UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 11, 1997
STEWART ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 0-19508 72-0693290
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
(Address of principal executive offices) (Zip Code)
(504) 837-5880
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events
On September 11, 1997, the Company issued the following press release
for the quarter ended July 31, 1997.
CONTACT: Ronald H. Patron
Stewart Enterprises, Inc.
110 Veterans Blvd.
Metairie, LA 70005
504/837-5880
FOR IMMEDIATE RELEASE
STEWART ENTERPRISES REPORTS CHANGES IN ACCOUNTING METHODS AND
THIRD QUARTER FISCAL YEAR 1997 RESULTS - EARNINGS PER SHARE
INCREASE 35%
Metairie, Louisiana, September 11, 1997. . . Stewart
Enterprises, Inc. (Nasdaq NMS:STEI) today announced that after
the effect of the changes in accounting methods discussed
below, net earnings for the third quarter of fiscal year 1997
increased 48% to $19.1 million, and earnings per share
increased 35%, to $.42, from $12.9 million and $.31,
respectively, for the third quarter of fiscal year 1996
presented on a pro forma basis to reflect the changes in
accounting methods. For the current quarter, revenues increased
27%, to $139.5 million from $110.1 million on a pro forma basis
for the corresponding quarter last fiscal year.
Excluding the effect of the accounting changes, net earnings
for the current quarter increased 33% to $17.2 million, and
earnings per share increased 23%, to $.38, from the $12.9
million and $.31, respectively, previously reported for the
third quarter of fiscal year 1996. Fiscal year 1997 per-share
performance reflects an 8% increase in the weighted average
number of shares outstanding, from 41.6 million to 44.8
million, due principally to the Company's equity offering
completed in June 1997.
For the nine-month period ended July 31, 1997, earnings before
the cumulative effect of the changes in accounting principles
increased 34% to $51.3 million, and earnings per share
increased 28% to $1.19, from $38.4 million and $.93,
respectively, presented on a pro forma basis for the
corresponding period in fiscal year 1996. The cumulative
effect of the changes in accounting principles resulted in a
$2.3 million, or $.05 per share, charge to earnings for the
nine months ended July 31, 1997. For the same period, revenues
increased 22%, to $390.4 million from $321.1 million on a pro
forma basis for the comparable period last fiscal year.
Excluding the effect of the accounting changes, net earnings
for the current year to date period increased 27% to $49.1
million, and earnings per share increased 21%, to $1.14, from
the $38.8 million and $.94, respectively, previously reported
for the first nine months of fiscal year 1996. Fiscal year
1997 per-share performance reflects a 4% increase in the
weighted average number of shares outstanding, from 41.3
million to 43.0 million, due principally to the Company's
recent equity offering.
COMPANY ANNOUNCES CHANGE IN ACCOUNTING METHODS
The Company also announced that effective November 1, 1996, it
has changed three of its accounting methods: (1) The Company
now defers a portion of the earnings realized on irrevocable
prearranged funeral trust funds and escrow accounts in order to
offset the estimated effects of inflation on the future cost of
performing prearranged funeral services. Previously, all
earnings realized on irrevocable prearranged funeral trust
funds and escrow accounts were recognized as realized. (2) The
Company now records all revenues and costs attributable to
sales of prearranged cemetery interment rights and related
products when customer contracts are signed. Previously, such
revenues and costs generally were deferred until 20% of the
contract amount had been collected. (3) The Company now
records revenue and related costs attributable to cemetery
burial site openings and closings at the time of sale.
Previously, such revenues and costs were deferred until
delivery of the services.
Ronald H. Patron, Chief Financial Officer, explained the reason
for the changes. "We have always adhered to the belief that
our accounting methods should reflect the manner in which we
operate our businesses. In our opinion, we have adopted new
methods that are preferable to all other acceptable methods,
because they provide a better matching of revenues and expenses
and are most reflective of the way we conduct the business."
Mr. Patron explained further, "The cemetery accounting methods
that we have adopted more accurately reflect the performance of
our cemeteries and conform to the methods used by other
publicly-traded death care companies. On the funeral side, we
believe it is prudent and preferable to defer a portion of our
funeral trust fund earnings in order to better match revenues
and expenses at the time the funeral is performed and to
maintain the gross profit of the prearranged sale until the
performance of the service. The alternative of deferring
prearranged funeral obtaining costs and all funeral trust fund
earnings would produce approximately the same results, but
would not as accurately reflect the timing of the revenues and
expenses."
EXPANSION OF CORPORATE DEVELOPMENT TEAM; INCLUSION IN S&P
MIDCAP 400 AND NASDAQ-100
Joseph P. Henican, III, Chief Executive Officer, commented, "We
are excited about the expansion of our Corporate Development
Division. We have augmented our corporate development team by
adding seasoned industry professionals to assist us throughout
the United States in locating and capitalizing on attractive
acquisition opportunities. These representatives will
substantially increase the number of acquisition candidates
considered and take the Company to a new level of businesses
acquired, adding fuel for the growth of the Company."
Mr. Henican commented further, "We are also particularly
pleased to have been selected for inclusion in the S&P MidCap
400 and Nasdaq-100 indices, two key barometers of stock market
activity. These events are milestones for our company,
reinforcing the link between our performance and that of the
market overall. It is rewarding to know that our business
strategies and resulting financial performance have earned us
increasing recognition in the global financial community."
CONTINUED EXPANSION IN EUROPE AND U.S.; TOTAL ACQUISITIONS AND
COMMITMENTS APPROACH $190 MILLION FOR FISCAL YEAR 1997
William E. Rowe, President and Chief Operating Officer, stated,
"We are pleased to report another strong financial performance.
