 1997 from $3.8 million for the three months ended March 31, 1996
before the $6.3 million legal settlement with Jeffrey Gamble. Funeral
contribution margin was 37.9% and cemetery contribution margin was 27.6% for
the three months ended March 31, 1997 compared to 34.9% and 24.2%,
respectively, for the three months ended March 31, 1996. Contribution margin is
defined as funeral revenues or cemetery revenues, as the case may be, less
related cost of sales. On a same-store business, excluding 1996 acquisitions
and dispositions , total calls decreased by 457 from 5,682 calls for the three
months ended March 31, 1996 to 5,225 calls for the three months ended March 31,
1997. The average revenue per call increased by $371 from $3,344 for the three
months ended March 31, 1996 to $3,715 for the three months ended March 31,
1997. Cemetery revenues increased primarily due to increased pre-need sales
efforts in Alabama, Florida and Tennessee.
General and administrative expenses decreased to $0.9 million for the
three months ended March 31, 1997 from $1.8 million for the three months ended
March 31, 1996. As a percentage of consolidated revenue, general and
administrative expense decreased to 3.7% for the three months ended March 31,
1997 compared to 8.0% for the three months ended March 31, 1996. General and
administrative expenses decreased due to the elimination of Corporate
Development staff as well as the implementation of a more efficient area
management system. The majority of the Company's funeral service locations and
cemeteries are managed by area management in geographic clusters. The clusters
are established primarily in non-urban areas. The area manager has better day
to day management of the locations with reduced overhead and travel expenses.
The Company has also restructured its accounting and information systems
to be more effective and efficient. The Company has chosen Lawson Software, the
Web Enterprise Company, to provide software supporting a major systems upgrade
project underway at the Company that is expected to enable the Company to
connect all cluster operations with timely operating and financial information
in a cost effective manner. The Company intends to begin using this state of
the art financial package in the second quarter of 1997.
Depreciation and amortization increased $0.8 million to $2.7 million for
the three months ended March 31, 1997 compared to $1.9 million for the three
months ended March 31, 1996. The increase is due to purchase accounting entries
related to the Acquisition of the Company.
Interest on long-term debt increased by $2.2 million for the three months
ended March 31, 1997 compared to the three months ended March 31, 1996 as a
result of additional borrowings by the Company to finance the Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of cash have been funds
provided by operating activities, proceeds from additional long-term debt and,
prior to the Acquisition, capital contributions by the Company's then majority
shareholder.
As of March 31, 1997, the Company had a net working capital deficit of
$0.1 million and a current ratio of 0.99:1, compared to a net working capital
of $2.1 million and a current ratio of 1.09:1 as of December 31, 1996.
Under the Bank Revolving Facility (as defined below), the Company may
borrow up to $25.0 million for general corporate purposes until August 26,
2001. The loans thereunder bear interest at the Base Rate or the Adjusted
Eurodollar Rate, each as defined thereunder. There is a commitment fee of 0.5%
on the unused portion of the credit line. There were outstanding borrowings of
$3.0 million on the credit line as of March 31, 1997.
Net cash used in operating activities was $2.8 million for the three
months ended March 31, 1997, compared to net cash provided by operating
activities of $4.5 million for the same period in 1996, for a decrease of $7.3
million. The legal settlement of $6.3 million in the three months ended March
31, 1996 is the primary source of the decrease. The net increase of $3.4
million in accounts receivable is attributable to increased pre-need sales. The
increase of $0.8 million in inventories is attributable to the Company's
remerchandising of all of its selection rooms and cemetery inventory
development. Accounts payable and other operating liabilities decreased by a
total of $3.3 million. The net loss from operating activities was reduced by
$5.6 million as well as $0.9 million of increased non-cash adjustments for
depreciation and amortization of goodwill and deferred finance costs.
Net cash used in investing activities primarily relates to the purchase
and implementation of Lawson financial systems and routine capital improvements
to the Company's facilities. The Company also acquired two cemeteries in
January 1997 for $0.5 million.
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<PAGE> 11
Net cash provided by financing activities represents the release of $3.9
million in restricted cash that had been restricted pursuant to the Bank Credit
Facilities (as defined below) and $3.0 million in borrowings on the operating
line of credit. This was offset by the $1.5 million payment to satisfy certain
obligations under agreements with former owners of funeral homes and cemeteries
and other payments on long- term debt of $3.6 million.
