10-Q

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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 quarterly period ended July 3, 2004

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: 0-29464

ROCK OF AGES CORPORATION
(Exact name of Registrant as Specified in its Charter)

Delaware	03-0153200
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification Number)

 772 Graniteville Road, Graniteville, Vermont                          05654
(Address of principal executive offices)                                     (Zip Code)

(802) 476-3121
(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 than 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 an accelerated filer (as described in Rule 12b-2 of the Exchange Act). Yes o No  ý

 As of August 10, 2004, 4,688,800 shares of Class A Common Stock, par value $0.01 per share, and 2,700,596 shares of Class B Common Stock, par value $0.01 per share, of Rock of Ages Corporation were outstanding.

ROCK OF AGES CORPORATION

INDEX

Form 10-Q for the Quarterly Period
Ended July 3, 2004

PART I	FINANCIAL INFORMATION		PAGE NO.
Item 1.	Financial Statements (Unaudited)
		Consolidated Balance Sheets - July 3, 2004 and December 31, 2003	4
		Consolidated Statements of Operations - Three Months and Six Months Ended July 3, 2004 and June 28, 2003	5
		Consolidated Statements of Cash Flows - Six Months Ended July 3, 2004 and June 28, 2003	6
		Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 4.	Controls and Procedures		29
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		30
Item 4.	Submission of Matters to a Vote of Security Holders		31
Item 5.	Other Information		31
Item 6.	Exhibits and Reports on Form 8-K		32
Signature			33

2

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Rock of Ages Corporation ("Rock of Ages" or the "Company") to differ materially from those contained in such statements. All statements other than statements of historical fact could be deemed forward-looking statements, and may include projections of revenue, gross profit, expenses, earnings or losses from operations or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions may include the challenge of continuing to build and grow Rock of Ages' retail distribution systems through strategic alliances, retail acquisitions, independent retailers and new store openings; uncertainties involving quarry yields and demand for Rock of Ages' dimension stone; and other risks and uncertainties described herein, including, but not limited to the items discussed in "Risk Factors That May Affect Future Results" in Item 2 of this report, and that are otherwise described from time to time in Rock of Ages' reports filed with the Securities and Exchange Commission reports filed after this report.

We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

3

PART I: FINANCIAL INFORMATION
Item 1: Financial Statement

ROCK OF AGES CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(Unaudited)

		July 3,			December 31,
		2004			2003
ASSETS
Current Assets:
Cash and cash equivalents	$	3,488		$	3,227
Trade receivables, net		15,341			15,587
Inventories		21,906			21,152
Prepaid & refundable income taxes		2,446			409
Due from affiliates		265			216
Deferred tax assets		721			721
Note receivable		—			5,250
Other current assets		4,469			3,665
Assets held for sale		745			817
Total current assets		49,381			51,044
Property, plant and equipment, net		44,533			42,495
Cash surrender value of life insurance, net		728			728
Intangibles, net		419			438
Debt issuance costs, net		212			244
Due from affiliates		56			66
Deferred tax assets		5,236			5,236
Intangible pension asset		904			904
Long-term investments		4,151			501
Other		812			805
Total assets	$	106,432		$	102,461
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under line of credit	$	—		$	4,751
Current installments of long-term debt		30			38
Current installments of deferred compensation		325			327
Accounts payable		2,213			1,651
Accrued expenses		3,925			4,312
Customer deposits		9,565			7,104
Accrued adverse judgment		6,500			—
Liabilities held for sale		—			17
Total current liabilities		22,558			18,200
Long-term debt, excluding current installments		16,280			12,794
Deferred compensation		6,328			5,999
Accrued pension cost		1,530			1,491
Accrued postretirement benefit costs		827			827
Deferred tax liability		104			107
Other		69			74
Total liabilities		47,696			39,492
Commitments
Stockholders' equity:
Preferred stock - $.01 par value;
2,500,000 shares authorized
No shares issued or outstanding
Common Stock - Class A, $.01 par value;
30,000,000 shares authorized
4,611,633 and 4,442,668 shares issued and outstanding		46			44
Common Stock - Class B, $.01 par value;
15,000,000 shares authorized
2,738,596 and 2,756,395 shares issued and outstanding		28			28
Additional paid-in capital		66,334			65,878
Accumulated deficit		(6,541	)		(2,067	)
Accumulated other comprehensive loss		(1,131	)		(914	)
Total stockholders' equity		58,736			62,969
Total liabilities and stockholders' equity	$	106,432		$	102,461

**SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

4

ROCK OF AGES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
( in thousands except per share data)
(Unaudited) 

		Three Months Ended					Six Months Ended
		July 3,			June 28,		July 3,			June 28,
		2004			2003		2004			2003
Net Revenues:
Quarrying	$	9,455		$	8,158	$	13,987		$	11,014
Manufacturing		6,323			5,400		9,555			8,979
Retailing		12,256			12,551		16,654			15,688
Total net revenues		28,034			26,109		40,196			35,681
Gross Profit:
Quarrying		4,280			3,332		4,630			2,715
Manufacturing		2,032			1,443		2,676			2,316
Retailing		7,271			7,412		9,474			8,637
Total gross profit		13,583			12,187		16,780			13,668
Operating Expenses:
Selling, general and administrative expenses:
Quarrying		860			773		1,702			1,517
Manufacturing		952			901		1,809			1,738
Retailing		5,591			5,881		10,169			10,224
Corporate overhead		1,312			1,261		2,603			2,507
Total SG&A expenses		8,715			8,816		16,283			15,986
Adverse judgment and legal expenses		6,500			1,855		6,500			2,441
Total Operating Expenses		15,215			10,671		22,783			18,427
Income (loss) from continuing operations before interest and income         taxes		(1,632	)		1,516		(6,003	)		(4,759	)
Interest expense		125			161		261			310
Income (loss) from continuing operations before income taxes		(1,757	)		1,355		(6,264	)		(5,069	)
Income tax expense (benefit)		(721	)		21		(1,841	)		(1,523	)
Income (loss) from continuing operations		(1,036	)		1,334		(4,423	)		(3,546	)
Discontinued operations, net of income taxes		(14)			19		(52)			18
Net income (loss)	$	(1,050	)	$	1,353	$	(4,475	)	$	(3,528	)
Net income (loss) per share - basic:
Net income (loss) from continuing operations	$	(0.14	)	$	0.19	$	(0.61	)	$	(0.49	)
Discontinued operations, net of income taxes		(0.00	)		0.00		(0.01	)		0.00
Net income (loss) per share	$	(0.14	)	$	0.19	$	(0.62	)	$	(0.49	)
Net income (loss) per share - diluted
Net income (loss) from continuing operations	$	(0.14	)	$	0.19	$	(0.61	)	$	(0.49	)
Discontinued operations, net of income taxes		(0.00	)		0.00		(0.01	)		0.00
Net income (loss) per share	$	(0.14	)	$	0.19	$	(0.62	)	$	(0.49	)
Weighted average number of common shares        outstanding - basic		7,281			7,175		7,247			7,181
Weighted average number of common shares        outstanding - diluted		7,281			7,226		7,247			7,181

**SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5

ROCK OF AGES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)

		Six Months Ended
		July 3,			June 28,
		2004			2003
Cash flows from operating activities:
Net loss	$	(4,475	)	$	(3,528	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization		1,774			1,804
Cash surrender value of life insurance		—			24
Deferred taxes		(3	)		10
Changes in operating assets and liabilities:
Trade receivables, net		246			742
Prearranged receivables		—			(479	)
Due from related parties		(39	)		(23	)
Inventories		(685	)		(68	)
Cemetery property		—			43
Other assets		(811	)		243
Trade payables, accrued expenses and income taxes payable		(1,879	)		(1,415	)
Customer deposits		2,461			1,828
Deferred compensation and pension		366			168
Accrued adverse judgment		6,500			—
Prearranged deferred revenue		—			125
Other liabilities		(5	)		163
Net cash provided by (used in) operating activities		3,450			(363	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(3,841	)		(2,843	)
Purchases of long-term investments		(3,650	)		—
Proceeds from sale of assets		5,250			—
Net cash used in investing activities		(2,241	)		(2,843	)
Cash flows from financing activities:
Net borrowings (repayments) under lines of credit		(4,751	)		1,139
Principal borrowings (repayments) on long-term debt		3,479			(73	)
Common stock repurchase		—			(2,603	)
Stock options exercised		747			—
Dividends paid on common stock		(290	)		(143	)
Financing fees paid		—			(5	)
Net cash used in financing activities		(815	)		(1,685	)
Effect of exchange rate changes on cash		(133	)		691
Net increase (decrease) in cash and cash equivalents		261			(4,200	)
Cash and cash equivalents, beginning of period		3,227			6,185
Cash and cash equivalents, end of period	$	3,488		$	1,985
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	261		$	310
Income Taxes	$	177		$	145

**SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6

ROCK OF AGES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)	Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the results that may be expected for a full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report Form 10-K (SEC File No. 000-29464, filed March 30, 2004).
In this report, the terms" Company," "we," "us," or "our" mean Rock of Ages Corporation and all subsidiaries included in our consolidated financial statements.
The Company's fiscal year ends on December 31 and its fiscal quarters are the 13-week period ending on the Saturday nearest March 31, June 30 and September 30. The first and fourth quarter may be more or less than 13 weeks, by 1 to 6 days, which can affect comparability between periods.
The consolidated financial statements include all subsidiaries in which we have the ability to control operating and financial policies. Affiliated companies (20% to 50% ownership) are generally recorded in the consolidated financial statements using the equity method of accounting. Less-than-20%-owned companies are included in the consolidated financial statements at the cost of our investment.

(2)	Discontinued Operations
In December 2003, the Company decided to sell the Autumn Rose quarry in Mill Creek, Oklahoma. This decision represents a disposal of long-lived assets under Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Accordingly, results of this quarry have been classified as discontinued operations and prior periods have been restated to reflect this reclassification. These quarry assets are classified as "assets held for sale" in the current assets section of the consolidated balance sheets. For business reporting purposes, the Autumn Rose quarry was previously classified in the Quarrying segment.
On December 17, 2003, the Company completed the sale of substantially all of the assets of Rock of Ages Kentucky Cemeteries, LLC. The decision was made to allow the Company to concentrate on its core businesses, quarrying, manufacturing and retailing, freeing up resources to pursue other growth strategies. The Company expects to continue to sell upright memorials in those cemeteries through its relationship with the buyer, Saber Management, LLC. The decision to sell this company represents a disposal of long-lived assets under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Accordingly, results of this business have been classified as discontinued operations, and prior periods have been restated to reflect this reclassification. For business reporting purposes, Rock of Ages Kentucky Cemeteries was previously classified in the Cemeteries segment.
Operating results from the Autumn Rose Quarry and Rock of Ages Kentucky Cemeteries, LLC for the three and six months ended July 3, 2004 and June 28, 2003 were as follows (in thousands):

7

		Three Months Ended						Six Months Ended
		July 3,			June 28,			July 3,			June 28,
		2004			2003			2004			2003
Autumn Rose Quarry
Net revenues	$	—		$	91		$	35		$	132
Gross profit (loss)		(18	)		(9	)		(65	)		(52	)
Pretax loss		(18	)		(9	)		(65	)		(52	)
Income tax benefit		(4	)		(2	)		(13	)		(10	)
Net loss		(14	)		(7	)		(52	)		(42	)
Rock of Ages Kentucky Cemeteries, LLC
Net revenues	$	—		$	1,053		$	—		$	2,029
Gross profit		—			418			—			810
Pretax income		—			32			—			75
Income tax expense		—			6			—			15
Net income		—			26			—			60

(3)

Stock Based Compensation

The Company has adopted the disclosure provisions of SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure" which is an amendment of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and continues to apply Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock plans. If the Company had elected to recognize compensation cost for options granted under its stock plans based upon the fair value at the grant dates of such options, consistent with the method prescribed by SFAS No. 123, net income (loss) and earnings per share would have been changed to the pro forma amounts indicated below:

		Three Months Ended						Six Months Ended
		July 3,			June 28,			July 3,			June 28,
		2004			2003			2004			2003
Net income (loss), as reported, in thousands	$	(1,050	)	$	1,353		$	(4,475	)	$	(3,528	)
Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of taxes		(72	)		(157	)		(144	)		(313	)
Net income (loss), pro forma, in thousands	$	(1,122	)	$	1,196		$	(4,619	)	$	(3,841	)
Net income (loss) per share, as reported	$	(0.14	)	$	0.19		$	(0.62	)	$	(0.49	)
Net income (loss) per share, pro forma	$	(0.15	)	$	0.17		$	(0.64	)	$	(0.53	)
Net income (loss) per share - assuming dilution, as reported	$	(0.14	)	$	0.19		$	(0.62	)	$	(0.49	)
Net income (loss) per share - assuming dilution, pro forma	$	(0.15	)	$	0.17		$	(0.64	)	$	(0.53	)

The fair value of each option grant is estimated on the date of the grant. The per share weighted average fair value of stock options granted during the first quarter of 2002 was $4.06 on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 3.9%; dividend yield of 0%; expected volatility of 61%, and expected lives of five (5) years. Because changes in the subjective input assumptions can materially affect the fair value estimate, in the opinion of management, the existing models do not necessarily provide a reliable single value of its options and may not be representative of the future effects on reported net income (loss) or the future stock price of the Company.

8

(4) Inventories

		($ in thousands)
		July 3,		December 31,
Inventories consist of the following:		2004		2003
Raw materials	$	9,862	$	9,976
Work-in-process		1,442		1,000
Finished goods and supplies		10,602		10,176
	$	21,906	$	21,152

(5)	Earnings Per Share
The following is a reconciliation of shares used in calculating basic and diluted earnings per share (in thousands):

	Three Months Ended		Six Months Ended
	July 3,	June 28,	July 3,	June 28,
	2004	2003	2004	2003
Basic weighted average shares	7,281	7,175	7,247	7,181
Effect of dilutive stock options	—	51	—	—
Diluted weighted average shares	7,281	7,226	7,247	7,181

Options to purchase 484,167 and 509,165 shares of Class A common stock were outstanding at July 3, 2004, and June 28, 2003, respectively, but were not included in the computation of diluted earnings per share for the three and six months ended July 3, 2004 and the six months ended June 28, 2004 because the effect would be anti-dilutive.

Options to purchase 25,000 shares of Class A common stock were outstanding at June 28, 2003 but were not included in the computation of diluted earnings per share for the three months ended June 28, 2003 because the options' exercise price was greater than the average market price of the common shares.

(6)	Segment Information
The Company is organized based on the products and services that it offers. Under this organizational structure, the Company operates in three segments: quarrying, manufacturing and retailing.
The quarrying segment extracts rough dimension granite blocks from the ground and sells those blocks to both the manufacturing segment and to outside manufacturers, as well as to distributors in Europe and Asia. The quarry segment SG&A has been restated as we decided to reclassify our expenses associated with the Eurimex litigation (both the judgment and legal costs and related expenses) out of Quarry SG&A expenses into a separate category for the current and prior periods. We believe separating these costs provides a better understanding of our ongoing quarry operations. For the three and six months ended June 28, 2003, Quarry SG&A was restated from $2,628,000 to $773,000 and from $3,958,000 to $1,517,000, respectively.
The manufacturing segment's principal products are granite memorials used primarily in cemeteries, although it also manufactures some specialized granite products for industrial applications.
The retailing segment sells memorials and other granite products at various locations throughout the United States.
The other segment includes unallocated corporate overhead and the Eurimex adverse judgment and legal expenses.
Inter-segment revenues are accounted for as if the sales were to third parties.

9

The following is the unaudited segment information for the three and six-month periods ended July 3, 2004 and June 28, 2003 (in thousands):

Three-month period: 

2004		Quarrying			Manufacturing			Retailing		Other			Total
Total net revenues	$	10,435		$	8,688		$	12,256	$	—		$	31,379
Inter-segment net revenues		(980	)		(2,365	)		—		—			(3,345	)
Net revenues		9,455			6,323			12,256		—			28,034
Total gross profit		4,609			1,932			7,042		—			13,583
Inter-segment gross profit		(329	)		100			229		—			—
Gross profit		4,280			2,032			7,271		—			13,583
Selling, general and administrative expenses		860			952			5,591		1,312			8,715
Adverse judgment and legal expenses		—			—			—		6,500			6,500
Total operating expenses		860			952			5,591		7,812			15,215
Income (loss) from continuing operations before interest and taxes	$	3,420		$	1,080		$	1,680	$	(7,812	)	$	(1,632	)
2003		Quarrying			Manufacturing			Retailing		Other			Total
Total net revenues	$	8,689		$	8,073		$	12,551	$	—		$	29,313
Inter-segment net revenues		(531	)		(2,673	)		—		—			(3,204	)
Net revenues		8,158			5,400			12,551		—			26,109
Total gross profit		3,565			1,439			7,183		—			12,187
Inter-segment gross profit		(233	)		4			229		—			—
Gross profit		3,332			1,443			7,412		—			12,187
Selling, general and administrative expenses		773			901			5,881		1,261			8,816
Adverse judgment and legal expenses		—			—			—		1,855			1,855
Total operating expenses		773			901			5,881		3,116			10,671
Income (loss) from continuing operations before interest and taxes	$	2,559		$	542		$	1,531	$	(3,116	)	$	1,516

10

Six-month period:

2004		Quarrying			Manufacturing			Retailing			Other			Total
Total net revenues	$	15,518		$	13,604		$	16,654		$	—		$	45,776
Inter-segment net revenues		(1,531	)		(4,049	)		—			—			(5,580	)
Net Revenues		13,987			9,555			16,654			—			40,196
Total gross profit		4,961			2,766			9,053			—			16,780
Inter-segment gross profit		(331	)		(90	)		421			—			—
Gross profit		4,630			2,676			9,474			—			16,780
Selling, general and administrative expenses		1,702			1,809			10,169			2,603			16,283
Adverse judgment and legal expenses		—			—			—			6,500			6,500
Total operating expenses		1,702			1,809			10,169			9,103			22,783
Income (loss) from continuing operations before interest and taxes	$	2,928		$	867		$	(695	)	$	(9,103	)	$	(6,003	)
2003		Quarrying			Manufacturing			Retailing			Other			Total
Total net revenues	$	11,852		$	13,398		$	15,688		$	—		$	40,938
Inter-segment net revenues		(838	)		(4,419	)		—			—			(5,257	)
Net revenues		11,014			8,979			15,688			—			35,681
Total gross profit		2,947			2,386			8,335			—			13,668
Inter-segment gross profit		(232	)		(70	)		302			—			—
Gross profit		2,715			2,316			8,637			—			13,668
Selling, general and administrative expenses		1,517			1,738			10,224			2,507			15,986
Adverse judgment and legal expenses		—			—			—			2,441			2,441
Total operating expenses		1,517			1,738			10,224			4,948			18,427
Income (loss) from continuing operations before interest and taxes	$	1,198		$	578		$	(1,587	)	$	(4,948	)	$	(4,759	)

Net revenues by geographic area are as follows ($ in thousands):

		Three Months Ended				Six Months Ended
		July 3,		June 28,		July 3,		June 28,
Net revenues (1):		2004		2003		2004		2003
United States	$	25,315	$	23,880	$	36,240	$	32,564
Canada		2,540		2,141		3,525		2,928
Ukraine		179		88		431		189
Total net revenues	$	28,034	$	26,109	$	40,196	$	35,681

(1) Net revenues are attributed to countries based on where product is produced.

