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 September 30, 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 (I.R.S. employer identification
of organization) incorporation or 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
September 30, 2001 was 8,940,950.

THE YORK GROUP, INC.

INDEX

PAGE
Part I. Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets -
September 30, 2001 (Unaudited) and December 31, 2000.... 2

Condensed Consolidated Statements of Income (Unaudited) -
Three and Nine months ended September 30, 2001 and 2000. 3

Consolidated Statements of Cash Flows (Unaudited) -
Nine months ended September 30, 2001 and 2000........... 4

Notes to Consolidated Financial Statements (Unaudited)..... 5-8

Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.......................9-11

Part II. Other Information
Item 4. Submission of Matters to Vote of Security Holders.......... 11

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)

SEPTEMBER 30, DECEMBER 31,
ASSETS 2001 2000
--------- ---------
(UNAUDITED)

Current assets:
Cash and cash equivalents ....................................................... $ 25,561 $ 4,337
Trade accounts and notes receivable, net of allowance for doubtful
accounts and returns and allowances of $3,688 in 2001 and $3,393 in 2000
Stockholders and affiliates ........................................... 1,333 4,505
Other ................................................................. 18,364 17,402
Inventories ..................................................................... 6,952 7,973
Prepaid expenses ................................................................ 1,075 1,047
Income tax receivable ........................................................... 2,062 3,941
Deferred tax assets ............................................................. 4,681 4,054
Assets held for sale ............................................................ 2,503 19,271
Net assets of discontinued operations ........................................... -- 3,814
--------- ---------

Total current assets .................................................. 62,531 66,344
--------- ---------

Property, plant and equipment, net ................................................. 28,113 34,794
Goodwill, net ...................................................................... 4,655 6,678
Deferred costs and other assets, net ............................................... 5,773 11,079
Assets held for sale ............................................................... 2,917 3,829
Net assets of discontinued operations .............................................. -- 55,218
--------- ---------

Total assets .......................................................... $ 103,989 $ 177,942
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable ................................................................ $ 9,720 $ 12,643
Accrued expenses ................................................................ 16,490 15,064
Current portion of long-term debt ............................................... 335 64,387
--------- ---------
Total current liabilities ............................................. 26,545 92,094
--------- ---------

Long-term debt, net of current portion ............................................. 140 489
--------- ---------

Other noncurrent liabilities ....................................................... 3,787 1,463
--------- ---------

Deferred tax liabilities ........................................................... 4,484 4,885
--------- ---------

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 .............................. (302) (123)
Retained earnings ............................................................... 28,791 38,590
--------- ---------

Total stockholders' equity ............................................ 69,033 79,011
--------- ---------

Total liabilities and stockholders' equity ............................ $ 103,989 $ 177,942
========= =========

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

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

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2001 2000 2001 2000
--------- --------- --------- ---------

Net sales (including sales to stockholders
and affiliates of $3,671 and $7,232 for the
three months ended September 30, 2001 and 2000,
respectively, and $12,931 and $24,398 for the
nine months ended September 30, 2001 and 2000,
respectively) ....................................... $ 26,913 $ 32,767 $ 103,818 $ 113,192
Cost of goods sold ....................................... 20,338 27,763 75,857 85,594
--------- --------- --------- ---------
Gross profit ............................................. 6,575 5,004 27,961 27,598

Other operating expenses ................................. 5,826 9,610 20,734 27,591

Plant closure and restructuring charges .................. -- 5,000 -- 5,000

Environmental expenses ................................... 3,521 -- 3,521 --

Merger expenses .......................................... 346 -- 346 --
--------- --------- --------- ---------
Total operating expenses ................................. 9,693 14,610 24,601 32,591
--------- --------- --------- ---------

Operating income (loss) .................................. (3,118) (9,606) 3,360 (4,993)
Interest income (expense), net ........................... 137 (1,707) (2,714) (5,161)
Other income, net ........................................ (1) 2,164 63 2,488
--------- --------- --------- ---------

Earnings (loss) from continuing
before income taxes ............................... (2,982) (9,149) 709 (7,666)

