FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the period ended March 31, 2001
or

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____TO____

Commission file number: 0-28096

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

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

DELAWARE 76-0490631
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)

8554 KATY FREEWAY, SUITE 200, HOUSTON, TEXAS 77024
(Address of principal executive offices) (Zip Code)

(713) 984-5500
(Registrant's telephone number, including area code)

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

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

YES X NO
--- ---

The number of shares outstanding of the registrant's common stock as of April
30, 2001 was 8,940,950.

THE YORK GROUP, INC.

INDEX

PAGE
Part I. Financial Information

Item 1.Financial Statements

Condensed Consolidated Balance Sheets -
March 31, 2001 (Unaudited) and December 31, 2000 ..... 2

Condensed Consolidated Statements of Income (Unaudited) -
Three months ended March 31, 2001 and 2000 ........... 3

Consolidated Statements of Cash Flows (Unaudited) -
Three months ended March 31, 2001 and 2000 ........... 4

Notes to Consolidated Financial Statements (Unaudited) .... 5-7

Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition .................. 8-10

Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K ......................... 11

Signature................................................................. 12

THE YORK GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

MARCH 31, DECEMBER 31,
ASSETS 2001 2000
--------- ------------
(UNAUDITED)

Current assets:
Cash and cash equivalents ............................. $ 7,800 $ 4,533
Trade accounts and notes receivable, net of allowance
for doubtful accounts and returns and allowances
of $3,041 in 2001 and $3,591 in 2000
Stockholders and affiliates .................. 1,495 6,028
Other ........................................ 27,667 19,627
Inventories, net ...................................... 10,559 10,531
Prepaid expenses ...................................... 2,175 2,170
Income tax receivable ................................. 2,283 4,083
Deferred tax assets ................................... 3,161 3,941
Assets held for sale .................................. 8,079 19,271
--------- ---------

Total current assets ......................... 63,219 70,184
--------- ---------

Property, plant and equipment, net ....................... 44,855 49,424
Goodwill, net ............................................ 54,626 55,163
Deferred costs and other assets, net ..................... 9,373 11,144
Assets held for sale ..................................... 5,676 3,829
--------- ---------

Total assets ................................. $ 177,749 $ 189,744
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt ..................... $ 50,397 $ 64,437
Accounts payable ...................................... 16,247 15,226
Accrued expenses ...................................... 14,227 16,271
--------- ---------

Total current liabilities .................... 80,871 95,934
--------- ---------

Long-term debt, net of current portion ................... 835 863
--------- ---------

Other noncurrent liabilities ............................. 5,439 5,756
--------- ---------

Deferred tax liabilities ................................. 9,127 8,180
--------- ---------

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized and unissued ........................... -- --
Common stock, $.01 par value, 25,000,000 shares
authorized; 8,940,950 shares issued and outstanding 89 89
Additional paid-in capital ............................ 40,455 40,455
Cumulative foreign currency translation adjustment .... (300) (123)
Retained earnings ..................................... 41,233 38,590
--------- ---------

Total stockholders' equity ................... 81,477 79,011
--------- ---------

Total liabilities and stockholders' equity ... $ 177,749 $ 189,744
========= =========

The accompanying notes are an integral part of
these consolidated financial statements.

THE YORK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
-------- --------

Net sales (including sales to
stockholders and affiliates of $4,609
and $9,736, respectively) .................... $ 53,441 $ 54,758

Cost of sales ................................... 36,680 38,518
-------- --------

Gross profit .......................... 16,761 16,240

Other operating expenses ........................ 10,226 11,416
-------- --------

Operating income ...................... 6,535 4,824

Interest expense, net ........................... (1,962) (1,803)
-------- --------

Income before income taxes ...................... 4,573 3,021

Income tax provision ............................ 1,930 1,314
-------- --------

Net income ...................................... $ 2,643 $ 1,707
======== ========

Shares used in computing earnings per share:
Basic ................................... 8,940 8,940
======== ========
Diluted ................................. 8,947 9,034
======== ========

Earnings per share:
Basic ................................... $ 0.30 $ 0.19
======== ========
Diluted ................................. $ 0.30 $ 0.19
======== ========

The accompanying notes are an integral part of
these financial statements.

