Alderwoods Group, Inc.

Alderwoods Group, Inc.

March 28, 2005 17:03 ET

Alderwoods Group Reports Fourth Quarter And Year-End Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: ALDERWOODS GROUP, INC.

NASDAQ SYMBOL: AWGI

MARCH 28, 2005 - 17:03 ET

Alderwoods Group Reports Fourth Quarter And Year-End
Results

CINCINNATI, OHIO--(CCNMatthews - March 28, 2005) -

Significant Progress in 2004: Reduced Debt by $167 Million, Refinanced
Debt and Divested 120 Non-Strategic Properties

Alderwoods Group, Inc. (NASDAQ:AWGI) today announced its fourth quarter
and year-end results, representing the 12 weeks and 52 weeks ended
January 1, 2005.

The Company reported total net income of $9.3 million, or $0.23 basic
and diluted earnings per share, on revenues of $716.8 million, for the
52 weeks ended January 1, 2005, compared with total net income of $10.8
million, or $0.27 basic and diluted earnings per share, on revenues of
$720.3 million, for the 53 weeks ended January 3, 2004.

From continuing operations, the Company reported a total net loss of
$3.8 million, or $0.09 basic and diluted loss per share, for fiscal
2004, compared with net income of $9.2 million, or $0.23 basic and
diluted earnings per share, for fiscal 2003.

Included in the total net loss for fiscal 2004 were $30.7 million in
costs associated with the Company's refinancing of long-term debt.

Highlights of Fiscal 2004 from Continuing Operations

- Total revenue declined 0.5% to $716.8 million

- Total funeral services performed for the year were 117,525, a decline
of 7,273 or 5.8%

- Average revenue per funeral increased 2.2% to $4,024

- Cemetery revenue declined 2.3% to $163.7 million

- Insurance revenue increased 31.1% to $80.1 million

- Pre-need funeral contracts written increased 8.9% to $179.5 million

- Pre-need cemetery contracts written increased 4.7% to $86.8 million

- Total debt reduced by $167.3 million

Highlights of Fiscal 2004 from Continuing Operations, After Adjusting
for the Effect of the 53rd Week in Fiscal 2003

- Total revenue increased 1.5% to $716.8 million

- Total funeral services performed for the year declined by 4,852 or 4.0%

- Cemetery revenue declined 0.2% to $163.7 million

- Insurance revenue increased 33.6% to $80.1 million

- Pre-need funeral contracts written increased 11.0% to $179.5 million

- Pre-need cemetery contracts written increased 6.9% to $86.8 million

"During 2004, we made excellent progress on our objective of continuing
to strengthen our balance sheet," said Mr. Paul Houston, President and
CEO of Alderwoods Group. "We paid down significant levels of debt and
refinanced substantially all of our long-term debt at lower interest
rates. There were costs associated with this refinancing, but by
reducing interest expense, Alderwoods Group has gained significant
financial flexibility going forward. In 2005, our focus will be to apply
our interest savings to generating value for our Company and for our
stakeholders."

Mr. Houston continued, "While holding our expenses in line, we achieved
year-over-year growth in the average revenue per funeral service
performed, which partially offset the lower number of funeral services
performed this year. We believe the decline in our funeral services was
the result of a lower than expected death rate in certain markets which
affected parts of our network. Our results were also impacted by a very
strong flu season in December 2003 which did not reoccur in 2004. In
2005, we will increase our efforts to generate funeral call growth at
each of our locations."

Significant Activities in 2004

Refinanced long-term debt to reduce interest expense: In 2004,
Alderwoods Group reduced its long-term debt by $167.3 million and
successfully completed the refinancing of substantially all of its
long-term debt, thereby significantly reducing interest expense going
forward. As at January 1, 2005, long-term debt outstanding stood at
$463.6 million, a reduction of $367.6 million since the Company emerged
on January 2, 2002. Costs related to the long-term debt refinancing in
fiscal 2004 amounted to $30.7 million and are included in interest
expense for the 52 weeks ended January 1, 2005. At the end of fiscal
2004, cash on hand was $9.4 million.

