UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the 12 weeks (fiscal quarter) ended March 26, 2005
|- | ---------------------------------------------------------------------------------------------------------------------------------------------
|  | OR                                                                                                                                           
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from           to          

Commission file number 000-33277

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ALDERWOODS GROUP, INC.(Exact name of registrant as specified in its charter)

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|Delaware                                                                             | 52-1522627                          
|------------------------------------------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or organization)                       | (I.R.S. Employer Identification No.)
|311 Elm Street, Suite 1000, Cincinnati, Ohio(Address of principal executive offices) | 45202(Zip Code)                     

Registrant's telephone number, including area code:513-768-7400

Former
name, former address and former fiscal year, if changed since last report:N/A

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 ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
Yes ý    No o

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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ý    No o

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APPLICABLE ONLY TO CORPORATE ISSUERS

At
April 22, 2005, there were 40,092,246 shares of Common Stock outstanding.



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ALDERWOODS GROUP, INC.

|           |  |                                             |  |                                                                                                |  | Page
|---------- |  | ------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|           |  |                                             |  |                                                                                                |  |     
|Part I.    |  | FINANCIAL INFORMATION                       |  |                                                                                               
|           |  | Item 1.                                     |  | FINANCIAL STATEMENTS:                                                                          |  |     
|           |  |                                             |  | CONSOLIDATED BALANCE SHEETS
as of March 26, 2005 and January 1, 2005                           |  | 1   
|           |  |                                             |  | CONSOLIDATED STATEMENTS OF OPERATIONS
for the 12 Weeks Ended March 26, 2005 and March 27, 2004 |  | 2   
|           |  |                                             |  | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the 12 Weeks Ended March 26, 2005          |  | 3   
|           |  |                                             |  | CONSOLIDATED STATEMENTS OF CASH FLOWS
for the 12 Weeks Ended March 26, 2005 and March 27, 2004 |  | 4   
|           |  |                                             |  | NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS                                         |  | 5   
|           |  | Item 2.                                     |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          |  | 20  
|           |  | Item 3.                                     |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                     |  | 32  
|           |  | Item 4.                                     |  | CONTROLS AND PROCEDURES                                                                        |  | 32  
|           |  | FORWARD-LOOKING STATEMENTS AND RISK FACTORS |  | 33                                                                                            
|Part II.   |  | OTHER INFORMATION                           |  |                                                                                               
|           |  | Item 1.                                     |  | LEGAL PROCEEDINGS                                                                              |  | 40  
|           |  | Item 6.                                     |  | EXHIBITS                                                                                       |  | 41  
|SIGNATURES |  | 45                                         

i

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PART I    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

ALDERWOODS GROUP, INC.        CONSOLIDATED BALANCE SHEETS        Expressed in thousands of dollars  except number of shares

|                                                        |                                                                                                                              | March 26,
2005 |           | January 1,
2005 |  
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | -------------- | --------- | --------------- | -
|
|                                                        |                                                                                                                              |                |           |                 |  
|ASSETS                                                  |                                                                                                                              |                |           |                 |  
|Current assets                                          |                                                                                                                              |                |           |                 |  
|                                                        | Cash and cash equivalents                                                                                                    |                | $         | 16,878          |  
|                                                        | Receivables, net of allowances                                                                                               |                |           | 58,774          |  
|                                                        | Inventories                                                                                                                  |                |           | 16,735          |  
|                                                        | Other                                                                                                                        |                |           | 10,817          |  
|                                                        | Assets held for sale                                                                                                         |                |           | 49,083          |  
|                                                        |                                                                                                                              |                |           |                 |  
|                                                        |                                                                                                                              |                | 152,287   |                 |  
|Pre-need funeral receivables and trust investments      |                                                                                                                              |                | 332,790   |                 |  
|Pre-need cemetery receivables and trust investments     |                                                                                                                              |                | 304,552   |                 |  
|Cemetery property                                       |                                                                                                                              |                | 117,271   |                 |  
|Property and equipment                                  |                                                                                                                              |                | 531,293   |                 |  
|Insurance invested assets                               |                                                                                                                              |                | 257,947   |                 |  
|Deferred income tax assets                              |                                                                                                                              |                | 9,881     |                 |  
|Goodwill                                                |                                                                                                                              |                | 321,081   |                 |  
|Cemetery perpetual care trust investments               |                                                                                                                              |                | 245,845   |                 |  
|Other assets                                            |                                                                                                                              |                | 40,033    |                 |  
|                                                        |                                                                                                                              |                |           |                 |  
|                                                        |                                                                                                                              | $              | 2,312,980 |                 | $
|                                                        |                                                                                                                              |                |           |                 |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                    |                                                                                                                              |                |           |                 |  
|Current liabilities                                     |                                                                                                                              |                |           |                 |  
|                                                        | Accounts payable and accrued liabilities                                                                                     |                | $         | 136,238         |  
|                                                        | Current maturities of long-term debt                                                                                         |                |           | 4,236           |  
|                                                        | Liabilities associated with assets held for sale                                                                             |                |           | 36,291          |  
|                                                        |                                                                                                                              |                |           |                 |  
|                                                        |                                                                                                                              |                | 176,765   |                 |  
|Long-term debt                                          |                                                                                                                              |                | 427,745   |                 |  
|Deferred pre-need funeral and cemetery contract revenue |                                                                                                                              |                | 86,872    |                 |  
|Non-controlling interest in funeral and cemetery trusts |                                                                                                                              |                | 543,636   |                 |  
|Insurance policy liabilities                            |                                                                                                                              |                | 226,319   |                 |  
|Deferred income tax liabilities                         |                                                                                                                              |                | 19,786    |                 |  
|Other liabilities                                       |                                                                                                                              |                | 17,227    |                 |  
|                                                        |                                                                                                                              |                |           |                 |  
|                                                        |                                                                                                                              |                | 1,498,350 |                 |  
|                                                        |                                                                                                                              |                |           |                 |  
|Non-controlling interest in perpetual care trusts       |                                                                                                                              |                | 251,044   |                 |  
|Stockholders' equity                                    |                                                                                                                              |                |           |                 |  
|                                                        | Common stock, $0.01 par value, 100,000,000 shares authorized, 40,060,010 issued and outstanding (January 1, 200540,017,454) |                |           | 400             |  
|                                                        | Capital in excess of par value                                                                                               |                |           | 740,494         |  
|                                                        | Accumulated deficit                                                                                                          |                |           | (200,452        | )
|                                                        | Accumulated other comprehensive income                                                                                       |                |           | 23,144          |  
|                                                        |                                                                                                                              |                |           |                 |  
|                                                        |                                                                                                                              |                | 563,586   |                 |  
|                                                        |                                                                                                                              |                |           |                 |  
|                                                        |                                                                                                                              | $              | 2,312,980 |                 | $
|                                                        |                                                                                                                              |                |           |                 |  

See accompanying notes to the interim consolidated financial statements

1

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ALDERWOODS GROUP, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)        Expressed in thousands of dollars  except per share amounts and number of shares

|                                                                  |                                       | 12 Weeks Ended |        
|----------------------------------------------------------------- | ------------------------------------- | -------------- | -------
|
|                                                                  |                                       |                |        
|Revenue                                                           |                                       |                |        
|                                                                  | Funeral                               |                | $      
|                                                                  | Cemetery                              |                |        
|                                                                  | Insurance                             |                |        
|                                                                  |                                       |                |        
|                                                                  |                                       |                | 183,796
|                                                                  |                                       |                |        
|Costs and expenses                                                |                                       |                |        
|                                                                  | Funeral                               |                |        
|                                                                  | Cemetery                              |                |        
|                                                                  | Insurance                             |                |        
|                                                                  |                                       |                |        
|                                                                  |                                       |                | 147,495
|                                                                  |                                       |                |        
|                                                                  |                                       |                | 36,301 
|General and administrative expenses                               |                                       |                | 10,643 
|Provision for asset impairment                                    |                                       |                | (755   
|                                                                  |                                       |                |        
|Income from operations                                            |                                       |                | 26,413 
|Interest on long-term debt (Note 3)                               |                                       |                | 7,516  
|Other expense (income), net                                       |                                       |                | (5,800 
|                                                                  |                                       |                |        
|Income before income taxes                                        |                                       |                | 24,697 
|Income taxes                                                      |                                       |                | 11,192 
|                                                                  |                                       |                |        
|Net income from continuing operations                             |                                       |                | 13,505 
|Discontinued operations (Note 9)                                  |                                       |                |        
|                                                                  | Loss from discontinued operations     |                |        
|                                                                  | Income taxes                          |                |        
|                                                                  |                                       |                |        
|Net loss from discontinued operations                             |                                       |                | (369   
|                                                                  |                                       |                |        
|Net income                                                        |                                       | $              | 13,136 
|                                                                  |                                       |                |        
|Basic earnings per Common share:                                  |                                       |                |        
|                                                                  | Net income from continuing operations |                | $      
|                                                                  | Net loss from discontinued operations |                |        
|                                                                  |                                       |                |        
|                                                                  | Net income                            |                | $      
|                                                                  |                                       |                |        
|Diluted earnings per Common share:                                |                                       |                |        
|                                                                  | Net income from continuing operations |                | $      
|                                                                  | Net loss from discontinued operations |                |        
|                                                                  |                                       |                |        
|                                                                  | Net income                            |                | $      
|                                                                  |                                       |                |        
|Basic weighted average number of shares outstanding (thousands)   |                                       |                | 40,049 
|                                                                  |                                       |                |        
|Diluted weighted average number of shares outstanding (thousands) |                                       |                | 41,312 
|                                                                  |                                       |                |        

See accompanying notes to the interim consolidated financial statements

2

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ALDERWOODS GROUP, INC.        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited)        Expressed in thousands of dollars except number of shares

|                           |                                              | Shares                                                                      |                                                                                                                                         | Common Stock Par Value |     | Capital in Excess of Par Value |   | Accumulated Deficit |     | Accumulated Other Comprehensive Income |          | Total  |  
|-------------------------- | -------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | --- | ------------------------------ | - | ------------------- | --- | -------------------------------------- | -------- | ------ | -
|Balance at January 1, 2005 |                                              | 40,017,454                                                                  |                                                                                                                                         | $                      | 400 |                                | $ | 740,210             |     | $                                      | (213,588 | )      | $
|Comprehensive income:      |                                              |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|                           | Net income                                   |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          | 13,136 |  
|                           | Other comprehensive income (loss):           |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|                           |                                              | Foreign currency translation adjustment, net of income taxes of $nil        |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|                           |                                              | Unrealized loss on insurance invested assets, net of income taxes of $2,224 |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|                           |                                              |                                                                             | Less: reclassification adjustments for realized losses on insurance invested assets included in net income, net of income taxes of $154 |                        |     |                                |   |                     |     |                                        |          |        |  
|                           |                                              | Unrealized loss on derivatives, net of income taxes of $nil                 |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|                           |                                              |                                                                             | Less: reclassification adjustments for realized gains on derivatives included in net income, net of income taxes of $nil                |                        |     |                                |   |                     |     |                                        |          |        |  
|                           |                                              |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|Comprehensive income       |                                              |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|Common stock issued:       |                                              |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|                           | Stock issued as compensation in lieu of cash |                                                                             | 1,306                                                                                                                                   |                        |     |                                |   |                     | 15  |                                        |          |        |  
|                           | Stock issued under equity incentive plan     |                                                                             | 41,250                                                                                                                                  |                        |     |                                |   |                     | 269 |                                        |          |        |  
|                           |                                              |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  
|Balance at March 26, 2005  |                                              | 40,060,010                                                                  |                                                                                                                                         | $                      | 400 |                                | $ | 740,494             |     | $                                      | (200,452 | )      | $
|                           |                                              |                                                                             |                                                                                                                                         |                        |     |                                |   |                     |     |                                        |          |        |  

See accompanying notes to the interim consolidated financial statements

3

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ALDERWOODS GROUP, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)        Expressed in thousands of dollars

|                                                 |                                                                     | 12 Weeks Ended                      |        
|------------------------------------------------ | ------------------------------------------------------------------- | ----------------------------------- | -------
|
|                                                 |                                                                     |                                     |        
|CASH PROVIDED BY (APPLIED TO)                    |                                                                     |                                     |        
|Operations                                       |                                                                     |                                     |        
|                                                 | Net income                                                          |                                     | $      
|                                                 | Loss from discontinued operations, net of tax                       |                                     |        
|                                                 | Items not affecting cash                                            |                                     |        
|                                                 |                                                                     | Depreciation and amortization       |        
|                                                 |                                                                     | Amortization of debt issue costs    |        
|                                                 |                                                                     | Insurance policy benefit reserves   |        
|                                                 |                                                                     | Provision for asset impairment      |        
|                                                 |                                                                     | Gain on disposal of business assets |        
|                                                 |                                                                     | Deferred income taxes               |        
|                                                 | Premium on long-term debt repurchase                                |                                     |        
|                                                 | Other, including net changes in other non-cash balances             |                                     |        
|                                                 |                                                                     |                                     |        
|Net cash provided by continuing operations       |                                                                     |                                     | 41,716 
|Net cash provided by discontinued operations     |                                                                     |                                     | 720    
|                                                 |                                                                     |                                     |        
|                                                 |                                                                     |                                     | 42,436 
|                                                 |                                                                     |                                     |        
|Investing                                        |                                                                     |                                     |        
|                                                 | Proceeds on disposition of business assets                          |                                     |        
|                                                 | Purchase of property and equipment                                  |                                     |        
|                                                 | Purchase of insurance invested assets                               |                                     |        
|                                                 | Proceeds on disposition and maturities of insurance invested assets |                                     |        
|                                                 |                                                                     |                                     |        
|                                                 | Net cash used in continuing operations                              |                                     |        
|                                                 | Net cash provided by (used in) discontinued operations              |                                     |        
|                                                 |                                                                     |                                     |        
|                                                 |                                                                     |                                     | (3,237 
|                                                 |                                                                     |                                     |        
|Financing                                        |                                                                     |                                     |        
|                                                 | Increase in long-term debt                                          |                                     |        
|                                                 | Repayment of long-term debt                                         |                                     |        
|                                                 | Issuance of Common stock                                            |                                     |        
|                                                 |                                                                     |                                     |        
|                                                 | Net cash used in continuing operations                              |                                     |        
|                                                 | Net cash used in discontinued operations                            |                                     |        
|                                                 |                                                                     |                                     |        
|                                                 |                                                                     |                                     | (31,700
|                                                 |                                                                     |                                     |        
|Increase (decrease) in cash and cash equivalents |                                                                     |                                     | 7,499  
|Cash and cash equivalents, beginning of period   |                                                                     |                                     | 9,379  
|                                                 |                                                                     |                                     |        
|Cash and cash equivalents, end of period         |                                                                     | $                                   | 16,878 
|                                                 |                                                                     |                                     |        

See accompanying notes to the interim consolidated financial statements

4

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ALDERWOODS GROUP, INC.        NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)        (Tabular amounts expressed in thousands of dollars except per share amounts)

NOTE 1.    NATURE OF OPERATIONS

Alderwoods Group, Inc., a Delaware corporation ("Alderwoods Group" and, together with its subsidiaries unless the context otherwise requires, the
"Company") is the second-largest operator of funeral homes and cemeteries in North America based on total revenue and number of locations. As of March 26, 2005, the Company operated
645 funeral homes, 76 cemeteries and 63 combination funeral homes and cemeteries throughout North America.

