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

                              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, 1998

                                                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 May 12, 1998, was 100.


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


<PAGE>


<TABLE>
<CAPTION>





                                                     TABLE OF CONTENTS
<S>                                                                                                                     <C>

                                                                                                                      Page
Part I.      FINANCIAL  INFORMATION

             Item 1.      FINANCIAL  STATEMENTS:

             CONSOLIDATED  BALANCE  SHEETS
                 as of March 31, 1998 and December 31, 1997                                                             1
             CONSOLIDATED  STATEMENTS OF OPERATIONS
                 for the Three Months Ended March 31, 1998 and March 31, 1997                                           3
             CONSOLIDATED  STATEMENTS  of  CASH  FLOWS
                 for the Three Months Ended March 31, 1998 and March 31, 1997                                           4
             NOTES  to  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                                                                           10
             Item 6.      EXHIBITS  and  REPORTS  on  FORM  8-K                                                        10
             SIGNATURES                                                                                                10






</TABLE>














                                                            (i)


<PAGE>

<TABLE>
<CAPTION>

PART I

ITEM 1.   FINANCIAL STATEMENTS


<S>                                                                            <C>                         <C>       
                                          PRIME SUCCESSION, INC. AND SUBSIDIARIES
                                                Consolidated Balance Sheets

                                                                                March 31, 1998               December  31, 1997
                                                                                  (unaudited)

                                     Assets

   
Cash and cash equivalents                                                      $ 2,002,829                 $   1,555,415
Receivables:
  Trade, less allowance of $2,830,447 and $2,647,693                            11,520,700                    13,073,005
  Other                                                                            670,088                     4,492,005
                                                                                ----------                    ----------
         Total receivables                                                      12,190,788                    17,565,010
                                                                                ----------                    ----------
Inventories:
  Merchandise                                                                    4,067,343                     3,836,994
  Cemetery lots and mausoleum spaces                                             1,423,281                     1,693,530
                                                                                ----------                    ----------

         Total inventories                                                       5,490,624                     5,530,524
                                                                                ----------                    ----------
Prepaids and other current assets                                                  249,271                       319,000
Deferred income taxes                                                              723,566                       723,566
                                                                                ----------                    ----------

         Total current assets                                                   20,657,078                    25,693,515
                                                                                ----------                    ----------
Property and equipment:
  Land and land improvements                                                    16,220,700                    16,190,801
  Buildings and improvements                                                    47,168,583                    47,313,605
  Equipment, furniture and fixtures                                              9,557,090                     9,051,236
  Accumulated depreciation                                                      (3,834,032)                   (3,165,322)
                                                                                ----------                    ----------

         Net property and equipment                                             69,112,341                    69,390,320
                                                                                ----------                    ----------
Developed cemetery properties                                                   13,563,951                    12,996,135
Undeveloped cemetery properties                                                 31,902,345                    31,902,345
Goodwill, less accumulated amortization of $8,918,519 and $7,482,615           220,650,524                   222,086,427
Other intangible assets, less accumulated amortization of
  $6,874,261 and $5,866,178                                                     22,128,828                    23,147,315
Long-term receivables, less allowance of $3,610,853 and $3,288,268              11,989,503                     9,318,513
Other assets                                                                       534,646                       571,615
                                                                               -----------                   -----------
                                                                              $390,539,216                  $395,106,185
                                                                              ============                  ============

See accompanying notes to interim consolidated financial statements.

