<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                              __________________

                                   FORM 10-Q

                                  (MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                      OR

    [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
              FOR THE TRANSITION PERIOD FROM ________ TO ________


                       COMMISSION FILE NUMBER 333-21411
                        ______________________________


                              ROSE HILLS COMPANY
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                  DELAWARE                                 13-3915765
        (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
       INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)

                         3888 SOUTH WORKMAN MILL ROAD
                          WHITTIER, CALIFORNIA 90601
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)


                                (562) 692-1212
              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE


                                      N/A
  (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
                                    REPORT)

                              __________________


   Indicate by check [X] whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

   The number of outstanding common shares as of November 13, 2001 was 1,000.
<PAGE>

                      ROSE HILLS COMPANY AND SUBSIDIARIES
           (A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)




                                                                          PAGE

PART I. FINANCIAL INFORMATION

  ITEM 1.  FINANCIAL STATEMENTS:

     CONDENSED CONSOLIDATED BALANCE SHEETS
      as of September 30, 2001 and December 31, 2000                        1

     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
      for the Three and Nine Months Ended September 30, 2001 and 2000       2

     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
      for the Nine Months Ended September 30, 2001 and 2000                 3

     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                   4

  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS                                    6

  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      11

PART II. OTHER INFORMATION

  ITEM 5   OTHER INFORMATION                                               11

  ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K                                13

  SIGNATURES                                                               14
<PAGE>

              ROSE HILLS COMPANY AND SUBSIDIARIES (A Wholly-Owned
                   Subsidiary of Rose Hills Holdings Corp.)
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                AS OF DECEMBER 31, 2000 AND SEPTEMBER 30, 2001
                     (In thousands, except share amounts)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                ASSETS                                                2000        2001
                                                                                                   ----------  -----------
<S>                                                                                                  <C>       <C>
Current assets:
   Cash and cash equivalents....................................................................     $ 8,171     $ 12,529
   Accounts receivable, net of allowances.......................................................      12,662       10,397
   Inventories..................................................................................       1,042        1,136
   Prepaid expenses and other current assets....................................................       2,640        1,545
   Deferred tax asset...........................................................................       3,550        3,550
                                                                                                    --------     --------
            Total current assets................................................................      28,065       29,157
                                                                                                    --------     --------
Long-term receivables, net of allowances........................................................      14,012       11,581
Cemetery property...............................................................................      74,551       71,880
Property and equipment, net.....................................................................      59,870       58,611
Goodwill, net...................................................................................     118,330      114,582
Deferred finance charges........................................................................       5,777        4,555
Receivables from service trusts.................................................................       7,323        7,811
Other assets....................................................................................       2,533        2,514
                                                                                                    --------     --------
          Total assets..........................................................................    $310,461     $300,691
                                                                                                    ========     ========

                                 LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
   Accounts payable and accrued liabilities.....................................................     $ 9,759      $ 9,528
   Current portion of long-term debt............................................................       7,842        8,772
                                                                                                    --------     --------
          Total current liabilities.............................................................      17,601       18,300
Retirement plan liabilities.....................................................................       6,876        6,779
Deferred tax liability..........................................................................       3,065        3,065
Subordinated notes payable......................................................................      80,000       80,000
Bank senior term-loan...........................................................................      61,581       57,111
Other long-term debt............................................................................       1,658        1,067
Other liabilities...............................................................................          50           50
Deferred revenue................................................................................      17,995       17,452

Commitments and contingencies

Stockholder's equity:
   Common stock, par value of $.01. Authorized and outstanding 1,000 shares.....................          --           --
   Additional paid-in capital...................................................................     129,554      129,554
   Accumulated deficit..........................................................................     (7,919)     (12,687)
                                                                                                    --------     --------
          Total stockholder's equity............................................................     121,635      116,867
                                                                                                    --------     --------
                Total liabilities and stockholder's equity......................................    $310,461     $300,691
                                                                                                    ========     ========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       1
<PAGE>

                    ROSE HILLS COMPANY AND SUBSIDIARIES (A
             Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (In thousands)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                       Three Months Ended    Nine Months Ended
                                                                                          September 30          September 30
                                                                                        2000       2001       2000       2001
                                                                                      ---------- ---------- ---------- ----------
<S>                                                                                     <C>        <C>       <C>        <C>
Sales and services:
   Funeral sales and services.......................................................    $ 7,862    $ 7,111   $ 24,104   $ 24,393
   Cemetery sales and services......................................................      9,228      9,460     30,899     30,798
                                                                                        -------    -------   --------   --------

           Total sales and services.................................................     17,090     16,571     55,003     55,191

Cost of sales and services:
   Funeral sales and services.......................................................      5,874      5,752     17,390     17,847
   Cemetery sales and services......................................................      6,665      7,808     21,702     24,988
                                                                                        -------    -------   --------   --------

               Total cost of sales and services.....................................     12,539     13,560     39,092     42,835

          Gross profit..............................................................      4,551      3,011     15,911     12,356

General and administrative expenses.................................................      1,778      2,331      5,598      5,376
Amortization of purchase price in excess of
               net assets acquired and other intangibles............................        924        912      2,780      2,755
Asset write down and other charges..................................................         --      1,000         --      4,425
                                                                                        -------    -------   --------   --------

               Income (loss) from operations .......................................      1,839     (1,232)     7,533       (200)

Other income (expense):
  Interest expense..................................................................     (3,941)    (3,559)   (11,982)   (11,286)
  Finance and interest income ......................................................        979        742      2,518      2,257
                                                                                        -------    -------   --------   --------

            Loss before income taxes and cumulative effect of accounting
               Change...............................................................     (1,123)    (4,049)    (1,931)    (9,229)

Income tax benefit .................................................................       (738)    (1,887)       (11)    (4,461)

Net loss before cumulative effect of accounting change..............................       (385)    (2,162)    (1,920)    (4,768)

Cumulative effect of accounting change (net of income tax benefit of $4,862) .......         --         --     (7,467)        --

