STEWART ENTERPRISES INC, S-3/A, 1997-06-09

STEWART ENTERPRISES INC
S-3/A, 1997-06-09
PERSONAL SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1997.

REGISTRATION NO. 333-27771

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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

----------------
STEWART ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

LOUISIANA 110 VETERANS MEMORIAL 72-0693290
BOULEVARD (I.R.S. EMPLOYER
(STATE OR OTHER METAIRIE, LOUISIANA 70005 IDENTIFICATION NUMBER)
JURISDICTION OF (504) 837-5880
INCORPORATION OR
ORGANIZATION) (ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES)

JOSEPH P. HENICAN, III
CHIEF EXECUTIVE OFFICER AND
VICE CHAIRMAN OF THE BOARD
STEWART ENTERPRISES, INC.
P. O. BOX 19925
NEW ORLEANS, LOUISIANA 70179
(504) 837-5880
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:
L. R. MCMILLAN, II RONALD J. FRAPPIER
JONES, WALKER, WAECHTER, JENKENS & GILCHRIST
POITEVENT, CARRERE & DENEGRE, L.L.P. A PROFESSIONAL CORPORATION
201 ST. CHARLES AVENUE 1445 ROSS AVENUE, SUITE 3200
NEW ORLEANS, LOUISIANA 70170-5100 DALLAS, TEXAS 75202-2711

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

----------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS 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 STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JUNE 9, 1997

PROSPECTUS

4,750,000 SHARES

LOGO
STEWART ENTERPRISES, INC.

CLASS A COMMON STOCK

Of the 4,750,000 shares of Class A Common Stock being offered hereby,
4,250,000 shares are being sold by the Company and 500,000 shares are being
sold by the Selling Shareholders. See "Selling Shareholders." The Company will
not receive any of the proceeds from the sale of the shares by the Selling
Shareholders. See "Use of Proceeds." The last reported sale price of the Class
A Common Stock (symbol "STEI") on the Nasdaq National Market on June 6, 1997
was $37.25 per share. See "Price Range of Common Stock and Dividend Policy."

The Company has two classes of common stock outstanding, Class A and Class B,
the rights of the holders of which are essentially identical, except that
holders of Class A Common Stock are entitled to one vote per share and holders
of Class B Common Stock are entitled to 10 votes per share. The Class B Common
Stock may be transferred only to certain transferees but is freely convertible
into an equal number of shares of Class A Common Stock. The Class A Common
Stock is freely transferable and non-convertible. Upon completion of the
offering, assuming that the over-allotment option described below is not
exercised, Frank B. Stewart, Jr., the Chairman of the Board of the Company and
one of the Selling Shareholders, will own beneficially shares of Class A and
Class B Common Stock having approximately 34.6% of the total voting power of
the Company.

-----------

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. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2)
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<S> <C> <C> <C> <C>
Per Share............ $ $ $ $
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Total(3)............. $ $ $ $
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</TABLE>
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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses of the offering, estimated at $269,441 payable by
the Company and $5,559 payable by the Selling Shareholders.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
712,500 additional shares of Class A Common Stock on the same terms and
conditions as set forth above solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will be $ , $ , $ and $ , respectively. See
"Underwriting."

-----------

The shares of Class A Common Stock are offered subject to prior sale when, as
and if delivered to and accepted by the Underwriters, and subject to certain
other 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 Class A Common Stock will be made on or about June , 1997 at
the offices of Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York
10167.

-----------

BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
ABN AMRO CHICAGO CORPORATION
JOHNSON RICE & COMPANY L.L.C.

June , 1997
<PAGE>

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS
AND THE IMPOSITION OF PENALTY BIDS. SEE "UNDERWRITING."

