Alderwoods 10Q 2006 Q1 Quarterly report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the 12 weeks (fiscal quarter) ended March 25, 2006
	OR
o	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 000-33277

ALDERWOODS GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware	52-1522627
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
311 Elm Street, Suite 1000, Cincinnati, Ohio (Address of principal executive offices)	45202 (Zip Code)

Registrant's telephone number, including area code:513-768-7400

Former name, former address and former fiscal year, if changed since last report:N/A

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 ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large Accelerated filer o Accelerated filer ý Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No o

APPLICABLE ONLY TO CORPORATE ISSUERS

At April 28, 2006, there were 40,672,950 shares of Common Stock outstanding.

ALDERWOODS GROUP, INC.

			Page

Part I.	FINANCIAL INFORMATION
	Item 1.	FINANCIAL STATEMENTS:
		CONSOLIDATED BALANCE SHEETS as of March 25, 2006 and December 31, 2005	1
		CONSOLIDATED STATEMENTS OF OPERATIONS for the 12 Weeks Ended March 25, 2006 and March 26, 2005	2
		CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY for the 12 Weeks Ended March 25, 2006	3
		CONSOLIDATED STATEMENTS OF CASH FLOWS for the 12 Weeks Ended March 25, 2006 and March 26, 2005	4
		NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS	5
	Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
	Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
	Item 4.	CONTROLS AND PROCEDURES	40
	FORWARD-LOOKING STATEMENTS		40
Part II.	OTHER INFORMATION
	Item 1.	LEGAL PROCEEDINGS	41
	Item 1A.	RISK FACTORS	41
	Item 6.	EXHIBITS	42
SIGNATURES			46

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALDERWOODS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

Expressed in thousands of dollars
except number of shares

		March 25, 2006			December 31, 2005
		(unaudited)
ASSETS
Current assets
	Cash and cash equivalents	$	8,140		$	7,455
	Receivables, net of allowances		45,915			52,862
	Inventories		15,382			15,784
	Other		7,668			6,885

			77,105			82,986
Pre-need funeral receivables and trust investments			332,053			334,427
Pre-need cemetery receivables and trust investments			305,855			307,322
Cemetery property			116,101			116,467
Property and equipment			540,457			542,901
Insurance invested assets			298,315			294,598
Deferred income tax assets			14,011			13,057
Goodwill			295,887			295,890
Cemetery perpetual care trust investments			246,091			243,805
Other assets			43,124			42,850

		$	2,268,999		$	2,274,303

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable and accrued liabilities	$	109,146		$	119,734
	Current maturities of long-term debt		2,402			2,435

			111,548			122,169
Long-term debt			361,347			371,040
Deferred pre-need funeral and cemetery contract revenue			74,857			91,618
Non-controlling interest in funeral and cemetery trusts			564,353			548,497
Insurance policy liabilities			275,473			266,729
Deferred income tax liabilities			9,976			10,552
Other liabilities			25,540			21,983

			1,423,094			1,432,588

Non-controlling interest in perpetual care trusts			246,344			243,962
Stockholders' equity
	Common stock, $0.01 par value, 100,000,000 shares authorized, 40,471,483 issued and outstanding (December 31, 2005—40,458,864)		405			405
	Capital in excess of par value		744,167			743,126
	Accumulated deficit		(167,902	)		(172,405	)
	Accumulated other comprehensive income		22,891			26,627

			599,561			597,753

		$	2,268,999		$	2,274,303

See accompanying notes to the interim consolidated financial statements

ALDERWOODS GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Expressed in thousands of dollars
except per share amounts and number of shares

		12 Weeks Ended
		March 25, 2006			March 26, 2005
Revenue
	Funeral	$	121,131		$	124,013
	Cemetery		37,831			38,304
	Insurance		22,855			21,568

			181,817			183,885

Costs and expenses
	Funeral		95,362			94,113
	Cemetery		33,158			33,184
	Insurance		21,907			20,287

			150,427			147,584

			31,390			36,301
General and administrative expenses			14,515			10,643
Provision for asset impairment			—			(1,219	)

			14,515			9,424

Income from operations			16,875			26,877
Interest on long-term debt (Note 3)			6,478			7,516
Other expense (income), net			(158	)		(5,800	)

Income before income taxes			10,555			25,161
Income taxes			4,810			11,192

Income from continuing operations			5,745			13,969
Loss from discontinued operations (Note 10)			—			(833	)

Income before cumulative effect of change in accounting principle			5,745			13,136
Cumulative effect of change in accounting principle			(1,242	)		—

Net income		$	4,503		$	13,136

Basic earnings per Common share:
	Income from continuing operations	$	0.14		$	0.35
	Loss from discontinued operations		—			(0.02	)
	Cumulative effect of change in accounting principle		(0.03	)		—

	Net income	$	0.11		$	0.33

Diluted earnings per Common share:
	Income from continuing operations	$	0.14		$	0.34
	Loss from discontinued operations		—			(0.02	)
	Cumulative effect of change in accounting principle		(0.03	)		—

	Net income	$	0.11		$	0.32

Basic weighted average number of shares outstanding (thousands)			40,466			40,049

Diluted weighted average number of shares outstanding (thousands)			42,301			41,312

See accompanying notes to the interim consolidated financial statements

ALDERWOODS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited)

Expressed in thousands of dollars except number of shares

				Shares	Common Stock Par Value		Capital in Excess of Par Value		Accumulated Deficit			Accumulated Other Comprehensive Income			Total
Balance at December 31, 2005				40,458,864	$	405	$	743,126	$	(172,405	)	$	26,627		$	597,753
Comprehensive income:
	Net income									4,503						4,503
	Other comprehensive income (loss):
		Foreign currency translation adjustment, net of income taxes of $nil											(359	)		(359	)
		Unrealized loss on insurance invested assets, net of tax recovery of $1,623											(3,013	)		(3,013	)
			Less: reclassification adjustments for realized losses on insurance invested assets included in net income, net of income taxes of $nil										1			1
		Unrealized loss on derivatives, net of income taxes of $nil											(10	)		(10	)
			Less: reclassification adjustments for realized gains on derivatives included in net income, net of income taxes of $nil										(355	)		(355	)

Comprehensive income																767
Stock based compensation								888								888
Common stock issued:
	Stock issued as compensation in lieu of cash			5,119				85								85
	Stock issued under equity incentive plan			7,500				68								68

Balance at March 25, 2006				40,471,483	$	405	$	744,167	$	(167,902	)	$	22,891		$	599,561

See accompanying notes to the interim consolidated financial statements

ALDERWOODS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Expressed in thousands of dollars

			12 Weeks Ended
			March 25, 2006			March 26, 2005
CASH PROVIDED BY (APPLIED TO)
Operations
	Net income		$	4,503		$	13,136
	Loss from discontinued operations			—			833
	Cummulative effect of change in accounting principle			1,242			—
	Items not affecting cash
		Depreciation and amortization		9,510			10,136
		Amortization of debt issue costs		455			905
		Stock based compensation		888			—
		Insurance policy benefit reserves		8,953			10,564
		Provision for asset impairment		—			(1,219	)
		Gain on disposal of business assets		(183	)		(5,831	)
		Deferred income taxes		(725	)		6,447
	Premium on long-term debt repurchase			—			282
	Other, including net changes in other non-cash balances			(4,190	)		6,972

Net cash provided by continuing operations				20,453			42,225
Net cash provided by discontinued operations				—			211

				20,453			42,436

Investing
	Proceeds on disposition of business assets			2,034			10,488
	Purchase of property and equipment			(4,753	)		(4,605	)
	Purchase of insurance invested assets			(23,365	)		(48,061	)
	Proceeds on disposition and maturities of insurance invested assets			15,974			37,778

	Net cash used in continuing operations			(10,110	)		(4,400	)
	Net cash provided by discontinued operations			—			1,163

				(10,110	)		(3,237	)

Financing
	Increase in long-term debt			—			5,151
	Repayment of long-term debt			(9,726	)		(37,072	)
	Issuance of Common stock			68			269

	Net cash used in continuing operations			(9,658	)		(31,652	)
	Net cash used in discontinued operations			—			(48	)

				(9,658	)		(31,700	)

Increase in cash and cash equivalents				685			7,499
Cash and cash equivalents, beginning of period				7,455			9,379

Cash and cash equivalents, end of period			$	8,140		$	16,878

See accompanying notes to the interim consolidated financial statements

ALDERWOODS GROUP, INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Tabular amounts expressed in thousands of dollars except per share amounts)

NOTE 1. NATURE OF OPERATIONS

Alderwoods Group, Inc., a Delaware corporation ("Alderwoods Group" and, together with its subsidiaries unless the context otherwise requires, the "Company"), is the second-largest operator of funeral homes and cemeteries in North America based on total revenue and number of locations. As of March 25, 2006, the Company operated 584 funeral homes, 73 cemeteries and 60 combination funeral homes and cemeteries throughout North America.

The Company's funeral operations encompass making funeral and cremation arrangements on an at-need or pre-need basis. The Company's funeral operations offer a full range of funeral services, including the collection of remains, registration of death, professional embalming, use of funeral home facilities, sale of caskets and other merchandise and transportation to a place of worship, funeral chapel, cemetery or crematorium.

The Company's cemetery operations assist families in making burial arrangements and offer a complete line of cemetery products (including a selection of burial spaces, burial vaults, lawn crypts, caskets, memorials, niches, mausoleum crypts and other merchandise), the opening and closing of graves and cremation services.

The Company's insurance operations sell a variety of insurance products, primarily to fund pre-need funeral services.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The interim consolidated financial statements include the accounts of the Company, its subsidiary companies and operations controlled by the Company through sales and management agreements. All subsidiaries are wholly owned, except for a few companies with small minority interests. The interim consolidated financial statements also include the accounts of the funeral trusts, cemetery merchandise and service trusts and perpetual care trusts, and several pooled investment funds created for such trusts in which the Company has a variable interest and is the primary beneficiary.

All significant inter-entity balances and transactions have been eliminated in the consolidated financial statements. The interim consolidated financial statements have been prepared using the United States dollar and are presented in accordance with United States generally accepted accounting principles ("GAAP").

The interim consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which in management's opinion are necessary for a fair presentation of the financial results as of March 25, 2006, and for the 12 weeks ended March 25, 2006, and March 26, 2005. The interim consolidated financial statements have been prepared on a basis consistent with the accounting policies described in the Company's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the U.S. Securities and Exchange Commission ("SEC") and should be read in conjunction therewith.

The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year or for any other interim period.

Use of estimates

The preparation of the interim consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. As a result, actual amounts could significantly differ from those estimates.

Stock-based compensation plans

Prior to January 1, 2006, the Company accounted for employee stock-based awards under the intrinsic value method, which followed the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standard No. 123R, "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires measurement of compensation cost for employee stock-based awards based upon fair value over the requisite service period for awards expected to vest. Furthermore, under SFAS 123R, liability based awards are recorded at fair value through to their settlement date.

Equity incentive plans and change in accounting policy

Pursuant to the provisions of SFAS 123R, the Company applied the modified-prospective transition method. Under this method, the fair value provision of SFAS 123R is applied to new employee share-based payment awards granted or awards modified, repurchased or cancelled after December 31, 2005. Measurement and attribution of compensation cost for unvested awards at December 31, 2005, granted prior to the adoption of SFAS 123R, are recognized based upon the provisions of SFAS No. 123, Accounting for Stock-Based Compensation, after adjustment for estimated forfeitures. Accordingly, SFAS 123R no longer permits pro-forma disclosure for income statement periods after December 31, 2005 and compensation expense will be recognized for all share-based payments based on grant-date fair value.

The fair value of restricted stock units and the fair value of stock options are determined using the Black-Scholes valuation model, which is consistent with the valuation techniques previously utilized for options in the footnote disclosures required under SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. The Company recorded stock-based compensation expense for equity incentive plans of $888,000 for the 12 weeks ended March 25, 2006. Had SFAS 123R been effective for the comparative period, stock-based compensation expense for equity incentive plans of $754,000 would have been recorded for the 12 weeks ended March 26, 2005.

