<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED +
+EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION. A FINAL PROSPECTUS +
+SUPPLEMENT AND ACCOMPANYING PROSPECTUS WILL BE DELIVERED TO PURCHASERS. THIS +
+PRELIMINARY PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS SHALL NOT +
+CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL +
+THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 26, 1996
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(5)
(TO PROSPECTUS DATED OCTOBER 22, 1996) Registration No. 333-14467
$100,000,000
LOGO
STEWART ENTERPRISES, INC.
% NOTES DUE 2003
Interest on the % Notes due 2003 (the "Notes") of Stewart Enterprises,
Inc., a Louisiana corporation (the "Company"), is payable semiannually on
and of each year, commencing , 1997. The Notes are
unsecured, not redeemable prior to maturity and not subject to any sinking
fund. The Notes will be represented by one or more global certificates
registered in the name of the nominee of The Depository Trust Company, as
depositary (the "Depositary"). Beneficial interests in the Notes will be shown
on, and transfers thereof will be effected only through, records maintained by
the Depositary and its participants. Except as described herein, Notes will not
be issued in definitive form. The Notes will trade in the Depositary's Same-Day
Funds Settlement System until maturity, and secondary market trading activity
for the Notes will therefore settle in immediately available funds. All
payments of principal and interest will be made by the Company in immediately
available funds. See "Description of the Notes."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discounts(2) Company(1)(3)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.......................... % % %
Total............................. $ $ $
- ------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Company, estimated at $162,000.
The Notes are being offered, subject to prior sale, by the Underwriters when,
as and if issued to and accepted by the Underwriters, and subject to various
prior conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the global certificate will be made on or about December , 1996
in book-entry form through the facilities of the Depositary, against payment
therefor.
NATIONSBANC CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
CITICORP SECURITIES, INC.
The date of this Prospectus Supplement is , 1996.
<PAGE>
IN CONNECTION WITH THE OFFERING OF THE NOTES, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF
THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
THE COMPANY
GENERAL
Stewart Enterprises, Inc. (the "Company") is the third largest provider of
products and services in the death care industry in North America. The Company
is a leader in the industry's movement toward consolidation, the integration
of funeral home and cemetery operations, the establishment of combined
facilities, and complete death care planning and delivery. Through its
subsidiaries, the Company operates 298 funeral homes and 120 cemeteries in 21
states, Puerto Rico, Mexico, Australia, New Zealand and Canada. From the
Company's initial public offering in October 1991 through November 18, 1996,
the Company has acquired 248 funeral homes and 91 cemeteries for an aggregate
purchase price of approximately $636 million.
The Company believes that it is distinguishable from its competitors by the
quality of its funeral homes and cemeteries, the depth and experience of its
management team, its decentralized management structure, and the quality and
value of its products and services. The Company believes that it owns and
operates one or more of the premier death care facilities in each of its
principal markets, which serve as a centerpiece for a group or cluster of
other properties in the same metropolitan area. The Company considers a
funeral home or cemetery to be a "premier" facility if, when measured by such
factors as tradition, heritage, reputation, physical size, volume of business,
available inventory, name recognition, aesthetics and potential for
development or expansion, it is one of the most highly regarded facilities in
its market area.
The Company retains key managers of acquired companies and gives them
significant operational authority in order to assure the continuation of high
quality services and the maintenance of the acquired firm's reputation and
goodwill. The Company's eight executive officers, four of whom joined the
Company through acquisitions, have an average of more than 25 years of
experience in the death care industry.
OPERATING STRATEGY
The Company's operating strategy is to build market share and increase
profit margins by marketing and providing, both prior to and at the time of
need, a complete range of death care products and services at competitive
prices. In order to achieve those objectives, the Company has acquired or
developed in most of its markets one or more premier facilities to serve as a
centerpiece for a cluster of other properties in the same area. Such
clustering provides certain economies of scale by, for example, enabling the
Company's facilities to share vehicles and employees, to reduce administrative
expenses, to centralize embalming services and to pool inventories of caskets
and other merchandise. Further, where feasible, the Company acquires, or
subsequently develops, combined operations in which a funeral home is located
at and is operated in conjunction with a Company-owned cemetery. Although
profit margins of cemetery operations are traditionally lower than those of
funeral homes, the Company's experience with combined operations has
demonstrated that the combination of a cemetery with a funeral home can
increase significantly the market share of the cemetery and funeral home and
provide cost savings through the sharing of facilities and other resources,
thereby increasing the overall profitability of both.
