_______________________________________________________

                       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 June 30, 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 July 30, 1999, was
100.


             _______________________________________________________


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                                                           TABLE OF CONTENTS

<S>           <C>                                                                                                     <C>
                                                                                                                      Page
Part I.       FINANCIAL  INFORMATION

              Item 1.      FINANCIAL  STATEMENTS:

              CONSOLIDATED  BALANCE  SHEETS
                  as of June 30, 1999 and December 31, 1998                                                              1

              CONSOLIDATED  STATEMENTS OF OPERATIONS
                  for the Three Months Ended June 30, 1999 and 1998                                                      3
                  and the Six Months Ended June 30, 1999 and 1998

              CONSOLIDATED  STATEMENTS  of  CASH  FLOWS
                  for the Six Months Ended June 30, 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                                                                           12

              Item 6.      EXHIBITS  and  REPORTS  on  FORM  8-K                                                        12


SIGNATURES                                                                                                              12





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                                       (i)

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                                     PART I

ITEM 1.   FINANCIAL STATEMENTS



                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

                                                                                  June 30, 1999           December 31, 1998
                                                                                  -------------           -----------------
                                                                                   (unaudited)
                                   Assets
                                   ------
<S>                                                                               <C>                     <C>
Cash and cash equivalents                                                         $    838,221               $  1,146,670
  Receivables:
         Trade, less allowance of $1,461,500 and  $2,086,520                        13,773,884                 14,718,380
         Other                                                                       1,160,737                    998,020
                                                                                  ------------               ------------
                  Total current receivables                                         14,934,621                 15,716,400
                                                                                  ------------               ------------

Inventories:
         Merchandise                                                                 3,977,819                  3,582,912
         Cemetery lots and mausoleum spaces                                            860,132                  1,178,137
                                                                                  ------------               ------------
                  Total current inventories                                          4,837,951                  4,761,049
                                                                                  ------------               ------------

Prepaids and other current assets                                                      181,375                    607,407
Deferred income taxes                                                                  588,088                    588,088
                                                                                  ------------               ------------
                  Total current assets                                              21,380,256                 22,819,614
                                                                                  ------------               ------------

Property and equipment:
         Land and land improvements                                                 16,520,594                 16,447,209
         Buildings and improvements                                                 50,021,755                 48,751,390
         Equipment, furniture and fixtures                                          10,587,401                 10,221,223
         Accumulated depreciation                                                   (7,309,496)                (5,906,519)
                                                                                  ------------               ------------
                  Net property and equipment                                        69,820,254                 69,513,303
                                                                                  ------------               ------------
Developed cemetery properties                                                       14,776,986                 14,660,921
Undeveloped cemetery properties                                                     30,992,379                 30,992,379
Goodwill, less accumulated amortization of $16,165,056 and $13,222,612             215,123,473                218,065,917
Other intangible assets, less accumulated amortization of $12,007,473 and
         $9,953,607                                                                 17,160,364                 19,263,641
Long-term receivables, less allowance of $5,299,302 and $6,205,730                  14,181,191                 15,221,081
Other assets                                                                           808,254                    585,439
                                                                                  ------------               ------------
                                                                                  $384,243,157               $391,122,295
                                                                                  ============               ============


      See accompanying notes to interim consolidated financial statements.

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                                      -1-
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<CAPTION>

                     PRIME SUCCESSION, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets


                                                                                     June 30, 1999        December 31, 1998
                                                                                     -------------        -----------------
                                                                                      (unaudited)
                      Liabilities and Shareholders' Equity
                      ------------------------------------
<S>                                                                                   <C>                  <C>
Accounts payable                                                                      $  1,356,572           $  2,031,580
Other accrued expenses                                                                   9,721,711              9,708,454
Current installments of obligations under agreements with former owners                  2,788,511              2,732,386
Current installments of long-term debt                                                   2,974,372              1,396,074
Due to related party                                                                       208,333                 83,333
                                                                                      ------------           ------------
                                            Total current liabilities                   17,049,499             15,951,827
                                                                                      ------------           ------------