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, Suite 1300,
New York, New York 10048, and Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains an Internet Web site containing reports, proxy statements and other
information regarding registrants that file electronically with the Commission
(http://www.sec.gov). Such reports, proxy statements and other information may
also be inspected at the National Association of Securities Dealers, Inc. at
1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement"),
under the Securities Act of 1933, as amended (the "Securities Act") with
respect to the shares of Class A Common Stock offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Class A Common Stock offered hereunder,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document referred to
herein are not necessarily complete and, where such contract or other document
is an exhibit to the Registration Statement, each such statement is qualified
in all respects by the provisions of such exhibit, to which reference is
hereby made for a full statement of the provisions thereof.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents filed by the Company with the Commission are hereby
incorporated by reference into this Prospectus (the Company's Exchange Act
file number is 0-19508): (i) the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1996, filed January 24, 1997; (ii) the
description of the Company's Class A Common Stock set forth in its
Registration Statement under the Exchange Act dated September 5, 1991; (iii)
the Company's Quarterly Report on Form 10-Q for the quarter ended January 31,
1997, filed March 17, 1997; and (iv) the Company's Current Reports on Form 8-
K, dated December 5, 1996, filed December 6, 1996; dated March 10, 1997, filed
March 11, 1997; dated May 23, 1997, filed May 23, 1997; and dated June 9,
1997, filed June 9, 1997.

All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such reports and documents.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
to the extent that a statement contained herein or in any other document
subsequently filed which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus has been delivered, upon written or
oral request, a copy of any or all of the documents incorporated herein by
reference (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Stewart Enterprises, Inc., Attention: Kenneth C. Budde, Senior
Vice President-Finance, 110 Veterans Memorial Boulevard, Metairie, Louisiana,
70005, telephone (504) 837-5880.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes that the over-allotment option granted to the
Underwriters will not be exercised. Share and per share amounts in this
Prospectus for fiscal years 1992 and 1993 have been adjusted to reflect the
Company's three-for-two stock split in the form of a 50% stock dividend
effected December 1, 1993. Additionally, share and per share amounts for fiscal
years 1992 through 1996 have been adjusted to reflect the Company's three-for-
two stock split in the form of a 50% stock dividend effected June 21, 1996.

THE COMPANY

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 345 funeral homes and 124 cemeteries in 23 states, Puerto
Rico, Mexico, Australia, New Zealand, Canada and Spain. During fiscal year
1996, the Company acquired 134 funeral homes and 15 cemeteries for an aggregate
purchase price of $179.0 million. During fiscal year 1997, as of May 20, 1997,
the Company has acquired 47 funeral homes and five cemeteries for an aggregate
purchase price of $111.4 million and has entered into agreements in principle
or letters of intent to acquire 22 funeral homes and two cemeteries for an
aggregate purchase price of approximately $32.5 million.

The Company's strategy is to build market share in its existing markets
through extensive marketing, the sale of prearranged products and services and
the development of new funeral homes, and to expand in existing and new markets
through selective acquisitions. In each market in which it wishes to expand,
the Company's strategy is to acquire one or more premier facilities to serve as
a centerpiece for a group or cluster of other properties that may be acquired
subsequently 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. Where feasible, the Company enters markets with, or subsequently
develops, combined operations in which a funeral home is located at and is
operated in conjunction with a Company-owned cemetery. The continued
acquisition and development of combined operations is a key component of the
Company's expansion plan.

The Company is a leader in the industry trend toward prearranged death care
planning. The Company believes that extensive marketing of death care
prearrangements assures a backlog of future business and builds current 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
3,000 commission sales counselors.

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 11 executive officers, five of whom joined the Company
through acquisitions, have an average of more than 24 years of experience in
the death care industry.

The Company is a Louisiana corporation, and the mailing address of its
executive offices is P.O. Box 19925, New Orleans, Louisiana 70179. Its
telephone number is (504) 837-5880.

3
<PAGE>

RECENT DEVELOPMENTS

The Company announced on June 9, 1997 that for the second quarter of fiscal
year 1997 its net earnings were $16.5 million and earnings per share were $.39,
compared to $13.4 million and $.32, respectively, reported for the second
quarter of fiscal year 1996. For the first half of fiscal year 1997, net
earnings were $31.9 million and earnings per share were $.76, compared to $25.9
million and $.63, respectively, reported for the first half of fiscal year
1996. Per-share amounts for fiscal year 1996 have been adjusted to reflect the
Company's three-for-two stock split effective June 21, 1996.