THE YORK GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED MARCH 31,
-----------------------------
2001 2000
-------- --------

Cash flows from operating activities:
Net income .................................................... $ 2,643 $ 1,707
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization .............................. 2,491 3,035
Deferred income taxes ...................................... 1,727 647
Decrease (increase), net of effects of assets held for sale:
Trade accounts and notes receivable ...................... (3,289) 4,875
Inventories .............................................. 442 1,715
Prepaid expenses ......................................... (5) 32
Income tax receivable .................................... 1,800 --
Deferred costs and other assets .......................... 1,232 (1,543)
Increase (decrease), net of effects of assets held for sale:
Accounts payable and accrued liabilities ................. (809) (2,025)
Other non-current liabilities ........................... (317) (3,009)
-------- --------

Net cash provided by operating activities ................ 5,915 5,434
-------- --------

Cash flows from investing activities:
Capital expenditures .......................................... (248) (1,183)
Proceeds from sale of property ................................ 11,756 --
-------- --------

Net cash provided by (used in) investing activities ...... 11,508 (1,183)
-------- --------

Cash flows from financing activities:
Repayments of long-term debt .................................. (14,068) (21,202)
Proceeds from issuance of long-term debt ...................... -- 16,800
-------- --------

Net cash used in financing activities .................... (14,068) (4,402)
-------- --------

Effects of exchange rate changes on cash ................................. (88) 153
-------- --------

Net increase in cash and cash equivalents ................................ 3,267 2

Cash and cash equivalents, beginning of period ........................... 4,533 17
-------- --------

Cash and cash equivalents, end of period ................................. $ 7,800 $ 19
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Cash paid during the period for income taxes ............... $ -- $ 1,000
======== ========
Cash paid during the period for interest ................... $ 1,660 $ 1,225
======== ========
Reductions of lease receivables through application of earned
rebate ...................................................... $ 214 $ 380
======== ========
Net reclass of certain assets available for sale ................ $ 2,411 $ --
======== ========

The accompanying notes are an integral part of
these financial statements.

THE YORK GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
(Unaudited)

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of The
York Group, Inc. and subsidiaries (the "Company") and have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These consolidated financial
statements should be read in conjunction with the Company's December 31, 2000
audited financial statements and the notes thereto included in the Company's
2000 Annual Report on Form 10-K. In the opinion of the Company, all adjustments
and eliminations, consisting only of normal and recurring adjustments, necessary
to present fairly the consolidated financial statements have been included. The
results of operations for such interim periods are not necessarily indicative of
results for the full year.

2. SUPPLEMENTAL INFORMATION

March 31, December 31,
2001 2000
------------- -------------
(in thousands)

Inventories:
Raw materials ..................................... $ 5,763 $ 5,813
Work in process ................................... 2,054 1,982
Finished goods .................................... 6,748 14,352
-------- --------
14,565 22,147
Less: amounts included in assets held for sale .... (4,006) (11,616)
-------- --------
Inventories, net .......................... $ 10,559 $ 10,531
======== ========

Property, Plant and Equipment:
Land and improvements ............................. $ 3,343 $ 3,345
Building and improvements ......................... 19,343 19,449
Equipment ......................................... 69,646 71,572
Construction-in-progress .......................... 751 1,008
-------- --------
93,083 95,374
Less: accumulated depreciation .................... (42,552) (42,121)
-------- --------
50,531 53,253
Less: amounts included in assets held for sale .... (5,676) (3,829)
-------- --------
Property, plant and equipment, net ........ $ 44,855 $ 49,424
======== ========

3. EARNINGS PER SHARE

Earnings per share data for all periods presented has been computed pursuant to
SFAS No. 128, "Earnings Per Share" which requires a presentation of basic
earnings per share (basic EPS) and diluted earnings per share (diluted EPS).
Basic EPS excludes dilution and is determined by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted EPS reflects the potential dilution that could occur
if securities and other contracts to issue common stock were exercised or
converted into common stock. At March 31, 2001 the Company had options
outstanding for the purchase of an aggregate of 1,202,608 shares of common stock
of which all but 260,223 are antidilutive and excluded from shares used in
computing diluted EPS.