Deferred merchandise liabilities and revenues, less trust fund deposits                 12,897,192             14,384,071
Obligations under agreements with former owners, less current installments              11,113,750             12,537,499
Long-term debt, less current installments                                              206,583,301            208,888,446
Deferred income taxes                                                                   16,523,017             16,523,017
Other long-term liabilities                                                              3,351,011              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                                                    128,767,633            128,888,394
         Accumulated deficit                                                           (12,042,247)            (9,770,471)
                                                                                      ------------           ------------
                                            Total shareholders' equity                 116,725,387            119,117,924
                                                                                      ------------           ------------
                                                                                      $384,243,157           $391,122,295
                                                                                      ============           ============


      See accompanying notes to interim consolidated financial statements.

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                                      -2-




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<CAPTION>

                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                                   (unaudited)


                                                     Three Months Ended                          Six Months Ended
                                                          June 30,                                   June 30,
                                                          --------                                   --------
                                                  1999                1998                    1999                   1998
                                                  ----                ----                    ----                   ----
<S>                                           <C>                 <C>                    <C>                   <C>
Revenues:
  Funeral services                            $ 18,052,753        $ 18,489,610           $ 38,927,876          $ 39,103,822
  Cemetery sales                                 4,247,818           6,623,629              9,166,820            12,593,990
                                              ------------        ------------           ------------          ------------
                                                22,300,571          25,113,239             48,094,696            51,697,812
Costs and expenses:
  Funeral homes                                 12,385,593          12,371,809             25,067,869            25,103,965
  Cemetery                                       2,629,352           4,411,310              5,906,255             8,389,769
                                              ------------        ------------           ------------          ------------
                                                15,014,945          16,783,119             30,974,124            33,493,734
Corporate general and
     administrative expenses                       861,241             813,101              1,693,847             1,540,146
Depreciation and amortization                    2,867,179           2,827,393              5,793,590             5,669,448
                                              ------------        ------------           ------------          ------------
Operating income                                 3,557,206           4,689,626              9,633,135            10,994,484
Other expenses:
  Interest expense, including
  amortization of deferred loan
  costs (see Note 1)                             6,003,090           6,076,670             11,855,167            12,182,744
                                              ------------        ------------           ------------          ------------
Loss before income taxes                        (2,445,884)         (1,387,044)            (2,222,032)           (1,188,260)
Income tax expense                                 (31,472)            (20,000)               (49,744)              (37,500)
                                              ------------        ------------           ------------          ------------
Net loss                                      $ (2,477,356)       $ (1,407,044)          $ (2,271,776)         $ (1,225,760)
                                              ============        ============           ============          ============

      See accompanying notes to interim consolidated financial statements.

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                                      -3-


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<CAPTION>











                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (unaudited)
                                                                                               Six Months Ended
                                                                                                   June 30,
                                                                                                   --------
                                                                                             1999              1998
                                                                                             ----              ----
<S>                                                                                     <C>               <C>
Cash flows from operating activities:
  Net loss                                                                              $ (2,271,776)     $ (1,225,760)
  Adjustments to reconcile net loss to net cash
     provided by operating activities:
         Depreciation and amortization                                                     6,681,115         6,546,394
         Depletion of cemetery property                                                      393,942           659,552
         (Gain) loss on sale of assets                                                       (28,127)           21,364
         Provision for deferred income taxes                                                      --            (7,653)
          Changes in operating assets and liabilities
                  net of effects of acquisition of subsidiaries:
                           Receivables (net)                                               1,821,668        (1,215,629)
                           Inventories                                                      (586,908)         (677,280)
                           Accounts payable and accrued expenses                            (661,751)       (1,931,348)
                           Deferred merchandise liabilities and revenue (net)             (1,690,022)           (6,062)
                           Other long-term liabilities                                      (368,500)        1,354,818
                           Other                                                              252,791           29,138
                                                                                         ------------      -----------
Net cash provided by operating activities                                                   3,542,432        3,547,534
                                                                                         ------------      -----------

Cash flows from investing activities:
     Proceeds from the disposal of assets                                                     150,768          449,144
     Purchases of property and equipment                                                   (1,900,989)      (1,735,844)
     Net cash received for sale of business                                                        --          250,000
     Net cash paid for purchase of business                                                        --         (400,000)
                                                                                          -----------      -----------
Net cash used in investing activities                                                      (1,750,221)      (1,436,700)