Contemporaneously with the consummation of the acquisition (the
"Acquisition") of the Company's parent in August 1996, the Company entered into
senior secured amortization extended term loan facilities (the "Bank Term
Facility") in an aggregate principal amount of $90 million, the proceeds of
which were used to finance the Acquisition and related transaction costs, to
pre-fund certain capital expenditures and to refinance existing indebtedness of
the Company, and a senior secured revolving credit facility (the "Bank
Revolving Facility"; together with the Bank Term Facility, the "Bank Credit
Facilities") in an aggregate principal amount of up to $25 million, the
proceeds of which will be used for general corporate purposes and a portion of
which may be extended (as agreed upon) in the form of swing line loans or
letters of credit for the account of the Company. The Bank Term Facility will
mature on August 26, 2003 and the Bank Revolving Facility will mature on August
26, 2001. The Bank Term Facility is subject to amortization, subject to certain
conditions, in semi-annual installments in the amounts of $1 million in each of
the first three years after the anniversary of the closing date of the Bank
Term Facility (the "Bank Closing"); $4 million in the fourth year after the
Bank Closing; $9 million in the fifth year after the Bank Closing; $12.5
million in the sixth year after the Bank Closing and $61.5 million upon the
maturity of the Bank Term Facility. The Revolving Credit Facility is payable in
full at maturity, with no prior amortization.
All obligations under the Bank Credit Facilities and any interest rate
hedging agreements entered into with the lenders or their affiliates in
connection therewith are unconditionally guaranteed (the "Bank Guarantees")
jointly and severally, by Prime Succession Holdings, Inc., the Parent Company,
and each of the Company's existing and future domestic subsidiaries (the "Bank
Guarantors"). All obligations of the Company and the Bank Guarantors under the
Bank Credit Facilities and the Bank Guarantees are secured by first priority
security interests in all existing and future assets (other than real property
and vehicles covered by certificates of title) of the Company and the Bank
Guarantors. In addition, the Bank Credit Facilities are secured by a first
priority security interest in 100% of the capital stock of the Company and each
subsidiary thereof and all intercompany receivables.
In connection with the Acquisition, the Company also issued $100 million
of 10 3/4% Senior Subordinated Notes due 2004, which were exchanged in January
1997 for $100 million of 10 3/4% Senior Subordinated Notes due 2004 (the
"Notes") that were registered under the Securities Act of 1933. The Notes
mature on August 15, 2004. Interest on the Notes is payable semi-annually on
February 15 and August 15 at the annual rate of 10 3/4%. The Notes are
redeemable in cash at the option of the Company, in whole or in part, at any
time on or after August 15, 2000, at prices ranging from 105.375% with annual
reductions to 100% in 2003 plus accrued and unpaid interest, if any, to the
redemption date. The proceeds of the Notes were used, in part, to finance the
Acquisition.
The Company and its Subsidiaries are subject to certain restrictive
covenants contained in the Indenture relating to the Notes, including, but not
limited to, covenants imposing limitations on the incurrence of additional
indebtedness; certain payments, including dividends and investments; the
creation of liens; sales of assets and preferred stock; transactions with
interested persons; payment restrictions affecting subsidiaries; sale-leaseback
transactions; and mergers and consolidations. In addition, the Bank Credit
Facilities contain certain restrictive covenants that, among other things,
limit the ability of the Company and its subsidiaries to dispose of assets,
incur additional indebtedness, prepay other indebtedness, pay dividends or make
certain restricted payments, create liens on assets, engage in mergers or
acquisitions or enter into leases or transactions with affiliates.
As of March 31, 1997, the Company had $194.4 million of indebtedness
outstanding and $22 million of borrowing availability under the Bank Revolving
Facility. The Company believes that, based upon current levels of operations
and anticipated growth and availability under the Bank Revolving Facility, it
can adequately service its indebtedness. If the Company cannot generate
sufficient cash flow from operations or borrow under the Bank Revolving
Facility to meet such obligations, then the Company may be required to take
certain actions, including reducing capital expenditures, restructuring its
debt, selling assets or seeking additional equity in order to avoid an event of
default under the Bank Credit Facilities or the Indenture relating to the
Notes. There can be no assurance that such actions could be effected or would
be effective in allowing the Company to meet such obligations.
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<PAGE> 12
PART II
ITEM 5 - OTHER INFORMATION
FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q include
"forward-looking statements" as defined in Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical facts
included herein, including, without limitation, the statements under Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, plans to increase
revenues, reduce general and administrative expense and take advantage of
synergies, are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
it can give no assurance that such expectations will prove to be correct.
Important factors that could cause actual results to differ materially from the
Company's expectations ("Cautionary Statements") are disclosed herein,
including, without limitation, in conjunction with the forward-looking
statements included herein. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the Cautionary Statements.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
The Exhibits, as shown in the "Index of Exhibits", attached hereto as
pages 11 and 12, are filed as a part of this Report.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
PRIME SUCCESSION, INC.
/s/ MYLES S. CAIRNS
------------------------
Myles S. Cairns
Chief Financial Officer,
Secretary and Treasurer
May 13, 1997
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<PAGE> 13
INDEX OF EXHIBITS
(A) EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------ --------------------
3.1* Certificate of Incorporation of Blackhawk Acquisition Corp.
3.2* Certificate of Amendment of Certificate of Incorporation of
Blackhawk Acquisition Corp. changing its name to Prime Succession
Acquisition Corp.
3.3* Certificate of Amendment of Certificate of Incorporation of Prime
Succession Acquisition Corp. changing its name to Prime
Succession, Inc.
3.4* By-Laws of Prime Succession, Inc.