The
Company's funeral operations encompass making funeral and cremation arrangements on an at-need or pre-need basis. The Company's funeral operations offer a
full range of funeral services, including the collection of remains, registration of death, professional embalming, use of funeral home facilities, sale of caskets and other merchandise and
transportation to a place of worship, funeral chapel, cemetery or crematorium.

The
Company's cemetery operations assist families in making burial arrangements and offer a complete line of cemetery products (including a selection of burial spaces, burial vaults,
lawn crypts, caskets, memorials, niches, mausoleum crypts and other merchandise), the opening and closing of graves and cremation services.

The
Company's insurance operations sell a variety of insurance products, primarily to fund pre-need funeral services.

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The interim consolidated financial statements include the accounts of the Company, its subsidiaries and operations controlled by the Company through sales and
management agreements. All subsidiaries are wholly owned, except for a few companies with small minority interests. The interim consolidated financial statements also include the accounts of the
funeral trusts, cemetery merchandise and service trusts and perpetual care trusts, and several pooled investment funds created for such trusts in which the Company has a variable interest and is the
primary beneficiary.

All
significant inter-entity balances and transactions have been eliminated in the consolidated financial statements. The interim consolidated financial statements have been prepared
using the U.S. dollar and are presented in accordance with United States generally accepted accounting principles ("GAAP").

The
interim consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which in management's opinion are necessary for a fair
presentation of the financial results as of March 26, 2005, and for the 12 weeks ended March 26, 2005, and March 27, 2004. The interim consolidated financial statements
have been prepared on a basis consistent with the accounting policies described in the Company's Annual Report on Form 10-K for the 52 weeks ended January 1, 2005, as filed with
the U.S. Securities and Exchange Commission ("SEC") and should be read in conjunction therewith.

The
results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year or for any other interim period.

5

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Use of estimates

The preparation of the interim consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements, and the reported amounts of revenue and
expenses during the reporting period. As a result, actual amounts could significantly differ from those estimates.

Stock option plan

Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS No. 123"), Statement of Financial Accounting Standards
No. 148, "Accounting for Stock-Based CompensationTransition and Disclosurean Amendment of FASB Statement No. 123," ("FAS No. 148"), established
accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. However, as allowed by FAS No. 123, the Company has
elected to continue to apply the intrinsic value-based method of accounting described below, and has adopted the disclosure requirements of FAS No. 123 and FAS No. 148.

The
Company applies the intrinsic value-based method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations,
including FASB Interpretation No. 44, "Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25," to account for its fixed plan stock
options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. Any compensation expense recorded
is charged against operations over the service period, which generally matches the option vesting period. No stock-based employee compensation cost was recorded for the 12 weeks ended
March 26, 2005, or the 12 weeks ended March 27, 2004, as all options granted under the Company's stock option plan had an exercise price equal to or greater than the market value
of the underlying Common stock on the grant date. The following table illustrates the effect on net income and net income per share, if the Company had applied the fair value recognition provisions of
FAS No. 123 to stock-based employee compensation.

|                                                                                                     |                      | 12 Weeks Ended |       
|---------------------------------------------------------------------------------------------------- | -------------------- | -------------- | ------
|
|Net income, as reported                                                                              |                      | $              | 13,136
|Total stock-based employee compensation expense determined under fair value-based method, net of tax |                      |                | (566  
|                                                                                                     |                      |                |       
|Pro forma net income                                                                                 |                      | $              | 12,570
|                                                                                                     |                      |                |       
|Net income per Common share:                                                                         |                      |                |       
|                                                                                                     | Basic, as reported   |                | $     
|                                                                                                     | Basic, pro forma     |                |       
|                                                                                                     | Diluted, as reported |                |       
|                                                                                                     | Diluted, pro forma   |                |       

6

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Comparability

Certain comparative amounts have been reclassified to conform to the presentation adopted in the current year, including, among other things, the reclassification
of assets held for sale as discontinued operations.

Recent accounting standards

In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 123R, "Share-Based
Payment" ("FAS No. 123R"). FAS No. 123R requires companies to recognize compensation expense in an amount equal to the fair value of the share-based payment (including
share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans) issued to employees. FAS No. 123R applies to all
transactions involving issuance of equity by a company in exchange for goods and services, including employee services. FAS No. 123R is effective in the first interim or annual reporting
period of the first fiscal year beginning on or after June 15, 2005. The Company will adopt FAS No. 123R in the first fiscal quarter of its 2006 fiscal year and expects to use the
modified prospective application method, which results in no restatement of the Company's previously issued annual consolidated financial statements. The adoption of FAS No. 123R using
the modified prospective application method is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

In
November 2004, the FASB issued Statement of Financial Accounting Standards No. 151, "Inventory Costs  an amendment of ARB
No. 43, Chapter 4" ("FAS No. 151"). FAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials
(spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities.
FAS No. 151 is effective for fiscal years beginning after June 15, 2005. The Company does not expect the adoption of FAS No. 151 to have a material impact on
its consolidated financial position, results of operations or cash flows.

In
December 2004, the FASB issued Statement of Financial Accounting Standards No. 153, "Exchange of Nonmonetary Assets  an amendment
of APB Opinion No. 29, Accounting for Nonmonetary Transactions" ("FAS No. 153"). The amendments made by FAS No. 153 are based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and
replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. FAS No. 153 is to be applied prospectively and is effective for nonmonetary
asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company elected to adopt FAS No. 153 on January 1, 2005. The adoption of
FAS No. 153 had no material impact on the Company's consolidated financial position, results of operations or cash flows.

7

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NOTE 3.    LONG-TERM DEBT

Long-term debt consists of the following:

March 26, 2005

January 1, 2005(unaudited)Revolving credit facility (a)

$


$
Senior secured term loan B due in 2009 (a)(b)


220,707


246,8267.75% Senior unsecured notes due in 2012 (c)


200,000


200,00012.25% Senior unsecured notes due in 2009 (d)





4,509Promissory notes and capitalized obligations, certain of which are secured by assets of certain subsidiaries


11,274


12,305431,981


463,640Less, current maturities of long-term debt


4,236


9,083$
427,745

$
454,557


---



8

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Year

Percentage2008

103.8752009

101.9382010 and thereafter

100.000




9

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The
Credit Agreement and the Eight-Year Senior Unsecured Notes are guaranteed by substantially all of Alderwoods Group's wholly-owned U.S. subsidiaries, other than Alderwoods
Group's insurance subsidiaries and other specified excluded subsidiaries. Alderwoods Group, the parent company, has no independent assets or operations, and the guarantees of its guarantor
subsidiaries are full and unconditional, and joint and several.

In
certain change of control situations, Alderwoods Group is required to make an offer to purchase the then-outstanding Eight-Year Senior Unsecured Notes at a price equal to
101% of their stated principal amount, plus accrued and unpaid interest to the applicable repurchase date and Liquidated Damages, if any.

The
Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes restrict the Company's ability to engage in asset sales. The Credit Agreement and the indenture
governing the Eight-Year Senior Unsecured Notes prohibit dispositions of assets unless the assets disposed of fulfill the requirements of specified exceptions. The indenture governing the
Eight-Year Senior Unsecured Notes excepts, among other exceptions, assets with a fair market value less than $5,000,000. One specified exception contained in the Credit Agreement is
dispositions of any of a group of identified "discontinued assets;" another is dispositions of assets not exceeding $35,000,000 book value in the aggregate over the life of the Credit Agreement,
provided that (i) the consideration received is at least equal to fair market value and (ii) not less than 75% of the consideration is paid in cash or cash equivalents. Within
270 days of the receipt of net proceeds from any such asset sale, the Company has the ability to apply such net proceeds at its option (or as otherwise required) to invest in
non-current operating assets (or enter into agreements for such investment which agreements are consummated within 360 days of such receipt of asset sale proceeds). Up to $10,000,000 of
such net proceeds in any fiscal year (but not in excess of $40,000,000 in the aggregate over the term of the Credit Agreement) may be applied to make capital expenditures. To the extent the Company
receives net proceeds in excess of additional specified thresholds and such excess is not applied to invest in non-current operating assets or make capital expenditures as described in the
two immediately preceding sentences, the Company must make mandatory repayments under the Credit Agreement and, after all indebtedness under the Credit Agreement has been repaid, offer to
purchase the Eight-Year Senior Unsecured Notes at a purchase price equal to 100.00% of the stated principal amount, plus accrued and unpaid interest and Liquidated Damages, if any.

Covenants
in the Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes restrict, and under specified circumstances prohibit, the payment of dividends by
the Company.

Pursuant
to the indenture governing the Eight-Year Senior Unsecured Notes, the Company has entered into a registration rights agreement (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, the Company is required, on or prior to May 16, 2005, to file an exchange offer registration statement on an appropriate form under the Securities
Act of 1933 with the SEC. Upon the effectiveness of the exchange offer registration statement, the Company will offer holders of the Eight-Year Senior Unsecured Notes the opportunity to
exchange their notes for notes with substantially identical terms covered by the exchange offer registration statement. In the event (i) the Company fails to timely file an appropriate
registration statement, (ii) the registration statement is not timely declared effective, (iii) the Company fails to timely consummate the exchange offer, or (iv) the registration
statement is declared effective, but thereafter ceases to be effective or usable during periods specified in the Registration Rights Agreement (each of (i) through (iv), a "Registration
Default"), then the Company

10

---



will
be subject to liquidated damages within the first 90-day period immediately following the Registration Default of 0.25% per annum of the outstanding principal amount of the
Eight-Year Senior Unsecured Notes. The amount of liquidated damages will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until the
Registration Default has been cured, up to a maximum of 1.00% per annum.

NOTE 4.    LEGAL CONTINGENCIES

The Company is a party to legal proceedings in the ordinary course of its business and believes it has made adequate provision for any potential estimated
liabilities. The Company does not expect the outcome of any proceedings, individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations
or liquidity.

11

---



NOTE 5.    SUPPLEMENTARY STATEMENTS OF CASH FLOWS DISCLOSURE

Supplemental disclosures related to the statement of cash flows consist of the following:

|                                             |                                                                            | 12 Weeks Ended                                                                                                              |      
|-------------------------------------------- | -------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -----
|
|Decrease (increase) in assets:               |                                                                            |                                                                                                                             |      
|                                             | Receivables, net of allowances                                             |                                                                                                                             |      
|                                             |                                                                            | Trade                                                                                                                       |      
|                                             |                                                                            | Other                                                                                                                       |      
|                                             | Inventories                                                                |                                                                                                                             |      
|                                             | Prepaid expenses                                                           |                                                                                                                             |      
|                                             | Cemetery property                                                          |                                                                                                                             |      
|                                             | Other assets                                                               |                                                                                                                             |      
|Increase (decrease) in liabilities:          |                                                                            |                                                                                                                             |      
|                                             | Accounts payable and accrued liabilities                                   |                                                                                                                             |      
|                                             | Net effect of pre-need receivables and deferred revenue                    |                                                                                                                             |      
|                                             | Other liabilities                                                          |                                                                                                                             |      
|                                             | Insurance policy liabilities                                               |                                                                                                                             |      
|                                             | Other changes in non-cash balances                                         |                                                                                                                             |      
|                                             |                                                                            |                                                                                                                             |      
|                                             |                                                                            | $                                                                                                                           | 6,467
|                                             |                                                                            |                                                                                                                             |      
|Supplemental information:                    |                                                                            |                                                                                                                             |      
|                                             | Interest paid                                                              |                                                                                                                             | $    
|                                             | Income taxes paid, net of refunds                                          |                                                                                                                             |      
|                                             | Bad debt expense                                                           |                                                                                                                             |      
|Non-cash investing and financing activities: |                                                                            |                                                                                                                             |      
|                                             | Stock issued in connection with the settlement of certain unsecured claims |                                                                                                                             |      
|                                             | Stock issued as compensation in lieu of cash                               |                                                                                                                             |      
|                                             | Restricted cash investing and financing activities:                        |                                                                                                                             |      
|                                             |                                                                            | Purchases of funeral, cemetery, and perpetual care trust investments                                                        |      
|                                             |                                                                            | Proceeds on disposition and maturities of funeral, cemetery, and perpetual care trust investments                           |      
|                                             |                                                                            | Increase in non-controlling interests in funeral, cemetery and perpetual care trusts                                        |      
|                                             |                                                                            | Decrease in non-controlling interests in funeral, cemetery and perpetual care trusts upon fulfillment of pre-need contracts |      

12

---



NOTE 6.    SUPPLEMENTARY FINANCIAL INFORMATION

A summary of certain balance sheet accounts is as follows:

March 26, 2005

January 1, 2005(unaudited)Receivables, net of allowances:Customer receivables

$
60,200

$
68,721Allowance for doubtful accounts


(10,592
)

(12,029
)Other


9,166


9,768$
58,774

$
66,460Pre-need funeral receivables and trust investments:Customer receivables

$
38,241

$
37,093Allowance for contract cancellations and refunds


(16,716
)

(17,263
)Funeral trust investments


283,907


288,903Amounts receivable from funeral trusts, net of allowances


27,358


27,243$
332,790

$
335,976Pre-need cemetery receivables and trust investments:Customer receivables

$
67,049

$
63,794Unearned finance income


(5,828
)

(5,715
)Allowance for contract cancellations and refunds


(18,666
)

(17,273
)Cemetery merchandise and service trust investments


261,997


268,785$
304,552

$
309,591Cemetery property:Developed land and lawn crypts

$
35,457

$
37,311Undeveloped land


31,876


30,660Mausoleums


49,938


50,648$
117,271

$
118,619Property and equipment:Land

$
161,418

$
166,252Buildings and improvements


367,932


368,230Automobiles


12,894


13,003Furniture, fixtures and equipment


57,175


54,298Computer hardware and software


23,961


23,306Accumulated depreciation and amortization


(92,087
)

(85,210
)$
531,293

$
539,879


13

---



Other assets:Intangible assets

$
16,335

$
15,060Debt issue costs


9,368


10,339Notes receivable


3,156


2,696Other


11,174


9,649$
40,033

$
37,744Accounts payable and accrued liabilities:Trade payables

$
14,076

$
19,847Interest


2,067


7,210Accrued liabilities


24,638


32,421Accrued insurance


17,572


18,057Accrued taxes


56,656


44,785Other


21,229


18,287$
136,238

$
140,607Deferred pre-need contract revenue:Funeral

$
71,409

$
69,215Cemetery


15,463


13,569$
86,872

$
82,784Other liabilities:Perpetual care liability

$
7,509

$
7,487Other


9,718


14,428$
17,227

$
21,915


NOTE 7.    SEGMENT REPORTING

The Company's reportable segments are comprised of the three businesses it operates, each of which offers different products and services: funeral homes,
cemeteries and insurance. There has been no change in the basis of this segmentation, accounting policies of the segments or the basis of measurement of segment profit or loss from that disclosed in
the Company's Annual Report on Form 10-K for the 52 weeks ended January 1, 2005, as filed with the SEC.

