losses in certain of our cemetery perpetual care trusts related to investments in General Motors, which contributed to the $10.0 million reduction in gross profit.
Corporate general and administrative expenses decreased $0.8 million to $7.0 million for the second quarter of 2009 primarily due to a $1.2 million decrease in professional fees, partially offset by a $0.5 million increase in information technology costs primarily due to the implementation of a new business system in the current year. During the second quarter of 2009, as well as subsequent to quarter-end, we repurchased our senior convertible notes on the open market. We believe that this is an attractive use of our cash and have taken advantage of the current market discounts to achieve some modest deleveraging. Throughout the second quarter, we purchased $22.6 million of our senior convertible notes on the open market, and as a result, we recorded an $8.7 million net gain on early extinguishment of debt. Subsequent to quarter-end, we have purchased an additional $17.5 million of our senior convertible notes on the open market, which will result in an additional net gain on early extinguishment of debt of approximately $4.6 million in the third quarter of 2009. Our weighted average diluted shares outstanding decreased to 91.9 million shares for the second quarter of 2009 compared to 94.6 million shares for the same period of 2008, yielding a positive impact on earnings per share.
Current economic conditions have continued to negatively impact our ability to close preneed sales, but to a lesser extent than the first quarter of 2009. For the second quarter of 2009, preneed cemetery property sales, net of discounts, declined 9.0 percent compared to the same period of last year, which decreased our cemetery revenue as described above. In addition, net preneed funeral sales decreased 1.3 percent for the second quarter of 2009 compared to the same period of last year, which does not impact current revenue, but reduces our backlog and could reduce our future revenues. In comparison, preneed cemetery property sales, net of discounts, and net preneed funeral sales decreased 27.9 percent and 14.5 percent, respectively, in the first quarter of 2009 compared to the prior year period. We believe the gradual improvement in our preneed cemetery property sales and our net preneed funeral sales, as compared to the first quarter of fiscal 2009, is due in part to the slow improvement in overall economic conditions.
For the six months ended April 30, 2009, net earnings decreased $3.9 million to $18.9 million from $22.8 million for the same period in fiscal year 2008. Net earnings for the first six months of 2009 included an $8.7 million pre-tax gain on the early extinguishment of debt related to our open market repurchases of $22.6 million principal amount of our senior convertible notes throughout the second quarter. Revenue decreased $21.1 million to $246.0 million for the six months ended April 30, 2009. Funeral revenue decreased $7.3 million to $143.0 million in the first six months of 2009. During the six months ended April 30, 2009, our same-store funeral operations experienced an increase in average revenue per traditional funeral service of 4.1 percent and an increase in average revenue per cremation service of 8.2 percent. These increases were partially offset by a decrease in funeral trust earnings resulting in an overall increase in the same-store average revenue per funeral service of 4.2 percent. The increases in same-store average revenue were partially offset by an 8.0 percent, or 2,516 event, decrease in same-store funeral services performed. The decline is due to several factors. We experienced a 1,071 call decline, or 43 percent of the total decline, in our two West Coast regions, due in part to a decrease in low-end cremation events. In addition, we experienced a 222 call decline, or 9 percent of the total decline, in funeral services due to an additional day in the second quarter of 2008 due to leap year. Finally, the remaining decrease in funeral services is primarily due to a decrease in deaths in our markets, when compared with the comparable prior year period. For the six months ended April 30, 2009, we experienced a $1.7 million decrease in funeral earnings related to trust activities. Cemetery revenue decreased $13.8 million to $103.0 million for the six months ended April 30, 2009. This decrease is due primarily to a $9.5 million, or 18.5 percent, decrease in cemetery property sales, net of discounts, due to current economic conditions, a $3.0 million decrease in cemetery merchandise delivered and services performed and a $2.6 million decrease in cemetery earnings related to trust activities. For the six months ended April 30, 2009, consolidated gross profit decreased $14.0 million to $48.7 million primarily due to a $10.2 million decrease in cemetery gross profit, coupled with a $3.8 million decrease in funeral gross profit. For the six months ended April 30, 2009, we recorded a $3.2 million charge in cemetery costs for our estimated probable obligation to restore the net realized losses in certain of our cemetery perpetual care trusts, of which $3.1 million related to investments in General Motors, which contributed in part to the $14.0 million decline in gross profit.
Corporate general and administrative expenses decreased $1.5 million to $14.5 million for the six months ended April 30, 2009 primarily due to a $1.4 million decrease in professional fees. Investment and other income, net decreased $1.0 million to $0.1 million for the six months ended April 30, 2009 due primarily to a decrease in the