Increased focus on strategic markets: The Company substantially
completed its program of divesting non-strategic assets, selling 52
funeral homes, 67 cemeteries and one combination location and applied
most of the $32.4 million resulting from these sales towards debt
reduction. The Company also completed the sale of Security Plan Life
Insurance, a non-strategic subsidiary, for $85 million. After payment of
applicable taxes and expenses and the recapitalization of Mayflower Life
Insurance Company, $65 million of the proceeds were used to reduce
long-term debt. In 2004, Alderwoods Group continued to develop
properties in strategic markets with a focus on combination locations
and funeral homes. The Company plans to advance its development program
with the building of additional properties in 2005.

Positioned for future growth: In late 2004, Alderwoods Group realigned
its field management structure in order to make more time available for
market managers to spend at locations coaching and training employees to
further improve service to families and increase the levels of community
involvement to help drive the number of funeral services performed. The
Company also created the new position of Senior Vice President of
Advance Planning, to improve the effectiveness of its sales organization
and increase its focus on growing the Company's pre-need funeral and
cemetery backlog.

Investing in Growth Strategies in 2005

In Fiscal 2005, Alderwoods Group will spend an additional $7-10 million
in programs to position the Company's operations to generate future
growth.

The spending will be directed towards:

- New recruitment programs to support field operations and the sales
organization and help the Company attract the best personnel for its
performance-based culture;

- Additional training programs to provide all new and existing staff
with the tools they require to fulfill their roles;

- The realignment of the Company's field management structure;

- Increased advertising and promotional programs to build local
awareness of the Company's brand and product and service offerings and
to generate pre-need sales leads; and

- Additional incremental amounts for the upkeep of facilities to ensure
they meet the needs of all the families served.

The Company also plans to continue to invest capital in the rollout of
Alderwoods Rooms across its network of funeral homes. Alderwoods Group
expects to build 110 rooms in 2005 in addition to the 234 that were
implemented as of January 1, 2005.

Mr. Paul Houston, President and CEO of Alderwoods Group, said, "Our
achievements in the areas of debt reduction, debt refinancing and the
sales of non-strategic assets have created opportunities for us to now
invest in strategies that we believe will support and drive future
growth for Alderwoods Group. In 2005, we look forward to a year of
intense focus on growing calls through the execution of these
strategies."

Discontinued Operations and Assets Held for Sale

Over the past several years, Alderwoods Group engaged in a strategic
market assessment to identify operating assets that did not fit into the
Company's market or business strategies. As a result of this assessment,
a significant number of properties have been identified as assets held
for sale and then subsequently sold.

In Fiscal 2004, the Company sold 52 funeral homes, 67 cemeteries and one
combination location in North America. Gross proceeds of these
dispositions were $32.4 million.

As of January 1, 2005, the Company holds for sale 18 funeral homes, six
cemeteries and four combination properties. All of these sites, with the
exception of one site, are under contract of sale. The Company expects
to complete the sale of these properties by mid-year 2005.

The Company now believes that the identification of non-strategic
businesses for disposal is substantially complete. However, the Company
will continue to evaluate its assets, from time to time, with the intent
of acquiring and disposing of locations in order to optimize the
Company's assets.

Upon completion of the disposal of the properties identified for sale,
the Company will operate 630 funeral homes, 73 cemeteries and 59
combination properties.

Financial Summary 12 Weeks Ended January 1, 2005

Overview

For the 12 weeks ended January 1, 2005, total net income was $24.4
million, an increase of $10.0 million compared to net income of $10.4
million for the 13 weeks ended January 3, 2004. Basic and diluted
earnings per share were $0.60 for the 12 weeks ended January 1, 2005
compared to basic and diluted earnings per share of $0.26 in the
year-ago period.