THE OFFERING

Securities Offered..........
4,750,000 shares of Class A Common Stock, of
which 4,250,000 shares are being offered by the
Company and 500,000 shares are being offered by
the Selling Shareholders. See "Use of Proceeds"
and "Selling Shareholders."

Common Stock Outstanding
Prior to the Offering...... 40,499,320 shares of Class A Common Stock
1,777,510 shares of Class B Common Stock

Common Stock to be
Outstanding After the
Offering................... 44,749,320 shares of Class A Common Stock
1,777,510 shares of Class B Common Stock

Rights of Holders of Class
A and Class B Common
Stock...................... The rights of holders of Class A Common Stock and
Class B Common Stock are essentially identical,
except that holders of Class A Common Stock are
entitled to one vote per share and holders of
Class B Common Stock are entitled to 10 votes per
share. The Class B Common Stock may be
transferred only to certain transferees but is
freely convertible into an equal number of shares
of Class A Common Stock. The Class A Common Stock
is freely transferable and non-convertible.

Upon completion of the offering, Frank B.
Stewart, Jr., Chairman of the Board of the
Company and one of the Selling Shareholders, will
own beneficially approximately 8.7% of the
Company's outstanding Class A Common Stock and
100% of the Company's outstanding Class B Common
Stock. Because holders of the Class B Common
Stock are entitled to 10 votes per share, Mr.
Stewart will own beneficially shares of Class A
and Class B Common Stock having approximately
34.6% of the total voting power of the Company.

Use of Proceeds............. The Company intends to use the net proceeds from
the sale of the Class A Common Stock offered
hereby to fund acquisitions and for general
corporate purposes. Pending use for such
purposes, the net proceeds will be used to repay
outstanding indebtedness. See "Use of Proceeds."

Nasdaq National Market
Symbol..................... STEI

4
<PAGE>

SUMMARY FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED OCTOBER 31, JANUARY 31,
------------------------------------------------------ ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Revenues:
Funeral................ $ 61,493 $ 75,348 $116,266 $ 188,991 $ 225,461 $ 53,087 $ 68,906
Cemetery(1)............ 83,338 107,315 138,092 179,831 207,926 49,670 53,756
-------- -------- -------- ---------- ---------- ---------- ----------
Total revenues......... 144,831 182,663 254,358 368,822 433,387 102,757 122,662
Gross profit:
Funeral................ 17,227 22,398 31,785 55,309 72,239 16,718 22,501
Cemetery(1)............ 14,446 19,032 25,812 34,434 45,879 11,881 13,369
-------- -------- -------- ---------- ---------- ---------- ----------
Total gross profit..... 31,673 41,430 57,597 89,743 118,118 28,599 35,870
Corporate general and
administrative......... (5,030) (7,223) (8,157) (11,113) (14,096) (2,950) (3,855)
-------- -------- -------- ---------- ---------- ---------- ----------
Operating earnings
before performance-
based stock options.... 26,643 34,207 49,440 78,630 104,022 25,649 32,015
Performance-based stock
options................ -- -- -- (17,252) -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Operating earnings...... 26,643 34,207 49,440 61,378 104,022 25,649 32,015
Interest expense........ (5,414) (6,540) (8,877) (22,815) (26,051) (6,204) (8,962)
Investment and other
income................. 1,221 1,902 1,635 2,937 4,104 551 785
Distributions to prior
ITI shareholders(2).... (1,508) -- -- -- -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Earnings from continuing
operations before
income taxes........... $ 20,942 $ 29,569 $ 42,198 $ 41,500(3) $ 82,075 $ 19,996 $ 23,838
======== ======== ======== ========== ========== ========== ==========
Earnings from continuing
operations............. $ 14,195 $ 18,839 $ 27,253 $ 26,145(3) $ 51,297 $ 12,498 $ 15,376
======== ======== ======== ========== ========== ========== ==========
Earnings per common
share from continuing
operations(4).......... $ .64 $ .71 $ .85 $ .72(3) $ 1.24 $ .30 $ .37
======== ======== ======== ========== ========== ========== ==========
Weighted average common
shares outstanding (in
thousands)(4).......... 22,239 26,535 31,910 36,386 41,410 41,031 41,853
======== ======== ======== ========== ========== ========== ==========
Dividends declared per
common share(4)........ $ .005 $ .018 $ .027 $ .033 $ .066 $ .013 $ .02
======== ======== ======== ========== ========== ========== ==========
<CAPTION>
OCTOBER 31, JANUARY 31, 1997
------------------------------------------------------ ----------------------
AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(5)
-------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Assets................. $299,996 $455,942 $759,390 $1,072,435 $1,372,588 $1,413,727 $1,413,727
Long-term debt, less
current maturities.... 82,740 122,517 260,913 317,451 515,901 545,655 394,709
Shareholders' equity... 143,134 232,006 325,671 483,978 547,447 557,877 708,823
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED OCTOBER 31, JANUARY 31,
------------------------------------------------------ ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Funeral homes in
operation at end of
period................ 48 76 105 161 298 167 310