Including the effects of our recent accounting changes, our
gross margin for both the quarter and the nine-month period
expanded to 30% from 27%, and our operating margin increased to
27% from 24% compared with the pro forma amounts for fiscal
year 1996. This performance is the result of our continued
focus on improving the performance of our core businesses and
the maturation of recent acquisitions."
Mr. Rowe went on to say, "Thus far in fiscal year 1997, we have
acquired or committed to acquire 111 businesses for an
aggregate purchase price of approximately $188 million,
including our continuing expansion in Europe with the
acquisition of or commitment to acquire 13 businesses in Spain.
These strategic acquisitions provide additional strength for
the Company's expansion in Spain and other parts of Europe.
Also, through these acquisitions and commitments, we have added
another 34 properties to our West Coast operations, will have
expanded our presence in Australia and New Zealand with 22 new
businesses there, and will have enhanced our existing clusters
in Florida with 14 new businesses there. We remain committed
to our strategy of clustering our operations and growing our
Company in a disciplined, balanced manner, and we will continue
to expand the business through our internal and external growth
strategies."
Founded in 1910, Stewart Enterprises is the third largest
provider of products and services in the death care industry in
North America, currently owning and operating 373 funeral homes
and 127 cemeteries in 23 states, Puerto Rico, Mexico,
Australia, New Zealand, Canada and Spain.
- ---------------------------------------------------------------
Statements made herein that are not historical facts are
forward-looking statements. The Company's actual results could
differ materially due to several important factors including
the following: the Company's ability to sustain recent levels
of acquisition activity and enter new markets; the economy,
death rate and competition in the Company's markets; financial
market conditions, including stock and bond prices and interest
rates; the Company's ability to achieve economies of scale and
manage growth; and the performance of acquired businesses.
Such factors, and others, are more fully described in Item 5 of
the Company's Form 10-Q for the quarter ended April 30, 1997.
The Company assumes no obligation to update information
contained herein.
- ---------------------------------------------------------------
STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended July 31,
-----------------------------------------
1997 1996 1996
------------ -------------- ------------
Revenues: (Pro forma)(1) (As reported)
Funeral $ 75,350 $ 55,380 $ 56,971
Cemetery 64,196 54,704 51,963
------------ -------------- ------------
Total revenues 139,546 110,084 108,934
------------ -------------- ------------
Costs and expenses:
Funeral 52,559 37,908 37,908
Cemetery 45,481 42,459 41,303
------------ -------------- ------------
Total costs and expenses 98,040 80,367 79,211
------------ -------------- ------------
Gross profit 41,506 29,717 29,723
Corporate general and administrative
expenses 3,423 2,884 2,884
------------ -------------- ------------
Operating earnings 38,083 26,833 26,839
Interest expense (10,132) (6,558) (6,558)
Investment and other income 756 397 397
------------ -------------- ------------
Earnings before income taxes 28,707 20,672 20,678
Income taxes 9,656 7,752 7,754
------------ -------------- ------------
Net earnings $ 19,051 $ 12,920 $ 12,924
============ ============== ============
Earnings per common share $ 0.42 $ 0.31 $ 0.31
============ ============== ============
Weighted average common shares
outstanding (in thousands) 44,826 41,551 41,551
============ ============== ============
Dividends per common share $ 0.02 $ 0.02
============ ============
(1) Reflects changes in the Company's accounting methods, effective November 1,
1996
STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
Nine Months Ended July 31,
-----------------------------------------
1997 1996 1996
------------ -------------- ------------
Revenues: (Pro forma)(1) (As reported)
Funeral $211,539 $160,237 $164,974
Cemetery 178,841 160,883 155,140
------------ -------------- ------------
Total revenues 390,380 321,120 320,114
------------ -------------- ------------
Costs and expenses:
Funeral 146,334 111,610 111,610
Cemetery 128,383 122,206 120,459
------------ -------------- ------------
Total costs and expenses 274,717 233,816 232,069
------------ -------------- ------------
Gross profit 115,663 87,304 88,045
Corporate general and administrative
expenses 10,459 9,149 9,149
------------ -------------- ------------
Operating earnings 105,204 78,155 78,896
Interest expense (29,165) (18,580) (18,580)
Investment and other income 2,322 1,804 1,804
------------ -------------- ------------
Earnings before income taxes
and cumulative effect of
change in accounting principles 78,361 61,379 62,120
Income taxes 27,035 23,017 23,295
------------ -------------- ------------
Earnings before cumulative
effect of change in accounting
principles 51,326 38,362 38,825
Cumulative effect of change in
accounting principles,
net of taxes (2,324) - -
------------ -------------- ------------
Net earnings $ 49,002 $ 38,362 $ 38,825
============ ============== ============
Earnings per common share:
Earnings before cumulative
effect of change in accounting
principles $ 1.19 $ 0.93 $ 0.94
Cumulative effect of change
in accounting principles (0.05) - -
------------ -------------- ------------
Net earnings $ 1.14 $ 0.93 $ 0.94
============ ============== ============
Weighted average common shares
outstanding (in thousands) 42,955 41,315 41,315
============ ============== ============
Dividends per common share $ 0.06 $ 0.046
============ ============
(1) Reflects changes in the Company's accounting methods, effective November 1,
1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STEWART ENTERPRISES, INC.
September 11, 1997 /s/ KENNETH C. BUDDE
--------------------------------
Kenneth C. Budde
Senior Vice President-Finance
Secretary and Treasurer
(Principal Accounting Officer)