Certain information provided below has been adjusted for the 13th week
included in the fourth quarter of 2003 which was estimated by
calculating the weekly average of the 13 weeks ended January 3, 2004.
The Company believes that the discussion below regarding the 13th week
facilitates comparability of fiscal period results.

Continuing Operations

Total revenue for the 12 weeks ended January 1, 2005, was $167.1 million
compared to $186.8 million for the 13 weeks ended January 3, 2004, a
decrease of $19.7 million, or 10.6%. The decrease in total revenue was
largely the result of an extra week being included in the prior period
results. In addition there were decreases in funeral and cemetery
revenue, partially offset by an increase in insurance revenue.

Funeral revenue was $108.9 million for the 12 weeks ended January 1,
2005, down $16.9 million compared to $125.8 million for the 13 weeks
ended January 3, 2004. After adjusting for the effect of the 13th week
in the prior period, funeral revenue decreased by $7.2 million or 6.2%.
The decrease was largely due to a 7.3% decrease in funeral services
performed, adjusted for the effect of the 13th week in the prior period.
Average funeral revenue per service was $4,044 for the 12 weeks ended
January 1, 2005, a 1.2% increase from $3,997 in the year-ago-period.

Funeral gross margin was 17.7% for the 12 weeks ended January 1, 2005,
compared to 24.7% for the 13 weeks ended January 3, 2004. The decrease
was primarily due to the decrease in funeral revenue. In the prior
period there was a $2.8 million reduction in the allowance for funeral
accounts receivable, which added 2.2% to the gross margin.

Cemetery revenue for the 12 weeks ended January 1, 2005, was $40.2
million, $5.9 million lower than $46.1 million for the 13 weeks ended
January 3, 2004. After adjusting for the effect of the extra 13th week
in the prior period cemetery revenue decreased by $2.3 million. For the
13 weeks ended January 3, 2004 there was an adjustment of $3.9 million
to cemetery cancellation allowances which increased revenue and gross
margin. After adjusting for this item, cemetery revenue for the 12 weeks
ended January 1, 2005 increased by $1.6 million or 4.1%.

Cemetery gross margin was 18.7% for the 12 weeks ended January 1, 2005,
compared to 29.3% for the 13 weeks ended January 3, 2004. After
factoring in the effect of the $3.9 million adjustment noted above the
gross margin was 22.7% for the 13 weeks ended January 3, 2004.

Insurance revenue was $18.0 million for the 12 weeks ended January 1,
2005, compared to $14.9 million for the 13 weeks ended January 3, 2004.
Insurance revenue increased due to higher premium income. Insurance
gross margin increased to 9.6% for the 12 weeks ended January 1, 2005,
compared to 2.7% for the 13 weeks ended January 3, 2004, primarily as a
result of the revenue increase.

General and administrative expenses totaled $15.1 million for the 12
weeks ended January 1, 2005 compared to $23.9 million for the 13 weeks
ended January 3, 2004. The prior period amount included a $6.0 million
reserve taken against a receivable that arose from a disposition of
assets in 2001.

For the 12 weeks ended January 1, 2005, interest expense was $7.3
million, a decrease of $4.1 million or 36.0%, compared to the 13 weeks
ended January 3, 2004. The Company undertook a series of debt
refinancings in 2003 and 2004, resulting in lower effective interest
rates, and made significant debt repayments during these years.

For the 12 weeks ended January 1, 2005, net income tax benefit was $3.0
million, compared to net income tax expense of $1.6 million for the 13
weeks ended January 3, 2004. The effective tax rate varied from the
statutory tax rate, primarily because the Company was not able to fully
realize the income tax benefit associated with the refinancing of long
term debt. In addition, the losses incurred in certain jurisdictions did
not offset the tax expenses in profitable jurisdictions.

