ROCK OF AGES CORP - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended April 2, 2005

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 Noo

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 May 12, 2005, 4,660,800 shares of Class A Common Stock, par value $0.01 per share, and 2,738,596 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 April 2, 2005

PART I	FINANCIAL INFORMATION		PAGE NO.

Item 1.	Financial Statements (Unaudited)

		Consolidated Balance Sheets - April 2, 2005 and December 31, 2004	4

		Consolidated Statements of Operations - Three Months Ended April 2, 2005 and April 3, 2004	5

		Consolidated Statements of Cash Flows - Three Months Ended April 2, 2005 and April 3, 2004	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		31

Item 4.	Controls and Procedures		31

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings		32

Item 5.	Other Information		32

Item 6.	Exhibits and Reports on Form 8-K		33

Signature			34

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 statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about our business or expected events based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual events, results or outcomes may differ materially from what is expressed or forecasted in such forward-looking 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 with other death care professionals, retail acquisitions, independent retailers and new store openings; uncertainties involving quarry yields and demand for Rock of Ages' dimension stone; changes in demand for the Company's products; product mix; the timing of customer orders and deliveries; the impact of competitive products and pricing; the success of the Company's branding program; difficulties encountered in the integration process of newly acquired businesses; weather conditions; 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.

PART I: FINANCIAL INFORMATION
Item 1: Financial Statement

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

		April 2,			December 31,
		2005			2004

ASSETS
Current Assets:
Cash and cash equivalents	$	2,555		$	4,298
Trade receivables, net		11,440			15,017
Inventories		26,472			23,858
Current and deferred tax assets		2,435			708
Due from affiliates		288			283
Other current assets		4,390			4,510

Total current assets		47,580			48,674

Property, plant and equipment, net		50,785			46,130
Cash surrender value of life insurance, net		743			743
Goodwill		318			163
Other intangibles, net		369			388
Debt issuance costs, net		209			225
Due from affiliates		54			55
Deferred tax assets		6,740			6,740
Intangible pension asset		739			739
Long-term investments		4,110			4,112
Other		562			608

Total assets	$	112,209		$	108,577


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under line of credit	$	11,621		$	7,287
Current installments of long-term debt		316			36
Current installments of deferred compensation		369			372
Accounts payable		2,530			2,433
Accrued expenses		3,632			4,234
Customer deposits		11,470			8,173

Total current liabilities		29,938			22,535

Long-term debt, excluding current installments		19,429			16,289
Deferred compensation		6,715			6,620
Accrued pension cost		2,209			1,993
Accrued postretirement benefit costs		911			879
Deferred tax liability		30			30
Other		45			45

Total liabilities		59,277			48,391


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
4,698,800 and 4,694,800 shares issued and outstanding as of April 2, 2005 and December 31, 2004, respectively		47			47
Common Stock - Class B, $.01 par value; 15,000,000 shares authorized
2,700,596 shares issued and outstanding as of April 2, 2005 and December 31, 2004		27			27
Additional paid-in capital		66,106			66,267
Accumulated deficit		(12,242	)		(5,288	)
Accumulated other comprehensive loss		(1,006	)		(867	)

Total stockholders' equity		52,932			60,186

Total liabilities and stockholders' equity	$	112,209		$	108,577

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

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

		Three Months Ended
		April 2,			April 3,
		2005			2004

Net Revenues:
Quarrying	$	3,566		$	4,532
Manufacturing		2,850			3,232
Retailing		4,055			4,398

Total net revenues		10,471			12,162

Gross Profit (loss):
Quarrying		(877	)		350
Manufacturing		199			644
Retailing		1,829			2,203

Total gross profit		1,151			3,197

Selling, general and administrative expenses:
Quarrying		894			842
Manufacturing		1,207			857
Retailing		6,086			4,577
Corporate overhead		1,366			1,291

Total selling, general and administrative expenses		9,553			7,567

Loss from continuing operations before interest and income taxes		(8,402	)		(4,370	)

Interest expense		317			136

Loss from continuing operations before income taxes		(8,719	)		(4,506	)

Income tax benefit		(1,765	)		(1,120	)


Loss from continuing operations	$	(6,954	)	$	(3,386	)
Discontinued operations, net of taxes		—			(38	)


Net loss	$	(6,954	)	$	(3,424	)


Net loss per share - basic:
Net loss from continuing operations	$	(0.94	)	$	(0.47	)
Discontinued operations		—			(0.00	)


Net loss per share - basic	$	(0.94	)	$	(0.47	)


Net loss per share - diluted:
Net loss from continuing operations	$	(0.94)		$	(0.47)
Discontinued operations		—			(0.00)


Net loss per share – diluted	$	(0.94)		$	(0.47)


Weighted average number of common shares outstanding – basic		7,396			7,215
Weighted average number of common shares outstanding – diluted		7,396			7,215

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

		Three Months Ended
		April 2,			April 3,
		2005			2004

Cash flows from operating activities:
Net loss	$	(6,954	)	$	(3,424	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization		1,151			821
Deferred taxes		—			(2	)
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net		3,577			4,129
Due from related parties		(5	)		(39	)
Inventories		(2,198	)		(1,013	)
Other current assets		121			(842	)
Other assets		46			(142	)
Trade payables, accrued expenses and income taxes		(2,232	)		(1,448	)
Customer deposits		3,076			3,303
Deferred compensation and pension		341			199
Other liabilities		—			(3	)