          Net loss .................................................................    $  (385)   $(2,162)  $ (9,387)  $ (4,768)
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       2
<PAGE>

                    ROSE HILLS COMPANY AND SUBSIDIARIES (A
             Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                         September 30
                                                                                      2000          2001
                                                                                   -----------  -------------
<S>                                                                                <C>          <C>
Cash flows from operating activities:
        Net loss..................................................................   $ (9,387)      $ (4,768)
     Adjustments to reconcile net loss to net cash provided by
     operating activities:
       Depreciation and amortization..............................................      6,117          5,769
          Amortization of deferred finance cost...................................      1,222          1,222
       Amortization of cemetery property..........................................      1,640          3,617
       Provision for bad debts and sales cancellation.............................      2,057            842
       Asset write-off from disposal of funeral homes.............................         --          1,455
       Loss/(Gain) on disposal of property and equipment..........................          1           (38)
Changes in operating assets and liabilities:
         Accounts receivable......................................................        717          2,908
         Inventories..............................................................       (184)           (94)
         Prepaid expenses and other current assets................................      2,082          1,095
         Accounts payable and accrued expenses....................................     (5,950)          (230)
         Retirement plan liabilities..............................................       (143)           (97)
             Net deferred revenue.................................................     20,277           (543)
         Other assets and liabilities, net........................................     (5,864)           685
                                                                                   -----------  -------------
             Net cash provided by operating activities............................     12,585         11,824
                                                                                   -----------  -------------
Cash flows from investing activities:
     Capital expenditures.........................................................     (3,555)        (3,433)
      Proceeds from disposal of property and equipment............................          4             98
                                                                                   -----------  -------------
             Net cash used in investing activities................................     (3,551)        (3,335)
                                                                                   -----------  -------------
Cash flows from financing activities:
      Principal payments of long-term debt........................................     (1,499)        (3,476)
       Principal payments of capital lease obligations............................       (384)          (517)
      Decrease in other long-term debt............................................        (11)          (138)
                                                                                   -----------  -------------
             Net cash used in financing activities................................     (1,894)        (4,131)
                                                                                   -----------  -------------
             Net increase in cash and cash equivalents............................      7,140          4,358
Cash and cash equivalents at beginning of period..................................      2,150          8,171
                                                                                   -----------  -------------
Cash and cash equivalents at end of period........................................   $  9,290      $  12,529
                                                                                   ===========  =============
Supplemental disclosures of cash flow information: Cash paid during the
      period for:
          Interest................................................................   $  8,855      $   8,134
          Taxes...................................................................        200             --
                                                                                   ===========  =============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>

                    ROSE HILLS COMPANY AND SUBSIDIARIES (A
             Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1.   BASIS OF PRESENTATION

     The accompanying September 30, 2001 condensed consolidated financial
statements of Rose Hills Company and subsidiaries (the "Company") have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and with the
instructions to Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnote disclosures necessary for complete financial
statements in conformity with accounting principles generally accepted in the
United Sates of America. In the opinion of management, the accompanying interim
condensed consolidated financial statements contain all adjustments (consisting
of normal recurring accruals and adjustments) considered necessary for a fair
presentation of the financial condition, results of operations and cash flows
for the periods presented. These unaudited condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended December 31, 2000.

     The Company operates 10 funeral homes, 3 funeral home and cemetery
combination properties and 1 cemetery property in the Southern California area.
Services offered at the locations include cemetery interment and professional
mortuary services, both of which include pre-need and at-need sales. In
addition, the Company offers for sale caskets, memorials, vaults, flowers and
the sale of pre-need funeral insurance from which commissions are earned.

     The accounting and reporting policies of the Company conform to accounting
principles generally accepted in the United States of America and the prevailing
practices within the cemetery and mortuary industry. All significant
intercompany accounts and transactions have been eliminated.


2.   CHANGE IN ACCOUNTING PRINCIPLE

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101 (SAB
101), "Revenue Recognition in Financial Statements" (the "Bulletin"). The
Bulletin provides the Staff's views on the application of existing accounting
principles generally accepted in the United States of America to revenue
recognition in financial statements. The Bulletin, which applies to all
companies and was not directed at the death care industry, states that industry
practice would not override these views. The Bulletin among other matters
emphasizes the importance of physical delivery of a product or service to
justify the recognition of revenue. Prior to the effective date of the Bulletin,
the Company had heretofore followed industry practice in recognizing revenues,
including recognizing revenue upon the sale of cemetery merchandise and services
before the time of death.

         In response to the issuance of the Bulletin and after consultation with
the SEC Staff, the Company changed the following accounting principles effective
January 1, 2000:

 .    Revenue recognition of pre-need interment rights are now accounted for in
     accordance with Financial Accounting Standards No. 66, Accounting for the
     Sales of Real Estate (FAS 66). The direct and acquisition costs for the
     deferred sales is deferred and recognized concurrent with the recognition
     of the deferred sales. Prior to January 1, 2000, the Company recognized the
     sale of pre-need interment rights, and their related costs, at the time of
     sale.

 .    Revenue recognition of pre-need cemetery services and merchandise, and
     their direct and acquisition costs, are now deferred until time of delivery
     or performance of service. Prior to January 1, 2000, the Company recognized
     the sale of pre-need service and merchandise, and their related costs, at
     the time of sale.

 .    Earnings realized by the cemetery service and merchandise trust funds are
     now deferred until the underlying service and merchandise is delivered.
     Prior to January 1, 2000, the Company recognized the earnings as they
     accrued.

                                       4
<PAGE>

     The amounts for the three and nine months ended September 30, 2000 in the
foregoing balance sheet, statement of operations and statement of cash flows,
and throughout the remainder of this report (including comparative data), have
been restated from those originally reported to reflect the proforma effects of
applying the accounting change effective January 1, 2000.

     During each of the nine months ended September 30, 2000 and 2001, the
Company realized cemetery sales and services revenue of approximately $2.7
million and $1.1 million, respectively, and during the three months ended
September 30, 2000 and 2001, the Company realized cemetery sales and service
revenue of approximately $1.2 million and $0.5 million, respectively, previously
included in the cumulative effect of accounting change as of January 1, 2000.