Executive strategic incentive plan

The 2005-2007 Executive Strategic Incentive Plan, approved by the Board of Directors on July 21, 2005, is a performance based compensation plan designed to motivate and reward the senior management team for achieving shareholder value objectives. The plan provides cash awards to the senior executives based on the Company's Common Stock reaching the threshold of an average price of $17.00 for the period from December 1, 2007 to December 31, 2007. The amount of the cash award increases the more the stock price exceeds the $17.00 threshold target price. Achieving an average stock price of $17.00 results

in an aggregate cash award of $5,600,000. Achieving an average stock price of $18.00 results in an aggregate cash award of $8,000,000. The aggregate cash award increases by $1.6 million for every $1.00 in appreciation of the average stock price beyond $18.00. In the event of a change in control of the Company, the cash awards would be calculated based upon the stock price on the date of the change in control and become payable within 30 days of the change in control. Prior to the implementation of SFAS 123R, no compensation expense was recorded in the 52 weeks ended December 31, 2005 as the stock price at December 31, 2005 was less than the threshold target price for the Executive Strategic Incentive Plan.

With the adoption of SFAS 123R, this incentive plan is classified as a liability based award resulting in the measurement of the estimated fair value at each reporting date, until December 31, 2007 when the actual liability is determined. The Company records an expense equal to the portion of the fair value relative to the term of the plan. The Company determines the fair value using a Monte Carlo model. This model uses term-to-expiry and stock price assumptions as at the measurement date, together with expected volatility, risk-free interest rate and dividend yield assumptions consistent with the valuation of the Company's stock options. The adoption of SFAS 123R resulted in a cumulative effect of change in accounting principle of $1,242,000, which reflects the estimated accrued liability as of January 1, 2006 (fair value of $6,624,000, based on a stock price of $15.87), the adoption date of SFAS 123R. The estimated accrued liability as of March 25, 2006 of $2,695,000 (fair value of $9,584,000, based on a stock price of $16.84) reflects the additional compensation expense of $1,453,000 in the 12 weeks ended March 25, 2006.

Pro-forma disclosure

The application of SFAS 123R to stock options, restricted stock units and the Executive Strategic Incentive Plan has the following pro forma effect on the 12 weeks ended March 25, 2006 and the 12 weeks

ended March 26, 2005 reported amounts relative to amounts that would have been reported using the intrinsic value method under previous accounting:

		12 Weeks Ended March 25, 2006
		Pro Forma Disclosure		SFAS 123(R) Adjustments			As Reported
Income from operations		$	19,216	$	(2,341	)	$	16,875
Income before income taxes			12,896		(2,341	)		10,555
Income taxes			4,410		77			4,810
Income from continuing operations			8,009		(2,264	)		5,745
Income before cumulative effect of change in accounting principle			8,009		(2,264	)		5,745
Cumulative effect of change in accounting principle			—		(1,242	)		(1,242	)

Net Income		$	8,009	$	(3,506	)	$	4,503
Basic earnings per Common share:
	Income from continuing operations	$	0.20	$	(0.06	)	$	0.14
	Loss from discontinued operations		—		—			—
	Cumulative effect of change in accounting principle		—		(0.03	)		(0.03	)

	Net income	$	0.20	$	(0.09	)	$	0.11

Diluted earnings per common share:
	Income from continuing operations	$	0.20	$	(0.06	)	$	0.14
	Loss from discontinued operations		—		—			—
	Cumulative effect of change in accounting principle		—		(0.03	)		(0.03	)

	Net income	$	0.20	$	(0.09	)	$	0.11

		12 Weeks Ended March 26, 2005
		Pro Forma Disclosure			SFAS 123(R) Adjustments			As Reported
Income from operations		$	26,123		$	754		$	26,877
Income before income taxes			24,407			754			25,161
Income taxes			11,105			(87	)		11,192
Income from continuing operations			13,302			667			13,969
Income before cumulative effect of change in accounting principle			12,469			667			13,136
Cumulative effect of change in accounting principle			—			—			—

Net Income		$	12,469		$	667		$	13,136
Basic earnings per Common share:
	Income from continuing operations	$	0.33		$	0.02		$	0.35
	Loss from discontinued operations		(0.02	)		—			(0.02	)
	Cumulative effect of change in accounting principle		—			—			—

	Net income	$	0.31		$	0.02		$	0.33

Diluted earnings per Common share:
	Income from continuing operations	$	0.32		$	0.02		$	0.34
	Loss from discontinued operations		(0.02	)		—			(0.02	)
	Cumulative effect of change in accounting principle		—			—			—

	Net income	$	0.30		$	0.02		$	0.32

Employee stock purchase plan

In April of 2005, the Company's stockholders approved the adoption of a compensatory employee stock purchase plan to provide for the purchase on the open market, to a maximum of 1,100,000, shares of Common stock of the Company. Eligible employees may authorize payroll deductions of up to 5% of their regular base salary to purchase shares of Common stock of the Company on the open market on a monthly basis. The Company will make a cash contribution to purchase shares of common stock of the Company as additional compensation to each participant equal to 50% of the employee's contribution for that month. For the 12 weeks ended March 25, 2006, a total of 28,034 shares were purchased and distributed to employees at an average price of $16.64 per share and compensation expense of $155,000 was incurred.

Comparability

Certain comparative amounts have been reclassified to conform to the presentation adopted in the current year.

NOTE 3. LONG-TERM DEBT

Long-term debt consists of the following:

	March 25, 2006		December 31, 2005
Revolving credit facility (a)	$	—	$	4,000
Senior secured term loan B due in 2009 (a)(b)		156,683		161,683
7.75% Senior unsecured notes due in 2012 (c)		200,000		200,000
Promissory notes and capitalized obligations, certain of which are secured by assets of certain subsidiaries		7,066		7,792

		363,749		373,475
Less, current maturities of long-term debt		2,402		2,435

	$	361,347	$	371,040

(a): In 2003, the Company entered into a senior secured facility (the "Credit Agreement"), which after subsequent amendments, includes a $368,000,000 Senior Secured Term Loan B due September 29, 2009 (the "Term Loan B") and a $75,000,000 revolving credit facility (the "Revolving Credit Facility"), of which $35,000,000 is available in the form of letters of credit.

The Revolving Credit Facility is intended to be used primarily to fund the Company's working capital requirements. The Revolving Credit Facility bears interest at a rate per annum in accordance with graduated pricing based upon the Company's consolidated leverage ratio, and the Company has the option to elect an interest rate equal to either (i) a base rate (7.50% at March 25, 2006), plus 1.75% (based upon the Company's consolidated leverage ratio at March 25, 2006), or (ii) LIBOR (4.96% for the three-month LIBOR at March 25, 2006), plus 2.75% (based upon the Company's consolidated leverage ratio at March 25, 2006). An annual fee of 0.50% is charged on the unused portion of the Revolving Credit Facility. The Revolving Credit Facility matures on September 29, 2008.

Material covenants in the Credit Agreement include a requirement to maintain a minimum interest coverage ratio and fixed charge coverage ratio, a requirement not to exceed a maximum leverage ratio, an annual maximum on capital expenditures and cemetery development, and specified maximum amounts for capital lease obligations, indebtedness, acquisitions, certain investments, and sales of accounts receivable. Outstanding principal amounts and interest accrued and unpaid may, at the election of the requisite lenders, become immediately due and payable and further commitments by the lenders to make loans may, at the election of the requisite lenders, be terminated upon the occurrence of events of default specified in the Credit Agreement. As of March 25, 2006, the Company was in compliance with all covenants and was not in breach of any provision of the Credit Agreement that would cause an event of default to occur. The Credit Agreement is secured by specified real property, and substantially all personal property of Alderwoods Group and specified subsidiaries.

As of March 25, 2006, the amount available under the Revolving Credit Facility was $75,000,000, reduced by $18,930,000 in outstanding letters of credit.

(b): The Term Loan B provides the Company with an option to elect an interest rate equal to either (i) a base rate (7.50% at March 25, 2006), plus 1.00%, or (ii) LIBOR (4.96% for the three-month LIBOR at March 25, 2006), plus 2.00%. The weighted average rate of interest was 6.74% at March 25, 2006.

The Term Loan B is repayable in quarterly principal installments from March 25, 2006, to June 13, 2009 (subject to reduction for prepayments) of 0.25% of the aggregate principal amount of the Term Loan B outstanding as of December 3, 2004, with a lump sum payment of the then-outstanding amount on the maturity date. The Company has prepaid the required quarterly principal installments up to and including the second quarter of its 2007 fiscal year.

(c): On August 19, 2004, the Company issued the 7.75% Senior Unsecured Notes, due in 2012 (the "Eight-Year Senior Unsecured Notes"). Interest accrues at an annual rate of 7.75% and is payable semi-annually on March 15 and September 15 or, if such day is not a business day, the next succeeding business day. At any time prior to September 15, 2007, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the Eight-Year Senior Unsecured Notes at a redemption price of 107.75% of the stated principal amount, plus accrued and unpaid interest and Liquidated Damages (as defined in the indenture governing the Eight-Year Senior Unsecured Notes), if any, with net cash proceeds from specified equity offerings, provided at least 65% of the aggregate principal amount of the Eight-Year Senior Unsecured Notes remains outstanding and the redemption occurs within 90 days of the date of the closing of the specified equity offering. On or after September 15, 2008, the Company may, at its option, redeem all or part of the Eight-Year Senior Unsecured Notes at the redemption prices (expressed as percentages of the stated principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, if redeemed during the twelve-month period beginning on September 15 of the years indicated below:

Year		Percentage
2008		103.875
2009		101.938
2010 and thereafter		100.000

The Credit Agreement and the Eight-Year Senior Unsecured Notes are guaranteed by substantially all of Alderwoods Group's wholly-owned U.S. subsidiaries, other than Alderwoods Group's insurance subsidiaries and other specified excluded subsidiaries. Alderwoods Group, the parent company, has no independent assets or operations, and the guarantees of its guarantor subsidiaries are full and unconditional, and joint and several.

In certain change of control situations, Alderwoods Group may be required to make an offer to purchase the then-outstanding Eight-Year Senior Unsecured Notes at a price equal to 101% of their stated principal amount, plus accrued and unpaid interest to the applicable repurchase date and Liquidated Damages, if any.

The Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes restrict the Company's ability to engage in asset sales. The Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes prohibit dispositions of assets unless the assets disposed of fulfill the requirements of specified exceptions. The indenture governing the Eight-Year Senior Unsecured Notes excepts, among other exceptions, assets with a fair market value less than $5,000,000. One specified exception contained in the Credit Agreement is dispositions of any of a group of identified "discontinued assets"; another is dispositions of assets not exceeding $35,000,000 book value in the aggregate over the life of the Credit Agreement, provided that (i) the consideration received is at least equal to fair market value

and (ii) not less than 75% of the consideration is paid in cash or cash equivalents. Within 270 days of the receipt of net proceeds from any such asset sale, the Company has the ability to apply such net proceeds at its option (or as otherwise required) to invest in non-current operating assets (or enter into agreements for such investment which agreements are consummated within 360 days of such receipt of asset sale proceeds). Up to $10,000,000 of such net proceeds in any fiscal year (but not in excess of $40,000,000 in the aggregate over the term of the Credit Agreement) may be applied to make capital expenditures. To the extent the Company receives net proceeds in excess of additional specified thresholds and such excess is not applied to invest in non-current operating assets or make capital expenditures as described in the two immediately preceding sentences, the Company must make mandatory repayments under the Credit Agreement and, after all indebtedness under the Credit Agreement has been repaid, offer to purchase the Eight-Year Senior Unsecured Notes at a purchase price equal to 100.00% of the stated principal amount, plus accrued and unpaid interest and Liquidated Damages, if any.

Covenants in the Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes restrict, and under specified circumstances prohibit, the payment of dividends by the Company.

NOTE 4. LEGAL CONTINGENCIES

Funeral Consumers Alliance, Inc. et al v. Alderwoods Group, Inc. et al was filed in the United States District Court for the Northern District of California in April, 2005. This case has been transferred to the United States District Court for the Southern District of Texas, Case No. CV3394. To date, six separate class action lawsuits, includingFrancis H. Rocha v. Alderwoods Group, Inc. et al, Marcia Berger v. Alderwoods Group, Inc. et al, Maria Magsarili and Tony Magsarili v. Alderwoods Group, Inc. et al, Caren Speizer v. Alderwoods Group, Inc. et al, andFrank Moroz v. Alderwoods Group, Inc. et al ("Funeral Consumer Cases"), have been consolidated into this case. Two other cases, also transferred to the United States District Court for the Southern District of Texas,Pioneer Valley Casket Co. v. Alderwoods Group, Inc. et al ("Pioneer Valley") andRalph Fancher et al v. Alderwoods Group, Inc. et al ("Fancher"), have been consolidated into this case for purposes of discovery only.