Net cash provided by (used in) operating activities		(3,077	)		1,539

Cash flows from investing activities:
Purchases of property, plant and equipment		(2,055	)		(1,871	)
Acquisitions, net of cash acquired		(4,118	)		—
Collection of note receivable		—			5,250

Net cash provided by (used in) investing activities		(6,173	)		3,379

Cash flows from financing activities:
Net borrowings (repayments) under lines of credit		4,333			(4,751	)
Principal payments on long-term debt		(80	)		(13	)
Net borrowings on long-term debt		3,500			—
Stock options exercised		24			197
Dividends paid on common stock		(185	)		(144	)

Net cash provided by (used in) financing activities		7,592			(4,711	)

Effect of exchange rate changes on cash		(85	)		(101	)

Net increase (decrease) in cash and cash equivalents		(1,743	)		106


Cash and cash equivalents, beginning of period		4,298			3,227


Cash and cash equivalents, end of period	$	2,555		$	3,333


Supplemental cash flow information:
Cash paid during the period for:
Interest	$	315		$	136
Income Taxes, net	$	351		$	131

Acquisitions:
Assets acquired	$	4,339			—
Liabilities assumed		(221	)		—
Common stock issued		—			—
Cash paid		4,118			—
Less cash acquired		—			—


Net cash paid for acquisitions	$	4,118		$	—

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ROCK OF AGES CORPORATION
NOTES TO 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, 2005).

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. As a result, 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 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

On November 9, 2004, the Company completed the sale of the assets of the Autumn Rose quarry for a total sale price of $750,000. The decision to sell this quarry 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, the Autumn Rose quarry was previously classified in the Quarry segment.

Operating results from the Autumn Rose Quarry for the three months ended April 3, 2004 were as follows (in thousands):

		Three Months Ended
		April 3,
		2004

Autumn Rose Quarry
Net Sales	$	35
Gross Profit		(47	)
Pretax loss		(47	)
Income tax benefit		(9	)
Net loss		(38	)

(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, whereby no stock compensation expense has been recorded for the periods presented. 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 123, net income and earnings per share would have been changed to the pro forma amounts indicated below (in thousands, except per share data):

		April 2,			April 3,
		2005			2004

Net loss, as reported, in thousands	$	(6,954	)	$	(3,424	)
Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of taxes		(117	)		(129	)
Net loss, pro forma, in thousands	$	(7,071	)	$	(3,553	)
Net loss per share, as reported		(0.94	)		(0.47	)
Net loss per share, pro forma	$	(0.96	)	$	(0.49	)
Net loss per share - assuming dilution, as reported		(0.94	)		(0.47	)
Net loss per share - assuming dilution, pro forma	$	(0.96	)	$	(0.49	)

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 throughout 2004 was $5.48, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 4.34%; dividend yield of $0; expected volatility of 74%, and expected lives of six (6) years. There were no stock options granted in the first quarter of 2005. 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 stock price of the Company.

(4)	Inventories

		($ in thousands)
Inventories consist of the following:		April 2,		December 31,
		2005		2004

Raw materials	$	12,230	$	12,485
Work-in-process		1,972		1,247
Finished goods and supplies		12,270		10,126

	$	26,472	$	23,858

(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
	April 2	April 3
	2005	2004

Basic weighted average shares	7,396	7,215
Effect of dilutive stock options	—	—

Diluted weighted average shares	7,396	7,215

Options to purchase 479,000 and 445,333 shares of Class A common stock were outstanding at April 2, 2005 and April 3, 2004, but were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.


(6)	Segment Information

The Company is organized based on the products and services 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 or sawn slabs to both the manufacturing segment and to outside manufacturers, as well as to customers in Europe and Asia.

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 in the United States.

The other segment includes unallocated corporate overhead, the Eurimex adverse judgment and legal expenses and the impairment of the note receivable. The Company reports the salaries and benefits of its chief executive officer, chief financial officer, general counsel and other employees and expenses that cannot be accurately allocated to a particular segment as unallocated corporate overhead. There were no adverse judgment and legal or impairment of note receivable expenses in the first quarter of 2005 or 2004.

Inter-segment revenues are accounted for as if the sales were to third parties and then eliminated in consolidation.

The following is the unaudited segment information for the three-month period ended April 2, 2005 and April 3, 2004 ($ in thousands):

2005		Quarrying			Manufacturing			Retailing			Other			Total

Total net revenues	$	3,975		$	4,459		$	4,055		$	—		$	12,489
Inter-segment net revenues		(409	)		(1,609	)		—			—			(2,018	)


Net revenues		3,566			2,850			4,055			—			10,471

Total gross profit		(873	)		321			1,703			—			1,151
Inter-segment gross profit		(4	)		(122	)		126			—			—


Gross profit		(877	)		199			1,829			—			1,151

Selling, general and administrative expenses		894			1,207			6,086			1,366			9,553

Income (loss) from continuing operations before interest and taxes	$	(1,771	)	$	(1,008	)	$	(4,257	)	$	(1,366	)	$	(8,402	)


2004		Quarrying			Manufacturing			Retailing			Other			Total


Total net revenues	$	5,082		$	4,916		$	4,398		$	—		$	14,396
Inter-segment net revenues		(550	)		(1,684	)		—			—			(2,234	)


Net revenues		4,532			3,232			4,398			—			12,162

Total gross profit		352			835			2,010			—			3,197
Inter-segment gross profit		(2	)		(191	)		193			—			—


