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Stewart Enterprises Reports Earnings Per Share From Continuing Operations of $.11 for the Fourth Quarter and $.43 for Fiscal



Stewart Enterprises Reports Earnings Per Share From Continuing Operations of
$.11 for the Fourth Quarter and $.43 for Fiscal Year 2012

NEW ORLEANS, LA, December 17, 2012 (GLOBE NEWSWIRE) -- Stewart Enterprises,
Inc. (NasdaqGS:STEI) reported today its results for the fourth quarter and
fiscal year ended October 31, 2012. Earnings from continuing operations for
the fourth quarter of 2012 were $9.1 million compared to $8.8 million for the
fourth quarter of 2011 and $37.5 million for fiscal year 2012 compared to
$39.3 million for fiscal year 2011. Fiscal year 2011 results included an
after-tax benefit of $7.5 million from the Company's successful settlement of
Hurricane Katrina litigation. On a diluted per share basis for the three and
twelve months ended October 31, 2012, the Company reported earnings from
continuing operations of $.11 and $.43 per share and adjusted earnings from
continuing operations of $.12 and $.46 per share, respectively.

               Three Months Ended October 31,  Twelve Months Ended October 31,
               2012            2011            2012            2011
               millions per    millions per    millions per    millions per
                        share           share           share           share
Net            $ 9.0    $ .11  $ 8.5    $ .10  $ 35.9   $ .41  $ 38.6   $ .42 
earnings^(1)
Net earnings
from           $ 9.1    $ .11  $ 8.8    $ .10  $ 37.5   $ .43  $ 39.3   $ .43 
continuing
operations^(1)
Adjusted
earnings from  $ 10.1   $ .12  $ 8.4    $ .09  $ 40.2   $ .46  $ 35.6   $ .39 
continuing
operations^(2)
 
^(1) The year ended October 31, 2011 included a $12.4 million ($7.5 million
after tax, or $.08 per diluted share) recovery related to the settlement of
the Hurricane Katrina litigation.
^(2) See table "Reconciliation of Non-GAAP Financial Measures" for additional
information on adjusted earnings and adjusted earnings per share from
continuing operations.

Thomas M. Kitchen, President and Chief Executive Officer, stated, "We finished
fiscal year 2012 with an exceptional fourth quarter, continuing the positive
momentum we generated during the fiscal year. The fourth quarter is the third
consecutive period with year-over-year improvements in many of our key metrics
including total revenue, gross profit and adjusted earnings. For the fourth
quarter of 2012, we increased adjusted earnings per share by 33 percent and
same-store funeral services by 2.2 percent. In addition, we expanded our gross
profit margin by 270 basis points, producing the highest fourth quarter gross
profit margin in six years.  For the year, we improved adjusted earnings per
share by 18 percent. These improvements were driven by a $3 million increase
in revenue and a $9 million increase in gross profit, which reflects the
highest annual revenue and gross profit in four years. Some additional
highlights of fiscal year 2012 compared to the prior year include:

  * Increasing cemetery gross profit by 20 percent and funeral gross profit by
    4 percent, while expanding cemetery gross profit margin by 250 basis
    points and funeral gross profit margin by 100 basis points;
  * Producing total annual returns of 11 percent in our preneed trusts and 13
    percent in our perpetual care trusts;
  * Experiencing the highest annual cemetery property and preneed funeral
    production in five years;
  * Improving cemetery cremation sales by 15 percent while investing
    approximately $8 million in our new cremation inventory development
    projects;
  * Realizing a 7 percent improvement in adjusted EBITDA to $109.6 million, as
    discussed in the table "Reconciliation of Non-GAAP Financial Measures;"
  * Purchasing 4 million shares of the Company's outstanding Class A common
    stock, including 1 million repurchased in the fourth quarter, resulting in
    a 3.5 percent decrease in total shares outstanding in fiscal year 2012;
  * Announcing a 14 percent increase in the Company's annual dividend to $.16
    per share and returning $13.3 million in dividends to our shareholders;
    and
  * Generating operating cash flow of $76.5 million and free cash flow of
    $61.4 million. As of October 31, 2012, the Company had more than $78
    million of cash and marketable securities with no amounts borrowed on our
    $150 million credit facility."

Mr. Kitchen concluded, "During the fiscal year, we successfully integrated our
operations and sales organizational structures to better serve customers and
families. In addition, we have prudently managed our expenses and continuously
evaluated our costs, resulting in expanded margins. We believe the changes we
have made this fiscal year are significant and will benefit the Company for
years to come."