14

---



The
Company sells primarily to external customers, though any intersegment sales or transfers occur at market price. The Company evaluates performance based on income from operations of
the respective businesses.

|For the 12 Weeks Ended:             |                | Funeral |   | Cemetery |  | Insurance |        | Other |   | Consolidated
|----------------------------------- | -------------- | ------- | - | -------- |  | --------- | ------ | ----- | - | ------------
|Revenue earned from external sales: |                |         |   |          |  |           |        |       |   |             
|                                    | March 26, 2005 |         | $ | 124,013  |  | $         | 38,215 |       | $ | 21,568      
|                                    | March 27, 2004 |         | $ | 121,942  |  | $         | 36,487 |       | $ | 18,405      
|Income from operations:             |                |         |   |          |  |           |        |       |   |             
|                                    | March 26, 2005 |         | $ | 29,761   |  | $         | 6,013  |       | $ | 1,282       
|                                    | March 27, 2004 |         | $ | 26,642   |  | $         | 5,277  |       | $ | 901         
|Depreciation and amortization:      |                |         |   |          |  |           |        |       |   |             
|                                    | March 26, 2005 |         | $ | 5,711    |  | $         | 3,281  |       | $ | 40          
|                                    | March 27, 2004 |         | $ | 5,479    |  | $         | 2,918  |       | $ | 47          

|Total assets at: |                            |  |   |           |  |   |         |  |   |         |  |   |        |  |  
|---------------- | -------------------------- |  | - | --------- |  | - | ------- |  | - | ------- |  | - | ------ |  | -
|                 | March 26, 2005 (unaudited) |  | $ | 1,146,628 |  | $ | 826,228 |  | $ | 283,384 |  | $ | 56,740 |  | $
|                 | January 1, 2005            |  | $ | 1,154,019 |  | $ | 878,350 |  | $ | 272,823 |  | $ | 67,236 |  | $
|Goodwill at:     |                            |  |   |           |  |   |         |  |   |         |  |   |        |  |  
|                 | March 26, 2005 (unaudited) |  | $ | 321,081   |  | $ |        |  | $ |        |  | $ |       |  | $
|                 | January 1, 2005            |  | $ | 321,134   |  | $ |        |  | $ |        |  | $ |       |  | $

The
following table reconciles earnings from operations of reportable segments to total income and identifies the components of "Other" segment earnings from operations:

|                                                                     |                                     | 12 Weeks Ended |       
|-------------------------------------------------------------------- | ----------------------------------- | -------------- | ------
|
|Earnings from operations of funeral, cemetery and insurance segments |                                     | $              | 37,056
|Other expenses of operations:                                        |                                     |                |       
|                                                                     | General and administrative expenses |                |       
|                                                                     |                                     |                |       
|Income from operations                                               |                                     | $              | 26,413
|                                                                     |                                     |                |       

NOTE 8.    PROVISION FOR ASSET IMPAIRMENT

In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS
No. 144"), the Company reviews its long-lived assets for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. FAS
No. 144 requires that long-lived assets to be held and used be recorded at the lower of carrying amount or fair value. Long-lived assets to be disposed of are to be
recorded at the lower of carrying amount or fair value, less estimated cost to sell.

15

---



Previously,
the Company designated certain parcels of surplus real estate as held for sale, as they do not meet the Company's future geographic and strategic objectives. During the
12 weeks ended March 26, 2005, the Company re-evaluated the estimated proceeds from sale and accordingly recorded a recovery in provision for asset impairment of $755,000.
During the 12 weeks ended March 27, 2004, the Company determined that the carrying amounts of certain of these surplus parcels of real estate exceeded their fair market value,
less estimated costs to sell. As a result, the Company recorded a long-lived asset impairment provision of $1,988,000.

The
fair market value was determined by specific offer or bid, or an estimate based on comparable recent sales transactions. The asset impairment provisions include management estimates.
As a result, actual results could differ significantly from these estimates.

NOTE 9.    DISCONTINUED OPERATIONS OF ASSETS HELD FOR SALE

Over the previous three fiscal years, the Company engaged in a strategic market rationalization assessment to dispose of cemetery and funeral operating locations
that did not fit into the Company's market or business strategies, as well as under-performing locations and excess cemetery land. The Company will on a smaller scale and over time,
continue to assess the Company's portfolio of funeral and cemetery locations to ensure they continue to fit in the Company's strategy. Once a property is added to the disposal list, the Company
expects to complete the sale within one year. As of March 26, 2005, the Company had 17 funeral, three cemetery and four combination locations which have not been sold within one
year of being added to the disposal list. However, the Company continues to include these locations in discontinued operations of assets held for sale. Subsequent to March 26, 2005, the Company
had completed the sale of all the above locations aside from one cemetery, for which negotiations with a buyer are underway.

During
the 12 weeks ended June 14, 2003, the Company identified Security Plan Life Insurance Company, its wholly-owned home service insurance company, as a
non-strategic asset, because it was not part of the Company's pre-need funeral sales efforts. The Company's continuing insurance operations include Mayflower National Life
Insurance Company and National Capital Life Insurance Company, its wholly-owned pre-need life insurance companies. On June 17, 2004, the Company announced the signing of an agreement by its
subsidiary, Mayflower National Life Insurance Company, to sell all the outstanding shares of Security Plan Life Insurance Company for $85,000,000. The sale concluded on October 1, 2004. After
payment of applicable taxes and expenses, and recapitalization of Mayflower National Life Insurance Company, the Company has utilized $65,000,000 of the proceeds to reduce long-term debt. The Company
recorded a pre-tax gain on the sale of $16,011,000.

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 also reclassified the prior fiscal periods to
reflect any comparative amounts on a similar basis. All discontinued operations financial information presented under the insurance segment relate to Security Plan Life Insurance Company.

Discontinued
operations consists of long-lived asset impairment provisions, gains and losses recorded on disposition, and operating results of the locations.
FAS No. 144 requires that long-lived assets to be

16

---



disposed
of are to be recorded at the lower of carrying amount or fair market value, less estimated costs to sell. Depreciation and amortization is not recorded once an asset has been identified as
held for sale. The fair market value was determined by specific offer or bid, or an estimate based on comparable recent sales transactions. Impairment provisions on assets previously identified as
held for sale resulted from changes in previously estimated proceeds, net asset values and closing costs. The long-lived asset impairment provisions are based on management estimates. As a
result, actual results could differ significantly from these estimates.

The
operating results of discontinued operations are summarized in the following table:

|                                                                 |           | 12 Weeks Ended |      
|---------------------------------------------------------------- | --------- | -------------- | -----
|
|Revenue                                                          |           |                |      
|                                                                 | Funeral   |                | $    
|                                                                 | Cemetery  |                |      
|                                                                 | Insurance |                |      
|                                                                 |           |                |      
|                                                                 |           | $              | 2,002
|                                                                 |           |                |      
|Gross margin                                                     |           |                |      
|                                                                 | Funeral   |                | $    
|                                                                 | Cemetery  |                |      
|                                                                 | Insurance |                |      
|                                                                 |           |                |      
|                                                                 |           |                | (161 
|Provision for asset impairment                                   |           |                | 103  
|Other expense (income), net                                      |           |                | 82   
|                                                                 |           |                |      
|Loss from discontinued operations                                |           |                | (346 
|Interest on long-term debt                                       |           |                | 23   
|                                                                 |           |                |      
|Loss from discontinued operations, before tax                    |           |                | (369 
|                                                                 |           |                |      
|Income tax provision for discontinued operations:                |           |                |      
|                                                                 | Current   |                |      
|                                                                 | Deferred  |                |      
|                                                                 |           |                |      
|Net loss from discontinued operations                            |           | $              | (369 
|                                                                 |           |                |      
|Depreciation included in gross margin of discontinued operations |           | $              | 13   
|                                                                 |           |                |      

17

---



Details
of assets held for sale at March 26, 2005, are as follows:

|                                                  |                                                         | Funeral |        | Cemetery |   | Total 
|------------------------------------------------- | ------------------------------------------------------- | ------- | ------ | -------- | - | ------
|Assets held for sale                              |                                                         |         |        |          |   |       
|                                                  | Current assets                                          |         | $      | 1,991    |   | $     
|                                                  | Pre-need receivables and trust investments              |         |        | 18,748   |   |       
|                                                  | Property and equipment                                  |         |        | 10,183   |   |       
|                                                  | Other assets                                            |         |        | 208      |   |       
|                                                  |                                                         |         |        |          |   |       
|                                                  |                                                         | $       | 31,130 |          | $ | 17,953
|                                                  |                                                         |         |        |          |   |       
|Liabilities associated with assets held for sale  |                                                         |         |        |          |   |       
|                                                  | Current liabilities                                     |         | $      | 136      |   | $     
|                                                  | Deferred pre-need contract revenue                      |         |        | 1,042    |   |       
|                                                  | Non-controlling interest in funeral and cemetery trusts |         |        | 16,842   |   |       
|                                                  | Other liabilities                                       |         |        | 300      |   |       
|                                                  |                                                         |         |        |          |   |       
|                                                  |                                                         | $       | 18,320 |          | $ | 17,971
|                                                  |                                                         |         |        |          |   |       
|Non-controlling interest in perpetual care trusts |                                                         | $       |       |          | $ | 5,824 
|                                                  |                                                         |         |        |          |   |       

Details
of assets held for sale at January 1, 2005, are as follows:

|                                                  |                                                         | Funeral |        | Cemetery |   | Total 
|------------------------------------------------- | ------------------------------------------------------- | ------- | ------ | -------- | - | ------
|Assets held for sale                              |                                                         |         |        |          |   |       
|                                                  | Current assets                                          |         | $      | 2,140    |   | $     
|                                                  | Pre-need receivables and trust investments              |         |        | 21,818   |   |       
|                                                  | Cemetery property                                       |         |        |         |   |       
|                                                  | Property and equipment                                  |         |        | 11,110   |   |       
|                                                  | Other assets                                            |         |        | 209      |   |       
|                                                  |                                                         |         |        |          |   |       
|                                                  |                                                         | $       | 35,277 |          | $ | 49,864
|                                                  |                                                         |         |        |          |   |       
|Liabilities associated with assets held for sale  |                                                         |         |        |          |   |       
|                                                  | Current liabilities                                     |         | $      | 66       |   | $     
|                                                  | Deferred pre-need contract revenue                      |         |        | 1,972    |   |       
|                                                  | Non-controlling interest in funeral and cemetery trusts |         |        | 20,033   |   |       
|                                                  | Other liabilities                                       |         |        | 412      |   |       
|                                                  |                                                         |         |        |          |   |       
|                                                  |                                                         | $       | 22,483 |          | $ | 40,898
|                                                  |                                                         |         |        |          |   |       
|Non-controlling interest in perpetual care trusts |                                                         | $       |       |          | $ | 12,647
|                                                  |                                                         |         |        |          |   |       

18

---



NOTE 10.    INCOME PER SHARE

The basic and diluted income per share computations for net income were as follows:

|                                                                                  |                                                                                 | 12 Weeks Ended
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------
|
|Income (numerator):                                                               |                                                                                 |               
|Net income attributable to Common stockholders                                    |                                                                                 | $             
|                                                                                  |                                                                                 |               
|Shares (denominator):                                                             |                                                                                 |               
|                                                                                  | Basic weighted average number of shares of Common stock outstanding (thousands) |               
|                                                                                  | Effect of stock options assumed exercised                                       |               
|                                                                                  |                                                                                 |               
|Diluted weighted average number of shares of Common stock outstanding (thousands) |                                                                                 |               
|                                                                                  |                                                                                 |               

For
the 12 weeks ended March 26, 2005, 2,373,750 employee and director stock options were dilutive to earnings and are included in the computation of diluted
earnings per share. Employee and director stock options to purchase 1,830,000 shares of Common stock and warrants to purchase 2,992,000 shares of Common stock were not included in the
computation of diluted earnings per share, because they were anti-dilutive.

19

---



ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Alderwoods Group, Inc., a Delaware corporation ("Alderwoods Group" and, together with its subsidiaries unless the context otherwise requires, the
"Company") is the second largest operator of funeral homes and cemeteries in North America based on total revenue and number of locations. As of March 26, 2005, the Company operated
645 funeral homes, 76 cemeteries and 63 combination funeral homes and cemeteries throughout North America. As of March 27, 2004, the Company operated
721 funeral homes, 138 cemeteries and 61 combination funeral homes and cemeteries throughout North America.

Alderwoods Group
is a holding company owning, directly or indirectly, the capital stock of approximately 212 subsidiaries through which funeral, cemetery and insurance
businesses are operated.