3.   ASSET WRITE DOWN AND OTHER CHARGES:

Disposition of Funeral Homes

         In early 2001, the Company began assessing the long-term term prospects
of certain satellite properties including their fit with the Rose Hills Cemetery
and Mortuary and the effectiveness of clustering synergies. Based on this
assessment, the Company determined that four of the satellite properties did not
fit the Company's long-term market strategy. In June 2001, the Company completed
disposition of these four locations, which included sub-leasing three locations,
and leasing one owned location to independent funeral operators.

         In connection with the disposition of these four locations, the Company
restructured its Satellite operations and terminated approximately 40 employees.
The Company recorded a charge of $1.9 million ($1.5 million non cash charges
relating to the write-off of goodwill and other assets and $.4 million in
severance pay and lease termination costs) during the quarter ended June 30,
2001.

Land Movement

         As more fully discussed in note (4) below the Company has accrued $2.5
million for remediation and related costs to be incurred in connection with the
land movement in a portion of the Rose Hills Memorial Park.

4.   Contingencies

      During August and September 2000, the Company discovered that there had
been some land movement in a portion of Rose Hills Memorial Park. The affected
area represents approximately 13 acres of the Park's approximately 1,418 total
acres, and consists of approximately 12,000 interment sites. The Company hired
an outside geo-technical and engineering firm to study the affected area, to
identify the underlying causes and the extent of the land movement, and to make
recommendations with regard to both short-term and long-term remediation and
stabilization measures. Pending the Company's receipt of the engineer's report,
the Company undertook various remediation measures, including the installation
of additional dewatering wells to improve water drainage conditions in the
affected area. The Company also began to relocate to other areas of the Park (at
the Company's expense) approximately 140 interred remains that were in the most
severely impacted portion of the affected area, and upon request from family
members, other interred remains that were located within the affected area. As
of October 31, 2001, the Company had relocated, at the Company's expense,
approximately 750 of the approximately 2,600 interred remains in the affected
area to other areas of the Cemetery.

      The Company received a preliminary report from the engineering firm in
July 2001. In the preliminary report, the engineers advised the Company that the
land movement most likely had been caused by a combination of geologic,
topographic, water and soil conditions within the affected area. The preliminary
report also identified a variety of measures that the Company could take to
remediate and improve the stability of the land area, including the construction
and installation of engineered reinforcement fill berms at the base of the
slide, the installation of horizontal and other additional drains throughout the
affected area, and the implementation of other erosion control measures. In
October 2001, the engineering firm completed additional tests and revised their
initial recommendation to include de-watering wells instead of horizontal
drains. The Company's management is continuing to confer with the engineering
consultants to determine whether a combination of these measures is likely to be
effective to restore the affected area to a condition that is suitable for
interments. If the engineering consultants advise the Company that these
measures are likely to achieve such a result, management currently expects that
the Company will implement the measures in stages, with the installation of the
de-watering wells, erosion control measures and related

                                       5
<PAGE>

improvements taking place as early as the second quarter of fiscal 2002, and the
construction and installation of the reinforcement fill berms beginning in the
third or fourth quarter of fiscal 2002. If the area can not be restored for
interments, management expects the Company will implement only those measures
that are necessary to repair and stabilize the affected area, and management
will then consider whether the area may be utilized for alternate purposes. In
this latter case, the Company is likely to incur additional costs in connection
with the relocation of interred remains to other parts of the Cemetery, and may
have to incur an accounting charge associated with a reduction in the value of
the affected property.

      Based on the engineering firm's preliminary cost estimates, the Company
presently estimates that the aggregate construction and related costs to restore
and stabilize the affected area will be approximately $3.1 million. The Company
expects to incur approximately $.5 million of these costs during the second
quarter of fiscal 2002, with the balance to be incurred during the last two
quarters of fiscal 2002. The Company also expects that the total direct costs of
relocating interred remains for the affected area to other areas of the Cemetery
(should that become necessary) could approximate $1.0 million. The Company is
also evaluating the necessity of building a water blending facility for water
discharged from newly installed wells. The cost of this system is expected to be
approximately $0.6 million. To the extent that funds are available, the Company
intends to seek reimbursement from the improvement reserve in the Company's
Endowment Care Fund (ECF) for the costs of relocating interred remains and for a
significant portion of the site assessment, repair, maintenance and remediation
costs associated with the affected area. Between October 2000 and September 30,
2001, the Company has incurred $1.6 million and has been reimbursed from the ECF
reserve $1.1 million of direct costs related to the relocation of interred
remains and professional and other services associated with the assessment,
remediation and stabilization of the affected area. As of September 30, 2001,
the ECF had $1.1 million in reserves for cemetery improvements. The Company
intends to utilize working capital and, if necessary, borrowings under its
existing revolving credit facility to pay for any remediation and related costs
which are not reimbursed from the ECF.

      Based on the additional test results, revised estimates provided by the
engineering firm during the third quarter, and the amounts available in the ECF
improvement reserve fund, the Company has increased its accrual from $1.5
million to $2.5 million as a reserve for these matters during the third quarter
ended September 30, 2001, respectively.

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

OVERVIEW

      Rose Hills Company (the "Company"), a Delaware corporation, is a wholly-
owned subsidiary of Rose Hills Holdings Corp. ("RH Holdings"). The Company was
formed in 1996 for purposes of acquiring Roses, Inc. (the "Mortuary") and
purchasing certain assets and assuming certain liabilities of Rose Hills
Memorial Park Association (the "Association") and Workman Mill Investment
Company, the owners of the real property and other cemetery assets of the Rose
Hills Memorial Park (the "Cemetery"). In connection with the acquisition, The
Loewen Group, Inc., a shareholder of RH Holdings, also caused one of its
subsidiaries to contribute 14 funeral homes and 2 funeral home cemetery
combination properties (the "Satellite Properties"). In 2001, the Company
disposed of four of the Satellite Properties as discussed above in Note 3. As a
result of these acquisitions (collectively the "Acquisition Transaction"), the
Company is the successor to the operations, assets and liabilities of the Rose
Hills Mortuary and Cemetery (collectively, "Rose Hills") and the Satellite
Properties.