Net income from continuing operations was $10.0 million, or $0.25 basic
and diluted earnings per share, for the 12 weeks ended January 1, 2005,
compared to net income of $4.4 million, or $0.11 basic and diluted
earnings per share, for the 13 weeks ended January 3, 2004.

Pre-need funeral and cemetery contracts written during the 12 weeks
ended January 1, 2005, totaled $42.2 million and $21.4 million,
respectively. For the 13 weeks ended January 3, 2004, pre-need funeral
and cemetery contracts written totaled $38.7 million and $21.7 million,
respectively. The Company is continuing its program to increase pre-need
sales. The Company believes that pre-need sales are an important part of
building the foundation for future revenue.

Discontinued Operations

The Company has classified all the locations identified for disposal as
assets held for sale in the consolidated balance sheets and recorded any
related operating results, long-lived asset impairment provisions, and
gains or losses recorded on disposition as income from discontinued
operations. The Company has reclassified prior periods to reflect any
comparative amounts on a similar basis.

For the 12 weeks ended January 1, 2005, income from discontinued
operations, net of tax, was $14.4 million, or $0.35 basic and diluted
earnings per share, which included $9.9 million of pre-tax gains on
disposals and $8.1 million of impairment reversals due to withdrawals of
excess funds from trusts in locations held for sale.

Financial Summary 52 Weeks Ended January 1, 2005

Overview

For the 52 weeks ended January 1, 2005, total net income was $9.3
million, a decrease of $1.5 million compared to net income of $10.8
million for the 53 weeks ended January 3, 2004. Basic and diluted
earnings per share were $0.23 for the 52 weeks ended January 1, 2005
compared to basic and diluted earnings per share of $0.27 for the 53
weeks ended January 3, 2004.

Certain information provided below has been adjusted for the 53rd week
included in 2003 which was estimated by calculating the weekly average
of the 13 weeks ended January 3, 2004. The Company believes that the
discussion below regarding the 53rd week facilitates comparability of
fiscal period results.

Continuing Operations

Total revenue for the 52 weeks ended January 1, 2005, was $716.8 million
compared to $720.3 million for the 53 weeks ended January 3, 2004, a
decrease of $3.5 million, or 0.5%. The decrease in total revenue was the
result of an extra week being included in the prior year results.

Funeral revenue was $473.0 million for the 52 weeks ended January 1,
2005, down $18.6 million compared to $491.6 million for the 53 weeks
ended January 3, 2004. After adjusting for the effect of the 53rd week
in the prior year, funeral revenue decreased by $8.9 million or 1.8%.
The decrease in funeral revenue was due to a 4.0% decrease in the number
of funeral services performed, adjusted for the effect of the 53rd week
in the prior year. This decrease was partially offset by a 2.2% increase
in average funeral revenue per service, which was $4,024, for the 52
weeks ended January 1, 2005, compared to $3,939 in the prior year.

Funeral gross margin decreased to 20.4% for the 52 weeks ended January
1, 2005, from 23.1% for the 53 weeks ended January 3, 2004. The decrease
in gross margin was primarily due to the decrease in funeral revenue.

Cemetery revenue was $163.7 million for the 52 weeks ended January 1,
2005, down $3.8 million or 2.3% compared to $167.5 million for the 53
weeks ended January 3, 2004. After adjusting for the effect of the 53rd
week, cemetery revenue in 2004 was $0.3 million or $0.2% lower than in
the prior year. In 2003, the Company recorded a one-time $3.9 million
increase in cemetery revenue due to a reversed estimate of accrued
perpetual care liabilities.

Cemetery gross margin was 14.5% for the 52 weeks ended January 1, 2005,
compared to 17.2% for the 53 weeks ended January 3, 2004. After
adjusting the prior year for the impact of the perpetual care accrual
adjustment, cemetery gross margins were 15.2% in the prior year.

Insurance revenue was $80.1 million for the 52 weeks ended January 1,
2005, an increase of 31.1% compared to $61.1 million for the 53 weeks
ended January 3, 2004. The increase is primarily due to higher premium
income as a result of the Company's subsidiary, Rose Hills, beginning to
sell the Company's insurance products.