The Company's operating strategy also emphasizes a decentralized management
structure under which funeral home and cemetery operations are managed by
three regional division presidents, each of whom is an experienced death care
industry executive, who has responsibility for all operations in his
geographic region. Although certain financial management and policy matters
are centralized, division presidents, local funeral home directors and
cemetery managers have substantial autonomy in the manner in which their
products and services are marketed and delivered and their funeral homes and
cemeteries are managed. The Company believes that this strategy permits each
local firm to maintain its unique style of operation and to capitalize on its
reputation and goodwill, while maintaining centralized supervisory controls
and providing specialized services at the corporate level.
The Company is a leader in the industry trend toward prearranged funeral
planning. The Company believes that extensive marketing of death care
prearrangements assures a backlog of future business and builds current
S-3
<PAGE>
and future market share. The Company markets a complete range of death care
products and services on a prearranged basis through a staff of approximately
2,350 commission sales counselors. Prearranged plans are generally funded
through trust, escrow or insurance arrangements.
ACQUISITION STRATEGY
The Company's acquisition strategy is to expand in existing and new markets
by acquiring premier funeral homes and cemeteries that have the potential to
serve as a centerpiece for a group or cluster of other properties that may be
acquired subsequently in the same metropolitan area. From the Company's
initial public offering in October 1991 through November 18, 1996, it has
acquired 248 funeral homes and 91 cemeteries and has entered 66 new markets,
including one in Mexico, two in Canada and several in Australia and New
Zealand, through these acquisitions.
The following table sets forth certain information with respect to the
Company's completed and pending acquisition activity.
<TABLE>
<CAPTION>
NUMBER OF
FUNERAL AGGREGATE
HOMES AND PURCHASE PRICE
CEMETERIES (IN MILLIONS)
---------- --------------
<S> <C> <C>
Properties owned at October 31, 1991........... 72 $ --
Acquisitions(/1/):
Fiscal 1992.................................. 11 30.0
Fiscal 1993.................................. 49 94.6
Fiscal 1994.................................. 60 177.6
Fiscal 1995.................................. 70 154.4
Fiscal 1996.................................. 149 179.0
Pending acquisitions, as of November 18,
1996........................................ 20 52.7
</TABLE>
--------
(1) Excludes funeral homes constructed by the Company.
The Company's acquisition strategy reflects a trend in the death care
industry of transition from small, family-owned firms to large,
professionally-managed, integrated, multiple-facility firms. Opportunities for
growth through the construction of new cemeteries and funeral homes are
limited because of a lack in many communities of available or reasonably
priced land with appropriate zoning and the existence of an adequate number of
funeral homes already serving a mature market. Accordingly, companies in the
death care industry can achieve significant growth only by increasing market
share through such means as acquisitions, extensive marketing of prearranged
products and services and the development of combined operations.
The Company believes that the consolidation trend that began in the United
States a number of years ago has now begun to evolve in other countries,
particularly in Europe, Canada, Australia and Mexico. The Company has acquired
a total of 136 funeral homes and cemeteries in Mexico, Australia, New Zealand
and Canada since the third quarter of fiscal year 1994 and it believes that
attractive expansion opportunities exist in those and other foreign countries.
The Company will continue to explore expansion opportunities in foreign
countries, although it expects most of its expansion to continue to occur
domestically, with its primary focus on the midwestern and western United
States.
Because combined operations and individual funeral homes typically produce
higher profit margins and cash flow than individual cemetery operations, the
Company seeks primarily to acquire combined operations, premier cemeteries on
or adjacent to which it can build and operate a funeral home, or individual
funeral homes and cemeteries that form the basis for or strengthen a cluster
of death care facilities. From the Company's initial public offering in
October 1991 through November 18, 1996, the Company has acquired or entered
into currently outstanding letters of intent or agreements in principle to
acquire 265 funeral homes and 94 cemeteries, 29 of which are combined
operations. Additionally, from October 1991 through November 18, 1996, the
Company
S-4
<PAGE>
has developed seven combined operations through the construction of funeral
homes on existing cemeteries. In evaluating a potential acquisition, the
Company also considers factors such as the size of the community the property
serves, the size and reputation of the property in the community, the
proximity of the property to other of the Company's funeral homes or
cemeteries, the opportunities for additional acquisitions and growth in the
community, and the potential for increasing the cemetery's profitability
through increasing prearranged marketing efforts. In keeping with the quality
of its existing properties, the Company is particularly careful about the
quality of the properties it seeks to acquire.