All of these cases, includingPioneer Valley andFancher, are purported class actions on behalf of casket consumers throughout the United States. The suits name as defendants the Company and four other public companies involved in the funeral or casket industry. Except forFancher, which alleges violations of State of Tennessee antitrust laws only, all of the Funeral Consumer Cases andPioneer Valley allege that defendants violated federal and state antitrust laws by engaging in anticompetitive practices with respect to the sale and pricing of caskets. All of the cases, includingFancher, seek injunctions, unspecified amounts of monetary damages, and treble damages. Motions to Dismiss filed by the Company and all other defendants are pending in the Funeral Consumer Cases andPioneer Valley and Fancher. Plaintiffs in all these cases have yet to provide any meaningful information regarding their alleged damages. As a result, the Company cannot quantify its ultimate liability, if any, for the payment of damages. The Company believes plaintiffs' claims are without merit and intends to vigorously defend itself in these actions.

Richard Sanchez et al v. Alderwoods Group, Inc. et al was filed in February 2005 in the Superior Court of the State of California, for the County of Los Angeles, Central District; Case No.BC328962. Plaintiffs seek to certify a nationwide class on behalf of all consumers who purchased funeral goods and services from the Company. Plaintiffs allege in essence that the Federal Trade Commission's Funeral Rule requires

the Company to disclose its markups on all items obtained from third-parties in connection with funeral service contracts. Plaintiffs' allege further that the Company has failed to make such disclosures. Plaintiffs seek to recover an unspecified amount of monetary damages, attorney's fees, costs and unspecified "injunctive and declaratory relief." The Company believes that plaintiffs' claims are without merit and intends to vigorously defend itself in this action.

On July 7, 2005, the Federal Trade Commission (the "FTC") issued a letter advisory opinion regarding the lawful construction of the term "cash advance item" as used in the Funeral Rule. The FTC opined with regard to a similar lawsuit in Texas state court: "The Commission believes that the court is incorrect in ruling that all goods or services purchased from a third-party vendor are cash advance items. This interpretation sweeps far too broadly, potentially bringing within its scope every component good or service that comprises a funeral. This was not and is not the Commission's intention in the 'cash advance' provisions of the Rule. In our opinion, the term 'cash advance item' in the Rule applies only to those items that the funeral provider represents expressly to be 'cash advance items' or represents by implication to be procured on behalf of a particular customer and provided to that customer at the same price the funeral provider paid for them." The FTC sets forth its analysis in the remainder of the letter.

The Company has learned that a number of plaintiffs to these actions along with the Funeral Consumers Alliance have filed a petition against the FTC in the District of Columbia Circuit Court asking the Court to overturn the FTC's July 7, 2005 Advisory Opinion.

In addition to the funeral and casket antitrust lawsuits, the Company has received a Civil Investigative Demand, dated August 4, 2005, from the Attorney General of Maryland on behalf of itself and other undisclosed state attorneys general, who have commenced an investigation of alleged anticompetitive practices in the funeral industry. The Company has received similar Civil Investigative Demands from the Attorneys General of Florida and Connecticut.

The ultimate outcome of the litigation matters described above cannot be determined at this time. An adverse decision in one or more of such matters could have a material adverse effect on the Company, its financial condition, results of operation and cash flows. However, the Company intends to aggressively defend the lawsuits.

In addition, the Company is party to other legal proceedings in the ordinary course of business, and believes it has made adequate provision for estimated potential liabilities. The Company does not expect the outcome of these proceedings, individually or in the aggregate, to have a material adverse effect on its financial position, results of operations or liquidity.

NOTE 5. SUPPLEMENTARY STATEMENTS OF CASH FLOWS DISCLOSURE

Supplemental disclosures related to the statement of cash flows consist of the following:

			12 Weeks Ended
			March 25, 2006			March 26, 2005
Decrease (increase) in assets:
	Receivables, net of allowances
		Trade	$	3,711		$	7,130
		Other		3,124			606
	Inventories			329			(55	)
	Prepaid expenses			(1,185	)		16,106
	Cemetery property			(1,424	)		(937	)
	Other assets			(761	)		(2,087	)
Increase (decrease) in liabilities:
	Accounts payable and accrued liabilities			(10,151	)		(11,407	)
	Net effect of pre-need receivables and deferred revenue			2,971			4,523
	Other liabilities			2,960			(6,526	)
	Insurance policy liabilities			(209	)		1,010
	Other changes in non-cash balances			(3,555	)		(1,391	)

			$	(4,190	)	$	6,972

Supplemental information:
	Interest paid		$	10,036		$	11,832
	Income taxes paid, net of refunds			(1,195	)		391
	Bad debt expense			1,094			522
Non-cash investing and financing activities:
	Stock issued as compensation in lieu of cash		$	85		$	15
	Restricted cash investing and financing activities:
		Purchases of funeral, cemetery, and perpetual care trust investments		76,972			107,274
		Proceeds on disposition and maturities of funeral, cemetery, and perpetual care trust investments		64,464			147,468
		Increase in non-controlling interests in funeral, cemetery and perpetual care trusts		32,770			11,588
		Decrease in non-controlling interests in funeral, cemetery and perpetual care trusts upon fulfillment of pre-need contracts		15,325			14,014

NOTE 6. SUPPLEMENTARY FINANCIAL INFORMATION

A summary of certain balance sheet accounts is as follows:

		March 25, 2006			December 31, 2005
Receivables, net of allowances:
	Customer receivables	$	47,603		$	50,459
	Allowance for doubtful accounts		(11,290	)		(10,320	)
	Other		9,602			12,723

		$	45,915		$	52,862

Pre-need funeral receivables and trust investments:
	Customer receivables	$	38,723		$	38,438
	Allowance for contract cancellations and refunds		(14,237	)		(15,988	)
	Funeral trust investments		297,612			282,084
	Amounts receivable from funeral trusts		9,955			29,893

		$	332,053		$	334,427

Pre-need cemetery receivables and trust investments:
	Customer receivables	$	60,089		$	61,749
	Unearned finance income		(6,051	)		(6,232	)
	Allowance for contract cancellations and refunds		(16,244	)		(15,648	)
	Cemetery merchandise and service trust investments		268,061			267,453

		$	305,855		$	307,322

Cemetery property:
	Developed land and lawn crypts	$	39,528		$	38,368
	Undeveloped land		30,007			31,243
	Mausoleums		46,566			46,856

		$	116,101		$	116,467

Property and equipment:
	Land	$	161,916		$	162,287
	Buildings and improvements		388,995			386,068
	Automobiles		10,206			10,652
	Furniture, fixtures and equipment		70,799			69,570
	Computer hardware and software		29,714			29,061
	Accumulated depreciation and amortization		(121,173	)		(114,737	)

		$	540,457		$	542,901

Other assets:
	Intangible assets	$	19,060		$	18,741
	Deferred finance costs		23,285			23,359
	Accumulated amortization		(15,713	)		(15,258	)
	Notes receivable		2,877			3,016
	Other		13,615			12,992

		$	43,124		$	42,850

Accounts payable and accrued liabilities:
	Bank overdraft	$	5,378		$	7,191
	Trade payables		14,249			13,634
	Interest		1,326			5,169
	Accrued liabilities		13,487			21,629
	Accrued insurance		21,886			21,261
	Accrued taxes		38,412			32,199
	Other		14,408			18,651

		$	109,146		$	119,734

Deferred pre-need contract revenue:
	Funeral	$	53,173		$	72,087
	Cemetery		21,684			19,531

		$	74,857		$	91,618

Other liabilities:
	Perpetual care liability	$	7,924		$	7,860
	Deferred compensation		13,443			9,929
	Other		4,173			4,194

		$	25,540		$	21,983

NOTE 7. SEGMENT REPORTING

The Company's reportable segments are comprised of the three businesses it operates, each of which offers different products and services: funeral homes, cemeteries and insurance. There has been no change in the basis of this segmentation, accounting policies of the segments or the basis of measurement of segment profit or loss from that disclosed in the Company's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the SEC.

The Company sells primarily to external customers, though any inter-segment sales or transfers occur at market price. The Company evaluates performance based on income from operations of the respective businesses.

For the 12 Weeks Ended:		Funeral		Cemetery		Insurance		Other			Consolidated
Revenue earned from external sales:
	March 25, 2006	$	121,131	$	37,831	$	22,855	$	—		$	181,817
	March 26, 2005	$	124,013	$	38,304	$	21,568	$	—		$	183,885
Income from operations:
	March 25, 2006	$	25,769	$	4,673	$	948	$	(14,515	)	$	16,875
	March 26, 2005	$	29,761	$	6,477	$	1,282	$	(10,643	)	$	26,877
Depreciation and amortization:
	March 25, 2006	$	5,730	$	2,915	$	27	$	838		$	9,510
	March 26, 2005	$	5,711	$	3,285	$	40	$	1,100		$	10,136
Purchase of property and equipment:
	March 25, 2006	$	1,533	$	2,095	$	3	$	1,122		$	4,753
	March 26, 2005	$	1,908	$	1,027	$	64	$	1,606		$	4,605
Development of cemetery property:
	March 25, 2006	$	—	$	1,323	$	—	$	—		$	1,323
	March 26, 2005	$	—	$	522	$	—	$	—		$	522
Total assets at:
	March 25, 2006	$	1,095,735	$	809,175	$	331,598	$	32,491		$	2,268,999
	December 31, 2005	$	1,107,916	$	807,673	$	326,160	$	32,554		$	2,274,303
Goodwill at:
	March 25, 2006	$	295,887	$	—	$	—	$	—		$	295,887
	December 31, 2005	$	295,890	$	—	$	—	$	—		$	295,890

The following table reconciles earnings from operations of reportable segments to total income and identifies the components of "Other" segment earnings from operations:

		12 Weeks Ended
		March 25, 2006			March 26, 2005
Earnings from operations of funeral, cemetery and insurance segments		$	31,390		$	37,520
Other expenses of operations:
	General and administrative expenses		(14,515	)		(10,643	)

Income from operations		$	16,875		$	26,877

NOTE 8. CONDENSED CONSOLIDATING GUARANTOR FINANCIAL INFORMATION

The following presents the condensed consolidating guarantor financial information as of March 25, 2006 and December 31, 2005 and for the 12 weeks ended March 25, 2006 and March 26, 2005 for the direct and indirect domestic subsidiaries of the Company that serve as guarantors of the 7.75% Senior Unsecured Notes due in 2012, and the Company's subsidiaries that do not serve as guarantors. Non-guarantor subsidiaries include the Canadian and Puerto Rican subsidiaries, insurance subsidiaries and certain domestic subsidiaries that are prohibited by law from guaranteeing the 7.75% Senior Unsecured Notes due in 2012.

Condensed Consolidating Balance Sheets

				March 25, 2006
				Parent Company			Guarantors			Non-Guarantors			Consolidating Adjustments			Consolidated Totals
ASSETS
	Cash and cash equivalents			$	—		$	5,017		$	3,123		$	—		$	8,140
	Other current assets				—			55,890			13,075			—			68,965
	Pre-need funeral receivables and trust investments				—			260,629			300,563			(229,139	)		332,053
	Pre-need cemetery receivables and trust investments				—			286,233			274,146			(254,524	)		305,855
	Cemetery property and property and equipment				—			547,800			108,758			—			656,558
	Insurance invested assets				—			—			298,315			—			298,315
	Goodwill				—			240,379			55,508			—			295,887
	Investment in subsidiaries				1,088,106			(91,866	)		—			(996,240	)		—
	Cemetery perpetual care trust investment				—			—			246,091			—			246,091
	Other assets				7,572			17,665			31,898			—			57,135

		Total assets		$	1,095,678		$	1,321,747		$	1,331,477		$	(1,479,903	)	$	2,268,999

LIABILITIES AND STOCKHOLDERS' EQUITY
	Liabilities:
		Current liabilities		$	39,282		$	71,492		$	(1,628	)	$	—		$	109,146
		Current maturities of long-term debt			—			2,379			23			—			2,402
		Intercompany, net of investments in and advances to affiliates			100,169			(285,739	)		185,570			—			—
		Long-term debt			356,683			4,664			—			—			361,347
		Deferred pre-need funeral and cemetery contract revenue and non-controlling interest in funeral and cemetery trusts			—			534,356			588,517			(483,663	)		639,210
		Insurance policy liabilities			—			—			275,473			—			275,473
		Other liabilities			(17	)		20,293			15,240			—			35,516
	Non-controlling interest in perpetual care trusts				—			—			246,344			—			246,344
	Stockholders' equity				599,561			974,302			21,938			(996,240	)		599,561

			Total liabilities and stockholders' equity	$	1,095,678		$	1,321,747		$	1,331,477		$	(1,479,903	)	$	2,268,999