      Rose Hills is the largest single location cemetery funeral home
combination in the United States and the Cemetery is the largest single location
cemetery in the United States. Rose Hills is situated less than 14 miles from
downtown Los Angeles on approximately 1,418 acres of permitted cemetery land
near Whittier, California. Rose Hills and the Satellite Properties constitute a
strategic assembly of cemeteries and funeral homes in the greater Los Angeles
area.


RESULTS OF OPERATIONS

For purposes of the following discussion, the Company's comparable results in
all periods presented represent financial results excluding operations that were
divested by the Company between January 1, 2000 and September 30, 2001.

                                        6
<PAGE>

The following table sets forth details of certain income statement data (in
millions):

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                           SEPTEMBER 30                        SEPTEMBER 30
                                                        2000             2001              2000               2001
                                                        ----             ----              ----               ----
     <S>                                              <C>              <C>               <C>                <C>
     Sales and service:
        Funeral:
            Services and merchandise                  $ 6.7             $ 6.4            $ 20.9             $ 21.3
            Insurance commissions                       0.8               0.6               1.9                2.2
            Disposed locations                          0.3               0.0               1.1                 .7
            Other                                       0.1               0.1               0.2                0.1
        Cemetery:
            Before need                                 4.3               4.8              15.5               15.7
            At-need                                     4.0               3.7              12.5               12.2
            Endowment care                               .9                .9               2.9                2.9
     Total sales and services                          16.8              16.5              53.9               54.4

     Gross profit:
        Funeral sales and services                      2.1               1.4               6.8                6.6
        Cemetery sales and services                     2.5               1.6               9.2                5.8
        Disposed locations                              0.0               0.0               0.1                0.0
     Total gross profit                                 4.6               3.0              15.9               12.4
</TABLE>


The following table sets forth certain income statement data as a percentage of
total sales for the Company.

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                            SEPTEMBER 30                        SEPTEMBER 30
                                                        2000             2001              2000               2001
                                                        ----             ----              ----               ----
     <S>                                             <C>                <C>             <C>                 <C>
     Sales and service:
      Funeral sales and services                       45.0%             42.7%            42.7%               43.5%
      Cemetery sales and services                      55.0%             57.3%            57.3%               56.5%
      Total sales and services                        100.0%            100.0%           100.0%              100.0%
     Gross profit:
       Funeral sales and services                      27.4%             19.5%            29.6%               28.0%
       Cemetery sales and services                     27.6%             17.4%            29.7%               18.8%
      Total gross profit                               27.5%             18.3%            29.7%               22.8%
      General and administrative
         expenses                                      10.6%             14.4%            10.2%                9.8%
      Goodwill amortization                             5.4%              5.5%             5.1%                5.0%
      Interest expense                                 23.6%             21.6%            22.2%               20.7%
</TABLE>


THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2000

     Consolidated revenues for the quarter ended September 30, 2001 decreased
1.4% to $16.5 million from $16.8 million for the quarter ended September 30,
2000. Consolidated gross profit for the third quarter of 2001 decreased by 34.3%
to $3.0 from $4.6 million in the same quarter of 2000. As a percentage of
revenue, consolidated gross margin percentage for the third quarter decreased to
18.3% in 2001 from 27.5% in the same quarter 2000.

                                       7
<PAGE>

     Funeral revenue for the quarter was $7.1 million compared to $7.6 million
in the same quarter for the prior year. At-need funeral revenue for the quarter
totaled $6.4 million, representing a 4.1% decrease over the same period last
year. The Company performed 1,714 funeral service calls during the third quarter
of 2001 compared to 1,704 in the third quarter of 2000, representing a 0.6%
increase. The Company has not changed prices; accordingly, it attributes the 6%
decrease from last year's average revenue per funeral call to changes in the mix
of services and products sold. Pre-need funeral revenue for the quarter was $0.6
million compared to $0.8 million for the same quarter in the prior year. Reduced
selling and marketing in the latter part of September 2001 and an unfavorable
persistency rate were primarily responsible for the $0.2 million decrease in
pre-need funeral revenue. The operating margin for the funeral segment was 19.5%
for the third quarter of 2001 compared to 27.4% for the same quarter last year.
The $0.7 million decrease in operating margin was primarily attributable to the
decrease in average revenue per funeral call.

     Cemetery revenue for the quarter was $9.5 million compared to $9.2 million
in the same quarter last year. Pre-need cemetery revenue for the third quarter
of 2001 was $4.8 million compared to $4.3 million for the same quarter during
the prior year. The number of pre-need property units sold during the third
quarter of 2001 was 1,515 compared to 1,850 units during the same quarter of
2000. A non-comparable multiple unit sale in the third quarter of 2000 and
reduced selling and marketing in the latter part of September 2001 contributed
to an 18% decreased in units sold but was countered by an increase in average
revenue per unit. Pre-need property commission expense as a percentage of sales
was 30% for the third quarter compared to 29% for the same quarter last year.
At-need cemetery revenue for the quarter was $3.7 million compared to $4.0
million for the same quarter last year, representing a 6% decrease. Total
interments were 2,223 for the quarter, which represented a 4% decrease over the
same quarter in the prior year. The operating margin for the cemetery segment
during the quarter decreased from 27.6% last year to 17.4% as a percentage of
sales. The decrease was due principally to a lower profit margin received on
high priced property estates. Other contributions to the decline were increased
spending on labor and environmental and property tax issues.

     Corporate general and administrative expense increased to $2.4 million for
the quarter ended September 30, 2001 from $1.8 million for the same quarter in
2000. The increase of $0.6 million compared to the prior period is due to a
one-time charge for settlement of a lawsuit involving the maintenance of
drainage easements for Rose Hills Memorial Park. No comparative charges were
incurred during the prior period. As a percentage of total sales, general and
administrative expenses were 14.4% compared to 10.6% for the same quarter of
2000.

