<PAGE>   1
================================================================================

                       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, 2000

                                       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 333-14599

                              ---------------------

                             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                            (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (859) 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 28, 2000,
was 100.

================================================================================

<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


                                                                                               PAGE
<S>                                                                                            <C>
PART I.       FINANCIAL  INFORMATION

              ITEM 1.  FINANCIAL  STATEMENTS:

              CONSOLIDATED  BALANCE  SHEETS
                  as of March 31, 2000 and December 31, 1999                                      1

              CONSOLIDATED  STATEMENTS OF OPERATIONS
                  for the Three Months Ended March 31, 2000 and 1999                              3

              CONSOLIDATED  STATEMENTS OF CASH  FLOWS
                  for the Three Months Ended March 31, 2000 and 1999                              4

              NOTES to INTERIM CONSOLIDATED  FINANCIAL  STATEMENTS                                5

              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 3.  DEFAULT UPON SENIOR SECURITIES                                            12

              ITEM 5.  OTHER  INFORMATION                                                        12

              ITEM 6.  EXHIBITS  AND  REPORTS ON  FORM  8-K                                      13


SIGNATURES                                                                                       13

</TABLE>



                                      (i)

<PAGE>   3


                                     PART 1

ITEM 1.  FINANCIAL STATEMENTS


                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                 March 31, 2000        December 31, 1999
                                                                                 --------------        -----------------
                                                                                   (unaudited)
         Assets
         ------

<S>                                                                              <C>                   <C>
Cash and cash equivalents                                                        $   3,298,007         $   3,891,970
Receivables:
  Trade, less allowance of $2,595,117 and $2,216,347                                11,391,120            13,902,326
  Other                                                                                781,616               797,128
                                                                                 -------------         -------------
           Total receivables                                                        12,172,736            14,699,454
                                                                                 -------------         -------------
Inventories:
  Merchandise                                                                        3,492,635             3,276,136
  Cemetery lots and mausoleum spaces                                                   925,659               827,694
                                                                                 -------------         -------------
           Total inventories                                                         4,418,294             4,103,830
                                                                                 -------------         -------------

Prepaids and other current assets                                                      315,483               424,576
                                                                                 -------------         -------------
           Total current assets                                                     20,204,520            23,119,830
                                                                                 -------------         -------------
Property and equipment:
  Land and land improvements                                                        16,934,262            16,929,888
  Buildings and improvements                                                        52,008,694            51,318,985
  Equipment, furniture and fixtures                                                 10,797,861            10,763,764
  Accumulated depreciation                                                          (9,468,276)           (8,673,146)
                                                                                 -------------         -------------
           Net property and equipment                                               70,272,541            70,339,491
                                                                                 -------------         -------------

Developed cemetery properties                                                       14,315,241            14,564,994
Undeveloped cemetery properties                                                     30,830,259            30,830,259
Goodwill, less accumulated amortization of $20,025,611 and
  $18,996,653                                                                      206,341,075           207,755,119
Other intangible assets, less accumulated amortization of
  $14,509,899 and $13,614,443                                                       13,843,102            14,839,249
Long-term receivables, less allowance of $3,908,702 and
  $3,965,996                                                                        14,287,229            14,397,421
Merchandise trust assets and investments in insurance
  contracts                                                                         21,928,936            21,814,901
Deferred obtaining costs, less accumulated amortization of
  $4,029,078 and $3,493,640                                                         15,854,371            15,270,796
Other assets                                                                         1,211,437             1,211,976
                                                                                 -------------         -------------
                                                                                  $409,088,711          $414,144,036
                                                                                 =============         =============

</TABLE>

      See accompanying notes to interim consolidated financial statements.



                                       1
<PAGE>   4


                    PRIME SUCCESSION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                              March 31, 2000        December 31, 1999
                                                                              --------------        -----------------
                                                                               (unaudited)
               Liabilities and Shareholders' Equity
               ------------------------------------

<S>                                                                       <C>                     <C>
Accounts payable                                                               $  1,296,061           $   2,594,453
Other accrued expenses                                                           11,006,542               9,988,292
Current installments of obligations under agreements with
  former owners                                                                   2,743,449               2,738,706
Current installments of long-term debt                                              374,593                 682,284
Long-term debt in default                                                       209,000,000             209,000,000
Due to related party                                                                391,667                 343,750
                                                                               ------------           -------------
                Total current liabilities                                       224,812,312             225,347,485
                                                                               ------------           -------------