Gross profit		350			644			2,203			—			3,197

Selling, general and administrative expenses		842			857			4,577			1,291			7,567


Income (loss) from continuing operations before interest and taxes	$	(492	)	$	(213	)	$	(2,374	)	$	(1,291	)	$	(4,370	)

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

		Three Months Ended
		April 2,		April 3,
		2005		2004

Net revenues (1):
United States	$	9,336	$	10,925
Canada		985		985
Ukraine		150		252
Total net revenues	$	10,471	$	12,162

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

Long-lived assets by geographic area are as follows:

		($ in thousands)
		April 2,		December 31,
		2005		2004

Long-lived assets:
United States	$	47,211	$	42,495
Canada		3,574		3,635

	$	50,785	$	46,130

(7)	Comprehensive Income

Comprehensive income (loss) consists of net income, cumulative translation adjustment, and a minimum pension liability adjustment ($ in thousands):

		Foreign Currency Translation Adjustment			Minimum Pension Liability Adjustment			Accumulated Other Comprehensive (Loss)

Balance at December 31, 2004	$	1,379		$	(2,246	)	$	(867	)
Changes in 2005		(139	)		—			(139	)

Balance at April 2, 2005	$	1,240		$	(2,246	)	$	(1,006	)

		Three Months Ended
		April 2,			April 3,
		2005			2004

Net loss	$	(6,954	)	$	(3,424	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(139	)		(160	)


Comprehensive loss	$	(7,093	)	$	(3,584	)

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

		Three Months Ended

		NON-UNION PENSION BENEFITS						DEFERRED COMPENSATION BENEFITS				OTHER BENEFITS

		April 2,			April 3,			April 2,		April 3,		April 2,		April 3,
		2005			2004			2005		2004		2005		2004

Service cost	$	182		$	156		$	73	$	43	$	4	$	5
Interest cost		326			320			83		79		30		28
Expected return on plan assets		(356	)		(340	)		—		—		—		—
Amortization of prior service costs		35			35			32		17		26		20
Amortization of net (gain) loss		49			29			—		—		—		—

Net periodic benefit cost	$	236		$	200		$	188	$	139	$	60	$	53

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2004, it expected to contribute $945,000 to the defined benefit pension plan during 2005. As of April 2, 2005, no contribution had been made but the Company still plans on contributing $945,000 to the plan in 2005.


(9)	Recent Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs-An Amendment of ARB No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and re-handling costs be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005 and is required to be adopted by us in the first quarter of 2006, beginning on January 1, 2006. We are currently evaluating the effect, if any, that the adoption of SFAS 151 will have on our consolidated results of operations.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), which replaces SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") and supercedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS 123R requires that all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair values, as of the beginning of our first annual period beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. Under SFAS 123R, we must determine the appropriate fair value model and related assumptions to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include modified prospective and modified retrospective adoption options. Under the modified retrospective option, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The modified prospective method requires that compensation expense be recorded for all unvested stock options at the beginning of the first quarter of adoption of SFAS 123R, while the modified retrospective method would record compensation expense for all unvested stock options beginning with the first period restated. We are evaluating the requirements of SFAS 123R and expect that the adoption of SFAS 123R will have a material impact on our consolidated results of operations and earnings per share. We have not yet determined the method of adoption or the effect of adopting SFAS 123R, and we have not determined whether the adoption will result in amounts that are similar to the current pro forma disclosures under SFAS 123.

(10)	Credit Facility

We have a credit facility with CIT that consists of an acquisition term loan line of credit of up to $30 million and a revolving credit facility of up to another $20 million based on eligible accounts receivable, inventory and certain fixed assets. As of April 2, 2005, we had $19.4 million outstanding and $10.6 million available under the term loan line of credit and $11.6 million outstanding and $8.4 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, the Company has been in violation of this covenant and has received waivers, which primarily allow the Company to exclude those expenses from the covenant calculation. As of April 2, 2005, we were in violation of this amended covenant primarily as a result of the poor operating results. The Company has received a waiver allowing us to be in compliance with our credit facility at April 2, 2005. The Company and its lenders have opted not to adjust the required trailing twelve-month covenant levels for the balance of 2005 at this time, however the Company believes it is probable that it will either be in compliance with those covenants or will be able to cure any default under those covenants through additional waivers or amended covenants as we enter our normally profitable quarters during the balance of the year. Therefore, we continue to classify the term debt as long-term on our Consolidated Balance Sheet at April 2, 2005.

The facility also requires that the ratio of the Company's total liabilities to net worth not exceed 2.0. As of April 2, 2005, the Company was in compliance with this covenant as our total liabilities to net worth ratio was 1.13.

(11)	Acquisitions

In February 2005, we acquired McColly Memorials, a memorial retailer, with 4 locations in the Pittsburgh, Pennsylvania area for a net purchase price of $554,000. The acquisition was accounted for by the purchase method of accounting. The assets acquired and liabilities assumed were recorded at estimated fair values as determined by management based on information currently available and on current assumptions as to future operations, which has resulted in $155,000 of cost in excess of net assets acquired.

In February 2005, we acquired the land and equipment comprising the Rockwell White quarry in Rockwell, North Carolina for a purchase price of $3.5 million. The acquisition was accounted for by the purchase method of accounting. The assets acquired and liabilities assumed were recorded at estimated fair values as determined by management based on information currently available and on current assumptions as to future operations, however we are still in the process of evaluating the value of granite reserves, therefore the current allocation to granite reserves is preliminary until the analysis is final.