The
Company provides services and products through three business segments:

Funeral Operations.The Company's funeral operations encompass making funeral and cremation arrangements on an
at-need or pre-need basis. The Company's funeral operations offer a full range of funeral services, including the collection of remains, registration of death, professional
embalming, use of funeral home facilities, sale of caskets and other merchandise and transportation to a place of worship, funeral chapel, cemetery or crematorium. The Company's funeral operations
generally experience higher volumes in the winter months, primarily due to higher incidents of deaths due to illnesses brought on by cold weather.

Cemetery Operations.The Company's cemetery operations assist families in making burial arrangements and offer a complete
line of cemetery products (including a selection of burial spaces, burial vaults,
lawn crypts, caskets, memorials, niches and mausoleum crypts), the opening and closing of graves and cremation services.

Insurance Operations.The Company operates two insurance subsidiaries licensed in a total of 35 states. These
insurance subsidiaries sell a variety of insurance products, primarily for the funding of pre-need funerals.

Critical Accounting Policies

Accounting policies that the Company believes are both most important to the portrayal of the Company's financial condition and results, and require management's
most difficult, subjective or complex judgments are described under Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Alderwoods
Group's Annual Report on Form 10-K for the 52 weeks ended January 1, 2005, as filed with the U.S. Securities and Exchange Commission ("SEC"). There have
been no changes to the Company's critical accounting policies in the 12 weeks ended March 26, 2005.

Basis of Presentation

The Company's accounting information contained in this Quarterly Report on Form 10-Q is presented on the basis of United States
generally accepted accounting principles ("GAAP"). This discussion and analysis of financial condition and results of operations of the Company are based upon and should be read in conjunction with
the Company's interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q (including the notes thereto).

20

---



Results of Operations

Detailed below are the operating results of the Company for the 12 weeks ended March 26, 2005 and March 27, 2004. The operating results are
expressed in dollar amounts as well as relevant percentages, presented as a percentage of revenue.

The
following provides a detailed discussion of continuing operations, which consist of those business operations the Company owned and operated both for the entire current and prior
fiscal quarters and that the Company plans to retain, and those business operations that have been opened during either the current or prior fiscal quarters and that the Company plans to retain.
Discontinued operations consist of those business operations that have been sold or closed during either the current or prior fiscal quarters and the business operations that are currently being
offered for sale.

The
operations of the Company comprise three business segments: funeral homes, cemeteries and insurance. Additional segment information is provided in Note 7 of the Company's
interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

12 Weeks Ended March 26, 2005 Compared to 12 Weeks Ended March 27, 2004

|                                                 |                                | 12 Weeks Ended |     
|------------------------------------------------ | ------------------------------ | -------------- | ----
|
|
|Revenue                                          |                                |                |     
|                                                 | Funeral                        |                | $   
|                                                 | Cemetery                       |                |     
|                                                 | Insurance                      |                |     
|                                                 |                                |                |     
|                                                 |                                | Total          |     
|                                                 |                                |                |     
|Gross margin                                     |                                |                |     
|                                                 | Funeral                        |                | $   
|                                                 | Cemetery                       |                |     
|                                                 | Insurance                      |                |     
|                                                 |                                |                |     
|                                                 |                                | Total          |     
|                                                 |                                |                |     
|Expenses                                         |                                |                |     
|                                                 | General and administrative     |                |     
|                                                 | Provision for asset impairment |                |     
|                                                 |                                |                |     
|Income from operations                           |                                |                | 26.4
|Interest on long-term debt and refinancing costs |                                |                | 7.5 
|Other expense (income), net                      |                                |                | (5.8
|                                                 |                                |                |     
|Income before income taxes                       |                                |                | 24.7
|Income taxes                                     |                                |                | 11.2
|                                                 |                                |                |     
|Net income from continuing operations            |                                |                | 13.5
|Loss from discontinued operations, net of tax    |                                |                | (0.4
|                                                 |                                |                |     
|Net income                                       |                                | $              | 13.1
|                                                 |                                |                |     

21

---



Other
information for the 12 weeks ended March 26, 2005, and 12 weeks ended March 27, 2004, is summarized in the following table.

|Continuing Operations:                            |                                                | March 26, 2005 |        | March 27, 2004 |   | Increase (decrease) |       
|------------------------------------------------- | ---------------------------------------------- | -------------- | ------ | -------------- | - | ------------------- | ------
|
|FuneralOther Information                         |                                                |                |        |                |   |                     |       
|Number of funeral services performed              |                                                |                | 30,042 |                |   | 30,437              |       
|                                                  | Number of same site funeral services performed |                |        | 29,917         |   |                     | 30,386
|Average revenue per funeral service               |                                                | $              | 4,128  |                | $ | 4,006               |       
|                                                  | Same site average revenue per funeral service  |                | $      | 4,129          |   | $                   | 4,002 
|Pre-need funeral contracts written (in millions)  |                                                | $              | 43.2   |                | $ | 40.3                |       
|Pre-need funeral conversion (percentages)         |                                                |                | 27     |                |   | 27                  |       
|CemeteryOther Information                        |                                                |                |        |                |   |                     |       
|Number of cemetery interments                     |                                                |                | 11,470 |                |   | 12,150              |       
|Pre-need cemetery contracts written (in millions) |                                                | $              | 20.9   |                | $ | 18.2                |       

Continuing Operations

Consolidated revenue of $183.8 million for the 12 weeks ended March 26, 2005, increased by $7.0 million, or 3.9%, compared to the
corresponding period in 2004, reflecting increases in all business segment revenues. Consolidated gross margin as a percentage of revenue increased to 19.8% for the 12 weeks ended
March 26, 2005, from 19.7% for the corresponding period in 2004.

Funeral
revenue of $124.0 million for the 12 weeks ended March 26, 2005, increased by $2.1 million, compared to $121.9 million for the corresponding
period in 2004, primarily as a result of an increase of $122, or 3.0%, in average revenue per funeral service performed, partially offset by a decrease in the number of funeral services performed. The
number of funeral services performed during the 12 weeks ended March 26, 2005 decreased by 1.3% from the corresponding period in 2004. The increase in average revenue per funeral
service performed was achieved through adjusting the pricing and mix of merchandise and services offered to customer families that were designed both to meet customer family needs and to increase
average revenues.

On
a same site basis funeral revenue was $123.5 million for the 12 weeks ended March 26, 2005, an increase of $1.9 million compared to $121.6 million
for the corresponding period in 2004, primarily as a result of an increase of $127, or 3.2%, in average revenue per funeral service performed partially offset by a decrease of 1.5% in the number of
funeral services performed from the corresponding period in 2004.

The
number of cremation services performed as a percentage of total services performed increased to 36% for the 12 weeks ended March 26, 2005, compared to 35% for the
corresponding period in 2004, consistent with national trends. The number of cremation services performed may impact funeral revenue, as the average revenue per cremation service is typically lower
than the average revenue for a traditional funeral service.

Funeral
gross margin as a percentage of revenue increased to 24.1% for the 12 weeks ended March 26, 2005, compared to 23.7% for the corresponding period in 2004. The
increase in gross margin was primarily due to the increase in funeral revenue. Due to the fixed nature of funeral costs over the short term, the Company believes that the amount of funeral revenue can
be increased without incurring significantly higher funeral costs, which could favourably impact funeral gross margins.

Pre-need
funeral contracts written for the 12 weeks ended March 26, 2005, were $43.2 million, compared to $40.2 million for the corresponding
period in 2004. The Company is continuing its program to increase pre-need sales. For the 12 weeks ended March 26, 2005, and for the corresponding period in 2004, 27% of the
funeral services performed were derived from backlog. The Company manages the cash impact

22

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of
its pre-need funeral sales program primarily by offsetting direct costs, including commissions paid to counselors, with either general agency commissions received from third party and
related insurance companies or amounts not required to be trusted. Pre-need funeral sales are important, because over time, they build the foundation for future funeral revenue and
generate positive cash flow when the funeral service is performed.

Cemetery
revenue of $38.2 million for the 12 weeks ended March 26, 2005, was $1.7 million, or 4.7%, higher than cemetery revenue for the corresponding period
in 2004, primarily due to higher pre-need space sales and a reduction of $0.7 million in the allowance for cancellation of related customer receivables as a result of analysis of improving
collection trends. This reduction in allowance was recorded in cemetery revenue.

Cemetery
gross margin as a percentage of revenue decreased slightly to 13.4% for the 12 weeks ended March 26, 2005, compared to 13.8% for the corresponding period in 2004,
primarily due to a $0.3 million decline in the income on its perpetual care trusts.

Pre-need
cemetery contracts written for the 12 weeks ended March 26, 2005, were $20.9 million, compared to $18.2 million for the corresponding
period in 2004. The increase in pre-need cemetery contracts written was primarily due to higher sales of cemetery spaces as the Company's sales force initiatives take effect.
Pre-need cemetery sales may initially decrease cash flows if the amount of cash initially collected is insufficient to cover the amount required to be trusted, sales commissions, and other
direct costs paid out. However, this cash flow impact is not significant, as the Company sets minimum down payments, maximum terms and sales commission rates to maximize cash flow. The Company
believes that pre-need cemetery sales are important, because over time, they generate positive cash flow and build the foundation for future cemetery revenue.

Insurance
revenue for the 12 weeks ended March 26, 2005, increased $3.2 million, or 17.4%, compared to the corresponding period in 2004, primarily due to increases
in premiums of $3.0 million. Insurance premium revenue is dependent on the level of pre-need funeral contracts written over time that are funded by the Company's insurance subsidiary. Insurance
production represents the insurance segment's participation in the Company's pre-need funeral contracts and for the 12 weeks ended March 26, 2005 was $30.4 million
compared to $25.3 million for corresponding period in 2004. Insurance gross margin as a percentage of revenue increased to 5.9% for the 12 weeks ended March 26, 2005, compared to
4.9% for the corresponding period in 2004, primarily due to the revenue increase being at a rate higher than that of the cost increase. The Company expects the insurance gross margin percentage to
grow modestly over the near term.

Interest
expense on long-term debt for the 12 weeks ended March 26, 2005, was $7.5 million, reflecting the effect of principal repayments and lower
interest rates compared to the corresponding period in 2004. Interest expense on long-term debt for the 12 weeks ended March 27, 2004 included a credit of $7.2 million from the
unamortized premium upon the early retirement of the 12.25% Convertible Subordinated Notes due in 2012, as detailed in the following table:

|                                                                                                                              |  | 12 weeks ended |    
|----------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---
|
|
|Tender premium on the repurchase of the 12.25% Senior unsecured notes due in 2009                                             |  | $              | 0.3
|Amortization of debt issue costs                                                                                              |  |                | 0.6
|Unamortized premium credited to interest expense on 12.25% Convertible subordinated notes due in 2012 that were fully retired |  |                |   
|Interest on long-term debt                                                                                                    |  |                | 6.6
|Allocation of interest to discontinued operations                                                                             |  |                |   
|                                                                                                                              |  |                |    
|Interest on long-term debt                                                                                                    |  | $              | 7.5
|                                                                                                                              |  |                |    

23

---



General
and administrative expenses for the Company for the 12 weeks ended March 26, 2005, were $10.6 million, or 5.8% of consolidated revenue, compared to
$11.7 million, or 6.6% of consolidated revenue for the corresponding period in 2004 primarily from a $0.9 million reduction of an accrual on the settlement of a legal matter relating to
a trustee fee dispute.

Income
tax expense for the 12 weeks ended March 26, 2005, was $11.2 million compared to $5.6 million for the corresponding period in 2004. The effective rate
of tax was 45.3% for the 12 weeks ended March 26, 2005, compared to 33.0% for the 12 weeks ended March 27, 2004. The effective tax rate varied from the statutory tax rate
for the 12 weeks ended March 26, 2005, because in certain jurisdictions there was an increase in the valuation allowance for which realization of the associated deferred tax benefit was
not considered more likely than not and losses incurred in certain jurisdictions may not offset the income in profitable jurisdictions. The Company's effective tax rate for the 12 weeks ended
March 27, 2004, varied from the statutory tax rate as a result of the favorable settlement of an income tax audit of $0.5 million and the impact of state and foreign income taxes. Future
income and losses may require the Company to record a change in the valuation allowance of tax assets that were taken into account in determining the net amount of liability for deferred income taxes
recorded on its balance sheet at March 26, 2005. If this occurs, any resulting increase in the valuation allowance would generally be treated as an additional income tax expense in the period
in which it arises, while any resulting decrease reflecting realization of the benefits of tax assets that had a corresponding valuation allowance established on January 2, 2002, would be
treated as a reduction of goodwill established on January 2, 2002, with any excess over the value assigned to such goodwill recognized as a capital transaction.

At
December 31, 2001, the Company had accrued $57.1 million of reorganization costs related to costs incurred during the Predecessor's reorganization, as well as costs
incurred in connection with the actual emergence and various related activities. As of March 26, 2005, the balance of $11.0 million of reorganization costs, primarily consisting of
accruals for a trustee fee dispute and legal fee reimbursements, has been included in accounts payable and accrued liabilities. Subsequent to March 26, 2005, the Company resolved the
outstanding trustee fee dispute and reduced its accrual for reorganizational cost by $0.9 million.

Discontinued Operations

Over the previous three fiscal years, the Company engaged in a strategic market rationalization assessment to dispose of cemetery and funeral operating locations
that did not fit into the Company's market or business strategies, as well as under-performing locations and excess cemetery land. The identification of business operations for disposal is complete.
The Company will, on a smaller scale and over time, continue to assess the Company's portfolio of funeral and cemetery locations to ensure they continue to fit in the Company's strategy. Once a
property is added to the disposal list, the Company expects to receive a firm purchase commitment within one year. As of March 26, 2005, the Company had 17 funeral, three cemetery and
four combination locations, which have not been sold within one year of being added to the disposal list. Subsequent to March 26, 2005, the Company had completed the sale of all the above
locations aside from one cemetery.

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. Depreciation and amortization is not recorded once an asset has
been identified as held for sale. The Company has also reclassified the prior fiscal periods to reflect any comparative amounts on a similar basis. All discontinued operations financial information
presented under the insurance segment relate to Security Plan Life Insurance Company.

During
the 12 weeks ended March 26, 2005, the Company closed four funeral locations and sold one funeral and three cemetery locations for gross
proceeds of $1.2 million.