Deferred merchandise liabilities and revenues                                    55,772,594              54,965,220
Obligations under agreements with former owners, less
      current installments                                                        8,752,923               9,510,666
Long-term debt, less current installments                                         3,239,646               3,398,698
Deferred income taxes                                                            17,747,792              17,747,792
Other long-term liabilities                                                       2,639,575               2,761,744

Shareholders' equity
       Common stock, par value $.01 per share, 1,000 shares
            authorized; 100 issued and outstanding shares                                 1                       1
       Additional paid-in capital                                               128,471,079             128,501,398
       Accumulated deficit                                                      (32,347,211)            (28,088,968)
                                                                               ------------           -------------
                Total shareholders' equity                                       96,123,869             100,412,431
                                                                               ------------           -------------

                                                                               $409,088,711            $414,144,036
                                                                               ============           =============
</TABLE>


      See accompanying notes to interim consolidated financial statements.



                                       2
<PAGE>   5



                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                      Three Months Ended
                                                                                          March 31,
                                                                                          ---------
                                                                                  2000                   1999
                                                                                  ----                   ----
<S>                                                                         <C>                    <C>
Revenues:
  Funeral                                                                     $19,010,665            $20,875,123
  Cemetery                                                                      3,969,611              4,919,002
                                                                              -----------            -----------
                                                                               22,980,276             25,794,125

Costs and expenses:
  Funeral                                                                      13,267,955             12,682,276
  Cemetery                                                                      2,999,648              3,276,903
                                                                              -----------            -----------
                                                                               16,267,603             15,959,179
Corporate general and administrative expenses                                     766,326                832,606
Depreciation and amortization                                                   2,890,396              2,926,411
Debt refinancing costs                                                            952,081                     --
                                                                              -----------            -----------
Operating income                                                                2,103,870              6,075,929
                                                                              -----------            -----------
Other expenses:
  Interest expense, including amortization of deferred loan costs
       (see note 1)                                                             6,313,811              5,852,077
                                                                              -----------            -----------
Income (loss) before income taxes                                              (4,209,941)               223,852
 Income tax expense                                                                48,302                 18,272
                                                                              -----------            -----------
 Net income (loss)                                                            $(4,258,243)           $   205,580
                                                                              ===========            ===========
</TABLE>

 See accompanying notes to interim consolidated financial statements.




                                        3
<PAGE>   6



                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                      Three Months Ended
                                                                                           March 31,
                                                                                  -------------------------
                                                                                  2000                 1999
                                                                                  ----                 ----
<S>                                                                               <C>              <C>
Cash flows from operating activities:
  Net income (loss)                                                               $(4,258,243)     $  205,580
  Adjustments to reconcile net income (loss) to net cash provided by
    operating activities:
     Depreciation and amortization                                                  3,321,346       3,364,834
     Depletion of cemetery property                                                   213,502         203,042
     Loss on property and equipment                                                   (13,034)        (62,245)
     Changes in operating assets and liabilities:
       Receivables (net)                                                            2,636,910       1,189,415
       Inventories                                                                   (278,214)       (488,931)
       Deferred merchandise trust assets                                             (114,035)     (1,191,936)
       Deferred obtaining costs                                                      (685,146)       (997,600)
       Accounts payable and accrued expenses                                         (280,142)     (2,307,985)
       Due to related party                                                            47,917         145,833
       Deferred merchandise liabilities                                               807,374       1,549,264
       Other long-term liabilities                                                   (122,168)       (221,131)
       Other                                                                           84,962         316,496
                                                                                  -----------      ----------
  Net cash provided by operating activities                                         1,361,029       1,704,636
                                                                                  -----------      ----------
Cash flows from investing activities:
     Proceeds from the disposal of property and equipment                              14,687         141,373
     Purchases of property and equipment                                             (746,836)     (1,255,970)
                                                                                  -----------      ----------
  Net cash used in investing activities                                              (732,149)     (1,114,597)
                                                                                  -----------      ----------
Cash flows from financing activities:
     Net proceeds of bank indebtedness under revolving loan                         1,672,000       2,000,000
     Payments on long-term debt                                                    (2,141,843)       (645,894)
     Payments on obligations under agreements with former owners                     (753,000)       (703,486)
                                                                                  -----------      ----------
  Net cash provided by (used in) financing activities                              (1,222,843)        650,620
                                                                                  -----------      ----------
  Net increase (decrease) in cash and cash equivalents                               (593,963)      1,240,659
  Cash and cash equivalents at beginning of period                                  3,891,970       1,146,670
                                                                                  -----------      ----------
  Cash and cash equivalents at end of period                                      $ 3,298,007      $2,387,329
                                                                                  ===========      ==========
</TABLE>


      See accompanying notes to interim consolidated financial statements.