Insurance gross margin increased to 5.9% for the 52 weeks ended January
1, 2005, compared to 2.9% in 2003 as a result of the revenue increase.

General and administrative expenses totaled $51.2 million for the 52
weeks ended January 1, 2005 compared to $56.3 million in the prior year.
There were a number of one-time adjustments to general and
administrative expenses in both years. Overall, general and
administrative expenses decreased on a comparative basis.

For the 52 weeks ended January 1, 2005, interest expense was $78.1
million, an increase of $1.6 million compared to the 53 weeks ended
January 3, 2004. The Company undertook a series of debt refinancings in
2003 and 2004, resulting in lower effective interest rates, and made
significant debt repayments during these years. However, in 2004 the
Company recorded costs of $30.7 million associated with the refinancing
of long-term debt, which is included in interest expense for the year.

For the 52 weeks ended January 1, 2005, net income tax benefit was $1.5
million, compared to a net income tax benefit of $6.5 million for the 53
weeks ended January 3, 2004. In 2004, the effective tax rate varied from
the statutory rate primarily because losses incurred in certain
jurisdictions did not offset the tax expenses in profitable
jurisdictions and because the Company was not able to fully realize the
income tax benefit associated with the refinancing of its long-term
debt. The income tax benefit for the 53 weeks ended January 3, 2004
arose due to a $9.7 million favorable settlement of a federal income tax
audit.

For the 52 weeks ended January 1, 2005, net loss from continuing
operations was $3.8 million, or $0.09 basic and diluted loss per share,
compared to net income of $9.2 million, or $0.23 basic and diluted
earnings per share for the 53 weeks ended January 3, 2004.

Pre-need funeral and cemetery contracts written during the 52 weeks
ended January 1, 2005, totaled $179.5 million and $86.8 million,
respectively. For the 53 weeks ended January 3, 2004, pre-need funeral
and cemetery contracts written totaled $164.8 million and $82.9 million,
respectively. The Company is continuing its program to increase pre-need
sales. The Company believes that pre-need sales are an important part of
building the foundation for future revenue.

Discontinued Operations

The Company has classified all the locations identified for disposal as
assets held for sale in the consolidated balance sheets and recorded any
related operating results, long-lived asset impairment provision, and
gains or losses recorded on disposition as income from discontinued
operations. The Company has reclassified prior periods to reflect any
comparative amounts on a similar basis.

For the 52 weeks ended January 1, 2005, income from discontinued
operations, net of tax, was $13.1 million, or $0.32 basic and diluted
loss per share, which included $27.5 million of pre-tax disposal gains,
and a pre-tax long-lived asset impairment provision of $15.2 million.

Internal Control over Financial Reporting

The Company is in the process of completing its evaluation of the
effectiveness of its internal control over financial reporting in order
to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act,
which requires management assessment of the effectiveness of the
Company's internal control over financial reporting as of the end of its
most recent fiscal year. As permitted by the SEC's exemptive order dated
November 30, 2004 (Release No. 50754), the Company expects to complete
its evaluation of the effectiveness of its internal control over
financial reporting on or before May 2, 2005, and will include the
results of such evaluation in an amendment to its Annual Report on Form
10-K, which amendment will be filed with the SEC.

As reported on March 15, 2005, management has identified a material
weakness in the Company's internal control over financial reporting as
of January 1, 2005. The material weakness identified relates to
limitations in the capacity of the Company's accounting and tax
resources to identify and react in a timely manner to new accounting
pronouncements and non-routine business transactions. The Company has
made or is planning to make a number of changes to remediate this
material weakness.

As a result of this material weakness, management will not be able to
conclude that the Company's internal control over financial reporting is
effective as of January 1, 2005, and the Company expects that its
independent auditors will issue an adverse opinion with respect to
internal control over financial reporting. As the Company has not
completed the evaluation of all its deficiencies, it is possible that
additional deficiencies identified could be determined to be
individually or in the aggregate a material weakness.