 11

Long-lived assets by geographic area are as follows ($ in thousands): 

		July 3,		December 31,
		2004		2003
Long-lived assets:
United States	$	41,029	$	39,473
Canada		3,504		3,022
	$	44,533	$	42,495

(7)	Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income and foreign currency translation adjustment. Comprehensive income (loss) for the three and six month period ended July 3, 2004 and June 28, 2003 are as follows ($ in thousands):

		July 3,			June 28,		July 3,			June 28,
		2004			2003		2004			2003
Net income (loss)	$	(1,050	)	$	1,353	$	(4,475	)	$	(3,528	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(57	)		628		(217	)		1,078
Comprehensive income (loss)	$	(1,107	)	$	1,981	$	(4,692	)	$	(2,450	)

Accumulated other comprehensive income (loss) at July 3, 2004 and December 31, 2003 are comprised of the following ($ in thousands):

		Foreign Currency Translation Adjustment			Minimum Pension Liability Adjustment			Accumulated Other Comprehensive (Loss)
Balance at December 31, 2003	$	680		$	(1,594	)	$	(914	)
Changes in 2004		(217	)		—			(217	)
Balance at July 3, 2004	$	463		$	(1,594	)	$	(1,131	)

12

(8) Components of Net Periodic Benefit Cost (in thousands)

		Three Months Ended July 3, 2004 and June 28, 2003
		NON-UNION PENSION BENEFITS						DEFERRED COMPENSATION BENEFITS				OTHER BENEFITS
		2004			2003			2004		2003		2004		2003
Service cost	$	156		$	133		$	43	$	47	$	5	$	5
Interest cost		320			318			79		79		28		28
Expected return on plan assets		(340	)		(303	)		0		0		0		0
Amortization of prior service costs		35			50			17		19		20		16
Amortization of net (gain) loss		29			49			0		0		0		0
Net periodic benefit cost	$	200		$	247		$	139	$	145	$	53	$	49

		Six Months Ended July 3, 2004 and June 28, 2003
		NON-UNION PENSION BENEFITS						DEFERRED COMPENSATION BENEFITS				OTHER BENEFITS
		2004			2003			2004		2003		2004		2003
Service cost	$	312		$	266		$	86	$	94	$	10	$	10
Interest cost		640			636			158		158		56		56
Expected return on plan assets		(680	)		(606	)		0		0		0		0
Amortization of prior service costs		70			100			34		38		40		32
Amortization of net (gain) loss		58			98			0		0		0		0
Net periodic benefit cost	$	400		$	494		$	278	$	290	$	106	$	98

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2003, that it expected to contribute $800,000 to the defined benefit pension plan during 2004. The contribution was made in full in April 2004.

(9)	Legal Proceeding
In April, 2001 our former distributor outside the United States, Eurimex S.A. (now known as Granite Stone Business International S.a.r.l.), initiated an arbitration proceeding against us in connection with our termination of the distribution agreement for our Salisbury Pink granite. Eurimex also claimed damages in connection with a distribution agreement for our Bethel White granite, which agreement expired by its terms in 1998. Pursuant to those agreements, the arbitration took place under the ICC rules.
On June 10, 2004 we announced that the three-member ICC arbitral tribunal had awarded Granite Stone Business International approximately $5.4 million in damages, plus interest on the award estimated at $1.1 million. The award was made on the claim that we had wrongfully terminated the Salisbury Pink distribution agreement. The tribunal ruled in our favor on the other four claims brought against us in the arbitration. We recorded a charge of $6.5 million for the adverse judgment during the three months ended July 3, 2004. See Note 13 Subsequent Events regarding the payment of the judgment.
On April 22, 2003, Kurtz Monument Company filed a complaint against us alleging that we breached certain terms of a sealed settlement agreement by engaging in conduct constituting commercial disparagement. Damages have not been specified. We believe this action by Kurtz Monument Company is without merit. We deny liability and will continue to vigorously defend claims made by Kurtz Monument Company.

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(10)	Credit Facility
On July 9, 2004, we reduced our credit facility with CIT from a total of $50 million to a total of $30 million and eliminated a lending participant in the facility, allowing CIT to hold the entire facility. We decided to reduce the size of the facility rather than maintain the original line at the higher cost that would have been required as a result of the change in the lending group. The new facility consists of an acquisition term loan line of credit of up to $17.5 million and a revolving credit facility of up to another $12.5 million based on eligible accounts receivable, inventory and certain fixed assets. As of July 3, 2004, we had $16.0 million outstanding and $1.5 million available under the term loan line of credit and $0 outstanding and $12.5 million available under the revolving credit facility. The agreement contains certain covenants for a minimum Operating Cash Flow to Debt Service Ratio and a limit on the Total Liabilities to Net Worth Ratio of the Company.
The facility requires the ratio of the sum of earnings before interest, taxes, depreciation and amortization (EBITDA) less taxes and capital expenditures to the sum of interest and scheduled debt repayments be at least 1.25 for any trailing twelve-month period at the end of a quarter. Primarily as a result of significant Eurimex expenses, we had received a waiver of this covenant until September 30, 2004, which required us to meet minimum interim EBITDA targets. As of July 3, 2004, we were in violation of this amended covenant solely as a result of the $6.5 million adverse judgment in the Eurimex case discussed above. We have received a waiver on this covenant from CIT for the period ending July 3, 2004. The covenants in the new agreement in effect as of July 8, 2004 revert back to the original debt service coverage ratio described above except that all expenses associated with the Eurimex litigation (judgments and legal expenses) are excluded from the calculation of EBITDA as described above.
The facility also requires that the ratio of the Company's total liabilities to net worth not exceed 2.0. As of July 3, 2004, the Company was in compliance with this covenant as our total liabilities to net worth ratio was 0.81.
(11)	Dividends Paid
On February 19, 2004, the Board of Directors declared a dividend of $.02 per share of common stock, payable on March 30, 2004 to holders of record as of March 1, 2004.
On May 3, 2004, the Board of Directors declared a dividend of $.02 per share of common stock, payable on June 15, 2004 to holders of record as of May 15, 2004.
(12)	Investment in FFS Holdings
In the second quarter of 2004, we made a $3.5 million investment in FFS Holdings, Inc., the new parent company of Forethought Financial Services, Inc., a leading provider of pre-need insurance currently marketed through funeral homes and cemeteries. The $3.5 million was paid out of the Company's term loan. The investment represents 6% of the total voting common equity and approximately 8% of the total common equity of FFS Holdings. FFS Holdings was formed to acquire the shares of Forethought by The Devlin Group, led by Robert M. Devlin, former Chairman and CEO of American General Corp. In addition to Mr. Devlin, The Devlin Group is composed of several senior insurance industry executives, including Douglas M. Schair, former Vice Chairman and Chief Investment Officer of Life Re Corporation. Mr. Schair, who is Vice Chairman and Chief Investment Officer of FFS Holdings and holds 16% of its voting shares, is also a member of the Board of Directors of Rock of Ages and holds 12% of its Class A common shares.
(13)	Subsequent Events
Dividends Declared
On July 29, 2004, the Board of Directors declared a dividend of $.02 per share of common stock, payable on September 15, 2004 to holders of record as of August 16, 2004.
Retail Acquisition
On August 4, 2004, the Company purchased the assets of Crone Monuments in Memphis, Tennessee for approximately $460,000. The purchase price will be allocated to the assets and liabilities assumed based upon their respective fair market values.

14

Payment of Adverse Judgment

On August 6, 2004, we announced that, pursuant to a Mutual Release Agreement, we paid Granite Stone Business International U.S. $6,500,000, and each party released the other and its affiliated persons from all claims of any kind arising through the date of the Mutual Release Agreement, including those which were the subject of the ICC arbitration. This judgment was paid out of the Company's revolving credit facility.

15

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
General
Rock of Ages is an integrated quarrier, manufacturer, distributor and retailer of granite and products manufactured from granite. During 2003, we had four business segments, quarrying, manufacturing, retail and cemeteries. The quarry division sells granite blocks both to the manufacturing division and to outside manufacturers, as well as to customers outside North America. The manufacturing division's principal products are granite memorials used primarily in cemeteries, although it also manufactures some specialized granite products for industrial applications. The retail division primarily sells granite memorials directly to consumers. The cemetery division sold cemetery property and funeral and cemetery products and services both at the time of need and on a preneed basis. On December 17, 2003, we sold all of our cemetery properties and assets to Saber Management, LLC for $6,750,000, thereby exiting the cemetery business.
Overall, we had a strong second quarter and first half of the year from an operational perspective. These good operational results were offset by a $6.5 million adverse judgment against us in the Eurimex litigation relating to a contract dispute on the distribution of granite blocks from certain quarries (see Part II, Item 1, Legal Proceedings). Because of the significance of this judgment, we have reclassified those expenses associated with the Eurimex case (both the judgment and the legal costs) out of Quarry SG&A to a separate line on the statement of operations for the current and prior periods. While this judgment is a significant sum, we have the resources to pay the judgment and we believe we can continue to operate our current business units as well as grow in areas where we see opportunities.
We also made a $3.5 million investment in FFS Holdings, Inc., the new parent company of Forethought Financial Services, Inc., a leading provider of pre-need insurance currently marketed through funeral homes and cemeteries. The investment represents 6% of the total voting common equity and approximately 8% of the total common equity of FFS Holdings. FFS Holdings was formed to acquire the shares of Forethought by The Devlin Group, led by Robert M. Devlin, former Chairman and CEO of American General Corp. In addition to Mr. Devlin, The Devlin Group is composed of several senior insurance industry executives, including Douglas M. Schair, former Vice Chairman and Chief Investment Officer of Life Re Corporation. Mr. Schair, who is Vice Chairman and Chief Investment Officer of FFS Holdings and holds 18% of its voting shares, is also a member of the Board of Directors of Rock of Ages and holds 12% of its Class A common shares. We believe this relationship with Forethought will open up opportunities for both companies due to our mutual customer group and contacts within the funeral industry. Finally, the investors in FFS Holdings, Inc. have significant experience in and knowledge of the insurance industry, which we believe will lead to long-term growth in the value of this investment.
Our quarry division continued to have a strong year as sales were up in all quarries compared to the first half of 2003. Our Salisbury Pink, Gardenia White and Bethel White quarries all continue to have strong sales as a result of a large demand for these granites overseas. Our Barre Gray quarry had strong sales compared to last year and our American Black quarry, which has experienced difficult quarry conditions over the last 18 months, had improved sales as recoveries in that quarry improved. Our gross margins were generally higher due to the higher revenues. As noted above, we reclassified our expenses associated with the Eurimex litigation (both the judgment and legal costs and related expenses) out of Quarry Sales, General and Administrative (SG&A) expenses into a separate category for the current and prior periods. We believe separating these costs provides a better understanding of our ongoing quarry operations. SG&A for the quarry group was up slightly primarily as a result of increased travel required to support our overseas customers.
Our manufacturing division had strong sales and earnings as a result of an increase in shipments primarily in our Canadian memorials group and our industrial products group. Gross margins have improved as well due to higher revenues as well as improved productivity. SG&A costs have increased only slightly over last year.
Results for our retail group improved in the second quarter and the first half of 2004 compared to last year. While we are disappointed by the modest improvement in revenue for the first half of the year, we are pleased with the improvement in operating income that is a combined result of the improved revenue as well as closer control of costs in our SG&A. Our order receipts and backlog were also up for the first half compared to last year but fell short of our expectations based on actual results for earlier years. We remain committed to our retail growth strategy and hired a new COO for our Memorials Group (both Manufacturing and Retail segments) with the goal of growing these businesses. We expect some of the initiatives that will be put in place to achieve growth in these businesses may result in lower short-term profits as we position ourselves for future growth.
Critical Accounting Policies
Critical accounting policies are as follows: Revenue recognition, impairment of long-lived assets, valuation of deferred income taxes, contingencies and accounting for pensions.

16

Revenue Recognition

The Company records revenues from quarrying, manufacturing and retailing.

Quarry Division

The granite we quarry is sold both to outside customers and used by our manufacturing group. Our quarry division recognizes revenue from sales of granite blocks to outside customers when the granite is shipped from the quarry. We provide a 5% discount for domestic customers if payment is made within 30 days of purchase, except in the case of December terms described below. Sales to foreign customers are typically secured by a letter of credit.

At our Barre, Vermont quarries, we allow customers to purchase granite blocks and request that we store the blocks for them. Many of our customers do not have adequate storage space at their facilities and want to ensure an adequate supply of blocks, especially when the Barre quarries are closed from mid-December through mid-March because of weather. Our quarry division recognizes revenue from blocks purchased when the customer selects and identifies the block at the quarry site and the customer requests the block be stored. At that time, the block is removed from inventory, the customer's name is printed on the block, and title and risk of ownership passes to the buyer. The customer is invoiced and normal payment terms apply, except in the case of December terms described below. Granite blocks owned by customers remain on our property for varying periods of time after title passes to the buyer. We retain a delivery obligation using our trucks. However, we consider the earnings process substantially complete because the cost of delivery service is inconsequential (less than 3%) in relation to the selling price. Further, under industry terms of trade, title passes and the payment obligation is established when the block is identified at the quarry.

Each December, we offer special December payment terms to our Barre quarries' customers. As noted above, from approximately mid-December to approximately mid-March, our Barre quarries are closed due to weather. During this time, the quarry customers' manufacturing plants remain open, and many prefer to ensure they own blocks of a size and quality selected by them prior to the quarries' closure. All blocks purchased in December are invoiced on or about December 31 and, at that time, the blocks are removed from inventory, the customer's name is printed on the blocks, and title and risk of ownership passes to the buyer. Payment terms are one-third of the invoice amount on January 15, one-third on February 15, and one-third on March 15. The program provides essentially the normal 30-day payment terms during the months when the Barre quarries are closed notwithstanding the customer purchases a three-month supply in December and makes payments over 90 days. Customers need not use these special December terms and may buy from inventory during the closure period on a first-come, first-served basis with the normal 30-day payment terms.

Manufacturing

Rock of Ages does not record a sale, nor do we record gross profit, at the time granite is transferred to the manufacturing division from our quarries. We record revenue and gross profit related to internally transferred granite only after the granite is manufactured into a finished product and sold to an outside customer. Manufacturing revenues related to outside customers are recorded when the finished product is shipped from our facilities. Manufacturing revenues related to internally transferred finished products to our owned retail outlets are recorded when ultimately sold at retail to an outside customer.

Retail

Retailing revenues are recorded when the finished monument is set in the cemetery. In certain instances, we may enter into an agreement with a customer that provides for extended payments terms, generally up to two years from either the date of setting the memorial or, in certain instances, upon the settlement of an estate.

Impairment of long-lived assets

Our long-lived assets consist primarily of property and equipment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or change in utilization of property and equipment. 

Recoverability of the undepreciated cost of property and equipment is measured by comparison of the carrying amount to estimated future undiscounted net cash flows the assets are expected to generate. Those cash flows include an estimated terminal value based on a hypothetical sale at the end of its depreciation period. Estimating these cash flows and terminal values requires management to make judgments about the growth in demand for our services, sustainability of gross margins, and our ability to integrate acquired companies and achieve economies of scale. If assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. 

17

In December 2003, we decided to sell the Autumn Rose quarry in Mill Creek, Oklahoma. Accordingly, it is now classified as assets held for sale in the accompanying balance sheets. We have determined the carrying value of the quarry exceeded its fair value based on discussions with interested parties. As a result, we recognized an after-tax impairment charge of approximately $480,000 in the 4th quarter of 2003, which decreased the carrying value to our best estimate of the fair value of the quarry. 

We have entered into arrangements whereby we accepted a promissory note as partial or full payment for certain transactions, particularly the sale of an operation. Such notes have varying terms with principal and interest paid to the Company over a period of generally not more than 5 years. While most notes are secured by an interest in real property and/or assets, management must make estimates and judgments as to the collectibility of such promissory notes. Such judgments depend on many factors including current and future economic conditions, the financial condition of the debtor as well as our estimate of the net realizable value of the security interest securing the note. We believe we have accurately assessed the collectibility of these assets, however, the above factors and other factors may cause our accounting estimates concerning the collectibility of the notes to change and future operating results could be materially impacted. 

Valuation of deferred income taxes

As of July 3, 2004, we had net deferred tax assets of $5,853,000. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. We have recorded a valuation allowance of $4,130,000 against the alternative minimum tax credit carry-forwards and other deferred tax assets. Based upon the projections for future taxable income over the periods for which the deferred tax assets are deductible, we believe it is more likely than not we will realize the benefit of these unreserved net deferred tax assets. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. 

Contingencies

We are involved in various types of legal proceedings from time to time. Due to their nature, such legal proceedings involve inherent uncertainties and risks, including, but not limited to, court rulings, judgments, negotiations between affected parties and government action. Management, with the assistance of its outside advisors, assesses the probability of loss for such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate. 

As described in Part 2, Item 1-Legal Proceedings, we were involved in an ICC arbitration proceeding in which Eurimex, our former distributor outside the United States, brought claims against us alleging, among other things, breach of contract and violation of antitrust laws under the European Community Treaty. The three-member ICC arbitral tribunal awarded Eurimex approximately $5.4 million in damages, plus interest on the award estimated at $1.1 million. The award was made on the claim that we had wrongfully terminated the Salisbury Pink distribution agreement. The tribunal ruled in our favor on the other four claims brought against us in the arbitration. We recorded a charge of $6.5 million for the adverse judgment during the three months ended July 3, 2004.  