(12)	Dividend Declaration

On February 9, 2005, the Board of Directors declared a dividend of $.025 per share of common stock, payable on March 15, 2005 to holders of record as of February 21, 2005.

(13)	Subsequent Events

On May 10, 2005, the Board of Directors declared a dividend of $.025 per share of common stock, payable on June 16, 2005 to holders of record as of May 26, 2005.

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 2005, we had three business segments, quarrying, manufacturing, and retail. 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 product is 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 first quarter of the year has historically been difficult for our quarry operations as the majority of our quarries are in northern climates, which causes us to close those operations from late December until mid March. This year our first quarter revenues were well below last year but above our 2003 level. The largest shortfall came from our Salisbury Pink quarry in North Carolina. While quarrying operations at the Salisbury Pink quarry are not as significantly affected by weather as our northern quarries, our overseas customers will often delay purchasing trips until our northern quarries have reopened so that they can select blocks from all our quarries on their inspection trips. In addition, we believe market demand may be down somewhat for Salisbury Pink granite as we believe our customer’s inventory levels are higher than normal at this time but within what we consider normal fluctuations in the market. Overall we believe demand for products in the quarry division remains good and we expect results for those operations to improve now that all operations are in full production.

Difficult weather also affected the results of our manufacturing division as the majority of their customers are in northern climates and are unable to set monuments in the cemeteries in the winter. We also believe there was a short term drop in demand in the memorial market overall (based on our observations of demand in the market and from our quarries and discussions with other granite memorial manufactures) in the first quarter of 2005. In addition, several large mausoleums, which were completed at year-end but could not be shipped at that time due to customer delays and/or cemetery delays also did not ship in the first quarter of 2005 due to continued delays primarily as a result of the weather. Finally, our Sales General and Administrative (SG&A) costs increased primarily as a result of an increase in our sales force as part of our intensified efforts to attract a greater number of authorized Rock of Ages retailers.

Revenues in our retail segment were down 8% compared to the first quarter of 2004 which we believe was the combined result of an overall short term drop in demand in the memorial market as well as harsh winter conditions which did not allow us to set monuments in cemeteries. In addition, we spent considerable time and effort in the first quarter of 2005 rolling out our new pricing and marketing plans and providing training to our sales force on those plans. We believe such efforts are critical to our success in the long term but may have distracted our sales force somewhat as we work to refocus our counselor's efforts to increase relationships with cemeteries and funeral homes. Retail operating income declined significantly in the first quarter of 2005 compared to the same period in 2004 as a combined result of the decrease in revenues and the associated lower gross profits and significant increases in SG&A costs associated with our plans to grow our retail division.

We have implemented significant changes in our retail division since the first quarter of 2004 in restructuring the management group by hiring a new Chief Operating Officer of the Memorials Division (which includes the Manufacturing and Retail segments), a new Senior Vice President of Marketing, and by effecting numerous other changes such as modifications to our product mix, branding strategy, marketing plan, retail counselor compensation structure, pricing policy, and other items. Our future success depends on increasing revenues from our existing retail stores through outreach programs with funeral homes and cemeteries to maximize revenues per store by expanding share and market area. In addition, we continue to work to expand and improve the distribution of our product through our owned stores, authorized dealers, funeral homes, and cemeteries. We believe these changes were necessary based on the performance of the retail segment to date and the important market opportunity we believe exists at the retail level. These changes, and the programs put in place as a result, represent a significant increase in effort and resources devoted to growing our retail business and as a result we expect operating results for the segment may suffer in the short term as we invest in people and programs in anticipation of future revenue growth.

Critical Accounting Policies

General

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles (GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Management has discussed the development, selection and disclosure of these estimates with the Audit Committee. Actual results may differ from these estimates.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Our critical accounting policies are as follows: revenue recognition, impairment of long-lived assets, valuation of deferred income taxes, contingencies and accounting for pensions.

Revenue Recognition

The Company records revenues from quarrying, manufacturing and retailing.

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, when they have significant business reasons to do so. 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, plant 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, plant 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.

We assess impairment of goodwill in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." The provisions of SFAS No. 142 require a two-step test be performed. First, the fair value of each reporting unit will be compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is performed. If the carrying value exceeds the fair value, then the implied fair value of the reporting unit's goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then an impairment loss equal to the difference will be recorded. We will perform our annual test of the impairment of goodwill in the third quarter of 2005.

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 five 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. In 2004, we wrote off $400,000 of a note receivable related to a non-core manufacturing operation in Elberton we sold in 2001 in accordance with an agreement reached with the buyer of that facility in connection with the termination of a supply agreement whereby we agreed to buy memorials from the buyer. 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 April 2, 2005, we had net current and deferred tax assets of $9.2 million. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not some portion or all of the current and deferred tax assets will not be realized. The ultimate realization of current and 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 $4.5 million 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 current and deferred tax assets are deductible, we believe it is more likely than not we will realize the benefit of these unreserved net current and deferred tax assets. The amount of the current and 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.

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 2004 we decreased the discount rate used to determine our liability in the pension plan from 6.25% to 5.79% based on a bond matching model which uses data on individual high-quality corporate bonds and the timing and amount of the future benefit payments in our plan to develop a weighted discount rate specific to our plan. 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 further decrease in the expected long-term rate of return on plan assets or a decrease in discount rate could result in an increase in our pension liability and a charge to equity as well as increases in pension expenses over time.

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 selling, general and administrative expenses, which are shown as a percentage of their respective revenues.