Income tax provision (benefit) ........................... (839) (5,256) 600 (4,535)
--------- --------- --------- ---------

Earnings (loss) from continuing
operations ............................................... (2,143) (3,893) 109 (3,131)

Discontinued operations:
Operating earnings of
Commemorative Products Segment,
net of taxes of $0, $464, $1,214 and $1,566 ............ -- 383 1,359 1,425

Net loss on disposition of
Commemorative Products Segment,
net of taxes of $710 .................................. -- -- (9,622) --
--------- --------- --------- ---------

Total income (loss) on discontinued operations ........... -- 383 (8,263) 1,425

Extraordinary item, net of taxes of $1,051 ............... -- -- (1,645) --
--------- --------- --------- ---------

Net loss ................................................. $ (2,143) $ (3,510) $ (9,799) $ (1,706)
========= ========= ========= =========

Basic earnings (loss) per share:
Continuing operations ................................ $ (0.24) $ (0.43) $ 0.01 $ (0.35)
Discontinued operations .............................. $ -- $ 0.04 $ (0.92) $ 0.16
Extraordinary item ................................... $ -- $ -- $ (0.18) $ --
-------- -------- --------- ---------
Total .................................................... $ (0.24) $ (0.39) $ (1.09) $ (0.19)
======== ======== ========= =========
Diluted earnings (loss) per share:
Continuing operations ................................ $ (0.24) $ (0.43) $ 0.01 $ (0.35)
Discontinued operations .............................. $ -- $ 0.04 $ (0.90) $ 0.16
Extraordinary item ................................... $ -- $ -- $ (0.18) $ --
-------- -------- --------- ---------
Total .................................................... $ (0.24) $ (0.39) $ (1.07) $ (0.19)
======== ======== ========= =========
Shares used in computing earning (loss) per share
Basic ................................................ 8,941 8,941 8,941 8,941
======== ======== ========= =========
Diluted .............................................. 8,941 8,941 9,174 8,941
======== ======== ========= =========

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

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

NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
2001 2000
-------- --------

Cash flows from operating activities:
Net loss ..................................................................... $ (9,799) $ (1,706)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities -
Depreciation and amortization ............................................. 4,992 7,027
(Gain) loss on sale of businesses and property, plant and
equipment ............................................................... 10,232 (349)
Deferred income taxes ..................................................... (1,028) (4,554)
Change in assets held for sale, net of sales .............................. 2,020 1,800
Change in assets of discontinued operations, net of sales ................. 700 5,549
Decrease (increase), net of effects of assets held for sale and assets
of discontinued operations:
Trade accounts and notes receivable .................................... 5,713 10,474
Inventories ............................................................ (189) 8,723
Prepaid expenses ....................................................... (28) (682)
Income tax receivable .................................................. 1,879 --
Deferred costs and other assets ........................................ 1,789 (8,312)
Increase (decrease), net of effects of assets held for sale and
assets of discontinued operations:
Accounts payable and accrued liabilities ............................... (3,055) (795)
Other non-current liabilities .......................................... 2,324 (179)
-------- --------

Net cash provided by operating activities .............................. 15,550 16,996
-------- --------

Cash flows from investing activities:
Capital expenditures ......................................................... (749) (4,443)
Proceeds from sale of businesses and property, plant and equipment ........... 71,003 1,391
-------- --------

Net cash provided by (used in) investing activities .................... 70,254 (3,052)
-------- --------

Cash flows from financing activities:
Repayments of long-term debt ................................................. (64,401) (49,143)
Proceeds from issuance of long-term debt ..................................... -- 36,725
Dividends paid ............................................................... -- (358)
-------- --------

Net cash used in financing activities .................................. (64,401) (12,776)
-------- --------

Effects of exchange rate changes on cash .................................................. (179) (278)
-------- --------

Net increase in cash and cash equivalents ................................................. 21,224 890

Cash and cash equivalents, beginning of period ............................................ 4,337 --
-------- --------