Accounting for pensions

We provide defined benefit pension and other postretirement benefit plans for certain of our employees. Accounting for these plans requires the use of actuarial assumptions including estimates on the expected long-term rate of return on assets and discount rates. In order to make informed assumptions, we rely on outside actuarial experts as well as public market data and general economic information. Any changes in one or more of these assumptions may materially affect certain amounts reported on our balance sheet. In particular, a decrease in the expected long-term rate of return on plan assets could result in an increase in our pension liability and a charge to equity as well as increases in pension expenses over time. See Note 8 of the Notes to Consolidated Financial Statements. 

 18

Results of Operations

The following table sets forth certain operations data as a percentage of net revenues with the exception of quarrying, manufacturing and retailing gross profit, and SG&A expenses, which are shown as a percentage of their respective revenues.

	Three Months Ended			Six Months Ended
	July 3,		June 28,	July 3,		June 28,
	2004		2003	2004		2003
Statement of Operations Data:
Net Revenues:
Quarrying	33.7%		31.2%	34.8%		30.9%
Manufacturing	22.6%		20.7%	23.8%		25.2%
Retailing	43.7%		48.1%	41.4%		43.9%
Total net revenues	100.0%		100.0%	100.0%		100.0%
Gross Profit:
Quarrying	45.3%		40.8%	33.1%		24.7%
Manufacturing	32.1%		26.7%	28.0%		25.8%
Retailing	59.3%		59.1%	56.9%		55.1%
Total gross profit	48.5%		46.7%	41.7%		38.3%
Operating Expenses:
Selling, general and administrative:
Quarrying	9.1%		9.5%	12.2%		13.8%
Manufacturing	15.1%		16.7%	18.9%		19.4%
Retailing	45.6%		46.9%	61.1%		65.2%
Corporate Overhead	4.7%		4.8%	6.5%		7.0%
Total SG&A expenses	31.1%		33.8%	40.5%		44.8%
Adverse Judgment and legal                    expenses	23.2%		7.1%	16.2%		6.8%
Total operating expenses	54.3%		40.9%	56.7%		51.6%
Income (loss) from continuing                operations before interest and                income taxes	(5.8%	)	5.8%	(15.0%	)	(13.3%	)
Interest expense	0.4%		0.6%	0.6%		0.9%
Income (loss) from continuing                operations before income taxes	(6.2%	)	5.2%	(15.6%	)	(14.2%	)
Provision for income taxes	(2.6%	)	0.1%	(4.6%	)	(4.3%	)
Income (loss) from continuing operations	(3.6%	)	5.1%	(11.0%	)	(9.9%	)
Discontinued operations, net of income taxes	0.0%		0.1%	(0.1%)		0.1%
Net income (loss)	(3.6%	)	5.2%	(11.1%	)	(9.8%	)

19

Three Months Ended July 3, 2004 Compared to Three Months Ended June 28, 2003

On a consolidated basis for all segments for the three-month period ended July 3, 2004, compared to the same period in 2003, revenue increased 7.4%, gross profit increased 11.5% and total SG&A costs, excluding the costs associated with the judgment and expenses in the Eurimex litigation, decreased 1.1% for reasons discussed in detail in the segment analyses below.

Quarry Segment Analysis

Revenues in our quarry operations for the three-month period ended July 3, 2004 were up 15.9% from the same period last year primarily as a result of increased shipments from our Bethel White and Gardenia White quarries to overseas customers. We also had increased shipments from our Pennsylvania Black quarry primarily as a result of improved quarry yields, which provided an increase in quality saleable stone.

Gross profit dollars from our quarry operations for the three-month period ended July 3, 2004 increased 28.5% and gross profit as a percentage of revenue increased from 40.8% of revenue to 45.3% of revenue. The increases in gross profit dollars and gross profit as a percentage of revenue were largely a result of the increase in revenues discussed above and the improved operational efficiencies associated with such increases.

SG&A costs in our quarry segment increased 11.3% for the three-month period ended July 3, 2004 primarily as a result of increased international travel required to support and expand our export business. Due to the significance of the Eurimex judgment, we reclassified the expenses associated with this case (both the judgment and the legal costs) out of Quarry SG&A to a separate line on the statement of operations for the current and prior periods.

Manufacturing Segment Analysis

Revenues in our manufacturing operations for the three-month period ended July 3, 2004 increased 17.1% from the same period last year as a result of strong shipments of mausoleums and other memorial products as well as an increase in shipments from our industrial products division. Our backlog of memorial orders, including mausoleums, remains strong. We believe that demand for surface plates and other precision granite products manufactured by our industrial products division has increased this year compared to last year as a result of improved economic conditions in the electronic and precision tool industries where our products are used.

Gross profit dollars from the manufacturing group increased 40.8% and gross profit as a percentage of manufacturing revenue increased by 5.4 percentage points for the three-month period ended July 3, 2004 compared to the same period last year. We had an increase in both gross profit dollars and gross profit percentage in all divisions in the manufacturing segment this quarter compared to the same quarter last year as a result of the positive effect improved revenues have on certain fixed costs in our operations as well as improved productivity through closer management of and cooperation with our union workforce.

SG&A costs for the three-month period ended July 3, 2004 for the manufacturing group increased 5.7% compared to the same period last year primarily as a result of normal cost increases.

Retail Segment Analysis

Revenues in our retail operations for the three-month period ended July 3, 2004 decreased 2.4% from the same period last year. Lower than expected order receipts and an increase in backlog contributed to this slight decrease in revenue.

Gross profit dollars from the retail operations decreased 1.9% and gross profit as a percentage of revenue was the same as last year. The decrease in gross profit dollars is a result of the decrease in revenues discussed above.

SG&A costs from our retail operations decreased 4.9% for the three-month period ended July 3, 2004 compared to last year and SG&A costs as a percentage of retail revenue decreased 1.3 percentage points from the same period last year. The slight decrease in SG&A cost in dollars and as a percentage of revenue is a result of several small factors including the shift in compensation of some of our sales counselors from commission to salary, a decrease in administrative costs associated with the consolidation of some administrative functions, and a decrease in sales in certain retail units where sales compensation is still commission based.

20

Consolidated Items

Unallocated Corporate overhead, consisting of operating costs not directly related to an operating segment, increased 4.0% for the three-month period ended July 3, 2004 compared to the same period last year primarily from normal cost increases.

Expenses associated with the Eurimex legal case, including the judgment and any legal or other related expenses, were $6.5 million in the three-month period ended July 3, 2004 which consisted of a judgment of $5.4 million plus accrued interest from October 2000 which totaled approximately $1.1 million. This compares to expenses in the same period of 2003 of $1.9 million, which consisted entirely of legal and other related expenses such as travel expenses to attend the tribunal hearings. The company does not expect any additional expenses as a result of these proceedings.

Interest expense decreased 22.4% for the three-month period ended July 3, 2004 compared to the same period last year as a result of the decrease in debt associated with the sale of the cemeteries.

Income tax benefit as a percentage of the net loss from continuing operations before taxes, for the three-month period ended July 3, 2004 was 41.0%. The higher rate in this quarter compared to the first half of 2004 is a result of updated annual earnings projections (which are significantly affected by the Eurimex judgment) which increased our expected annual tax rate. This higher estimated annual tax rate is a result of our projected lower annual results for 2004 in our US operations compared to our Canadian operations. Because our Canadian operations have a higher tax rate, our overall tax rate increased. The significantly higher tax rate in this quarter resulted primarily from the revision to our 2004 estimated annual tax rate.

Six Months Ended July 3, 2004 Compared to Six Months Ended June 28, 2003

On a consolidated basis for all segments for the six-month period ended July 3, 2004, compared to the same period in 2003, revenue increased 12.7%, gross profit increased 22.8% and total SG&A costs, excluding the costs associated with the judgment and expenses in the Eurimex litigation, were unchanged from the same period last year for reasons discussed in detail in the segment analyses below.

Quarry Segment Analysis

Revenues in our quarry operations for the six-month period ended July 3, 2004 were up 27.0% from the same period last year as a result of increased shipments from all our active quarries. Major increases came from Barre Gray, Bethel White and Salisbury Pink. In addition, yields from our Pennsylvania Black quarry have improved providing an increase in quality saleable stone. We also have begun to see some revenues from the distribution of the Galactic Blue granite in the Ukraine.

Gross profit dollars from our quarry operations for the six-month period ended July 3, 2004 increased 70.5% and gross profit as a percentage of revenue increased from 24.7% of revenue to 33.1% of revenue. The increases in gross profit dollars and gross profit as a percentage of revenue, are largely a result of the increase in revenues discussed above and the improved operational efficiencies associated with such increases with the exception of Salisbury Pink where we returned pricing to more normal levels this year after having decreased it in 2003 in order to enter new markets.

SG&A costs in our quarry segment increased 12.2% for the six-month period ended July 3, 2004. The increases in SG&A costs, in the six-month period ended July 3, 2004, are primarily a result of increased international travel required to support and expand our export business.

 Manufacturing Segment Analysis

Revenues in our manufacturing operations for the six-month period ended July 3, 2004 increased 6.4% from the same period last year as a result of increased shipments of mausoleums and other memorial products as well as an increase in shipments from our industrial products division. The manufacturing group had $1.0 million in shipments for the World War II monument in the first half of last year compared to none this year so the increase in revenue shows a significant improvement.

Gross profit dollars from the manufacturing group increased 15.5% and gross profit as a percentage of manufacturing revenue increased by 2.2 percentage points for the six-month period ended July 3, 2004 compared to the same period last year. The increase in gross profit is a result of increased revenue and the positive effect improved revenues have on certain fixed costs in our operations, as well as improved productivity.

21

SG&A costs for the six-month period ended July 3, 2004 for the manufacturing group increased 4.1% compared to the same period last year primarily as a result of normal cost increases.

Retail Segment Analysis

Revenues in our retail operations for the six-month period ended July 3, 2004 increased 6.2% from the same period last year primarily as a result of strong shipments in the first quarter of 2004 compared to the first quarter of 2003.

Gross profit dollars from the retail operations increased 10.0% and gross profit as a percentage of revenue increased 1.8 percentage points compared to the same period last year. The increase is primarily a result of improved gross margins in the first quarter of 2004 compared to the same period of 2003, which was the result of higher revenues in that period and the associated improvement in operational efficiencies.

SG&A costs from our retail operations decreased 0.5% for the six-month period ended July 3, 2004 compared to last year and SG&A costs as a percentage of retail revenue decreased 4.1 percentage points from the same period last year. The decrease in SG&A costs is a result of several small factors including the shift in compensation of some of our sales counselors from commission to salary, a decrease in administrative costs associated with the consolidation of some administrative functions, and a decrease in sales in certain retail units where sales compensation is still commission based.

Consolidated Items

Unallocated Corporate overhead increased 3.8% for the six-month period ended July 3, 2004 compared to the same period last year primarily from normal cost increases.

Expenses associated with the Eurimex legal case, including the judgment and any legal or other related expenses, were $6.5 million in the six-month period ended July 3, 2004 which consisted of a judgment of $5.4 million plus accrued interest from October 2000 which totaled approximately $1.1 million. This compares to expenses in the same period of 2003 of $2.4 million which consisted entirely of legal and other related expenses. The company does not expect any additional expenses as a result of these proceedings.

Interest expense decreased 15.8% for the six-month period ended July 3, 2004 compared to the same period last year as a result of the decrease in debt associated with the sale of the cemeteries.

Income tax benefit as a percentage of the net loss from continuing operations before taxes, for the six-month period ended July 3, 2004 was 29.4%. This estimated annual tax rate is higher than that projected at the end of the three-month period ended March 31, 2004 as a result of updated annual earnings projections, which are significantly affected by the Eurimex judgment. This higher estimated annual tax rate is a result of our projected lower annual results for 2004 in our US operations compared to our Canadian operations. Because our Canadian operations have a higher tax rate, our overall tax rate increased. The estimated annual tax rate for the six-month period ending July 3, 2004 is slightly lower than the same period last year primarily as a result of different projected pre-tax earnings between the US and Canada and their respective tax rates.

Liquidity and Capital Resources

We consider our liquidity to be adequate to meet our long and short-term cash requirements to fund operations and pursue our growth strategy. Historically, we have met these requirements primarily from cash generated by operating activities and periodic borrowings under the commercial credit facilities described below. We anticipate there may be future acquisitions, and as we pursue our growth strategy that may require additional financing compared to our existing credit facility.

In January 2003, we repurchased 500,500 shares of our common stock for a total of $2,602,600 as part of our share buy back program. Upon completion of this transaction, we had repurchased a total of 676,200 shares for $3,359,269 under the share buy back program. All shares have subsequently been retired. There remain 323,800 shares authorized to be purchased under the current repurchase program. We will continue to repurchase shares on an opportunistic basis determined by, among other things, current debt levels, anticipated uses of capital, the price of the stock and the general market conditions.

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In 2003, the funded status of our defined benefit pension plan improved by approximately $1.2 million primarily as a result of payments to fund the plan of $1.0 million in 2003. We have historically contributed between $800,000 and $1.0 million per year and expect to make annual contributions in this range, which, we believe, we will be able to fund either from cash from operations or borrowing under our credit facilities. We made our annual contribution of $800,000 to our pension plan in April 2004.

Cash Flow. At July 3, 2004, the Company had cash, cash equivalents and marketable securities of $3.5 million and working capital of $26.8 million, compared to $2.0 million and $29.3 million, at June 28, 2003. The decrease in working capital is primarily the result of the accrual of the adverse judgment.

For the six-month period ended July 3, 2004, net cash provided by operating activities was $3.5 million which consisted primarily of the net loss of $4.5 million plus cash provided primarily by a decrease in receivables and an increase in customer deposits and accrued Eurimex judgment expenses less cash used primarily as a result of a decrease in payables and accrued expenses and an increase in inventories.  This compares to cash used in operating activities for the period ended June 28, 2003 of $363,000, which consisted primarily of the net loss of $3.5 million plus cash provided primarily by a decrease in receivables and an increase in customer deposits less cash used primarily as a result of a decrease in payables and accrued expenses. 

Net cash used in investing activities was $2.2 million in the six-month period ended July 3, 2004 as a result of proceeds from the sale of the cemeteries of $5.2 million less capital purchases of $3.8 million and purchases of long-term investments of $3.7 million, compared to $2.8 million used in investing activities in the corresponding period of 2003 as a result of capital purchases.

Net cash used in financing activities in the six-month period ended July 3, 2004 was $815,000, which consisted primarily of repayments under the line of credit exceeding the borrowing of long-term debt and stock options exercised of $747,000 less dividends paid on common stock of $290,000 compared to $1.7 million used in the corresponding period of 2003, which consisted primarily of repurchases of stock under the Company's stock repurchase program offset by borrowings under the Company's line of credit less dividends paid on common stock of $143,000.

Capital Resources. We have a credit facility with the CIT Group/Business Credit ("CIT") that expires in October 2007. On July 9, 2004, we reduced our credit facility with CIT from a total of $50 million to a total of $30 million and eliminated a lending participant in the facility, allowing CIT to hold the entire facility. We decided to reduce the size of the facility rather than maintain the original line at the higher cost that would have been required as a result of the change in the lending group. The new facility consists of an acquisition term loan line of credit of up to $17.5 million and a revolving credit facility of up to another $12.5 million based on eligible accounts receivable, inventory and certain fixed assets. As of July 3, 2004, we had $16.0 million outstanding and $1.5 million available under the term loan line of credit and $0 outstanding and $12.5 million available under the revolving credit facility. On August 6, 2004 we paid the $6.5 million Eurimex judgment out of our revolving credit facility. Our loan agreement with CIT places restrictions on our ability to, among other things, sell assets, participate in mergers, incur debt, pay dividends, repurchase stock, and make investments or guarantees. The agreement also contains certain covenants for a minimum Operating Cash Flow to Debt Service Ratio and a limit on the Total Liabilities to Net Worth Ratio of the Company as described below.

Debt Service Coverage Ratio. The facility requires the ratio of the sum of earnings before interest, taxes, depreciation and amortization (EBITDA) less taxes and capital expenditures to the sum of interest and scheduled debt repayments be at least 1.25 for any trailing twelve-month period at the end of a quarter. Primarily as a result of significant Eurimex expenses, we had received a waiver of this covenant until September 30, 2004, which required us to meet minimum interim EBITDA targets. As of July 3, 2004, we were in violation of this amended covenant solely as a result of the $6.5 million adverse judgment in the Eurimex case discussed above. We have received a waiver on this covenant from CIT for the period ending July 3, 2004. The covenants in the new agreement in effect as of July 9, 2004 revert back to the original debt service coverage ratio described above except that all expenses associated with the Eurimex litigation (judgments and legal expenses) are excluded from the calculation of EBITDA as described above.

Total Liabilities to Net Worth Ratio. The facility also requires that the ratio of the Company's total liabilities to net worth not exceed 2.0. As of July 3, 2004, the Company was in compliance with this covenant as our total liabilities to net worth ratio was 0.81.

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We have a multi-tiered interest rate structure on our outstanding debt with CIT. As of July 3, 2004, the interest rate structure was as follows:

	Amount	Formula	Effective Rate
Revolving Credit Facility	$  —	Prime - .50%	3.50%
Term Loans	3.5 million	Prime + 4.0%	8.00%
Term Loans	12.5 million	LIBOR + 1.75%	3.07%

The Company can elect the interest rate structure for the Revolver and/or the Term Loan under the credit facility based on the prime rate or LIBOR. The rate of 8% on the $3.5 million term loan was for a short period during the change in the facility. The rate reverted to Prime - .25% on July 15, 2004 for an effective rate of 4.0%.

The incremental rate above or below prime and above LIBOR is based on the Company's Funded Debt to Net Worth Ratio.

As of July 3, 2004, the Company had $4.0 million CDN available and $0 outstanding under a demand revolving line of credit with the Royal Bank of Canada.