	Three Months Ended
	April 2		April 3
	2005		2004

Statement of Operations Data:
Net Revenues:
Quarrying	34.1%		37.2%
Manufacturing	27.2%		26.6%
Retailing	38.7%		36.2%

Total net revenues	100.0%		100.0%

Gross Profit (loss):
Quarrying	(24.6%	)	7.7%
Manufacturing	7.0%		19.9%
Retailing	45.1%		50.1%

Total gross profit	11.0%		26.3%

Operating Expenses:
Selling, general and administrative:
Quarrying	25.1%		18.6%
Manufacturing	42.4%		26.5%
Retailing	150.1%		104.1%
Corporate Overhead	13.0%		10.6%

Total SG&A expenses	91.2%		62.2%

Loss from continuing operations before interest and income taxes	(80.2%	)	(35.9%	)

Interest expense	3.1%		1.1%


Loss from continuing operations before income taxes	(83.3%	)	(37.0%	)

Income tax benefit	(16.9%	)	(9.2%	)


Net loss from continuing operations	(66.4%	)	(27.8%	)

Discontinued operations	—		(0.3%	)


Net loss	(66.4%	)	(28.1%	)

Three Months Ended April 2, 2005 Compared To Three Months Ended April 3, 2004

On a consolidated basis for all segments for the three-month period ended April 2, 2005 compared to the three month period ended April 3, 2004; revenue decreased 14%, gross profit decreased 64% and total SG&A costs increased 26% for reasons discussed in detail in the segment analysis below.

Quarry Segment Analysis

Revenues in our quarry operations for the three-month period ended April 2, 2005 decreased 21% from the same period in 2004 primarily as a result of decreased shipments from our Salisbury Pink and Barre Gray quarries. Our quarry group sells to two primary groups of customers – those that use our product for memorial use, which are primarily domestic customers, and those that use it for building use, which are primarily overseas customers. Demand from our memorial customers was down, we believe, as a result of a harsher than normal winter which not only prohibits monuments from being set in cemeteries, but also tends to dampen demand for memorial purchases overall. Of our export quarries, Bethel White is the only one significantly affected by winter weather (it, along with our other northern quarries, typically closes from mid-December to mid-March) however it is also the most sought after, which means if we do not have Bethel White blocks available for inspection, international inspectors typically do not travel to inspect and purchase blocks from our other export quarries. We anticipate reduced demand for Salisbury Pink in 2005, as worldwide inventories of pink granite blocks are higher than normal. Our Barre Gray quarry continues to face competition from imported granites, especially colored granites, which may decrease demand for this quarry over time, however we expect revenue levels in 2005 will be generally consistent with 2004.

Gross profit dollars from our quarry operations for the three-month period ended April 2, 2005 decreased 351% and gross profit as a percentage of revenue decreased 33% to negative 25% from the same period in 2004. The decrease in gross profit was primarily the result of lower revenues and the fact that we continue to do some quarry development and repairs and maintenance work through the winter months when shipments are low.

SG&A costs in our quarry segment for the three-month period ended April 2, 2005 increased 6% from the same period in 2004 as a result of regular payroll and benefits increases.

Manufacturing Segment Analysis

Revenues in our manufacturing group for the three-month period ended April 2, 2005 decreased 12% from the same period in 2004. The decrease was primarily a result of a decrease in shipments from our US memorials division due primarily to a harsher than normal winter which not only prohibits monuments from being set in cemeteries, but also tends to dampen demand for memorial purchases overall. The harsh winter also delayed the preparation of the sites for approximately $600,000 in mausoleums and estate memorials that are completed and cannot ship until our customers and/or the cemeteries make such preparations.

Gross profit dollars from the manufacturing group declined 69% and gross profit as a percentage of revenue decreased 13% for the three-month period ended April 2, 2005 compared to the same period in 2004. The decrease is primarily a result of the decrease in shipments from the memorials group and the fact that a portion of our costs are fixed and do not decrease with a drop in revenue.

SG&A costs for the manufacturing group were up 41% over last year primarily as a result of increased sales personnel hired in the memorials group in order to implement our growth plans.

Retail Segment Analysis

Revenues in our retail operations the three-month period ended April 2, 2005 decreased 8% from the same period in 2004. We believe the decrease is, as is the case for all our segments, a result of harsher than normal winter conditions which not only prohibits monuments from being set in cemeteries, but also tends to dampen demand for memorial purchases overall. In addition, we spent considerable time and effort in the first quarter of 2005 rolling out our new pricing and marketing plans and providing training to our sales force on those plans. We believe such efforts are critical to our success in the long term but may have distracted our sales force somewhat as we work to refocus our counselor's efforts to increase relationships with cemeteries and funeral homes. We have implemented significant changes in our retail division over the last nine months. While the changes have been helpful in stabilizing our core market in the short term, some of these changes, including a new Chief Operating Officer, a change in compensation structure, changes to our product offerings and pricing, among other things, may have distracted our sales force. We continue to make significant changes in how we approach our markets and are implementing programs, which we believe should lead to significant future growth in our retail operations.

Gross profit dollars for retail operations in the three-month period ended April 2, 2005 decreased 17% from the same period last year and gross profit as a percentage of revenue decreased 5%. The decreases are the result of a decrease in sales and the fact that a portion of our costs are fixed and do not decrease with a drop in revenue.