24

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Pre-need Funeral and Cemetery Backlog for Continuing Operations

The Company's backlog represents pre-need funeral and cemetery arrangements with customer families. These arrangements are subject to trust or insurance funding
requirements. The activities in the Company's funeral backlog, excluding the effects of unrealized gains and losses on trust investments, were as follows:

|                                |                                                                                    | 12 Weeks Ended |          
|------------------------------- | ---------------------------------------------------------------------------------- | -------------- | ---------
|
|
|Funeral backlog:                |                                                                                    |                |          
|                                | Beginning balance                                                                  |                | $        
|                                | Sales, net of cancellations                                                        |                |          
|                                | Maturities                                                                         |                |          
|                                | Net increase in insurance benefits and earnings realized on funeral trust balances |                |          
|                                | Change in cancellation reserve                                                     |                |          
|                                | Other                                                                              |                |          
|                                |                                                                                    |                |          
|                                | Ending balance                                                                     |                | $        
|                                |                                                                                    |                |          
|Trust funded                    |                                                                                    | $              | 348,854  
|Third party insurance companies |                                                                                    |                | 663,589  
|Subsidiary insurance companies  |                                                                                    |                | 283,628  
|                                |                                                                                    |                |          
|                                |                                                                                    | $              | 1,296,071
|                                |                                                                                    |                |          

The
activities in the Company's cemetery backlog, excluding the effects of unrealized gains and losses on trust investments, were as follows:

|                  |                                              | 12 Weeks Ended |  
|----------------- | -------------------------------------------- | -------------- | -
|
|
|Cemetery backlog: |                                              |                |  
|                  | Beginning balance                            |                | $
|                  | Sales, net of cancellations                  |                |  
|                  | Maturities                                   |                |  
|                  | Earnings realized on cemetery trust balances |                |  
|                  | Change in cancellation reserve               |                |  
|                  |                                              |                |  
|                  | Ending balance                               |                | $
|                  |                                              |                |  

Liquidity and Capital Resources

Cash Flows

The Company derives the majority of its cash from at-need funeral and cemetery revenue. Cash flow is also impacted by the funeral and cemetery
pre-need activities. Pre-need funeral and cemetery activities are discussed in detail in Item 1 "Business" in Alderwoods Group's Annual Report on Form 10-K for
the 52 weeks ended January 1, 2005, as filed with the SEC.

Net
cash from continuing operating activities was $41.7 million for the 12 weeks ended March 26, 2005, compared to $4.9 million for the corresponding period
in 2004. The increase is primarily due to the

25

---



increase
of $15.0 million in withdrawals of excess funds from funeral and cemetery trusts resulting from the Company's ongoing review process, and $16.1 million related to collateral for
liability lines of insurance coverage replaced with letters of credit. The Company has substantially completed its ongoing review of excess funds from funeral and cemetery trusts and has
completed the withdrawal of excess funds.

The
Company's insurance subsidiaries are subject to certain state regulations that restrict distributions, loans and advances from such subsidiaries to the Company and its other
subsidiaries. Dividends are only distributable after regulatory approval is obtained. The cash inflows from operations of the insurance subsidiaries are primarily generated from insurance premiums,
all of which are invested in insurance invested assets.

Net
cash used in continuing investing activities was $4.4 million for the 12 weeks ended March 26, 2005, compared to $1.7 million for the corresponding period
in 2004, primarily due to the increase of $1.9 million in net purchase of insurance invested assets.

Net
cash used in continuing financing activities was $31.7 million for the 12 weeks ended March 26, 2005, compared to $9.3 million for the
corresponding period in 2004. The increase was primarily due to the higher net repayment of debt during the 12 weeks ended March 26, 2005, compared to the corresponding period in 2004.

The
net increase in cash from discontinued operations was $1.8 million for the 12 weeks ended March 26, 2005, compared to a decrease of $0.1 million in the
corresponding period in 2004.

As
of March 26, 2005, the Company expects to complete the sale of its funeral homes, cemeteries and real estate held for sale in 2005, with the majority of expected proceeds of
approximately $12.0 million used to further reduce long-term debt. Subsequent to March 26, 2005, the Company completed the sale of its remaining discontinued locations aside
from one cemetery for proceeds of approximately $6.0 million. Actual amounts could significantly differ from these estimates, as the assets held for sale and proceeds may change as a result of
further negotiations with potential buyers.

As
of March 26, 2005, the Company's cash balance was $16.9 million and the amount available under the Credit Agreement's $75.0 million revolving credit facility (the
"Revolving Credit Facility") was $75.0 million, less $25.6 million in outstanding letters of credit. The Company's debt repayment obligation over the next 12 months is
$4.2 million and aggregates $230.3 million over the next five years. The Company believes that the Revolving Credit Facility, together with existing cash, cash flow from operations and
expected cash proceeds from the sale of discontinued operations, will be sufficient to meet the Company's anticipated capital expenditures, working capital requirements and debt repayment obligations
in both the near and intermediate terms.

26

---



Long-Term Indebtedness

The change in the Company's carrying amounts of long-term indebtedness is as follows:

|Issue                                            |                  | Long-Term Indebtedness Carrying Value January 1, 2005 |       | Net increase
(decrease) |   | Long-Term Indebtedness Carrying Value March 26, 2005
|------------------------------------------------ | ---------------- | ----------------------------------------------------- | ----- | ----------------------- | - | ----------------------------------------------------
|
|Revolving credit facility                        |                  | $                                                     |      |                         | $ |                                                    
|Senior secured Term Loan B due in 2009           |                  |                                                       | 246.8 |                         |   | (26.1                                               
|7.75% Senior unsecured notes due in 2012         |                  |                                                       | 200.0 |                         |   |                                                    
|12.25% Senior unsecured notes due in 2009        |                  |                                                       | 4.5   |                         |   | (4.5                                                
|Promissory notes and capitalized obligations (a) |                  |                                                       | 12.3  |                         |   | (1.0                                                
|                                                 |                  |                                                       |       |                         |   |                                                     
|                                                 | Carrying amounts |                                                       | $     | 463.6                   |   | $                                                   
|                                                 |                  |                                                       |       |                         |   |                                                     

---

The
Credit Agreement and the Eight-Year Senior Unsecured Notes are guaranteed by substantially all of Alderwoods Group's wholly-owned U.S. subsidiaries, other than the Alderwoods
Group's insurance subsidiaries and certain other excluded subsidiaries. Alderwoods Group, Inc., the parent company, has no independent assets or operations, and the guarantees of its guarantor
subsidiaries are full and unconditional, and joint and several.

Financial
covenants under the Credit Agreement require the Company to maintain a minimum interest coverage ratio and fixed charge coverage ratio, and not to exceed a maximum leverage
ratio. As of March 26, 2005, the Company met all of the financial covenants required by the Credit Agreement.

Pursuant
to the indenture governing the Eight-Year Senior Unsecured Notes, the Company has entered into a registration rights agreement (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, the Company is required, on or prior to May 16, 2005, to file an exchange offer registration statement in an appropriate form under the Securities
Act of 1933 with the SEC. Upon the effectiveness of the exchange offer registration statement, the Company will offer holders of the Eight-Year Senior Unsecured Notes the opportunity to
exchange their notes for notes with substantially identical terms covered by the exchange offer registration statement. In the event (i) the Company fails to timely file an appropriate
registration statement, (ii) the registration statement is not timely declared effective, (iii) the Company fails to timely consummate the exchange offer, or (iv) the registration
statement is declared effective, but thereafter ceases to be effective or usable during periods specified in the Registration Rights Agreement (each of (i) through (iv), a "Registration
Default"), then the Company will be subject to liquidated damages within the first 90-day period immediately following the Registration Default, of 0.25% per annum of the outstanding
principal amount of the Eight-Year Senior Unsecured Notes. The amount of liquidated damages will increase by an additional 0.25% per annum with respect to each subsequent
90-day period until the Registration Default has been cured, up to a maximum of 1.00% per annum.

27

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Contractual Obligations and Commercial Commitments

The following table details the Company's contractual obligations of continuing and discontinued operations as of March 26, 2005. Significant changes to
long-term debt are discussed above under "Long-Term Indebtedness."

|                                                     |  |   |         | Payments Due by Period
|---------------------------------------------------- |  | - | ------- | ----------------------
|
|
|Long-term debt (a)                                   |  | $ | 420,707 |                       
|Promissory notes and capitalized obligations (a) (b) |  |   | 11,351  |                       
|Operating leases (c)                                 |  |   | 42,767  |                       
|Purchase obligations (d)                             |  |   | 4,100   |                       
|                                                     |  |   |         |                       
|Total                                                |  | $ | 478,925 |                       
|                                                     |  |   |         |                       

---

In
addition to the operating leases noted in the table above, as of March 26, 2005, the Company leased approximately 1,270 vehicles under a master operating lease
agreement, which has a minimum lease term of 12 months. The Company's practice is to continue these leases on a month-to-month basis after the expiry of the minimum
lease term. Lease payments for these vehicles are projected to be $7.4 million over the next 12 months.

The
Company issues purchase orders for the supply of goods and services for its operations. As of March 26, 2005, there were no significant or unusual purchase orders outstanding.
The Company entered into agreements with certain suppliers of funeral and cemetery merchandise, and office supplies to obtain volume discounts. However, none of these agreements have committed
purchase quantities or prices.

The
following table details the Company's commercial commitments as of March 26, 2005.

|                                   |  |   |      | Amount of Commitment Expiration Per Period
|---------------------------------- |  | - | ---- | ------------------------------------------
|
|
|Lines of credit (a)                |  | $ |     |                                           
|Standby letters of credit (b)      |  |   | 25.6 |                                           
|                                   |  |   |      |                                           
|Total contractual cash obligations |  | $ | 25.6 |                                           
|                                   |  |   |      |                                           

---

28

---



At
March 26, 2005, the aggregate fair value of the Company's forward foreign currency exchange contracts and foreign currency option contracts was an asset of
$0.9 million. There has been no material change in the Company's forward foreign currency exchange contract and foreign currency option commitments, which are described under Item 7A.
" Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the 52 weeks ended January 1, 2005, as
filed with the SEC.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements as of March 26, 2005, consist of operating leases noted above under "Contractual Obligations and Commercial Commitments."

Other Information

EBITDA from Continuing Operations

The Company's earnings from continuing operations before interest on long-term debt and refinancing costs, taxes, depreciation and amortization, provision for
goodwill impairment and provision for asset impairment ("EBITDA") are presented in the table below and reconciled to the Company's net income (loss) from continuing operations. The Company considers
EBITDA to be an important supplemental indicator of operating performance. The Company believes that EBITDA is frequently used by securities analysts, investors and other interested parties in the
evaluation of the operating performance of companies with high yield debt, and the vast majority of companies with high yield debt present EBITDA when reporting their results. The Company believes
EBITDA facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting relative
interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and the age and book depreciation of facilities and equipment
(affecting relative depreciation expense). It is also one basis, subject to certain modifications, on which compliance with certain of the financial covenants under the Credit Agreement is determined
and some payments under certain of the
Company's compensation plans are calculated. EBITDA is not a term that has specific meaning in accordance with GAAP and may be calculated differently by other companies. EBITDA is not a measurement of
the Company's financial performance under GAAP and should not be considered in isolation, as an alternative to net income, operating income or any other performance measures derived in accordance with
GAAP, or otherwise as a measure of a company's profitability, or as an alternative to cash flows from operating activities or otherwise as a measure of the Company's liquidity.

EBITDA
has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of results as reported under GAAP. Some of these limitations are:



29

---





Because
of these limitations, EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of its business or reduce our
indebtedness.

|                                                 |  | 12 Weeks Ended
|------------------------------------------------ |  | --------------
|
|
|EBITDA from continuing operations:               |  |               
|Net income from continuing operations            |  | $             
|Income taxes                                     |  |               
|Interest on long-term debt and refinancing costs |  |               
|Depreciation                                     |  |               
|Provision for asset impairment                   |  |               
|                                                 |  |               
|EBITDA from continuing operations                |  | $             
|                                                 |  |               

Restrictions

The Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes restrict the Company's ability to engage in asset sales. The Credit
Agreement and indenture governing the Eight-Year Senior Unsecured Notes prohibit dispositions of assets unless the assets disposed of fulfill the requirements of specified exceptions. The indenture
governing the Eight-Year Senior Unsecured Notes excepts, among other exceptions, assets with a fair market value less than $5.0 million. One specified exception contained in the Credit
Agreement is dispositions of any of a group of identified "discontinued assets;" another is dispositions of assets not exceeding $35.0 million book value in the aggregate over the life of the
Credit Agreement, provided that (i) the consideration received is at least equal to fair market value and (ii) not less than 75% of the consideration is paid in cash or cash equivalents.
Within 270 days of the receipt of net proceeds from any such asset sale, the Company has
the ability to apply such net proceeds at its option (or as otherwise required) to invest in non-current operating assets (or enter into agreements for such investment which agreements
are consummated within 360 days of such receipt of asset sale proceeds). Up to $10.0 million of such net proceeds in any fiscal year (but not in excess of $40.0 million in the
aggregate over the term of the Credit Agreement) may be applied to make capital expenditures. To the extent the Company receives net proceeds in excess of additional specified thresholds and such
excess is not applied to invest in non-current operating assets or make capital expenditures as described in the two immediately preceding sentences, the Company must make mandatory repayments under
the Credit Agreement and, after all indebtedness under the Credit Agreement has been repaid, offer to purchase the Eight-Year Senior Unsecured Notes at a purchase price equal to 100.0% of the stated
principal amount, plus accrued and unpaid interest and Liquidated Damages (as defined in the indenture governing the Eight-Year Senior Unsecured Notes), if any.

Covenants
in the Credit Agreement and in the indenture governing the Eight-Year Senior Unsecured Notes restrict, and under specified circumstances prohibit, the payment of dividends by
Alderwoods Group. The Company is not expecting to pay any dividends on the Common Stock in the foreseeable future.

The
Company's insurance subsidiaries are subject to certain state regulations that restrict distributions, loans and advances from such subsidiaries to the Company and its other
subsidiaries. The cash flow used in operations of the insurance subsidiaries for the 12 weeks ended March 26, 2005, was approximately $10.3 million.