Company Overview

Alderwoods Group is the second largest operator of funeral homes and
cemeteries in North America, based upon total revenue and number of
locations. As of January 1, 2005, the Company operated 648 funeral
homes, 79 cemeteries and 63 combination funeral home and cemetery
locations throughout North America. Of the Company's total locations, 18
funeral homes, six cemeteries and four combination funeral home and
cemetery locations were held for sale as of January 1, 2005. The Company
provides funeral and cemetery services and products on both an at-need
and pre-need basis. In support of the pre-need business, the Company
operates insurance subsidiaries that provide customers with a funding
mechanism for the pre-arrangement of funerals.

For more information about the Company's results, readers are directed
to the Company's Form 10-K for the year ended January 1, 2005, which
will be filed with the United States Securities and Exchange Commission
(SEC) on March 28, 2005, and will be available in PDF format through the
Company's website (www.alderwoods.com).

Basis of Presentation

The Company's financial results discussed in this media release are
presented in U.S. dollars, and all accounting information is presented
on the basis of United States generally accepted accounting principles.

The Company's fiscal year ends on the Saturday nearest to the last day
of December in each year (whether before or after such date). During
2004, the Company's first, second and fourth fiscal quarters each
consisted of 12 weeks and the third fiscal quarter consisted of 16
weeks. The fourth fiscal quarter of 2004 ended on January 1, 2005.

Forward Looking Statements

Certain statements contained in this press release, including, but not
limited to, information regarding the status and progress of the
Company's operating activities, the plans and objectives of the
Company's management, assumptions regarding the Company's future
performance and plans, and any financial guidance provided, as well as
certain information in other filings with the SEC and elsewhere are
forward-looking statements within the meaning of Section 27A(i) of the
Securities Act of 1933 and Section 21E(i) of the Securities Exchange Act
of 1934. The words "believe," "may," "will," "estimate," "continues,"
"anticipate," "intend," "expect" and similar expressions identify these
forward-looking statements. These forward-looking statements are made
subject to certain risks and uncertainties that could cause actual
results to differ materially from those stated, including the following:
uncertainties associated with future revenue and revenue growth; the
impact of the Company's significant leverage on its operating plans; the
ability of the Company to service its debt; the Company's ability to
attract, train and retain an adequate number of sales people;
uncertainties associated with the volume and timing of pre-need sales of
funeral and cemetery services and products; variances in death rates;
variances in the use of cremation; and various other uncertainties
associated with the funeral service industry and the Company's
operations in particular, which are referred to in the Company's
periodic reports filed with the SEC, especially under the heading
"Forward looking Statements and Risk factors". The Company undertakes no
obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events.

Conference Call

Alderwoods Group will host a conference call tomorrow morning, March 29,
2005, at 11:00 a.m. eastern time. A question and answer session will
follow brief remarks by Paul Houston, President and CEO and Ken Sloan,
Executive Vice President and Chief Financial Officer. The toll-free
conference dial-in number for U.S. and Canadian listeners is
800.640.7112 and for local or international participants is
416.620.2419. Interested parties may listen to the audio webcast via the
Alderwoods Group website at http://www.alderwoods.com. A telephone
replay will be accessible until midnight on April 12, 2005, by dialing
800.558.5253 or 416.626.4100 and quoting reservation number 21236588. An
archived replay of the webcast will also be available through the
Alderwoods Group website at http://www.alderwoods.com.




ALDERWOODS GROUP, INC.