Condensed Consolidating Balance Sheets

				December 31, 2005
				Parent Company		Guarantors			Non-Guarantors		Consolidating Adjustments			Consolidated Totals
ASSETS
	Cash and cash equivalents			$	—	$	4,034		$	3,421	$	—		$	7,455
	Other current assets				1,964		60,070			13,497		—			75,531
	Pre-need funeral receivables and trust investments				—		260,915			285,617		(212,105	)		334,427
	Pre-need cemetery receivables and trust investments				—		287,522			273,732		(253,932	)		307,322
	Cemetery property and property and equipment				—		549,860			109,508		—			659,368
	Insurance invested assets				—		—			294,598		—			294,598
	Goodwill				—		247,160			48,730		—			295,890
	Investment in subsidiaries				1,075,366		(91,898	)		—		(983,468	)		—
	Cemetery perpetual care trust investment				—		464			243,341		—			243,805
	Other assets				8,101		17,367			30,439		—			55,907

			Total assets	$	1,085,431	$	1,335,494		$	1,302,883	$	(1,449,505	)	$	2,274,303

LIABILITIES AND STOCKHOLDERS' EQUITY
	Liabilities:
		Current liabilities		$	39,333	$	73,597		$	6,804	$	—		$	119,734
		Current maturities of long-term debt			—		2,412			23		—			2,435
		Intercompany, net of investments in and advances to affiliates			82,643		(260,549	)		177,906		—			—
		Long-term debt			365,683		5,357			—		—			371,040
		Deferred pre-need funeral and cemetery contract revenue and non-controlling interest in funeral and cemetery trusts			—		533,061			573,091		(466,037	)		640,115
		Insurance policy liabilities			—		—			266,729		—			266,729
		Other liabilities			19		20,040			12,476		—			32,535
	Non-controlling interest in perpetual care trusts				—		—			243,962		—			243,962
	Stockholders' equity				597,753		961,576			21,892		(983,468	)		597,753

		Total liabilities and stockholders' equity		$	1,085,431	$	1,335,494		$	1,302,883	$	(1,449,505	)	$	2,274,303

Condensed Consolidating Statement of Operations (unaudited)

	12 Weeks Ended March 25, 2006
	Parent Company			Guarantors			Non-Guarantors			Consolidating Adjustments			Consolidated Totals
Revenues	$	—		$	136,713		$	45,104		$	—		$	181,817
Costs and expenses		—			110,720			39,707			—			150,427
General and administrative expenses		582			1,039			12,894			—			14,515

Income (loss) from operations		(582	)		24,954			(7,497	)		—			16,875
Interest on long-term debt		6,423			103			(48	)		—			6,478
Intercompany charges		4,647			8,752			(13,399	)		—			—
Other expense (income), net		—			(264	)		106			—			(158	)

Income (loss) before income taxes		(11,652	)		16,363			5,844			—			10,555
Income taxes		316			2,461			2,033			—			4,810

Income (loss) from continuing operations		(11,968	)		13,902			3,811			—			5,745

Equity in subsidiaries		17,713			(203	)		—			(17,510	)		—
Loss from discontinued operations		—			—			—			—			—

Income before cumulative effect of change in accounting principle		5,745			13,699			3,811			(17,510	)		5,745
Cumulative effect of change in accounting principle		(1,242	)		—			—			—			(1,242	)

Net income	$	4,503		$	13,699		$	3,811		$	(17,510	)	$	4,503

Condensed Consolidating Statement of Operations (unaudited)

	12 Weeks Ended March 26, 2005
	Parent Company			Guarantors			Non-Guarantors			Consolidating Adjustments			Consolidated Totals
Revenues	$	—		$	140,358		$	43,527		$	—		$	183,885
Costs and expenses		—			109,946			37,638			—			147,584
General and administrative expenses		(83	)		(1,133	)		11,859			—			10,643
Provision for asset impairment		—			(1,198	)		(21	)		—			(1,219	)

Income (loss) from operations		83			32,743			(5,949	)		—			26,877
Interest on long-term debt		7,310			187			40			(21	)		7,516
Intercompany charges		2,209			6,483			(8,692	)		—			—
Other expense (income), net		—			(5,928	)		128			—			(5,800	)

Income (loss) before income taxes		(9,436	)		32,001			2,575			21			25,161
Income taxes		176			9,876			1,140			—			11,192

Income (loss) from continuing operations		(9,612	)		22,125			1,435			21			13,969

Equity in subsidiaries		22,748			78			—			(22,826	)		—
Loss from discontinued operations		—			(545	)		(267	)		(21	)		(833	)

Income before cumulative effect of change in accounting principle		13,136			21,658			1,168			(22,826	)		13,136
Cumulative effect of change in accounting principle		—			—			—			—			—

Net income	$	13,136		$	21,658		$	1,168		$	(22,826	)	$	13,136

Condensed Consolidating Statement of Cash Flows (unaudited)

	12 Weeks Ended March 25, 2006
	Parent Company			Guarantors			Non-Guarantors			Consolidating Adjustments		Consolidated Totals
CASH PROVIDED BY (APPLIED TO)
Cash flows from operating activities of continuing operations	$	8,930		$	3,023		$	8,500		$	—	$	20,453
Cash flows from investing activities of continuing operations		—			(1,320	)		(8,790	)		—		(10,110	)
Cash flows from financing activities of continuing operations		(8,928	)		(726	)		(4	)		—		(9,658	)

Increase (decrease) in cash and cash equivalents		2			977			(294	)		—		685
Cash and cash equivalents, beginning of period		(2	)		4,040			3,417			—		7,455

Cash and cash equivalents, end of period	$	—		$	5,017		$	3,123		$	—	$	8,140

Condensed Consolidating Statement of Cash Flows (unaudited)

	12 Weeks Ended March 26, 2005
	Parent Company			Guarantors			Non-Guarantors			Consolidating Adjustments			Consolidated Totals
CASH PROVIDED BY (APPLIED TO)
Cash flows from operating activities of continuing operations	$	30,644		$	5,453		$	6,107		$	21		$	42,225
Cash flows from operating activities of discontinued operations		—			268			(36	)		(21	)		211
Cash flows from investing activities of continuing operations		—			7,526			(11,926	)		—			(4,400	)
Cash flows from investing activities of discontinued operations		—			95			1,068			—			1,163
Cash flows from financing activities of continuing operations		(30,641	)		(881	)		(130	)		—			(31,652	)
Cash flows from financing activities of discontinued operations		—			—			(48	)		—			(48	)

Increase (decrease) in cash and cash equivalents		3			12,461			(4,965	)		—			7,499
Cash and cash equivalents, beginning of period		(3	)		6,387			2,995			—			9,379

Cash and cash equivalents, end of period	$	—		$	18,848		$	(1,970	)	$	—		$	16,878

NOTE 9. PROVISION FOR ASSET IMPAIRMENT

In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), the Company reviews its long-lived assets for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. SFAS No. 144 requires that long-lived assets to be held and used be recorded at the lower of carrying amount or fair value. Long-lived assets to be disposed of are to be recorded at the lower of carrying amount or fair value, less estimated costs to sell.

Previously, the Company designated certain parcels of surplus real estate as held for sale, as they do not meet the Company's future geographic and strategic objectives. During the 12 weeks ended March 26, 2005, the Company determined that the fair market value, less estimated costs to sell exceeded the carrying amounts of certain parcels of the surplus real estate. Accordingly, the Company recorded a long-lived asset impairment recovery of $1,219,000 for the 12 weeks ended March 26, 2005.

As of March 25, 2006, in conjunction with the Company's ongoing assessment to ensure that each of the Company's properties fits into the Company's strategy, the Company held four funeral homes for sale. The net carrying amount of these locations was $727,000, which was less than estimated aggregate fair market value. The fair market values were determined by specific offers or bids, or estimates based on

comparable recent sales transactions. For the 12 weeks ended March 25, 2006, these properties had funeral home revenues and costs of $230,000 and $162,000 (March 26, 2005—$303,000 and $228,000), respectively.

The assets of $3,467,000 (December 31, 2005—$3,121,000) and liabilities of $2,740,000 (December 31, 2005—$1,858,000) of these locations are classified according to their nature in the consolidated balance sheets and, on the basis of materiality, have not been identified separately as to assets held for sale and liabilities associated with assets held for sale in the balance sheet.

In addition, for the 12 weeks ended March 25, 2006, the total revenues and costs of disposed funeral home locations which were not reclassified to discontinued operations were $211,000 and $286,000 (March 26, 2005—$467,000 and $386,000), respectively.

The asset impairment provisions include management estimates. As a result, actual results could differ significantly from these estimates.

NOTE 10. DISCONTINUED OPERATIONS OF ASSETS HELD FOR SALE

Over the previous four fiscal years, the Company engaged in a strategic market rationalization assessment to dispose of cemetery and funeral operating locations that did not fit into the Company's market or business strategies, as well as under-performing locations and excess cemetery land. The Company will on a smaller scale and over time, continue to assess the Company's portfolio of funeral and cemetery locations to ensure they continue to fit in the Company's strategy.

As of January 1, 2005, the Company had 18 funeral, six cemetery and four combination locations which had not been sold within one year of being added to the disposal list. The Company completed the sale of all these locations during 2005, except for one cemetery which was reclassified back to continuing operations.

The revenues and costs and impairment provisions for the locations identified as discontinued operations are presented in the following table:

		12 Weeks Ended March 26, 2005
Revenue
	Funeral	$	1,459
	Cemetery		454

		$	1,913

Gross margin
	Funeral	$	19
	Cemetery		(180	)

			(161	)
Provision for asset impairment			568

Loss from discontinued operations			(729	)
Interest on long-term debt			23
Other expense (income), net			81

Loss from discontinued operations, before tax			(833	)
Income tax provision for discontinued operations			—

Loss from discontinued operations		$	(833	)

Depreciation included in gross margin of discontinued operations		$	13

NOTE 11. INCOME PER SHARE

The basic and diluted income per share computations for net income were as follows:

		12 Weeks Ended
		March 25, 2006		March 26, 2005
Income (numerator):
Net income attributable to Common stockholders		$	4,503	$	13,136

Shares (denominator):
	Basic weighted average number of shares of Common stock outstanding (thousands)		40,466		40,049
	Effect of stock options assumed exercised (thousands)		1,835		1,263

Diluted weighted average number of shares of Common stock outstanding (thousands)			42,301		41,312

For the 12 weeks ended March 25, 2006, 5,004,750 employee and director stock options were dilutive to earnings and are included in the computation of diluted earnings per share. Warrants to purchase

2,992,000 shares of Common stock were not included in the computation of diluted earnings per share, because they were anti-dilutive.

NOTE 12. EFFECT OF HURRICANE KATRINA

During the 52 weeks ended December 31, 2005, some of the Company's operations were affected by Hurricane Katrina. The Company operated 30 funeral homes, four cemeteries and a limousine company in those areas of Louisiana and Mississippi that were affected by the hurricane on August 29, 2005. The Company has experienced some damage at all of these locations. Of the 30 funeral homes, seven experienced significant damage, were not in operation at the end of the 2005 fiscal year and are not expected to reopen. All four cemeteries are in operation. The New Orleans limousine company that had provided services both to the Company's funeral operations and other third-parties experienced significant damage to its fleet of vehicles and will not be resuming operations.

The Company is making every effort to use its existing operating facilities to provide services to customers normally served by the Company's closed locations.

Financial results

The Company's financial results include the results from operations for those locations affected by Hurricane Katrina as outlined in the following table:

			12 Weeks Ended
			March 25, 2006		March 26, 2005
Funeral Homes
	Revenue		$	6,858	$	7,695
		Number of funeral services performed		1,463		1,670
		Number of same-site funeral services performed		1,463		1,401
	Costs and expenses		$	5,510	$	6,245
	Gross margin		$	1,348	$	1,450
	Pre-need funeral contracts written		$	1,297	$	2,827
Cemeteries
	Revenue		$	684	$	743
		Number of cemetery interments		218		310
	Costs and expenses		$	558	$	663
	Gross margin		$	126	$	80
	Pre-need cemetery contracts written		$	227	$	344

Insurance coverage and long-term asset gain or loss

The Company purchases insurance coverage for property damage, including damage from wind and flood, subject to separate limits, sub-limits and deductible amounts. The Company, along with its insurance providers, is continuing to assess and estimate the extent of damages. Based on a review of the Company's insurance policy, the Company expects to recover a substantial portion of the costs associated with the storm damage through insurance, including the capital costs of rebuilding. For those properties not in operation and requiring significant repair or rebuilding, insurance proceeds have not yet been fully estimated and as a result, an estimated aggregate loss or gain for these properties cannot be determined.

The aggregate net book value of buildings and contents for those locations not in operation is approximately $4.2 million at March 25, 2006.