A reconciliation of weighted-average shares outstanding to shares used in
computing diluted EPS is as follows:

March 31, March 31,
2001 2000
--------- ---------

Weighted-average shares outstanding ............ 8,940,950 8,940,950
Dilutive effect of securities
consisting of options and convertible debt .... 5,777 93,256
--------- ---------
Shares used in computing diluted EPS ........... 8,946,727 9,034,206
========= =========

4. SEGMENT INFORMATION

SFAS No. 131, "Disclosure About Segments of an Enterprise and Related
Information", requires certain financial and supplementary information to be
discussed on an annual and interim basis for each reportable segment of an
enterprise. In accordance with SFAS No. 131, the Company identified its
reporting segments based on its internal reporting of strategic business units.
The products within each segment require substantially different manufacturing
processes, are marketed to different customer bases and have different economic
characteristics.

The Company's Casket Segment includes the manufacturing and distribution
operations of a wide variety of metal, wood and other caskets, caskets
components and metal burial vaults. The Company's Commemorative Products Segment
produces and sells products, primarily cast bronze, which are used to
commemorate people, places and events. The All Other Segment includes the
Company's fleet operations, architectural services, merchandising products and
services, and corporate expenses. Product transfers between industry segments
are not material. The Company evaluates segment performance based upon operating
income.

Interim financial information regarding the Company's segments is presented
below:

THREE MONTHS ENDED MARCH 31,
-----------------------------
2001 2000
-------- --------

Net Sales:
Caskets ................................ $ 39,701 $ 41,251
Commemorative Products ................. 11,062 10,760
All other .............................. 2,678 2,747
-------- --------

Consolidated net sales ............... $ 53,441 $ 54,758
======== ========

Operating Income:
Caskets ................................ $ 9,449 $ 8,995
Commemorative Products ................. 1,918 706
All other .............................. (4,832) (4,877)
-------- --------

Consolidated operating income ........ $ 6,535 $ 4,824
======== ========

5. DEBT AND LIQUIDITY

The Company was not in compliance with specified debt covenants at various times
during 2000 and 2001. In January 2001, the Company reached agreements whereby
its lenders provided specified forbearance through June 30, 2001. Under the
terms of these agreements, the Company has agreed to a revised amortization
schedule with respect to repayment of the bank term loan and Senior Notes.
Further, the Company has agreed to make specified prepayments of the Senior
Notes as well as the bank term loan and revolving credit facility ("Bank
Facilities") from the proceeds of planned asset sales. These forbearance
agreements expire on June 30, 2001. The terms of the Bank Facilities provide for
an interest rate to be based upon the prime rate. The Senior Notes and Bank
Facilities are secured by substantially all of the Company's assets, including
the stock of all the Company's subsidiaries. The Senior Notes and Bank
Facilities, as modified by the terms of the forbearance agreements, do not
permit the payment of cash dividends, limit the Company's capital expenditures
and are guaranteed by the Company's subsidiaries. The Bank and the holder of the
Senior Notes have entered into an intercreditor agreement whereby both sets of
creditors have a security interest in substantially all of the Company's assets.
Since October 31, 2000, the Company has not been permitted to make additional
borrowings under the revolving credit facility.

During the first quarter of 2001, the Company received proceeds of $11.8 million
relating to the sale of Company-owned distribution operations and has reduced
outstanding debt by $14.1 million. The Company has, and continues to, pursue
multiple options relevant to securing the capital required to continue
operations beyond the expiration of the present forbearance agreements. These
options include refinancing with new or existing lenders, the sale of additional
assets, and potential business combination transactions.

