<PAGE>
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, 1998
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 333-21411
________________________________
ROSE HILLS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3915765
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3888 SOUTH WORKMAN MILL ROAD
WHITTIER, CALIFORNIA 90601
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(562) 692-1212
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
N/A
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
__________________
Indicate by check [X] 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 Common shares as of May 12, 1998, was 1,000.
<PAGE>
ROSE HILLS COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS
as of March 31, 1998 and December 31, 1997 1
CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three Months Ended March 31, 1998 and 1997 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Three Months Ended March 31, 1998 and 1997 3
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
for the Three Months Ended March 31, 1998 4
NOTES TO INTERIM 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 9
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES 9
INDEX OF EXHIBITS 10 - 11
EXHIBIT 27 12
</TABLE>
<PAGE>
ROSE HILLS COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND MARCH 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 3,462 $ 7,176
Accounts receivable, net of allowances 5,870 4,946
Inventory 875 889
Prepaid expenses and other current assets 2,299 2,726
Deferred tax asset 4,658 4,658
-------- --------
Total current assets 17,164 20,395
-------- --------
Long-term receivables, net of allowances 10,082 13,661
Cemetery property 76,778 76,022
Property, plant and equipment, net 64,101 63,940
Goodwill 128,200 127,350
Deferred finance charges 10,672 10,258
Other assets 5,101 5,091
-------- --------
Total assets $312,098 $316,717
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 2,052 $ 2,035
Accrued expenses 8,156 10,341
Accrued interest 1,291 3,195
Other current liabilities 1,459 1,029
Current portion of long-term debt 2,368 1,982
-------- --------
Total current liabilities 15,326 18,582
Retirement plan liabilities 7,389 7,289
Deferred tax liability 5,122 5,122
Subordinated notes payable 80,000 80,000
Bank senior term loan 72,500 72,500
Other long-term debt 2,415 2,461
Other liabilities 2,088 2,122
-------- --------
Total liabilities 184,840 188,076
-------- --------
Commitment and contingencies
Stockholder's equity:
Common stock par value $.01; 1,000 authorized; 1,000 shares outstanding
Additional paid in capital 129,554 129,554
Accumulated earnings (deficit) (2,296) (913)
-------- --------
Total stockholder's equity 127,258 128,641
-------- --------
Total liabilities and stockholder's equity $312,098 $316,717
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(1)
<PAGE>
ROSE HILLS COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------
1997 1998
------- -------
<S> <C> <C>
Sales and services:
Funeral sales and services $ 7,709 $ 8,381
Cemetery sales and services 8,702 12,012
Insurance commissions and other 1,573 2,285
------- -------
Total sales and services 17,984 22,678
------- -------
Cost of sales and services:
Funeral sales and services 1,503 1,282
Cemetery sales and services 1,192 2,459
------- -------
Total costs of sales and services 2,695 3,741
------- -------
Gross profit 15,289 18,937
Selling, general and administrative expenses 9,259 11,059
Amortization of purchase price in excess of
net assets acquired and other intangibles 1,116 958
------- -------
Income from operations 4,914 6,920
Other expense - Interest expense (3,933) (4,252)
------- -------
Income before income tax 981 2,668
Provision for income tax 471 1,285
------- -------
Net income $ 510 $ 1,383
======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(2)
<PAGE>
ROSE HILLS COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31 March 31
1997 1998
------- -------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 510 $ 1,383
------- -------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,893 2,114
Amortization of cemetery property 671 756
Provision for bad debts and sales cancellation 372 1,037
Loss on disposal of property, plant and equipment 0 13
Changes in assets and liabilities, net of effects of Acquisition Transaction:
Increase in accounts receivable (2,473) (3,692)
Decrease (increase) in inventories 22 (14)
Decrease (increase) in prepaid expenses and in other current assets 16 (427)
Increase in accounts payable and accrued expenses 20 4,072
Decrease in retirement plan liabilities (78) (100)
Net decrease in other assets and liabilities, net (162) (334)
------- -------
Total adjustments 281 3,425
------- -------