OPERATIONS
Funeral Operations. The Company's funeral homes offer a complete range of
services to meet families' funeral needs, including prearrangement, family
consultation, the sale of caskets and related funeral products, the removal
and preparation of remains, the use of funeral home facilities for visitation
and worship, and transportation services. Most of the Company's funeral homes
have a non-denominational chapel on the premises, thereby permitting family
visitation and religious services to take place at one location, which reduces
transportation costs to the Company and inconvenience to the family.
In addition to traditional services, substantially all of the Company's
funeral homes offer cremation, which has become more common in the United
States in recent years. For the nine months ended July 31, 1996, cremations
accounted for approximately 19% of funeral services performed by the Company
in the United States. In Australia, New Zealand and Mexico, cremations
accounted for 63%, 68% and 46%, respectively, of funeral services performed by
the Company for the nine months ended July 31, 1996. On September 30, 1996,
the Company entered Canadian markets with the acquisition of the Urgel Bourgie
firm. Historically, cremations have accounted for approximately 50% of the
funeral services performed by Urgel Bourgie. While cremations within the
United States often result in lower average revenue when compared to
traditional funeral services, they generally produce higher gross profit
margins than traditional funeral services. In the Company's foreign markets,
cremations generally produce revenues comparable to those of traditional
funeral services in those markets.
In addition to at-need sales, the Company markets funeral merchandise and
services as well as cemetery property and merchandise on a prearranged basis
through a staff of approximately 2,350 commission sales counselors.
Prearranged funeral plans enable families to establish in advance the type of
service to be performed, the products to be used and the cost of such products
and services in accordance with prices prevailing at the time the agreement is
signed rather than when the products and services are delivered. Prearranged
funeral plans permit families to eliminate the emotional strain of making
death care plans at the time of need and enable the Company to establish a
portion of its future market share. The Company believes that extensive
marketing of prearranged products and services produces a backlog of future
business and builds current and future market share. The Company sold 33,787
prearranged funeral services during the fiscal year ended October 31, 1995 and
26,366 during the nine months ended July 31, 1996. At July 31, 1996, the
Company had a backlog of 240,573 prearranged funeral services expected to be
delivered some time in the future.
Prearranged funeral plans generally are financed either through trust funds
or escrow accounts established by the Company, or through insurance. The
Company's selection of trust funds, escrow accounts or insurance depends
primarily on the regulatory requirements of each jurisdiction in which it
operates. In the case of trust- or escrow-funded plans, local law or contracts
with customers often require that all or a portion of the payments received by
the Company for prearranged funeral plans be placed in trust funds or escrow
accounts established by the Company. In certain jurisdictions where trust or
escrow arrangements are neither statutorily nor contractually required, the
Company typically deposits on a voluntary basis a portion of the payments
received into escrow accounts to fund the future delivery of prearranged
funeral plans.
Prearranged funeral trust funds and escrow accounts, which amounted to
approximately $296 million at July 31, 1996, are designed to provide funding
for the future delivery of prearranged funeral services sold by the Company.
When a prearranged funeral is funded through a trust fund or escrow account,
generally a percentage
S-5
<PAGE>
of the sale price, which is often paid in installments, can be retained by the
Company to defray costs related to the sale, and the remainder is placed in a
trust fund or escrow account. The percentage of the sale price placed in trust
funds or in escrow accounts varies among the different jurisdictions in which
the Company operates.
The Company does not recognize revenue from the sale of prearranged funeral
services until delivery. The Company does not recognize revenue from sales of
prearranged funeral merchandise until delivery in jurisdictions where such
sales are revocable by the customer; where such sales are not revocable,
revenue is recognized currently. The Company recognizes as revenue on a
current basis all dividends and interest earned, and net capital gains
realized, by all prearranged funeral trust funds and escrow accounts except in
those states where earnings revert to the customer if a prearranged funeral
service contract is cancelled. Principal and earnings are withdrawn only as
funeral services are delivered or contracts are cancelled, except in
jurisdictions that permit earnings to be withdrawn currently and in
unregulated jurisdictions where escrow accounts are used.
Funeral operations accounted for approximately 51% of the Company's revenues
during the fiscal year ended October 31, 1995 and 52% during the nine months
ended July 31, 1996.
Cemetery Operations. The Company's cemetery operations involve the sale of
cemetery property and related cemetery merchandise, which includes lots, lawn
crypts, family and community mausoleums, monuments, memorials and burial
vaults, and interment services. Cemetery property and merchandise sales are
made at the time of need or on a prearranged basis. Prearranged sales
generally are financed by the Company through installment sale contracts, the
terms of which generally range from one to seven years. Prearranged sales
represented approximately 61% of cemetery revenue during the fiscal year ended
October 31, 1995.