30

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Continuing and Discontinued Locations

The Company's number of continuing and discontinued locations by country, state and province as of March 26, 2005, and the overall totals as of
March 26, 2005, and January 1, 2005, are summarized in the table below.

|                                     |                  | Number of Continuing
Operations Locations |    | Number of Discontinued
Operations Locations |    |    |   |    |    |  
|------------------------------------ | ---------------- | ----------------------------------------- | -- | ------------------------------------------- | -- | -- | - | -- | -- | -
|
|
|
|Canada                               |                  |                                           |    |                                             |    |    |   |    |    |  
|                                     | British Columbia |                                           | 17 |                                             |   |    | 1 |    |   |  
|                                     | Alberta          |                                           | 11 |                                             |   |    |  |    |   |  
|                                     | Saskatchewan     |                                           | 23 |                                             |   |    |  |    |   |  
|                                     | Manitoba         |                                           | 3  |                                             | 1  |    | 2 |    |   |  
|                                     | Ontario          |                                           | 22 |                                             |   |    |  |    |   |  
|                                     | Quebec           |                                           | 17 |                                             |   |    |  |    |   |  
|                                     | Nova Scotia      |                                           | 10 |                                             |   |    |  |    |   |  
|                                     |                  |                                           |    |                                             |    |    |   |    |    |  
|Total Canadian                       |                  | 103                                       |    | 1                                           |    | 3  |   |   |    | 
|United States                        |                  |                                           |    |                                             |    |    |   |    |    |  
|                                     | Alabama          |                                           | 8  |                                             |   |    | 1 |    |   |  
|                                     | Alaska           |                                           | 3  |                                             |   |    |  |    |   |  
|                                     | Arizona          |                                           | 5  |                                             |   |    | 1 |    |   |  
|                                     | Arkansas         |                                           | 3  |                                             |   |    |  |    |   |  
|                                     | California       |                                           | 46 |                                             | 1  |    | 7 |    |   |  
|                                     | Colorado         |                                           | 3  |                                             | 1  |    | 1 |    |   |  
|                                     | Connecticut      |                                           | 3  |                                             |   |    |  |    |   |  
|                                     | Florida          |                                           | 32 |                                             | 5  |    | 8 |    | 13 |  
|                                     | Georgia          |                                           | 24 |                                             | 6  |    | 5 |    |   |  
|                                     | Idaho            |                                           | 4  |                                             | 1  |    |  |    |   |  
|                                     | Illinois         |                                           | 6  |                                             | 16 |    | 3 |    |   |  
|                                     | Indiana          |                                           | 16 |                                             | 4  |    | 1 |    |   |  
|                                     | Kansas           |                                           | 7  |                                             |   |    |  |    |   |  
|                                     | Kentucky         |                                           | 1  |                                             |   |    |  |    |   |  
|                                     | Louisiana        |                                           | 22 |                                             | 2  |    |  |    |   |  
|                                     | Maryland         |                                           | 2  |                                             |   |    |  |    |   |  
|                                     | Massachusetts    |                                           | 13 |                                             |   |    |  |    |   |  
|                                     | Michigan         |                                           | 12 |                                             |   |    |  |    |   |  
|                                     | Minnesota        |                                           | 9  |                                             | 1  |    | 1 |    |   |  
|                                     | Mississippi      |                                           | 21 |                                             | 1  |    | 3 |    | 1  |  
|                                     | Montana          |                                           | 4  |                                             |   |    |  |    |   |  
|                                     | Nevada           |                                           | 2  |                                             |   |    | 1 |    |   |  
|                                     | New Hampshire    |                                           | 4  |                                             |   |    |  |    |   |  
|                                     | New Mexico       |                                           | 5  |                                             |   |    |  |    |   |  
|                                     | New York         |                                           | 38 |                                             | 1  |    |  |    |   |  
|                                     | North Carolina   |                                           | 26 |                                             | 8  |    | 3 |    |   |  
|                                     | Ohio             |                                           | 16 |                                             | 4  |    | 1 |    |   |  
|                                     | Oklahoma         |                                           | 18 |                                             | 1  |    | 1 |    |   |  
|                                     | Oregon           |                                           | 18 |                                             | 1  |    | 3 |    |   |  
|                                     | Pennsylvania     |                                           | 6  |                                             |   |    |  |    |   |  
|                                     | Rhode Island     |                                           | 3  |                                             |   |    |  |    |   |  
|                                     | South Carolina   |                                           | 6  |                                             | 5  |    | 2 |    |   |  
|                                     | Tennessee        |                                           | 31 |                                             | 2  |    | 5 |    |   |  
|                                     | Texas            |                                           | 60 |                                             | 4  |    | 4 |    | 3  |  
|                                     | Virginia         |                                           | 22 |                                             |   |    |  |    |   |  
|                                     | Washington       |                                           | 21 |                                             | 3  |    | 3 |    |   |  
|                                     | West Virginia    |                                           | 3  |                                             |   |    |  |    |   |  
|                                     | Puerto Rico      |                                           | 3  |                                             | 5  |    | 2 |    |   |  
|                                     |                  |                                           |    |                                             |    |    |   |    |    |  
|Total United States                  |                  | 526                                       |    | 72                                          |    | 56 |   | 17 |    | 3
|                                     |                  |                                           |    |                                             |    |    |   |    |    |  
|Overall total, as of March 26, 2005  |                  | 629                                       |    | 73                                          |    | 59 |   | 17 |    | 3
|                                     |                  |                                           |    |                                             |    |    |   |    |    |  
|Overall total, as of January 1, 2005 |                  | 630                                       |    | 73                                          |    | 59 |   | 18 |    | 6
|                                     |                  |                                           |    |                                             |    |    |   |    |    |  

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding the Company's exposure to certain market risks, see Item 7A. "Quantitative and Qualitative Disclosures About
Market Risk" in the Company's Annual Report on Form 10-K for the 52 weeks ended January 1, 2005, as filed with the SEC. As of March 26, 2005, there were
no material changes in such matters disclosed in the Form 10-K.

ITEM 4.    CONTROLS AND PROCEDURES

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. As of the end of the period covered
by the report, an evaluation was carried out, under the supervision and with the participation of the Company's management, including the Chief Executive Officer, the Company's principal executive
officer (the "CEO"), and the Chief Financial Officer, the Company's principal financial officer (the "CFO"), of the effectiveness of the Company's disclosure controls and procedures as of
March 26, 2005. The Company has not completed implementation of the changes it believes are required to remediate the previously reported material weaknesses in internal control over financial
reporting related to maintaining an effective control environment (i) over the financial reporting and income tax processes that have resulted in limitation in the capacity of the accounting
and tax resources to identify and react in a timely manner to new accounting pronouncements and non-routine and complex business transactions and (ii) at its operating locations
that have resulted in the Company not achieving full awareness and consistent compliance with the Company's policies and procedures which are designed to both prevent and detect misstatements at the
location level. As a result, the CEO and CFO have concluded that the Company's disclosure controls and procedures were not effective as of March 26, 2005.

In
addition to the changes outlined below, the Company has implemented various procedures to correct and/or mitigate the material weaknesses and other deficiencies the Company has
identified. The Company believes that the actions it has taken to date in this regard, when taken as a whole, have mitigated the material weaknesses and other deficiencies with respect to the
preparation of this Quarterly Report on Form 10-Q such that the information required to be disclosed herein has been recorded, processed, summarized and reported correctly.

Plan for remediation of Internal Controls Over Financial Reporting

In
order to remediate these material weaknesses, the Company is making the following changes:



32

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Changes In Internal Controls Over Financial Reporting

During the first fiscal quarter of 2005 the Company continued implementing a new tax accounting system. The new tax accounting system is designed to improve the
accuracy and timing of the state and entity level calculations required for financial statement disclosure and detailed analysis of the valuation allowance.

During
the first fiscal quarter of 2005 the Company continued implementing a new pre-need funeral trust accounting software system. The implementation has involved changes to our
processes, and accordingly, has required changes to internal controls.

Other
than the changes discussed above, there have not been any changes in the Company's internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) promulgated by the SEC under the Securities Exchange Act of 1934) during the Company's most recently completed fiscal
quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, 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 in this Quarterly Report on Form 10-Q, 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, although not all forward-looking statements contain such identifying words. These
forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Risks and uncertainties that could cause or
contribute to such differences include, without limitation, those discussed elsewhere in this Quarterly Report on Form 10-Q and particularly below under "Risk Factors" and above under
"Management's Discussion and Analysis of Financial Condition and Results of Operations."

The
information appearing in this Quarterly Report on Form 10-Q is accurate only as of the date hereof, as the Company's business, financial condition, results of
operations or prospects may have changed after that date. Except as required by law, 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. All subsequent written and oral forward-looking statements attributable to the Company and
persons acting on its behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this Quarterly Report on Form 10-Q.

Risk Factors

In addition to other information in this Quarterly Report on Form 10-Q, the following important factors, among others, could cause future
results to differ materially from estimates, predictions or projections.

33

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Risks Related to the Company's Debt

The Company's significant level of debt and interest payment obligations may restrict future operations and impair the Company's ability
to meet debt obligations.

The
significant level of debt and demands on the Company's cash resources could have material consequences to the Company's business, including, but not limited to:



Despite the Company's significant level of debt, the Company may still be able to incur more debt, which could intensify the risks described above.

The
Company may be able to incur significant amounts of debt in the future, subject to compliance with its existing financing arrangements. Although the Company's Credit Agreement and
the indenture governing the Eight-Year Senior Unsecured Notes contain restrictions on the incurrence of additional debt, debt incurred in compliance with these restrictions could be
significant. If new debt is added to the Company's and its subsidiaries' current debt level, the related risks that the Company faces would be magnified.

The Company may not be able to generate sufficient cash to service all of its debt.

The
Company's ability to make payments on and to refinance its debt depends on its ability to generate cash in the future, which will be affected by the death rate and general economic,
financial, competitive, legislative, regulatory and other factors beyond the Company's control. The Company cannot assure that its business will generate sufficient cash flows from operations or that
future borrowings will be available to it under its Credit Agreement in amounts sufficient to enable it to service its debt at maturity or otherwise, or to fund its other liquidity needs.

If
the Company is unable to meet its debt obligations or to fund its other liquidity needs, the Company may need to restructure or refinance its debt. The Company's ability to refinance
its debt or obtain additional financing will depend on:



As
a result, it may be difficult for the Company to obtain financing on terms that are acceptable to it, or at all. Without this financing, the Company could be forced to sell assets
under unfavorable circumstances to make up for any shortfall in its payment obligations. The terms of the Company's Credit

34

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Agreement
and the indenture governing the Eight-Year Senior Unsecured Notes limit the Company's ability to sell assets and also restrict the use of proceeds from such a sale. Moreover,
substantially all of the Company's assets have been pledged to secure repayment of its debt under the Credit Agreement. In addition, the Company may not be able to sell assets quickly enough or for
sufficient amounts to enable it to meet its obligations.

The Company depends on the cash flows from its subsidiaries to meet its obligations.

Alderwoods Group is a holding company with no independent operations. As a result, Alderwoods Group depends on its subsidiaries to provide cash flows necessary to
service debt obligations at the Alderwoods Group level. Alderwoods Group's cash flows and its ability to service its debt depends on the earnings of its subsidiaries and on the distribution of
earnings, loans or other payments to it by these subsidiaries. The ability of a subsidiary to make any dividend, distribution, loan or other payment to Alderwoods Group or another subsidiary could be
subject to statutory or contractual restrictions. For example, Alderwoods Group's insurance subsidiaries are subject to state regulation that restrict distributions, loans and advances to Alderwoods
Group and other subsidiaries. Payments by a subsidiary to Alderwoods Group or another subsidiary will also be contingent upon earnings and business considerations of such subsidiary. Because
Alderwoods Group depends on the cash flows of subsidiaries to meet its obligations, these types of restrictions may impair Alderwoods Group's ability to make scheduled interest and principal payments
on its debts.

Restrictive covenants in the Company's Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes may prevent it from pursuing business
activities that could otherwise improve its results of operations.

The
terms of the Company's Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes limit its ability and the ability of its subsidiaries to, among
other things:



The
Company's Credit Agreement also requires it to maintain financial ratios. Complying with these restrictive covenants and financial ratios, as well as those that may be contained in
any future debt agreements, may impair the Company's ability to finance its future operations or capital needs or to take advantage of other favorable business opportunities. The Company's ability to
comply with these restrictive covenants and financial ratios will depend on its future performance, which may be affected by events beyond its control. The Company's failure to comply with any of
these covenants or restrictions when they apply will result in a default under the particular debt instrument, which could permit acceleration of the debt under that instrument and, in some cases, the
acceleration of debt under other instruments that contain cross-default or cross-acceleration provisions. In an event of default, or in the event of a cross-default or cross-acceleration, and if the
Company is unable to negotiate a waiver with its lenders, the Company may not have sufficient funds available to make the required payments under its debt. If the Company is unable to repay amounts
owed under the terms of the Credit Agreement, the lenders

35

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thereunder
may be entitled to sell most or substantially all of the Company's assets and the assets of many of its subsidiaries to satisfy its obligations under the Credit Agreement.

Risks Related to the Company

The Company operates in a highly competitive industry.

The North American death care industry primarily consists of small family-owned businesses. The death care industry in the United States is made up of
approximately 22,000 funeral homes and 10,500 cemeteries. The Company believes the three largest public operators in the death care industry in the United States based on total revenue and
number of locations, are Service Corporation International, Alderwoods Group and Stewart Enterprises, Inc. The Company believes the three largest public death care companies collectively
generate approximately 20% of funeral service revenues in the United States. The Company's competition in the markets in which it operates generally arise from one or more of the above public
operators in addition to independent operators of funeral homes and cemeteries for at-need and pre-need business. The market share of a single funeral home or cemetery in any
community is a function of the name, reputation and location of that funeral home or cemetery although competitive pricing, professional service and attention and well-maintained locations
are also important. Gains in market share within a community are usually realized over a number of years, although losses in market share may appear in a shorter time frame.

To
compete successfully, the Company's funeral services and cemeteries must maintain good reputations and high professional standards in the industry, as well as offer attractive
products and services at competitive prices. In addition, the Company must market itself in such a manner as to distinguish it from its competitors. The Company has historically experienced price
competition from independent funeral home and cemetery operators, and from monument dealers, casket retailers, low-cost funeral providers and other non-traditional providers of
services or products. The intense competition the Company faces may force it to reduce prices and thereby its profit margins to retain or recapture its market share. If the Company is unable to
successfully compete, its financial condition, results of operations and cash flows could be materially and adversely affected.