Fourth Quarter Results

FUNERAL

  * Funeral revenue increased $1.3 million, or 1.9 percent, to $69.3 million
    for the fourth quarter of 2012.
  * Same-store services increased 2.2 percent, or 280 events, which the
    Company believes compares favorably to industry-wide data. The increase
    was partially offset by a 0.3 percent decrease in same-store average
    revenue per funeral service.
  * Funeral gross profit increased $2.6 million, or 18.8 percent, to $16.4
    million for the fourth quarter of 2012 compared to $13.8 million for the
    same period of 2011. The improvement in gross profit is primarily due to
    the improvement in revenue, as previously noted, as well as a reduction in
    operating expenses associated with the Company's continuous improvement
    initiative, including successfully integrating the Company's operations
    and sales organizational structures. Funeral gross profit margin improved
    340 basis points to 23.7 percent for the fourth quarter of 2012 from 20.3
    percent for the fourth quarter of 2011.
  * The cremation rate for the Company's same-store operations was 43.1
    percent for the fourth quarter of 2012 compared to 42.1 percent for the
    fourth quarter of 2011.
  * Net preneed funeral sales increased 1.4 percent during the fourth quarter
    of 2012 compared to the fourth quarter of 2011. Preneed funeral sales are
    deferred until the underlying contracts are performed and have no impact
    on current revenue.

CEMETERY

  * Cemetery revenue decreased $1.3 million, or 2.1 percent, to $60.1 million
    for the fourth quarter of 2012. Cemetery property sales declined $1.2
    million, or 4.3 percent, compared to the fourth quarter of 2011. Fourth
    quarter 2011 cemetery property sales were 14.4 percent higher than the
    same period in 2010. The decrease in cemetery property sales is due in
    part to a decline in large cemetery property sales in the fourth quarter
    of 2012 compared to the same period of 2011. In addition, there was a
    decrease in revenue recognized for cemetery property sales for which the
    property was not yet constructed or the down payment required for revenue
    recognition was not yet received. These declines were partially offset by
    an improvement in merchandise delivered and services performed and an
    increase in revenue related to trust activities.
  * Cemetery gross profit increased $0.9 million, or 8.3 percent, to $11.8
    million for the fourth quarter of 2012 compared to $10.9 million for the
    same period of 2011. The increase in gross profit is due in part to the
    reduction in operating expenses associated with the Company's continuous
    improvement initiative, including successfully integrating the Company's
    operations and sales organizational structures, coupled with a decline in
    property and related selling costs. Cemetery gross profit margin improved
    180 basis points to 19.6 percent for the fourth quarter of 2012 from 17.8
    percent for the same period of 2011.

OTHER

  * Corporate general and administrative expenses increased $1.0 million to
    $8.2 million for the fourth quarter of 2012, compared to $7.2 million for
    the same period of 2011. During the fourth quarter of 2012, the Company
    incurred higher professional fees and health care expenses.
  * The effective tax rate for continuing operations for the quarter ended
    October 31, 2012 was 35.1 percent compared to 28.9 percent for the same
    period in 2011. The tax rate for the three months ended October 31, 2011
    was impacted primarily by a tax benefit associated with a deduction
    attributable to the prior disposition of a business.
  * During the fourth quarter of 2012, the Company repurchased 1.1 million
    shares of its Class A common stock for $8.3 million under its stock
    repurchase program.

Fiscal Year 2012 Results

FUNERAL

  * Funeral revenue declined $0.7 million, or 0.2 percent, to $283.0 million
    for fiscal year 2012. This decline is primarily due to a 0.9 percent
    decrease in same-store funeral services, which the Company believes is
    consistent with industry-wide data in its markets and compares favorably
    to its peers. This decrease was partially offset by a 0.3 percent
    improvement in same-store average revenue per funeral service.
  * Funeral gross profit increased $2.7 million, or 4.1 percent, to $69.3
    million for fiscal year 2012. The improvement in gross profit is primarily
    due to a reduction in operating expenses associated with the Company's
    continuous improvement initiative, including successfully integrating the
    Company's operations and sales organizational structures, as well as an
    improvement in the Company's insurance claims experience. Funeral gross
    profit margin improved 100 basis points to 24.5 percent for fiscal year
    2012 from 23.5 percent for the same period of 2011.
  * The cremation rate for the Company's same-store operations was 43.1
    percent for fiscal year 2012 compared to 42.5 percent for the same period
    of 2011.
  * Net preneed funeral sales increased 10.0 percent during fiscal year 2012
    compared to the same period of 2011. Preneed funeral sales are deferred
    until the underlying contracts are performed and have no impact on current
    revenue.