SG&A costs in retail in 2005 increased 33% from the same period last year. The increase was primarily the combined result of the change in compensation method for our sales counselors from commission (where the expense was recognized when revenue was recognized) to salary (where the expense is now recognized when the counselor is paid) thereby increasing sales expense in the first quarter when revenues are historically low, and the additional personnel and programs added in the last nine months which are aimed at increasing revenues in the retail segment. As stated above, we made a decision to invest in the people and programs in an effort to achieve significant growth in the retail segment and we expect these additional costs will result in higher SG&A costs throughout 2005.

Consolidated Items

Unallocated corporate overhead for the three-month period ended April 2, 2005 increased 6% from last year primarily as a result of expenses associated with executive searches as well as relocation expenses for new hires.

Interest expense increased 133% from $136,000 to $317,000 primarily as a result of current higher borrowings and higher interest rates. The increased borrowings resulted from an increase in long-term debt from the investment in Forethought Financial Services in July 2004, and the investment in the Rockwell White quarry in February 2005 and an increase in short term borrowings on our revolving credit facility primarily as a result of payment of the Eurimex settlement amount in June 2004 and the decreased operating results in the first quarter of 2005. The interest rate paid on our credit facility is tied primarily to LIBOR, which increased throughout 2004 and we anticipate further increases in 2005. In addition, the Company has a tiered interest rate structure on its debt tied to the ratio of Funded Debt to Net Worth. As a result of the increased debt, the rate structure will increase by 25 basis points for both the revolver and term loans going forward.

Income tax benefit, as a percentage of pre-tax income, for the three-month period ended April 2, 2005 decreased to 20% for 2005 from a benefit of 25% for the same period in 2004. The tax provision was determined by applying the Company's tax rate in Canada and the U.S. on the actual pretax earnings in each respective jurisdiction. The decrease is attributable to higher losses in the U.S. combined with breakeven results in Canada.

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, as we pursue our growth strategy that may require additional financing compared to our existing credit facility.

In 2004, the funded status of our defined benefit pension plan decreased by approximately $1 million primarily as a result of a decrease in the discount rate used to calculate the pension benefit obligation from 6.25% to 5.79%. We have historically contributed between $800,000 and $1.0 million per year to the plan and expect to make an annual contribution of $945,000 in 2005, which, we believe, we will be able to fund either from cash from operations or borrowing under our credit facilities.

Cash Flows.

At April 2, 2005, we had cash and cash equivalents of approximately $2.6 million and working capital of approximately $17.6 million, compared to approximately $3.3 million and $28.4 million, respectively, at April 2, 2004.

Cash flows from Operations. Net cash used in operating activities was $3.1 million in the three-month period ended April 2, 2005 compared to cash provided by operating activities of $1.5 million in the same period of 2004. The primary reason for the change is the lower earnings in 2005 coupled with a decrease in accounts receivable, an increase in inventory and a decrease in payables, which had the effect of decreasing cash from operations.


Cash flows from Investing Activities. Cash flows used in investing activities were $6.2 million in the three-month period ended April 2, 2005 compared to cash provided by investing activities of $3.4 million in the same period of 2004. In 2005, our capital spending was $2.1 million as a result of continued investment in our quarry, retail and manufacturing operations. In addition, we used $3.5 million in cash to acquire the Rockwell quarry and approximately $600,000 in cash to acquire the McColly retail operation. Cash used in investing activities comes from either borrowings under our credit facilities or from operations.

Cash flows from Financing Activities. Net cash provided by financing activities in the three-month period ended April 2, 2005 was $7.6 million, which consisted primarily of borrowings under the line of credit of $4.3 million and long-term debt of $3.4 million, and proceeds from stock purchases resulting from stock options exercised of $24,000 less dividends paid on common stock of $185,000. This compares to $4.7 million used in the financing activities in the corresponding period of 2004, which consisted primarily of repayments under the line of credit of $4.7 million, dividends paid on common stock of $144,000, less proceeds from stock purchases resulting from stock options exercised of $197,000.

Capital Resources

CIT Credit Facility

We have a credit facility with the CIT Group/Business Credit ("CIT") that expires in October 2007. The facility consists of an acquisition term loan line of credit of up to $30.0 million and a revolving credit facility of up to another $20.0 million based on eligible accounts receivable, inventory and certain fixed assets. As of April 2, 2005, we had $19.4 million outstanding and $10.6 million available under the term loan line of credit and $11.6 million outstanding and $8.4 million available under the 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.

Minimum Operating Cash Flow to Debt Service Coverage Ratio. The facility requires the ratio of the sum of earnings before interest, taxes, depreciation and amortization (EBITDA) less taxes paid and capital expenditures to the sum of interest, scheduled debt repayments and dividends be at least 1.25 for any trailing twelve-month period at the end of a quarter. Primarily as a result of the expenses attributable to the Eurimex arbitration (including the $6.5 million settlement amount paid in 2004) the Company has been in violation of this covenant and has received waivers, which primarily allow the Company to exclude those expenses from the covenant calculation. As of December 31, 2004, the Company was in violation of the Debt Service Coverage Ratio due to charges in the fourth quarter of 2004 related to an impaired note receivable and severance payments as well as higher than normal capital expenditures in 2004. We received a waiver, which allowed us to exclude certain of these expenditures from our calculation of EBITDA and capital expenditures in the fourth quarter of 2004 and in 2005. For the period ended April 2, 2005, the Company was in violation of the modified covenant levels primarily as a result of the poor operating results. The Company has received a waiver allowing us to be in compliance with our credit facility at April 2, 2005. The Company and its lenders have opted not to adjust the required trailing twelve-month covenant levels for the balance of 2005 at this time, however the Company believes it is probable that it will either be in compliance with those covenants or will be able to cure any default under those covenants, through additional waivers or amended covenants as we enter our normally profitable quarters during the balance of the year. Therefore, we continue to classify the term debt as long-term on our Consolidated Balance Sheet at April 2, 2005.