                                       4
<PAGE>   7

                     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,
                         ---------------------------
                         2000                   1999
                         ----                   ----
                       $430,949               $438,423

(2)      Footnote disclosure which would substantially duplicate the disclosure
         contained in the Annual Report on Form 10-K for the year ended December
         31, 1999 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, 2000 assuming continuation as a going concern. All such
         adjustments are of a normal recurring nature.

(3)      The  unaudited  interim  consolidated  financial  statements  have been
         prepared assuming Prime Succession, Inc. and subsidiaries will continue
         as a  going  concern.  As  discussed  in  Item  3  of  Part  II,  Prime
         Succession,  Inc. is in default with respect to its Senior Subordinated
         Notes and Bank Credit Agreement,  which raises substantial doubts about
         its ability to  continue  as a going  concern.  The  unaudited  interim
         consolidated  financial  statements do not include any adjustments that
         might result from the outcome of this uncertainty.

(4)      Certain reclassifications have been made to the 1999 amounts to conform
         to the 2000 presentations.



                                       5
<PAGE>   8

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

OVERVIEW

         On August 26, 1996 (the "Closing Date"), the capital stock of Prime
Succession, Inc. "(Predecessor Company") 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, 2000, the Company through its subsidiaries owns or operates 141
funeral homes and 19 cemeteries in 19 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 $23.0 million and $25.8 million for the
three months ended March 31, 2000 and 1999, respectively. Sales of funeral
services of $19.0 million and $20.9 million accounted for approximately 82.6%
and 81.0% and cemetery sales of $4.0 million and $4.9 million accounted for
approximately 17.4% and 19.0%, respectively, of total net sales for the three
months ended March 31, 2000 and 1999.

         The Company had no funeral homes when it began operation in 1992 and
grew to 146 funeral homes in 1996. In order to achieve this rapid growth, former
management was primarily focused on identifying properties to be acquired and
consummating such acquisitions rather than on maximizing profitability of the
funeral homes and cemeteries which it had acquired. New management substantially
eliminated the Company's acquisition program and sought to take greater
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.



                                       6
<PAGE>   9


RESULTS OF OPERATIONS

         The Company's operations are detailed below for the three months ended
March 31, 2000 and 1999 expressed in dollar amounts as well as relevant
percentages. Revenue, gross margin, earnings from operations and expenses are
presented as a percentage of revenue.

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

<TABLE>
<CAPTION>

                                                            Three Months Ended          Three Months Ended
                                                                 March 31,                   March 31,
                                                                 ---------                   ---------
                                                            2000           1999         2000            1999
                                                            ----           ----         ----            ----
                                                           (million of dollars)              (percent)
                                                           --------------------              ---------
<S>                                                      <C>            <C>            <C>             <C>
REVENUE

         Funeral                                           $19.0          $20.9          82.6%           81.0%

         Cemetery                                            4.0            4.9          17.4            19.0
                                                           -----          -----         -----           -----
                  Total                                    $23.0          $25.8         100.0%          100.0%
GROSS MARGIN                                               =====          =====         =====           =====
         Funeral                                             5.7            8.2          30.0%           39.2%

         Cemetery                                            1.0            1.6          25.0            32.7
                                                           -----          -----

                  Total                                      6.7            9.8          29.1            38.0
EXPENSES

         Corporate general and administrative                0.8            0.8           3.5             3.1

         Depreciation and amortization                       2.9            2.9          12.6            11.2

         Debt refinancing costs                              0.9             --           3.9              --
                                                           -----          -----
EARNINGS FROM OPERATIONS                                     2.1            6.1           9.1            23.6

         Interest on long-term debt                          6.3            5.9          27.4            22.9
                                                           -----          -----
INCOME (LOSS) BEFORE INCOME TAXES                           (4.2)           0.2         (18.3)            0.8

         Income taxes                                         --             --            --              --
                                                           -----          -----
NET INCOME (LOSS)                                          $(4.2)         $ 0.2         (18.3)%           0.8%
                                                           =====          =====
</TABLE>