Cash and cash equivalents, end of period .................................................. $ 25,561 $ 890
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Cash paid during the period for income taxes ................................ $ 142 $ 2,800
======== ========
Cash paid during the period for interest .................................... $ 2,843 $ 4,626
======== ========
Reductions of lease receivables through application of earned rebates ....... $ 589 $ 954
======== ========
Issuance of note receivable in connection with sale of distribution
centers ............................................................... $ 445 $ --
======== ========

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

THE YORK GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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 and
eliminations 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.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible Assets". SFAS 141
requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. Under SFAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but are
reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that are not deemed to have
indefinite lives will continue to be amortized over their useful lives (but
with no maximum life). The amortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1, 2001, the Company is
required to adopt SFAS 142 effective January 1, 2002. Management is currently
evaluating the effect that adoption of the provisions of SFAS 142 will have
on the Company's results of operations and financial position. Goodwill
amortization for the three and nine months ended September 30, 2001 was $0.1
and $2.1 million, respectively.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 covers all legally enforceable obligations
associated with the retirement of tangible long-lived assets and provides the
accounting and reporting requirements for such obligations. SFAS No. 143 is
effective for the Company's fiscal year beginning January 1, 2003. The
Company is currently evaluating the impact that adoption of this standard
will have on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 144. "Accounting for the Impairment
or Disposal of Long-lived Assets". The FASB's new rules on asset impairment
supercedes FAS No. 121, "Accounting for the Impairment of Long-lived Assets
and for Long-lived Assets to be Disposed of," and will be effective for the
Company's fiscal year beginning January 1, 2002. The Company is currently
evaluating the impact that adoption of this standard will have on the
Company's financial statements.

RECLASSIFICATIONS

Certain reclassifications have been made to the 2000 consolidated financial
statements contained herein to conform to the classifications presented in 2001.

2. DISCONTINUED OPERATIONS

On May 24, 2001, the Company sold its Commemorative Products business segment.
In connection with the sale of the Commemorative Products business, the Company
incurred a one-time charge of approximately $9.6 million, net of income tax of
approximately $0.7 million related to the write-off of the segment assets, net
of proceeds received. The disposition of the Commemorative Products business
represents the disposal of a business segment under Accounting Principles Board
("APB") opinion No. 30. Accordingly, results of this operation have been
classified as discontinued, and prior periods have been restated. For business
segment reporting purposes, these business results were previously classified as
the segment "Commemorative Products."

The components of net assets of discontinued operations included in the
consolidated balance sheet at December 31, 2000, are as follows (in thousands):

Current Assets and Liabilities:
Cash ................................................. $ 196
Receivables .......................................... 3,748
Inventories .......................................... 2,558
Other current assets ................................. 1,152
Trade payables ....................................... (2,583)
Other payables ....................................... (1,257)
--------

Net current assets of discontinued operations ........ $ 3,814
========

Long-term Assets and Liabilities:
Property, plant and equipment, net .................. $ 14,630
Goodwill ............................................ 48,485
Other assets ........................................ 65
Long-term liabilities ............................... (7,962)
--------
Net long-term assets of discontinued operations ..... $ 55,218
========

3. SUPPLEMENTAL INFORMATION

September 30, December 31,
2001 2000
------------- ------------
(in thousands)

Inventories:
Raw materials ............................................ $ 4,330 $ 5,275
Work in process .......................................... 1,549 1,567
Finished goods ........................................... 2,830 12,747
-------- --------
8,709 19,589
Less: amounts included in assets held for sale ........... (1,757) (11,616)
-------- --------
Inventories .................................... $ 6,952 $ 7,973
======== ========

Property, Plant and Equipment:
Land and improvements .................................... $ 2,644 $ 3,107
Building and improvements ................................ 14,376 16,590
Equipment ................................................ 54,284 57,391
Construction-in-progress ................................. 354 283
-------- --------
71,658 77,371
Less: accumulated depreciation ........................... (40,628) (38,748)
-------- --------
31,030 38,623
Less: amounts included in assets held for sale ........... (2,917) (3,829)
-------- --------
Property, plant and equipment, net ............. $ 28,113 $ 34,794
======== ========