Prearranged cemetery merchandise trust funds and escrow accounts, which
amounted to approximately $106 million at July 31, 1996, are designed to
provide funding for the future delivery of the prearranged merchandise sold by
the Company and are established in most of the jurisdictions in which the
Company operates. In certain jurisdictions, local law or contracts with
customers generally require that a portion of the sale price received be
placed in trust funds or escrow accounts; however, in other jurisdictions
where trust or escrow arrangements are neither statutorily nor contractually
required, the Company typically makes deposits on a voluntary basis into
escrow accounts. The Company recognizes as revenue on a current basis all
dividends and interest earned, and net capital gains realized, by prearranged
merchandise trust funds or escrow accounts. At the same time, the liability
for the estimated cost to deliver cemetery merchandise is adjusted through a
charge to earnings to reflect inflationary merchandise cost increases. The
principal and earnings are withdrawn only as the merchandise is delivered or
contracts are cancelled.
The Company also provides maintenance of cemetery grounds pursuant to
perpetual care contracts and laws, or on a voluntary basis where trust or
escrow arrangements are neither contractually nor statutorily required, by
placing a portion, generally 10%, of the proceeds from cemetery property sales
into perpetual care trust funds or escrow accounts. The income from these
funds, which have been established in most jurisdictions in which the Company
operates cemeteries, is used for maintenance of those cemeteries, but
principal, including in some jurisdictions net realized capital gains,
generally must be held in perpetuity. The Company recognizes and withdraws
currently all dividend and interest income earned and, where permitted, net
capital gains realized by perpetual care funds. Perpetual care trust funds and
escrow accounts amounted to approximately $140 million at July 31, 1996.
Cemetery operations accounted for approximately 48% of the Company's
revenues for the fiscal year ended October 31, 1995 and 47% during the nine
months ended July 31, 1996.
Combined Funeral and Cemetery Operations. Fifty of the Company's 120
cemeteries are combined operations. Many of these facilities are in the
Company's key markets, including New Orleans, Louisiana; Dallas, Fort Worth
and Houston, Texas; Miami, Orlando, Tampa and St. Petersburg, Florida;
Nashville and Knoxville, Tennessee; Mobile, Alabama; Baltimore, Maryland;
Philadelphia, Pennsylvania; Portland, Oregon; Los Angeles, California; and
Washington, D.C.
S-6
<PAGE>
The Company began to develop and acquire combined facilities in 1979 because
it believed that the operation of such facilities would permit it to increase
market share through the delivery of better and more convenient services at
competitive prices. Although profit margins of cemetery operations typically
are lower than those of funeral homes, the Company's experience with combined
operations has demonstrated that the combination of a cemetery with a funeral
home can increase significantly the market share of the cemetery and funeral
home, thereby increasing the overall profitability of both. The enhanced
purchasing power, more sophisticated management systems and sharing of
facilities, personnel and equipment made possible by integration and combined
facilities results in lower average operating costs to the Company and allows
the Company to offer families the convenience of complete funeral home and
cemetery planning and services from a single supplier at a competitive price.
Foreign Operations. Since the third quarter of fiscal year 1994, the Company
has acquired a total of 136 funeral homes and cemeteries in Mexico, Australia,
New Zealand and Canada. Management expects these properties to generate
slightly less than 10% of consolidated total revenues for fiscal year 1996 and
slightly more than 10% of consolidated total revenues for fiscal year 1997. In
addition, management anticipates that these properties will account for
approximately 15% of consolidated total assets as of October 31, 1996.
In addition to the inherent risks generally associated with foreign
operations, fluctuations in the value of the foreign currency of the country
in which the Company operates relative to the U.S. dollar can affect the
value, in U.S. dollar terms, of the earnings derived from the foreign
operations and can result in foreign currency translation adjustments that
affect the Company's shareholders' equity or, in the case of operations in
highly inflationary economies, net earnings. Based on the three-year
cumulative inflation rate in Mexico at October 31, 1996, management expects
that during the first quarter of fiscal year 1997 the Company will be required
to change its method for reporting foreign currency translation adjustments
for its Mexican operations to the method prescribed for highly inflationary
economies. As a result, foreign currency translation adjustments for the
Company's Mexican operations will be reflected in results of operations,
instead of in shareholders' equity. Management does not expect this change to
have a material effect on the Company's results of operations.