The Company's investments held in trusts are invested in securities, the value of which is affected by financial market conditions that are beyond its
control.

Cemetery
revenue is impacted by perpetual care trust net realized investment income, which the Company recognizes to the extent of allowed reimbursement from the trust when it performs
cemetery maintenance services. The Company recognizes trust income on funeral and cemetery merchandise and service trust investments when the underlying pre-need funeral and cemetery
contract obligations are fulfilled. The level of trust income is largely dependent on yields on the investments made with trust funds, which are subject to financial market conditions and other
factors that are beyond the Company's control. Trust income is also affected by the mix of fixed income and equity securities the Company chooses to maintain in the funds, and the Company may not
choose the optimal mix for any particular market condition. If earnings from trust funds decline, the Company would likely experience a decline in future revenue and cash flow. In addition, if the
trust funds experienced significant investment losses, there would likely be insufficient funds in the trusts to cover the costs of delivering services and merchandise or to maintain cemeteries in the
future. The Company would have to cover any such shortfalls with cash flows from operations, which could adversely affect its ability to service debt.

The level of pre-need sales and the terms of the Company's pre-need contracts may adversely impact its results of operations and cash
flows.

The
Company recently made significant changes to its pre-need sales force organization. The Company cannot assure that the changes it has made will not result in a decline in
its pre-need sales or that the Company will continue to be successful in recruiting and retaining qualified sales people. In addition,

36

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depending
on the terms of the contract, pre-need sales have the potential to have an initial negative impact on cash flows because of the commission paid on the sale and the portion of
sales proceeds required to be placed into trust or escrow. The Company's commission structure emphasizes contracts with positive cash flows; however, the Company cannot assure that in the future it
will not enter into pre-need sales that have a negative impact on cash flows, which could impair its ability to service debt. A weakening economy that causes customer families to have less
discretionary income could cause a decline in pre-need sales. Declines in pre-need cemetery property sales would reduce current revenue, and declines in other
pre-need sales would reduce the Company's pre-need backlog and future revenue and could reduce future market share.

Increasing insurance benefits related to pre-need services funded through life insurance or annuity contracts may not cover future increases in the cost of
providing a price guaranteed funeral service.

The
Company sells price guaranteed pre-need funeral services at prices prevailing when the agreements are signed. There is no guarantee that the insurance payout or the
annuity contract payout will cover future increases in the cost of providing a price guaranteed funeral service, which could have an effect on the Company's profit margins.

Fluctuations in the value of the Canadian dollar could result in currency exchange losses.

A
significant portion of the Company's corporate and administrative expenses are payable in Canadian dollars, while most of the Company's revenue is generated in U.S. dollars and
the Company reports its financial statements in U.S. dollars. Therefore, a strengthening of the Canadian dollar relative to the U.S. dollar will adversely affect the Company's results of
operations. Expenses for the Company's corporate and administrative functions are paid principally in Canadian dollars and have predictable future cash outflows ("Foreign Currency Expenditure"). The
Company has a program to hedge the variability in the United States dollar equivalent of a portion of the Foreign Currency Expenditure due to the fluctuation in the exchange rate between the United
States dollar and Canadian dollar ("Foreign Currency Hedge Program"). The Company uses forward foreign exchange contracts and foreign
exchange option contracts to partially mitigate foreign exchange variability. Under the Foreign Currency Hedge Program, losses or gains in the Company's underlying foreign exchange exposure are
partially offset by gains or losses on the forward foreign exchange contracts and foreign exchange option contracts, so as to reduce the magnitude of foreign exchange transaction gains or losses. Any
hedging activities the Company undertakes may not be successful in mitigating all of this risk.

The Company's effective income tax rate may vary.

The
Company expects that its effective income tax rate for 2005 may vary significantly from the statutory tax rate because (1) income tax benefits may be offset by an increase in
the valuation allowance due to the uncertainty regarding the ability to utilize the benefits in the future, (2) the losses incurred in certain jurisdictions may not offset the tax expense in
profitable jurisdictions, (3) there are differences between foreign and United States income tax rates and (4) many tax years are subject to audit by different tax jurisdictions,
which audits may result in additional taxes payable.

Volatility is possible.

There
can be no assurance as to the degree of price volatility in the market for the Common Stock and Warrants. The market price of the Common Stock and Warrants may be subject to
significant fluctuations in response to numerous factors, including variations in the Company's annual or quarterly financial results or those of its competitors, changes by financial analysts in
their estimates of the future earnings of the Company, conditions in the economy in general or in the death care industry in particular or unfavorable publicity. Additionally, there can be no
assurance that the market value of the Common Stock will exceed the exercise price of the Warrants at any time prior to their expiration.

Dividends are not anticipated; payment of dividends is subject to restriction.

37

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The
Company is not expecting to pay any dividends on its Common Stock in the foreseeable future. Certain institutional investors may only invest in dividend-paying equity securities or
may operate under other restrictions that may prohibit or limit their ability to invest in the Company's Common Stock. In addition, covenants in the Credit Agreement and indenture governing the
Eight-Year Senior Unsecured Notes restrict, and under certain circumstances prohibit, the payment of dividends by the Company.

Certain provisions in the Company's charter documents have anti-takeover effects.

Certain
provisions of the certificate of incorporation and bylaws of the Company, as well as the General Corporation Law of the State of Delaware, may have the effect of delaying,
deferring or preventing a change in control of the Company. Such provisions, including those providing for the possible issuance of preferred stock of the Company without stockholder approval,
regulating the nomination of directors and eliminating stockholder action by written consent may make it more difficult for other persons, without the approval of the Company's board of directors, to
make a tender offer or otherwise acquire substantial amounts of the Company's Common stock or to launch other takeover attempts that a stockholder might consider to be in such stockholder's best
interest.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on the
Company's access to capital and the market price of the Company's Common Stock.

The
Company recently completed its evaluation of the effectiveness of its internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, which
requires management's assessment of the effectiveness of the Company's internal control over financial reporting as of the end of its most recent fiscal year. In performing such evaluation, management
identified two material weaknesses in the Company's internal control over financial reporting as of January 1, 2005. One material weakness identified is that the Company did not maintain an
effective control environment over the financial reporting and income tax processes such that there were limitations in the capacity of the accounting and tax resources to identify and react in a
timely manner to new accounting pronouncements and non-routine and complex business transactions, certain of which limitations were due to a lack of experienced personnel and turnover in
accounting and corporate tax functions. The other material weakness identified is that the Company did not maintain an effective control environment at its operating locations that have resulted in
the Company not achieving full awareness and consistent compliance with the Company's policies and procedures which are designed to both prevent and detect misstatements at the location level.
Accordingly, management concluded that the Company did not maintain effective internal control over financial reporting as of January 1, 2005. These factors, the Company's inability to
remediate the material weaknesses in a timely manner, or other future changes in internal controls could cause investors to lose confidence in the accuracy of the Company's financial statements and
could have a material adverse effect on the Company's access to capital and the market price of the Company's Common Stock.

Risks Related to the Company's Industry

Declines in the number of deaths in the Company's markets can cause a decrease in revenues. Changes in the number of deaths are not predictable from market to market or over
the short term.

Declines
in the number of deaths could cause at-need sales of funeral and cemetery services, property and merchandise to decline, which could decrease revenues. Although the
United States Bureau of the Census estimates that the number of deaths in the United States will increase through 2010, longer lifespans could reduce the rate of deaths. Changes in the
number of deaths can vary among local markets and from quarter to quarter, and variations in the number of deaths in the Company's markets or from quarter to quarter are not predictable.

The growth in the rate of cremations in North America may result in decreased revenue and gross margin.

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There
is an increasing trend in North America toward cremation. According to the Cremation Association of North America, approximately 29% of all deaths in 2003 in the
United States were followed by cremation. This figure has grown at approximately 1% annually since 1997 and is projected to continue to grow at a comparable rate over the next three to five
years. Compared to traditional funeral services, cremations have historically generated higher gross profit percentages but lower overall revenues. A substantial increase in the rate of cremations
performed by the Company could have a material adverse effect on its financial condition, results of operations and cash flows.

The funeral home and cemetery industry is highly regulated.

The
Company's operations are subject to regulation, supervision and licensing under numerous federal, state, provincial and local laws, ordinances and regulations, including extensive
regulations concerning trust funds, pre-need sales of funeral and cemetery products and services, environmental matters and various other aspects of the business. The impact of such
regulations varies depending on the location of funeral homes and cemeteries. Violations of applicable laws could result in fines or other sanctions to the Company.

From
time to time, federal, state, provincial and local regulatory agencies have considered and may enact additional legislation or regulations that could affect the Company by
increasing costs and decreasing cash flows. For example, additional legislation or regulations requiring more liberal refund and cancellation policies for pre-need sales of products and
services or prohibiting door-to-door or telephone solicitation of potential customer families could adversely impact sales, resulting in lower revenue. Similarly, additional
legislation or regulations increasing trust requirements could reduce the amount of cash available to the Company for other purposes. Additional legislation or regulations prohibiting the common
ownership of funeral homes and cemeteries in the same market could adversely impact both sales and costs and expenses in the affected markets. If adopted in the states or provinces in which the
Company operates, additional legislation or regulations such as these could have a material adverse effect on the Company's financial condition, results of operations and cash flows.

Funeral and cemetery businesses have high fixed costs.

The
Company incurs many of the costs of operating and maintaining facilities, land and equipment regardless of the number of funeral services or internments performed. Because the
Company cannot necessarily decrease these costs when it experiences lower sales volumes, a decline in sales may cause margins, profits and cash flows to decline at a greater rate than a decline in
revenue.

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PART II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding the Company's legal proceedings, see Note 4 to the Company's interim consolidated financial statements included in
Part I of this Quarterly Report on Form 10-Q, which Note 4 is incorporated herein by reference.

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ITEM 6.    EXHIBITS

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                                                                                                                                                                                                                                   
|2.1            |  | Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 99.1 to the
Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed September 10, 2001)                                                                                             
|2.2            |  | Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 2.2
to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)                                                                           
|2.3            |  | Second Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to
Exhibit 2.3 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)                                                                    
|2.4            |  | Order Approving Modification of Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries and Compromise and Settlement of Claims
Filed by Thomas Hardy (incorporated by reference to Exhibit 2.4 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001) 
|2.5            |  | Findings of Fact, Conclusions of Law and Order Confirming Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries, As Modified,
dated December 5, 2001 (incorporated by reference to Exhibit 2.5 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
|2.6            |  | Final Order dated December 7, 2001 (incorporated by reference to Exhibit 2.6 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)                                                                                                                                                                                                             
|2.7            |  | Stock Purchase Agreement dated as of June 17, 2004, by and between Citizens Insurance Company of America and Mayflower National Life Insurance Company (incorporated by reference to Exhibit 2.7 to the Form 10-Q of
Alderwoods Group, Inc., SEC File No. 000-33277, filed July 26, 2004)                                                                                         
|3.1            |  | Certificate of Incorporation of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28,
2002)                                                                                                                                                                                        
|3.2            |  | Bylaws of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.2 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)                                                                                                                                                                                                              
|4.1            |  | Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Form 10-12G/A of Loewen Group International, Inc., SEC File No. 000-33277, filed December 17,
2001)                                                                                                                                                                                   
|4.2            |  | Equity Registration Rights Agreement among Alderwoods Group, Inc. and certain holders of Common Stock. (incorporated by reference to Exhibit 4.2 to the Form 10-K of Alderwoods Group, Inc., SEC
File No. 000-33277, filed March 28, 2002)                                                                                                                                        
|4.3            |  | Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)                                                                                                                                                                                                                             
|4.4            |  | Form of Warrant Certificate (incorporated by reference to Exhibit A to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed on March 28, 2002)                                                                                                                                                                                                   
|               |  |                                                                                                                                                                                                                                                                                                                                                                                   

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|4.5  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc., and Angelo, Gordon & Co. (incorporated by reference to Exhibit 4.6 to the Form 10-Q of Alderwoods Group, Inc., SEC
file No. 000-33277, filed July 24, 2002)                                                                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Franklin Mutual Advisors, LLC (incorporated by reference to Exhibit 4.7 to the Form 10-Q of
Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                                        
|4.7  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and GSCP Recovery, Inc. and GSC Recovery II, L.P. (incorporated by reference to Exhibit 4.8 to the
Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                        
|4.8  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Oaktree Capital Management, LLC (incorporated by reference to Exhibit 4.9 to the Form 10-Q of
Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                                      
|4.9  |  | Indenture governing the 73/4% Senior Unsecured Notes due 2012 (incorporated by reference to Exhibit 4.9 to the Form 10-Q of Alderwoods Group, Inc., SEC File
No. 000-33277, filed November 18, 2004)                                                                                                                                                                                                                                 
|4.10 |  | Indenture governing the 121/4% Senior Notes due 2009 (incorporated by reference to Exhibit 10.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed
March 28, 2002)                                                                                                                                                                                                                                            
|4.11 |  | First Supplemental Indenture dated as of August 4, 2004, to the Indenture governing the 121/4% Senior Notes due 2009 (incorporated by reference to Exhibit 4.11 to the
Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)                                                                                                                                                                         
|10.1 |  | Subordinated Bridge Loan Agreement dated January 23, 2004, among Alderwoods Group, Inc., Banc of America Bridge LLC, as administrative agent and initial bridge lender and the other bridge lenders party
hereto and Bank of America Securities LLC, as sole lead arranger and sole book manager (incorporated by reference to Exhibit 10.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed
March 16, 2004)
|10.2 |  | Credit Agreement dated September 17, 2003, among Alderwoods Group, Inc., Bank of America, N.A., as administrative agent, swing line lender, L/C Issuer and the other lenders party hereto (incorporated by
reference to Exhibit 10.1 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 12, 2003)                                                                                                    
|10.3 |  | Amendment No. 1 dated January 23, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, swing line lender, L/C Issuer and the other lenders party
hereto (incorporated by reference to Exhibit 10.3 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)                                                                                       
|10.4 |  | Amendment No. 2 dated August 19, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party
hereto (incorporated by reference to Exhibit 10.4 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)                                                                                     
|10.5 |  | Amendment No. 3 dated December 3, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party
hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed December 8, 2004)                                                                                      
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                      