         Consolidated revenues decreased 10.9% to $23.0 million for the three
months ended March 31, 2000 compared to $25.8 million in the corresponding
period for 1999, with funeral service revenues decreasing 9.1% to $19.0 million
compared to $20.9 million in the corresponding period in 1999, and cemetery
revenues decreasing 18.4% to $4.0 million compared to $4.9 million in the
corresponding period for 1999. Funeral revenues decreased primarily as a result
of a decline in call volume. Cemetery revenues decreased primarily due to a
decline in prearranged sales of property, merchandise and services. Consolidated
operating income decreased from $6.1



                                       7
<PAGE>   10

million for the three months ended March 31, 1999, to $2.1 million for the three
months  ended  March 31,  2000 due to a decline  in both  funeral  and  cemetery
revenue as well as the incurrence of $0.9 million in debt refinance costs.

         Consolidated contribution margin decreased 31.6% to $6.7 million for
the three months ended March 31, 2000 compared to $9.8 million for the three
months ended March 31, 1999, with funeral contribution margin of 30.0% for the
three months ended March 31, 2000 compared to 39.2% for the three months ended
March 31, 1999 and cemetery contribution margin of 25.0% for the three months
ended March 31, 2000 compared to 32.7% for the corresponding period in 1999.
Funeral contribution margin decreased primarily as a result of a decline in call
volume. 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 remained constant at $0.8
million for the three months ended March 31, 2000 and 1999. As a percentage of
consolidated revenue, general and administrative expense increased to 3.5% in
2000 from 3.1% for the corresponding period in 1999.

         Depreciation and amortization expense remained constant at $2.9 million
for the three months ended March 31, 2000 and 1999.

         The Company incurred $0.9 million in debt refinance costs for the three
months ended March 31, 2000.

         Interest expense of $6.3 million for the three months ended March 31,
2000 increased by $0.4 million compared to $5.9 million for the corresponding
period in 1999, primarily as a result of pricing premiums on existing debt.
Pricing reduction or premium is determined 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 in 2000 and 1999 have been funds
provided by operating activities and proceeds under the revolving loan. As of
March 31, 2000, the Company had a net working capital deficit of $204.6 million
and a current ratio of .09:1, compared to a net working capital deficit of
$202.2 million and a current ratio of 0.10:1 as of December 31, 1999.

         The primary uses of cash in 2000 and 1999 have been for the principal
payments on long-term debt, payments on obligations under agreements with former
owners and capital expenditures.

         In the three months ended March 31, 2000 and 1999, the Company used
$0.7 million and $1.3 million for capital expenditures, respectively. In the
three months ended March 31, 2000 and 1999, the Company paid $2.1 million and
$0.6 million in principal payments on long-term debt, respectively. Payments
relating principally to repayment of former owner obligations for the three
months ended March 31, 2000 and 1999 were $0.8 million and $0.7 million,
respectively. In the three months ended March 31, 2000, the Company borrowed
$1.7 million on its revolving line of credit compared to $2.0 million for the
same period in 1999.

         The Company estimates that net capital expenditures net in 2000 will be
$2.4 million which will be used in part for the repair and improvement of
existing facilities.

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



                                       8
<PAGE>   11


         The Bank Credit Agreement provided the Company with senior secured
extended term loan facilities (the "Bank Term Facility") in an aggregate
principal amount of $90 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 million. The Bank Term Facility will
mature 7 years after the Acquisition Closing Date, and the Bank Revolving
Facility matures 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 million in each of the first three
years after the anniversary of the closing date of the Bank Term Facility (the
"Bank Closing"); $4 million in the fourth year after the Bank Closing; $9
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. The Company also has a $0.5 million bank credit
line, renewable annually, for general corporate purposes exclusive of the Bank
Revolving Facility.

         All obligations under the Bank Credit Agreement 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 Agreement and the Bank Guarantees are secured by first priority
security interests in all existing and future assets (other than certain real
property and vehicles covered by certificates of title) of the Company and the
Bank Guarantors. In addition, the obligations 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
million of 10 3/4% Senior Subordinated Notes due 2004, which were exchanged in
January 1997 for $100 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 is 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 Agreement contains 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 September 30, 1999, the Company was in default with respect to
certain financial covenants set forth in the Bank Credit Agreement. On November
12, 1999, the Lenders granted the Company a conditional waiver of non-compliance
until January 31, 2000 pursuant to a Limited Waiver and Amendment to Credit
Agreement entered into among the Company, the Bank Guarantors, the Lenders and
The Bank of Nova Scotia.