Total Liabilities to Net Worth Ratio. The facility also requires the ratio of the Company's total liabilities to net worth not exceed 2.0. As of April 2, 2005, the Company was in compliance with this covenant as our total liabilities to net worth ratio was 1.13.

Interest Rates. We have a multi-tiered interest rate structure on our outstanding debt with CIT. We can elect the interest rate structure under the credit facility based on the prime rate or LIBOR for both the revolving credit facility and the term loan. The incremental rate above or below prime and above LIBOR is based on our Funded Debt to Net Worth Ratio and as a result of the waiver noted above, the Company’s rate structure will increase by 25 basis points for both the revolver and term loans going forward. The rates in effect as of April 2, 2005 were as follows, but will increase 25 basis points going forward:

		Amount	Formula	Effective Rate

Revolving Credit Facility	$	6.0 million	Prime – 0.50%	5.25%
Revolving Credit Facility		5.6 million	LIBOR + 1.50%	4.24%
Term Loans		100,000	Prime – 0.25%	5.50%
Term Loans		15.8 million	LIBOR +1.75%	4.70%
Term Loans		3.5 million	LIBOR +1.75%	4.49%

Canadian Credit Facility

As of April 2, 2005, 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

Our contractual obligations have not changed materially since December 31, 2004, as disclosed in our annual report on Form 10-K. 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 $5.1 million budgeted for capital expenditures in 2005, not including potential acquisitions. We believe the combination of cash flow from operations and our credit facility will be sufficient to fund our operations for 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.

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 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.

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 reporting units under SFAS 142, goodwill impairment could be incurred at our normal annual impairment review or in some cases at the closing of the acquisition.

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 independent retailers. Since we entered the retail business, we have acquired retailers with multiple retail outlets and have opened new stores in 18 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. Three important components of our growth strategy are to continue to acquire retailers, open new retail stores in selected markets, 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 may 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.

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 28% of the deaths in the United States in 2002, compared to approximately 24% in 1998, and CANA expects this rate to rise to approximately 36% by 2010. While we continue to believe 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.

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 the months of January and February 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, shipping conditions 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 30% of our revenues in fiscal 2004 from sales to customers outside the United States, with approximately 9% of revenues in fiscal 2004 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.

Our credit facility with CIT includes covenants that impose restrictions on our financial and business operations and financial tests that we must meet in order to continue to borrow under the facility.

The terms of our credit facility with CIT restrict our ability to, among other things, consummate asset sales, participate in mergers, incur additional debt, pay dividends, repurchase stock or make investments or guarantees. The terms also contain covenants that require us to meet financial tests, including a minimum Operating Cash Flow to Debt Service Ratio and a maximum Total Liabilities to Net Worth Ratio, in order to continue to borrow under the facility and avoid a default that might lead to an early termination of the facility. The terms of this credit facility, including these covenants, are generally described above in this Item 7 under the caption "Liquidity and Capital Resources-Capital Resources-CIT Credit Facility.

As described under such caption, we have been and were as of December 31, 2004, in violation of the minimum Operating Cash Flow to Debt Service Coverage Ratio, but were granted a waiver allowing us to exclude certain expenditures from our calculation of EBITDA and capital expenditures in the fourth quarter of 2004 and thereby comply with this covenant at December 31, 2004. Also as described under such caption, the waiver includes modifications to the minimum Operating Cash Flow to Debt Service Coverage Ratio in 2005 based on our projections. For the period ended April 2, 2005, we were in violation of the modified covenant levels. We have received a waiver of compliance for the period ended April 2, 2005. Due to the large shortfall in EBITDA for the first quarter of 2005, we may not be in compliance with our loan covenants in future quarters. Accordingly, we cannot provide assurances that we will be able to maintain compliance with this or other covenants in our loan facility or that we will continue to receive waivers of any non-compliance. The Company and its lenders have opted not to adjust the required trailing twelve-month covenant levels for the balance of 2005 at this time, however the Company believes it is probable that it will either be in compliance with those covenants or will be able to cure any default under those covenants through additional waivers or amended covenants as we enter our normally profitable quarters during the balance of the year. While we currently maintain excellent relations with our lenders, if we are unable to comply with the financial or other covenants of our loan facility and do not receive waivers of our non-compliance, we may be unable to borrow additional amounts under the facility could be accelerated and become due and payable immediately, which would adversely affect our liquidity and our business and operations.

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.

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.

If we or our independent registered public accounting firm are unable to affirm the effectiveness of our internal control over financial reporting in future years, the market value of our common stock could be adversely affected.

Our internal controls may not be adequate. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we assess and report on our internal control over financial reporting, beginning with our Annual Report on Form 10-K for the year ending December 31, 2006. In addition, our independent registered public accounting firm must audit and report on, management's assessment of our internal controls over financial reporting. We are in the process of documenting and testing our system of internal controls to provide the basis for our report. However, at this time, due to the ongoing evaluation and testing, no assurance can be given that there may not be significant deficiencies or material weaknesses in our internal control over financial reporting that would be required to be reported. Accordingly, we cannot assure you that we or out independent registered public accounting firm will be able to report that our internal controls over financial reporting are effective. In this event, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the market value of our Class A Common Stock.

Employees' strikes and other labor-related disruptions may adversely affect our operations.