</TABLE>














                                                            -1-


<PAGE>

<TABLE>
<CAPTION>


                                          PRIME SUCCESSION, INC. AND SUBSIDIARIES
                                                Consolidated Balance Sheets
<S>                                                                              <C>                           <C>      
                                                                                March 31, 1998               December  31, 1997
                                                                                  (unaudited)


                                           Liabilities and Shareholders' Equity


Accounts payable                                                               $ 1,456,419                   $ 2,679,090

Other accrued expenses                                                           5,222,704                     8,441,985
Current installments of obligations under agreements with
  former owners                                                                  2,305,690                     2,369,684
Current installments of long-term debt                                           1,371,942                     1,389,530
Due to related party                                                                    --                        83,333
                                                                               -----------                  ------------

         Total current liabilities                                              10,356,755                    14,963,622
                                                                               -----------                   -----------

Deferred merchandise liabilities and revenues, less trust fund deposits         17,092,845                    17,600,097
Obligations under agreements with former owners, less current
  installments                                                                  14,571,481                    15,259,919
Long-term debt, less current installments                                      200,790,049                   201,580,635
Deferred income taxes                                                           16,770,180                    16,770,180
Other long-term liabilities                                                      4,557,254                     2,690,510
Shareholders' equity:
  Common stock, par value $.01 per share, 1,000 shares authorized;
    100 issued and outstanding shares                                                    1                             1
  Additional paid-in capital                                                   129,025,889                   129,047,493
  Accumulated deficit                                                           (2,625,238)                   (2,806,272)
                                                                               -----------                   -----------

         Total shareholders' equity                                            126,400,652                   126,241,222
                                                                               -----------                   -----------
                                                                             $ 390,539,216                  $395,106,185
                                                                             =============                  ============

See accompanying notes to interim consolidated financial statements.





</TABLE>















                                                            -2-



<PAGE>

<TABLE>
<CAPTION>


                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                                   (unaudited)


                                                                                    Three Months Ended
                                                                                          March 31,
                                                                                1998                          1997
                                                                                ----                          ----
Revenues:
<S>                                                                             <C>                      <C>           
  Funeral services                                                              $   20,614,212           $   19,459,911
  Cemetery sales                                                                     5,970,361                4,735,379
                                                                                     ---------              -----------
                                                                                    26,584,573               24,195,290
Costs and expenses:
  Funeral homes                                                                     12,732,156               12,100,651
  Cemetery                                                                           3,978,459                3,413,840
                                                                                    ----------              -----------
                                                                                    16,710,615               15,514,491
Corporate and regional general and administrative
  expenses                                                                             727,045                  877,788
                                                                                       
Depreciation and amortization                                                        2,842,055                2,731,659
                                                                                     ---------               ----------
Operating income                                                                     6,304,858                5,071,352
                                                                                     ---------               ----------
Other expenses:
  Interest expense, including amortization of
      deferred loan costs of $438,473 and $438,473                                   6,106,074                5,991,748
                                                                                     ---------               ----------
Income (loss) before income taxes                                                      198,784                 (920,396)
                                                                                       
Income tax expense                                                                     (17,500)                 (29,342)
                                                                                      
Net income (loss)                                                               $      181,284           $     (949,738)
                                                                                     =========               ===========
                                                                                       



See accompanying notes to interim consolidated financial statements.


</TABLE>








                                                             -3-



<PAGE>

<TABLE>
<CAPTION>

                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (unaudited)
                                                                                    Three Months Ended
                                                                                        March 31,
                                                                                1998                          1997
                                                                                ----                          ----
Cash flows from operating activities:
<S>                                                                              <C>                               <C>           
  Net income (loss)                                                              $     181,284                      $    (949,738)
  Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
         Depreciation and amortization                                               3,415,466                          3,170,132  
         Provision for doubtful accounts                                               573,434                            176,367
         Depletion of cemetery property                                                350,108                            544,271
         Changes in operating assets and liabilities
                  net of effects of acquisition of subsidiaries:
                           Receivables                                               2,129,798                         (1,089,661)
                           Inventories                                                (878,024)                        (1,324,543)
                           Accounts payable and accrued expenses                    (4,525,285)                        (2,486,103)
                           Deferred merchandise liabilities and revenue               (743,761)                           221,574
                           Other long-term liabilities                               1,866,744                           (557,785) 
                           Other                                                        28,986                           (489,817)
                                                                                     ---------                        -----------
Net cash provided by (used in) operating activities                                  2,398,750                         (2,785,303)
                                                                                     ---------                        -----------