CEMETERY

  * Cemetery revenue increased $4.1 million, or 1.8 percent, to $233.1 million
    for fiscal year 2012. Cemetery property sales improved $2.4 million, or
    2.3 percent, compared to fiscal year 2011. In addition, revenue related to
    trust activities increased by $2.4 million and merchandise delivered and
    services performed increased by $1.3 million. These improvements were
    partially offset by a $2.1 million decline in finance charges as a result
    of reduced interest rates in this low interest rate environment and a $1.6
    million decrease in revenue recognized for cemetery property sales for
    which the property was not yet constructed or the down payment required
    for revenue recognition was not yet received.
  * Cemetery gross profit increased $6.6 million, or 19.5 percent, to $40.4
    million for fiscal year 2012. The increase in gross profit is primarily
    due to the improvement in revenue, as previously noted, as well as a
    reduction in operating expenses associated with the Company's continuous
    improvement initiative, including successfully integrating the Company's
    operations and sales organizational structures.  Cemetery gross profit
    margin improved 250 basis points to 17.3 percent for fiscal year 2012 from
    14.8 percent for the same period of 2011.

OTHER

  * Corporate general and administrative expenses increased $1.7 million to
    $28.5 million for fiscal year 2012, compared to $26.8 million for the same
    period of 2011. During fiscal year 2012, the Company increased spending on
    marketing and consumer research, as well as professional fees associated
    with the operations and sales integration, which the Company believes will
    provide benefits in the future. In addition, the Company experienced an
    increase in health care expenses.
  * Results for fiscal year 2011 include $12.4 million related to the
    settlement of Hurricane Katrina insurance litigation. The settlement
    increased prior year's pre-tax earnings by $12.4 million, net earnings by
    $7.5 million and diluted earnings per share by $.08.
  * The Company recorded $3.3 million in restructuring and other charges
    during fiscal year 2012. This charge was primarily related to separation
    pay, termination benefits and a non-cash asset impairment due to the
    restructuring of the operations and sales organizational structure, as
    well as a separate reduction in workforce associated with the Company's
    continuous improvement initiative, announced in April 2012. For the three
    and twelve months ended October 31, 2012, the decline in costs associated
    with the restructuring of the Company's operations and sales
    organizational structure, as well as the reduction in force are consistent
    with the previously announced expectations of approximately $10 million on
    an annual basis, realized in part in fiscal year 2012, and expected to be
    realized in full in fiscal year 2013. For additional information, see Note
    17 to the consolidated financial statements included in the Company's Form
    10-K for the fiscal year ended October 31, 2012.
  * As a result of the refinancing of the Company's senior notes and revolving
    credit facility in April 2011, the Company recorded a $1.9 million charge
    for the early extinguishment of debt during fiscal year 2011.
  * The effective tax rate for continuing operations for the year ended
    October 31, 2012 was 33.3 percent compared to 37.7 percent for the same
    period in 2011.  For the year ended October 31, 2012, the Company
    benefited from a $2.1 million reduction in the valuation allowance for
    capital losses, associated with the positive performance of its trust
    portfolio.
  * During fiscal year 2012, the Company sold one of its e-commerce businesses
    with the results of its operations and the related impairment reported
    within discontinued operations.
  * During fiscal year 2012, the Company repurchased 4.0 million shares of the
    Company's Class A common stock for $27.4 million under its stock
    repurchase program. As of October 31, 2012, the Company had $16.4 million
    remaining under its $125.0 million program.
  * The Company's weighted average diluted shares outstanding decreased to
    86.3 million shares for the year ended October 31, 2012 compared to 90.5
    million shares for fiscal year 2011. The decrease is primarily a result of
    the Company's stock repurchase program, which has yielded a positive
    impact on the Company's earnings per share.

Cash Flow Results and Debt for Total Operations

  * During the fourth quarter of fiscal year 2011, the Company received $11.3
    million as a result of the Hurricane Katrina settlement.
  * Cash flow provided by operating activities for the fourth quarter of
    fiscal year 2012 was $17.8 million compared to $26.4 million for the same
    period of last year, or $15.1 million excluding the Hurricane Katrina
    settlement. The improvement in operating cash flow, excluding the
    Hurricane Katrina settlement, is due in part to an increase in net
    earnings, coupled with a $0.8 million decrease in net tax payments in the
    fourth quarter of 2012 compared to the fourth quarter of 2011.
  * Cash flow provided by operating activities for fiscal 2012 was $76.5
    million compared to $86.8 million for fiscal year 2011, or $75.5 million
    excluding the Hurricane Katrina settlement.
  * Free cash flow was $14.1 million for the fourth quarter of 2012 compared
    to $21.7 million for the fourth quarter of 2011, or $10.4 million
    excluding the Hurricane Katrina settlement. Free cash flow was $61.4
    million for fiscal year 2012 compared to $69.2 million for the same period
    of 2011, or $57.9 million excluding the Hurricane Katrina settlement. See
    table "Reconciliation of Non-GAAP Financial Measures" for additional
    information on free cash flow.
  * The Company paid $3.4 million, or $.04 per share, and $13.3 million, or
    $.155 per share, in dividends for the fourth quarter and fiscal year 2012,
    respectively, compared to $3.1 million, or $.035 per share, and $11.8
    million, or $.13 per share, in dividends during the fourth quarter and
    fiscal year 2011, respectively.