Contractual Obligations - ($ in thousands)

Contractual Cash Obligations		Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-Term Debt (1)	$	16,310	$	30	$	24	$	16,023	$	233
Operating Leases (2)		2,502		798		1,125		554		25
Purchase Obligations (3)		11,250		2,250		4,500		4,500		—
Total Obligations	$	30,062	$	3,078	$	5,649	$	21,077	$	258

(1)	Long-Term Debt consists of various notes payable for general business use and strategic acquisitions, the repayment of which, is expected to be funded from a combination of cash flow from operations and its existing credit facility.
(2)	Operating Leases are principally for real estate and are expected to be funded from cash flow from operations.
(3)	The purchase obligation is a supply agreement with Adams Granite Co. The Company has agreed to purchase a minimum of $2,250,000 (+/- 10%) of monuments from Adams Granite each year for a term of seven years with various stipulations as to variations from the "minimum order" and pricing agreements, and is expected to be funded from cash flow from operations. The remaining term of the agreement is five years.

Our primary need for capital will be to maintain and improve our manufacturing, quarrying, and retail facilities and to finance acquisitions as part of our growth strategy. We have approximately $6.0 million budgeted for capital expenditures in 2004. We believe that the combination of cash flow from operations and our existing credit facility will be sufficient to fund our operations for at least the next twelve months.

Seasonality

Historically, the Company's operations have experienced certain seasonal patterns. Generally our net sales have been highest in the second or third quarter and lowest in the first quarter of each year due primarily to weather. Cemeteries in northern areas generally do not accept granite memorials during winter months when the ground is frozen because they cannot be properly set. In addition, we typically close certain of our Vermont and Canadian quarries during these months because of increased operating costs attributable to adverse weather conditions. As a result, we have historically incurred a net loss during the first three months of each calendar year.

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Risk Factors That May Affect Future Results

The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or which are currently deemed immaterial may also impair our business, financial condition and results of operations. If any of these risks actually occur, our business, financial condition and results of operations could be materially adversely affected.

Our continued growth depends, at least in part, on acquisitions, which involve numerous risks that could negatively affect our earnings and financial condition.

Our ability to continue to grow depends in part upon the acquisition of additional companies. We cannot assure you we will identify suitable acquisition candidates, or we will be able to consummate transactions on acceptable terms. Further, even if we successfully acquire additional companies, we cannot assure you we will be able to successfully integrate the operations of such companies with our own. We intend to finance acquisitions through a combination of available cash resources, bank borrowings, and, in appropriate circumstances, the issuance of equity and/or debt securities. Acquiring additional companies will have a significant effect on our financial position, and could cause substantial fluctuations in our quarterly and yearly operating results. Also, acquisitions may result in the recording of significant goodwill and intangible assets on the Company's financial statements, the write-off of which would reduce reported earnings at the point in time the goodwill is deemed impaired. With respect to retail acquisitions, and as a result of our definition of reporting units under SFAS 142, goodwill impairment could be incurred at the closing of the acquisition.

Our continued growth depends, at least in part, on our ability to form relationships with funeral directors, cemeteries and other death care providers.

Our ability to continue to grow our retail business depends in part on our ability to develop referral relationships with funeral homes, cemeteries and other death care professionals. We cannot assure you we will be able to successfully form these relationships in all of the areas in which we have retail businesses. In certain areas, we may be unable to form such relationships where our stores are in direct competition with funeral homes and cemeteries that sell granite memorials.

If we are unable to maintain our relationships with independent retailers, our sales may not continue to grow and could decline.

We have historically sold our granite memorials to consumers through authorized independent retailers throughout North America. Over the past seven years, we have acquired 28 retailers with multiple retail outlets in 16 states. However, we are still dependent in part on our independent retailers for the successful distribution of our products to the ultimate customer. We have no control over the independent retailers' operations, including such matters as retail price, advertising and marketing. Four important components of our growth strategy are to continue to acquire retailers, open new retail stores in selected markets, add independently owned authorized retailers, and pursue strategic alliances with funeral homes, cemetery owners, and other death care professionals. Although we have taken steps to reduce conflicts between our owned retail stores and our independent retailers, the implementation of these elements of our strategy has in the past been, and may in the future be, construed by some of our existing independent retailers as an effort to compete with them. In certain cases, this has adversely affected their relationship with us and caused them to decrease or cease their purchases of our products. These issues will continue to arise as we pursue our growth strategy. In addition, significant barriers to entry created by local heritage, community presence and tradition characterize the granite memorial retail industry. Consequently, we have experienced and may continue to experience difficulty replacing retailers or entering particular retail markets in the event of a loss of an independent retailer. We cannot assure you we will be able to maintain our existing relationships or establish new relationships with independent retailers. Disruption in our relationships with independent retailers could impede our sales growth or cause sales to decline, which would adversely affect our business and financial results.

Opening new stores is a component of our growth strategy and entails uncertainties and risks that could adversely affect our profitability.

Our ability to continue to grow our retail business will depend in part upon our ability to open new retail stores in selected locations. Our success in opening new retail stores will depend on our ability to identify suitable locations for opening new retail stores on acceptable terms, our ability to attract and retain competent management and sales personnel, and our ability to form strategic alliances and relationships with local funeral homes, cemeteries and other death care professionals, and our ability to attract customers to our new stores. It is unlikely new retail stores we open will generate significant profits in the early stages, and many new stores will lose money for the first few years of operation. Accordingly, opening new retail stores may adversely affect our business or profitability.

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If we lose our key personnel, or are unable to attract and retain additional qualified personnel, our business could suffer.

Our operations and the implementation of our operating and growth strategies, such as integration of acquisitions and the opening of new retail stores, are management intensive. We are substantially dependent upon the abilities and continued efforts of Kurt M. Swenson, our Chairman, President and Chief Executive Officer, and other senior management. Our business is also dependent on our ability to continue to attract and retain a highly skilled retail, quarrying and manufacturing workforce, including sales managers and counselors, stone cutters, sand blasters, sculptors and other skilled artisans. The loss of the services of Mr. Swenson, other members of the Company's senior management or other highly skilled personnel could adversely affect our business and operating results.

We face intense competition and, if we are unable to compete successfully, we may be unable to increase our sales, which would adversely affect our business and profitability.

The dimension stone industry is highly competitive. We compete with other dimension stone quarriers, including quarriers of granite, marble, limestone, travertine and other natural stones. We also compete with manufacturers of so-called "engineered stone" as well as manufacturers of other building materials like concrete, aluminum, glass, wood and other materials. We compete with providers of these materials on the basis of price, availability of supply, end-user preference for certain colors, patterns or textures, and other factors.

The granite memorial industry is also highly competitive. We compete with other granite quarriers and manufacturers in the sale of granite blocks for memorial use on the basis of price, color, quality, geographic proximity, service, design availability, production capability, availability of supply and delivery options. All of our colors of granite are subject to competition from memorial grade granite blocks of similar color supplied by quarriers located throughout the world. There are approximately 140 manufacturers of granite memorials in North America. There are also manufacturers of granite memorials in India, South Africa, China and Portugal that sell finished memorials in North America.

Our quarrying and manufacturing competitors include both domestic and international companies, some of which may have greater financial, technical, manufacturing, marketing and other resources. Foreign competitors may have access to lower cost labor and better commercial deposits of memorial grade granite, and may be subject to less restrictive regulatory requirements. For example, companies in South Africa, India, China and Portugal also manufacture and export finished granite memorials into North America which compete with our products.

The competition for retail sales of granite memorials faced by our retail outlets is also intense and is based on price, quality, service, design availability and breadth of product line. Competitors include funeral home and cemetery owners, including consolidators, which have greater financial resources than we do, as well as approximately 3,000 independent retailers of granite memorials located outside of cemeteries and funeral homes.

We cannot assure you domestic or foreign competition will not adversely impact our business.

The increasing trend toward cremation, and potential declines in memorialization for other reasons, may result in decreased sales of our products.

There is an increasing trend toward cremation in the United States. According to the Cremation Association of North America, or CANA, cremation was used in approximately 27% of the deaths in the United States in 2001, compared to approximately 17% in 1990, and CANA expects this rate to rise to approximately 36% by 2010. While we continue to believe that many families will choose to permanently memorialize their loved-ones, regardless of whether they choose cremation over a traditional burial, to the extent increases in cremation rates result in decreases in memorialization rates, this decrease will result in a decline in our memorial sales, which will adversely affect our business and results of operations.

Our business is also subject to the risk memorialization rates may decline over time for other reasons. Certain cemeteries have in the past and may in the future limit the use of granite memorials as a memorialization option. To the extent general memorialization rates or the willingness of cemeteries to accept granite memorials declines, this decline could adversely affect our business.

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Sales of our products are seasonal and may cause our quarterly operating results to fluctuate.

Historically, our operations have experienced certain seasonal patterns. Generally, our net sales are highest in the second or third quarter and lowest in the first quarter of each year due primarily to weather. Cemeteries in northern regions generally do not accept granite memorials during winter months when the ground is frozen because they cannot be properly set. We typically close certain of our Vermont and Canadian quarries during these months because of increased operating costs attributable to weather conditions. We have historically incurred an aggregate net loss during the first three months of each calendar year. Our operating results may vary materially from quarter to quarter due to, among other things, acquisitions, changes in product mix and limitations on the timing of price increases, making quarterly year-to-year comparisons less meaningful.

Our competitive position could be harmed if we are unable to protect our intellectual property rights.

We believe our tradenames, trademarks, brands, designs and other intellectual property are of great value, and we rely on trademark, copyright and other proprietary rights laws to protect our rights to this valuable intellectual property. Third parties may in the future try to challenge our ownership of our intellectual property. In addition, our business is subject to the risk of third parties counterfeiting our products or infringing on our intellectual property rights. We may need to resort to litigation in the future to protect our intellectual property rights, which could result in substantial costs and diversion of resources. Our failure to protect our intellectual property rights, most notably the Rock of Ages trademark, could have a material adverse effect on our business and competitive position.

Our business is subject to a number of operating risks that are difficult to predict and manage.

Our quarry and manufacturing operations are subject to numerous risks and hazards inherent in those industries, including among others, unanticipated surface or underground conditions, varying saleable granite recovery rates due to natural cracks and other imperfections in granite quarries, equipment failures, accidents and worker injuries, labor issues, weather conditions and events, unanticipated transportation costs and price fluctuations. As a result, actual costs and expenditures, production quantities and delivery dates, as well as revenues, may differ materially from those anticipated, which could adversely affect our operating results.

Our international operations may expose us to a number of risks related to conducting business in foreign countries.

We derived approximately 28% of our revenues in fiscal 2003 from sales to customers outside the United States, with approximately 8% of revenues in fiscal 2003 from sales in Canada by the Company's Canadian subsidiary. Foreign sales are subject to numerous risks, including currency conversion risks, limitations (including taxes) on the repatriation of earnings, slower and more difficult accounts receivable collection and greater complication and expense in complying with foreign laws.

Sales of our ancillary products are cyclical, which may adversely affect our operating results.

The markets for our industrial precision products, which include machine base and surface plates that are utilized in the automotive, aeronautic, computer, machine tool, optical, precision grinding and inspection industries, and granite press rolls used in the manufacture of paper, are subject to substantial cyclical variations. Sales of these products are subject to decline as a result of general economic downturns, or as a result of uncertainties regarding current and future economic conditions that generally affect such industries. We cannot assure you changes in the industries to which we sell our precision products will not adversely affect our operating results.

Existing stockholders are able to exercise significant control over us.

Kurt M. Swenson and his brother, Kevin C. Swenson, collectively have 64% of the total voting power of all outstanding shares of our common stock, and will therefore be in a position to control the outcome of most corporate actions requiring stockholder approval, including the election of directors and the approval of transactions involving a change in control of the Company.

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We may incur substantial costs to comply with government regulations.

Our quarry and manufacturing operations are subject to substantial regulation by federal and state governmental statutes and agencies, including the federal Occupational Safety and Health Act, the Mine Safety and Health Administration and similar state and Canadian authorities. Our operations are also subject to extensive laws and regulations administered by the United States Environmental Protection Agency and similar state and Canadian authorities, for the protection of the environment, including but not limited to those relating to air and water quality, and solid and hazardous waste handling and disposal. These laws and regulations may require parties to fund remedial action or to pay damages regardless of fault. Environmental laws and regulations may also impose liability with respect to divested or terminated operations even if the operations were divested or terminated many years ago. In addition, current and future environmental or occupational health and safety laws, regulations or regulatory interpretations may require significant expenditures for compliance, which could require us to modify or curtail our operations. We cannot predict the effect of such laws, regulations or regulatory interpretations on our business, financial condition or results of operations. While we expect to be able to continue to comply with existing environmental and occupational health and safety laws and regulations, any material non-compliance could adversely affect our business and results of operations.

No-Call Legislation may adversely affect our retail marketing efforts.

Our retail stores and sales counselors are subject to the so-called "No-Call" laws, which allow consumers to place their telephone number on a "no-call" list maintained by various states and the federal government. At present, there are "No-Call" laws in a majority of states in which we do business and the federal "No-Call" law went into effect in the Fall of 2003. Counselors are unable to make telephone calls to any consumer whose number has been placed on the applicable no-call list, subject to certain limited exceptions. Making telephone calls to introduce the Company and set appointments has been an important part of marketing our retail products and services. While we are taking steps to decrease our reliance on telephone marketing calls, compliance with the "No-Call" laws could adversely affect our retail business and results of operations.

Provisions of our corporate organizational documents and Delaware law could delay or prevent a change in control of the Company, even if it would be beneficial to our stockholders.

Certain provisions contained in our Certificate of Incorporation and By-laws: 

• grant ten votes per share to each share of Class B Common Stock;
• divide the Board of Directors into three classes, each of which will have a different three-year term;
• provide the stockholders may remove directors from office only for cause and by a supermajority vote;
• provide special meetings of the stockholders may be called only by the Board of Directors or certain Company officers and not by stockholders;
• establish certain advance notice procedures for nomination of candidates for election as directors and for stockholder proposals to be considered at annual stockholders' meetings;
• authorize the issuance of preferred stock. Accordingly, the Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could materially adversely affect the voting power or other rights of, or be dilutive to, the holders of our Common Stock.

Certain of these provisions may have the effect of discouraging, delaying or preventing a change in control or unsolicited acquisition proposals a stockholder may consider favorable. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit or delay large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us.

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Item 3.	Quantitative and Qualitative Disclosure About Market Risk
The Company has financial instruments that are subject to interest rate risk, principally debt obligations under its credit facilities. Historically, the Company has not experienced material gains or losses due to interest rate changes. Based on the Company's current variable rate debt obligations, the Company believes its exposure to interest rate risk is not material.
The Company is subject to foreign currency exchange rate risk primarily from the operations of its Canadian subsidiary. Based on the size of this subsidiary and the Company's corresponding exposure to changes in the Canadian/U. S. dollar exchange rate, the Company does not consider its market exposure relating to currency exchange to be material.
Item 4.	Controls and Procedures
	(a)  Disclosure Controls and Procedures.  The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(c) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
	(b) Internal Control Over Financial Reporting.  There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II	OTHER INFORMATION
Item 1.	Legal Proceedings
We are a party to legal proceedings that arise from time to time in the ordinary course of our business. While the outcome of these ordinary course proceedings cannot be predicted with certainty, we do not expect them to have a material adverse effect on our business or financial condition. In addition, we were a party to an International Chamber of Commerce ("ICC") arbitration proceeding. That proceeding and its outcome, are summarized below.
Granite Stone Business International Sarl (f/k/a Eurimex SA) (Luxembourg) vs. Rock of Ages Corporation (USA) ICC Arbitration 11502/KGA/MS. In April, 2001 our former distributor outside the United States, Eurimex S.A. (now known as Granite Stone Business International S.a.r.l.), initiated an arbitration proceeding against us in connection with our termination of the distribution agreement for our Salisbury Pink granite. Eurimex also claimed damages in connection with a distribution agreement for our Bethel White granite, which agreement expired by its terms in 1998. Pursuant to those agreements, the arbitration took place under the ICC rules.
On June 10, 2004, we announced that the three-member ICC arbitral tribunal had awarded Granite Stone Business International approximately $5.4 million in damages, plus interest on the award estimated at $1.1 million. The award was made on the claim that we had wrongfully terminated the Salisbury Pink distribution agreement. The tribunal ruled in our favor on the other four claims brought against us in the arbitration.
On August 6, 2004, we announced that, pursuant to a Mutual Release Agreement, we paid Granite Stone Business International U.S. $6,500,000, and each party released the other and its affiliated persons from all claims of any kind arising through the date of the Mutual Release Agreement, including those which were the subject of the ICC arbitration.
Kurtz Monument Company (Pennsylvania) v. Rock of Ages Corporation (Delaware) Case No. 03-510 U.S. District Court for the Western District of Pennsylvania. On April 22, 2003, Kurtz Monument Company filed a complaint against us alleging that we breached certain terms of a sealed settlement agreement by engaging in conduct constituting commercial disparagement. Damages have not been specified. We believe this action by Kurtz Monument Company is without merit. We deny liability and will continue to vigorously defend claims made by Kurtz Monument Company.
The Company carries insurance with coverages that it believes to be customary in its industry. Although there can be no assurance that such insurance will be sufficient to protect us against all contingencies, management believes that its insurance protection is reasonable in view of the nature and scope of our operations.

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Item 4.	Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on June 22, 2004 (the "Annual Meeting"), to elect three Class I directors and to ratify the selection of KPMG LLP as the Company's registered public accounting firm for the 2004 fiscal year.
Each of James L. Fox, Douglas M. Schair and Charles M. Waite was elected to serve as a Class I director for a three-year term expiring at the annual meeting of stockholders in 2007 and until their successors are duly elected and qualified. Each of Frederick E. Webster Jr. and Pamela G. Sheiffer continue to serve as Class II directors for a term expiring at the annual meeting of stockholders in 2005 and until their successors are duly elected and qualified. Each of Richard C. Kimball and Kurt M. Swenson continue to serve as Class III directors for a term expiring at the annual meeting of stockholders in 2006 and until their successors are duly elected and qualified.
The following table sets forth the number of votes cast for, against or withheld, as well as the number of abstentions, as to the election of each of James L. Fox, Douglas M. Schair and Charles M. Waite and the ratification of the selection of KPMG LLP as the Company's independent auditors of the 2004 fiscal year.

	Votes For	Votes Withheld/ Votes Against	Abstentions
Election of
James L. Fox	28,456,969	45,377	—
Douglas M. Schair	28,456,969	45,377	—
Charles M. Waite	28,456,659	45,687	—
KPMG LLP	28,475,896	23,100	3,350

Item 5.