Net cash provided by operating activities 791 4,808
------- -------
Cash flows from investing activities:
Capital expenditures (631) (532)
------- -------
Net cash used in investing activities (631) (532)
------- -------
Cash flows from financing activities:
Repayments of borrowings under Bank Credit Agreement 0 (500)
Increase in other long-term debt (83) 0
Principal payments of capital lease obligations 0 (62)
------- -------
Net cash used in financing activities (83) (562)
------- -------
Net increase in cash and cash equivalents 77 3,714
Cash and cash equivalents at beginning of period 7,900 3,462
------- -------
Cash and cash equivalents at end of period $ 7,977 $ 7,176
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest paid $ 3,645 $ 3,774
Taxes paid 14 0
======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(3)
<PAGE>
ROSE HILLS COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARES OUTSTANDING)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
SHARES ADDITIONAL (ACCUMULATED STOCKHOLDER'S
OUTSTANDING PAID IN CAPITAL DEFICIT) EQUITY
----------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 1,000 129,554 (2,296) 127,258
Net income -- -- 1,383 1,383
----- ------- ------ -------
Balance, March 31, 1998 1,000 129,554 (913) 128,641
===== ======= ==== =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(4)
<PAGE>
ROSE HILLS COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying March 31, 1998 interim consolidated financial statements
of Rose Hills Company and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting. Accordingly, they do not include all of the information and footnote
disclosures necessary for complete financial statements in conformity with
generally accepted accounting principles. These unaudited consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended December 31, 1997.
In the opinion of management, the accompanying interim consolidated
financial statements contain all adjustments considered necessary for a fair
presentation of the financial condition as of March 31, 1998 and the results of
operations and cash flows for the three months ended March 31, 1998.
Earnings (loss) per share have not been included, as the Company is a
wholly-owned subsidiary of Rose Hills Holdings Corp. ("RH Holdings").
The Company was formed in 1996 for purposes of acquiring Roses, Inc. (the
"Mortuary" or "Roses") and purchasing certain assets and assuming certain
liabilities of Rose Hills Memorial Park Association and Workman Mill Investment
Company (the "Cemetery" or the "Association"). Also, in connection with the
acquisition one of RH Holdings' shareholders contributed 14 funeral homes and 2
funeral home cemetery combination properties. As a result of these acquisitions
(collectively "Acquisition Transaction"), the Company is the successor to the
operations of the predecessor Mortuary and Cemetery.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles (GAAP) and the prevailing practices within the
cemetery and mortuary industry. All significant intercompany accounts and
transactions have been eliminated.
Reclassification
Certain reclassifications have been made to the 1997 consolidated financial
statements to conform to the 1998 presentation.
2. SETTLEMENT AGREEMENT
In connection with the Acquisition Transaction, Roses entered into a
"Settlement Agreement" dated November 19, 1996 with the Association to resolve
amounts due/owed between Roses and the Association as of November 18, 1996. As
of March 31, 1998, the Company and the Association have not reached a final
agreement with respect to amounts owed under the terms of the Settlement
Agreement. However, in the opinion of management of the Company, amounts accrued
at March 31, 1998 are adequate to satisfy amounts that may be due the
Association.
(5)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Rose Hills Company (the "Company"), a Delaware corporation, is a wholly-owned
subsidiary of Rose Hills Holdings Corp. ("RH Holdings"). The Company was formed
in 1996 for purposes of acquiring Roses, Inc. (the "Mortuary") and purchasing
certain assets and assuming certain liabilities of Rose Hills Memorial Park
Association and Workman Mill Investment Company (the "Association" and the
assets and liabilities purchased therefrom, the "Cemetery"). Also, in
connection with the acquisition, a subsidiary of The Loewen Group, Inc. (The
Loewen Group, Inc. collectively with its affiliates, "Loewen"), a shareholder of
RH Holdings, contributed 14 funeral homes and 2 funeral home cemetery
combination properties (the "Satellite Properties"). As a result of these
acquisitions (collectively the "Acquisition Transaction"), the Company is the
successor to the operations of the predecessor Mortuary and Cemetery.