Trust Performance

The following total returns include realized and unrealized gains and losses:

  * For the quarter ended October 31, 2012, the Company's preneed funeral and
    cemetery merchandise and services trusts experienced a total return of 2.2
    percent, and its perpetual care trusts experienced a total return of 2.4
    percent.
  * For the twelve months ended October 31, 2012, the Company's preneed
    funeral and cemetery merchandise and services trusts experienced a total
    return of 11.4 percent, and its perpetual care trusts experienced a total
    return of 13.2 percent.
  * For the three years ended October 31, 2012, the Company's preneed funeral
    and cemetery merchandise and services trusts experienced an average annual
    total return of 9.9 percent, and its perpetual care trusts experienced an
    average annual total return of 11.0 percent.
  * For the five years ended October 31, 2012, the Company's preneed funeral
    and cemetery merchandise and services trusts experienced an average annual
    total return of 1.6 percent, and its perpetual care trusts experienced an
    average annual total return of 4.0 percent.
  * For fiscal year 2012, the fair market value of the Company's portfolio
    improved $51.6 million to $856.2 million.

Founded in 1910, Stewart Enterprises, Inc. is the second largest provider of
products and services in the death care industry in the United States. The
Company currently owns and operates 217 funeral homes and 141 cemeteries in
the United States and Puerto Rico. Through its subsidiaries, the Company
provides a complete range of funeral and cremation merchandise and services,
along with cemetery property, merchandise and services, both at the time of
need and on a preneed basis.

Stewart Enterprises, Inc. will host its quarterly conference call for
investors to discuss fourth quarter results on Tuesday, December 18, 2012 at
10 a.m. Central Standard Time. The teleconference dial-in number is
1-800-303-0442, using pass code 33868085. To participate, please call the
number at least 15 minutes prior to the call. If you are calling from outside
the United States, the dial-in number is 1-847-413-3733. A replay of the call
will be available by dialing 1-888-843-7419 (from within the continental
United States) or 1-630-652-3042 (from outside the continental United States),
and using pass code 33868085# until January 1, 2013, at 11:59 p.m. Central
Standard Time. Interested parties will also have the opportunity to listen to
the live conference call via the Internet through Stewart Enterprises' website
http://www.stewartenterprises.com. To listen to the live call, please go to
the website at least 15 minutes early to register, download and install any
necessary audio software. A replay will be available at this website shortly
following the conference call and will be available at the website until
January 18, 2013.

 
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
 
                                                Three Months Ended October 31,
                                                2012            2011
Revenues:                                                        
Funeral                                         $ 69,338        $ 68,056 
Cemetery                                         60,098          61,322 
                                                 129,436         129,378 
Costs and expenses:                                              
Funeral                                          52,985          54,225 
Cemetery                                         48,289          50,484 
                                                 101,274         104,709 
Gross profit                                     28,162          24,669 
Corporate general and administrative expenses    (8,257)         (7,227)
Restructuring and other charges                  (439)           — 
Hurricane related charges, net                   (55)            (13)
Net gain on dispositions                         71              — 
Other operating income, net                      438             432 
Operating earnings                               19,920          17,861 
Interest expense                                 (5,857)         (5,779)
Investment and other income, net                 26              278 
Earnings from continuing operations before       14,089          12,360 
income taxes
Income taxes                                     4,949           3,572 
Earnings from continuing operations              9,140           8,788 
Discontinued operations:                                         
Loss from discontinued operations before income  (249)           (435)
taxes
Income tax benefit                               (86)            (174)
Loss from discontinued operations                (163)           (261)
                                                                 
Net earnings                                    $ 8,977         $ 8,527 
                                                                 
Basic earnings per common share:                                 
Earnings from continuing operations             $ .11           $ .10 
Loss from discontinued operations                —               — 
Net earnings                                    $ .11           $ .10 
                                                                 
Diluted earnings per common share:                               
Earnings from continuing operations             $ .11           $ .10 
Loss from discontinued operations                —               — 
Net earnings                                    $ .11           $ .10 
                                                                 
Weighted average common shares outstanding (in                   
thousands):
Basic                                            84,641          88,528 
Diluted                                          85,181          88,840 
                                                                 
Dividends declared per common share             $ .080          $ .035 

 
 