Accrued Expenses:
Accrued rebates .......................................... $ 5,752 $ 6,899
Accrued environmental obligations ........................ 1,458 --
Accrued payroll .......................................... 4,238 2,983
Other accrued expenses ................................... 5,042 5,182
-------- --------
Accrued expenses ............................. $ 16,490 $ 15,064
======== ========

4. 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 (loss) per share (basic EPS) and diluted earnings (loss) 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
September 30, 2001, the Company had options outstanding for the purchase of
an aggregate of 827,608 shares of common stock, of which all but 372,966 are
antidilutive for the nine months ended September 30, 2001, and are 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:

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ---------------------
2001 2000 2001 2000
----- ----- ----- -----

Weighted-average shares outstanding ............... 8,941 8,941 8,941 8,941
Dilutive effect of stock options .................. -- -- 233 --
----- ----- ----- -----
Shares used in computing diluted EPS .............. 8,941 8,941 9,174 8,941
===== ===== ===== =====

5. SEGMENT INFORMATION

The Company is the second largest casket manufacturer in the United States and
produces a wide variety of caskets and casket components. The Company's finished
caskets are primarily marketed through a network of privately owned
distributors, which serve domestic funeral homes, as well as certain foreign
markets. Less than 10% of sales are distributed through Company-owned
distribution centers, and less than 10% of sales are to buyers outside of the
United States.

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.
Due to the sale of the Commemorative Products segment and the sale or closing of
other non-casket operations, and due to restructuring within casket
manufacturing, distribution, merchandising, transportation and corporate units,
the separate analysis of these parts of the Company's casket business unit is
not meaningful. Consequently, the Company's management believes that it operates
only one strategic business unit and that no additional segment data can be
provided.

6. ENVIRONMENTAL ACCRUAL

During the third quarter of 2001, the Company recorded $3.5 million of
environmental charges to reflect probable cost estimates for necessary
environmental remediation activities at three of the Company's manufacturing
facilities identified during the third quarter of 2001. The charge also
includes approximately $0.2 million of already incurred environmental
consulting fees. Management believes that the Company's accrual at September
30, 2001 for such activities is a reasonable estimate of the total uninsured
costs associated with this exposure based upon an independent consultant's
studies. This exposure was not reasonably estimatable prior to the third
quarter of 2001.

7. PLAN OF MERGER

On May 24, 2001, the Company and Matthews International Corporation (Matthews)
signed a merger agreement whereby Matthews is to acquire 100% of the outstanding
common shares of York for $10 cash per share. Matthews also agreed to pay up to
an additional $1 cash per share based on the excess cash, as defined in the
merger agreement, remaining on York's balance sheet as of October 31, 2001.

Completion of this transaction, which has been approved by the Company's
stockholders, is subject to the Company achieving a specific minimum earnings
before interest, taxes, depreciation and amortization ("EBITDA Threshold") from
its casket operations, compliance with applicable legal and regulatory
requirements, and customary closing conditions.

On November 5, 2001, the Company reported in a press release that all regulatory
requirements to the proposed merger have been met. The "EBITDA", "Adjusted
Working Capital" and "Excess Cash Increment" results per the merger agreement
are expected to be finalized on or about November 27, 2001, at which time the
Company will report these results. Closing of the merger is anticipated to take
place on or about November 30, 2001.

No adjustments have been made to these financial statements to reflect the
proposed merger, including adjustments to deferred taxes and other recorded
asset values.

8. DEBT AND LIQUIDITY

Cash and cash equivalents were $25.6 million at September 30, 2001, representing
an increase of $2.8 million from June 30, 2001. Long-term debt, including
current maturities, totaled $0.5 million at September 30, 2001. This debt
primarily consisted of capital lease obligations.

During the third quarter of 2001, the Company received net cash proceeds of
$0.3 million from the sale of Company-owned distribution centers, net of a
settlement payment related to the second quarter sale of vault operations.
The Company also reduced outstanding debt by $0.3 million.

During the second quarter of 2001, the Company received net cash proceeds of
$58.9 million from the sale of its Commemorative Products segment, its metal
vault manufacturing business, Company-owned distribution centers, non-core
real estate and a note receivable. During the same period, the Company also
reduced outstanding debt by $50.4 million.