The Cemetery and the Mortuary (collectively, "Rose Hills") are located on the
grounds of the Cemetery, Rose Hills Memorial Park. Rose Hills is the largest
single location cemetery funeral home combination in the United States and the
Cemetery is the largest single location cemetery in the United States. Rose
Hills is situated less than 14 miles from downtown Los Angeles on approximately
1,418 acres of permitted cemetery land near Whittier, California. The Cemetery
and Mortuary have been continuously operating since 1914 and 1956, respectively.
As a result of the Acquisition Transaction the Company owns a strategic assembly
of cemeteries and funeral homes in the greater Los Angeles area.
RESULTS OF OPERATIONS
The following table sets forth certain income statement data as a percentage
of total sales for the Company.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1998
------ ------
<S> <C> <C>
Sales and services:
Funeral sales and services 42.9% 37.0%
Cemetery sales and services 48.4% 53.0%
Insurance commissions and other 8.7% 10.0%
Total sales and services 100.0% 100.0%
Gross profit:
Funeral sales and services 80.5% 84.7%
Cemetery sales and services 86.3% 79.5%
Insurance Commissions and Other 100.0% 100.0%
Total gross profit 85.0% 83.5%
Selling, general and administrative
expenses 51.5% 48.8%
Amortization 6.2% 4.2%
Interest expense 21.9% 18.7%
</TABLE>
QUARTER ENDED MARCH 31, 1998 COMPARED TO MARCH 31, 1997
Consolidated revenues for the quarter ended March 31, 1998 increased 26.1% to
$22.7 million from $18.0 million for the quarter ended March 31, 1997.
Consolidated gross profit increased 37.0% to $3.7 million from $2.7 million in
1997. As a percentage of revenue, consolidated gross margin percentage
decreased to 83.5% in 1998 from 85.0% in 1997.
Cemetery revenue for the quarter increased $3.3 million or 37.9% to 12.0
million. Pre-need cemetery property sales at Rose Hills increased by $2.3
million (69.6%) and pre-need cemetery merchandise and services were $1.3 million
greater than in the first quarter of 1997, a 150% increase. This increase in
pre-need sales was attributable to an increase in the number of products offered
on pre-need contracts and the addition of over 120 new sales counselors compared
to 1997. The number of interments increased by 4.5% over the prior year.
Overall cemetery gross margin percentage decreased to 79.5% from 86.3% in 1997
due to the increased proportion of cemetery merchandise and services with
associated lower gross margins. This sales mix shift is in line with the
Company's strategic plan, which calls for greater emphasis on sales of pre-need
cemetery merchandise and services.
(6)
<PAGE>
Funeral revenue increased to $8.4 million from $7.7 million, an increase of
9.1%. The number of total calls at Rose Hills Mortuary increased 3.0% from 1997
to 1,493. The Satellite Properties' total calls was down 1.5%. Offsetting the
decline in total calls was the increase in gross margin percentage on funeral
revenue.
Selling, general and administrative expenses increased to $11.1 million from
$9.3 million in 1997. An increase in sales commission expense of approximately
$1.1 million was the primary reason for this increase. As a percentage of total
sales, selling, general and administrative expenses was 48.8% compared to 51.1%
for the first quarter of 1997.