Cash flows from financing activities:
     Net payments of bank indebtedness under revolving loan                                        --         (700,000)
     Payments on long-term debt                                                              (733,036)        (644,632)
     Payments on obligations under agreements with former owners                           (1,367,624)      (1,256,664)
                                                                                          -----------      -----------
Net cash used in financing activities                                                      (2,100,660)      (2,601,296)
                                                                                          -----------      -----------
Net decrease in cash and cash equivalents                                                    (308,449)        (490,462)
Cash and cash equivalents at beginning of period                                            1,146,670        1,555,415
                                                                                          -----------      -----------
Cash and cash equivalents at end of period                                                $   838,221      $ 1,064,953


      See accompanying notes to interim consolidated financial statements.

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                                      -4-
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                     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                                  Six Months Ended
                                  June 30,                                           June 30,
                                  --------                                           --------
                       1999                      1998                     1999                     1998
                       ----                      ----                     ----                     ----
<S>                   <C>                       <C>                      <C>                      <C>
                      $449,102                  $438,473                 $887,525                 $876,946

(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 June 30,  1999.  All such
     adjustments are of a normal recurring nature.

</TABLE>




























                                      -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
June 30,  1999,  the Company  through its  subsidiaries  owns and  operates  142
funeral homes and 20 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 $48.1 million and $51.7 million for the six
months ended June 30, 1999 and 1998, respectively.  Sales of funeral services of
$38.9 million and cemetery  sales of $9.2 million  accounted  for  approximately
80.9% and 19.1%, respectively,  of total net sales for the six months ended June
30, 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.  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-
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Results of Operations

     The Company's  operations  are detailed  below for the three months and the
six months ended June 30, 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.
Income taxes are presented as a percentage of losses before income taxes.

Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998

                                                              Three Months Ended           Three Months Ended
                                                                   June 30,                     June 30,
                                                                   --------                     --------
                                                             1999            1998         1999           1998
                                                             ----            ----         ----           ----
                                                             (millions of dollars)             (percent)
                                                             ---------------------             ---------
<S>                                                          <C>             <C>        <C>            <C>
Revenue
         Funeral                                             $18.1           $18.5         81.0%           73.7%
         Cemetery                                              4.2             6.6         19.0            26.3
                                                             -----           -----        ------          ------
                  Total                                      $22.3           $25.1        100.0%          100.0%
                                                             =====           =====        ======          ======
Gross Margin
         Funeral                                             $ 5.7           $ 6.1         31.5%           33.0%
         Cemetery                                              1.6             2.2         38.1            33.3
                                                             -----           -----
                  Total                                        7.3             8.3         32.7            33.1
Expenses
         Corporate general and administrative                  0.9             0.8          4.0             3.2
         Depreciation and amortization                         2.9             2.8         13.0            11.2
                                                             -----           -----
Earnings From Operations                                       3.5             4.7         15.7            18.7
         Interest on long-term debt                            6.0             6.1         26.9            24.3
                                                             -----           -----
Income Before Income Taxes                                    (2.5)           (1.4)       (11.2)           (5.6)
         Income taxes                                           --              --           --              --
                                                             -----           -----
Net income                                                   $(2.5)          $(1.4)       (11.2)%          (5.6)%
                                                             =====           =====
</TABLE>

     Consolidated revenues decreased 11.2% to $22.3 million for the three months
ended June 30, 1999  compared to $25.1 million in the  corresponding  period for
1998, with funeral service revenues decreasing 2.2% to $18.1 million compared to
$18.5  million  in the  corresponding  period  in 1998,  and  cemetery  revenues
decreasing 36.4% to $4.2 million  compared to $6.6 million in the  corresponding
period for 1998.  Funeral and cemetery  revenues  decreased  primarily  due to a
restructuring  of  pre-need   commission  rates  and  decline  in  sales  force.
Consolidated  operating  income decreased from $4.7 million for the three months
ended June 30, 1998, to $3.5 million for the three months ended June 30, 1999.

