Company Report – Alderwoods Group, Inc.IntroductionThe funeral industry is made up of thousands of independent operators and a few large corporations that each own and manage hundreds of funeral homes, cemeteries and crematoriums. Alderwoods Group, Inc. is a company that entered the funeral services industry in 2002 after the restructuring of the now bankrupt Loewen Group, Inc. (Financial Post). The price/earnings ratio in October 2005 was seventeen times its earnings per share (Yahoo! Finance). Over the next ten years, revenue and market capitalization are expected to increase at Alderwoods due to the aging baby boom generation and the fact that Alderwoods has aggressively eliminated its debt by selling many of its assets (which include cemeteries and funeral homes). Funeral homes, cemeteries and crematoria are businesses that provide after-life activities for families. The industry covers everything from coffin and laboratory equipment manufacturers (suppliers), funeral homes (providers) to the final resting place in a cemetery (plots, vaults, headstones, internment vaults, mausoleums ) or in the case of cremation, ovens, chargers and finally, urns. Within the industry, there are four main competitors nationwide: Service Corporation International (SCI), Alderwoods Group, Inc., Carriage Services, Inc., and Stewart Enterprises, Inc. These are all public companies that manage funeral homes, cemeteries and crematoriums across North America. As of January 1, 2005, Alderwoods Group "employs approximately 8,500 people in 648 funeral homes, 79 cemeteries and 63 funeral home and cemetery combinations across North America (Alderwoods 2004 Annual Report). » These totals are significantly lower than in the 1990s, when Loewen's was trying to capture market share and aggressively buying up hundreds of independent funeral homes and cemeteries. Overreaching and having to settle a $500 million breach of contract lawsuit, the Loewen Group filed for bankruptcy and sold many of its assets before reorganizing as Alderwoods (Financial Post). The Alderwoods Group has had to continue to take drastic measures to ensure its survival and return on investment. As a result, management continued to sell its assets and reduced its debt from $2,342,916,000 at the end of 2002 to $1,307,043,000 (Alderwoods Annual Reports, 2002 and 2004). In January 2003, Alderwoods reduced its workforce from 802 funeral homes and 185 cemeteries to what it is today (Alderwoods 2002 Annual Report). Adlerwoods' stock performance has outperformed the S&P 500 over the previous two years (Yahoo! Finance).