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
 
                                                        Year Ended October 31,
                                                        2012        2011
Revenues:                                                            
Funeral                                                 $ 282,984   $ 283,657 
Cemetery                                                 233,113     229,007 
                                                         516,097     512,664 
Costs and expenses:                                                  
Funeral                                                  213,670     217,009 
Cemetery                                                 192,745     195,238 
                                                         406,415     412,247 
Gross profit                                             109,682     100,417 
Corporate general and administrative expenses            (28,521)     (26,775)
Restructuring and other charges                          (3,291)     — 
Hurricane related recoveries (charges), net              (55)         12,232 
Net gain (loss) on dispositions                          403         (389)
Other operating income, net                              1,211       1,625 
Operating earnings                                       79,429      87,110 
Interest expense                                         (23,401)     (22,747)
Loss on early extinguishment of debt                     —            (1,884)
Investment and other income, net                         174         672 
Earnings from continuing operations before income taxes  56,202      63,151 
Income taxes                                             18,722      23,834 
Earnings from continuing operations                      37,480      39,317 
Discontinued operations:                                             
Loss from discontinued operations before income taxes    (2,314)     (1,245)
Income tax benefit                                       (730)       (483)
Loss from discontinued operations                        (1,584)     (762)
                                                                     
Net earnings                                            $ 35,896    $ 38,555 
                                                                     
Basic earnings per common share:                                     
Earnings from continuing operations                     $ .43       $ .44 
Loss from discontinued operations                        (.02)       (.01)
Net earnings                                            $ .41       $ .43 
                                                                     
Diluted earnings per common share:                                   
Earnings from continuing operations                     $ .43       $ .43 
Loss from discontinued operations                        (.02)       (.01)
Net earnings                                            $ .41       $ .42 
                                                                     
Weighted average common shares outstanding (in                       
thousands):
Basic                                                    85,879      90,001 
Diluted                                                  86,278      90,486 
                                                                     
Dividends declared per common share                     $ .195      $ .130 

 
 
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
 
ASSETS                                       October 31, 2012 October 31, 2011
                                                               
Current assets:                                                
Cash and cash equivalents                    $ 68,187         $ 65,688 
Restricted cash and cash equivalents          6,250            6,250 
Marketable securities                         10,514           662 
Receivables, net of allowances                52,441           49,146 
Inventories                                   36,495           35,859 
Prepaid expenses                              4,923            5,055 
Deferred income taxes, net                    30,671           29,768 
Total current assets                          209,481          192,428 
Receivables due beyond one year, net of       72,620           67,979 
allowances
Preneed funeral receivables and trust         432,422          409,296 
investments
Preneed cemetery receivables and trust        225,048          216,582 
investments
Goodwill                                      249,584          247,038 
Cemetery property, at cost                    401,670          396,014 
Property and equipment, at cost:                               
Land                                          49,085           46,538 
Buildings                                     360,852          353,688 
Equipment and other                           204,971          197,766 
                                              614,908          597,992 
Less accumulated depreciation                 323,648          305,708 
Net property and equipment                    291,260          292,284 
Deferred income taxes, net                    62,125           79,793 
Cemetery perpetual care trust investments     263,663          240,392 
Other assets                                  13,812           15,292 
Total assets                                 $ 2,221,685      $ 2,157,098 

 
 
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
 
LIABILITIES AND SHAREHOLDERS' EQUITY         October 31, 2012 October 31, 2011
                                                               
Current liabilities:                                           
Current maturities of long-term debt         $ 6              $ 5 
Accounts payable and accrued expenses         25,214           24,547 
Accrued payroll and other benefits            19,964           18,181 
Accrued insurance                             22,152           22,398 
Accrued interest                              2,161            2,129 
Estimated obligation to fund cemetery         11,965           12,017 
perpetual care trust
Other current liabilities                     14,723           10,013 
Income taxes payable                          1,004            1,173 
Total current liabilities                     97,189           90,463 
Long-term debt, less current maturities       321,887          317,821 
Deferred income taxes, net                    4,931            5,104 
Deferred preneed funeral revenue              240,415          240,286 
Deferred preneed cemetery revenue             265,347          259,237 
Deferred preneed funeral and cemetery         585,164          558,194 
receipts held in trust
Perpetual care trusts' corpus                 261,883          238,980 
Other long-term liabilities                   20,548           19,337 
Total liabilities                             1,797,364        1,729,422 
Commitments and contingencies                                  
                                                               
Shareholders' equity:                                          
Preferred stock, $1.00 par value, 5,000,000   —                — 
shares authorized; no shares issued
Common stock, $1.00 stated value:                              
Class A authorized 200,000,000 shares;
issued and outstanding 81,359,536 and         81,360           84,421 
84,421,416 shares at October 31, 2012 and
2011, respectively
Class B authorized 5,000,000 shares; issued
and outstanding 3,555,020 shares at October
31, 2012 and 2011; 10 votes per share         3,555            3,555 
convertible into an equal number of Class A
shares
Additional paid-in capital                    479,060          515,274 
Accumulated deficit                           (139,696)        (175,592)
Accumulated other comprehensive income:                        
Unrealized appreciation of investments        42               18 
Total accumulated other comprehensive income  42               18 
Total shareholders' equity                    425,321          427,676 
Total liabilities and shareholders' equity   $ 2,221,685      $ 2,157,098 

 
 
