_______________________________________________________

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              ______________________

                                    FORM 10-Q
                              _______________________

(Mark One)
    [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 1999

                                       OR

    [ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
      For the transition period from _________________ to _________________
                      Commission file number _____________

                             _____________________

                             PRIME SUCCESSION, INC.
             (Exact name of registrant as specified in its charter)
                             _____________________


            DELAWARE                                          13-3904211
(State or Other Jurisdiction of                            (I.R.S. Employer
 Incorporation or Organization)                            Identification No.)


  3940 Olympic Blvd., Suite 500                                  41018
    Erlanger, Kentucky, U.S.A.                                (Postal Code)
(Address of principal executive offices)

                                 (606) 746-6800
              (Registrant's telephone number, including area code)


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

     The number of outstanding  shares of Common Stock as of April 30, 1999, was
100.


            _______________________________________________________


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>           <C>                                                                                                     <C>

Part I.       FINANCIAL  INFORMATION

              Item 1.      FINANCIAL  STATEMENTS:

              CONSOLIDATED  BALANCE  SHEETS
                  as of March 31, 1999 and December 31, 1998                                                             1

              CONSOLIDATED  STATEMENTS OF OPERATIONS
                  for the Three Months Ended March 31, 1999 and 1998                                                     3

              CONSOLIDATED  STATEMENTS  of  CASH  FLOWS
                  for the Three Months Ended March 31, 1999 and 1998                                                     4

              NOTES  to INTERIM CONSOLIDATED  FINANCIAL  STATEMENTS                                                      5

              Item 2.      MANAGEMENT'S  DISCUSSION  and  ANALYSIS
                           of  FINANCIAL  CONDITION  and  RESULTS  of  OPERATIONS                                        6


Part II.      OTHER  INFORMATION

              Item 5.      OTHER  INFORMATION                                                                           11

              Item 6.      EXHIBITS  and  REPORTS  on  FORM  8-K                                                        11


SIGNATURES                                                                                                              11

</TABLE>


















                                       (i)

<PAGE>
<TABLE>
<CAPTION>

                                     Part I

Item 1.   Financial Statements



                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

                                                                                  March 31, 1999             December 31, 1998
                                                                                  --------------             -----------------
                                                                                    (unaudited)
                                  Assets
                                  ------
<S>                                                                                <C>                          <C>
Cash and cash equivalents                                                             $  2,387,329               $  1,146,670

  Receivables:
         Trade, less allowance of $2,156,399 and  $2,086,520                            14,725,872                 14,718,380
         Other                                                                             679,323                    998,020
                                                                                      ------------               ------------
                           Total current receivables                                    15,405,195                 15,716,400

Inventories:
         Merchandise                                                                     3,912,339                  3,582,912
         Cemetery lots and mausoleum spaces                                                884,206                  1,178,137
                                                                                      ------------               ------------
                           Total current inventories                                     4,796,545                  4,761,049
                                                                                      ------------               ------------
Prepaids and other current assets                                                          240,440                    607,407
Deferred income taxes                                                                      588,088                    588,088
                                                                                      ------------               ------------
                  Total current assets                                                  23,417,597                 22,819,614
                                                                                      ------------               ------------
Property and equipment:
         Land and land improvements                                                     16,505,502                 16,447,209
         Buildings and improvements                                                     49,514,030                 48,751,390
         Equipment, furniture and fixtures                                              10,550,270                 10,221,223
         Accumulated depreciation                                                       (6,674,892)                (5,906,519)
                                                                                      ------------               ------------ 
                  Net property and equipment                                            69,894,910                 69,513,303
                                                                                      ------------               ------------
Developed cemetery properties                                                           14,911,314                 14,660,921
Undeveloped cemetery properties                                                         30,992,379                 30,992,379
Goodwill, less accumulated amortization of $14,669,298 and $13,222,612                 216,619,231                218,065,917
Other intangible assets, less accumulated amortization of $10,970,863 and
         $9,953,607                                                                     18,156,326                 19,263,641
Long-term receivables, less allowance of $6,150,960 and $6,205,730                      14,342,870                 15,221,081
Other assets                                                                               609,221                    585,439
                                                                                      ------------               ------------
                                                                                      $388,943,848               $391,122,295
                                                                                      ============               ============