Consolidated Statements of Operations
Expressed in thousands of dollars except per share amounts and number
of shares

12 Weeks 13 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
---------- --------- --------- ---------
January 1, January 3 January 1, January 3
2005 2004 2005 2004
---------- ---------- --------- ---------
(Unaudited)(Unaudited)

Revenue
Funeral $ 108,891 $ 125,821 $ 472,935 $ 491,612
Cemetery 40,192 46,070 163,731 167,542
Insurance 18,020 14,926 80,124 61,127
---------- --------- --------- ---------
167,103 186,817 716,790 720,281
---------- --------- --------- ---------
Costs and expenses
Funeral 89,646 94,693 376,646 378,195
Cemetery 32,667 32,588 139,919 138,767
Insurance 16,292 14,525 75,415 59,375
---------- --------- --------- ---------
138,605 141,806 591,980 576,337
---------- --------- --------- ---------
28,498 45,011 124,810 143,944

General and
administrative expenses 15,053 23,887 51,218 56,281
Provision for asset
impairment 989 50 1,922 4,395
---------- --------- --------- ---------
Income from operations 12,456 21,074 71,670 83,268
Interest on long-term
debt and refinancing
costs 7,316 11,427 78,079 76,453
Other expense
(income), net (1,815) 3,660 (1,163) 4,056
---------- --------- --------- ---------
Income (loss) before
income taxes 6,955 5,987 (5,246) 2,759
Income taxes (3,046) 1,562 (1,453) (6,485)
---------- --------- --------- ---------
Net income (loss) from
continuing operations 10,001 4,425 (3,793) 9,244
Discontinued operations
Income from discontinued
operations 14,350 8,520 19,630 5,985
Income taxes (15) 2,526 6,488 4,422
---------- --------- --------- ---------
Income from discontinued
operations 14,365 5,994 13,142 1,563
---------- --------- --------- ---------
Net income $ 24,366 $ 10,419 $ 9,349 $ 10,807
---------- --------- --------- ---------
---------- --------- --------- ---------
Basic and diluted
earnings (loss) per
Common share:
Net income (loss) from
continuing operations $ 0.25 $ 0.11 $ (0.09) $ 0.23
Income from discontinued
operations 0.35 0.15 0.32 $ 0.04
---------- --------- --------- ---------
Net income $ 0.60 $ 0.26 $ 0.23 $ 0.27
---------- --------- --------- ---------
---------- --------- --------- ---------
Basic weighted average
number of shares
outstanding (thousands) 40,015 39,981 40,001 39,971
---------- --------- --------- ---------
---------- --------- --------- ---------
Diluted weighted average
number of shares
outstanding (thousands) 41,116 40,794 41,132 40,465
---------- --------- --------- ---------
---------- --------- --------- ---------



ALDERWOODS GROUP, INC.

Consolidated Balance Sheets
Expressed in thousands of dollars

January 1, January 3,
2005 2004
------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 9,379 $ 41,612
Receivables, net of allowances 66,460 58,076
Inventories 16,714 17,339
Other 27,621 25,467
Assets held for sale 85,141 441,762
------------- ------------
205,315 584,256

Pre-need funeral receivables and
trust investments 335,976 334,730
Pre-need cemetery receivables and
trust investments 309,591 313,020
Cemetery property 118,619 117,362
Property and equipment 539,879 548,518
Insurance invested assets 250,785 196,440
Deferred income tax assets 8,160 6,683
Goodwill 321,134 320,640
Cemetery perpetual care trust
investments 245,225 -
Other assets 37,744 31,354
------------- ------------
$ 2,372,428 $ 2,453,003
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 140,607 $ 154,283
Current maturities of long-term
debt 9,083 10,896
Liabilities associated with assets
held for sale 63,381 313,258
------------- ------------
213,071 478,437

Long-term debt 454,557 619,956
Deferred pre-need funeral and
cemetery revenue 82,784 600,664
Non-controlling interest in funeral
and cemetery trusts 551,957 -
Insurance policy liabilities 214,745 172,209
Deferred income tax liabilities 20,346 21,414
Other liabilities 21,915 15,430
------------- ------------
1,559,375 1,908,110
------------- ------------
Non-controlling interest in
perpetual care trusts 257,141 -

Stockholders' equity
Common stock 400 400
Capital in excess of par value 740,210 739,950
Accumulated deficit (213,588) (222,937)
Accumulated other comprehensive
income 28,890 27,480
------------- ------------
555,912 544,893
------------- ------------
$ 2,372,428 $ 2,453,003
------------- ------------
------------- ------------



ALDERWOODS GROUP, INC.