During the first quarter of 2001, the Company received net cash proceeds of
$11.8 million from the sale of Company-owned distribution centers. The
Company also reduced outstanding debt by $14.1 million.

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

GENERAL

RESULTS OF CONTINUING OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2000

Third quarter sales from continuing operations of $26.9 million were $5.9
million, or 17.9%, lower than the third quarter of 2000, primarily due to the
impact of the sale of metal vault manufacturing operations during the second
quarter of 2001, and Company-owned distribution centers throughout all of 2001,
and lower sales volume, partially offset by improved net price realization. The
sale of Company-owned distribution centers reduces sales dollars due to the
difference between distributor-level and manufacturing-level pricing as the
volume shifted from Company-owned to independently-owned distribution channels.
Third quarter 2001 casket volume decreased compared to the third quarter of 2000
primarily due to distributor inventory reduction.

Third quarter 2001 gross profit from continuing operations was $6.6 million
compared to $5.0 million in the third quarter of 2000, increasing as a
percentage of sales to 24.4% from 15.3% in 2000. This increase is primarily due
to the non-recurrence of inventory write-downs and accrued liability adjustments
recorded during the third quarter of 2000, continued manufacturing productivity
improvements, cost reductions and favorable net price realization, partially
offset by the gross margin impact of selling Company-owned distribution centers
and lower sales volume.

Other operating expenses, excluding environmental and merger expenses, from
continuing operations were $5.8 million, or 21.6% of sales, in the third
quarter of 2001 compared to $9.6 million, or 2.93% of sales in the third
quarter of 2000. Other operating expenses decreased due to the reduction of
selling and distribution expenses resulting from the sale of Company-owned
distribution centers, administrative cost reductions and the non-recurrence
of certain asset write downs recorded during the third quarter of 2000.

During the third quarter of 2001, the Company recorded $3.5 million of
environmental charges to reflect probable cost estimates for the necessary
environmental remediation activities at three of the Company's manufacturing
facilities identified during the third quarter of 2001. The charge also
includes approximately $0.2 million of already incurred environmental
consulting fees.

As a result of the significant improvement of its net cash and debt position,
the Company recorded third quarter 2001 net interest income of $0.1 million,
compared to net interest expenses of $1.7 million for the third quarter of 2000.
Interest received during the third quarter of 2001 was $0.1 million, compared to
$1.5 million paid in the third quarter of 2000.

Also affecting third quarter 2001 comparisons to the third quarter of 2000 was
the non-recurrence of $2.2 million of other income resulting from a favorable
litigation settlement in the third quarter of 2000 and $0.3 million of third
quarter 2001 cost incurred in conjunction with the pending merger.

The third quarter 2001 effective tax rate for continuing operations was
unfavorably affected by the capitalization of certain merger-related expenses
for tax purposes. There were no income taxes paid during the third quarters of
2001 or 2000.

The net loss from continuing operations was $2.1 million, or $.24 per fully
diluted share, for the third quarter of 2001, compared to $3.9 million, or $.43
per fully diluted share, for the third quarter of 2000.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

Sales from continuing operations for the nine months ended September 30, 2001 of
$103.8 million were $9.4 million, or 8.2%, lower than the first nine months of
2000, primarily due to the impact of the sale of the Company's metal vault
manufacturing business during the second quarter of 2001 and Company-owned
distribution centers throughout 2001. This was partially offset by improved net
price realization. Sales volume for the first nine months of 2001 decreased
approximately 1.0% compared to the first nine months of 2000, which was
comparable to the year-to-year decrease in estimated deaths.

For the first nine months of 2001, gross profit from continuing operations was
$28.0 million compared to $27.6 million for the first nine months ended
September 30, 2000, increasing as a percentage of sales to 26.9% from 24.4% in
2000. This increase is primarily due to the non-recurrence of inventory
write-downs and accrued liability adjustments recorded during the third quarter
of 2000, continued manufacturing productivity improvements, cost reductions and
favorable net price realization, partially offset by the gross margin impact of
selling Company-owned distribution centers and slightly lower sales volume.