At-need funerals
performed............. 12,365 14,588 23,539 37,263 38,351 9,034 13,241
Prearranged funerals
performed............. 5,449 6,320 7,571 9,225 15,422 4,070 4,548
-------- -------- -------- ---------- ---------- ---------- ----------
Total funerals
performed........... 17,814 20,908 31,110 46,488 53,773 13,104 17,789
Prearranged funerals
sold.................. 15,250 17,859 26,637 33,787 37,545 8,434 9,057
Backlog of prearranged
funerals at end of
period................ 112,801 130,610 183,886 222,532 294,829 229,571 296,014
Cemeteries in
operation at end of
period................ 35 57 90 105 120 109 120
Interments performed... 22,107 26,557 33,118 42,480 46,007 11,685 13,997
</TABLE>

5
<PAGE>

- --------
(1) Includes the Company's construction and sales operations, which previously
were classified as a separate industry segment.

(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,
or $.30 per share, after-tax) recorded during the third quarter of fiscal
year 1995 in connection with the vesting of the Company's performance-based
stock options. Excluding that charge, earnings from continuing operations
before income taxes, earnings from continuing operations, and earnings per
common share from continuing operations for fiscal year 1995 were $58.8
million, $37.0 million and $1.02, respectively.

(4) Fiscal years 1992 and 1993 reflect the Company's three-for-two split of its
Class A and Class B Common Stock effected December 1, 1993 by means of a
50% stock dividend. Additionally, fiscal years 1992 through 1996 reflect
the Company's three-for-two split effected June 21, 1996 by means of a 50%
stock dividend.

(5) Adjusted to reflect the sale of the Class A Common Stock offered hereby and
the application of the net proceeds from such sale, based on an estimated
offering price of $37.25 per share. See "Use of Proceeds" and
"Capitalization."

6
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,250,000 shares of
Class A Common Stock offered by it hereby are estimated to be approximately
$150.9 million ($176.3 million if the Underwriters' over-allotment option is
exercised in full), based on an estimated offering price of $37.25 per share
and after deducting estimated underwriting discounts and commissions and
expenses of the offering payable by the Company. The Company will not receive
any proceeds from the sale of Class A Common Stock by the Selling
Shareholders.

The Company's growth strategy depends largely on its ability to consummate
acquisitions, and the availability of substantial financial resources is
important to its ability to compete effectively for acquisition opportunities.
The purpose of this offering is to further strengthen the Company's financial
position and to provide it with the financial flexibility necessary to take
advantage of acquisition opportunities as they arise. The Company initially
will use substantially all of the net proceeds to reduce the balances
outstanding on its revolving credit facilities, which amounts will then become
available to the Company to fund its continuing acquisition program and for
general corporate purposes. As of May 19, 1997, $418 million was outstanding
under the Company's $600 million revolving line of credit and no amount was
outstanding under the Company's $10 million revolving line of credit. The $600
million revolving line of credit bears interest at the lead lending bank's
prime rate, or at certain optional rates at the Company's election (a weighted
average rate of approximately 6.23% at May 19, 1997), contains a facility fee
of 12.5 basis points, and matures on April 30, 2002.