     In October 2001, the engineering firm hired to study and evaluate the
recent land movement in the Rose Hills Memorial Park completed additional tests
and revised their initial recommendation. Based on Management's evaluation of
the revised recommendation, the Company has accrued an additional $1.0 million
in remediation costs in this reporting period.

     EBITDA, earnings before interest, taxes, depreciation, amortization
(including cemetery property amortization included on cost of sales), and
non-recurring charges (including a $1.0 million land movement reserve),
decreased to $3.2 million for the quarter ended September 30, 2001 from $5.3
million for the quarter ended September 30, 2000. Reduced profit margins in the
funeral and cemetery segments (created by a strategy to maintain 1999 price
levels and an increase in the sale of high priced property estates that have
lower profit margins), along with the one-time settlement charge for the
maintenance of drainage easements, were primarily responsible for the $2.1
million decrease from the prior year. EBITDA should not be considered in
isolation, as a substitute for net income or cash flow data prepared in
accordance with accounting principles generally accepted in the United States of
America or as a measure of a company's profitability or liquidity.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

     Consolidated revenues for the nine months ended September 30, 2001 were
$54.4 million and 1.1% above the same period ended September 30, 2000.
Consolidated gross profit totaled $12.4 million compared to $16.0 million in the
same period in 2000. As a percentage of revenue, consolidated gross margin
decreased to 22.8% in 2001 from 29.7% in 2000.

     Funeral revenue for the nine months ended September 30, 2001 increased to
$23.6 million from $23.0 million during the same period in the prior year, an
increase of 2.9%. At-need funeral revenue totaled $21.3 million, representing a
2.1% increase from the prior year. The Company performed 5,714 funeral service
calls during the period this year compared to 5,633 last year, representing a
1.4% increase. The Rose Hills funeral home experienced a 3.5% case count
increase, which was offset by a 2.2% decrease at satellite funeral locations.
Based upon available market data, the Company believes that the increase is due
to an overall increase in deaths and an increase in market share. Pre-need
funeral revenue for the period was $2.2 million compared to $1.9 million in the
prior year, representing a 13.9% increase. The significant increase over the
prior year is due to selling pre-need cemetery merchandise and services on
insurance contracts (beginning July 2000). As of September 30, 2001 the Company
had a prearranged funeral and cemetery insurance backlog of approximately $164.8
million. The operating margin for the funeral segment was 28.0% compared to
29.6% last year.

                                       8
<PAGE>

     Cemetery revenue for the nine months ended September 30, 2001 was $30.8
million, which was consistent with the prior year. Pre-need cemetery revenue
increased 1.1% to $15.7 million compared to $15.5 million in the same period
last year, which includes a $1.8 million bulk sale to IBPS in the second quarter
2001. No comparable sale was made in the same period last year. During the
period, the company deferred approximately $1.2 million in cemetery property
sales relating to projects under construction. Management believes these
projects will be completed by year-end and the associated revenue recognized.
Pre-need property commission expense as a percentage of sales was 28% for the
nine months of 2001 compared to 27% for the same period last year. At-need
cemetery revenue for the period was $12.2 million representing a decrease of
1.9% from $12.5 million in the same period last year. Total interments for the
period were 7,297, a 3.3% increase over last year. The Company has not changed
prices; accordingly, it attributes the decrease from last year's average revenue
per interment to changes in the mix of services and products sold. Income from
endowment care funds totaled approximately $2.9 million, which was consistent
with last year. The operating margin for the cemetery segment was 18.8% of sales
compared to 29.7% last year. The $3.4 million decline in operating margin was
due to lower margins received on high priced estate sales and the IBPS $1.8
million bulk sale and an increase in labor, advertising, and property tax
expenses.

     Corporate general and administrative expenses decreased to $5.4 million
from $5.6 million in 2000. As a percentage of total sales, general and
administrative expenses was 9.8% compared to 10.2% for the same period in 2000.

     EBITDA, earnings before interest, taxes, depreciation, amortization
(including cemetery property amortization included in cost of sales) and
non-recurring charges (includes a $2.5 million land movement reserve, a $0.3
million satellite operations restructuring charge and a $0.5 million goodwill
impairment) decreased to $15.8 million for the nine months ended September 30,
2001 from $17.7 million in 2000. The cemetery segment's lower margin was
primarily responsible for the $1.9 million decrease in EBITDA. Other charges
impacting the EBITDA decrease included a one-time $0.5 million charge for
settlement of a lawsuit involving maintenance of drainage easements and a $0.4
million Phantom Equity Plan charge; no comparable charges were made in the same
period last year. EBITDA should not be considered in isolation, as a substitute
for net income or cash flow data prepared in accordance with accounting
principles generally accepted in the United States of America or as a measure of
a company's profitability or liquidity.


LIQUIDITY AND CAPITAL RESOURCES

     The Company presently believes that, based upon current levels of
operations and anticipated growth and the availability of the Bank Revolving
Facility (see description below), it can meet working capital and short-term
liquidity requirements for current operations, satisfy its contingent
obligations and service its indebtedness through December 31, 2002. As of
September 30, 2001, the Company had net working capital of $11.9 million and a
current ratio of 1.68 as compared to $10.5 million of net working capital and
current ratio of 1.59 at December 31, 2000.

     Net cash provided by operating activities was $11.8 million for the nine
months ended September 30, 2001. For the same period last year, net cash
provided by operating activities was $12.6 million.

     The primary use of cash will be for working capital, principal payments on
outstanding long-term indebtedness and capital expenditures as permitted under
the terms of bank agreements. The Company estimates its current year capital
expenditures of approximately $5.0 million will be used primarily to develop and
improve the existing infrastructure and cemetery grounds.