average rate earned on our cash balances. During the six months ended April 30, 2009, we purchased $22.6 million of our senior convertible notes on the open market. As a result, we recorded an $8.7 million net gain on early extinguishment of debt. Our weighted average diluted shares outstanding decreased to 91.9 million shares for the six months ended April 30, 2009 compared to 95.8 million shares for the same period of 2008, yielding a positive impact on earnings per share.
For the first six months of 2009, preneed cemetery property sales, net of discounts, declined 18.5 percent compared to the same period of last year, which decreased our cemetery revenue as described above. In addition, net preneed funeral sales decreased 8.0 percent for the six months ended April 30, 2009 compared to the same period of last year, which does not impact current revenue, but reduces our backlog and could reduce our future revenues.
During the second quarter of fiscal 2009, we experienced positive trends in regards to the overall market and in our preneed and perpetual care trusts. For the quarter ended April 30, 2009, our preneed funeral and cemetery merchandise and services trusts experienced a total return, including both realized and unrealized losses, of 5.0 percent, and our cemetery perpetual care trusts experienced a total return, including both realized and unrealized losses, of 4.8 percent.
As of April 30, 2009 and October 31, 2008, the fair market value of the investments in our funeral and cemetery merchandise and services trusts were $262.4 million and $253.6 million, respectively, lower than our cost basis. We review our investment portfolio quarterly, and as part of that review during the quarter ended April 30, 2009, we determined that we no longer had the intent to hold certain securities until they recovered their value. In addition, there were certain securities that we deemed were practically worthless as of October 31, 2008 that further declined in value during fiscal year 2009. As a result, for the first six months of fiscal 2009, we realized additional losses of $11.7 million in our funeral and cemetery merchandise and services trusts, of which $0.2 million was realized in the second quarter of fiscal 2009. These losses were allocated to the underlying contracts and will affect the amount of future revenue recognized, and cash withdrawn, at the time the specific contract is performed.
The preneed contracts we manage are long-term in nature, and we believe that the trust investments will appreciate in value over the long-term. We continue to monitor our investment portfolio closely. As of April 30, 2009 and October 31, 2008, we had $225.4 million and $240.9 million in earnings that have been realized and allocated to contracts that will be recognized when the underlying contracts are performed.
In our cemetery perpetual care trusts, as of April 30, 2009 and October 31, 2008, the fair market value of our investments were $84.8 million and $81.0 million, respectively, lower than our cost basis. In addition, during the first six months of fiscal 2009, we realized losses of $3.2 million in our cemetery perpetual care trusts, of which $3.1 million was realized in the second quarter of fiscal 2009 related to investments in General Motors. This loss resulted in the recording of an additional funding obligation of $3.2 million included in cemetery costs in the statement of earnings for the first six months of fiscal 2009. See Note 5 to the condensed consolidated financial statements for further information on the estimated probable funding obligation.
The sectors in which our trust investment portfolio is invested in have not changed materially from that disclosed in our 2008 Form 10-K.
We anticipate that a sustained decline in the value of our trust investments could have several negative impacts on our Company in the future. Unless the market values of our trusts increase substantially, we expect to report lower earnings from our trusts which will reduce future revenue. In addition, our trust management fees are based on the fair market value of the assets managed; therefore, we expect to report lower trust management fees. In fiscal year 2008, cemetery perpetual care trust earnings, funeral and cemetery merchandise and services trust earnings and trust management fees comprised 7 percent of our revenue and 36 percent of our gross profit. In our 2008 Form 10-K, we disclosed that based on then current market conditions and then current realized losses, we believed the decrease in revenue from trust earnings recognized on delivery of preneed services and merchandise, cemetery perpetual care trust earnings and trust management fees for fiscal year 2009 could be as much as $10 million, or approximately 2 percent, of fiscal year 2008 revenue and approximately 10 percent of fiscal year 2008 gross profit. During the first six months of fiscal 2009, we realized a $4.3 million decrease in earnings related to trust activities, of which $1.7 million related to the funeral segment and $2.6 million related to the cemetery