Other Information

Holders of Common Stock are entitled to receive such dividends as may be legally declared by the board of directors and, in the event of dissolution and liquidation, to receive the net assets of the Company remaining after payment of all liabilities, in proportion to their respective holdings. On July 29, 2004, the Board of Directors declared a dividend of $.02 per share of common stock, payable on September 15, 2004 to holders of record as of August 16, 2004.

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Item 6.	Exhibits and Reports on Form 8-K
(a)	Exhibits
	Number	Exhibits
	3.1	Amended and Restated Certificate of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-33685) filed with the Securities and Exchange Commission on August 15, 1997 and declared effective on October 20, 1997.
	3.2	Amended and Restated By-Laws of the Registrant (as amended through April 6, 1999) incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31.1999.
	4	Specimen Certificate representing the Class A Common Stock incorporated by reference to Exhibit 4 to the Company's Registration Statement on Form S-1 (Registration No. 333-33685) filed with the Securities and Exchange Commission on August 15, 1997and declared effective on October 20, 1997.
	10.1	Consent Agreement dated as of June 21, 2004 by and among Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Keith Monument Company, LLC, Rock of Ages Memorials, Inc. , Sioux Falls Monument Company and The CIT Group/Business Credit.
	10.2	Promissory Note dated June 21, 2004 in the amount of $3,500,000 from Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Keith Monument Company, LLC, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company to The CIT Group/Business Credit.
	10.3	Eight Amendment to Financing Agreement dated as of July 8, 2004 by and between The CIT Group/Business Credit and Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation,, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company.
	10.4	Assignment and Transfer Agreement dated as of July 9, 2004 by and between The CIT Group/Business Credit and Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company.
	10.5	Waiver and Agreement dated as of August 10, 2004 by and between The CIT Group/Business Credit and Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company.
	10.6	Mutual Release Agreement dated August 6, 2004 between Dyckerhoff AG, Granite Stone Business International S.a.r.l., formerly known as Eurimex S.A., and Rock of Ages Corporation.
	10.7	Common Stock Purchase Agreement dated June 16, 2004 between CRGH, LLC and Rock of Ages Corporation.
	31.1	Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b)	Reports Submitted on Form 8-K:
	On May 3, 2004, the Registrant filed a report on Form 8-K pursuant to Item 5. (Other Events), Item 7. (Financial Statements and Exhibits) and Item 12. (Results of Operations) to report the board of directors had declared a quarterly cash dividend of $0.02 per share payable on June 15, 2004 to shareholders of record at the close of business on May 15, 2004. The Registrant also reported Rudolph ("Rick") Wrabel had been named President and Chief Operating Officer of the Memorials Division, effective May 17, 2004.
	On May 28, 2004, the Registrant filed a report on Form 8-K pursuant to Item 5. (Other Events and Required FD Disclosure), and Item 7. (Financial Statements and Exhibits) to report it had received notice that the decision of the arbitral tribunal in the pending ICC arbitration, Granite Stone International Sarl (f/k/a Eurimex) v. Rock of Ages Corporation, had been submitted for review by the ICC, and that the deadline for issuance by the ICC Court of a final decision had been extended from May 31, 2004 to August 31, 2004.
	On June 10, 2004, the Registrant filed a report on Form 8-K pursuant to Item 5. (Other Events and Required FD Disclosure) and Item 7. (Financial Statements and Exhibits) to report a three-member arbitral tribunal of the International Chamber of Commerce awarded Granite Stone International (f/k/a Eurimex) an award of approximately $5.4 million in damages, plus interest on the award estimated at $1.1 million. The award was made on the claim by Eurimex that Rock of Ages wrongfully terminated the agreement for the distribution of Salisbury Pink outside the United States in 2000. The tribunal ruled in favor of Rock of Ages on the four other claims brought by Eurimex in the arbitration.

32 

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 hereunto duly authorized.

	ROCK OF AGES CORPORATION
Dated: August xx, 2004	By: /s/ Douglas S. Goldsmith Douglas S. Goldsmith Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial and Accounting Officer)

33

Exhibit Index

Number	Exhibits
3.1	Amended and Restated Certificate of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-33685) filed with the Securities and Exchange Commission on August 15, 1997 and declared effective on October 20, 1997.
3.2	Amended and Restated By-Laws of the Registrant (as amended through April 6, 1999) incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31,1999.
4	Specimen Certificate representing the Class A Common Stock incorporated by reference to Exhibit 4 to the Company's Registration Statement on Form S-1 (Registration No. 333-33685) filed with the Securities and Exchange Commission on August 15, 1997and declared effective on October 20, 1997.
10.1	Consent Agreement dated as of June 21, 2004 by and among Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Keith Monument Company, LLC, Rock of Ages Memorials, Inc., Sioux Falls Monument Company and The CIT Group/Business Credit.
10.2	Promissory Note dated June 21, 2004 in the amount of $3,500,000 from Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Keith Monument Company, LLC, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company to The CIT Group/Business Credit.
10.3	Eight Amendment to Financing Agreement dated as of July 8, 2004 by and between The CIT Group/Business Credit and Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company.
10.4	Assignment and Transfer Agreement dated as of July 9, 2004 by and between The CIT Group/Business Credit and Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company.
10.5	Waiver and Agreement dated as of August 10,2 004 by and between The CIT Group/Business Credit and Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC, Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corporation, Rock of Ages Memorials, Inc. and Sioux Falls Monument Company.
10.6	Mutual Release Agreement dated August 6, 2004 between Dyckerhoff AG, Granite Stone Business International S.a.r.l., formerly known as Eurimex S.A., and Rock of Ages Corporation.
10.7	Common Stock Purchase Agreement dated June 16, 2004 between CRGH, LLC and Rock of Ages Corporation.
31.1	Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

34

Index

Consolidated Balance Sheets
Consolidated Statements Of Operations
Consolidated Statements Of Cash Flows
Notes To Condensed Consolidated Financial Statements
Managements Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosure About Market Risk
Controls and Procedures
Legal Proceedings
Submission of Matters to a Vote of Security Holders
Other Information
Exhibits and Reports on Form 8-K
Signature






 

EX-10

EXHIBIT 10.1

     CONSENT AGREEMENT, dated as of June 21, 2004 ("Consent"), executed and delivered in connection with that certain FINANCING AGREEMENT, among ROCK OF AGES CORPORATION, a Delaware corporation ("ROA"), ROCK OF AGES KENTUCKY CEMETERIES, LLC, a Delaware limited liability company ("Kentucky"), CAROLINA QUARRIES, INC., a Delaware corporation ("Carolina"), AUTUMN ROSE QUARRIES, INC., a Georgia corporation ("Autumn"), PENNSYLVANIA GRANITE CORP., a Pennsylvania corporation ("Pennsylvania"), KEITH MONUMENT COMPANY LLC, a Delaware limited liability company ("Keith"), ROCK OF AGES MEMORIALS INC., a Delaware corporation ("Memorials") and SIOUX FALLS MONUMENT CO., a South Dakota corporation ("Sioux Falls"), as borrowers (ROA, Kentucky, Carolina, Autumn, Pennsylvania, Keith, Memorials and Sioux Falls each a "Company" and collectively the "Companies"), the lenders party thereto (each a "Lender" and collectively the "Lenders") and THE CIT GROUP/BUSINESS CREDIT, INC., as agent for the Lenders (in such capacity, the "Agent"). Terms which are capitalized in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Financing Agreement (as defined below).

     WHEREAS, the Companies, the Lenders and the Agent are parties to that certain Financing Agreement, dated as of December 17, 1997, which agreement has been amended by (a) the letter amendment dated June 22, 1998 (the "First Amendment"), (b) the Amendment dated June 1, 1999 (the "Second Amendment"), (c) the Consent and Amendment dated December 20, 1999 (the "Third Amendment"), (d) the Consent and Amendment dated as of December 27, 2000 (the "Fourth Amendment"), (e) the Fifth Amendment dated as of October 23, 2002 (the "Fifth Amendment"), (f) the Sixth Amendment and Waiver, dated November 11, 2003 (the "Sixth Amendment") and (g) the Seventh Amendment and Waiver, dated February 16, 2004 (the "Seventh Amendment") (as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and the Seventh Amendment, and as the same may hereafter be amended, modified, supplemented or restated from time to time, the "Financing Agreement");

     WHEREAS, pursuant to that certain Common Stock Purchase Agreement, dated on or about the date hereof (the "Stock Purchase Agreement"), between CRGH, LLC (the "Seller") and ROA, ROA intends to purchase 25,000 shares of the Class A common stock (the "Class A Shares") of FFS Holdings, Inc., a Delaware corporation ("FFS Holdings"), and 10,000 shares of the non-voting Class B common stock (together with the Class A Shares, the "Shares") of FFS Holdings (the "Acquisition");

     WHEREAS, concurrently with the Acquisition, FFS Holdings will acquire all of the issued and outstanding capital stock of Forethought Financial Services, Inc. and its subsidiaries from Hillenbrand Industries, Inc.; and

     WHEREAS, ROA has requested that the Agent and the Lenders consent to the Acquisition and the Agent and the Lenders are willing to consent to the Acquisition on the terms and subject to the conditions set forth in this Consent.

     NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

     Section One.  Consent.  Effective upon the satisfaction of the conditions contained in Section Three hereof, the Agent and the Lenders hereby consent to the Acquisition, provided that: (i) the Acquisition is consummated not later than September 30, 2004, pursuant to the terms of the Stock Purchase Agreement as in effect on the date of execution thereof; (ii) the purchase price for the Shares shall not exceed $3,500,000; (iii) immediately before and immediately after giving effect to the Acquisition, no Default or Event of Default shall have occurred or be continuing; (iv) ROA shall promptly and diligently exercise all of its rights and remedies under the Stock Purchase Agreement and each other document, instrument and agreement entered into in connection therewith (the Stock Purchase Agreement and such other documents, instruments and agreements are collectively referred to herein as the "Acquisition Documents"); (v) ROA shall not give any consent under, waive the effect of, or amend, modify or supplement any provision of, or otherwise permit any deviation from the terms of, any of the Acquisition Documents, in each case without the Lenders' prior written consent; (vi) any dividends, distributions, proceeds or other amounts received by ROA in respect of any of the Shares shall be promptly remitted by ROA to the Agent for application to the Obligations in accordance with the terms of the Financing Agreement; (vii) ROA shall not sell or pledge, or otherwise dispose of or encumber, or suffer any lien to exist on, the Shares without the prior written consent of the Required Lenders; and (viii) except for any restrictions on the transfer or pledge of the Shares contained in the Stockholders and Warrant Holder Agreement relating to the Shares or the Financing Agreement, ROA shall not agree to or suffer to exist any other restrictions on the transfer or pledge of the Shares. The failure by ROA to comply with any of the requirements contained in this Section One shall constitute an Event of Default under the Financing Agreement.

     Section Two.  Acquisition Term Loan. Upon satisfaction of the conditions contained in Section Three hereof, the Agent will make an Acquisition Term Loan to ROA in the amount of $3,500,000, the proceeds of which shall be used solely to make the Acquisition (the "Forethought Term Loan"). Notwithstanding anything to the contrary contained in the Financing Agreement: (a) The CIT Group/Business Credit, Inc., as a Lender, will fund the entire Forethought Term Loan and Fleet National Bank will not fund any portion of the Forethought Term Loan; (b) the Forethought Term Loan shall be non-amortizing; (c) so long as any Obligations under the Financing Agreement shall be owing to Fleet National Bank: (i) no payments or proceeds of Collateral shall be applied to pay any principal of or interest on the Forethought Term Loan; (ii) no payments shall be made by any Company in respect of the ICC award against ROA in favor of Eurimex; and (iii) interest on the Forethought Term Loan shall accrue at all times at a variable per annum rate equal to the Chase Bank Rate plus 4%; and (d) concurrently with the funding of the Forethought Term Loan, the Agent shall establish a $3,500,000 reserve against Availability and shall maintain such reserve so long as any Obligations under the Financing Agreement shall be owing to Fleet National Bank.

Section Three.Conditions Precedent and Subsequent. This Consent shall become effective when all of the following conditions, the satisfaction of each of which is a condition precedent to the effectiveness of this Consent, shall have been satisfied:

            (a)   the Agent shall have received a fully executed counterpart or original of this Consent.

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           (b)   a promissory note, in the form of Exhibit A hereto, duly executed by each of the Companies.

           (c)   all of the representations and warranties contained in the Financing Agreement shall continue to be true and correct in all material respects, except for such representations and warranties which, by their terms, are only made as of a previous date.

           (d)   no Default or Event of Default shall have occurred and be continuing.

     Section Four.  General Provisions.

           (a)   Except as herein expressly amended, the Financing Agreement and all other agreements, documents, instruments and certificates executed in connection therewith, are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms.

          (b)   As of the effective date hereof, all references to the Financing Agreement in the Financing Agreement shall mean the Financing Agreement as amended hereby and as hereafter amended, supplemented or modified from time to time.

          (c)   This Consent embodies the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, commitments, arrangements, negotiations or understandings, whether written or oral, of the parties with respect thereto.

          (d)   This Consent may be executed by the parties hereto individually or in combination, in one or more counterparts, each of which shall be an original and all of which shall constitute one and the same agreement.

          (e)    Nothing herein shall be construed as a waiver by the Agent or the Lenders of any Default or Event of Default, whether or not the Agent or any Lender has knowledge thereof.

          (f)    This Consent shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflict of laws principles.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, each Company, the Agent and each of the Lenders has signed below to indicate its agreement with the foregoing and its intent to be bound thereby.

ROCK OF AGES CORPORATION
ROCK OF AGES KENTUCKY CEMETERIES, LLC
CAROLINA QUARRIES, INC.
AUTUMN ROSE QUARRIES, INC.
PENNSYLVANIA GRANITE CORP.
KEITH MONUMENT COMPANY LLC
ROCK OF AGES MEMORIALS INC.
SIOUX FALLS MONUMENT CO.

By:/s/ Kurt M. Swenson
Name:  Kurt M. Swenson
Title:     Chairman and Chief Executive Officer

- - 4 -

THE CIT GROUP/BUSINESS CREDIT, INC.,
    as Agent and as a Lender

By: /s/ Peter L. Skavia
Name:  Peter L. Skavia
Title:     Senior Vice President

FLEET NATIONAL BANK,
     as a Lender

By: /s/ Michael A. Palmer
Name:   Michael A. Palmer
Title:     Senior Vice President

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EXHIBIT 10.2

PROMISSORY NOTE

June 21, 2004

$3,500,000.00

     FOR VALUE RECEIVED, the undersigned, ROCK OF AGES CORPORATION, a Delaware corporation, ROCK OF AGES KENTUCKY CEMETERIES, LLC, a Delaware limited liability company, CAROLINA QUARRIES, INC., a Delaware corporation, AUTUMN ROSE QUARRIES, INC., a Georgia corporation, PENNSYLVANIA GRANITE CORP., a Pennsylvania corporation, KEITH MONUMENT COMPANY, LLC, a Delaware limited liability company, ROCK OF AGES MEMORIALS INC., a Delaware corporation, and SIOUX FALLS MONUMENT CO., A South Dakota corporation, and such other subsidiaries or affiliates of the foregoing as the Lenders, by unanimous consent, permit to become parties to the Financing Agreement (herein the "Companies") jointly and severally, promise to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC. (herein the "Agent") as Agent for itself and the other lenders that are, or may be, pursuant to the terms of the Financing Agreement referred to below, lenders to the Companies, at its office located at 1211 Avenue of the Americas, New York, New York 10036, in lawful money of the United States of America and in immediately available funds, the principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000.00) in accordance with the provisions of Section 4 of the Financing Agreement (as defined below).

     Each Company further agrees to pay interest at said office, in like money, on the unpaid principal amount owing hereunder from time to time from the date hereof on the date and at the rate specified in Section 8 of the Financing Agreement (as defined below).

     If any payment on this Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day, and with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

     This Note is one of the Promissory Notes referred to in the Financing Agreement, dated December 17, 1997 (as amended, the "Financing Agreement"), between the Companies, the Agent and the lenders that are now, or in the future, a party thereto, and is subject to, and entitled to, all provisions and benefits thereof and is subject to optional and mandatory prepayment, in whole or in part, as provided therein.

     Upon the occurrence of any one or more of the Events of Default specified in the Financing Agreement or upon termination of the Financing Agreement, all amounts then remaining unpaid on this Note may become, or be declared to be, at the sole election of the Agent, or at the direction of the Required Lenders, immediately due and payable as provided in the Financing Agreement.

ROCK OF AGES CORPORATION
ROCK OF AGES KENTUCKY CEMETERIES, LLC
CAROLINA QUARRIES, INC.
AUTUMN ROSE QUARRIES, INC.
PENNSYLVANIA GRANITE CORP.
KEITH MONUMENT COMPANY LLC
ROCK OF AGES MEMORIALS INC.
SIOUX FALLS MONUMENT CO.

By: /s/ Kurt M. Swenson
Name:  Kurt M. Swenson
Title:     Chairman and Chief Executive Officer

EXHIBIT 10.3

     EIGHTH AMENDMENT, dated as of July 8, 2004 ("Amendment"), executed and delivered in connection with that certain FINANCING AGREEMENT, among ROCK OF AGES CORPORATION, a Delaware corporation ("ROA"), ROCK OF AGES KENTUCKY CEMETERIES, LLC, a Delaware limited liability company ("Kentucky"), CAROLINA QUARRIES, INC., a Delaware corporation ("Carolina"), AUTUMN ROSE QUARRIES, INC., a Georgia corporation ("Autumn"), PENNSYLVANIA GRANITE CORP., a Pennsylvania corporation ("Pennsylvania"), KEITH MONUMENT COMPANY LLC, a Delaware limited liability company ("Keith"), ROCK OF AGES MEMORIALS INC., a Delaware corporation ("Memorials") and SIOUX FALLS MONUMENT CO., a South Dakota corporation ("Sioux Falls"), as borrowers (ROA, Kentucky, Carolina, Autumn, Pennsylvania, Keith, Memorials and Sioux Falls each a "Company" and collectively the "Companies"), the lenders party thereto (each a "Lender" and collectively the "Lenders") and THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), as agent for the Lenders (in such capacity, the "Agent"). Terms which are capitalized in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Financing Agreement (as defined below).