EBITDA, earnings before interest, taxes, depreciation and amortization
(including cemetery property amortization included in cost of sales), increased
to $9.3 million for the quarter ended March 31, 1998 from $7.4 million for the
quarter ended March 31, 1997. The increase was primarily a result of the
increase in pre-need sales and an increase in leverage of existing corporate
overhead. EBITDA should not be considered in isolation, as a substitute for net
income or cash flow data prepared in accordance with generally accepted
accounting principles or as a measure of a company's profitability or liquidity.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that, based upon current levels of operations and
anticipated growth and the availability of the Bank Revolving Facility (see
description below), it can meet working capital and short-term liquidity
requirements for current operations and to service its indebtedness. As of March
31, 1998 the Company had net working capital of $1.8 million and a current ratio
of 1.10 which approximates the same amounts and ratio at December 31, 1997.
Net cash provided by operating activities was $4.8 million for the three
months ended March 31, 1998, compared to net cash provided by operating
activities of $0.8 million for the same period in 1997.
The primary uses of cash will be principal payments on outstanding long-term
indebtedness and capital expenditures as permitted under the terms of bank
agreements. The Company estimates its current year capital expenditures of
approximately $4.5 million will be used primarily to develop and improve the
existing infrastructure and cemetery grounds, as well as the addition of rolling
stock.
Contemporaneously with the consummation of the Acquisition, the Company
entered into senior secured amortization extended term loan facilities (the
"Bank Term Facility") in an aggregate principal amount of $75 million, the
proceeds of which were used to finance the Acquisition Transaction 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") in an aggregate principal amount of up
to $25 million, the proceeds of which are available 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. In
addition, the Company has the right, subject to certain conditions to
performance tests, to increase the Bank Term Facility by up to $25.0. The Bank
Term Facility and the Bank Revolving Facility will mature on November 1, 2003.
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"); $3 million in the fourth year after the Bank
Closing; $7 million in the fifth year after the Bank Closing; $9 million in the
ninth year after the Bank Closing and $53 million upon 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, Rose Hills Holdings, Corp. and each of the Company's
existing and future domestic subsidiaries (the "Bank Guarantors"). All
obligations of the Company and the Bank Guarantees are secured by first priority
security interests in all existing and future assets (including real property
located at Rose Hill but excluding other 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 Transaction, the Company also issued $80
million of 9-1/2% Senior Subordinated Notes due 2004, which were exchanged in
September 1997 for $80 million of 9-1/2% Senior Subordinated Notes due 2004 (the
"Notes") that were registered under the Securities Act of 1933. The Notes
mature on November 15, 2004. Interest on the Notes is payable semi-annually on
May 15 and November 15 at the annual rate of 9-1/2%. The Notes are redeemable in
cash at the option of the Company, in whole or in part, at any time on or after
November 15, 2000, at prices ranging from 104.75% 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
Transaction.
(7)
<PAGE>
As a result of the Acquisition Transaction and the application of proceeds
therefrom, the Company's total outstanding indebtedness was approximately $153.5
million as of March 31, 1998. As of March 31, 1998, the Company also had $25.0
million of borrowing capacity available under the Bank Revolving Facility.
Management believes that, based upon current levels of operations and
anticipated growth and the 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, 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. There can
be no assurance that such actions could be effected or would be effective in
allowing the Company to meet such obligations.
The Company and its Subsidiaries are subject to certain restrictive covenants
contained in the indenture 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 (including the Exchange Notes), pay
dividends or make certain restricted payments, create liens on assets, engage in
mergers or acquisitions or enter into leases or transactions with affiliates. At
March 31, 1998 the company was in compliance with the terms of the indenture and
the bank audit facilities.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income". For the three month periods ended March 31, 1998 and
1997 the Company did not have any applicable comprehensive income.
In June 1997, the FASB issued FASB No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS 131 establishes standards for the way
public business enterprises are to report information about operating segments
in annual financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. Statement 131 uses
a "management approach" concept as the basis for identifying reportable
segments.
The management approach is based on the way that management organizes the
segments within the enterprise for making operating decisions and assessing
performance. Consequently, the segments are evident from the structure of the
enterprise's internal organization. Furthermore, the management approach
facilitates consistent descriptions of an enterprise in its annual report and
various other published information. It focuses on financial information that
an enterprise's decision makers use to make decisions about the enterprise's
operating matters.