segment. This decrease is consistent with our previously announced expectations of a reduction in revenue of approximately $10 million on an annual basis, and we continue to believe that an approximate $10 million decline in revenue related to trust activities can be expected based on current market conditions and current realized losses. If market conditions further deteriorate and our investment portfolio experiences additional realized losses or we conclude we are no longer able, or intend to hold our investments until they recover in value, it is likely the decrease in revenue and gross profit could be significantly higher. Approximately two-thirds of our funeral revenue and nearly 80 percent of our cemetery revenue, or approximately 70 percent of our consolidated revenue, is not impacted by declines in the value of our trust investments.
In addition, each quarter we perform an analysis to determine whether our preneed contracts are in a loss position, which would necessitate a charge to earnings. When we review our backlog for potential loss contracts, we consider the impact of the market value of our trust assets. We look at unrealized gains and losses based on current market prices quoted for the investments, but we do not include anticipated future returns on the investments in our analysis. If a deficiency were to exist, we would record a charge to earnings and a corresponding liability for the expected loss on the delivery of those contracts in our backlog. Due to the positive margins of our preneed contracts and the trust portfolio returns we have experienced in prior years and deferred on our consolidated balance sheet until delivery, currently there is capacity for additional market depreciation before a contract loss would result.
For additional information regarding our preneed funeral and cemetery merchandise and services trusts and our cemetery perpetual care trusts, see Notes 3, 4 and 5 to the condensed consolidated financial statements included in this report. The increase in the losses in the trusts for the six months ended April 30, 2009 is primarily a result of the declines in the equity markets since the end of our fiscal year.
The following table presents our trust portfolio returns including realized and unrealized gains and losses.

                                                                   Funeral and Cemetery
                                                                      Merchandise and            Cemetery Perpetual
                                                                      Services Trusts               Care Trusts
For the quarter ended April 30, 2009                                           5.0 %                       4.8 %
For the six months ended April 30, 2009                                       (2.1 )%                     (0.6 )%
For the last three years ended April 30, 2009                                 (7.2 )%                     (5.6 )%
For the last five years ended April 30, 2009                                  (1.8 )%                     (1.5 )%

Our operations provided cash of $29.1 million for the six months ended April 30, 2009, compared to $28.4 million for the corresponding period in 2008. The increase in operating cash flow is primarily due to collections of prior period sales exceeding receivables for new sales. In addition, we paid $10.7 million in net tax payments in the first half of 2008 compared to $3.4 million in the first half of 2009. These increases were partially offset by $1.3 million of cash outflows related to Hurricane Ike paid in the first six months of 2009, coupled with the timing of payments to vendors and the timing of payroll payments.
Critical Accounting Policies
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions (see Note 1(d) to the condensed consolidated financial statements). Our critical accounting policies are those that are both important to the portrayal of our financial condition and results of operations and require management's most difficult, subjective and complex judgment. These critical accounting policies are discussed in MD&A in our 2008 Form 10-K. There have been no significant changes to our critical accounting policies since the filing of our 2008 Form 10-K. Results of Operations
Effective during the second quarter of fiscal year 2009, we have three operating and reportable segments consisting of a funeral segment, cemetery segment and a corporate trust management segment. For a discussion of our segments, see Note 9 to the condensed consolidated financial statements included herein. Prior period data has been retrospectively adjusted to conform to the new segment presentation. As there have been no material acquisitions or construction of new locations in fiscal years 2009 and 2008, results essentially reflect those of same-store locations.

Three Months Ended April 30, 2009 Compared to Three Months Ended April 30, 2008

Funeral Operations

                                               Three Months Ended April 30,
                                           2009            2008          Decrease
                                                       (In millions)
        Funeral Revenue:
        Funeral Home Locations           $    67.0       $    71.8      $     (4.8 )
        Corporate Trust Management (1)         4.2             5.0             (.8 )

        Total Funeral Revenue            $    71.2       $    76.8      $     (5.6 )


        Funeral Costs:
        Funeral Home Locations           $    52.5       $    54.0      $     (1.5 )
        Corporate Trust Management (1)          .2              .3             (.1 )

        Total Funeral Costs              $    52.7       $    54.3      $     (1.6 )


        Funeral Gross Profit:
        Funeral Home Locations           $    14.5       $    17.8      $     (3.3 )
        Corporate Trust Management (1)         4.0             4.7             (.7 )

        Total Funeral Gross Profit       $    18.5       $    22.5      $     (4.0 )

     Same-Store Analysis for the Three Months Ended April 30, 2009 and 2008

   Change in Average Revenue   Change in Same-Store     Same-Store Cremation Rate
      Per Funeral Service        Funeral Services         2009             2008
           2.4% (1)                   (9.6)%             41.4%            39.9%