     WHEREAS, the Companies, the Lenders and the Agent are parties to that certain Financing Agreement, dated as of December 17, 1997, which agreement has been amended by (a) the letter amendment dated June 22, 1998 (the "First Amendment"), (b) the Amendment dated June 1, 1999 (the "Second Amendment"), (c) the Consent and Amendment dated December 20, 1999 (the "Third Amendment"), (d) the Consent and Amendment dated as of December 27, 2000 (the "Fourth Amendment"), (e) the Fifth Amendment dated as of October 23, 2002 (the "Fifth Amendment"), (f) the Sixth Amendment and Waiver dated November 11, 2003 (the "Sixth Amendment") and (g) the Seventh Amendment and Waiver dated as of February 16, 2004 (the "Seventh Amendment") (as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and the Seventh Amendment, and as the same may hereafter be amended, modified, supplemented or restated from time to time, the "Financing Agreement"); 

     WHEREAS, the Companies have requested that the Lenders agree to modify certain provisions contained in the Financing Agreement, and the Lenders have agreed to the foregoing request, on the terms and subject to the conditions set forth in this Amendment.

NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section One.   Amendments.

(a)    Section 1.  Definitions.  Section 1 of the Financing Agreement is hereby amended as follows:

(i)     The reference to "$20,000,000" appearing in the definition of the term "Line of Credit" is deleted and "$12,500,000" substituted in lieu thereof.

(ii)     The reference to "$30,000,000" appearing in the definition of the term "Acquisition Term Loan Line of Credit" is deleted and "$17,500,000" substituted in lieu thereof.

(iii)     The following new defined term shall be added to Section 1 and inserted in appropriate alphabetical order:

"Eurimex Expenses shall mean the aggregate amount paid by ROA in respect of the award made by the International Chamber of Commerce in favor of Granite Stone Business International (formerly known as Eurimex) and against ROA (including, without limitation, the amount of the award and all costs, expenses and fees incurred in connection therewith)."

(iv)     The definitions of the terms "Leverage Ratio," "Line of Credit Fee," "Operating Cash Flow," "Operating Cash Flow Ratio" and "Total Debt Service" are amended and restated in their entirety to read as follows:

"Leverage Ratio shall mean the ratio determined by dividing Total Liabilities by Tangible Net Worth."

"Line of Credit Fee shall: (a) mean the fee payable to the Agent, for the ratable benefit of the Lenders, due on the last Business Day of each month for the Line of Credit and the Acquisition Term Loan Line of Credit, and (b) be determined by multiplying the difference between (i) the sum of the Line of Credit and the Acquisition Term Loan Line of Credit and (ii) the sum, for such month, of (x) the average daily balance of Revolving Loans, plus (y) the average daily undrawn balance of Letters of Credit, plus (z) the average daily balance of Acquisition Term Loans, in each case outstanding during such month, by the Applicable Fee Percentage for the Line of Credit Fee for the number of days in such month."

"Operating Cash Flow shall mean, for any period, the consolidated EBITDA of the Companies for such period, minus the sum of (i) the consolidated Unfinanced Capital Expenditures of the Companies made during such period, plus (ii) the consolidated cash taxes paid by the Companies during such period. Notwithstanding the foregoing, for purposes of determining the Operating Cash Flow Ratio for any period, the aggregate amount of Eurimex Expenses paid in cash during such period shall be excluded from the calculation of Operating Cash Flow for such period; provided, however, that the aggregate amount of Eurimex Expenses excluded from the calculation of Operating Cash Flow shall not exceed: (a) for the four fiscal quarters ended on or about March 31, 2004, $1,855,000; (b) for the four fiscal quarters ended or ending on or about June 30, 2004, September 30, 2004, December 31, 2004 or March 31, 2005, $6,500,000; and (d) for each period of four fiscal quarters ending thereafter, zero."

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"Operating Cash Flow Ratio shall mean, for any period, the ratio determined by dividing Operating Cash Flow for such period by Total Debt Service for such period."

"Total Debt Service shall mean, for any period, the sum of Interest Expense for such period, plus the amount of all repayments of principal scheduled to be made during such period in respect of Indebtedness that becomes due and payable during such period pursuant to any agreement or instrument to which any of the Companies is a party relating to: (i) the borrowing of money or the obtaining of credit; (ii) the deferred purchase price of assets; (iii) any Capital Lease or similar lease arrangement; (iv) any reimbursement obligations in respect of letters of credit or bankers acceptances due and payable during such period; or (v) other Indebtedness guaranteed by any of the Companies."

(v)     In the definition of the term Applicable Fee Percentage, the reference to ".125%" appearing in the first row under the heading "Applicable Fee Percentage for Line of Credit Fee" is deleted and ".25%" substituted in lieu thereof.

(b)   Section 7. Covenants. Section 7 of the Financing Agreement is hereby amended as follows:

(i)    Clause G of Paragraph 10 of Section 7 is deleted in its entirety and the following substituted in lieu thereof

"G.   Declare or pay any cash dividend of any kind on, or purchase, acquire, redeem or retire, for cash, any capital stock or equity interest, of any class whatsoever, whether now or hereafter outstanding, except that: (i) any Company may declare and pay dividends on its capital stock to ROA to facilitate payment of income taxes due as a result of the filing of a unitary or consolidated tax return on which the income of such Company is included; and (ii) in addition to the dividends permitted to be paid under clause (i) above, any Company may declare and pay cash dividends on its capital stock, provided, that (x) the aggregate amount of dividends paid by all of the Companies pursuant to this clause (ii) shall not exceed $150,000 in any fiscal quarter or $600,000 in any fiscal year (with no carry-over of amounts from one quarter or one year to another), (y) Availability on the date of payment of each such dividend and after giving effect thereto shall, in each case, be not less than $3,000,000 and (z) such Company shall have given the Agent at least three (3) days prior written notice of such payment."

(ii)    Paragraphs 14 and 15 of Section 7 are amended and restated in their entirety to read as follows:

- 3 -

"14.   The Companies shall maintain, on a consolidated basis, for each fiscal quarter, together with the immediately preceding three fiscal quarters, an Operating Cash Flow Ratio of at least 1.25 to 1."

"15.   The Companies shall maintain at all times, on a consolidated basis, a Leverage Ratio of not more than 2 to 1.

(iii)    Effective immediately upon the assignment by Fleet National Bank of all of its rights and obligations under the Financing Agreement to CIT (the "Assignment"), paragraphs 23 and 24 of Section 7 are deleted in their entirety and the following is substituted in lieu of each such paragraph: "[Intentionally omitted]."

Section Two.   Eurimex Reserve. Concurrently with the consummation of the Assignment, the Agent will establish a $6,500,000 reserve against Availability and will maintain such reserve until all amounts (including, without limitation, interest) owing by the Companies to Granite Stone Business International (formerly known as Eurimex) in respect of the award by the International Chamber of Commerce are paid in full.

Section Three.    Representations and Warranties. To induce the Agent and the Lenders to enter into this Amendment, each Company warrants and represents to the Agent and the Lenders as follows:

(a)    all of the representations and warranties contained in the Financing Agreement and each other document relating thereto to which such Company is a party continue to be true and correct in all material respects as of the date hereof, as if repeated as of the date hereof, except for such representations and warranties which, by their terms, are only made as of a previous date;

(b)    the execution, delivery and performance of this Amendment by such Company is within its corporate or limited liability company powers, has been duly authorized by all necessary corporate or limited liability company action, and such Company has received all necessary consents and approvals (if any shall be required) for the execution and delivery of this Amendment;

(c)    upon the execution of this Amendment, this Amendment shall constitute the legal, valid and binding obligation of such Company, enforceable against such Company in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) general principles of equity;

(d)    such Company is not in default under any indenture, mortgage, deed of trust, or other material agreement or material instrument to which it is a party or by which it may be bound. Neither the execution and delivery of this Amendment, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof will (i) violate any law or regulation applicable to such Company, (ii) cause a violation by such Company of any order or decree of any court or government instrumentality applicable to it, (iii) conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or other material agreement or material instrument to which such Company is a party or by which it may be bound, (iv) result in the creation or imposition of any lien, charge, or encumbrance upon any of the property of such Company, except in favor of the Agent, to secure the Obligations, or (v) violate any provision of any organizational document or capital stock of such Company;

- 4 -

(e)     no Default or Event of Default has occurred and is continuing; and

(f)      since the date of the receipt by the Agent and the Lenders of the Companies' most recent financial statements, no change or event has occurred which has had or is reasonably likely to have a material adverse effect on the business, operations, prospects, profitability or condition, financial or otherwise, of such Company, the Companies and their subsidiaries taken as a whole or the Collateral.

Section Four.  Conditions Precedent. Section One(b)(iii) of this Amendment shall become effective when all of the following conditions, the satisfaction of each of which is a condition precedent to the effectiveness of this Amendment, shall have occurred:

(a)     The Agent shall have received a fully executed counterpart or original of this Amendment.

(b)    All of the representations and warranties set forth in Section Three of this Amendment shall be true and correct.

(c)     The Agent and the Lenders shall have received payment of all fees, expenses and disbursements (including, without limitation, the fees and expenses of external counsel) incurred by them in connection with the preparation, negotiation and execution of this Amendment and the transactions contemplated to occur hereunder.

Section Five.    Post-Closing Covenant. On or before July 31, 2004, each Company shall execute and deliver to the Agent a Trademark Security Agreement, in form and substance satisfactory to the Agent, pursuant to which the Companies grant to the Agent a first-priority security interest in all of the Companies' trademarks, trademark applications and related goodwill.

Section Six.   General Provisions.

(a)     Except as herein expressly amended, the Financing Agreement and all other agreements, documents, instruments and certificates executed in connection therewith, are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms.

(b)     As of the effective date hereof, all references to the Financing Agreement in the Financing Agreement shall mean the Financing Agreement as amended hereby and as hereafter amended, supplemented or modified from time to time.

(c)     This Amendment embodies the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, commitments, arrangements, negotiations or understandings, whether written or oral, of the parties with respect thereto.

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(d)     This Amendment may be executed by the parties hereto individually or in combination, in one or more counterparts, each of which shall be an original and all of which shall constitute one and the same agreement.

(e)     This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of law principles.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, each Company, the Agent and each of the Lenders has signed below to indicate its agreement with the foregoing and its intent to be bound thereby.

ROCK OF AGES CORPORATION
ROCK OF AGES KENTUCKY CEMETERIES, LLC
CAROLINA QUARRIES, INC.
AUTUMN ROSE QUARRIES, INC.
PENNSYLVANIA GRANITE CORP.
KEITH MONUMENT COMPANY LLC
ROCK OF AGES MEMORIALS INC.
SIOUX FALLS MONUMENT CO.

By: /s/ Kurt M. Swenson         
Name:  Kurt M. Swenson
Title:    Chairman and Chief Executive Officer
            of each of the above Companies

THE CIT GROUP/BUSINESS CREDIT, INC.,
     as Agent and as a Lender

By: /s/ Nicholas Malatestinic
Name: Nicholas Malatestinic
Title:    Vice President, Team Leader

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EXHIBIT 10.4

ASSIGNMENT AND TRANSFER AGREEMENT

Dated: July 9, 2004

     Reference is made to the Financing Agreement, dated December 17, 1997 (as amended, modified, supplemented and in effect from time to time, the "Financing Agreement"), among ROCK OF AGES CORPORATION ("ROA"), a Delaware corporation with a principal place of business at 772 Graniteville Road, Barre, Vermont 05654; ROCK OF AGES KENTUCKY CEMETERIES, LLC ("Kentucky"), a Delaware limited liability company with a principal place of business at 771 West Main Street, Lexington, Kentucky 40508; CAROLINA QUARRIES, INC. ("Carolina"), a Delaware corporation with a principal place of business at 805 Harris Granite Road, Salisbury, North Carolina 28146; AUTUMN ROSE QUARRIES, INC. ("Autumn"), a Georgia corporation with a principal place of business in Mill Creek, Oklahoma 74856; PENNSYLVANIA GRANITE CORP. (herein "Pennsylvania"), a Pennsylvania corporation with a principal place of business at 410 Trythall Road, Elverson, Pennsylvania 19520; KEITH MONUMENT COMPANY LLC ("Keith"), a Delaware limited liability company with a principal place of business at 771 West Main Street, Lexington, Kentucky 40508; ROCK OF AGES MEMORIALS, INC. ("Memorials"), a Delaware corporation with a principal place of business at 771 West Main Street, Lexington, Kentucky 40508; SIOUX FALLS MONUMENT CO. ("Sioux Falls"), a South Dakota corporation with a principal place of business at 4901 W. 12th Street, Sioux Falls, South Dakota 57106; and such other subsidiaries or affiliates of the foregoing as the Lenders, by unanimous consent, permit to become parties to the Financing Agreement (herein collectively the "Companies"), the Lenders named therein, and The CIT Group/Business Credit, Inc., as Agent (the "Agent"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Financing Agreement. This Assignment and Transfer Agreement, between the Assignor (as defined and set forth on Schedule 1 hereto and made a part hereof) and the Assignee (as defined and set forth on Schedule 1 hereto and made a part hereof) is dated as of the Effective Date (as set forth on Schedule 1 hereto and made a part hereof).

     1.     The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date, an undivided interest (the "Assigned Interest") in and to all the Assignor's rights and obligations under the Financing Agreement respecting those, and only those, financing facilities contained in the Financing Agreement as are set forth on Schedule 1 (collectively, the "Assigned Facilities" and individually, an "Assigned Facility"), in a principal amount for each Assigned Facility as set forth on Schedule 1.

     2.     The Assignor (i) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Financing Agreement or any other instrument, document or agreement executed in conjunction therewith (collectively the "Ancillary Documents") or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Financing Agreement, any Collateral thereunder or any of the Ancillary Documents furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Companies or any guarantor or the performance or observance by the Companies or any guarantor of any of their respective obligations under the Financing Agreement or any of the Ancillary Documents furnished pursuant thereto.

     3.     The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Transfer Agreement; (ii) confirms that it has received a copy of the Financing Agreement, together with the copies of the most recent financial statements of the Companies, and such other documents and information as it has deemed appropriate to make its own credit analysis; (iii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Financing Agreement; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Financing Agreement as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will be bound by the provisions of the Financing Agreement and will perform in accordance with its terms all the obligations which by the terms of the Financing Agreement are required to be performed by it as Lender; and (vi) if the Assignee is organized under the laws of a jurisdiction outside the United States, attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Financing Agreement or such other documents as are necessary to indicate that all such payments are subject to such tax at a rate reduced by an applicable tax treaty.

     4.     Following the execution of this Assignment and Transfer Agreement, such agreement will be delivered to the Agent for acceptance by it and the Companies, effective as of the Effective Date.

     5.     Upon such acceptance, from and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts, except as otherwise provided in the Financing Agreement) to the Assignee, whether such amounts have accrued prior to the Effective Date or accrue subsequent to the Effective Date. The Assignor and Assignee shall make all appropriate adjustments in payments for periods prior to the Effective Date made by the Agent or with respect to the making of this assignment directly between themselves.

     6.    From and after the Effective Date, (i) the Assignee shall be a party to the Financing Agreement and, to the extent provided in this Assignment and Transfer Agreement, have the rights and obligations of a Lender thereunder, and (ii) the Assignor shall, to the extent provided in this Assignment and Transfer Agreement, relinquish its rights and be released from its obligations under the Financing Agreement.

      7.     THIS ASSIGNMENT AND TRANSFER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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      IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Transfer Agreement to be executed by their respective duly authorized officers on Schedule 1 hereto.

Schedule I to Assignment and Transfer Agreement
Name of Assignor:		Fleet National Bank
Name of Assignee:		The CIT Group/Business Credit, Inc.
Effective Date of Assignment:		July 9, 2004
Assigned Facilities	Commitment Amount Assigned		Percentage Assigned of Each Facility (shown as a percentage of aggregate commitments of all Lenders)
Acquisition Term Loans	$7,000,000		40%
Revolving Loans	$5,000,000		40%
Letter of Credit participation interest	$1,200,000		40%
Pro-rata share of fees and interest earned under the Financing Agreement as provided in Paragraph 4 of Section 12 of the Financing Agreement.

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Accepted:
THE CIT GROUP BUSINESS CREDIT, INC.    as Agent By: /s/Nicholas Malatestinic Name: Nicholas Malatestinic Title:   Vice President, Team Leader	FLEET NATIONAL BANK    as Assignor By: /s/ John F. Lynch Name:   John F. Lynch Title:      Senior Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.    as Assignee By: /s/ Nicholas Malatestinic Name:  Nicholas Malatestinic Title:    Vice President, Team Leader	ROCK OF AGES CORPORATION ROCK OF AGES KENTUCKY CEMETERIES, LLC CAROLINA QUARRIES, INC. AUTUMN ROSE QUARRIES, INC. PENNSYLVANIA GRANITE CORP. KEITH MONUMENT COMPANY LLC ROCK OF AGES MEMORIALS INC. SIOUX FALLS MONUMENT CO. By: /s/ Kurt M. Swenson  Name:   Kurt M. Swenson Title:      Chairman and Chief Executive Officer               of each of the above Companies

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EXHIBIT 10.5

THE CIT GROUP/BUSINESS CREDIT, INC.
1211 Avenue of the Americas
New York, New York10036

August 10, 2004

Rock of Ages Corporation
772 Graniteville Road
Barre, Vermont 05654

Attention:    Mr. Kurt M. Swenson
                  Chief Executive Officer

RE:     Waiver and Agreement

Gentlemen:

     We refer to the Financing Agreement, dated as of December 17, 1997 (as amended, the "Financing Agreement"), among Rock of Ages Corporation, Rock of Ages Kentucky Cemeteries, LLC ("Kentucky"), Carolina Quarries, Inc., Autumn Rose Quarries, Inc., Pennsylvania Granite Corp., Keith Monument Company LLC, Rock of Ages Memorials, Inc. and Sioux Falls Monument Co. (all of the aforementioned entities, collectively, the "Companies"), the lenders party thereto (collectively, the "Lenders"), and The CIT Group/Business Credit, Inc., as agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Financing Agreement.
 

     Waiver. You have notified us that consolidated EBITDA of the Companies for the three fiscal quarters ending in June 2004 was $1,046,000. The failure of the Companies to have achieved consolidated EBITDA of at least $2,300,000 for the three fiscal quarters ending in June 2004 constitutes a violation of Section 7 of the Financing Agreement (as in effect on June 30, 2004) and an Event of Default under the Financing Agreement (as in effect on June 30, 2004)(the Event of Default referred to in this paragraph is hereinafter referred to as the "Designated Default").