There can be no assurance that expansion into foreign markets will yield
results comparable to those realized as a result of the Company's expansion in
the United States. Through fiscal year 1996, however, the Company's foreign
operations have produced results that do not deviate significantly from
management's expectations.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be approximately $99.2 million, based on an offering price of
100% and after deducting estimated underwriting discounts and commissions and
estimated expenses of the offering. The Company will use substantially all of
the net proceeds to reduce the balances outstanding on one or more of its four
revolving credit facilities, which amounts will then become available to the
Company to fund its continuing acquisition program and for general corporate
purposes. At November 18, 1996, the Company's four revolving credit facilities
had the following outstanding balances, weighted average interest rates and
maturity dates: (i) $215.8 million, 6.04% and October 31, 2000; (ii) $88
million, 6.48% and October 31, 2000; (iii) $75 million, 6.01% and January 17,
1997 and (iv) $1.7 million, 5.81% and December 31, 1996, respectively. Of the
funds drawn by the Company on its revolving lines of credit in the last 12
months, approximately 92% was used to fund acquisitions and the remainder was
used for general corporate purposes. As of November 18, 1996, pending
acquisitions consisted of 17 funeral homes and three cemeteries for an
aggregate purchase price of $52.7 million. See the discussion under the
caption "Capitalization" for additional information about the Company's
revolving credit facilities.
After the application of the net proceeds from this offering, the Company's
credit agreements, including agreements with the holders of the Company's
senior notes (all of which permit a maximum debt-to-equity ratio of 1.25 to
1.0), would allow it to borrow approximately an additional $155.7 million,
substantially all of which would be available under its existing revolving
lines of credit.
S-7
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of July
31, 1996, and as adjusted to reflect the issuance of the Notes and the
application of the net proceeds therefrom as described under the heading "Use
of Proceeds." The table does not reflect debt incurred by the Company in
connection with its acquisition of 77 funeral homes and five cemeteries in
Canada on September 30, 1996 or the reallocation of debt under the Company's
$350 million revolving line of credit on October 31, 1996. The effect of these
transactions on the Company's capitalization is discussed below.
<TABLE>
<CAPTION>
JULY 31, 1996
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt..................... $ 4,693 $ 4,693
======== ========
Long-term debt, excluding current maturities(/1/)
The Notes.............................................. -- 100,000
Revolving line of credit............................... 251,311 159,375
Revolving line of credit note.......................... 7,302 --
6.04% Senior notes..................................... 50,000 50,000
Senior notes, Series A, B and C........................ 75,000 75,000
Other, principally seller financing of acquired
operations or debt assumed in acquisitions, and
partially secured..................................... 11,689 11,689
-------- --------
Total long-term debt................................. 395,302 396,064
-------- --------
Preferred stock, $1.00 par value, 5,000,000 shares
authorized; none outstanding............................ -- --
Shareholders' equity:
Class A common stock, no par value, 150,000,000 shares
authorized; 39,830,323 shares issued and outstanding.. 39,830 39,830
Class B common stock, no par value, 5,000,000 shares
authorized; 1,777,510 shares issued and outstanding... 1,778 1,778
Additional paid-in capital............................. 305,095 305,095
Retained earnings...................................... 203,678 203,678
Cumulative foreign translation adjustment.............. (19,449) (19,449)
Unrealized appreciation of investments................. 1,154 1,154
-------- --------
Total shareholders' equity........................... 532,086 532,086
-------- --------
Total capitalization................................. $927,388 $928,150
======== ========
</TABLE>
- --------
(1) All of the Company's long-term debt is unsecured, except for $2.7 million
at July 31, 1996 ($4.2 million at November 18, 1996) representing liens on
the assets or stock of subsidiaries, which were incurred or assumed in
connection with acquisitions. Long-term debt outstanding at July 31, 1996,
excluding current maturities, included the following:
(i) $251.3 million under a $350 million revolving line of credit which
bears interest at a lending bank's prime rate or certain optional rates
at the Company's election (a weighted average rate of 6.0% at July 31,
1996) and matures on October 31, 2000;
(ii) $7.3 million under a $10 million revolving line of credit note ($1.7
million outstanding at November 18, 1996), which bears interest at a
rate determined by reference to the lending bank's cost of funds or to
LIBOR, at the Company's election (a rate of 6.25% at July 31, 1996),
and matures on December 31, 1996;
(iii) $50 million of senior long-term notes, bearing interest at 6.04% and
maturing on November 30, 2003, with principal payments of $7.143
million due each year commencing November 30, 1997;
S-8
<PAGE>
(iv) $75 million of senior long-term notes consisting of $15 million Series
A due May 1, 1998 bearing interest at 7.92%, $50 million Series B due
November 1, 2002 with principal payments of $16.7 million due on each
of November 1, 2000 and 2001 and $16.6 million due November 1, 2002,
bearing interest at 8.44%, and $10 million Series C due November 1,
2006 bearing interest at 8.72%; and
(v) $11.7 million of other long-term debt ($16.4 million outstanding at
November 18, 1996), representing primarily seller financing of acquired
operations or debt assumed in acquisitions, with maturities through
2023 and bearing interest at a weighted average rate of 6.41% at July
31, 1996.