         On January 31, 2000, the Company and the Bank Guarantors entered into a
Limited Waiver and Forebearance Agreement to Credit Agreement with the Lenders
and The Bank of Nova Scotia pursuant to which the Lenders agreed to waive
certain conditions to additional borrowings under the Revolving Credit Facility
and to forbear from exercising certain rights and remedies under the Bank Credit
Agreement through March 15, 2000. The Lenders have not granted the Company a
further waiver beyond March 15, 2000 and have specifically reserved all of their
rights and remedies under the Bank Credit Agreement with respect to the existing
defaults. However, the Lenders have not accelerated the indebtedness outstanding
under the Bank Credit Agreement or pursued any available remedies.



                                       9
<PAGE>   12

         Pursuant to the Limited Waiver and Forebearance Agreement to Credit
Agreement dated January 31, 2000, on February 8, 2000, The Bank of Nova Scotia,
as Administrative Agent under the Bank Credit Agreement, issued a Payment
Blockage Notice to the Trustee under the Indenture relating to the Notes. As a
consequence, the Company did not make the semi-annual interest payment due
February 15, 2000 on the Notes. The Company has not received an acceleration
notice from either the Trustee or the holders of the Notes, nor have the holders
of the Notes otherwise pursued any remedies available to them. Certain of the
Note holders have formed an informal committee which is currently in discussions
with the Company regarding the possible restructuring of the indebtedness owed
in respect of the Notes. The informal committee has retained legal counsel and
financial advisors to assist them in such discussions. No assurance can be given
that the Company will reach an agreement with the informal committee with
respect to the restructuring of such indebtedness. As of March 31, 2000, the
Company has $212.6 million of indebtedness outstanding and approximately $0.2
million of borrowing availability under the Revolving Credit Facility.

         Statements of Financial Account Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities," is required to be
implemented in the first quarter of the Company's fiscal year 2001. The effect
of this pronouncements on the Company's consolidated financial condition and
results of operations is not expected to be material.

         The SEC issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements" in December 1999. SAB 101 presents the
staff's views on the application of existing generally accepted accounting
principles to revenue recognition in the financial statements. The industry is
currently assessing the impact of the application of SAB 101 on revenue
recognition policies. If it is determined that SAB 101 modifies or amends
revenue recognition policies followed by the industry and previously accepted by
the SEC, the adjustment would be required to be reflected in the Company's
consolidated financial statements in the quarter ending June 30, 2000.



                                       10
<PAGE>   13

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The market risk inherent in the Company's market risk sensitive
instruments and positions is the potential change arising from increases or
decreases in the prices of interest rates as discussed below. Generally, the
Company's market risk sensitive instruments and positions are characterized as
"other than trading". The Company's exposure to market risk as discussed below
includes "forward-looking statements" and represents an estimate of possible
changes in fair value or future earnings that would occur assuming hypothetical
future movements in interest rates. The Company's views on market risk are not
necessarily indicative of actual results that may occur and do not represent the
maximum possible gains and losses that may occur, since actual gains and losses
will differ from those estimated, based upon actual fluctuations in interest
rates and the timing of transactions.

INTEREST

         The Company has entered into various fixed and variable rate debt
obligations.

         As of March 31, 2000, the carrying value of the Company's long-term
fixed-rate debt was approximately $103.9 million compared to fair value of $23.9
million. Fair value was determined using quoted market prices, where applicable,
or discounted future cash flows based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements. If these
instruments are held to maturity, no reduction in the carrying value due to
market value decline will be realized.

         As of March 31, 2000, the Company had $108.7 million in variable-rate
debt. Each 0.5% change in average interest rates applicable to such debt would
result in a change of approximately $0.5 million in the Company's pre-tax
earnings.

         The Company monitors its mix of fixed and variable rate debt
obligations in light of changing market conditions and from time to time may
alter that mix as permitted by, for example, entering into interest rate swaps
or other interest rate hedging transactions.



                                       11
<PAGE>   14

                                     PART II

ITEM 3. - DEFAULT UPON SENIOR SECURITIES

         As of September 30, 1999, the Company was in default with respect to
certain financial covenants set forth in the Bank Credit Agreement. On November
12, 1999, the Lenders granted the Company a conditional waiver of non-compliance
until January 31, 2000 pursuant to a Limited Waiver and Amendment to Credit
Agreement entered into among the Company, the Bank Guarantors, the Lenders and
The Bank of Nova Scotia.