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
 
                                                        Year Ended October 31,
                                                        2012       2011
Cash flows from operating activities:                               
Net earnings                                            $ 35,896   $ 38,555 
Adjustments to reconcile net earnings to net cash                   
provided by operating activities:
Net losses on dispositions                                468       389 
Loss on early extinguishment of debt                     —          1,884 
Non-cash restructuring charge                            1,236      — 
Premiums paid on early extinguishment of debt            —          (850)
Depreciation and amortization                            26,412     27,052 
Non-cash interest and amortization of discount on        5,531      5,305 
senior convertible notes
Provision for doubtful accounts                           4,256     4,879 
Share-based compensation                                  3,404     2,952 
Excess tax benefits from share-based payment             —          (351)
arrangements
Provision for deferred income taxes                      16,000     20,141 
Estimated obligation to fund cemetery perpetual care     619        72 
trust
Other                                                    159        (184)
Changes in assets and liabilities:                                  
Increase in receivables                                  (12,158)   (7,503)
Decrease in prepaid expenses                             124        424 
Increase in inventories and cemetery property            (6,778)    (4,105)
Federal income tax refunds                               76         1,698 
Decrease in accounts payable and accrued expenses        (546)      (858)
Net effect of preneed funeral production and                        
maturities:
Decrease in preneed funeral receivables and trust        1,280      35,532 
investments
Decrease in deferred preneed funeral revenue             (4)        (4,356)
Decrease in deferred preneed funeral receipts held in    (4,803)    (32,787)
trust
Net effect of preneed cemetery production and                       
deliveries:
(Increase) decrease in preneed cemetery receivables and  (135)      3,872 
trust investments
Increase (decrease) in deferred preneed cemetery         6,110      (2,354)
revenue
Decrease in deferred preneed cemetery receipts held in   (859)      (1,194)
trust
Increase (decrease) in other                             249        (1,383)
Net cash provided by operating activities                76,537     86,830 
                                                                    
Cash flows from investing activities:                               
Proceeds from sales/maturities of certificates of
deposit and marketable securities and release of         2,869      10,000 
restricted funds  
Deposits of restricted funds and purchases of
restricted cash equivalents, certificates of deposit     (12,630)   (6,912)
and marketable securities
Proceeds from sale of assets                             755        332 
Purchase of subsidiaries and other investments, net of   (6,442)    (9,110)
cash acquired
Additions to property and equipment                      (20,846)   (26,958)
Other                                                    148        149 
Net cash used in investing activities                    (36,146)   (32,499)
                                                                    
Cash flows from financing activities:                               
Proceeds of long-term debt                               —          200,000 
Repayments of long-term debt                             (5)        (200,005)
Debt refinancing costs                                   (34)       (5,944)
Issuance of common stock                                 2,910      1,495 
Purchase and retirement of common stock                  (27,428)   (28,838)
Dividends                                                (13,335)   (11,762)
Excess tax benefits from share-based payment             —          351 
arrangements
Net cash used in financing activities                    (37,892)   (44,703)
                                                                    
Net increase in cash                                     2,499      9,628 
Cash and cash equivalents, beginning of year             65,688     56,060 
Cash and cash equivalents, end of year                  $ 68,187   $ 65,688 
                                                                    
Supplemental cash flow information:                                 
Cash paid during the year for:                                      
Income taxes, net                                       $ 2,798    $ 3,298 
Interest                                                $ 18,237   $ 20,203 
                                                                    
Non-cash investing and financing activities:                        
Issuance of common stock to directors                   $ 437      $ 456 
Issuance of restricted stock, net of forfeitures        $ 690      $ 914 
Dividends declared but not paid                         $ 3,400    $ — 

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
               FOR THE PERIODS ENDED OCTOBER 31, 2012 AND 2011
                                 (Unaudited)

The Company recorded several items during the three and twelve months ended
October 31, 2012 and 2011 that impacted earnings from continuing operations: a
non-cash interest expense related to the Company's senior convertible notes,
restructuring and other charges, early extinguishment of debt, a perpetual
care funding obligation, net hurricane related recoveries, net gains and
losses on dispositions and unusual tax adjustments. The Company is presenting
adjusted earnings in the table below to eliminate the effects of the specified
items.