The Company has initiated or completed much of the damage repairs and along with its insurance companies, is continuing to estimate the full extent of repairs and replacement costs. The Company may record additional expense for changes to its expected deductible under its insurance policies and other expenses not expected to be reimbursed under the insurance policy. During the 12 weeks ended March 25, 2006, the Company increased its expected costs by $100,000.

The Company has business interruption insurance that allows the recovery of operating costs and lost profits. The Company is preparing its analysis in support of a claim. Potential proceeds from this claim cannot currently be reasonably estimated and therefore no receivable or recovery has been recorded as of March 25, 2006.

NOTE 13. SUBSEQUENT EVENTS

On April 3, 2006, Service Corporation International and the Company announced that they have entered into a merger agreement. Pursuant to the agreement, each share of the Company will be converted into the right to receive $20.00 per share of cash. In addition, Service Corporation International will assume approximately $364 million of the Company's debt.

Completion of the proposed transaction is contingent on approval by the stockholders of the Company and regulatory review, including Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the Competition Act (Canada), and subject to notification under the Investment Canada Act. The proposed transaction is expected to close by the end of 2006.

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

Overview

Alderwoods Group, Inc., a Delaware corporation ("Alderwoods Group" and, together with its subsidiaries unless the context otherwise requires, the "Company"), is the second largest operator of funeral homes and cemeteries in North America based on total revenue and number of locations. As of March 25, 2006, the Company operated 584 funeral homes, 73 cemeteries and 60 combination funeral homes and cemeteries throughout North America. As of March 26, 2005, the Company operated 645 funeral homes, 76 cemeteries and 63 combination funeral homes and cemeteries throughout North America.

Alderwoods Group is a holding company owning, directly or indirectly, the capital stock of approximately 200 subsidiaries through which funeral, cemetery and insurance businesses are operated.

The Company provides services and products through three business segments:

Funeral Operations. The Company's funeral operations encompass making funeral and cremation arrangements on an at-need or pre-need basis. The Company's funeral operations offer a full range of funeral services, including the collection of remains, registration of death, professional embalming, use of funeral home facilities, sale of caskets and other merchandise and transportation to a place of worship, funeral chapel, cemetery or crematorium. The Company's funeral operations generally experience higher volumes in the winter months, primarily due to higher incidence of deaths, as a result of illnesses brought on by cold weather.

Cemetery Operations. The Company's cemetery operations assist families in making burial arrangements and offer a complete line of cemetery products (including a selection of burial spaces, burial vaults, lawn crypts, caskets, memorials, niches, mausoleum crypts and other merchandise), the opening and closing of graves and cremation services.

Insurance Operations. The Company operates an insurance subsidiary licensed in a total of 34 states and the District of Columbia. This insurance subsidiary sells a variety of insurance products for the funding of pre-need funeral services.

Critical Accounting Policies

Accounting policies that the Company believes are both most important to the portrayal of the Company's financial condition and results, and require management's most difficult, subjective or complex judgments are described under Item 7. "—Management's Discussion and Analysis of Financial Condition and Results of Operations" in Alderwoods Group's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the U.S. Securities and Exchange Commission ("SEC") and in Note 2 included in Item 1 of Part I of this Quarterly Report on Form 10-Q. Aside from the adoption of SFAS 123R as described in Note 2 included in Item 1 of Part I of this Quarterly Report on Form 10-Q, there have been no changes to the Company's critical accounting policies in the 12 weeks ended March 25, 2006.

Basis of Presentation

The Company's accounting information contained in this Quarterly Report on Form 10-Q is presented on the basis of United States generally accepted accounting principles ("GAAP"). This discussion and analysis of financial condition and results of operations of the Company are based upon and should be read in conjunction with the Company's interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q (including the notes thereto).

Results of Operations

The operations of the Company comprise three businesses: funeral activities, cemetery activities and an insurance business in support of its pre-need funeral business. Additional segment information is provided in Note 7 to the Company's interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Hurricane Katrina

During the 52 weeks ended December 31, 2005, some of the Company's operations were affected by Hurricane Katrina. The Company operates 30 funeral homes, four cemeteries and a limousine company in those areas of Louisiana and Mississippi that were affected by the hurricane on August 29, 2005. The Company has experienced some damage at all of these locations. Of the 30 funeral homes, seven experienced significant damage, were not in operation at the end of the 2005 fiscal year and are not expected to reopen. All four cemeteries are in operation. The New Orleans limousine company that had provided services both to the Company's funeral operations and other third-parties experienced significant damage to its fleet of vehicles and will not be resuming operations.

The Company is making every effort to use its existing operating facilities to provide services to customers normally served by the Company's closed locations.

The Company purchases insurance coverage for property damage, including damage from wind and flood, subject to separate limits, sub-limits and deductible amounts. The Company, along with its insurance providers, is continuing to assess and estimate the extent of damages. Based on a review of the Company's insurance policy, the Company expects to recover a substantial portion of the costs associated with the storm damage through insurance, including the capital costs of rebuilding. For those properties not in operation and requiring significant repair or rebuilding, insurance proceeds have not yet been fully estimated, and as a result, any estimated aggregate loss or gain for these properties cannot be determined. The aggregate net book value of buildings and contents for those locations not in operation is approximately $4.2 million at March 25, 2006.

The Company has initiated or completed much of the damage repairs and along with its insurance providers, is continuing to estimate the full extent of repairs and replacement costs. The Company may record additional expense for changes to its expected deductible under its insurance policies and other expenses not expected to be reimbursed under the insurance policy. During the 12 weeks ended March 25, 2006, the Company increased its expected costs by $100,000.

Additional information regarding Hurricane Katrina is provided in Note 12 to the Company's interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

12 Weeks Ended March 25, 2006 Compared to 12 Weeks Ended March 26, 2005

Detailed below are the operating results of the Company for the 12 weeks ended March 25, 2006 and March 26, 2005. The operating results are expressed in dollar amounts as well as relevant percentages, presented as a percentage of revenue.

			12 Weeks Ended
			March 25, 2006			March 26, 2005			March 25, 2006		March 26, 2005
			(in thousands)			(in thousands)			(percentages)		(percentages)
Revenue
	Funeral		$	121,131		$	124,013		66.6		67.4
	Cemetery			37,831			38,304		20.8		20.8
	Insurance			22,855			21,568		12.6		11.8

		Total	$	181,817		$	183,885		100.0		100.0

Gross margin
	Funeral		$	25,769		$	29,900		21.3		24.1
	Cemetery			4,673			5,120		12.4		13.4
	Insurance			948			1,281		4.1		5.9

		Total		31,390			36,301		17.3		19.7

Expenses
	General and administrative			14,515			10,643		8.0		5.8
	Provision for asset impairment			—			(1,219	)	—		(0.7	)

Income from operations				16,875			26,877		9.3		14.6
Interest on long-term debt				6,478			7,516		3.6		4.1
Other expense (income), net				(158	)		(5,800	)	(0.1	)	(3.2	)

Income before income taxes				10,555			25,161		5.8		13.7
Income taxes				4,810			11,192		2.6		6.1

Income from continuing operations			$	5,745		$	13,969		3.2		7.6

Other information from continuing operations for the 12 weeks ended March 25, 2006, and 12 weeks ended March 26, 2005, is summarized in the following table:

Continuing Operations:		March 25, 2006		March 26, 2005		Increase (decrease)
						(amount)			(percentages)
Funeral—Other Information
Number of funeral services performed			28,139		30,042		(1,903	)	(6.3	)
	Number of same site funeral services performed		28,036		29,185		(1,149	)	(3.9	)
Average revenue per funeral service		$	4,305	$	4,128	$	177		4.3
	Same site average revenue per funeral service	$	4,302	$	4,133	$	169		4.1
Pre-need funeral contracts written (in millions)		$	40.8	$	43.2	$	(2.4	)	(5.5	)
Pre-need funeral conversion (percentages)			27		27		—		—
Cemetery—Other Information
Number of cemetery interments			10,845		11,517		(672	)	(5.8	)
Pre-need cemetery contracts written (in millions)		$	21.1	$	20.9	$	0.2		1.0

Continuing Operations

Consolidated revenue of $181.8 million for the 12 weeks ended March 25, 2006, decreased by $2.1 million, or 1.1%, compared to the corresponding period in 2005, reflecting decreases in the funeral

and cemetery segments partially offset by an increase in insurance revenue. Consolidated gross margin as a percentage of revenue decreased to 17.3% for the 12 weeks ended March 25, 2006, from 19.7% for the corresponding period in 2005.

Funeral revenue of $121.1 million for the 12 weeks ended March 25, 2006, decreased by $2.9 million, compared to $124.0 million for the corresponding period in 2005, primarily as a result of a decrease in the number of funeral services performed partially offset by an increase of $177, or 4.3%, in average revenue per funeral service performed. The number of funeral services performed during the 12 weeks ended March 25, 2006 decreased by 6.3% from the corresponding period in 2005. The increase in average revenue per funeral service performed was achieved through adjusting the pricing and mix of merchandise and services offered to customer families designed to both meet customer family needs and to increase average revenues.

Included in the funeral revenue for the 12 weeks ended March 25, 2006 is $6.9 million from 1,463 funeral services performed in New Orleans, Louisiana and on the Gulf Coast of Mississippi compared to $7.7 million of funeral revenue from 1,670 funeral services performed for the 12 weeks ended March 26, 2005. The Company's funeral operations in these areas were significantly affected by Hurricane Katrina.

On a same site basis, funeral revenue was $120.6 million for both the 12 weeks ended March 25, 2006, and for the corresponding period in 2005. Same site calls decreased by 1,149 or 3.9% compared to the comparative period. This was offset by an increase in same site average revenue per funeral service of $169 or 4.1% compared to the comparative period. If the locations affected by Hurricane Katrina were removed, the number of funeral services performed on a same site basis would have declined 4.4% from the corresponding period in 2005.

The number of cremation services performed as a percentage of total services performed increased to 36.7% for the 12 weeks ended March 25, 2006, compared to 35.6% for the corresponding period in 2005, consistent with national trends. The number of cremation services performed may impact funeral revenue, as the average revenue per cremation service is typically lower than the average revenue for a traditional funeral service.

Funeral gross margin as a percentage of revenue decreased to 21.3% for the 12 weeks ended March 25, 2006, compared to 24.1% for the corresponding period in 2005. The decrease in gross margin was primarily due to reduced revenue as a result of a lower number of services performed.

Pre-need funeral contracts written for the 12 weeks ended March 25, 2006, were $40.8 million, compared to $43.2 million for the corresponding period in 2005, and $41.0 million in the fourth quarter 2005. The Company is continuing its program to increase pre-need sales. For the 12 weeks ended March 25, 2006, 27% of the funeral services performed were derived from the pre-need backlog, consistent with the comparative period in 2005. The Company manages the cash impact of its pre-need funeral sales program primarily by offsetting direct costs, including commissions paid to counselors, with either general agency commissions received from third party and related insurance companies or amounts not required to be trusted. Pre-need funeral sales are important, because over time, they build the foundation for future funeral revenue and generate positive cash flow when the funeral service is performed.

Cemetery revenue of $37.8 million for the 12 weeks ended March 25, 2006, was $0.5 million, or 1.2%, lower than cemetery revenue for the corresponding period in 2005, primarily due to lower revenue recognized from pre-need space sales.

Cemetery gross margin as a percentage of revenue decreased to 12.4% for the 12 weeks ended March 25, 2006, compared to 13.4% for the corresponding period in 2005, primarily due to higher facilities expenses of $0.5 million.

Pre-need cemetery contracts written for the 12 weeks ended March 25, 2006, were $21.1 million, compared to $20.9 million for the corresponding period in 2005. Pre-need cemetery sales may initially decrease cash flows if the amount of cash initially collected is insufficient to cover the amount required to be trusted, sales commissions, and other direct costs paid out. However, this initial net cash flow impact is not significant, as the Company sets minimum down payments, maximum terms and sales commission rates to maximize cash flow. The Company believes that pre-need cemetery sales are important, because over time, they generate positive cash flow and build the foundation for future cemetery revenue.

Insurance revenue for the 12 weeks ended March 25, 2006, increased $1.3 million, or 6.0%, compared to the corresponding period in 2005, primarily due to increases in premiums of $1.2 million offset by $0.4 million of capital gains in 2005 not repeated in 2006. Insurance premium revenue is dependent on the level of pre-need funeral contracts written over time that are funded by the Company's insurance subsidiary. Insurance production represents the insurance segment's participation in the Company's pre-need funeral contracts and for the 12 weeks ended March 25, 2006 was $29.6 million compared to $30.8 million for the corresponding period in 2005. Insurance gross margin as a percentage of revenue decreased to 4.1% for the 12 weeks ended March 25, 2006, compared to 5.9% for the corresponding period in 2005. The 12 weeks ended March 25, 2006 showed improvement from business growth offset by approximately $0.3 million of expenses from the impact of Hurricane Katrina on outstanding policies.