     Consolidated  contribution  margin of $7.3 million  decreased 12.0% for the
three  months  ended June 30, 1999 from $8.3  million for the three months ended
June 30, 1998. Consolidated  contribution margin decreased primarily as a result
of restructuring  of pre-need  commission rates and decline in sales force which
decreased both funeral and cemetery revenues.  Funeral  contribution  margin was
31.5% for the three months  ended June 30, 1999  compared to 33.0% for the three
months  ended June 30, 1998 and  cemetery  contribution  margin of 38.1% for the
three months ended June 30, 1999 compared to 33.3% for the corresponding  period
in 1998.  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).




                                      -7-
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<CAPTION>

     Corporate general and administrative  expense increased to $0.9 million for
the three months ended June 30, 1999  compared to $0.8 million at June 30, 1998.
As a percentage of  consolidated  revenue,  general and  administrative  expense
increased  to 4.0% in 1999  from  3.2%  for the  corresponding  period  in 1998.
Corporate  general  and  administrative   expense  increased  primarily  due  to
personnel changes.

     Depreciation  and  amortization  expense  increased  $0.1  million  to $2.9
million for the three  months  ended June 30, 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 $6.0  million for the three months ended June 30, 1999
decreased by $0.1 million compared to $6.1 million for the corresponding  period
in 1998, primarily as a result of principal repayment on existing debt.

Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998

                                                           Six months ended               Six months ended
                                                              June 30,                       June 30,
                                                              --------                       --------
                                                         1999            1998           1999           1998
                                                         ----            ----           ----           ----
                                                         (millions of dollars)               (percent)
                                                         ---------------------               ---------
<S>                                                      <C>              <C>         <C>            <C>
Revenue
         Funeral                                         $38.9           $39.1        80.9%          75.6%
         Cemetery                                          9.2            12.6        19.1           24.4
                                                         -----           -----       ------         ------
                  Total                                  $48.1           $51.7       100.0%         100.0%
                                                         =====           =====       ======         ======
Gross Margin
         Funeral                                         $13.9           $14.0        35.7%          35.8%
         Cemetery                                          3.2             4.2        34.8           33.3
                                                         -----           -----
                  Total                                   17.1            18.2        35.6           35.2
Expenses
         General and administrative                        1.7             1.5         3.5            2.9
         Depreciation and amortization                     5.8             5.7        12.0           11.0
                                                         -----           -----
Earnings From Operations                                   9.6            11.0        20.0           21.3
         Interest on long-term debt                       11.8            12.2        24.5           23.6
                                                         -----           -----
Loss Before Income Taxes                                  (2.2)           (1.2)       (4.6)          (2.3)
         Income taxes                                      0.1              --        (5.0)            --
                                                         -----           -----
Net Loss                                                 $(2.3)          $(1.2)       (4.8)%         (2.3)%

</TABLE>






                                      -8-

<PAGE>

     Consolidated  revenues  decreased  7.0% to $48.1 million for the six months
ended June 30, 1999  compared to $51.7 million in the  corresponding  period for
1998, with funeral service revenues decreasing 0.5% to $38.9 million compared to
$39.1  million  in the  corresponding  period  in 1998,  and  cemetery  revenues
decreasing 26.9% to $9.2 million compared to $12.6 million in the  corresponding
period for 1998.  Funeral and cemetery  revenues  decreased  primarily  due to a
restructuring  of  pre-need   commission  rates  and  decline  in  sales  force.
Consolidated  operating  income  decreased from $11.0 million for the six months
ended June 30, 1998, to $9.6 million for the six months ended June 30, 1999.

     Consolidated  contribution  margin of $17.1 million  decreased 6.0% for the
six months ended June 30, 1999 from $18.2  million for the six months ended June
30, 1998.  Consolidated  contribution  margin decreased primarily as a result of
restructuring  of  pre-need  commission  rates and  decline in sales force which
decreased both funeral and cemetery revenues.  Funeral  contribution  margin was
35.7% for the six  months  ended  June 30,  1999  compared  to 35.8% for the six
months ended June 30, 1998 and cemetery contribution margin of 34.8% for the six
months  ended June 30, 1999  compared to 33.3% for the  corresponding  period in
1998.  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 $1.7 million for
the six  months  ended June 30,  1999 from $1.5  million  for the  corresponding
period  in  1998.  As  a  percentage  of  consolidated   revenue,   general  and
administrative expense increased to 3.5% in 1999 from 2.9% for the corresponding
period in 1998. Corporate general and administrative expense increased primarily
due to personnel changes.