The unresolved status of the debt refinancing and potential asset sales to
satisfy the Company's debt obligations raises substantial doubt as to the
Company's ability to continue as a going concern. Management believes that this
doubt is significantly reduced by the Company's actions and alternatives in
obtaining refinancing and selling assets to satisfy these obligations. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

6. SUBSEQUENT EVENT

Since March 31, 2001, the Company completed additional sales of distribution
operations, and signed definitive agreements to sell assets related to its
metal burial vault business and real estate. These additional asset sales are
expected to yield net proceeds of $12 million. The Company does not expect to
incur any losses on the sale of these assets.

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

GENERAL

The Company is the second largest casket manufacturer in the United States
and produces a wide variety of caskets, casket components and burial vaults.
The Company also manufactures commemorative products. The Company's finished
caskets are marketed through a network of Company and privately owned
distributors, which serve domestic funeral homes, as well as certain foreign
markets. The Company is currently in the process of selling its Company owned
distribution centers. Burial vaults are sold directly to funeral home and
cemetery operators as well as to privately owned distributors. The Company's
commemorative memorial products are sold directly to cemetery operators,
monument dealers and funeral homes, and its architectural signage products
are sold primarily to sign and trophy dealers.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

First quarter 2001 sales were $53.4 million compared to $54.8 million for the
same period in 2000. Casket Segment sales were $39.7 million compared to $41.3
million in 2000, a decrease of $1.6 million. Finished casket unit volumes
decreased 5.0%, compared to an estimated 5.7% decrease in deaths, from the same
period last year. The first quarter 2001 sale of a majority of the Company-owned
distribution centers to independently owned distributors of the Company's
products also reduced sales dollars per unit by the difference between
distributor-level pricing to funeral homes and plant-level pricing to
distributors for the units affected by this channel shift. These effects were
partially offset by favorable net price realization. Commemorative Products
Segment sales were $11.1 million in the first quarter of 2001 compared to $10.8
million in 2000. Sales from the All Other Segment, primarily consisting of York
Merchandising Systems(TM), were materially unchanged from the first quarter of
2000.

First quarter 2001 gross profit was $16.8 million compared to $16.2 million in
2000, increasing as a percentage of sales to 31.4% from 29.7% in 2000. Casket
Segment gross profit decreased approximately $0.8 million to $12.4 million,
primarily due to the lower finished casket volume and the sale of Company-owned
distribution centers, as described above. These effects were partially offset by
manufacturing cost reductions and favorable net price realization. Commemorative
Products Segment gross profit increased $1.1 million to $4.2 million primarily
due to the elimination of inefficiencies resulting from the Company's foundry
consolidation efforts. The All Other Segment gross profit increased $0.2 million
primarily due to cost and productivity improvements.

Other operating expenses for the first quarter of 2001 were $10.2 million
compared to $11.4 million in 2000. Casket Segment operating expenses decreased
$1.3 million primarily due to the reduction of selling and distribution expenses
resulting from the sale of Company-owned distribution centers. Commemorative
Products and All Other segment operating expenses were materially unchanged from
the prior year period.

Net interest expense increased slightly from 2000, reflecting higher interest
rates and an increase in deferred finance fee amortization, offset to some
degree by lower debt levels in 2001. Interest paid during both the first quarter
of 2001 and 2000 was $1.6 million and $1.2 million, respectively.

The Company's effective income tax rate decreased to 42.2% from 43.5% in 2000,
reflecting the higher income levels and decrease of non-deductible expenses,
primarily goodwill amortization, due to the write-off of non-deductible goodwill
included in the Company's fourth quarter 2000 restructuring charge. Cash paid
for income taxes during the first quarter of 2000 was $1.0 million. In the first
quarter of 2001, no cash was paid for income taxes.

In the first quarter of 2001, the Company recorded net income of $2.6 million,
compared to net income of $1.7 million in 2000. Both basic and diluted earnings
per share were $.30 in 2001 compared to $.19 in 2000.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $7.8 million at March 31, 2001, representing an
increase of $3.3 million from December 31, 2000. During the first quarter of
2001, cash flows from operations totaled approximately $5.9

million, cash used in investing activities totaled approximately $11.5 million
and cash used in financing activities totaled approximately $14.1 million.