Cash flows from investing activities:
  Proceeds from the disposal of assets                                                 319,506                             27,956
  Purchases of property and equipment                                                 (710,236)                          (498,571)
  Net cash paid for purchase of business                                                    --                           (506,542)
                                                                                     ---------                          ---------
                                                                                            
Net cash used in investing activities                                                 (390,730)                          (977,157)
                                                                                     ---------                          ---------

Cash flows from financing activities:
  Net proceeds (payments) of bank indebtedness under revolving loan                   (200,000)                         3,000,000
  Payments on long-term debt                                                          (608,174)                        (3,570,875)
  Payments on obligations under agreements with former owners                         (752,432)                        (1,541,234)
  Decrease in restricted cash                                                               --                          3,886,337
                                                                                      ---------                         ---------
                                                                                            
Net cash provided by (used in) financing activities                                  (1,560,606)                        1,774,228
                                                                                     ----------                         ---------
Net increase (decrease) in cash and cash equivalents                                    447,414                        (1,988,232)
Cash and cash equivalents at beginning of period                                      1,555,415                         2,985,704
                                                                                    -----------                         ---------
Cash and cash equivalents at end of period                                         $  2,002,829                      $    997,472
                                                                                    ===========                      ============

 See accompanying notes to interim consolidated financial statements.

</TABLE>

                                                             -4-


<PAGE>


                     PRIME SUCCESSION, INC. AND SUBSIDIARIES

               Notes to Interim Consolidated Financial Statements
                                   (unaudited)

(1)     Footnote disclosure which would  substantially  duplicate the disclosure
        contained in the Annual Report on Form 10-K for the year ended  December
        31,  1997 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,
        1998. All such adjustments are of a normal recurring nature.

(2)     Certain reclassifications have been made to the 1997 amounts to conform
        to the 1998 presentation.



                                                             -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  home 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
May 8, 1998, the Company through its subsidiaries  owns and operates 143 funeral
homes and 19 cemeteries in 20 states, primarily in non-urban areas of the United
States.  The Company  commenced  operations in 1992 and expanded rapidly through
the  aggressive  acquisition  of funeral  homes and  cemeteries.  The  Company's
consolidated  revenues and operating income were $26.6 million and $24.2 million
for the three  months  ended  March 31,  1998 and 1997,  respectively.  Sales of
funeral  services of $20.6 million and cemetery sales of $6.0 million  accounted
for  approximately  77.5% and  22.5%,  respectively,  of total net sales for the
three months ended March 31, 1998.

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-
<PAGE>
<TABLE>
<CAPTION>


Results of Operations

The Company's operations are detailed below for the three months ended March 31,
1998 and 1997  expressed  in dollar  amounts  as well as  relevant  percentages.
Revenue,  gross margin,  earnings (loss) from operations and expenses other than
income  taxes  are  presented  as a  percentage  of  revenue. 

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

                                                          Three months ended             Three months ended
                                                               March 31,                  March 31,
                                                               ---------                  ---------
                                                         1998            1997         1998        1997
                                                         ----            ----         ----        ----
                                                         (millions of dollars)            (percent)
                                                         ---------------------            ---------
Revenue
<S>                                                     <C>            <C>             <C>        <C>  
         Funeral                                       $20.6           $19.5           77.4%      80.5%
                                                                              
         Cemetery                                        6.0             4.7           22.6       19.5
                                                         ---             ---          -----     ------
                  Total                                 26.6            24.2         100.0%     100.0%
                                                        ====            ====         ======     ======
Gross Margin
         Funeral                                       $ 7.8           $ 7.4           37.9       37.9%
         Cemetery                                        2.0             1.3           33.3       27.7
                                                         ---             ---
                  Total                                  9.8             8.7           36.8%      36.0%
                                                                              
Expenses
         General and administrative                      0.7             0.9            2.6%       3.7%
                                                                              