Consolidated Statements of Cash Flows
Expressed in thousands of dollars

12 Weeks 13 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
---------- --------- --------- ---------
January 1, January 3 January 1, January 3
2005 2004 2005 2004
---------- ---------- --------- ---------
(Unaudited)(Unaudited)


CASH PROVIDED BY
(APPLIED TO)
Operations
Net income $ 24,366 $ 10,419 $ 9,349 $ 10,807
Income from discontinued
operations, net of tax (14,365) (5,994) (13,142) (1,563)
Items not affecting cash
Depreciation 11,035 9,671 42,085 40,182
Amortization of debt
issue costs 3,981 1,860 10,118 3,220
Insurance policy
benefit reserves 8,425 6,384 40,705 28,772
Provision for asset
impairment 989 50 1,922 4,395
Loss (gain) on
disposal of assets (1,979) 503 (3,530) 1,056
Deferred income taxes (4,356) (670) (5,126) (1,950)
Premium on long-term
debt repurchase - - 32,450 1,266
Other, including net
changes in other
non-cash balances 3,453 16,269 (11,104) 51,112
---------- ---------- --------- ---------
Net cash provided by
continuing operations 31,549 38,492 103,727 137,297
Net cash provided by
discontinued operations 1,505 395 15,862 18,478
---------- ---------- --------- ---------
33,054 38,887 119,589 155,775
---------- ---------- --------- ---------

Investing
Proceeds on disposition
of business assets 6,375 1,038 20,917 11,409
Purchase of property and
equipment (13,302) (9,941) (37,183) (25,186)
Purchase of insurance
invested assets (44,382) (49,606) (138,346) (117,689)
Proceeds on disposition
and maturities of
insurance invested
assets 38,366 32,787 86,763 78,059
---------- ---------- --------- ---------
Net cash used in
continuing operations (12,943) (25,722) (67,849) (53,407)
Net cash provided by
discontinued operations 14,607 25,041 108,975 23,694
---------- ---------- --------- ---------
1,664 (681) 41,126 (29,713)
---------- ---------- --------- ---------

Financing
Increase in long-term
debt 145 153 390,044 330,455
Repayment of long-term
debt (35,708) (29,920) (582,608) (458,868)
Issuance of Common stock - 8,028 56 28
---------- ---------- --------- ---------
Net cash used in
continuing operations (35,563) (21,739) (192,508) (128,385)
Net cash provided by
(used in) discontinued
operations 1 (8,078) (440) (2,177)
---------- ---------- --------- ---------
(35,562) (29,817) (192,948) (130,562)
---------- ---------- --------- ---------

Increase (decrease) in
cash and cash
equivalents (844) 8,389 (32,233) (4,500)
Cash and cash
equivalents, beginning
of period 10,223 33,223 41,612 46,112
---------- ---------- --------- ---------
Cash and cash
equivalents, end of
period $ 9,379 $ 41,612 $ 9,379 $ 41,612
---------- ---------- --------- ---------
---------- ---------- --------- ---------


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Alderwoods Group, Inc.
    Kenneth A. Sloan
    Executive Vice President, Chief Financial Officer
    (416) 498-2455
    (416) 498-2449 (FAX)
    ken.sloan@alderwoods.com
    or
    Alderwoods Group, Inc.
    Chaya Cooperberg
    Director, Investor Relations and Communications
    (416) 498-2802
    (416) 498-2449 (FAX)
    chaya.cooperberg@alderwoods.com
    www.alderwoods.com