     Concurrent with the Acquisition Transaction, the Company entered into
senior secured amortization extended term loan facilities (the "Bank Term
Facility") in an aggregate principal amount of $75.0 million, the proceeds of
which were used to finance the Acquisition Transaction and related transaction
costs, to pre-fund certain capital expenditures and to refinance existing
indebtedness of the Company, and a senior secured revolving credit facility (the
"Bank Revolving Facility") in an aggregate principal amount of up to $25.0
million , the proceeds of which are available for general corporate purposes and
a portion of which may be extended (as agreed upon) in the form of swing line
loans or letters of credit for the account of the Company. Effective May 2, 2001
the Company amended the Bank Revolving Facility reducing the aggregate principal
amount available to $10.0 million and extending its maturity date to April 1,
2003. Borrowings under the Revolving Credit Facility must be fully paid for a
minimum period of 30 days for each 12-month period ending December 1.

     The Bank Term Facility is payable, subject to certain conditions, in
semi-annual installments in the amounts of $1.0 million in each of the first
three years after the anniversary of the closing date of the Bank Term Facility
(the "Bank Closing"); $3.0 million in the fourth year after the Bank Closing;
$7.0 million in 2001; $9.0 million in 2002 and $53.0 million upon maturity of
the Bank Term Facility.

                                       9
<PAGE>

     All obligations under the Bank Credit Facilities entered into with the
lenders or their affiliates in connection therewith are unconditionally
guaranteed (the "Bank Guarantees"), jointly and severally, by Rose Hills
Holdings Corp. and each of the Company's existing and future domestic
subsidiaries (the "Bank Guarantors"). All obligations of the Company and the
Bank Guarantees are secured by first priority security interests in all existing
and future assets (including real property located at Rose Hills but excluding
other real property and vehicles covered by certificates of title) of the
Company and the Bank Guarantors. In addition, the Bank Credit Facilities are
secured by a first priority security interest in 100% of the capital stock of
the Company and each subsidiary thereof and all intercompany receivables.

     In connection with the Acquisition Transaction, the Company also issued $80
million of 9-1/2% Senior Subordinated Notes due 2004, which were exchanged in
September 1997 for $80 million of 9-1/2% Senior Subordinated Notes due 2004 (the
"Notes") that were registered under the Securities Act of 1933. The Notes mature
on November 15, 2004. Interest on the Notes is payable semi-annually on May 15
and November 15 at the annual rate of 9-1/2%. The Notes are redeemable in cash
at the option of the Company, in whole or in part, at any time on or after
November 15, 2000, at prices ranging from 104.75% with annual reductions to 100%
in 2003 plus accrued and unpaid interest, if any, to the redemption date. The
proceeds of the Notes were used, in part, to finance the Acquisition
Transaction.

     As a result of the Acquisition Transaction and the application of proceeds
therefrom, the Company's total outstanding indebtedness was approximately $145.1
million as of September 30, 2001. As of October 31, 2001 the Company had the
entire $10.0 million of borrowing capacity available under the Bank Revolving
Facility available. Management currently believes that, based upon current
levels of operations and anticipated growth and the availability under the Bank
Revolving Facility, it can adequately service its existing indebtedness through
December 31, 2002. If the Company cannot generate sufficient cash flow from
operations or borrow under the Bank Revolving Facility to meet such obligations,
the Company may be required to take certain actions, including reducing capital
expenditures, restructuring its debt, selling assets or seeking additional
equity in order to avoid an Event of Default. There can be no assurance that
such actions could be effected or would be effective in allowing the Company to
meet such obligations. In addition, the Company currently expects that it will
have to obtain new or additional financing to pay some or all of the principal
amount due at maturity under the Bank Term Facility ($53 million by November 1,
2003) and under the Notes ($80 million on November 15, 2004). No assurance can
be given that such financing will be available to the Company or, if available,
that it may be obtained on terms and conditions that are satisfactory to the
Company.

     The Company and its Subsidiaries are subject to certain restrictive
covenants contained in the indenture to the Notes, including, but not limited
to, covenants imposing limitations on: the incurrence of additional
indebtedness; certain payments, including dividends and investments; the
creation of liens; sales of assets and preferred stock; transactions with
interested persons; payment restrictions affecting subsidiaries; sale-leaseback
transactions; and mergers and consolidations. In addition, the Bank Credit
Facilities contain certain restrictive covenants that, among other things, limit
the ability of the Company and its subsidiaries to dispose of assets, incur
additional indebtedness, prepay other indebtedness (including the Exchange
Notes), pay dividends or make certain restricted payments, create liens on
assets, engage in mergers or acquisitions or enter into leases or transactions
with affiliates. At September 30, 2001 the Company was in compliance with the
terms of the indenture and the Bank Credit Facilities.

NEW ACCOUNTING PRONOUNCEMENTS

         On June 29, 2001, Statement of Financial Accounting Standards (SFAS)
No. 142, "Goodwill and Other Intangible Assets" (Statement 142) was approved by
the Financial Accounting Standards Board (FASB). Statement 142 changes the
accounting for goodwill from an amortization method to an impairment -only
approach. Amortization of goodwill, including goodwill recorded in past business
combinations, will cease upon adoption of this statement. The provisions of
Statement 142 will be effective for fiscal years beginning after December 15,
2001 and must be adopted at the beginning of a fiscal year. Management has not
determined the impact of Statement 142, but anticipates the adoption of this
statement will have a material adverse impact on the Company's consolidated
financial position through an impairment charge to goodwill in the first quarter
of 2002. Also, effective in the first quarter of 2002, the Company will account
for goodwill by an impairment method instead of an amortization method.
Amortization expense related to goodwill for the twelve months ended December
31, 2000 was $3.3 million and $2.5 million for the nine months ended September
30, 2001.

                                      10
<PAGE>

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (Statement 144), which supersedes
both FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" (Statement 121), and the accounting
and reporting provisions of APB Opinion No. 30, "Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
(Opinion 30), for the disposal of a segment of a business (as previously defined
in that Opinion). Statement 144 retains the fundamental provisions in Statement
121 for recognizing and measuring impairment losses on long-lived assets held
for use and long-lived assets to be disposed of by sale, while also resolving
significant implementation issues associated with Statement 121. Statement 144
retains the basic provisions of Opinion 30 on how to present discontinued
operations in the income statement but broadens that presentation to include a
component of an entity (rather than a segment of a business). Unlike Statement
121, an impairment assessment under Statement 144 will never result in a
write-down of goodwill. Rather, goodwill is evaluated for impairment under
Statement 142, "Goodwill and Other Intangible Assets".