         Depreciation and amortization                   2.8             2.7           10.5       11.2
                                                         ---             ---
Earnings From Operations                                 6.3             5.1           23.7       21.1
         Interest on long-term debt                      6.1             6.0           22.9       24.8
                                                         ---             ---
Income (loss) Before Income Taxes                        0.2            (0.9)           0.8       (3.7)
                                                                              
         Income taxes                                     --              --             --         --
                                                       -----           -----
Net income (loss)                                      $ 0.2           $(0.9)           0.8%      (3.7)%
                                                       =====           ===== 
                                                                            
</TABLE>

Consolidated revenues increased 9.9% to $26.6 million for the three months ended
March 31, 1998 compared to $24.2 million in the  corresponding  period for 1997,
with funeral service revenues increasing 5.6% to $20.6 million compared to $19.5
million in the corresponding  period in 1997, and cemetery  revenues  increasing
27.7% to $6.0 million compared to $4.7 million in the  corresponding  period for
1997.  Funeral  revenues  increased  primarily  as a result  increased  pricing,
enhanced  merchandising  of merchandise  display areas. On same-store  business,
excluding 1997  acquisitions and  dispositions,  total calls decreased by 4 from
5,182  calls for the three  months  ended  March 31, 1997 to 5,178 calls for the
three months ended March 31, 1998 and average revenue per call increased by $215
from $3,763 in 1997 to $3,978 in 1998. Cemetery revenues increased primarily due
to  increased  pre-need  sales  efforts  in  Alabama,   Florida  and  Tennessee.
Consolidated  operating  income increased from $5.1 million for the three months
ended March 31, 1997, to $6.3 million for the three months ended March 31, 1998.


Consolidated  contribution  margin of $6.3 million increased 23.5% for the three
months  ended March 31, 1998 from $5.1  million for the three months ended March
31, 1997, with funeral  contribution  margin of 37.9% for the three months ended
March 31, 1998  compared to 37.9% for the three  months ended March 31, 1997 and
cemetery  contribution margin of 33.3% for the three months ended March 31, 1998
compared to 27.7% for the corresponding  period in 1997.  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-



Corporate general and  administrative  expense decreased to $0.7 million for the
three months ended March 31, 1998 from $0.9 million for the corresponding period
in 1997. As a percentage of  consolidated  revenue,  general and  administrative
expense  decreased  to 2.6% in 1998  from 3.7% for the  corresponding  period in
1997.  Corporate general and administrative  expense decreased  primarily due to
restructured, upgraded and more efficient information and accounting systems.

Depreciation and amortization expense increased $0.1 million to $2.8 million for
the  three  months  ended  March  31,  1998  compared  to $2.7  million  for the
corresponding period in 1997. This increase is primarily the result of increased
depreciation on capital expenditures.

Interest  expense of $6.1  million  for the three  months  ended  March 31, 1998
increased by $0.1 million compared to $6.0 million for the corresponding  period
in 1997,  primarily as a result of additional  borrowings  to finance  operating
activities of the Company.



Liquidity and Capital Resources

The  Company's  primary  sources of cash since 1995 have been funds  provided by
operating  activities,  proceeds  from  additional  long-term  debt and  capital
contributions.  As of March 31,  1998,  the Company  had a net  working  capital
surplus  of $10.3  million  and a current  ratio of  1.99:1,  compared  to a net
working  capital of $2.1  million  and a current  ratio of 1.82:1  compared to a
working  capital  surplus of $10.7  million and a current  ratio of 1.72:1 as of
December 31, 1997.

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 three months  ended March 31, 1997,  the
Company purchased two cemeteries for an aggregate purchase price of $0.6 million
with no acquisitions occurring in the comparable period in 1998.

In the three months ended March 31, 1998 and 1997, the Company used $0.7 million
and $0.5 million for capital  expenditures.  In the three months ended March 31,
1998,  the Company paid $0.6 million in  principal  payments on long-term  debt,
principally relating to repayment of former owner obligations,  compared to $3.6
million in the corresponding period in 1997. In the three months ended March 31,
1997 the Company  borrowed $3.0 million on its revolving line of credit compared
a payment of $0.2 million for the same period in 1998.