      See accompanying notes to interim consolidated financial statements.
</TABLE>









                                       -1-


<PAGE>
<TABLE>
<CAPTION>

                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets


                                                                                      March 31, 1999          December 31, 1998
                                                                                      --------------          ----------------- 
                                                                                        (unaudited)
                      Liabilities and Shareholders' Equity
                      ------------------------------------
<S>                                                                                   <C>                        <C>
Accounts payable                                                                      $  1,896,096               $  2,031,580
Other accrued expenses                                                                   7,535,953                  9,708,454
Current installments of obligations under agreements with former owners                  2,817,923                  2,732,386
Current installments of long-term debt                                                   2,854,756                  1,396,074
Due to related party                                                                       145,833                     83,333
                                                                                      ------------               ------------ 
                                            Total current liabilities                   15,250,561                 15,951,827
                                                                                      ------------               ------------ 

Deferred merchandise liabilities and revenues, less trust fund deposits                 13,845,370                 14,384,071
Obligations under agreements with former owners, less current installments              11,748,476                 12,537,499
Long-term debt, less current installments                                              208,783,870                208,888,446
Deferred income taxes                                                                   16,523,017                 16,523,017
Other long-term liabilities                                                              3,498,380                  3,719,511

Shareholders' equity:
         Common stock, par value $.01 per share, 1,000 shares authorized;
                  100 issued and outstanding shares                                              1                          1
         Additional paid-in capital                                                    128,859,064                128,888,394
         Accumulated deficit                                                            (9,564,891)                (9,770,471)
                                                                                      ------------               ------------
                                            Total shareholders' equity                 119,294,174                119,117,924
                                                                                      ------------               ------------ 
                                                                                      $388,943,848               $391,122,295
                                                                                      ============               ============


      See accompanying notes to interim consolidated financial statements.

</TABLE>






















                                       -2-


<PAGE>
<TABLE>
<CAPTION>


                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                                   (unaudited)


                                                                                                   Three Months Ended
                                                                                                        March 31,
                                                                                                        ---------
                                                                                                  1999               1998
                                                                                                  ----               ----
<S>                                                                                            <C>                <C>
Revenues:
  Funeral services                                                                             $20,875,123        $20,614,212
  Cemetery sales                                                                                 4,919,002          5,970,361
                                                                                               -----------        -----------
                                                                                                25,794,125         26,584,573
Costs and expenses:
  Funeral homes                                                                                 12,682,276         12,732,156
  Cemetery                                                                                       3,276,903          3,978,459
                                                                                               -----------        ----------- 
                                                                                                15,959,179         16,710,615
Corporate general and administrative expenses                                                      832,606            727,045
Depreciation and amortization                                                                    2,926,411          2,842,055
                                                                                               -----------        ----------- 
Operating income                                                                                 6,075,929          6,304,858
                                                                                               -----------        -----------  
Other expenses:
  Interest expense, including amortization of deferred loan costs
     of $438,423 and $438,473                                                                    5,852,077          6,106,074
                                                                                               -----------        -----------
Income before income taxes                                                                         223,852            198,784
Income tax expense                                                                                 (18,272)           (17,500)
                                                                                               -----------        -----------  
Net income                                                                                     $   205,580        $   181,284
                                                                                               ===========        ===========  

      See accompanying notes to interim consolidated financial statements.


</TABLE>



















                                       -3-

<PAGE>
<TABLE>
<CAPTION>

                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (unaudited)
                                                                                              Three Months Ended
                                                                                                   March 31
                                                                                                   --------
                                                                                             1999             1998
                                                                                             ----             ---- 
<S>                                                                                        <C>               <C>
Cash flows from operating activities:
  Net income                                                                             $   205,580       $   181,284
  Adjustments to reconcile net income to net cash
     provided by operating activities:
         Depreciation and amortization                                                     3,364,834         3,415,466
         Depletion of cemetery property                                                      203,042           350,108
         Gain on sale of assets                                                              (62,245)               --
         Changes in operating assets and liabilities
                  net of effects of acquisition of subsidiaries:
                           Receivables (net)                                               1,189,415         2,703,232
                           Inventories                                                      (488,931)         (878,024)
                           Accounts payable and accrued expenses                          (2,307,985)       (4,525,285)
                           Deferred merchandise liabilities and revenue (net)               (640,272)         (743,761)
                           Other long-term liabilities                                      (221,131)        1,866,744
                           Other                                                             462,329            28,986
                                                                                         -----------       ----------- 
Net cash provided by operating activities                                                  1,704,636         2,398,750
                                                                                         -----------       -----------  

Cash flows from investing activities:
  Proceeds from the disposal of assets                                                       141,373           319,506
  Purchases of property and equipment                                                     (1,255,970)         (710,236)
                                                                                         -----------       -----------
Net cash used in investing activities                                                     (1,114,597)         (390,730)
                                                                                         -----------       -----------