     Depreciation  and  amortization  expense  increased  $0.1  million  to $5.8
million for the six months ended June 30, 1999  compared to $5.7 million for the
corresponding period in 1998. This increase is primarily the result of increased
depreciation on capital expenditures.

     Interest  expense of $11.8  million for the six months  ended June 30, 1999
decreased by $0.4 million compared to $12.2 million for the corresponding period
in 1998, primarily as a result of principal repayments on existing debt.


Liquidity and Capital Resources

     The Company's  primary  sources of cash since 1995 have been funds provided
by  operations  and  proceeds  from   additional   long-term  debt  and  capital
contributions.  As of June 30,  1999,  the  Company  had a net  working  capital
surplus of $4.3 million and a current ratio of 1.25:1, 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  1995  have been for the  acquisition  of
funeral homes and cemeteries,  including the Acquisition,  principal payments on
long-term debt and capital expenditures.  In the six months ended June 30, 1998,
the Company  acquired one funeral home. The Company made no  acquisitions in the
six months ended June 30, 1999.

     In the six  months  ended June 30,  1999 and 1998,  the  Company  used $1.9
million  and $1.7  million for capital  expenditures,  respectively.  In the six
months ended June 30, 1999, the Company paid $0.7 million in principal  payments
on long-term debt compared to $0.6 million in the corresponding  period in 1998.
In the six months ended June 30, 1998,  the Company repaid a net of $0.7 million
on its revolving line of credit.  The Company had a net  repayment/borrowing  on
its revolving line of credit of zero for the same period in 1999.

     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.




                                      -9-
<PAGE>

     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.

     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 June 30,  1999,  the  Company  had  approximately  $209.6  million of
indebtedness   outstanding   and   approximately   $5.2   million  of  borrowing
availability under the Revolving Credit Facility. On July 14, 1999, the State of
Florida  approved  the  Company's  application  to change  its method of funding
pre-need merchandise liabilities from trust funds to surety bonds, thus allowing
the Company to replace  approximately  $6.0 million of trust funds with a surety
bond of $8.5 million.  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.



                                      -10-

<PAGE>

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:

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
and non-critical systems have also completed Phase V.

     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 has  completed its  evaluation  of third  parties'
compliance.

     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 has developed a contingency  plan to address the possibility
of the Company's and third parties' non-compliance.



                                      -11-
<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
13 and 14, 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
July 30, 1999













                                      -12-


<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.


                                      -13-
<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


















                                      -14-

<PAGE>
<TABLE>
<CAPTION>


Exhibit 12
Prime  Succession,  Inc. and subsidiaries
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)


                                                             Three Months Ended           Six Months Ended
                                                                  June 30,                    June 30,
                                                        --------------------------------------------------------

                                                           1999          1998            1999          1998
                                                           ----          ----            ----          ----
         <S>                                                <C>           <C>             <C>           <C>

         Ratio of Earnings to
            Fixed Charges

         Earnings:
            Loss before income taxes                      (2,446)       (1,387)         (2,222)       (1,188)
            Add:  Fixed charges, net                       6,258         6,303          12,350        12,678

         Income before income taxes and fixed charges,
         net                                               3,812         4,916          10,128        11,490

         Fixed Charges:
            Total interest expense (1)                     6,003         6,077          11,855        12,183
            Interest factor in rents (2)                     255           226             495           495

                   Total fixed charges                     6,258         6,303          12,350        12,678

         Ratio of earnings to fixed charges                 0.61          0.78            0.82          0.91

         Coverage deficiency (3)                           2,446         1,387           2,222         1,188

             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  inadequate  to cover  fixed  charges for all
     periods indicated above. Coverage deficiency represents the excess of fixed
     charges over income before income taxes and fixed charges, net.

</TABLE>