Statement 131 is effective for financial statements for periods beginning
after December 15, 1997. Earlier application is encouraged. In the initial
year of application, comparative information for earlier years is to be
restated, unless it is impracticable to do so. Statement 131 need not be
applied to interim financial statements in the initial year of its application,
but comparative information for interim periods in the initial year of
application shall be reported in financial statements for interim periods in the
second year of application. Management has not determined the impact of SFAS
131 on its consolidated financial statements.
In February 1998, the FASB released SFAS No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits". The new statement is
effective for fiscal years beginning after December 15, 1997. Statement 132
need not be applied to interim financial statements. Management has not
determined the impact of SFAS132 on its consolidated financial statements.
YEAR 2000
The Year 2000 issue is the result of some computer programs being written
using two digits rather than four to represent calendar years. Such computer
programs may recognize a value of "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations.
The Company has committed personnel and resources to address potential Year
2000 issues both internally and with the Company's vendors and suppliers. The
Company is in the process of identifying and assessing its mission-critical
systems related to the issue. The Company plans to address Year 2000 issues in
sufficient time prior to the century rollover.
(8)
<PAGE>
The Company is currently assessing the cost to remediate its Year 2000
issues. Although the actual cost to remediate these issues is not yet fully
known, based upon information available to date, it is not expected that the
remediation will have a material impact on the Company's financial condition or
operating results.
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.
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
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.
ROSE HILLS COMPANY
/s/ KENTON C. WOODS
-------------------
Kenton C. Woods
Chief Financial Officer,
Secretary and Treasurer
May 13, 1998
(9)
<PAGE>
INDEX OF EXHIBITS
(a)
Exhibit
Number Description
- ------ -----------
2.1* __ Asset Purchase Agreement, dated as of September 19, 1996, by and
between and between Rose Hills Memorial Park Association and Tudor
Acquisition Corp. (now known as the Rose Hills Company).
2.2* __ Agreement and Plan of Merger, dated as of September 19, 1996, by and
among the Stockholders of Roses, Inc. And Tudor Acquisition Corp.
(now known as the Rose Hills Company).
2.3* __ Amendment to the Agreement and Plan of Merger dated as of November 18,
1996 by and among Rose Hills Acquisition Corp. (now known as Rose
Hills Company), Roses Inc., the Stockholders of Roses Inc., and RH
Mortuary Corporation.
3.1* __ Restated Certificate of Incorporation of Tudor Acquisition Corp.
changing its name to Rose Hills Acquisition Corp.
3.2* __ Certificate of Amendment of Certificate of Incorporation of Rose Hills
Acquisition Corp. changing its name to Rose Hills Company.
3.3* __ Amended and Restated By-Laws of Rose Hills Company.
4.1* __ Indenture dated as of November 15, 1996 between Rose Hills Acquisition
Corp. and United States Trust Company of New York, as Trustee.
4.2* __ Form of 9 1/2% Senior Subordinated Note due 2004 (included in Exhibit
10.1* __ Stockholders' Agreement dated as of November 19, 1996 among Rose Hills
Holdings Corp., Blackstone Capital Partners II Merchant Banking Fund
L.P., Blackstone Rose Hills Offshore Capital Partners L.P.,
Blackstone Family Investment Partnership II L.P., Roses Delaware,
Inc., Loewen Group International, Inc., and RHI Management Direct
L.P.
10.2* __ Administrative Services Agreement dated as of November 19, 1996
between Rose Hills Acquisition Corp. (now known as Rose Hills
Company), The Loewen Group, Inc., and Loewen Group International Inc.
10.3* __ Credit Agreement dated as of November 19, 1996 among Rose Hills
Company, Rose Hills Holdings Corp., 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.