Cash flows from financing activities:
  Net proceeds (payments) of bank indebtedness under revolving loan                        2,000,000          (200,000)
  Payments on long-term debt                                                                (645,894)         (608,174)
  Payments on obligations under agreements with former owners                               (703,486)         (752,432)
                                                                                         -----------       ----------- 
Net cash provided by (used in) financing activities                                          650,620        (1,560,606)
                                                                                         -----------       ----------- 
Net increase in cash and cash equivalents                                                  1,240,659           447,414
Cash and cash equivalents at beginning of period                                           1,146,670         1,555,415
                                                                                         -----------       -----------
Cash and cash equivalents at end of period                                               $ 2,387,329       $ 2,002,829
                                                                                         ===========       ===========


      See accompanying notes to interim consolidated financial statements.


</TABLE>









                                       -4-
<PAGE>


                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

               Notes to Interim Consolidated Financial Statements
                                   (unaudited)



(1)  Interest expense includes amortization of deferred loan costs as follows:

                             Three Months Ended
                                 March 31,
                                 ---------
                       1999                      1998
                       ----                      ----  
                     $438,423                  $438,473

(2)  Footnote  disclosure  which would  substantially  duplicate the  disclosure
     contained in the Annual Report on Form 10-K for the year ended December 31,
     1998 has not been included.  The unaudited interim  consolidated  financial
     statements reflect all adjustments which, in the opinion of management, are
     necessary  to  reflect a fair  statement  of the  results  for the  periods
     presented  and to present  fairly the  consolidated  financial  position of
     Prime  Succession,  Inc. and  subsidiaries  as of March 31, 1999.  All such
     adjustments are of a normal recurring nature.

































                                       -5-

<PAGE>

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

Overview

     On  August  26,  1996  (the  "Closing  Date"),  Prime  Succession,   Inc.'s
(Predecessor   Company)  capital  stock  was  purchased  (the   Acquisition)  by
Blackstone Capital Partners II Merchant Banking Fund L.P. and affiliates, Loewen
Group  International,  Inc. and PSI Management  Direct L.P. A new entity,  Prime
Succession,  Inc.  (Successor  Company),  was formed  and became a  wholly-owned
subsidiary of the Predecessor  Company. In connection with the Acquisition,  all
of the assets and liabilities of the Predecessor Company were transferred to the
Successor Company.  Collectively,  the Predecessor Company and Successor Company
are herein referred to as "the Company".

     The  Company  provides  merchandise  and  services  in both the funeral and
cemetery  segments of the death care industry in the United States.  In addition
to  providing  merchandise  and  services at the time of need,  the Company also
makes funeral,  cemetery and cremation  arrangements  on a pre-need basis. As of
March 31,  1999,  the Company  through its  subsidiaries  owns and  operates 143
funeral homes and 20 cemeteries  in 20 states,  primarily in non-urban  areas of
the United States. The Company commenced operations in 1992 and expanded rapidly
through  the  aggressive  acquisition  of  funeral  homes  and  cemeteries.  The
Company's  consolidated  revenues  were $25.8  million and $26.6 million for the
three  months  ended  March 31,  1999 and 1998,  respectively.  Sales of funeral
services of $20.9  million and  cemetery  sales of $4.9  million  accounted  for
approximately  81.0% and 19.0%,  respectively,  of total net sales for the three
months ended March 31, 1999.

     The Company had no funeral homes when it began  operations in 1992 and grew
to 146 funeral  homes in 1996.  In order to achieve  this rapid  growth,  former
management was primarily focused on identifying funeral homes to be acquired and
consummating  acquisitions of such homes rather than on maximizing profitability
of the funeral homes and cemeteries which it had acquired.  As a result,  former
management  did not take  advantage  of certain  opportunities  to  improve  the
efficiency  and  performance  of the  funeral  homes  acquired.  New  management
substantially  eliminated the Company's  acquisition  program.  In addition,  in
order to improve the Company's present and long-term operating performance,  new
management took advantage of (i) the quality and size of the Company's portfolio
of properties, (ii) the opportunity to operate more efficiently those properties
located in close  proximity  to one  another,  and (iii) the shift in focus from
acquisitions to profit  maximization at existing locations and (iv) the benefits
at both  local  sites and the  corporate  headquarters  from the  Administrative
Services  Agreement with Loewen. The Company's future results of operations will
depend in large part on the ability of management to  successfully  maintain its
business strategy.