Other operating expenses from continuing operations, excluding environmental
and merger expenses, were $20.7 million, or 20.0% of sales during the first
nine months of 2001 compared to $27.6 million, or 24.4% of sales, for the
first nine months of 2000. Other operating expenses decreased due to the
reduction of selling and distribution expenses resulting from the sale of
Company-owned distribution centers, administrative cost reductions and the
non-recurrence of certain asset write-downs recorded during the third quarter
of 2000.

Net interest expense decreased to $2.7 million for nine months ended
September 30, 2001 from $5.2 million in 2000 due to the retirement of
substantially all of the Company's outstanding debt on May 24, 2001. Interest
paid during the first nine months of 2001 was $2.8 million compared to $4.6
million for the first nine months of 2000.

The effective tax rate for continuing operations for the nine months ended
September 30, 2001 was unfavorably affected by the capitalization of certain
merger-related expenses for tax purposes. In the first nine months of 2001 $0.1
was paid for income taxes. Cash paid for income taxes during the nine months
ended September 30, 2000 was $2.8 million.

Net income from continuing operations was $0.1 million, or $.01 per fully
diluted share, for the first nine months of 2001, compared to a net loss of $3.1
million, or $.35 per fully diluted share, for the nine months ended September
30, 2000.

DISCONTINUED OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2000

There was no net income or loss from the discontinued Commemorative Products
Segment during the third quarter of 2001. This compares to $0.4 million, or $.04
per diluted share, for the third quarter of 2000.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

Year-to-date 2001 net income from the discontinued Commemorative Products
Segment of $1.4 million represents approximately five months of operations. Net
income from the discontinued segment for the first nine months of 2000 of $1.4
million represents a full nine months of operating results. For comparable time
periods, year-over-year earnings improved as a result of non-recurrence of first
half 2000 inefficiencies stemming from late 1999 and early 2000 foundry
consolidation activities. Year-to-date 2001 and 2000 net earnings reflect
after-tax write-downs of long-lived assets of $0.5 million and $0.6 million,
respectively.

In the second quarter of 2001, the Company recorded an after-tax loss of $9.6
million on the sale of the Commemorative Products Segment.

EXTRAORDINARY ITEM

In the second quarter of 2001, the Company recorded an after-tax
extraordinary loss resulting from the early retirement of debt. This
extraordinary loss consisted of the write-off of deferred financing costs and
for the payment of make-whole premiums.

LIQUIDITY AND CAPITAL RESOURCES

During the third quarter of 2001, the Company received net cash proceeds of
$0.3 million from to the sale of Company-owned distribution centers, net of a
settlement payment related to the second quarter sale of vault operations.
The Company also reduced outstanding debt by $0.3 million.

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. In addition, casket 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

Certain of the information relating to the Company contained or incorporated by
reference herein is "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements included or
incorporated by reference or made by management of the Company, other than
statements of historical fact regarding the Company, are forward-looking
statements. These statements, and all phases of the Company's operations, are
subject to risks and uncertainties, any one of which could cause actual results
to differ materially from those described in the forward-looking statements.
Such risks and uncertainties include or relate to, among other things, the
closing of the merger with Matthews, and the final determination of "EBITDA" and
the "Excess Cash Increment", as defined under the terms of the Agreement and
Plan of Merger between York and Matthews, as well as acceptance of the same by
Matthews.

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 on its cash equivalents. 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 4. Submission of Matters to a Vote of Security Holders

On August 9, 2001, the Company held a special meeting of stockholders
to vote upon a proposal to adopt an Agreement and Plan Merger dated
as of May 24, 2001 by and among Matthews International Corporation, a
Pennsylvania corporation ("Matthews"), Empire Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of Matthews ("Empire"), and
York, pursuant to which Empire will merge with and into York, with
York continuing as the surviving corporation as a subsidiary of
Matthews.

7,596,751 votes were cast for the proposed merger, and 70,722
votes were cast against the proposed merger.

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.

November 14, 2001 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)