General and administrative expenses for the Company for the 12 weeks ended March 25, 2006, were $14.5 million, or 8.0% of consolidated revenue, compared to $10.6 million, or 5.8% of consolidated revenue, for the corresponding period in 2005. General and administrative expenses included the following items affecting the comparison of the 12 weeks ended March 25, 2006 to the 12 weeks ended March 26, 2005:

	12 Weeks Ended
	March 25, 2006		March 26, 2005
	(in millions)
Increased legal expenses	$	0.8	$	—
Legal expenses related to Funeral Consumers Alliance litigation		0.5		—
Legal and other expenses related to the proposed Service Corporation International merger agreement		0.5		—
Equity incentive plan stock based compensation expense related to stock options and restricted stock units		0.9		—
Increase in long term executive incentive expense		0.6		—
Foreign exchange impact on Canadian dollar based support centre expenses		0.7		—
Reduction in accrual on settlement of US trustee bankruptcy fee		—		(0.9	)

Included in general and administrative expenses for the 12 weeks ended March 25, 2006 was $0.9 million of stock based compensation expense from stock options and restricted stock units resulting from the adoption of SFAS 123R using the modified prospective method. For the 12 weeks ended March 26, 2005, the Company applied APB No. 25 and related interpretations to account for stock based compensation and no stock based compensation expense was recognized.

From 2003 to 2005 the Company had a long term incentive plan for its executive officers based on Company performance targets for which an expense of $0.8 million was recorded in general and administrative expenses for the 12 weeks ended March 26, 2005. In July, 2005 the Company adopted the 2005-2007 Executive Strategic Incentive Plan, a stock price based incentive plan for its executive officers. This stock price based incentive plan is accounted for under SFAS 123R as a liability based award, resulting in the measurement of the estimated fair value at each reporting date. On adoption of SFAS 123R, the Company recorded a cumulative effect of change in accounting principle as of January 1, 2006 of

$1.2 million based on a estimated fair value of $6.6 million as at January 1, 2006. On March 25, 2006, additional compensation expense of $1.5 million was recorded for the 12 weeks ended March 25, 2006 based on estimated fair value of $9.6 million as at March 25, 2006.

Interest expense on long-term debt for the 12 weeks ended March 25, 2006, was $6.5 million, reflecting the effect of principal repayments and lower interest rates compared to interest expense and tender premium in the corresponding period in 2005, as detailed in the following table:

	12 Weeks Ended
	March 25, 2006		March 26, 2005
	(in millions)
Interest on long-term debt	$	6.0	$	6.3
Amortization of debt issue costs		0.4		0.5
Tender premium on the repurchase of the 12.25% Senior Unsecured Notes due in 2009		—		0.3
Unamortized deferred finance costs expensed relating to payments made on the Credit Agreement		0.1		0.4

Total interest on long-term debt and refinancing costs	$	6.5	$	7.5

Income tax expense for the 12 weeks ended March 25, 2006 was $4.8 million compared to $11.2 million for the corresponding period in 2005. The Company's financial statement effective tax rate for the 12 weeks ended March 25, 2006 was 45.6%. The effective tax rate will vary from the statutory rate because, (i) stock option compensation expense recorded as a result of the adoption of SFAS 123R is a permanent difference in certain jurisdictions, (ii) costs related to the proposed transaction with SCI may not be deductible, (iii) the realization of the benefits of the tax assets that had a corresponding valuation allowance established on January 2, 2002 will result in a reduction to goodwill established on January 2, 2002, (iv) the realization of tax assets that had a corresponding valuation allowance established after January 2, 2002 will result in a benefit, and (v) losses incurred in certain jurisdictions may not offset the tax expense in profitable jurisdictions.

At December 31, 2001, the Company had accrued $57.1 million of reorganization costs related to costs incurred during it's predecessor's reorganization, as well as costs incurred in connection with the actual emergence from reorganization proceedings and various related activities. As of March 25, 2006, the balance of $1.1 million of reorganization costs, primarily consisting of an accrual for a legal fee reimbursement, has been included in accounts payable and accrued liabilities.

During the 12 weeks ended March 25, 2006, the Company sold five funeral locations for gross proceeds of $0.9 million.

Discontinued Operations

In fiscal years 2002 through 2004, the Company engaged in a strategic market rationalization assessment to dispose of cemetery and funeral operating locations that did not fit into the Company's market or business strategies, as well as under-performing locations and excess cemetery land. The Company will, on a smaller scale and over time, continue to assess the Company's portfolio of funeral and cemetery locations to ensure they continue to fit in the Company's strategy.

As of June 18, 2005, the Company had completed the strategic market rationalization program except for one cemetery which was classified back to continuing operations during the 12 weeks ended June 18, 2005.

Pre-need Funeral and Cemetery Backlog for Continuing Operations

The Company's backlog represents pre-need funeral and cemetery arrangements with customer families. These arrangements are subject to trust or insurance funding requirements. The activities in the Company's funeral backlog, excluding the effects of unrealized gains and losses on trust investments, were as follows:

		12 Weeks Ended
		March 25, 2006			March 26, 2005
		(in thousands)
Funeral backlog:
	Beginning balance	$	1,336,829		$	1,278,653
	Sales, net of cancellations		40,258			39,638
	Maturities		(43,093	)		(34,313	)
	Net increase in insurance benefits and earnings realized on funeral trust balances		3,002			4,314
	Change in cancellation reserve		3,656			7,425
	Other		(3,432	)		354

	Ending balance	$	1,337,220		$	1,296,071

Trust funded		$	345,774		$	348,854
Third party insurance companies			649,253			663,589
Subsidiary insurance companies			342,193			283,628

		$	1,337,220		$	1,296,071

The activities in the Company's cemetery backlog, excluding the effects of unrealized gains and losses on trust investments, were as follows:

		12 weeks Ended
		March 25, 2006			March 26, 2005
		(in thousands)
Cemetery backlog:
	Beginning balance	$	275,406		$	262,825
	Sales, net of cancellations		20,930			21,033
	Maturities		(19,426	)		(19,389	)
	Earnings realized on cemetery trust balances		272			(306	)
	Change in cancellation reserve		302			(117	)

	Ending balance	$	277,484		$	264,046

Liquidity and Capital Resources

Cash Flows

The Company derives the majority of its cash from at-need funeral and cemetery revenue. Cash flow is also impacted by the funeral and cemetery pre-need activities. Pre-need funeral and cemetery activities are discussed in detail in Item 1. "Business" in Alderwoods Group's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the SEC.

Net cash from continuing operating activities was $20.5 million for the 12 weeks ended March 25, 2006, compared to $42.2 million for the corresponding period in 2005. The decrease is due primarily to $15.0 million in withdrawals of excess funds from funeral and cemetery trusts in 2005 and $16.1 million

related to collateral for liability lines of insurance coverage replaced with letters of credit recorded in the comparative period.

The Company's insurance subsidiary is subject to certain state regulations that restrict distributions, loans and advances from the subsidiary to the Company and its other subsidiaries. Dividends are only distributable after regulatory approval is obtained. The cash inflows from operations of the insurance subsidiary are primarily generated from insurance premiums, all of which are invested in insurance invested assets.

Net cash used in continuing investing activities was $10.1 million for the 12 weeks ended March 25, 2006, compared to $4.4 million for the corresponding period in 2005, primarily due to the decrease of $8.5 million in proceeds on disposition of business assets.

Net cash used in continuing financing activities was $9.7 million for the 12 weeks ended March 25, 2006, compared to $31.7 million for the corresponding period in 2005. The decrease of $21.9 million was due primarily to the lower net repayment of debt during the 12 weeks ended March 25, 2006, compared to the corresponding period in 2005.

As of March 25, 2006, the Company's cash balance was $8.1 million and the amount available under the Credit Agreement's $75.0 million revolving credit facility (the "Revolving Credit Facility") was $75.0 million, less $18.9 million in outstanding letters of credit. The Company's debt repayment obligation over the next 12 months is $2.4 million and aggregates $162.2 million over the next five years. The Company believes that the Revolving Credit Facility, together with existing cash and cash flow from operations will be sufficient to meet the Company's anticipated capital expenditures, working capital requirements and debt repayment obligations in both the near and intermediate terms.

Long-Term Indebtedness

The change in the Company's carrying amounts of long-term indebtedness is as follows:

Issue		Long-Term Indebtedness Carrying Value December 31, 2005		Net increase (decrease)			Long-Term Indebtedness Carrying Value March 25, 2006
		(in millions)		(in millions)			(in millions)
Revolving Credit Facility		$	4.0	$	(4.0	)	$	—
Senior secured Term Loan B due in 2009			161.7		(5.0	)		156.7
7.75% Senior unsecured notes due in 2012			200.0		—			200.0
Promissory notes and capitalized obligations (a)			7.7		(0.7	)		7.0

	Carrying amounts	$	373.4	$	(9.7	)	$	363.7

(a): The change represents the net amount of repayments and other adjustments.

The Credit Agreement and the Eight-Year Senior Unsecured Notes are guaranteed by substantially all of Alderwoods Group's wholly-owned U.S. subsidiaries, other than the Alderwoods Group's insurance subsidiaries and certain other excluded subsidiaries. Alderwoods Group, Inc., the parent company, has no independent assets or operations, and the guarantees of its guarantor subsidiaries are full and unconditional, and joint and several.

Financial covenants under the Credit Agreement require the Company to maintain a minimum interest coverage ratio and fixed charge coverage ratio, and not to exceed a maximum leverage ratio. As of March 25, 2006, the Company met all of the financial covenants required by the Credit Agreement.

Contractual Obligations and Commercial Commitments

The following table details the Company's contractual obligations of continuing operations as of March 25, 2006. Significant changes to long-term debt are discussed above under "Long-Term Indebtedness."

			Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
	(in thousands)
Long-term debt (a)	$	356,683	$	—	$	4,661	$	152,022	$	200,000
Promissory notes and capitalized obligations (a) (b)		7,066		2,402		2,660		420		1,584
Operating leases (c)		38,135		7,429		9,693		6,466		14,547

Total	$	401,884	$	9,831	$	17,014	$	158,908	$	216,131

(a): See Note 3 to the Company's interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
(b): Promissory notes and capitalized obligations include amounts payable under non-competition agreements and capitalized lease obligations.
(c): Operating leases are primarily for premises and automobiles and expire over the next one to 28 years.

In addition to the operating leases noted in the table above, as of March 25, 2006, the Company leased approximately 1,190 vehicles under a master operating lease agreement, which has a minimum lease term of 12 months. The Company's practice is to continue these leases on a month-to-month basis after the expiry of the minimum lease term. Lease payments for these vehicles are projected to be $7.3 million over the next 12 months.

The Company issues purchase orders for the supply of goods and services for its operations. As of March 25, 2006, there were no significant or unusual purchase orders outstanding. The Company entered into agreements with certain suppliers of funeral and cemetery merchandise, and office supplies to obtain volume discounts. However, none of these agreements have committed purchase quantities or prices.

The following table details the Company's commercial commitments as of March 25, 2006.

			Amount of Commitment Expiration Per Period
Commercial Commitments	Total Amounts Committed		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
	(in thousands)
Lines of credit (a)	$	—	$	—	$	—	$	—	$	—
Standby letters of credit (b)		18.9		18.9		—		—		—

Total contractual cash obligations	$	18.9	$	18.9	$	—	$	—	$	—

(a): Relates to the Revolving Credit Facility described more fully in Note 3 to the Company's interim consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. The expiry date of the Revolving Credit Facility is September 29, 2008.
(b): Standby letters of credit primarily relate to surety bonds for various pre-need sales trusting requirements and collateral for liability lines of insurance coverage for various years.

At March 25, 2006, the aggregate fair value of the Company's forward foreign currency exchange contracts and foreign currency option contracts was an asset of $0.5 million. There has been no material

change in the Company's forward foreign currency exchange contract and foreign currency option commitments, which are described under Item 7A. "—Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the SEC.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements as of March 25, 2006, consist of operating leases noted above under "Contractual Obligations and Commercial Commitments".