As of July 31, 1996 the Company had an aggregate of $1.5 million ($1.7
million at November 18, 1996) in standby letters of credit issued under the
$350 million revolving line of credit, which amounts count as advances for
purposes of determining the availability of funds under such line of
credit.
----------------
CANADIAN ACQUISITION
On September 30, 1996, the Company completed its acquisition of Urgel
Bourgie, Quebec Province's largest funeral home and cemetery firm. The
consideration paid by the Company consisted of approximately C$124.7 million
(US$91.7 million) in cash plus the assumption of a C$10.0 million (US$7.3
million) note payable. The acquisition was financed by borrowings under the
Company's revolving credit facilities, including a new US$75 million revolving
line of credit which matures on January 17, 1997 ($75 million outstanding and
6.01% rate at November 18, 1996).
DEBT REALLOCATION
On October 31, 1996, the Company and the lenders under the $350 million
revolving line of credit entered into an agreement whereby the $350 million
facility was replaced with a $262 million facility between the lenders and the
Company and an $88 million facility between the lenders and two of the
Company's subsidiaries which is guaranteed by the Company. Borrowings under
the new facilities bear interest at a lending bank's prime rate or certain
alternative rates at the Company's election, mature on October 31, 2000 and
have other terms and conditions that are identical to those contained in the
$350 million facility. At November 18, 1996, $215.8 million was outstanding
under the $262 million facility, with a weighted average interest rate of
6.04%, and $88.0 million was outstanding under the $88 million facility, with
a weighted average interest rate of 6.48%. The Company's consolidated total
debt was not affected by this transaction.
S-9
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED OCTOBER 31, JULY 31,
----------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Revenues:
Funeral................ $ 52,748 $ 61,493 $ 75,348 $116,266 $ 188,991 $137,352 $ 164,974
Cemetery............... 68,781 76,326 102,385 133,745 175,562 132,591 150,802
-------- -------- -------- -------- ---------- -------- ----------
Total death care
revenues.............. 121,529 137,819 177,733 250,011 364,553 269,943 315,776
Construction and sales
contracts............. 8,818 7,012 4,930 4,347 4,269 3,448 4,338
Operating profit:
Funeral................ 13,498 17,227 22,398 31,785 55,309 39,467 53,364
Cemetery............... 12,552 13,699 18,293 25,266 33,969 26,932 34,206
-------- -------- -------- -------- ---------- -------- ----------
Total death care
operating profit...... 26,050 30,926 40,691 57,051 89,278 66,399 87,570
Construction and sales
contracts............. 267 747 739 546 465 430 475
Corporate general and
administrative........ (5,249) (5,030) (7,223) (8,157) (11,113) (7,796) (9,149)
-------- -------- -------- -------- ---------- -------- ----------
Operating earnings
before performance-
based stock options... 21,068 26,643 34,207 49,440 78,630 59,033 78,896
Performance-based
stock options......... -- -- -- -- (17,252) (17,252) --
-------- -------- -------- -------- ---------- -------- ----------
Operating earnings...... 21,068 26,643 34,207 49,440 61,378 41,781 78,896
Interest expense........ (9,162) (5,414) (6,540) (8,877) (22,815) (17,249) (18,580)
Investment and other
income................. 3,040 (1) 1,221 1,902 1,635 2,937 1,505 1,804
Distributions to prior
ITI shareholders(2).... (1,238) (1,508) -- -- -- -- --
-------- -------- -------- -------- ---------- -------- ----------
Earnings from continuing
operations before
income taxes........... $ 13,708 (1) $ 20,942 $ 29,569 $ 42,198 $ 41,500 (3) $ 26,037 (3) $ 62,120
======== ======== ======== ======== ========== ======== ==========
Earnings from continuing
operations............. $ 9,242 (1) $ 14,195 $ 18,839 $ 27,253 $ 26,145 (3) $ 16,402 (3) $ 38,825
======== ======== ======== ======== ========== ======== ==========
OTHER DATA:
Depreciation and
amortization.......... $ 5,090 $ 5,639 $ 7,346 $ 11,027 $ 16,792 $ 11,470 $ 15,865
Capital
expenditures(4)....... 8,035 7,742 13,598 16,997 20,676 15,400 23,099