Our business is labor intensive, and our workforce includes, among other employees, highly skilled quarrying and manufacturing personnel such as stone cutters, sand blasters, sculptors and other skilled artisans. Approximately 35% of our workforce is unionized. Strikes or labor disputes with our unionized employees may adversely affect our ability to conduct our business.

Our collective bargaining agreements with the Granite Cutters Association and the United Steelworkers of America, respectively, which together represent approximately 169 employees in our Vermont manufacturing and quarrying operations expire on April 28, 2006. If we are unable to reach agreement with any of our unionized work groups in future negotiations regarding the terms of their collective bargaining agreement, or if additional segments of our workforce become unionized, we could be subject to work interruptions or stoppages which could adversely affect our operations and our business.


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.

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 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.

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 the litigation described below.

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.

David A. Pier and Rock of Ages Memorials, Inc. # 53 160 00645 04 American Arbitration Association. On September 29, 2004, Mr. Pier, a 56 year old former sales employee of Rock of Ages Memorials, Inc. ("ROAM"), filed a demand for arbitration, alleging age and sex discrimination in connection with his termination from employment by ROAM. Mr. Pier also alleges that ROAM defamed him. ROAM denies that Mr. Pier's termination was motivated by any discriminatory or illegal reason, and further denies that it has defamed Mr. Pier or published any facts concerning his termination other than the termination letter directed to him. At the present time, the parties are engaged in an abbreviated discovery process. ROAM expects the case to be heard in late July 2005, with a decision to be rendered sometime during the fourth quarter of 2005. While we believe Mr. Pier's claims are without merit, it is not possible at this time to assess the likelihood of Mr. Pier prevailing on his claims.

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.

Item 5.	Other Information

Holders of the 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 February 9, 2005, the Board of Directors declared a dividend of $.025 per share of common stock, payable on March 15, 2005 to holders of record as of February 21, 2005. On May 10, 2005, the Board of Directors declared a dividend of $.025 per share of common stock, payable on June 16, 2005 to holders of record as of May 26, 2005.

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	Waiver Letter dated May 12, 2005.

	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 January 4, 2005, the Registrant filed a report on Form 8-K pursuant to Item 1.01 (Entry into a Material Definitive Agreement), Item 8.01 (Other Events) and Item 9.01 (Financial Statements and Exhibits) to report it had executed the Ninth Amendment to its Financing Agreement with its lender, The CIT Group/Business Credit, and that its credit facility had been increased from $30 million to $50 million. The Registrant also reported it had entered into a consulting agreement with Richard C. Kimball, a director of the Company and Vice Chairman of the Board.

	On February 1, 2005, the Registrant filed a report on Form 8-K pursuant to Item 8.01 (Other Events) and Item 9.01 (Financial Statements and Exhibits) to announce the unexpected passing of Douglas M. Schair, a Director of the Company and one of its largest shareholders.

	On February 11, 2005, the Registrant filed a report on Form 8-K pursuant to Item 1.01 (Entry into a Material Definitive Agreement) and Item 8.01 (Other Events) to report that on February 9, 2005, the Compensation Committee of the Board of Directors of the Company determined respective bonus amounts for 2004, and increased the respective base salaries for 2005, to be paid to certain officers. The Registrant also announced the Board of Directors of the Company had declared a quarterly cash dividend of $0.025 for each share of common stock, payable on March 15, 2005 to stockholders of record on February 21, 2005.

	On February 18, 2005, the Registrant filed a report on Form 8-K pursuant to Item 1.01 (Entry into a Material Definitive Agreement), Item 8.01 (Other Events) and Item 9.01 (Financial Statements and Exhibits), to report on February 15, 2005, the Company signed an Asset Purchase Agreement and completed the purchase of the real and personal property comprising the Rockwell Quarry Company, for $3.5 million. The Registrant also reported on February 16, 2005, the Company had signed an Asset Purchase Agreement and completed the purchase of the combined business operations of McColly Memorials, Inc., Enterline Monument, Inc. and Shetler Memorials, Inc. (collectively, the "McColly Group") for a total purchase price of $625,000.

	On February 24, 2005, the Registrant filed a report on Form 8-K pursuant to Item 2.02 (Results of Operations and Financial Condition), Item 5.02 (Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers) and Item 9.01 (Financial Statements and Exhibits) to announce its results of operations for the year ended December 31, 2004. The Registrant also reported Jon M. Gregory, President and Chief Operating Officer of the Company's Quarry Division, had advised the Company he would be retiring as of March 31, 2006. The Company has designated Douglas M. Goldsmith, currently the Senior Vice President/Chief Financial Officer of the Company, to assume Mr. Gregory's responsibilities as of December 31, 2005.

	On March 21, 2005, the Registrant filed a report on Form 8-K pursuant to Item 1.01 (Entry into a Material Definitive Agreement) and Item 9.01 (Financial Statements and Exhibits) to report the Company had signed a letter from its lenders, the CIT Group/Business Credit and Chittenden Trust Company (the "Waiver Letter") pursuant to which CIT and Chittenden waived compliance with certain financial covenants contained in the Financing Agreement dated December 17, 1997, as amended, and modified those covenants for 2005.

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: May 17, 2005	By: /s/ Douglas S. Goldsmith Douglas S. Goldsmith Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial and Accounting Officer)

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	Waiver Letter dated May 12, 2005.

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.

Index

CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO 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
Other Information
Exhibits and Reports on Form 8-K
SIGNATURE