     The  Company  is a party  to a  supply  agreement  with  Batesville  Casket
Company,  Inc.  ("BCC"),  The Forethought  Group and Forethought  Life Insurance
Company   ("FLIC"),   pursuant  to  which  the  Company  must  purchase  caskets
exclusively  from BCC and,  in  connection  with its  pre-need  sales of funeral
services  funded by  insurance,  the  Company  must  offer to its  customers  in
specified markets exclusively FLIC insurance products.  The agreement expires on
December 31, 2004,  subject to earlier  termination by any party thereto upon 30
days  notice  following  a  material,  uncured  breach of the  agreement  or the
occurrence of certain insolvency events. Management of the Company believes that
the terms of such supply agreement are favorable to the Company.

















                                       -6-
<PAGE>
<TABLE>
<CAPTION>

Results of Operations

     The  Company's  operations  are  detailed  below for the three months ended
March  31,  1999  and 1998  expressed  in  dollar  amounts  as well as  relevant
percentages.  Revenue, gross margin, earnings from operations and expenses other
than income taxes are presented as a percentage of revenue.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998

                                                            Three Months Ended           Three Months Ended
                                                                 March 31,                   March 31,
                                                                 ---------                   --------- 
                                                            1999            1998         1999           1998
                                                            ----            ----         ----           ----  
                                                           (millions of dollars)              (percent)
<S>                                                          <C>           <C>          <C>            <C>
Revenue
         Funeral                                             $20.9         $20.6        81.0%           77.4%
         Cemetery                                              4.9           6.0        19.0            22.6
                                                             -----         -----       ------          ------
                  Total                                      $25.8         $26.6       100.0%          100.0%
                                                             =====         =====       ======          ======
Gross Margin
         Funeral                                             $ 8.2         $ 7.8        39.2%           37.9%
         Cemetery                                              1.6           2.0        32.7            33.3
                                                             -----         -----        
                  Total                                        9.8           9.8        38.0            36.8
Expenses
         Corporate general and administrative                  0.8           0.7         3.1             2.6
         Depreciation and amortization                         2.9           2.8        11.2            10.5
                                                             -----         -----
Earnings From Operations                                       6.1           6.3        23.6            23.7
         Interest on long-term debt                            5.9           6.1        22.9            22.9
                                                             -----         -----
Income Before Income Taxes                                     0.2           0.2         0.8             0.8
         Income taxes                                           --            --          --              --
                                                             -----         -----
Net income                                                   $ 0.2         $ 0.2         0.8%            0.8%
                                                             =====         =====

 
     Consolidated  revenues decreased 3.0% to $25.8 million for the three months
ended March 31, 1999 compared to $26.6 million in the  corresponding  period for
1998, with funeral service revenues increasing 1.5% to $20.9 million compared to
$20.6  million  in the  corresponding  period  in 1998,  and  cemetery  revenues
decreasing 18.3% to $4.9 million  compared to $6.0 million in the  corresponding
period for 1998. Funeral revenues  increased  primarily as a result of increased
pricing and enhanced merchandising. Cemetery revenues decreased primarily due to
a  restructuring  of  pre-need  commission  rates and  decline  in sales  force.
Consolidated  operating  income decreased from $6.3 million for the three months
ended March 31, 1998, to $6.1 million for the three months ended March 31, 1999.


</TABLE>


                                       -7-
<PAGE>

     Consolidated  contribution margin of $9.8 million remained constant for the
three months ended March 31, 1999 and 1998, with funeral  contribution margin of
39.2% for the three months ended March 31, 1999  compared to 37.9% for the three
months  ended March 31, 1998 and cemetery  contribution  margin of 32.7% for the
three months ended March 31, 1999 compared to 33.3% for the corresponding period
in 1998. Funeral  contribution  margin increased primarily as a result of a cost
reduction  plan  placed in effect  during the third  quarter  of 1998.  Cemetery
contribution  margin decreased due to a decline in pre-need sales.  Contribution
margin is defined as a percentage of funeral revenues or cemetery  revenues,  as
the  case  may be,  less  related  cost of  sales  (including  direct  operating
expenses).
 
     Corporate general and administrative  expense increased to $0.8 million for
the three months  ended March 31, 1999 from $0.7  million for the  corresponding
period  in  1998.  As  a  percentage  of  consolidated   revenue,   general  and
administrative expense increased to 3.1% in 1999 from 2.6% for the corresponding
period in 1998. Corporate general and administrative expense increased primarily
due to personnel changes in the first quarter of 1999.
 