4.1* Indenture dated as of August 15, 1996 between Prime Succession
Acquisition Corp. and United States Trust Company of New York, as
Trustee
4.2* Form of 10 3/4% Senior Subordinated Note due 2004 (included in
Exhibit 4.1)
10.1(a)* Casket Supply Agreement, dated January 1, 1993, between Batesville
Casket Company, Inc. and Prime Succession, Inc.
10.1(b)* Amendment Agreement, dated August 1994, between Batesville Casket
Company, Inc. and Prime Succession, Inc. (with respect to Casket
Supply Agreement)
10.1(c)* Amendment 2, dated May 22, 1995, between Batesville Casket
Company, Inc. and Prime Succession, Inc. (with respect to Casket
Supply Agreement)
10.2* Stockholders' Agreement dated as of August 26, 1996 among Prime
Succession, Inc. (to be renamed Prime Succession Holdings, Inc.),
Blackstone Capital Partners II Merchant Banking Fund L.P.,
Blackstone Offshore Capital Partners II L.P., Blackstone Family
Investment Partnership II L.P., PSI Management Direct L.P. and
Loewen Group International, Inc.
10.3* Administrative Services Agreement dated as of August 26, 1996
between Prime Succession Acquisition Corp. (to be renamed Prime
Succession, Inc.) and Loewen Group International, Inc.
10.4* Credit Agreement dated as of August 26, 1996 among Prime
Succession, Inc. (to be renamed Prime Succession Holdings, Inc.),
Prime Succession Acquisition Corp. (to be renamed Prime
Succession, Inc.), Goldman, Sachs & Co., as syndication agent and
arranging agent, the financial institutions from time to time
parties thereto as lenders and The Bank of Nova Scotia, as
administrative agent for such lenders.
10.6* 10.5*Letter Agreement dated August 1, 1996 between Prime
Succession Acquisition Corp. (to be renamed Prime Succession,
Inc.) and Gary Wright.
10.6* Letter Agreement dated August 1, 1996 between Prime Succession
Acquisition Corp. (to be renamed Prime Succession, Inc.) and Myles
Cairns
10.7* Put/Call Agreement, dated as of August 26, 1996, among Blackstone
Capital Partners II Merchant Banking Fund L.P., Blackstone
Offshore Capital Partners II L.P., Blackstone Family Investment
Partnership II L.P., PSI Management Direct L.P., Loewen Group
International Inc. and the Loewen Group Inc.
10.8* Stock Purchase Agreement, dated as of June 14, 1996, by and among
Prime Succession, Inc., the individuals or entities listed on the
signature pages thereof, The Loewen Group Inc. and Blackhawk
Acquisition Corp.
-11-
<PAGE> 14
(A) EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------ --------------------
12 Computation of Ratio of Earnings to Fixed Charges
21* Subsidiaries of Prime Succession, Inc. (formerly known as Prime
Succession Acquisition Corp.)
27 Financial Data Schedule
* Incorporated by reference to the Exhibits to the Company's
Registration Statement on Form S-4 (Registration No. 333-14599).
(B) Reports on Form 8-K
None
-12-
<PAGE> 1
Exhibit 12
Prime Succession, Inc. and subsidiaries
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
1997 1996
---- ----
<S> <C> <C>
Ratio of Earnings to
Fixed Charges
Earnings:
Loss before income taxes (920) (6,396)
Add: Fixed charges, net 6,192 4,005
Income (loss) before income
taxes and fixed charges, net
5,272 (2,391)
Fixed Charges:
Total interest expense (1) 5,992 3,778
Interest factor in rents (2) 200 227
Total fixed charges 6,192 4,005
Ratio of earnings to fixed charges 0.85 (0.60)
Coverage deficiency (3) 920 6,396
<FN>
(1) Total interest expense for each period includes amortization of
loan costs. (1)
(2) Interest factor in rents represents one-third of rent expense,
which is considered (2) representative of the interest factor.
(3) The Company's earnings are inadequate to cover fixed charges for
all periods indicated above. (3) Coverage deficiency represents the
excess of fixed charges over income before income taxes and fixed
charges, net.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF PRIME SUCCESSION, INC.
AND SUBSIDIARIES, FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 997
<SECURITIES> 0
<RECEIVABLES> 15,594
<ALLOWANCES> 3,024
<INVENTORY> 4,635
<CURRENT-ASSETS> 19,608
<PP&E> 69,568
<DEPRECIATION> 1,326
<TOTAL-ASSETS> 393,469
<CURRENT-LIABILITIES> 19,755
<BONDS> 206,038
0
0
<COMMON> 0
<OTHER-SE> 129,554
<TOTAL-LIABILITY-AND-EQUITY> 393,469
<SALES> 24,195
<TOTAL-REVENUES> 24,195
<CGS> 15,514
<TOTAL-COSTS> 15,514
<OTHER-EXPENSES> 3,609
<LOSS-PROVISION> 176
<INTEREST-EXPENSE> 5,992
<INCOME-PRETAX> (920)
<INCOME-TAX> 29
<INCOME-CONTINUING> (950)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (950)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