Purchases of funeral
homes and
cemeteries(5)......... 2,902 26,215 76,341 154,594 99,691 84,389 52,958
EBITDA(6).............. 27,960 31,995 43,455 62,102 81,107 (6) 54,756 (6) 96,565
Ratio of EBITDA to
interest expense(6)... 3.05x 5.91x 6.64x 7.00x 3.55x (6) 3.17x (6) 5.20x
<CAPTION>
OCTOBER 31, JULY 31,
----------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Assets................. $238,519 $299,996 $455,942 $759,390 $1,056,113 $945,231 $1,188,585
Long-term debt, less
current maturities.... 53,139 82,740 122,517 260,913 317,451 278,896 395,302
Shareholders' equity... 127,954 143,134 232,006 325,671 483,978 449,747 532,086
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED OCTOBER 31, JULY 31,
----------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Funeral homes in
operation at end of
period................ 43 48 76 105 161 146 201
At-need funerals
performed............. 12,233 12,365 14,588 23,539 37,263 28,256 28,348
Prearranged funerals
performed............. 4,715 5,449 6,320 7,571 9,225 6,279 10,712
-------- -------- -------- -------- ---------- -------- ----------
Total funerals
performed........... 16,948 17,814 20,908 31,110 46,488 34,535 39,060
Prearranged funerals
sold.................. 12,677 15,250 17,859 26,637 33,787 24,159 26,366
Backlog of prearranged
funerals at end of
period................ 103,395 112,801 130,610 183,886 222,532 205,994 240,573
Cemeteries in
operation at end of
period................ 29 35 57 90 105 101 114
Interments performed... 20,886 22,107 26,557 33,118 42,480 32,090 34,509
</TABLE>
S-10
<PAGE>
- --------
(1) Includes a pre-tax gain of approximately $1.3 million ($0.5 million after
taxes and other adjustments), resulting principally from the refinancing
of obligations of affiliated limited partnerships following the Company's
initial public offering in October 1991.
(2) Investors Trust, Inc. ("ITI"), which generally administers the Company's
trust funds and escrow accounts, was acquired by the Company on November
1, 1992.
(3) Includes a non-recurring, non-cash charge of $17.3 million ($10.9 million
after-tax) recorded during the third quarter of fiscal year 1995 in
connection with the vesting of the Company's performance-based stock
options.
(4) Excludes acquisitions and includes the following amounts for the
construction of new funeral homes for the years ended October 31, 1991
through 1995 and for the nine months ended July 31, 1995 and 1996,
respectively: $3.9 million, $0, $4.6 million, $2.8 million, $5.5 million,
$3.4 million and $2.2 million.
(5) Represents purchases of subsidiaries as reflected in the Company's
Consolidated Statements of Cash Flows, which amounts are net of cash
acquired, seller financing and stock issued (which items represent the
principal differences between the amounts presented herein and the
purchase prices disclosed under the caption "The Company--Acquisition
Strategy").
(6) "EBITDA" means earnings from continuing operations before interest, taxes,
depreciation, amortization (including amortization of goodwill) and
extraordinary items. EBITDA and the ratio of EBITDA to interest expense
for fiscal year 1995 and for the nine months ended July 31, 1995 include
the effect of a non-recurring, non-cash charge of $17.3 million recorded
in connection with the vesting of the Company's performance-based stock
options; excluding the charge, such amounts would be $98,359 and 4.31x,
respectively, for fiscal year 1995, and $72,008 and 4.17x, respectively,
for the nine months ended July 31, 1995. EBITDA is frequently used by
security analysts and is presented here to provide additional information
about the Company's operations. EBITDA should not be considered as an
alternative to net earnings as an indicator of the Company's operating
performance or as an alternative to cash flows as a better measure of the
Company's liquidity.
S-11
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which reference is hereby made. The following
summary of the Notes is qualified in its entirety by reference to the
Indenture referred to in the Prospectus. Capitalized terms not defined herein
have the meanings assigned to such terms in the Prospectus.