     Effective as of June 30, 2004, upon the Agent's receipt of one or more counterparts of this letter signed by all of the Companies, the Lenders hereby waive the Designated Default as an Event of Default. Nothing herein shall constitute a waiver by the Agent or any Lender of any other Default or Event of Default, whether or not the Agent or any Lender has any knowledge thereof, nor shall anything herein be deemed a waiver by the Agent or any Lender of any Default or Event of Default which may occur after the date hereof.

     Agreement.  The Companies and the Lenders hereby agree that for purposes of determining the Companies' compliance with Paragraphs 14 and 15 of Section 7 of the Financing Agreement, for any time or period, whether occurring before, on or after the date of this letter, the assets, liabilities, earnings and other results of operations of the business of Kentucky sold to Saber Management Kentucky, LLC shall not be included.
 

     By signing below, each of the Companies hereby represents and warrants that: (a) all of the representations and warranties set forth in the Financing Agreement (except for such representations and warranties that were only required to be true and correct as of a prior date) are true and correct in all material respects on the date hereof; and (b) no Default or Event of Default (other than the Designated Default) has occurred and is continuing on the date hereof.

     Except as otherwise expressly agreed herein, the Financing Agreement and all other agreements, documents, instruments and certificates executed in connection therewith are hereby ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms.

     This letter agreement shall be governed by and construed in accordance with the laws of the State of New York.

     Please sign below to indicate your agreement to the terms hereof.

	Very truly yours, THE CIT GROUP/BUSINESS CREDIT, INC.      as Lender and Agent By: /s/ Nicholas Malatestinic Name: Nicholas Malatestinic Title: Vice President, Team Leader
Agreed to by:
ROCK OF AGES CORPORATION ROCK OF AGES KENTUCKY CEMETERIES, LLC CAROLINA QUARRIES, INC. AUTUMN ROSE QUARRIES, INC. PENNSYLVANIA GRANITE CORP. KEITH MONUMENT COMPANY LLC ROCK OF AGES MEMORIALS INC. SIOUX FALLS MONUMENT CO. By: /s/ Douglas S. Goldsmith Name:  Douglas S. Goldsmith Title:     Vice President and Chief Financial Officer

EXHIBIT 10.6 

MUTUAL RELEASE AGREEMENT

            This Mutual Release Agreement (the "Agreement"), dated as of August 6, 2004, is entered into between Dyckerhoff AG ("Dyckerhoff"), Granite Stone Business International S.a.r.l. f/k/a and including Eurimex S.A. (Luxembourg) ("GSBI") and all of their respective, subsidiaries, divisions and affiliates including, but not limited to, GroupeCimentsLuxembourgeois, Materiaux S.A., and MarbrerieJacquemartSarl (including the respective predecessors and successors of any of the foregoing, collectively, the "GSBI Parties"), and Rock of Ages Corporation ("Rock of Ages") and all of its subsidiaries, divisions and affiliates including, but not limited to, Carolina Quarries Inc., Pennsylvania Granite Corp., and Rock of Ages Memorials, Inc. (including the respective predecessors and successors of any of the foregoing, collectively, the "Rock of Ages Parties").  The GSBI Parties and Rock of Ages Parties are referred to collectively as the "Parties" and singularly as a "Party."

            WHEREAS, on April 5, 2001, GSBI initiated an arbitration against Rock of Ages before the International Court of Arbitration of the International Chamber of Commerce referenced 11502/KGA/MS (the "Arbitration");

            WHEREAS, on June 7, 2004, an arbitral tribunal rendered an award in the Arbitration (the "Award"), attached as Exhibit A:

a.	Awarding GSBI US$5,397,000 as compensation for lost profits resulting from the termination of an agreement dated December 8, 1997, entered into between Rock of Ages and GSBI  for the supply and distribution of Salisbury Pink granite (the "Salisbury Pink Agreement");
b.	Awarding interest to GSBI at the applicable yearly Luxembourg legal rate-5.75% in 2001, 5% in 2002, 5% in 2003 and 4.75% in 2004-on the amount so awarded, from October 18, 2000, until June 9, 2004;
c.	Awarding interest to GSBI at the applicable yearly Luxembourg legal rate-as established by the Reglement Grand Ducal for the relevant period-on the amount so awarded, from June 9, 2004, until payment;
d.	Declaring that GSBI's claims VIII-XI, which alleged violations of U.S. antitrust laws, had been withdrawn with prejudice;
e.	Ordering that GSBI and Rock of Ages shall bear the costs of the Arbitration, fixed by the ICC Court at US$600,000, in equal shares;

f.	Ordering that GSBI and Rock of Ages shall each bear its own legal and other costs incurred in connection with the Arbitration; and
g.	Denying all other claims of each of GSBI and Rock of Ages;

      WHEREAS, in discharge of the Award and all claims between them, the Parties desire to provide for the releases and other matters described herein;

     NOW, THEREFORE, in consideration of the foregoing, the payment by Rock of Ages to GSBI of Six Million Five Hundred Thousand US Dollars (US $6,500,000), net of withholding taxes and similar charges if and to the extent applicable (the "Payment"), and the representations, warranties and agreements herein contained, the receipt and sufficiency of which consideration are hereby acknowledged, the Parties agree as follows:

1.	Mutual Release.  The Payment and the representations, warranties and agreements set forth herein, shall constitute a full and final resolution of all disputes between the Parties.  Upon receipt by GSBI of the Payment, each GSBI Party hereby releases, acquits, satisfies and forever discharges each Rock of Ages Party of and from all manner of actions, causes of action, suits, contracts, claims and demands whatsoever, in law or equity, which each GSBI Party ever had, now has, or hereafter can, shall or may have, against any Rock of Ages Party, from the beginning of time through the date of this Agreement.  Each Rock of Ages Party hereby releases, acquits, satisfies and forever discharges each GSBI Party of and from all manner of actions, causes of action, suits, contracts, claims and demands whatsoever, in law or equity, which each Rock of Ages Party ever had, now has, or hereafter can, shall or may have, against any GSBI Party, from the beginning of time through the date of this Agreement.
	For the avoidance of doubt, the foregoing releases shall extend to, but are not limited to, all claims arising out of, in connection with or related to any actual or potential business relationship between any GSBI Party and any Rock of Ages Party from the beginning of the world through the date of this Agreement, including without limiting the generality of the foregoing all claims raised in the Arbitration;
	provided, however, that such releases shall not release any Party from any agreements, covenants or provisions, or from liability for breach of any of its representations and warranties, contained in this Agreement.
2.	Payment.  On July 29, 2004, or upon receipt by Rock of Ages of a copy of this Agreement duly signed by GSBI and Dyckerhoff (whichever occurs later), Rock of Ages will pay GSBI the Payment by wire transfer to the following account hereby designated by GSBI:

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Granite Stone Business International, S.a.r.l.
SocieteGenerale Bank & Trust
11, avenue Emile Reuter
L-2420 Luxembourg
Swift - BIC: SGABLULL
IBAN Account Number: LU79 0614 1317 5260 0USD

The Parties hereby acknowledge and confirm that (i) the Payment includes all interest due under the Award and (ii) the Payment shall be made net of withholding taxes and similar charges if and to the extent applicable ("Withholding Taxes"); provided that for this purpose no Withholding Taxes shall be applicable and no Withholding Taxes shall be deducted from the Payment, if, prior to Rock of Ages making the Payment, GSBI has delivered to Rock of Ages a properly completed and signed United States Internal Revenue Service ("IRS") Form W-8BEN, certifying (by checking box 9a. in Part II of such Form) that GSBI is a resident of Luxembourg within the meaning of the income tax treaty between the United States and Luxembourg, in which event GSBI shall be deemed to have represented and warranted to Rock of Ages that no Withholding Taxes are applicable to the Payment.  If such Form W-8BEN has not been so completed, signed and timely delivered, Rock of Ages will (i) deduct applicable Withholding Taxes from the Payment, (ii) timely pay such Withholding Taxes to the IRS, and (iii) send proof of such payment to GSBI within thirty (30) days of receipt of confirmation of payment from the IRS.

3.

Authority, Consent.

a.

Each Party acknowledges that in deciding to enter into this Agreement such Party has relied entirely on its own independent judgment and has entered into the Agreement in the exercise of such judgment with the advice of counsel of its own choosing.

b.

Each Party represents and warrants that it is fully entitled and duly authorized to enter into this Agreement and to make the representations and warranties of such Party and perform the agreements of such Party set forth in this Agreement.  Each Party represents and warrants that the entities and/or person(s) signing this Agreement on its behalf is/are duly authorized to sign on behalf of such Party and that this Agreement is the valid and binding agreement of such Party, enforceable against such Party in accordance with its terms.

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	c.	Each Party represents and warrants that no claim, right, demand, action or cause of action released pursuant to Section 1 hereof has been assigned or transferred, in whole or in part, to any other person or entity, including without limitation, any other Party or any parent, subsidiary, shareholder, agent, representative or affiliate of such Party or of any other Party, in any manner, including by way of operation of law or otherwise.
4.	Actions of Entities, Further Assurances.  This Agreement shall constitute, as applicable, written consents of stockholders and directors of each Party, to the extent that the execution, delivery or performance by such Party of this Agreement is required to be approved by such stockholders or directors.
5.	Survival. The representations, warranties, promises, covenants and agreements contained in this Agreement shall survive the execution of this Agreement.
6.	Binding Effect.  Except as otherwise provided in this Agreement, every covenant, term, and provision of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, legal representatives, executors, successors, permitted transferees, and assigns.
7.	Entire Agreement, Changes.  This Agreement: (i) contains the entire agreement between the Parties; (ii) constitutes the complete, final and exclusive embodiment of their agreement with respect to the subject matter hereof; and (iii) supersedes any prior agreements, oral or written, between the Parties, all of which are hereby rescinded.  This Agreement is executed without reliance upon any promise, warranty or representation by any Party or any representative of any Party other than those expressly contained herein.  This Agreement cannot be changed or modified in any respect except by a written instrument that is signed by the Party against whom the change or modification is to be enforced.
8.	No Admission.  Nothing in this Agreement is intended, nor shall be construed as, an explicit or implicit admission of liability or finding of wrongdoing by any Party.
9.	Authorship.  This Agreement shall be deemed to have been mutually pre-approved by the Parties with the advice of counsel and shall not be construed for or against either of them solely by reason of authorship.
10.	Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.  Facsimile signatures shall be deemed original signatures for all purposes.
11.	Applicable Law.  This Agreement shall be deemed to have been entered into and shall be construed and interpreted in accordance with the substantive laws of the State of New York, without reference to its choice of law or conflicts of laws principles.  In the event of any action or proceeding arising from a claimed breach of, or an action to enforce the terms of, this Agreement, the Parties hereby consent to the exclusive personal jurisdiction of the courts of the State of New York and federal courts located in the Southern District of New York.

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12. Costs. Each Party shall bear its own costs and expenses related to the negotiation, execution and performance of this Agreement.

     IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be executed as of the date first above written.

GRANITE STONE BUSINESS INTERNATIONAL S.a.r.l.
For and on behalf of itself and the other GSBI Parties.

By:	/s/ Christian Weiler	By:	/s/ Serge Toussaint
Name:	Christian Weiler	Name:	Serge Toussaint
Title:		Title:

DYCKERHOFF AG
For and on behalf of itself and the other GSBI Parties.

By:	/s/ Wolfgang Bauer	By:	/s/ Alexander Rontgen
Name:	Wolfgang Bauer	Name:	Alexander Rontgen
Title:		Title:

ROCK OF AGES CORPORATION
For and on behalf of itself and the other Rock of Ages Parties.

By:	/s/ Kurt M. Swenson
Name:	Kurt M. Swenson
Title:	Chairman/CEO

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EXHIBIT A

Copy of the Award

    EXHIBIT 10.7

COMMON STOCK PURCHASE AGREEMENT

COMMON STOCK PURCHASE AGREEMENT

      This Common Stock Purchase Agreement (the "Agreement") is entered into this 16th day of June, 2004, by and between CRGH, LLC (the "Principal"), and Rock of Ages Corporation, a Delaware corporation (the "Investor").

      WHEREAS, FFS Holdings, Inc., a Delaware corporation ("FFS Holdings") has, or will have prior to the Closing (as defined herein), authorized the issuance of 950,000 shares of Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"), and 50,000 shares of non-voting Class B Common Stock, par value $0.01 per share, herein, the "Class B Common Stock" and, together with the Class A Common Stock, the "Common Stock") and up to 28,700 shares of preferred stock, par value $0.01 per share (the "Preferred Stock").

      WHEREAS, FFS Holdings has entered into a Stock Purchase Agreement, dated as of February 12, 2004 (as amended from time to time, the "Purchase Agreement"), with Hillenbrand Industries, Inc. ("Hillenbrand") pursuant to which FFS Holdings will acquire all of the issued and outstanding stock of Forethought Financial Services, Inc. and its subsidiaries from Hillenbrand (the "Transaction").

      WHEREAS, subject to the terms and conditions of the Subscription Agreement between FFS Holdings and the Principal, to be entered into pursuant to the terms and conditions set forth in that certain Resale Commitment Agreement dated as of June 16, 2004, between The Devlin Group II, LLC ("TDG") and the Principal (as amended from time to time, the "Resale Commitment Agreement") a copy of which is attached hereto as Exhibit A, prior to the Closing (as defined herein) FFS Holdings shall issue shares of Common Stock with a per share purchase price of $100.00, of which the Principal shall purchase the number of shares of Common Stock specified in the Resale Commitment Agreement.

      WHEREAS, prior to the Closing the Principal, other principals of TDG and certain Affiliates (as defined herein, and being referred to collectively with TDG's principals as the "TDG Stockholders"), together with persons unrelated to either TDG or the Investor (referred to collectively, with the persons unrelated to TDG, as the "Non-TDG Investors") will purchase from FFS Holdings additional shares of Common Stock which, together with the Common Stock purchased by the Principal, shall have an aggregate issue price of $41,300,000.

      WHEREAS, the Principal desires to sell to the Investor all of the shares of Common Stock which the Principal has committed to purchase pursuant to the Resale Commitment Agreement, and the Investor desires to purchase from the Principal such shares of Common Stock (specified as to number and class thereof on Annex A hereto) on the terms and conditions contained in this Agreement.

      NOW, THEREFORE, in consideration of the mutual premises, representations, warranties, covenants and conditions set forth in this Agreement, the parties to this Agreement, intending to be legally bound, mutually agree as follows:

ARTICLE I

Purchase and Sale of Shares

     1.1     Purchase and Sale.   Subject to the terms and conditions of this Agreement, the Investor does hereby agree to purchase at the Closing the number and type of shares of Common Stock set forth on Annex A hereto (the "Shares"), at a purchase price of $100 per Share, for the total purchase price set forth on Annex A hereto (the "Purchase Price").

     1.2     Closing.  (a) The sale and purchase of the Shares shall occur at a closing (the "Closing") at Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, to be held one business day after the satisfaction or waiver by the appropriate party of the conditions set forth in this Agreement. Payment of the Purchase Price shall be made by the Investor (against receipt of share certificates and a stock power duly endorsed for transfer delivered by the Principal) to the Principal, in respect of the Shares, at the Closing by wire transfer of immediately available funds denominated in U.S. dollars to an account designated by the Principal.

     (b)     On June 21, 2004, or upon such other day as the Principal shall notify the Investor, the Investor shall deliver the Purchase Price to the Escrow Agent (as defined in the Escrow Agreement substantially in the form of Exhibit F attached hereto (the "Escrow Agreement")) which shall be held in escrow on behalf of the Investor pursuant to the terms of the Escrow Agreement. At Closing, the Escrow Agent shall transfer the Purchase Price to the Principal against receipt of the Shares pursuant to a joint notice delivered by the Investor and the Principal to the Escrow Agent.

     1.3    Termination and Unconsummated Transaction Expenses.

     (a) The Investor acknowledges and agrees that, if the Principal provides the Investor with written notice (a "Termination Notice") that the Transaction has been terminated (the date specified by the Principal for such termination, the "Termination Date"), the obligations of the Principal under this Agreement shall terminate and be of no further force or effect.

     (b) After the delivery of the Termination Notice, the Investor shall pay to or reimburse the Principal for all amounts paid or payable by the Principal in respect of Transaction Expenses (as defined in the Resale Commitment Agreement) under the Resale Commitment Agreement. The Transaction Expenses will be payable by the Investor from time to time on or after the Termination Date upon receipt of written request for payment from the Principal.

ARTICLE II

Representations and Warranties of Principal

The Principal represents and warrants to the Investor that:

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     2.1   Authority. The Principal has the requisite authority to enter into and perform its obligations under this Agreement.

     2.2  Authorization. This Agreement, when executed and delivered by the Principal, will constitute its valid and legally binding obligation, enforceable in accordance with its terms, except to the extent the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally or by general equitable principles.

2.3     Nature and Validity of Shares.

           (a)  The Class A Common Stock and Class B Common Stock will be issued pursuant to a restated certificate of incorporation of FFS Holdings in substantially the form attached hereto as Exhibit B.

           (b)  At the Closing, the Principal will be the record and beneficial owner of the Shares, free and clear of any and all liens and encumbrances (except for such restrictions on transfer (i) generally arising under applicable federal and state securities laws and (ii) imposed upon the Shares under the terms of the Stockholders Agreement). The Shares will be duly and validly issued, and fully paid and nonassessable. The Principal has the power and authority to sell, transfer, assign and deliver such Shares as provided in this Agreement, and such delivery will convey to Purchaser good and marketable title to such Shares, free and clear of any and all liens and encumbrances except as aforesaid.