     Depreciation  and  amortization  expense  increased  $0.1  million  to $2.9
million for the three months  ended March 31, 1999  compared to $2.8 million for
the  corresponding  period in 1998.  The  increase  is  primarily  the result of
increased depreciation on capital expenditures.

     Interest  expense of $5.9 million for the three months ended March 31, 1999
decreased by $0.2 million compared to $6.1 million for the corresponding  period
in 1998,  primarily as a result of pricing  reductions on existing debt. Pricing
reduction  or  premium is  determined  quarterly  and is based on the  Company's
ability to achieve certain ratios set forth in the Bank Credit Agreement.


Liquidity and Capital Resources
 
     The Company's  primary  sources of cash since 1996 have been funds provided
by operations and proceeds from additional long-term debt. As of March 31, 1999,
the  Company  had a net working  capital  surplus of $8.2  million and a current
ratio of 1.54:1, compared to a net working capital surplus of $6.9 million and a
current ratio of 1.43:1 as of December 31, 1998.

     The  primary  uses of cash  since  1996  have been for the  acquisition  of
funeral homes and cemeteries,  including the Acquisition,  principal payments on
long-term  debt and capital  expenditures.  In the three  months ended March 31,
1999 and 1998, the Company made no acquisitions.

     In the three  months  ended March 31, 1999 and 1998,  the Company used $1.3
million and $0.7 million for capital  expenditures,  respectively.  In the three
months ended March 31, 1999 and 1998, the Company paid $0.6 million in principal
payments on long-term debt. Payments relating principally to repayment of former
owner  obligations  for the three months ended March 31, 1999 and 1998 were $0.7
million and $0.8 million, respectively. In the three months ended March 31, 1999
the Company  borrowed $2.0 million on its revolving line of credit compared to a
repayment of $0.2 million for the same period in 1998.
 
     The Company estimates that capital  expenditures net of estimated disposals
of $2.0  million in 1999 to be used in part for the repair  and  improvement  of
existing  facilities.  The Company  also  expects to invest  approximately  $0.5
million in 1999 for cemetery inventory development.

     Contemporaneously  with the  consummation of the  Acquisition,  the Company
entered into senior secured  credit  facilities  (the "Bank Credit  Facilities")
with a syndicate  of  financial  institutions  and The Bank of Nova  Scotia,  as
administrative agent.

     The Bank  Credit  Facilities  provided  the  Company  with  senior  secured
amortization  extended  term loan  facilities  (the "Bank Term  Facility") in an
aggregate principal amount of $90.0 million,  the proceeds of which were used to
finance the  Acquisition  and related  transaction  costs,  to pre-fund  certain
capital expenditures and to refinance existing  indebtedness of the Company, and
a senior secured revolving credit facility (the "Bank Revolving Facility") in an
aggregate principal amount of up to $25.0 million,  the proceeds of which may be
used for general  corporate  purposes and a portion of which may be extended (as
agreed  upon) in the form of swing  line  loans or  letters  of  credit  for the
account of the  Company.  The Bank Term  Facility  will mature 7 years after the
Acquisition  Closing Date, and the Bank  Revolving  Facility will mature 5 years
after the  Acquisition  Closing  Date.  The Bank Term  Facility  is  subject  to
amortization,  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"); $4.0 million
in the fourth year after the Bank Closing;  $9.0 million in the fifth year after
the Bank  Closing;  $12.5  million in the sixth year after the Bank  Closing and
$61.5 million upon the maturity of the Bank Term Facility.  The Revolving Credit
Facility will be payable in full at maturity, with no prior amortization.

                                       -8-

<PAGE>

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

     In connection with the Acquisition,  the Company also issued $100.0 million
of 10 3/4% Senior  Subordinated  Notes due 2004, which were exchanged in January
1997 for  $100.0  million  of 10 3/4%  Senior  Subordinated  Notes due 2004 (the
"Notes") that were registered under the Securities Act of 1933. The Notes mature
on August 15, 2004.  Interest on the Notes is payable  semi-annually on February
15 and August 15 at the annual rate of 10 3/4%. The Notes are redeemable in cash
at the  option  of the  Company,  in whole  or in part,  at any time on or after
August 15, 2000, at prices ranging from 105.375% with annual  reductions to 100%
in 2003 plus accrued and unpaid  interest,  if any, to the redemption  date. The
proceeds of the Notes were used, in part, to finance the Acquisition.
 