Other Information

EBITDA from Continuing Operations

The Company's earnings from continuing operations before interest on long-term debt and refinancing costs, taxes, depreciation and amortization, provision for goodwill impairment and provision for asset impairment ("EBITDA"), a non-GAAP financial measure, are presented in the table below and reconciled to the Company's income from continuing operations, before cumulative effect of change in accounting principle. The Company considers EBITDA to be an important supplemental indicator of operating performance. The Company believes that EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of the operating performance of companies with high yield debt, and the vast majority of companies with high yield debt present EBITDA when reporting their results. The Company believes EBITDA facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting relative interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). It is also one basis, subject to certain modifications, on which compliance with certain of the financial covenants under the Credit Agreement is determined and some payments under certain of the Company's compensation plans are calculated. EBITDA is not a term that has specific meaning in accordance with GAAP and may be calculated differently by other companies. EBITDA is not a measurement of the Company's financial performance under GAAP and should not be considered in isolation, as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP, or otherwise as a measure of a company's profitability, or as an alternative to cash flows from operating activities or otherwise as a measure of the Company's liquidity.

EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of results as reported under GAAP. Some of these limitations are:

•: it does not reflect cash expenditures for capital expenditures or contractual commitments;
•: it does not reflect changes in, or cash requirements for, working capital;
•: it does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on indebtedness;
•: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect cash requirements for such replacements;
•: other companies, including other companies in the death care industry, may calculate these measures differently than the Company does, limiting their usefulness as a comparative measure; and
•: it must be evaluated in conjunction with the discussion on results of operations for each of the periods.

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of its business or reduce its indebtedness.

	12 weeks Ended
	March 25, 2006		March 26, 2005
	(thousands of dollars)
EBITDA from continuing operations before cumulative effect of change in accounting principle:
Income from continuing operations	$	5,745	$	13,969
Income taxes		4,810		11,192
Interest on long-term debt and refinancing costs		6,478		7,516
Depreciation		9,510		10,136
Provision for asset impairment		—		(1,219	)

EBITDA from continuing operations	$	26,543	$	41,594

Restrictions

The Credit Agreement and the indenture governing the Eight-Year Senior Unsecured Notes restrict the Company's ability to engage in asset sales. The Credit Agreement and indenture governing the Eight-Year Senior Unsecured Notes prohibit dispositions of assets unless the assets disposed of fulfill the requirements of specified exceptions. The indenture governing the Eight-Year Senior Unsecured Notes excepts, among other exceptions, assets with a fair market value less than $5,000,000. One specified exception contained in the Credit Agreement is dispositions of any of a group of identified "discontinued assets;" another is dispositions of assets not exceeding $35,000,000 book value in the aggregate over the life of the Credit Agreement, provided that (i) the consideration received is at least equal to fair market value and (ii) not less than 75% of the consideration is paid in cash or cash equivalents. Within 270 days of the receipt of net proceeds from any such asset sale, the Company has the ability to apply such net proceeds at its option (or as otherwise required) to invest in non-current operating assets (or enter into agreements for such investment which agreements are consummated within 360 days of such receipt of asset sale proceeds). Up to $10,000,000 of such net proceeds in any fiscal year (but not in excess of $40,000,000 in the aggregate over the term of the Credit Agreement) may be applied to make capital expenditures. To the extent the Company receives net proceeds in excess of additional specified thresholds and such excess is not applied to invest in non-current operating assets or make capital expenditures as described in the two immediately preceding sentences, the Company must make mandatory repayments under the Credit Agreement and, after all indebtedness under the Credit Agreement has been repaid, offer to purchase the Eight-Year Senior Unsecured Notes at a purchase price equal to 100.0% of the stated principal amount, plus accrued and unpaid interest and Liquidated Damages (as defined in the indenture governing the Eight-Year Senior Unsecured Notes), if any.

Covenants in the Credit Agreement and in the indenture governing the Eight-Year Senior Unsecured Notes restrict, and under specified circumstances prohibit, the payment of dividends by Alderwoods Group. The Company is not expecting to pay any dividends on the Common Stock in the foreseeable future.

The Company's insurance subsidiary is subject to certain state regulations that restrict distributions, loans and advances from the subsidiary to the Company and its other subsidiaries. The cash flow provided by operations of the insurance subsidiary for the 12 weeks ended March 25, 2006, was approximately $7.4 million, all of which premiums have been used for net purchases of insurance invested assets.

Operating Locations

The Company's number of operating locations by country, state and province as of March 25, 2006, and the overall totals as of March 25, 2006, and December 31, 2005, are summarized in the table below.

		Number of Operating Locations
		Number of Operating Locations			Total Number of Operating Locations
Country, State/Province		Funeral	Cemetery	Combination	Total Number of Operating Locations
Canada
	British Columbia	17	—	1	18
	Alberta	11	—	—	11
	Saskatchewan	22	—	—	22
	Manitoba	3	1	2	6
	Ontario	22	—	—	22
	Quebec	14	—	—	14
	Nova Scotia	6	—	—	6

Total Canadian		95	1	3	99
United States
	Alabama	7	—	1	8
	Alaska	3	—	—	3
	Arizona	5	—	1	6
	Arkansas	3	—	—	3
	California	44	1	6	51
	Colorado	3	1	1	5
	Connecticut	1	—	—	1
	Florida	32	7	8	47
	Georgia	24	6	5	35
	Idaho	3	1	—	4
	Illinois	6	16	3	25
	Indiana	13	4	1	18
	Kansas	7	—	—	7
	Louisiana	18	2	—	20
	Maryland	2	—	—	2
	Massachusetts	13	—	—	13
	Michigan	12	—	—	12
	Minnesota	9	1	1	11
	Mississippi	17	1	3	21
	Montana	4	—	—	4
	Nevada	2	—	1	3
	New Hampshire	4	—	—	4
	New Mexico	5	—	—	5
	New York	36	1	—	37
	North Carolina	26	8	3	37
	Ohio	13	4	1	18
	Oklahoma	18	1	1	20
	Oregon	18	1	3	22
	Pennsylvania	5	—	—	5
	Rhode Island	3	—	—	3
	South Carolina	6	3	4	13
	Tennessee	31	2	5	38
	Texas	52	4	4	60
	Virginia	18	—	—	18
	Washington	20	3	3	26
	West Virginia	3	—	—	3
	Puerto Rico	3	5	2	10

Total United States		489	72	57	618

Overall total, as of March 25, 2006		584	73	60	717

Overall total, as of December 31, 2005		594	72	60	726

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding the Company's exposure to certain market risks, see Item 7A. "—Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the SEC. As of March 25, 2006, there were no material changes in such matters disclosed in the Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. As of the end of the period covered by this report, an evaluation was carried out, under the supervision and with the participation of the Company's management, including the Chief Executive Officer, the Company's principal executive officer (the "CEO"), and the Chief Financial Officer, the Company's principal financial officer (the "CFO"), of the effectiveness of the Company's disclosure controls and procedures as of March 25, 2006. Based on that evaluation, as of the date of the evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective.

Changes In Internal Controls Over Financial Reporting

During the twelve weeks ended March 25, 2006, the Company continued implementing a new pre-need trust accounting software system. The implementation has involved changes to processes, and accordingly, has required changes to internal controls.

Other than the changes discussed above, there have not been any changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC under the Securities Exchange Act of 1934) during the Company's most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q, including, but not limited to, information regarding the status and progress of the Company's operating activities, the plans and objectives of the Company's management, assumptions regarding the Company's future performance and plans, the expected closing of the merger agreement with Service Corporation International, and any financial guidance provided in this Quarterly Report on Form 10-Q, are forward-looking statements within the meaning of Section 27A(i) of the Securities Act of 1933 and Section 21E(i) of the Securities Exchange Act of 1934. The words "believe," "may," "will," "estimate," "continues," "anticipate," "intend," "expect" and similar expressions identify these forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Risks and uncertainties that could cause or contribute to such differences include, without limitation, those discussed elsewhere in this Quarterly Report on Form 10-Q and particularly below under "Risk Factors" and under "Management's Discussion and Analysis of Financial Condition and Results of Operations."

The information appearing in this Quarterly Report on Form 10-Q is accurate only as of the date hereof, as the Company's business, financial condition, results of operations or prospects may have changed after that date. Except as required by law, the Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to the Company and persons acting on its behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this Quarterly Report on Form 10-Q.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding the Company's legal proceedings, see Note 4 to the Company's interim consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q, which Note 4 is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Other than as set forth below, there have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the 52 weeks ended December 31, 2005, as filed with the SEC.

Risks Related to the Proposed Transaction with Service Corporation International

The proposed merger of the Company into a wholly owned subsidiary of Service Corporation International is subject to certain closing conditions that, if not satisfied or waived, will result in the transaction not being completed, which may cause the price of the Company's common stock to decline.

The proposed merger of the Company into a wholly owned subsidiary of Service Corporation International is subject to customary conditions to closing, including the receipt of required approval of the Company's stockholders and regulatory approvals. Many of the conditions to the closing of the transaction are outside of the control of the Company. If any condition to the closing of the transaction is not satisfied or, if permissible, waived, the transaction will not be completed.

If the Company does not complete the transaction, the price of its common stock may fluctuate to the extent that the current market price reflects a market assumption that the transaction will be completed with each share of the Company's common stock being converted into the right to receive $20 in cash. The Company will also be obligated to pay certain professional fees and related expenses in connection with the transaction, whether or not the transaction is completed. In addition, the Company has expended, and will continue to expend, significant management resources in an effort to complete the transaction. If the transaction is not completed, the Company will have incurred significant costs, including the diversion of management resources, for which it will have received little or no benefit. Further, upon termination of the merger agreement under certain specified circumstances the Company or Service Corporation International may be required to pay a termination fee of $25 million to the other party.

Whether or not the transaction with Service Corporation International is completed, the announcement and pendency of the transaction could cause disruptions in the Company's business, which could have an adverse effect on its business and financial results.

Whether or not the transaction with Service Corporation International is completed, the announcement and pendency of the transaction could cause disruptions in the Company's business. Specifically:

•: current and prospective employees may experience uncertainty about their future roles with the Company, which might adversely affect the Company's ability to retain key managers and other employees or hire new employees; and
•: the attention of management may be directed toward the completion of the transaction, rather than toward the execution of existing business plans.

ITEM 6. EXHIBITS

Exhibit Number		Description

2.1		Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 99.1 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed September 10, 2001)
2.2		Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 2.2 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.3		Second Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 2.3 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.4		Order Approving Modification of Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries and Compromise and Settlement of Claims Filed by Thomas Hardy (incorporated by reference to Exhibit 2.4 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.5		Findings of Fact, Conclusions of Law and Order Confirming Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries, As Modified, dated December 5, 2001 (incorporated by reference to Exhibit 2.5 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.6		Final Order dated December 7, 2001 (incorporated by reference to Exhibit 2.6 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.7		Stock Purchase Agreement dated as of June 17, 2004, by and between Citizens Insurance Company of America and Mayflower National Life Insurance Company (incorporated by reference to Exhibit 2.7 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 26, 2004)
2.8		Agreement and Plan of Merger, dated April 2, 2006, by and among Service Corporation International, Coronado Acquisition Corporation and Alderwoods Group, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed April 4, 2006)
3.1		Certificate of Incorporation of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
3.2		Bylaws of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.2 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
4.1		Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Form 10-12G/A of Loewen Group International, Inc., SEC File No. 000-33277, filed December 17, 2001)
4.2		Equity Registration Rights Agreement among Alderwoods Group, Inc. and certain holders of Common Stock. (incorporated by reference to Exhibit 4.2 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)

4.3		Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
4.4		Form of Warrant Certificate (incorporated by reference to Exhibit A to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed on March 28, 2002)
4.5		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc., and Angelo, Gordon & Co. (incorporated by reference to Exhibit 4.6 to the Form 10-Q of Alderwoods Group, Inc., SEC file No. 000-33277, filed July 24, 2002)
4.6		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Franklin Mutual Advisors, LLC (incorporated by reference to Exhibit 4.7 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)
4.7		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and GSCP Recovery, Inc. and GSC Recovery II, L.P. (incorporated by reference to Exhibit 4.8 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)
4.8		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Oaktree Capital Management, LLC (incorporated by reference to Exhibit 4.9 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)
4.9		Indenture governing the 7³/4% Senior Unsecured Notes due 2012 (incorporated by reference to Exhibit 4.9 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)
10.1		Subordinated Bridge Loan Agreement dated January 23, 2004, among Alderwoods Group, Inc., Banc of America Bridge LLC, as administrative agent and initial bridge lender and the other bridge lenders party hereto and Bank of America Securities LLC, as sole lead arranger and sole book manager (incorporated by reference to Exhibit 10.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)
10.2		Credit Agreement dated September 17, 2003, among Alderwoods Group, Inc., Bank of America, N.A., as administrative agent, swing line lender, L/C Issuer and the other lenders party hereto (incorporated by reference to Exhibit 10.1 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 12, 2003)
10.3		Amendment No. 1 dated January 23, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, swing line lender, L/C Issuer and the other lenders party hereto (incorporated by reference to Exhibit 10.3 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)
10.4		Amendment No. 2 dated August 19, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party hereto (incorporated by reference to Exhibit 10.4 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)
10.5		Amendment No. 3 dated December 3, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed December 8, 2004)
10.6		Amendment No. 4 dated March 18, 2005, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 24, 2005)