         The Company is required to adopt Statement 144 no later than the year
beginning after December 15, 2001. Accordingly, the Company will adopt Statement
144 in the first quarter of 2002. Management does not expect the adoption of
Statement 144 for long-lived assets held for use to have a material impact on
the Company's financial statements because the impairment assessment under
Statement 144 is largely unchanged from Statement 121. The provisions of the
Statement for assets held for sale or other disposal generally are required to
be applied prospectively after the adoption date to newly initiated disposal
activities. Therefore, Management cannot determine the potential effects that
adoption of Statement 144 will have on the Company's financial statements.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company's market risk is impacted by changes in interest rates.
Pursuant to the Company's policies, and depending on market conditions, the
Company may utilize derivative financial instruments (such as interest rate
collar agreements) from time to time to reduce the impact of adverse changes in
interest rates. The Company does not use derivative instruments for speculation
or trading purposes, and has no material sensitivity to changes in market rates
and prices on its derivative financial instrument positions. The Company did not
have any such agreements or instruments in place as of September 30, 2001.

PART II

ITEM 5 - OTHER INFORMATION

CONTINGENCIES

      The Company is involved in certain matters of threatened and filed
litigation, none of which, in the judgment of the Management, will have a
material impact on the Company's consolidated financial position or results of
operations.

      Environmental audits of the Company's various properties were conducted in
connection with the Acquisition Transaction. Management is aware of certain
areas within the Cemetery that have required and may in the future require
remediation, including a solid waste disposal area that previously was used to
dump rubbish, green waste and used motor oil in the 1970's. The Company believes
that Rose Hills Foundation (the "Foundation"), an unaffiliated company that is
the successor to the Association, is obligated to pay for or otherwise indemnify
the Company for the remediation costs associated with this area pursuant to the
terms of an Environmental Compliance Agreement entered into at the time of the
Acquisition Transaction. To date, the Foundation has taken charge of the
investigation and remediation of the area, including installing a cap on the
area. To oversee the work, and because the Company and the Foundation have
disagreed in the past about the amount of work required to remedy the situation,
the Company has retained an outside technical consultant to further investigate
the solid waste disposal area to determine what risks, if any, the solid waste
disposal area poses for the Company, and to quantify such risks. The Company's
ultimate goal is to resolve future responsibility with respect to the solid
waste disposal area as between the Foundation and the Company. The Company and
the Foundation are currently in discussions regarding these goals, and the
Company is keeping the local regional water quality control board apprised of
the progress of the investigation and the remedy presently proposed by the
Foundation to the local water board. However, no assurance can be given as to
the outcome of the Company's discussions with the Foundation and local water
board agency or as to whether the Foundation will completely fulfill all
requirements imposed by such agency.

      In addition, two of the Company's cemetery properties are located in or
near areas of regional groundwater contamination. The Company submitted
information in connection with contamination at one of these areas and was
informed by the Environmental Protection Agency that the Company will not be
included in the Super Fund cleanup of the basin.

                                      11
<PAGE>

     The Company recently stopped using a historic septic system in Rose Hills
Memorial Park and hooked up restroom facilities in this area to the local sewer
system. The Company is also negotiating with the local water board agency
concerning the agencies requirement that the Company also hook-up two other
small, historic septic systems to the sewer system. Because the two remaining
septic systems are small, used infrequently, and located in remote areas of the
park, the Company has requested and agency staff has tentatively expressed
support for monitoring of the two small septic systems to determine whether a
hook-up will be required. The Company is awaiting formal approval of this
approach. If the agency denies the Company's request, then the Company could
elect to go ahead with the additional hook-ups or use chemical toilets at such
locations.

     Although there can be no assurance, Management does not believe that the
above or other environmental matters affecting the Company will have a material
adverse effect on the Company's financial condition or results of operations.

     During August and September 2000, the Company discovered that there had
been some land movement in a portion of Rose Hills Memorial Park. The affected
area represents approximately 13 acres of the Park's approximately 1,418 total
acres, and consists of approximately 12,000 interment sites. The Company hired
an outside geo-technical and engineering firm to study the affected area, to
identify the underlying causes and the extent of the land movement, and to make
recommendations with regard to both short-term and long-term remediation and
stabilization measures. Pending the Company's receipt of the engineer's report,
the Company undertook various remediation measures, including the installation
of additional dewatering wells to improve water drainage conditions in the
affected area. The Company also began to relocate to other areas of the Park (at
the Company's expense) approximately 140 interred remains that were in the most
severely impacted portion of the affected area, and upon request from family
members, other interred remains that were located within the affected area. As
of October 31, 2001, the Company had relocated, at the Company's expense,
approximately 750 of the approximately 2,600 interred remains in the affected
area to other areas of the Cemetery.

     The Company received a preliminary report from the engineering firm in July
2001. In the preliminary report, the engineers advised the Company that the land
movement most likely had been caused by a combination of geologic, topographic,
water and soil conditions within the affected area. The preliminary report also
identified a variety of measures that the Company could take to remediate and
improve the stability of the land area, including the construction and
installation of engineered reinforcement fill berms at the base of the slide,
the installation of horizontal and other additional drains throughout the
affected area, and the implementation of other erosion control measures. In
October 2001, the engineering firm completed additional tests and revised their
initial recommendation to include additional de-watering wells instead of
horizontal drains. The Company's management is continuing to confer with the
engineering consultants to determine whether a combination of these measures is
likely to be effective to restore the affected area to a condition that is
suitable for interments. If the engineering consultants advise the Company that
these measures are likely to achieve such a result, management currently expects
that the Company will implement the measures in stages, with the installation of
the de-watering wells, erosion control measures and related improvements taking
place as early as the second quarter of fiscal 2002, and the construction and
installation of the reinforcement fill berms beginning in the third or fourth
quarter of fiscal 2002. If the area can not be restored for interments,
management expects the Company will implement only those measures that are
necessary to repair and stabilize the affected area, and management will then
consider whether the area may be utilized for alternate purposes. In this latter
case, the Company is likely to incur additional costs in connection with the
relocation of interred remains to other parts of the Cemetery, and may have to
incur an accounting charge associated with a reduction in the value of the
affected property.