     The  Company  and its  subsidiaries  are  subject  to  certain  restrictive
covenants contained in the Indenture relating to the Notes,  including,  but not
limited to,  covenants  imposing  limitations  on the  incurrence  of additional
indebtedness;   certain  payments,  including  dividends  and  investments;  the
creation  of liens;  sales of assets  and  preferred  stock;  transactions  with
interested persons; payment restrictions affecting subsidiaries;  sale-leaseback
transactions;  and  mergers and  consolidations.  In  addition,  the Bank Credit
Facilities contain certain restrictive covenants that, among other things, limit
the  ability of the  Company and its  subsidiaries  to dispose of assets,  incur
additional  indebtedness,  prepay  other  indebtedness,  pay  dividends  or make
certain  restricted  payments,  create  liens on  assets,  engage in  mergers or
acquisitions or enter into leases or transactions with affiliates.

     As of March 31,  1999,  the Company  had  approximately  $212.0  million of
indebtedness   outstanding   and   approximately   $3.2   million  of  borrowing
availability  under the Revolving  Credit  Facility.  The Company believes that,
based upon current levels of operations and anticipated  growth and availability
under the Revolving Credit Facility, it can adequately service its indebtedness.
If the Company cannot  generate  sufficient  cash flow from operations or borrow
under the Revolving Credit Facility to meet such  obligations,  then the Company
may  be  required  to  take  certain   actions,   including   reducing   capital
expenditures,  restructuring  its debt,  selling  assets or  seeking  additional
equity in order to avoid an Event of  Default.  There can be no  assurance  that
such actions  could be effected or would be effective in allowing the Company to
meet such obligations.

     In September 1998,  Statement of Financial  Accounting  Standards (FAS) No.
133, "Accounting for Derivative Instruments and Hedging" was issued. FAS No. 133
requires  companies  to record  derivatives  on the  balance  sheet as assets or
liabilities  measured at fair value.  Gains or losses  resulting from changes in
the values of those  derivatives  would be accounted for depending on the use of
the derivative and whether it qualified under the standard hedge accounting. The
Company  is  currently  assessing  the  effect  of this  standard,  but does not
anticipate a material impact on the result of operations.



Year 2000 Issues

     Overview.  As the Year 2000  approaches,  all companies  that use computers
must address "Year 2000" issues.  Year 2000 issues result from the past practice
in the  computer  industry of using two digits  rather than four to identify the
applicable year. This practice can create  breakdowns or erroneous  results when
computers perform operations involving years later than 1999.

     The Company's State of Readiness.  The Company has devised and commenced an
extensive  compliance  plan with the  objective of bringing all of the Company's
information technology (IT) systems and non-IT systems into Year 2000 compliance
by the end of the second  quarter of 1999.  The  Company has divided its systems
into (i)  critical  systems,  consisting  of IT systems,  and (ii)  non-critical
systems,  consisting of a mixture of IT and non-IT systems.  Each system will be
evaluated and brought into compliance in five phases:



                                       -9-
<PAGE>


o  Phase I:   Awareness - Prepare and present comprehensive report to management
o  Phase II:  Assessment - Identify and evaluate all systems for Year 2000
              compliance
o  Phase III: Compliance - Complete necessary Year 2000 modifications
o  Phase IV:  Testing - Test all modified systems for Year 2000 compliance
o  Phase V:   Implementation - Return Year 2000 compliance systems to daily
              operation

     The Company's systems used to maintain  financial records were either found
to be compliant or have completed Phases I through V. As a result, 100% of these
critical  systems are currently  compliant.  All of the Company's other critical
systems have completed  Phase II, and ninety percent were found to be compliant.
The remaining  non-compliant  critical  systems have completed Phases III and IV
and commenced Phase V, with a scheduled  completion during the second quarter of
1999.

     Ninety percent of the Company's  non-critical  systems have completed Phase
II and were either found to be compliant or made compliant by completing  Phases
III through V. The Company anticipates that the remaining  non-critical  systems
will be evaluated and brought into  compliance by the end of the second  quarter
of 1999.

     In  addition,  the Company  has  communicated  with all of its  significant
vendors,  financial  institutions  and insurers to determine the extent to which
these third parties'  failure to resolve their Year 2000 issues could affect the
Company's  operations.  The Company has received indication that its significant
suppliers  expect  to be Year  2000  compliant  prior  to the end of the  second
quarter  of 1999.  The  Company  expects to  complete  its  evaluation  of third
parties' compliance by the end of the second quarter of 1999.