42

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|10.6   |  | Amendment No. 4 dated March 18, 2005, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party
hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 24, 2005)
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.7  |  | Employment Agreement dated January 2, 2004, by and between Alderwoods Group, Inc. and Kenneth A. Sloan (incorporated by reference to Exhibit 10.6 to Form 10-K of Alderwoods Group, Inc.,
SEC File No. 000-33277, filed March 16, 2004)                                                                                                    
|*10.8  |  | Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Ellen Neeman (incorporated by reference to Exhibit 10.7 to Form 10-K of Alderwoods Group, Inc.,
SEC File No. 000-33277, filed March 16, 2004)                                                                                                       
|*10.9  |  | Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Cameron R.W. Duff (incorporated by reference to Exhibit 10.8 to Form 10-K of Alderwoods Group, Inc.,
SEC File No. 000-33277, filed March 16, 2004)                                                                                                  
|*10.10 |  | Employment Agreement dated January 2, 2004, by and between Alderwoods Group, Inc. and Ross S. Caradonna (incorporated by reference to Exhibit 10.9 to Form 10-K of Alderwoods Group, Inc.,
SEC File No. 000-33277, filed March 16, 2004)                                                                                                   
|*10.11 |  | Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Richard J. Scully (incorporated by reference to Exhibit 10.35 to Form 10-Q of Alderwoods Group, Inc., SEC
File No. 000-33277, filed May 1, 2003)                                                                                                    
|*10.12 |  | Amended and Restated Employment Agreement dated May 1, 2003, by and between Alderwoods Group, Inc. and John S. Lacey (incorporated by reference to Exhibit 10.36 to Form 10-Q of Alderwoods Group,
 Inc., SEC File No. 000-33277, filed July 24, 2003)                                                                                     
|*10.13 |  | Amendment No. 1 dated March 16, 2004, to the Amended and Restated Employment Agreement dated May 1, 2003, by and between Alderwoods Group, Inc. and John S. Lacey (incorporated by reference to
Exhibit 10.12 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 10, 2004)                                          
|*10.14 |  | Amended and Restated Employment Agreement dated May 1, 2003, by and between Alderwoods Group, Inc. and Paul A. Houston (incorporated by reference to Exhibit 10.37 to Form 10-Q of Alderwoods Group,
 Inc., SEC File No. 000-33277, filed July 24, 2003)                                                                                   
|*10.15 |  | Employment Agreement dated September 13, 2004, by and between Alderwoods Group, Inc. and Aaron Shipper (incorporated by reference to Exhibit 10.15 to Form 10-K of Alderwoods Group, Inc., SEC
File No. 000-33277, filed March 28, 2005)                                                                                                   
|*10.16 |  | Alderwoods Group, Inc. 2002 Equity Incentive Plan (incorporated by reference to Exhibit 10.27 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28,
2002)                                                                                                                                                    
|*10.17 |  | Director Compensation Plan (incorporated by reference to Exhibit 10.28 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)                                                                                                                                                                           
|*10.18 |  | Alderwoods Group Canada Inc. 2003-2005 Executive Strategic Incentive Plan (incorporated by reference to Exhibit 10.40 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed
July 24, 2003)                                                                                                                                 
|*10.19 |  | Alderwoods Support Function Annual Incentive Plan (incorporated by reference to Exhibit 10.19 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2005)                                                                                                                                                        
|10.20  |  | Description of Compensation of Directors**                                                                                                                                                                                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                            

43

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|10.21 |  | Form of Indemnification Agreement between Alderwoods Group, Inc. and each of its directors and executive officers (incorporated by reference to Exhibit 10.33 to Form S-1/A of Alderwoods Group, Inc.,
SEC File No. 333-85316, filed July 25, 2002)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**                                                                                                                                               
|31.2  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**                                                                                                                                               
|32.1  |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**                                                                                                                  

---

*      Indicates
management contract or compensatory plan or arrangement.

**    Filed
herewith.

44

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

|                      |  | ALDERWOODS GROUP, INC.
|--------------------- |  | ----------------------
|Dated: April 27, 2005 |  | By:                   

45

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INDEX TO EXHIBITS

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                                                                                                                                                                                                                                   
|2.1            |  | Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 99.1 to the
Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed September 10, 2001)                                                                                             
|2.2            |  | Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 2.2
to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)                                                                           
|2.3            |  | Second Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to
Exhibit 2.3 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)                                                                    
|2.4            |  | Order Approving Modification of Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries and Compromise and Settlement of Claims
Filed by Thomas Hardy (incorporated by reference to Exhibit 2.4 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001) 
|2.5            |  | Findings of Fact, Conclusions of Law and Order Confirming Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries, As Modified,
dated December 5, 2001 (incorporated by reference to Exhibit 2.5 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
|2.6            |  | Final Order dated December 7, 2001 (incorporated by reference to Exhibit 2.6 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)                                                                                                                                                                                                             
|2.7            |  | Stock Purchase Agreement dated as of June 17, 2004, by and between Citizens Insurance Company of America and Mayflower National Life Insurance Company (incorporated by reference to Exhibit 2.7 to the
Form 10-Q of Alderwoods Group, Inc. SEC File No. 000-33277, filed July 26, 2004)                                                                                          
|3.1            |  | Certificate of Incorporation of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28,
2002)                                                                                                                                                                                        
|3.2            |  | Bylaws of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.2 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)                                                                                                                                                                                                              
|4.1            |  | Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Form 10-12G/A of Loewen Group International, Inc., SEC File No. 000-33277, filed December 17,
2001)                                                                                                                                                                                   
|4.2            |  | Equity Registration Rights Agreement among Alderwoods Group, Inc. and certain holders of Common Stock. (incorporated by reference to Exhibit 4.2 to the Form 10-K of Alderwoods Group, Inc., SEC
File No. 000-33277, filed March 28, 2002)                                                                                                                                        
|4.3            |  | Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)                                                                                                                                                                                                                             
|4.4            |  | Form of Warrant Certificate (incorporated by reference to Exhibit A to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed on March 28, 2002)                                                                                                                                                                                                   
|               |  |                                                                                                                                                                                                                                                                                                                                                                                   

46

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|4.5  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc., and Angelo, Gordon & Co. (incorporated by reference to Exhibit 4.6 to the Form 10-Q of Alderwoods Group, Inc.
SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                                                  
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Franklin Mutual Advisors, LLC (incorporated by reference to Exhibit 4.7 to the Form 10-Q of
Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                                         
|4.7  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and GSCP Recovery, Inc. and GSC Recovery II, L.P. (incorporated by reference to Exhibit 4.8 to the
Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                         
|4.8  |  | Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Oaktree Capital Management, LLC (incorporated by reference to Exhibit 4.9 to the Form 10-Q of
Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)                                                                                                                                                                       
|4.9  |  | Indenture governing the 73/4% Senior Unsecured Notes due 2012 (incorporated by reference to Exhibit 4.9 to the Form 10-Q of Alderwoods Group, Inc., SEC File
No. 000-33277, filed November 18, 2004)                                                                                                                                                                                                                                  
|4.10 |  | Indenture governing the 121/4% Senior Notes due 2009 (incorporated by reference to Exhibit 10.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed
March 28, 2002)                                                                                                                                                                                                                                             
|4.11 |  | First Supplemental Indenture dated as of August 4, 2004, to the Indenture governing the 121/4% Senior Notes due 2009 (incorporated by reference to Exhibit 4.11 to the
Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)                                                                                                                                                                          
|10.1 |  | Subordinated Bridge Loan Agreement dated January 23, 2004, among Alderwoods Group, Inc., Banc of America Bridge LLC, as administrative agent and initial bridge lender and the other bridge lenders party
hereto and Bank of America Securities LLC, as sole lead arranger and sole book manager (incorporated by reference to Exhibit 10.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16,
 2004)
|10.2 |  | Credit Agreement dated September 17, 2003, among Alderwoods Group, Inc., Bank of America, N.A., as administrative agent, swing line lender, L/C Issuer and the other lenders party hereto (incorporated by
reference to Exhibit 10.1 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 12, 2003)                                                                                                     
|10.3 |  | Amendment No. 1 dated January 23, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, swing line lender, L/C Issuer and the other lenders party
hereto (incorporated by reference to Exhibit 10.3 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)                                                                                        
|10.4 |  | Amendment No. 2 dated August 19, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, swing line lender, L/C Issuer and other lenders party hereto
(incorporated by reference to Exhibit 10.4 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)                                                                                      
|10.5 |  | Amendment No. 3 dated December 3, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party
hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed December 8, 2004)                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       

47

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|10.6  |  | Amendment No. 4 dated March 18, 2005, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party
hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 24, 2005)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7  |  | Employment Agreement dated January 2, 2004, by and between Alderwoods Group, Inc. and Kenneth A. Sloan (incorporated by reference to Exhibit 10.6 to the Form 10-K of Alderwoods Group, Inc., SEC
File No. 000-33277, filed March 16, 2004)                                                                                                
|10.8  |  | Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Ellen Neeman (incorporated by reference to Exhibit 10.7 to the Form 10-K of Alderwoods Group, Inc., SEC File
No. 000-33277, filed March 16, 2004)                                                                                                   
|10.9  |  | Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Cameron R.W. Duff (incorporated by reference to Exhibit 10.8 to the Form 10-K of Alderwoods Group, Inc., SEC
File No. 000-33277, filed March 16, 2004)                                                                                              
|10.10 |  | Employment Agreement dated January 2, 2004, by and between Alderwoods Group, Inc. and Ross S. Caradonna (incorporated by reference to Exhibit 10.9 to the Form 10-K of Alderwoods Group, Inc., SEC
File No. 000-33277, filed March 16, 2004)                                                                                               
|10.11 |  | Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Richard J. Scully (incorporated by reference to Exhibit 10.35 to Form 10-Q of Alderwoods Group, Inc., SEC
File No. 000-33277, filed May 1, 2003)                                                                                                    
|10.12 |  | Amended and Restated Employment Agreement dated May 1, 2003, by and between Alderwoods Group, Inc. and John S. Lacey (incorporated by reference to Exhibit 10.36 to Form 10-Q of Alderwoods Group,
 Inc., SEC File No. 000-33277, filed July 24, 2003)                                                                                     
|10.13 |  | Amendment No. 1 dated March 16, 2004, to the Amended and Restated Employment Agreement dated May 1, 2003, by and between Alderwoods Group, Inc. and John S. Lacey (incorporated by reference to
Exhibit 10.12 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 10, 2004)                                          
|10.14 |  | Amended and Restated Employment Agreement dated May 1, 2003, by and between Alderwoods Group, Inc. and Paul A. Houston (incorporated by reference to Exhibit 10.37 to Form 10-Q of Alderwoods Group,
 Inc., SEC File No. 000-33277, filed July 24, 2003)                                                                                   
|10.15 |  | Employment Agreement dated September 13, 2004, by and between Alderwoods Group, Inc. and Aaron Shipper (incorporated by reference to Exhibit 10.15 to Form 10-K of Alderwoods Group, Inc.,
SEC File No. 000-33277, filed March 28, 2005)                                                                                                   
|10.16 |  | Alderwoods Group, Inc. 2002 Equity Incentive Plan (incorporated by reference to Exhibit 10.27 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28,
2002)                                                                                                                                                    
|10.17 |  | Director Compensation Plan (incorporated by reference to Exhibit 10.28 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)                                                                                                                                                                           
|10.18 |  | Alderwoods Group Canada Inc. 2003-2005 Executive Strategic Incentive Plan (incorporated by reference to Exhibit 10.40 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed
July 24, 2003)                                                                                                                                 
|10.19 |  | Alderwoods Support Function Annual Incentive Plan (incorporated by reference to Exhibit 10.19 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2005)                                                                                                                                                        
|10.20 |  | Description of Compensation of Directors                                                                                                                                                                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                            

48

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|10.21 |  | Form of Indemnification Agreement between Alderwoods Group, Inc. and each of its directors and executive officers (incorporated by reference to Exhibit 10.33 to Form S-1/A of Alderwoods Group,
 Inc., SEC File No. 333-85316, filed July 25, 2002)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                  
|31.2  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                  
|32.1  |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                     

49

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Exhibit 10.20

COMPENSATION OF DIRECTORS

For fiscal 2005, each Director of Alderwoods Group, Inc. (the "Company") who is not an employee of the Company or any of its subsidiaries ("Outside
Directors") receives an annual base retainer of $32,000. In addition, with respect to Board and each standing or other committee meeting, each Outside Director receives $2,000 for each meeting
attended in person (other than members of the Audit Committee, who received $4,000 for each meeting of the Audit Committee attended in person) and $500 for each meeting attended by telephone. The
chair of the Compensation Committee and the chair of the Nominating and Corporate Governance Committee receive an additional $7,500 as part of their annual base retainer, and the chair of the Audit
Committee receives an additional $15,000 as part of her annual base retainer.

Pursuant
to the Company's Director Compensation Plan (the "Director Compensation Plan"), each Outside Director has the option of receiving his or her annual base retainer and
attendance fees in cash, Common stock or a combination thereof. Furthermore, each participant in the Director Compensation Plan may elect to have Common stock paid in the form of deferred common stock
("Deferred Stock"), which will be credited to a booking account in the name of the participant. The Deferred Stock is subject to a deferral period during which the participant has no right to transfer
any rights under his or her Deferred Stock and has no other rights of ownership therein.

---



Exhibit 31.1

CERTIFICATION

I,
Paul A. Houston, certify that:

|Date: April 27, 2005 | By: | /s/PAUL A. HOUSTONPaul A. Houston
President, Chief Executive Officer and Director
(Principal Executive Officer)
|-------------------- | --- | ---------------------------------------------------------------------------------------------------------------

---



Exhibit 31.2

CERTIFICATION

I,
Kenneth A. Sloan, certify that:

|Date: April 27, 2005 | By: | /s/KENNETH A. SLOANKenneth A. Sloan
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer and Chief Accounting Officer)
|-------------------- | --- | ------------------------------------------------------------------------------------------------------------------------------------------------

---



Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alderwoods Group, Inc. (the "Company") on Form 10-Q for the twelve weeks ended
March 26, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to
18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

|Dated: April 27, 2005 | /s/PAUL A. HOUSTONPaul A. Houston
President, Chief Executive Officer
and Director
(Principal Executive Officer)    
|--------------------- | -------------------------------------------------------------------------------------------------------------------
|                      | /s/KENNETH A. SLOANKenneth A. Sloan
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)

The
foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure
document.

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