Capital expenditures were $0.2 million and $1.2 million in the first quarter of
2001 and 2000, respectively. The Company has budgeted capital expenditures for
2001 of approximately $5.0 million. Major 2001 expenditures include maintenance
and replacement projects which extend the life of the assets, with no
significant individual projects currently planned.

Long-term debt, including current maturities, at March 31, 2001, totaled $51.2
million, which primarily consisted of $10.1 million of senior notes (the "Senior
Notes"), $20.8 million outstanding on the Company's bank term loan, $14.9
million outstanding on the Company's revolving credit facility, subordinated
promissory notes totaling $3.6 million issued in conjunction with an acquisition
and capital lease obligations totaling $1.3 million. The Company was not in
compliance with specified debt covenants at various times during 2000 and 2001.
In January 2001, the Company reached agreements whereby its lenders provided
specified forbearance through June 30, 2001. The Bank and the holder of the
Senior Notes have entered into an intercreditor agreement whereby both creditors
have a security interest in substantially all of the Company's assets. Since
October 31, 2000, the Company has not been permitted to make additional
borrowings under the revolving credit facility.

During the first quarter of 2001, the Company received $11.8 million of proceeds
relating to the sale of Company-owned distribution operations and has reduced
outstanding debt by $14.1 million.

The Company has, and continues to, pursue multiple options relevant to
securing the capital required to continue operations beyond the expiration of
the present forbearance agreements. These options include refinancing with
new or existing lenders, the sale of additional assets, and potential
business combination transactions. Since March 31, 2001, the Company
completed additional sales of distribution operations, and signed definitive
agreements to sell assets related to its metal burial vault business and real
estate. These additional asset sales are expected to yield net proceeds of
$12 million. There are no anticipated losses on the sale of these assets.

INFLATION

Inflation has not had a material net impact on the Company over the past three
years nor is it anticipated to have a material impact for the foreseeable
future.

SELECTED QUARTERLY OPERATING RESULTS AND SEASONALITY

Historically, the Company's operations have experienced seasonal variations.
Generally, the Company's net sales of caskets are highest in the first quarter
and lowest in the third quarter of each year. These fluctuations are due in part
to the seasonal variance in the death rate, with a greater number of deaths
generally occurring in cold weather months, and the timing of the Company's
annual manufacturing facility vacation shutdowns, which occur primarily in the
third quarter. The Company's memorialization sales seasonally lag the Company's
casket business, and are highest in the second quarter, coinciding with the
Memorial Day holiday, and lowest in the first quarter. In addition, casket and
memorialization products operating results can vary between quarters of the same
or different years due to, among other things, fluctuations in the number of
deaths, changes in product mix, and the timing of annual price increases
relative to changes in costs. As a result, the Company experiences variability
in its operating results on a quarterly basis, which may make quarterly
year-to-year comparisons less meaningful.

FORWARD-LOOKING STATEMENTS

This Form 10-Q includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are based upon
management's current expectations and assumptions. Important factors that could
cause actual results to differ materially from those in forward-looking
statements included herein include, among others, customer demands and the
Company's reaction to such demands, changes in mortality and/or cremation rates,
further consolidation in the funeral service industry, and fluctuations in the
prices of raw materials and other manufacturing costs and the availability of
debt and/or equity financing or refinancing options.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, the Company is exposed to market risk,
primarily from changes in interest rates. The Company continually monitors
exposure to market risk and develops appropriate strategies to manage this risk.
The Company is not exposed to any other significant market risks, including
commodity price risk, foreign currency exchange risk or interest rate risks from
the use of derivative financial instruments. Management does not use significant
derivative financial instruments for trading or to speculate on changes in
interest rates or commodity prices.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Reports on Form 8-K
None

SIGNATURE

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.

________________ THE YORK GROUP, INC.

By: /s/ DAN E. MALONE
------------------------------
Dan E. Malone
Vice President and Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)