The Company  estimates  that capital  expenditures  will be  approximately  $1.5
million in 1998 to be used in part for the repair and  improvement  of  existing
facilities.  The Company  also expects to invest  approximately  $1.0 million in
1998 for cemetery inventory development.

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

The Bank Credit Facilities provided the Company with senior secured amortization
extended  term loan  facilities  (the  "Bank  Term  Facility")  in an  aggregate
principal amount of $90 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 proceeds of which will 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 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.

                                      -8-
<PAGE>

All obligations  under the Bank Credit  Facilities and any interest rate hedging
agreements  entered  into with the  lenders or their  affiliates  in  connection
therewith are  unconditionally  guaranteed (the "Bank  Guarantees")  jointly and
severally, by the Company and each of the Company's existing and future domestic
subsidiaries  (the "Bank  Guarantors").  All  obligations of the Company and the
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  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 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 and its subsidiaries are subject to certain  restrictive  covenants
contained in the Indenture relating to the Notes, including, but not limited to,
covenants  imposing  limitations on the  incurrence of additional  indebtedness;
certain payments,  including  dividends and investments;  the creation of liens;
sales of assets and  preferred  stock;  transactions  with  interested  persons;
payment restrictions affecting subsidiaries;  sale-leaseback  transactions;  and
mergers and  consolidations.  In addition,  the Bank Credit  Facilities  contain
certain restrictive covenants that, among other things, limit the ability of the
Company  and  its   subsidiaries   to  dispose  of  assets,   incur   additional
indebtedness,   prepay  other  indebtedness,   pay  dividends  or  make  certain
restricted payments,  create liens on assets,  engage in mergers or acquisitions
or enter into leases or transactions with affiliates.

As of March 31, 1998, the Company had approximately $202 million of indebtedness
outstanding and  approximately $10 million of borrowing  availability  under the
Revolving Credit Facility.  The Company believes that, based upon current levels
of operations and anticipated growth and availability under the Revolving Credit
Facility,  it can  adequately  service its  indebtedness.  If the Company cannot
generate  sufficient  cash flow from  operations  or borrow under the  Revolving
Credit  Facility to meet such  obligations,  then the Company may be required to
take certain actions, including reducing capital expenditures, restructuring its
debt,  selling assets or seeking additional equity in order to avoid an Event of
Default.  There can be no assurance that such actions could be effected or would
be effective in allowing the Company to meet such obligations.















                                       -9-
<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 within the "safe harbor provisions"
     of the Private  Securities  Litigation  Reform Act of 1995.  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", and located
     elsewhere  herein  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 included herein. All
     subsequent written and oral forward-looking  statements attributable to the
     Company (as defined  herein) 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
     11 and 12, 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/ MYLES S. CAIRNS
                                                  Myles S. Cairns
                                                  Chief Financial Officer,
                                                  Secretary and Treasurer
May 12, 1998



















                                      -10-


<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.

      10.5*       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.

                                      -11-

(a)    Exhibit
         Number                                      Document Description

      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




                                      -12-
<PAGE>



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


                                                        Three months ended
                                                            March 31,
                                                   -----------------------------
                                                       1998           1997
                                                   -----------------------------
     Ratio of Earnings to
     Fixed Charges


     Earnings:
     Income (loss) before income taxes                       181           (920)
     Add:  Fixed charges, net                              6,375          6,192


     Income (loss) before income
          taxes and fixed charges, net                     6,556          5,272

     Fixed Charges:
              Total interest expense (1)                   6,106          5,992
              Interest factor in rents (2)                   269            200
                                                                           

                       Total fixed charges                 6,375          6,192

     Ratio of earnings to fixed charges                     1.03           0.85
     Coverage surplus (deficiency) (3)                       181           (920)

          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
               the three months ended March 31, 1997.  Coverage deficiency
               represents the excess of fixed charges over income before income
               taxes and fixed charges, net.