         On January 31, 2000, the Company and the Bank Guarantors entered into a
Limited Waiver and Forebearance Agreement to Credit Agreement with the Lenders
and The Bank of Nova Scotia pursuant to which the Lenders agreed to waive
certain conditions to additional borrowings under the Revolving Credit Facility
and to forbear from exercising certain rights and remedies under the Bank Credit
Agreement through March 15, 2000. The Lenders have not granted the Company a
further waiver beyond March 15, 2000 and have specifically reserved all of their
rights and remedies under the Bank Credit Agreement with respect to the existing
defaults. However, the Lenders have not accelerated the indebtedness outstanding
under the Bank Credit Agreement or pursued any available remedies.

         Pursuant to the Limited Waiver and Forebearance Agreement to Credit
Agreement dated January 31, 2000, on February 8, 2000, The Bank of Nova Scotia,
as Administrative Agent under the Bank Credit Agreement, sent a Payment Blockage
Notice to the Trustee under the Indenture relating to the Notes. As a
consequence, the Company did not make the semi-annual interest payment in the
amount of $5,375,000 due February 15, 2000 on the Notes. The Company has not
received an acceleration notice from either the Trustee or the holders of the
Notes, nor have the holders of the Notes otherwise pursued any remedies
available to them. Certain of the Note holders have formed an informal committee
which is currently in discussions with the Company regarding the possible
restructuring of the indebtedness owed in respect of the Notes. The informal
committee has retained legal counsel and financial advisors to assist them in
such discussions. No assurance can be given that the Company will reach an
agreement with the informal committee with respect to the restructuring of such
indebtedness.

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.

         The unaudited interim consolidated financial statements have been
prepared assuming Prime Succession, Inc. and subsidiaries will continue as a
going concern. As discussed in Item 3 of Part II, Prime Succession, Inc. is in
default with respect to its Senior Subordinated Notes and Bank Credit Agreement,
which raises substantial doubts about its ability to continue as a going
concern. The unaudited interim consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.



                                       12
<PAGE>   15

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

         The Exhibits, as show in the "Index of Exhibits", attached hereto as
pages 14 and 15, 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 28, 2000



                                       13
<PAGE>   16


                                INDEX OF EXHIBITS

(a) EXHIBIT
    NUMBER                               DOCUMENT DESCRIPTION
    ------                               --------------------

      2*              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.

      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.



                                       14
<PAGE>   17

(a) EXHIBIT
    NUMBER                               DOCUMENT DESCRIPTION
    ------                               --------------------

         10.4(a)*     First  Amendment to Credit  Agreement  dated September 30,
                      1998  among  Prime  Succession,   Inc.,  Prime  Succession
                      Holdings,   Inc.,   Goldman  Sachs  Credit  Partners,   as
                      syndication  agent and  arranging  agent,  and The Bank of
                      Nova Scotia as administrative agent for such lenders.

         10.4(b)*     Limited  Waiver and  Amendment  dated  November  12,  1999
                      entered into by and among Prime Succession, Inc. (formerly
                      known  as  Prime  Succession   Acquisition  Corp.),  Prime
                      Succession   Holdings,   Inc.  (formerly  known  as  Prime
                      Succession,   Inc.),  the  Financial  Institutions  listed
                      therein,   Goldman   Sachs  Credit   Partners   L.P.,   as
                      syndication  agent and  arranging  agent,  and The Bank of
                      Nova Scotia, as administrative agent.

         10.4(c)*     Limited  Waiver  and  Forebearance   Agreement  to  Credit
                      Agreement dated January 31, 2000 entered into by and among
                      Prime Succession, Inc. (formerly known as Prime Succession
                      Acquisition  Corp.),  Prime  Succession   Holdings,   Inc.
                      (formerly known as Prime Succession,  Inc.), the Financial
                      Institutions listed therein, 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.

         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

         16*          Letter from Ernst & Young LLP (independent  auditors prior
                      to  the   Acquisition)   concerning   change  in   Company
                      accountants   delivered   pursuant   to  Item   304(a)  of
                      Regulation S-K.

          21*         Subsidiaries of Prime Succession,  Inc. (formerly known as
                      Prime Succession 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) with respect to the
       Exchange Notes.

(b)    Reports on Form 8-K

         The Company filed a Form 8-K dated January 31, 2000, reporting on the
         Limited Waiver and Forebearance Agreement to Credit Agreement
         referenced in exhibit number 10.4(c) above.



                                       15