     The Costs Involved. Because all of the Company's computer systems have been
replaced in the past two years as part of the Company's ongoing goal to maintain
state of the art technology,  the Company's Year 2000 compliance costs have been
relatively low. To date, the company has incurred minor expenses in implementing
its compliance plan.  Management estimates that the total cost to be incurred by
the Company to complete its compliance plan will be insignificant. This estimate
includes the use of both internal and external  resources.  All costs related to
the Year 2000 compliance plan are included in the Information Systems budget and
are based on management's best estimates.  There can be no guarantee that actual
results will not differ from those estimated.

     Risks. If the Company is not successful in its efforts to bring its systems
into Year 2000  compliance,  the Company's  ability to procure  merchandise in a
timely and cost-effective manner may be impaired,  daily business procedures may
be delayed due to the use of manual procedures, and some business procedures may
be interrupted if no  alternative  methodology is available,  which could have a
material adverse effect on the Company's operations.

     The Company has no  guarantee  that the  systems of third  parties  will be
brought into compliance on a timely basis. The non-compliance of a third party's
system could have a material adverse effect on the Company's operations.

     The Company's Contingency Plan. Although the Company believes that its Year
2000  compliance  plan is adequate to achieve full system  operation on a timely
basis, the Company is in the process of developing a contingency plan to address
the possibility of the Company's and third parties' non-compliance.  The Company
anticipates  completing its contingency plan by the end of the second quarter of
1999.














                                      -10-
<PAGE>


                                    PART II

ITEM 5 - OTHER INFORMATION

Forward-Looking Statements

     Certain   statements  in  this  Quarterly   Report  on  Form  10-Q  include
"forward-looking  statements"  as  defined  in  Section  21E of  the  Securities
Exchange Act of 1934. All statements  other than statements of historical  facts
included  herein,  including,  without  limitation,  the statements under Item 2
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  regarding  the  Company's  financial  position,  plans to  increase
revenues,  reduce  general  and  administrative  expense and take  advantage  of
synergies,  are forward-looking  statements.  Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct. Important
factors that could cause actual results to differ  materially from the Company's
expectations ("Cautionary Statements") are disclosed herein, including,  without
limitation, in conjunction with the forward-looking  statements included herein.
All subsequent written and oral forward-looking  statements  attributable to the
Company  or  persons  acting on its  behalf  are  expressly  qualified  in their
entirety by the Cautionary Statements.


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

     The Exhibits, as shown in the "Index of Exhibits", attached hereto as pages
12 and 13, are filed as a part of this Report.



SIGNATURES

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

                                                        PRIME SUCCESSION, INC.

                                                        /s/ ARTHUR J. ANSIN
                                                        Arthur J. Ansin
                                                        Chief Financial Officer,
                                                        Secretary and Treasurer
April 30, 1999















                                      -11-
<PAGE>

INDEX OF EXHIBITS

      (a) Exhibit
          Number                            Document Description

            3.1*        Certificate of  Incorporation  of Blackhawk  Acquisition
                        Corp.

            3.2*        Certificate of Amendment of Certificate of Incorporation
                        of  Blackhawk  Acquisition  Corp.  changing  its name to
                        Prime Succession Acquisition Corp.

            3.3*        Certificate of Amendment of Certificate of Incorporation
                        of Prime Succession  Acquisition Corp. changing its name
                        to Prime Succession, Inc.

            3.4*        By-Laws of Prime Succession, Inc.

            4.1*        Indenture  dated as of August  15,  1996  between  Prime
                        Succession  Acquisition  Corp.  and United  States Trust
                        Company of New York, as Trustee

            4.2*        Form  of 10  3/4%  Senior  Subordinated  Note  due  2004
                        (included in Exhibit 4.1)

            10.1(a)*    Casket Supply Agreement,  dated January 1, 1993, between
                        Batesville  Casket Company,  Inc. and Prime  Succession,
                        Inc.

            10.1(b)*    Amendment   Agreement,   dated  August   1994,   between
                        Batesville  Casket Company,  Inc. and Prime  Succession,
                        Inc. (with respect to Casket Supply Agreement)

            10.1(c)*    Amendment  2,  dated May 22,  1995,  between  Batesville
                        Casket Company,  Inc. and Prime  Succession,  Inc. (with
                        respect to Casket Supply Agreement)

            10.1(d)*    Exclusive  Supply  Agreement,   dated  January  1,  1998
                        between Batesville Casket Company, Inc., The Forethought
                        Group,  Forethought  Life  Insurance  Company  and Prime
                        Succession, Inc.