10.4* __ Put/Call Agreement, dated as of November 19, 1996 among Blackstone
Capital Partners II Merchant Banking Fund L.P., Blackstone Rose Hills
Offshore Capital Partners L.P., Blackstone Family Investment
Partnership II L.P., Roses Delaware, Inc., Loewen Group
International, Inc., The Loewen Group Inc., and RHI Management Direct
L.P.
10.5** __ Buddhist Memorial Complex Development and Use Agreement dated as of
March 1, 1994 between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
10.6** __ First Amendment to Buddhist Memorial Complex Development and Use
Agreement, dated as of September 1, 1994 between Rose Hills Memorial
Park Association and International Buddhist Progress Society.
10.7** __ Second Amendment to Buddhist Memorial Complex Development and Use
Agreement, dated as of March 15, 1995 between Rose Hills Memorial
Park Association and International Buddhist Progress Society.
10.8** __ Third Amendment to Buddhist Memorial Complex Development and Use
Agreement, dated as of May 15, 1995 between Rose Hills Memorial Park
Association and International Buddhist Progress Society.
10.9** __ Fourth Amendment to Buddhist Memorial Complex Development and Use
Agreement, dated as of October 15, 1995 between Rose Hills Memorial
Park Association and International Buddhist Progress Society.
10.10**__ Memorandum of Understanding, dated as of March 22, 1996 between Rose
Hills Memorial Park Association and International Buddhist Progress
Society.
10.11**__ Amended and Restated Employment Agreement, 1996 by and dated
December between Rose Hills Company and Kendall E. Nungesser.
10.12**__ Employment Agreement dated November 19, 1996 by and between RH
Mortuary Corporation and Dennis C. Poulsen.
10.13**__ Employment Confirmation dated November 18, 1996 by and between Rose
Hills Company and Mark Helmintoller.
10.14**__ Employment Letter Agreement, dated April 22, 1997 by and between
Rose Hills Company and Kenton C. Woods.
10.15**__ Addendum to Employment Letter Agreement, dated April 28, 1997 by and
between Rose Hills Company and Kenton C. Woods.
10.16**__ Non-Competition Agreement dated as of November 19, 1996, between RH
Mortuary Corporation and Kendall E. Nungesser.
10.17**__ Non-Competition Agreement dated as of November 19, 1996 between RH
Mortuary Corporation and Dennis C. Poulsen.
10.18**__ Non-Competition Agreement dated as of November 19, 1996 between RH
Mortuary Corporation and Sandy V. Durko.
21* __ Subsidiaries of Rose Hills Company (formerly known as Rose Hills
Acquisition Corp.).
27*** __ Financial Data Schedule
<PAGE>
Exhibit
Number Description
- ------ -----------
(b) Reports on Form 8-K
None
________________
*Incorporated by reference to the Exhibits to the Company's Registration
Statement on Form S-4 (Registration No. 333-21411).
**Incorporated by reference to the Exhibits to the Company's Registration
Statement on Form S-4 (Registration No. 333-21411 Amendment No. 1).
***Filed Herewith.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF ROSE HILLS COMPANY AND
SUBSIDIARIES, FOR THE THREE MONTHS ENDED MARCH 31, 1998 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,176
<SECURITIES> 0
<RECEIVABLES> 4,946
<ALLOWANCES> 0
<INVENTORY> 889
<CURRENT-ASSETS> 20,395
<PP&E> 63,940
<DEPRECIATION> 0
<TOTAL-ASSETS> 316,717
<CURRENT-LIABILITIES> 18,582
<BONDS> 80,000
0
0
<COMMON> 0
<OTHER-SE> 129,554
<TOTAL-LIABILITY-AND-EQUITY> 316,717
<SALES> 22,678
<TOTAL-REVENUES> 22,678
<CGS> 3,741
<TOTAL-COSTS> 3,741
<OTHER-EXPENSES> 12,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,252
<INCOME-PRETAX> 2,668
<INCOME-TAX> 1,285
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,383
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