*10.7		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and Kenneth A. Sloan (incorporated by reference to Exhibit 10.3 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.8		Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Ellen Neeman (incorporated by reference to Exhibit 10.7 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)
*10.9		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and Ross S. Caradonna (incorporated by reference to Exhibit 10.4 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.10		Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Richard J. Scully (incorporated by reference to Exhibit 10.35 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 1, 2003)
*10.11		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and John S. Lacey (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.12		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and Paul A. Houston (incorporated by reference to Exhibit 10.2 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.13		Employment Agreement dated May 10, 2005, by and between Alderwoods Group, Inc. and Aaron Shipper (incorporated by reference to Exhibit 10.1 to Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 12, 2005)
*10.14		Employment Agreement dated May 10, 2005, by and between Alderwoods Group, Inc. and Mark W. H. Wilson (incorporated by reference to Exhibit 10.2 to Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 12, 2005)
*10.15		Alderwoods Group, Inc. 2002 Equity Incentive Plan (incorporated by reference to Exhibit 10.27 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
*10.16		Alderwoods Group, Inc. 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 3, 2005)
*10.17		Alderwoods Group, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 3, 2005)
*10.18		Director Compensation Plan (incorporated by reference to Exhibit 10.28 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
*10.19		Alderwoods Group Canada Inc. 2003-2005 Executive Strategic Incentive Plan (incorporated by reference to Exhibit 10.40 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2003)
*10.20		Amendment to the Alderwoods Group Canada Inc. 2003-2005 Executive Strategic Incentive Plan (incorporated by reference to Exhibit 10.5 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)

*10.21		Alderwoods Support Function Annual Incentive Plan (incorporated by reference to Exhibit 10.19 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2005)
10.22		Description of Compensation of Directors (incorporated by reference to Exhibit 10.20 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed April 28, 2005)
10.23		Form of Indemnification Agreement between Alderwoods Group, Inc. and each of its directors and executive officers (incorporated by reference to Exhibit 10.33 to Form S-1/A of Alderwoods Group, Inc., SEC File No. 333-85316, filed July 25, 2002)
*10.24		2005-2007 Executive Strategic Incentive Plan of Alderwoods Group Canada Inc. (incorporated by reference to Exhibit 10.6 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.25		Form of Director Non-Qualified Stock Option Agreement (2005 Equity Incentive Plan) (incorporated by reference to Exhibit 10.7 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.26		Form of Employee Non-Qualified Stock Option Agreement (2005 Equity Incentive Plan) (incorporated by reference to Exhibit 10.8 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.27		Form of Restricted Stock Units Agreement (2005 Equity Incentive Plan) (incorporated by reference to Exhibit 10.9 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
*10.28		Performance Plan Definitions and Performance Criteria on the Alderwoods Support Function Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 3, 2006)
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

* Indicates management contract or compensatory plan or arrangement.

** Filed herewith.

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.

		ALDERWOODS GROUP, INC.
Dated: May 1, 2006		By:	/s/ KENNETH A. SLOAN Kenneth A. Sloan Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

INDEX TO EXHIBITS

Exhibit Number		Description
2.1		Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 99.1 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed September 10, 2001)
2.2		Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 2.2 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.3		Second Modification to the Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries (incorporated by reference to Exhibit 2.3 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.4		Order Approving Modification of Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries and Compromise and Settlement of Claims Filed by Thomas Hardy (incorporated by reference to Exhibit 2.4 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.5		Findings of Fact, Conclusions of Law and Order Confirming Fourth Amended Joint Plan of Reorganization of Loewen Group International, Inc., Its Parent Corporation and Certain of Their Debtor Subsidiaries, As Modified, dated December 5, 2001 (incorporated by reference to Exhibit 2.5 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.6		Final Order dated December 7, 2001 (incorporated by reference to Exhibit 2.6 to the Form 8-K of The Loewen Group Inc., SEC File No. 1-12163, filed December 11, 2001)
2.7		Stock Purchase Agreement dated as of June 17, 2004, by and between Citizens Insurance Company of America and Mayflower National Life Insurance Company (incorporated by reference to Exhibit 2.7 to the Form 10-Q of Alderwoods Group, Inc. SEC File No. 000-33277, filed July 26, 2004)
2.8		Agreement and Plan of Merger, dated April 2, 2006, by and among Service Company International, Coronado Acquisition Corporation and Alderwoods Group, Inc., (incorporated by reference to Exhibit 2.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, Filed April 4, 2006)
3.1		Certificate of Incorporation of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
3.2		Bylaws of Alderwoods Group, Inc. (incorporated by reference to Exhibit 3.2 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
4.1		Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Form 10-12G/A of Loewen Group International, Inc., SEC File No. 000-33277, filed December 17, 2001)
4.2		Equity Registration Rights Agreement among Alderwoods Group, Inc. and certain holders of Common Stock. (incorporated by reference to Exhibit 4.2 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)

4.3		Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
4.4		Form of Warrant Certificate (incorporated by reference to Exhibit A to Exhibit 4.3 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed on March 28, 2002)
4.5		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc., and Angelo, Gordon & Co. (incorporated by reference to Exhibit 4.6 to the Form 10-Q of Alderwoods Group, Inc. SEC File No. 000-33277, filed July 24, 2002)
4.6		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Franklin Mutual Advisors, LLC (incorporated by reference to Exhibit 4.7 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)
4.7		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and GSCP Recovery, Inc. and GSC Recovery II, L.P. (incorporated by reference to Exhibit 4.8 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)
4.8		Waiver of Registration Rights dated June 27, 2002, by and between Alderwoods Group, Inc. and Oaktree Capital Management, LLC (incorporated by reference to Exhibit 4.9 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2002)
4.9		Indenture governing the 7³/4% Senior Unsecured Notes due 2012 (incorporated by reference to Exhibit 4.9 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)
10.1		Subordinated Bridge Loan Agreement dated January 23, 2004, among Alderwoods Group, Inc., Banc of America Bridge LLC, as administrative agent and initial bridge lender and the other bridge lenders party hereto and Bank of America Securities LLC, as sole lead arranger and sole book manager (incorporated by reference to Exhibit 10.1 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)
10.2		Credit Agreement dated September 17, 2003, among Alderwoods Group, Inc., Bank of America, N.A., as administrative agent, swing line lender, L/C Issuer and the other lenders party hereto (incorporated by reference to Exhibit 10.1 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 12, 2003)
10.3		Amendment No. 1 dated January 23, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, swing line lender, L/C Issuer and the other lenders party hereto (incorporated by reference to Exhibit 10.3 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)
10.4		Amendment No. 2 dated August 19, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, swing line lender, L/C Issuer and other lenders party hereto (incorporated by reference to Exhibit 10.4 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed November 18, 2004)
10.5		Amendment No. 3 dated December 3, 2004, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed December 8, 2004)
10.6		Amendment No. 4 dated March 18, 2005, to the Credit Agreement among Alderwoods Group, Inc., Bank of America, N.A. as administrative agent, owing line lender, L/C Issuer and other lenders party hereto (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 24, 2005)

10.7		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and Kenneth A. Sloan (incorporated by reference to Exhibit 10.3 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.8		Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Ellen Neeman (incorporated by reference to Exhibit 10.7 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 16, 2004)
10.9		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and Ross S. Caradonna (incorporated by reference to Exhibit 10.4 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.10		Employment Agreement dated January 23, 2003, by and between Alderwoods Group, Inc. and Richard J. Scully (incorporated by reference to Exhibit 10.35 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 1, 2003)
10.11		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and John S. Lacey (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.12		Amended and Restated Employment Agreement dated August 1, 2005, by and between Alderwoods Group Canada Inc. and Paul A. Houston (incorporated by reference to Exhibit 10.2 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.13		Employment Agreement dated May 10, 2005, by and between Alderwoods Group, Inc. and Aaron Shipper (incorporated by reference to Exhibit 10.1 to Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 12, 2005)
10.14		Employment Agreement dated May 10, 2005, by and between Alderwoods Group, Inc. and Mark W. H. Wilson (incorporated by reference to Exhibit 10.2 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 12, 2005)
10.15		Alderwoods Group, Inc. 2002 Equity Incentive Plan (incorporated by reference to Exhibit 10.27 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
10.16		Alderwoods Group, Inc. 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 3, 2005)
10.17		Alderwoods Group, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed May 3, 2005)
10.18		Director Compensation Plan (incorporated by reference to Exhibit 10.28 to the Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2002)
10.19		Alderwoods Group Canada Inc. 2003-2005 Executive Strategic Incentive Plan (incorporated by reference to Exhibit 10.40 to Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 24, 2003)
10.20		Amendment to the Alderwoods Group Canada Inc. 2003-2005 Executive Strategic Incentive Plan (incorporated by reference to Exhibit 10.5 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)

10.21		Alderwoods Support Function Annual Incentive Plan (incorporated by reference to Exhibit 10.19 to Form 10-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 28, 2005)
10.22		Description of Compensation of Directors (incorporated by reference to Exhibit 10.20 to the Form 10-Q of Alderwoods Group, Inc., SEC File No. 000-33277, filed April 28, 2005)
10.23		Form of Indemnification Agreement between Alderwoods Group, Inc. and each of its directors and executive officers (incorporated by reference to Exhibit 10.33 to Form S-1/A of Alderwoods Group, Inc., SEC File No. 333-85316, filed July 25, 2002)
10.24		2005-2007 Executive Strategic Incentive Plan of Alderwoods Group Canada Inc. (incorporated by reference to Exhibit 10.6 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.25		Form of Director Non-Qualified Stock Option Agreement (2005 Equity Incentive Plan) (incorporated by reference to Exhibit 10.7 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.26		Form of Employee Non-Qualified Stock Option Agreement (2005 Equity Incentive Plan) (incorporated by reference to Exhibit 10.8 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.27		Form of Restricted Stock Units Agreement (2005 Equity Incentive Plan) (incorporated by reference to Exhibit 10.9 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed July 25, 2005)
10.28		Performance Plan Definitions and Performance Criteria for the Alderwoods Support Function Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K of Alderwoods Group, Inc., SEC File No. 000-33277, filed March 3, 2006)
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 31.1

CERTIFICATION

I, Paul A. Houston, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Alderwoods Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.

The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c): Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d): Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.

The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

(a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
(b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: May 1, 2006

By:

/s/ PAUL A. HOUSTON

Paul A. Houston
President, Chief Executive Officer and Director
(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Kenneth A. Sloan, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Alderwoods Group, Inc.;

2.

3.

4.

(a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c): Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d): Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.

(a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
(b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: May 1, 2006

By:

/s/ KENNETH A. SLOAN

Kenneth A. Sloan
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alderwoods Group, Inc. (the "Company") on Form 10-Q for the twelve weeks ended March 25, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

(1): The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2): The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Dated: May 1, 2006	/s/ PAUL A. HOUSTON Paul A. Houston President, Chief Executive Officer and Director (Principal Executive Officer)
	/s/ KENNETH A. SLOAN Kenneth A. Sloan Executive Vice President, Chief Financial Officer (Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

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ALDERWOODS GROUP, INC.
PART I FINANCIAL INFORMATION
ALDERWOODS GROUP, INC. CONSOLIDATED BALANCE SHEETS Expressed in thousands of dollars except number of shares
ALDERWOODS GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Expressed in thousands of dollars except per share amounts and number of shares
ALDERWOODS GROUP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited) Expressed in thousands of dollars except number of shares
ALDERWOODS GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Expressed in thousands of dollars
Condensed Consolidating Balance Sheets
Condensed Consolidating Balance Sheets
Condensed Consolidating Statement of Operations (unaudited)
Condensed Consolidating Statement of Operations (unaudited)
Condensed Consolidating Statement of Cash Flows (unaudited)
Condensed Consolidating Statement of Cash Flows (unaudited)
PART II OTHER INFORMATION
SIGNATURES
INDEX TO EXHIBITS

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Negative
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Litigous
Readability	8th grade Avg

Alderwoods Inactive 10-Q2006 Q1 Quarterly report

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