     Based on the engineering firm's preliminary cost estimates, the Company
presently estimates that the aggregate construction and related costs to restore
and stabilize the affected area will be approximately $3.1 million. The Company
expects to incur approximately $.5 million of these costs during the second
quarter of fiscal 2002, with the balance to be incurred during the last two
quarters of fiscal 2002. The Company also expects that the total direct costs of
relocating interred remains for the affected area to other areas of the Cemetery
(should that become necessary) could approximate $1.0 million. The Company is
also evaluating the necessity of building a water blending facility for water
discharged from all new and existing de-watering wells. The cost of this system
is expected to be approximately $0.6 million. To the extent that funds are
available, the Company intends to seek reimbursement from the improvement
reserve in the Company's Endowment Care Fund (ECF) for the costs of relocating
interred remains and for a significant portion of the site assessment, repair,
maintenance and remediation costs associated with the affected area. Between
October 2000 and September 30, 2001, the Company has incurred $1.6 million and
has been reimbursed from the ECF reserve $1.1 million of direct costs related to
the relocation of interred remains and professional and other services
associated with the assessment, remediation and stabilization of the affected
area. As of September 30, 2001, the ECF had $1.1 million in reserves for
cemetery improvements. The Company intends to utilize working capital and, if
necessary, borrowings under its existing revolving credit facility to pay for
any remediation and related costs which are not reimbursed from the ECF.

     Based on the additional test results, revised estimates provided by the
engineering firm during the third quarter, and the amounts available in the ECF
improvement reserve fund, the Company has increased its accrual from $1.5
million to $2.5 million as a reserve for these matters during the third quarter
ended September 30, 2001.

                                       12
<PAGE>

     In connection with the Acquisition Transaction, the Rose Hills Memorial
Park cemetery land was subject to a significant step-up in assessed value by the
County of Los Angeles. Prior to the Acquisition Transaction, the Cemetery was
operated as a not-for profit corporation and was largely exempt from property
taxes. In connection with the Acquisition Transaction, the Company obtained an
independent appraisal of the fair value of the undeveloped and unsold cemetery
property. In early 1998, the Company also engaged an independent property tax
consultant to prepare an estimate of the fair value of the property to assist in
the process.

     In July 2000, the County of Los Angeles completed its property tax
reassessment reflecting its opinion of the fair value of Rose Hills' cemetery
property at the Acquisition Transaction date. The County placed a fair value on
the cemetery property that is approximately 60% higher than the independent
appraisal prepared by the property tax consultant and approximately 50% higher
than the fair market value computed by the independent appraiser at the time of
the Acquisition Transaction. The Company filed an assessment appeal with the Los
Angeles County Assessor, however, the supplemental tax based on the reassessment
must be paid during the appeal process. The total supplemental property tax
assessed by the County for the period November 1996 to September 30, 2001 is
approximately $2.5 million greater than the amount accrued by the Company using
the independent property tax appraisal. A large portion of the supplemental tax
bill is payable, interest-free, over four years.

     The Company believes, based in part on the advice of its property tax
advisors, that it can obtain a significant reduction in assessed value during
the appeal process. However, there is no assurance that the appeal will succeed.
In the event the Company does not prevail upon appeal, the Company will pursue
other administrative procedures, including filing for a reduction in assessed
value under California's Proposition 8, which requires the County to reduce
assessed values when declines deemed other than temporary occur.

 As discussed more fully in the Company's Annual Report on the Form 10-K for
the year ended December 31, 2000, the shareholders of Rose Hills Holdings Corp.
("Holdings"), the corporate parent of the Company, reached an agreement
pursuant to which the majority shareholder of Holdings would exercise its put
and the minority shareholder, a reorganized Loewen Group, Inc., would acquire
100% of the outstanding common stock of Holdings. In September 2001, the U.S.
Bankruptcy Court tentatively approved Loewen's plan of reorganization, including
the proposed transaction to acquire Rose Hills Company. The proposed
reorganization plan is subject to confirmation hearings scheduled for the end of
November, 2001. If the U.S. Bankruptcy Court confirms the reorganization plan at
those hearings, the proposed acquisition of the Company is expected to be
completed in January 2002, at which time the Company would become a wholly owned
subsidiary of a reorganized Loewen Group. If this change in control occurs as
described above, the Company will become obligated in January 2002, to pay
approximately $2.5 million in aggregate compensation to certain members of Rose
Hills Company's management under the Company's equity appreciation plan.

FORWARD-LOOKING STATEMENTS

     Certain statements in this Quarterly Report on Form 10-Q include "forward-
looking statements" as defined in Section 21E of the Securities Exchange Act of
1934. All statements other than statements of historical facts included herein,
including, without limitation, the statements under Item 2 "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position and its plans to increase revenues
and operating margins, reduce general and administrative expenses, take
advantage of synergies, and make capital expenditures, and the ability to meet
its financial obligations, are forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Important factors that could cause actual results to differ materially
from the Company's expectations include those that have been disclosed herein
and in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000. Persons should review the factors identified herein and in
the Company's Form 10-K to understand the risks inherent in such forward-looking
statements.

     All subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the qualifications in the preceding paragraph.


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     None

                                       13
<PAGE>

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


               ROSE HILLS COMPANY


               /s/ KENTON C. WOODS
               -------------------
               Kenton C. Woods
               Executive Vice President Finance and Chief Financial Officer,
               Secretary and Treasurer
               (Duly Authorized Officer and Principal Financial Officer)



November 13, 2001

                                       14