(1)   Corporate
      trust
      management
      consists of
      the trust
      management
      fees and
      funeral
      merchandise
      and services
      trust
      earnings
      recognized
      with respect
      to preneed
      contracts
      delivered
      during the
      period. Trust
      management
      fees are
      established
      by the
      Company at
      rates
      consistent
      with industry
      norms based
      on the fair
      market value
      of assets
      managed and
      are paid by
      the trusts to
      our
      subsidiary,
      Investors
      Trust, Inc.
      The trust
      earnings
      represent the
      amount of
      earnings
      realized by
      the trusts
      over the life
      of the
      preneed
      contracts and
      allocated to
      those
      products and
      services
      delivered
      during the
      relevant
      periods. See
      Notes 3 and 6
      to the
      condensed
      consolidated
      financial
      statements
      included
      herein for
      information
      regarding the
      cost basis
      and market
      value of the
      trust assets
      and current
      performance
      of the trusts
      (i.e.,
      current
      realized
      gains and
      losses,
      interest
      income and
      dividends).
      Trust
      management
      fees included
      in funeral
      revenue for
      the three
      months ended
      April 30,
      2009 and 2008
      were $0.9
      million and
      $1.3 million,
      respectively.
      As corporate
      trust
      management is
      considered a
      separate
      operating
      segment,
      trust
      earnings are
      included in
      the total
      average
      revenue per
      funeral
      service
      presented.
      Funeral trust
      earnings
      recognized
      with respect
      to preneed
      contracts
      delivered
      included in
      funeral
      revenue for
      the three
      months ended
      April 30,
      2009 and 2008
      were
      $3.3 million
      and
      $3.7 million,
      respectively.

Funeral revenue decreased $5.6 million, or 7.3 percent, from $76.8 million in the second quarter of 2008 to $71.2 million in the second quarter of 2009. The decrease in funeral revenue is primarily due to a $0.8 million decrease in funeral earnings related to trust activities and a 9.6 percent, or 1,537 events, decrease in our same-store funeral services performed, to 14,434 events. The decline is due to several factors. We experienced a 640 call decline, or 42 percent of the total decline, in our two West Coast regions, due in part to a decrease in low-end cremation events. In addition, we experienced a 222 call decline, or 14 percent of the total decline, in funeral services due to an additional day in the second quarter of 2008 due to leap year. Finally, the remaining decrease in funeral services is primarily due to a decrease in deaths in our markets, when compared with the comparable prior year period. These decreases were partially offset by an increase in average revenue per traditional funeral service of 2.8 percent and an increase in average revenue per cremation service of 7.5 percent. These increases were partially offset by a quarter-over-quarter decrease in funeral trust earnings resulting in an overall increase in our same-store average revenue per funeral service of 2.4 percent. The cremation rate for our same-store operations was 41.4 percent for the second quarter of 2009 compared to 39.9 percent for the second quarter of 2008.

Funeral gross profit decreased $4.0 million to $18.5 million for the second quarter of 2009 compared to $22.5 million for the same period of 2008, primarily due to the decrease in revenue, noted above, partially offset by a $1.6 million decrease in expenses. The decrease in expenses is primarily due to a decrease in salaries and wages due to effective labor management and an improvement in our general liability claims experience.

Cemetery Operations

                                               Three Months Ended April 30,
                                                                        Increase
                                          2009            2008         (Decrease)
                                                      (In millions)
       Cemetery Revenue:
       Cemetery Locations               $    53.6       $    57.6      $      (4.0 )
       Corporate Trust Management (1)         1.8             2.4              (.6 )

       Total Cemetery Revenue           $    55.4       $    60.0      $      (4.6 )


       Cemetery Costs:
       Cemetery Locations               $    48.1       $    46.7      $       1.4
       Corporate Trust Management (1)          .2              .2                -

       Total Cemetery Costs             $    48.3       $    46.9      $       1.4


       Cemetery Gross Profit:
       Cemetery Locations               $     5.5       $    10.9      $      (5.4 )
       Corporate Trust Management (1)         1.6             2.2              (.6 )

       Total Cemetery Gross Profit      $     7.1       $    13.1      $      (6.0 )

(1) Corporate trust management consists of trust management fees and cemetery merchandise and services trust earnings recognized with respect to preneed contracts delivered during the period. Trust management fees are . . .