The Notes constitute a single series of Debt Securities for purposes of the
Indenture and are limited to $100 million aggregate principal amount. The
Notes will be unsecured obligations of the Company maturing on , 2003,
and will rank pari passu with all other unsecured indebtedness of the Company
and prior to any of its subordinated indebtedness. The Notes will not be
redeemable prior to maturity and will not be entitled to the benefit of any
mandatory redemption or sinking fund. The Notes will be subject to the legal
defeasance provisions of the Indenture.
Interest on the Notes at the rate set forth on the cover page of this
Prospectus Supplement will accrue from , 1996 and will be payable
semiannually on and of each year, beginning , 1997, to the
persons in whose names the Notes are registered at the close of business on
the preceding and , respectively. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. All payments on the
Notes will be made in U.S. dollars.
BOOK-ENTRY SYSTEM
The Notes initially will be represented by one or more global certificates
deposited with, or on behalf of, the Depositary, and registered in the name of
a nominee of the Depositary. Except as set forth below, the Notes will be
available for purchase in denominations of $1,000 and integral multiples
thereof in book-entry form only.
The Depositary has advised the Company and the Underwriters that the
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary was created to hold securities of persons who
have accounts with the Depositary ("participants") and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations, some of which (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of the
Notes in book-entry form will be made by the Company in immediately available
funds. The Notes will trade in the Depositary's Same-Day Funds Settlement
System until maturity, or until the Notes are issued in certificated form, and
secondary market trading activity in the Notes will therefore be required by
the Depositary to settle in immediately available funds.
S-12
<PAGE>
UNDERWRITING
Upon the terms and subject to the conditions set forth in the Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the Company
has agreed to sell to each of the Underwriters named below, and each of the
Underwriters has severally agreed to purchase, the principal amount of Notes
set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
NationsBanc Capital Markets, Inc............................ $
Bear, Stearns & Co. Inc.....................................
Citicorp Securities, Inc....................................
------------
Total..................................................... $100,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to purchase the Notes are subject to certain conditions and that, if any Notes
are purchased by the Underwriters pursuant to the Underwriting Agreement, all
of the Notes agreed to be purchased by the Underwriters must be so purchased.
The Company has been advised by the Underwriters that they propose to offer
the Notes in part directly to the public at the initial public offering price
set forth on the cover page of this Prospectus Supplement and in part to
certain selected dealers at such price less a concession not to exceed % of
the principal amount of the Notes. The Underwriters may allow, and such
dealers may reallow, a concession not to exceed % of the principal amount of
the Notes to certain other brokers and dealers. After the Notes are released
for sale to the public, the offering price and other selling terms may from
time to time be changed by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company does not intend to list the Notes on any securities exchange. The
Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market-making at any time without notice. There can be no assurance that an
active market for the Notes will develop or, if a market does develop, at what
prices the Notes will trade.
Settlement for the Notes will be made in immediately available funds and all
secondary trading in the Notes will settle in immediately available funds. See
"Description of the Notes--Same-Day Settlement and Payment."
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the Underwriters may be required to make in
respect thereof.
NationsBanc Capital Markets, Inc. is an affiliate of NationsBank of Texas,
N.A. ("NationsBank"), which is a lender to the Company under three of its
revolving credit facilities. Citicorp Securities, Inc. is an affiliate of
Citicorp USA, Inc. ("Citicorp"), which is a lender to the Company under two of
its revolving credit facilities. NationsBank and Citicorp will receive their
proportionate share of any repayment by the Company of amounts outstanding
under such facilities from the proceeds of the offering of the Notes. In
addition, NationsBank or its affiliates and Citicorp or its affiliates
participate on a regular basis in various general financing and banking
transactions for the Company and its affiliates. Citibank, N.A., an affiliate
of Citicorp Securities, Inc., acts as Trustee under the Indenture governing
the Notes. The Underwriters may engage in transactions with or perform
services for the Company in the ordinary course of business.
S-13
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS IN CONNECTION WITH THE OFFERING MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS DO NOT CONSTITUTE
AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICI-
TATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITA-
TION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company................................................................ S-3
Use of Proceeds............................................................ S-7
Capitalization............................................................. S-8
Summary Financial and Operating Data....................................... S-10
Description of the Notes................................................... S-12
Underwriting............................................................... S-13
PROSPECTUS
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 4
Ratio of Earnings to Fixed Charges......................................... 4
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 14
Legal Matters.............................................................. 15
Experts.................................................................... 15
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
STEWART
ENTERPRISES,
INC.
$100,000,000
% NOTES DUE 2003
---------------
PROSPECTUS SUPPLEMENT
---------------
NATIONSBANC CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
CITICORP SECURITIES, INC.
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