                  Three Months Ended              Twelve Months Ended
                  October 31,                     October 31,
Adjusted Balances
are Net of Tax    2012            2011            2012            2011
^(1)
                  millions per    millions per    millions per    millions per
                           share           share           share           share
Consolidated net  $ 9.0    $ .11  $ 8.5    $ .10  $ 35.9   $ .41  $ 38.6   $ .42 
earnings
Add: Loss from
discontinued       0.1      —      0.3      —      1.6      .02    0.7      .01 
operations
Earnings from
continuing         9.1      .11    8.8      .10   37.5      .43    39.3     .43 
operations
Add: Non-cash
interest expense
on senior          0.7      .01    0.6      —      2.6      .03    2.3      .03 
convertible notes
^(2)
Add:
Restructuring and  0.3      —      —        —      2.1      .02    —        — 
other charges
^(3)
Add: Loss on
early              —        —      —        —      —        —      1.2      .01 
extinguishment of
debt
Add: Perpetual
care funding       —        —      —        —      0.4      —      —        — 
obligation ^(4)
Add: Hurricane
related            —        —      —        —      —        —      (7.5)    (.08)
recoveries, net
^(5)
Subtract:  Net
(gain) loss on     —        —      —        —     (0.3)     —      0.3      — 
dispositions
Subtract: Unusual  —        —      (1.0)    (.01) (2.1)     (.02)  —        — 
tax adjustments
Adjusted earnings
from continuing   $ 10.1   $ .12  $ 8.4    $ .09  $ 40.2   $ .46  $35.6    $ .39 
operations
 
^(1) The tax rate associated with the Company's adjustment for the net gain on
dispositions for the twelve months ended October 31, 2012 was 37.0 percent. The
tax rate associated with the loss on early extinguishment of debt and the net
impairment losses on dispositions for the twelve months ended October 31, 2011
was 38.3 percent.
^(2) Effective November 1, 2009, the Company adopted Financial Accounting
Standards Board guidance that relates to the Company's senior convertible notes,
which has been applied retrospectively in the Company's financial statements. For
additional information, see Note 3 to the financial statements included in the
Company's Form 10-K for the year ended October 31, 2012. The tax rate associated
with the interest expense related to the Company's senior convertible notes was
36.4 percent and 37.0 percent for the three and twelve months ended October 31,
2012, respectively. The tax rate associated with the interest expense related to
the Company's senior convertible notes was 38.4 percent and 38.3 percent for the
three and twelve months ended October 31, 2011, respectively.
^(3) The Company recorded $3.3 million in restructuring and other charges during
fiscal year 2012, including $0.4 million in the fourth quarter of 2012. These
charges were primarily related to separation pay, termination benefits and a
non-cash asset impairment due in part to the restructuring of the operations and
sales of the organization, along with a separate reduction in workforce
associated with the Company's continuous improvement initiative. The tax rate
associated with the Company's adjustment for restructuring and other charges for
the three and twelve months ended October 31, 2012 was 35.5 percent and 37.0
percent, respectively.
^(4) As a result of Eastman Kodak's bankruptcy, the Company recorded a charge to
record a probable funding obligation related to the Company's perpetual care
trusts during the first quarter of 2012. The tax rate associated with the
Company's adjustment for the perpetual care funding obligation for the twelve
months ended October 31, 2012 was 37.0 percent.
^(5) In August 2011, the Company successfully settled litigation related to
Hurricane Katrina damages for $12.4 million, including $1.1 million that was
advanced to the Company in fiscal year 2007. The tax rate associated with the
Company's adjustment for net hurricane related recoveries for the twelve months
ended October 31, 2011 was 39.1 percent.

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
               FOR THE PERIODS ENDED OCTOBER 31, 2012 AND 2011
                                 (Unaudited)

Free cash flow is defined as net cash provided by operating activities less
maintenance capital expenditures. Management believes that free cash flow is a
useful measure of the Company's ability to make strategic investments,
repurchase stock, repay debt or pay dividends (subject to the restrictions in
its debt agreements). The following table provides a reconciliation between
net cash provided by operating activities (the GAAP financial measure that the
Company believes is most directly comparable to free cash flow) and free cash
flow for the three and twelve months ended October 31, 2012 and 2011:

 

 Free Cash Flow           Three Months Ended        Twelve Months Ended
                          October 31,               October 31,
(Dollars in millions)     2012         2011         2012          2011
Net cash provided by      $ 17.8       $ 26.4       $ 76.5        $ 86.8 
operating activities ^(1)
Less: Maintenance capital  (3.7)        (4.7)        (15.1)        (17.6)
expenditures
Free cash flow            $ 14.1       $ 21.7       $ 61.4        $ 69.2 
 
^(1) During the fourth quarter of fiscal year 2011, the Company received $11.3
million as a result of the Hurricane Katrina settlement. Cash flow provided by
operating activities for the fourth quarter of fiscal year 2012 was $17.8
million compared to $26.4 million for the same period of last year, or $15.1
million excluding the Hurricane Katrina settlement. The improvement in
operating cash flow, excluding the Hurricane Katrina settlement, is due in
part to an increase in net earnings, coupled with a $0.8 million decrease in
net tax payments in the fourth quarter of 2012 compared to the fourth quarter
of 2011. Cash flow provided by operating activities for fiscal 2012 was $76.5
million compared to $86.8 million for fiscal year 2011, or $75.5 million
excluding the Hurricane Katrina settlement.