            (c)  The authorized share capital of FFS Holdings as of the Closing will be one million twenty-eight thousand seven hundred (1,028,700) shares, of which nine hundred and fifty thousand (950,000) shares shall be Class A Common Stock, fifty thousand (50,000) shares shall be Class B Common Stock, and twenty-eight thousand seven hundred shares (28,700) shares shall be Preferred Stock. As of the Closing, three hundred ninety three thousand (393,000) shares of Class A Common Stock, twenty thousand (20,000) shares of Class B Common Stock and all twenty eight thousand seven hundred (28,700) shares of Preferred Stock shall be outstanding. All of the outstanding shares of FFS Holdings as of the Closing will be duly authorized, fully paid, nonassessable and not entitled to preemptive or similar rights, other than as set forth in the Stockholders Agreement. As of the Closing, except pursuant to (i) the Warrant (as defined in the Purchase Agreement) (ii) the Note (as defined in the Purchase Agreement) and (iii) the Class B Common Stock, there will be no outstanding options, warrants or other rights of any kind to acquire any additional shares of capital stock of FFS Holdings or securities convertible into or exchangeable for, or which otherwise confer on the holder thereof any right to acquire, any such additional shares, nor will FFS Holdings be committed to issue any such option, warrant, right or security, provided, however that the issuance at or prior to Closing of option and/or restricted stock grants in an aggregate amount not in excess of five percent (5%) of the outstanding capital stock of FFS Holdings shall not be deemed a breach of this representation and warranty. As of the Closing, there will be no agreements or understandings to which FFS Holdings is a party with respect to the voting of any shares of its capital stock or which restrict the transfer of any such shares except the Stockholders Agreement. As of the Closing, there will be no outstanding contractual obligations of FFS Holdings to repurchase, redeem or otherwise acquire any of its shares of capital stock, other equity interests or any other securities except with respect to the Preferred Shares and as set forth in the Note. As of the Closing, except as provided in the Stockholders Agreement, FFS Holdings will not be under any obligation by reason of any agreement to register the offer and sale or resale of any of its securities under any securities laws.

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      (d)  As of the Closing, FFS Holdings will not have conducted any material operations or incurred any material obligations other than in connection with the Transaction or as otherwise set forth in the Offering Circular prepared by FLAC Holdings, LLC, an indirect subsidiary of FFS Holdings, in connection with its issuance of Series A and Series B Notes.

      2.4   No Brokers or Finders. No agent, broker, finder or investment or commercial banker, or other person engaged by or acting on behalf of the Principal in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated hereby, is or will be entitled to any brokerage or finder's or similar fee or other commission as a result of this Agreement or the transactions contemplated hereby.

     2.5    No Prohibition. No claim, action, suit, investigation or other proceeding is pending or, to the Principal's knowledge, threatened before any governmental entity, which purports to enjoin or restrain the Principal or to seek relief from or against the Principal, or which could result in an order prohibiting the Principal from, consummating the transactions contemplated hereby.

     2.6   Securities Act.  The sale of the Shares in accordance with the terms of this Agreement (assuming the accuracy of the representations and warranties of the Investor contained in Article III hereof) is exempt from the registration requirements of the Securities Act of 1933, as amended (the "1933 Act").

     2.7   Representation Regarding Funding. The funds to be used by the Principal to acquire the Shares from FFS Holdings will not be obtained from the Investor, FFS Holdings or any person Related to the Investor or FFS Holdings. For purposes of this Agreement, a person will be treated as "Related" to another person (which, as used herein, includes any entity) if such person is (A) either "controlled" or is in "control" (as defined pursuant to Section 1.482-l(i)(4) of the treasury regulations of the Internal Revenue Code of 1986, as amended, the "Treasury Regulations") of such person, (B) a "controlled taxpayer" with respect to such person as that term is defined pursuant to Section 1.482-1(i)(5) of the Treasury Regulations, or (C) part of the same controlled group as such person (as defined pursuant to Section 1.482-1(i)(6) of the Treasury Regulations).

ARTICLE III

Representations, Warranties and Agreements of the Investor

The Investor represents and warrants to the Principal that:

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     3.1  Organization;  Authority. The Investor is a duly formed corporation, validly existing and in good standing under the laws of its jurisdiction of formation. The Investor has the requisite authority to enter into and perform its obligations under this Agreement.

     3.2   Authorization. This Agreement, when executed and delivered by the Investor, will constitute its valid and legally binding obligation, enforceable in accordance with its terms, except to the extent the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally or by general equitable principles.

     3.3    No Brokers or Finders. No agent, broker, finder, or investment or commercial banker, or other person or firm engaged by or acting on behalf of the Investor or its Affiliates in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated hereby, is or will be entitled to any brokerage or finder's or similar fee or other commission as a result of this Agreement or the transactions contemplated hereby. For purposes of this Agreement "Affiliate" means, with respect to any person, any other person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such person, and, unless otherwise noted, the term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through ownership of voting securities, by contract or otherwise.

     3.5    Investment Representations.

     (a)    The Shares to be received by the Investor will be acquired by it for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof in violation of applicable federal and state securities laws, and it has no current intention of selling, granting a participation in or otherwise distributing the same, in each case, in violation of applicable federal and state securities laws. By executing this Agreement, the Investor further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant a participation to such person, or to any third person, with respect to any of the Shares, in each case, in violation of applicable federal and state securities laws.

      (b)   The Investor understands that the Shares have not been registered under the 1933 Act on the basis that the sale provided for in this Agreement is exempt from registration under the 1933 Act.

      (c)   The Investor is an "accredited investor" within the meaning of Regulation D promulgated under the 1933 Act. The Investor understands that the Shares may not be sold, transferred or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration statement covering such Shares or an available exemption from registration under the 1933 Act, the Investor must be prepared to bear the economic risk of this investment for an indefinite period of time. In particular, the Investor acknowledges that it is aware that the Shares may not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all of the conditions of Rule 144 are met. Among the current conditions for use of Rule 144 by certain holders is the availability to the public of current information about FFS Holdings. Such information is not now available, and to the Principal's knowledge FFS Holdings does not have any current plans to make such information available.

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     (d)  The Investor has performed its own due diligence and business investigations with respect to FFS Holdings. The Investor is fully familiar with the nature of the investment in FFS Holdings, the speculative and financial risks thereby assumed, and the uncertainty with respect to the timing and amounts of distributions, if any, to be made by FFS Holdings. The Investor does not desire any further information which may be available with respect to these matters and has had a sufficient opportunity to review the matters that it believes to be important in deciding whether to acquire the Shares. The Investor has not relied in connection with this investment upon any representations, warranties or agreements other than those set forth in this Agreement.

     3.6   Shareholder Restrictions. The Investor understands and acknowledges that the Shares being purchased hereunder shall be subject to the transfer restrictions applicable to Non-TDG Investors contained in the Stockholders Agreement, including, without limitation, the absolute restriction on transferability (other than to certain permitted transferees) referred to as the "Blackout Period" therein. The Investor has no intention of selling or otherwise transferring the Shares to any other person who is or becomes a party to the Stockholders Agreement or to any person who is Related to such a party or to FFS Holdings.

     3.7   Representation Regarding Funding. The funds to be used by the Investor to acquire the Shares from the Principal will not be obtained from FFS Holdings, the Principal or any party Related to FFS Holdings or the Principal.

ARTICLE IV

Covenants of the Parties

     4.1   Stockholders Agreement. The Investor shall execute and deliver a counterpart to the Stockholders Agreement at Closing.

     4.2    Consistent Reporting. Neither the Principal nor the Investor shall take any position with respect to any tax or tax-related audit, controversy or claim, or any financial statement, public filing, tax return, administrative filing or any other filing that is not consistent with the Investor being the bona fide purchaser of the Shares, and for so long as the Investor owns the Shares, the beneficial owner of the Shares. Neither the Principal, the Investor nor any person Related to the Investor or the Principal shall take any position on any financial statement, public filing, tax return, administrative filing, or any other filing or any position whether written or oral with any governmental entity or judicial or administrative body, agency or office that is inconsistent with the positions listed on Annex D to the Purchase Agreement, the text of which is set forth on Exhibit D to this Agreement.

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     4.3    Confidentiality; Public Announcement.

      (a)  The Investor acknowledges that it has reviewed the Mutual Confidentiality Agreement dated July 3, 2003, between Hillenbrand and Devlin Associates, LLC, ("Devlin") as amended by Amendment No. 1, dated August 19, 2003 and Amendment No. 2, dated August 29, 2003 (as amended, the "Confidentiality Agreement") and hereby agrees to be bound by the same terms and conditions that bind Devlin to the extent applicable to Representatives (as defined in the Confidentiality Agreement) of Devlin. The Investor further agrees to defend, indemnify and hold the Principal, Devlin, TDG and their respective Affiliates harmless from and against, and to reimburse the Principal, Devlin, TDG and their respective Affiliates with respect to, any and all losses, damages, liabilities, claims, judgments, settlements and fines (including expenses and reasonable attorneys' fees) incurred by the Principal, Devlin, TDG and their respective Affiliates caused by or arising out of or in connection with a breach by the Investor of any term of the Confidentiality Agreement to the extent applicable to Representatives (as defined in the Confidentiality Agreement).

      (b)  The Investor shall not (and shall cause its Affiliates not to) issue any press release or public announcement concerning this Agreement or the Transaction without obtaining the prior written approval of FFS Holdings which approval will not be unreasonably withheld or delayed, unless, in the sole judgment of FFS Holdings, (i) disclosure is otherwise required by applicable law, provided that, to the extent required by applicable law, the party intending to make such release shall use its best efforts consistent with such applicable law to consult with the other party with respect to the text thereof or (ii) disclosure could adversely affect the consummation of the Transaction or the business of FFS (including as it relates to Hillenbrand).

      (c)  Notwithstanding anything to the contrary set forth herein or in any other agreement to which the parties hereto are parties or by which they are bound, commencing on the date hereof, the obligations of confidentiality contained herein and therein, as they relate to the transaction contemplated by this Agreement ("The Purchase"), shall not apply to the tax structure or tax treatment of The Purchase, and each party hereto (and any employee, representative, or agent of any party hereto) may disclose to any and all persons, without limitation of any kind, the tax structure and tax treatment of The Purchase commencing on the date hereof; provided, however, that such disclosure shall not include the name (or other identifying information not relevant to the tax structure or tax treatment) of any person and shall not include information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws.

      4.4     Investor Representation Letter.

       (a)   The Investor will, as soon as reasonably practicable (and in no event more than one business day) following the receipt of the Principal's request to do so, execute and deliver to Hillenbrand a representation letter in the form attached hereto as Exhibit E-1 (the "Investor Representation Letter").

       (b)  The Investor will procure that each representation, warranty, assertion of fact, undertaking, covenant or other statement made by it in the Investor Representation Letter is, and will at all applicable times, be true and correct.

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      4.5    Principal Representation Letter.

      (a)   The Principal will execute and deliver to Hillenbrand a representation letter in the form attached hereto as Exhibit E-2 (the "Principal Representation Letter").

      (b)  The Principal will procure that each representation, warranty, assertion of fact, undertaking, covenant or other statement made by it in the Principal Representation Letter is, and will at all applicable times, be true and correct..

ARTICLE V

Conditions to Obligations of the Investor at Closing

     The obligations of the Investor under Article I to purchase the Shares are subject to the fulfillment on or before the Closing of each of the following conditions:

     5.1   Representations and Warranties. The representations and warranties of the Principal contained in Article II hereof shall be true on and as of the Closing with the same force and effect as if they had been made at the Closing.

     5.2  Performance. The Principal shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it on or before the Closing, including without limitation the execution and delivery of the agreements and undertakings provided for in this Agreement.

     5.3  Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the Closing.

ARTICLE VI

Conditions to the Obligations of the Principal at Closing

     The obligations of the Principal under Article I to issue and deliver the Shares are subject to the fulfillment on or before the Closing of each of the following conditions:

     6.1  Representations and Warranties. The representations, warranties and agreements of the Investor contained in Article III hereof shall be true on and as of the Closing with the same force and effect as if they had been made at the Closing.

     6.2   Performance. Investor shall have performed in all material respects all of its obligations and materially complied with all of its covenants required to be performed or complied with on or prior to the Closing, including without limitation the execution and delivery of the agreements and undertakings provided for in this Agreement.

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      6.3    Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the Closing.

ARTICLE VII

Mutual Conditions Precedent

     The obligations of the Principal and the Investor under Article I of this Agreement are subject to the fulfillment on or before the Closing of the following conditions:

     7.1     Transaction. The First Closing (as defined in the Purchase Agreement) shall have occurred.

     7.2    Issuance of Shares. FFS Holdings shall have issued the Shares to the Principal.

     7.3    Representation Letters. Each of the Investor and the Principal shall have executed and delivered to Hillenbrand the Investor Representation Letter or the Principal Representation Letter, as applicable.

     7.4    Investment. FFS Holdings shall have issued to the TDG Stockholders (including the Principal) and the Non-TDG Investors Common Stock with an aggregate issue price of $41,300,000.

ARTICLE VIII

Miscellaneous

       8.1   No Waiver; Modifications in Writing. This Agreement sets forth the entire understanding of the parties, and supersedes all prior agreements, arrangements and communications, whether oral or written, with respect to the subject matter hereof. No waiver of or consent to any departure from any provision of this Agreement shall be effective unless signed in writing by the party entitled to the benefit thereof, provided that notice of any such waiver shall be given to each party hereto as set forth below. Except as otherwise provided herein, no amendment, modification or termination of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Principal and the Investor. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Principal from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

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      8.2     Notices.  All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by telecopy, nationally-recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:

If to the Principal:	c/o 153 Foreside Road Falmouth, ME 04105 Telephone: 207-781-7706 Facsimile: 207-781-7709 Attention: Douglas Schair
With a copy to:	Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile:  (212) 310-8007 Attention: Thomas A. Roberts and Michael Nissan
If to the Investor:	Rock of Ages Corporation 369 North State Street Concord, NH 03301 Telephone: 1-877-225-7626 Attention: Michael Tule

     All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of dispatch by nationally-recognized overnight courier, on the next business day following such dispatch and (c) in the case of mailing, on the third business day after the posting thereof.

     8.3    Taxes.  The Principal shall pay any and all stamp, transfer and other similar taxes payable or determined to be payable in connection with the execution and delivery of this Agreement or the transfer of the Shares or the issuance of any of FFS Holdings' capital stock issued upon the redemption or exchange of the Shares, including all federal, state and local income or similar taxes, and the Principal shall save and hold the Investor harmless from and against any and all liabilities with respect to or resulting from any delay in paying, or omission to pay, such taxes.

     8.4    FIRPTA Certificate.  At the Closing, the Principal shall provide the Investor with an affidavit of non-foreign status that complies with section 1445 of the Internal Revenue Code of 1986, as amended.

     8.5   Termination. If the Closing has not occurred on or prior to December 31, 2004, then the obligations of the parties to this Agreement shall terminate and this Agreement shall be without further force and effect, provided however that the obligations of the Investor pursuant to Sections 1.3 and 4.3 and of the parties under this Article VIII shall survive any such termination.

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    8.6    Execution of Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Any properly executed counterpart to this Agreement which is delivered by facsimile shall be deemed to be an original counterpart to this Agreement.

    8.7   Binding Effect; Assignment.  The rights and obligations of the Investor under this Agreement may not be assigned to any other person. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any person other than the parties to this Agreement, and their respective successors and assigns. This Agreement shall be binding upon the Principal and the Investor and their respective successors and assigns.

    8.8   Governing Law. This Agreement shall be governed by the laws of the State of Delaware as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies.

     8.9  WAIVER OF RIGHT TO JURY TRIAL.  EACH OF THE PRINCIPAL AND THE INVESTOR, BY ITS EXECUTION HEREOF, WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. EACH OF THE PRINCIPAL AND THE INVESTOR ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP. EACH OF THE PRINCIPAL AND THE INVESTOR FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     8.10   Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

     8.11    Headings.  The Article and Section headings used or contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.

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     8.12  Injunctive Relief. Each of the parties to this Agreement hereby acknowledges that in the event of a breach by any of them of any material provision of this Agreement, the aggrieved party may be without an adequate remedy at law. Each of the parties therefore agrees that, in the event of a breach of any material provision of this Agreement, the aggrieved party may elect to institute and prosecute proceedings to enforce specific performance or to enjoin the continuing breach of such provision, as well as to obtain damages for breach of this Agreement. By seeking or obtaining any such relief, the aggrieved party will not be precluded from seeking or obtaining any other relief to which it may be entitled.

     8.13   Attorneys' Fees.  In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof or thereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy.

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COMMON STOCK PURCHASE AGREEMENT

COUNTERPART SIGNATURE PAGE

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

CRGH, LLC

By: /s/ Robert M. Devlin 
      Name: Robert M. Devlin
      Title:    Principal

ROCK OF AGES CORPORATION

By: /s/ Michael Tule 
      Name:  Michael Tule
      Title:     Vice President/General Counsel

ANNEX A

Number of Shares of Class A Common Stock to be purchased at $100 per share: 25,000

Number of Shares of Class B Common Stock to be purchased at $100 per share: 10,000 

Purchase Price (Number of Shares multiplied by $100): $3,500,000
 

EX-31

EXHIBIT 31.1

CERTIFICATION
OF CHIEF EXECUTIVE OFFICER

I, Kurt M. Swenson, Chief Executive Officer of Rock of Ages Corporation, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Rock of Ages Corporation;
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 registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant'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)) for the registrant 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b)	[Paragraph omitted in accordance with SEC transition instructions]
	c)	Evaluated the effectiveness of the registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant'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 registrant's internal control over financial reporting.

Date: August 16, 2004  /s/Kurt M. Swenson
    Kurt M. Swenson
    Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION
OF CHIEF FINANCIAL OFFICER

I, Douglas S. Goldsmith, Chief Financial Officer of Rock of Ages Corporation, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Rock of Ages Corporation;
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 quarterly 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 registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant'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 registrant 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 registrant, 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)	[Paragraph omitted in accordance with SEC transition instructions]
	c)	Evaluated the effectiveness of the registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	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 registrant'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 registrant's internal control over financial reporting.

Date: August 16, 2004  /s/Douglas S. Goldsmith
    Douglas S. Goldsmith
    Chief Financial Officer

EX-32

EXHIBIT 32.1

Certification of the Chief Executive Officer 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 on Form 10-Q of Rock of Ages Corporation (the "Company") for the quarterly period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Kurt M. Swenson, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his 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.

/s/Kurt M. Swenson

Name: Kurt M. Swenson
Title:   Chief Executive Officer
Date:  August 16, 2004

A signed original of this written statement required by Section 906, or other document authenticating , acknowledging or otherwise adopting the signature that appears in typed form with the electronic version of this written statement required by Section 906,  has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EXHIBIT 32.2

Certification of the Chief Financial Officer 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 on Form 10-Q of Rock of Ages Corporation (the "Company") for the quarterly period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Douglas S. Goldsmith, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his 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.

/s/Douglas S. Goldsmith

Name: Douglas S. Goldsmith
Title:   Chief Financial Officer
Date:   August 16, 2004

 A signed original of this written statement required by Section 906, or other document authenticating , acknowledging or otherwise adopting the signature that appears in typed form with the electronic version of this written statement required by Section 906,  has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.