            10.2*       Stockholders'  Agreement  dated as of  August  26,  1996
                        among  Prime  Succession,  Inc.  (to  be  renamed  Prime
                        Succession Holdings,  Inc.), Blackstone Capital Partners
                        II  Merchant  Banking  Fund  L.P.,  Blackstone  Offshore
                        Capital Partners II L.P.,  Blackstone  Family Investment
                        Partnership  II L.P.,  PSI  Management  Direct L.P.  and
                        Loewen Group International, Inc.

            10.3*       Administrative Services Agreement dated as of August 26,
                        1996 between Prime Succession  Acquisition  Corp. (to be
                        renamed  Prime   Succession,   Inc.)  and  Loewen  Group
                        International, Inc.

            10.4*       Credit Agreement dated as of August 26, 1996 among Prime
                        Succession,   Inc.  (to  be  renamed  Prime   Succession
                        Holdings,  Inc.), Prime Succession Acquisition Corp. (to
                        be renamed Prime  Succession,  Inc.),  Goldman,  Sachs &
                        Co.,  as  syndication  agent and  arranging  agent,  the
                        financial institutions from time to time parties thereto
                        as   lenders   and  The   Bank  of   Nova   Scotia,   as
                        administrative agent for such lenders.

            10.4(a)*    First Amendment to Credit  Agreement dated September 30,
                        1998 among Prime  Succession,  Inc.  (formerly  known as
                        Prime Succession  Acquisition  Corp.),  Prime Succession
                        Holdings,  Inc.  (formerly  known as  Prime  Succession,
                        Inc.),   Goldman   Sachs  Credit   Partners   L.P.,   as
                        syndication  agent and arranging  agent, and The Bank of
                        Nova Scotia as administrative agent.

            10.5*       Letter  Agreement  dated  August 1, 1996  between  Prime
                        Succession   Acquisition  Corp.  (to  be  renamed  Prime
                        Succession, Inc.) and Gary Wright.




                                      -12-

<PAGE>

      (a)    Exhibit
             Number                         Document Description



            10.6*       Letter  Agreement  dated  August 1, 1996  between  Prime
                        Succession   Acquisition  Corp.  (to  be  renamed  Prime
                        Succession, Inc.) and Myles Cairns.

            10.7*       Put/Call  Agreement,  dated as of August 26, 1996, among
                        Blackstone  Capital  Partners II Merchant  Banking  Fund
                        L.P.,  Blackstone  Offshore  Capital  Partners  II L.P.,
                        Blackstone  Family  Investment  Partnership II L.P., PSI
                        Management Direct L.P., Loewen Group  International Inc.
                        and the Loewen Group Inc.

            10.8*       Stock Purchase Agreement,  dated as of June 14, 1996, by
                        and among Prime  Succession,  Inc.,  the  individuals or
                        entities  listed on the  signature  pages  thereof,  The
                        Loewen Group Inc. and  Blackhawk  Acquisition  Corp.

            12          Computation of Ratio of Earnings to Fixed Charges

            21*         Subsidiaries of Prime Succession,  Inc.  (formerly known
                        as Prime Succession Acquisition Corp.)

            27          Financial Data Schedule

*    Incorporated  by reference to the  Exhibits to the  Company's  Registration
     Statement on Form S-4 (Registration No. 333-14599).


      (b)         Reports on Form 8-K

                        None        

























                                      -13-

<PAGE>
<TABLE>
<CAPTION>


Exhibit 12

Prime  Succession,  Inc. and subsidiaries
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)


                                                             Three Months Ended
                                                                 March 31,
                                                        -----------------------------
                                                                       
                                                             1999          1998
                                                             ----          ----
<S>                                                          <C>           <C>
Ratio of Earnings to
Fixed Charges


Earnings:
     Income before income taxes                                224            199
     Add:  Fixed charges, net                                6,092          6,375

Income before income taxes and fixed charges,
     net                                                     6,316          6,574

Fixed Charges:
     Total interest expense (1)                              5,852          6,106
     Interest factor in rents (2)                              240            269

           Total fixed charges                               6,092          6,375

Ratio of earnings to fixed charges                            1.04           1.03

Coverage surplus (3)                                           224            199

FN

(1)  Total interest expense for each period includes amortization of loan costs.

(2)  Interest  factor in rents  represents  one-third of rent expense,  which is
     considered representative of the interest factor.

(3)  The Company's  earnings are adequate to cover fixed charges for all periods
     indicated above.  Coverage  surplus  represents the excess of income before
     income taxes and fixed charges, net over fixed charges.


</TABLE>