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
               FOR THE PERIODS ENDED OCTOBER 31, 2012 AND 2011
                                 (Unaudited)

Adjusted EBITDA is defined as earnings from continuing operations plus
depreciation and amortization, interest expense, early extinguishment of debt,
perpetual care funding obligations, restructuring and other charges, income
taxes and net hurricane charges and less net gain on dispositions and net
hurricane recoveries.  Adjusted EBITDA margins are calculated by dividing
adjusted EBITDA by revenue.

Management believes that adjusted EBITDA is a useful measure for providing
additional insight into the Company's operating performance. Due to the
Company's significant cash investment in preneed activity, management does not
view adjusted EBITDA as a measure of the Company's cash flow. Investors should
be aware that adjusted EBITDA may not be comparable to similarly titled
measures presented by other companies. The following table provides a
reconciliation between net earnings (the GAAP financial measure that the
Company believes is most directly comparable to adjusted EBITDA) and adjusted
EBITDA for the three and twelve months ended October 31, 2012 and 2011:

                                Three Months Ended     Twelve Months Ended
Adjusted EBITDA                 October 31,            October 31,
(Dollars in millions)           2012        2011       2012        2011
Consolidated net earnings       $ 9.0       $ 8.5      $ 35.9      $ 38.6 
Add: Loss from discontinued      0.1         0.3        1.6         0.7 
operations
Earnings from continuing         9.1         8.8        37.5        39.3 
operations
Add: Depreciation and            6.6         6.7        26.4        27.1 
amortization
Add: Interest expense            5.9         5.8        23.4        22.7 
Add: Loss on early               —           —          —           1.9 
extinguishment of debt
Add: Perpetual care funding      —           —          0.6         — 
obligation ^(1)
Add: Restructuring and other     0.4         —          3.3         — 
charges
Add: Income taxes                5.0         3.6        18.7        23.8 
Add (Subtract):  Hurricane
related charges (recoveries),    0.1         —          0.1         (12.2)
net
Subtract: Net gain on            (0.1)       —          (0.4)       — 
dispositions
Adjusted EBITDA                 $ 27.0      $ 24.9     $ 109.6     $ 102.6 
 
^(1) As a result of Eastman Kodak's bankruptcy, the Company recorded a charge
to record a probable funding obligation related to the Company's perpetual
care trusts during the first quarter of 2012.

                          STEWART ENTERPRISES, INC.
                               AND SUBSIDIARIES

                            CAUTIONARY STATEMENTS

This press release includes forward-looking statements that are generally
identifiable through the use of words such as "believe," "expect," "intend,"
"plan," "estimate," "anticipate," "project," "will" and similar
expressions. These forward-looking statements rely on assumptions, estimates
and predictions that could be inaccurate and that are subject to risks and
uncertainties that could cause actual results to differ materially from our
goals or forecasts. These risks and uncertainties include, but are not limited
to:

  * effects on our trusts and escrow accounts of changes in stock and bond
    prices and interest and dividend rates;
     
  * effects of the substantial unrealized losses in the investments in our
    trusts, including:

    * decreased future cash flow and earnings as a result of reduced earnings
      from our trusts and trust fund management;
       
    * the potential to realize additional losses and additional cemetery
      perpetual care funding obligations and tax valuation allowances;

  * effects on at-need and preneed sales of a weak economy;
     
  * effects on revenue due to the changes in the number of deaths in our
    markets and recent annual declines in funeral call volume;
     
  * effects on our revenue and earnings of the continuing national trend
    toward increased cremation and the increases in the percentage of
    cremations performed by us that are inexpensive direct cremations;
     
  * effects on our future revenue and costs of our organizational
    restructuring designed to better integrate operations and sales, being
    implemented primarily during the latter part of fiscal year 2012 and the
    beginning of fiscal year 2013;
     
  * effects on cash flow and earnings as a result of increased costs,
    particularly supply costs related to increases in commodity prices;
     
  * effects on our market share, prices, revenues and margins of intensified
    price competition or improved advertising and marketing by competitors,
    including low-cost casket providers and increased offerings of products or
    services over the Internet;
     
  * risk of loss due to hurricanes and other natural disasters;
     
  * effects of the call options the Company purchased and the warrants the
    Company sold on our Class A common stock and the effects of the
    outstanding warrants on the ownership interest of our current
    stockholders;
     
  * our ability to pay future dividends on and repurchase our common stock;
     
  * our ability to consummate significant acquisitions of or investments in
    death care or related businesses successfully;
     
  * the effects on us as a result of our industry's complex accounting model;

and other risks and uncertainties described in our Form 10-K for the year
ended October 31, 2012, filed with the SEC. We disclaim any obligation or
intent to update or revise any forward-looking statements in order to reflect
events or circumstances after the date of this release.

CONTACT: Lewis J. Derbes, Jr.
         Stewart Enterprises, Inc.
         1333 S. Clearview Parkway
         Jefferson, LA 70121
         504-729-1400

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