Under the most restrictive of its credit agreements, the Company is required
to maintain a debt-to-equity ratio of not more than 1.25 to 1.0. After
application of the net proceeds of this offering, the Company's additional
borrowing capacity would be approximately $398 million under this ratio.

Of the funds drawn by the Company on its revolving lines of credit in the 12
months ended April 30, 1997, approximately 80% was used to fund acquisitions,
and the remainder was used for additions to property and equipment, including
new funeral home construction, and general corporate purposes.

As of May 20, 1997, pending acquisitions consisted of 22 funeral homes and
two cemeteries for an aggregate purchase price of approximately $32.5 million.

7
<PAGE>

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Class A Common Stock is traded on the Nasdaq National Market
under the Symbol STEI. The following table sets forth, for the periods
indicated, the range of high and low bid prices, as reported by the Nasdaq
National Market. Prices for fiscal year 1995 and for the first three quarters
of fiscal year 1996 have been adjusted to reflect a three-for-two stock split
effected in the form of a 50% stock dividend on June 21, 1996.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year 1997
Third Quarter (through June 6, 1997)................ 37 1/2 32 1/2
Second Quarter...................................... 37 1/2 32 1/4
First Quarter....................................... 38 3/4 32 3/4
Fiscal Year 1996
Fourth Quarter...................................... 36 26 3/4
Third Quarter....................................... 32 11/64 24 1/2
Second Quarter...................................... 31 24 43/64
First Quarter....................................... 26 11/64 21 11/64
Fiscal Year 1995
Fourth Quarter...................................... 24 20 11/64
Third Quarter....................................... 22 43/64 18 1/2
Second Quarter...................................... 18 21/64 15 53/64
First Quarter....................................... 16 1/2 15 1/2
</TABLE>

The Company declared quarterly cash dividends of $.007 per share on its Class
A and Class B Common Stock during the first three quarters of fiscal year 1995,
$.013 per share during the fourth quarter of fiscal year 1995 and the first two
quarters of fiscal year 1996, and $.02 per share thereafter. The Company
intends to continue its current policy of declaring quarterly cash dividends on
the Class A and Class B Common Stock in the amount of $.02 per share. The
declaration and payment of dividends is at the discretion of the Board of
Directors and will depend on the Company's results of operations, financial
condition, cash requirements, future prospects and other factors deemed
relevant by the Board of Directors. The most restrictive of the Company's
credit agreements restricts the declaration and payment of cash dividends on
the capital stock of the Company within any period of four consecutive quarters
to 50% or less of the Company's consolidated net earnings for those four
quarters. Additionally, the credit agreement limits the purchase, redemption,
or retirement of any shares of the Company's capital stock to 5% or less of its
consolidated net worth on the payment date.

8
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
January 31, 1997, and such capitalization as adjusted to reflect the sale by
the Company of the 4,250,000 shares of Class A Common Stock offered hereby,
assuming no exercise of the Underwriters' over-allotment option (based upon an
estimated offering price of $37.25 per share and after deducting estimated
underwriting discounts and commissions and expenses of the offering payable by
the Company).

<TABLE>
<CAPTION>
JANUARY 31, 1997
--------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt................ $ 11,589 $ 11,589
========== ==========
Long-term debt, excluding current maturities(2)
Revolving lines of credit......................... $ 316,611 $ 165,665
Senior notes...................................... 117,857 117,857
6.70% Notes due 2003.............................. 100,000 100,000
Other, principally seller financing of acquired
operations or assumption upon acquisition........ 11,187 11,187
---------- ----------
Total long-term debt............................ 545,655 394,709
---------- ----------
Preferred stock, $1.00 par value, 5,000,000 shares
authorized; none outstanding....................... -- --
Shareholders' equity:
Class A Common Stock, no par value, $1.00 stated
value, 150,000,000 shares authorized; 40,272,178
shares issued and outstanding; 44,522,178 shares
as adjusted...................................... 40,272 44,522
Class B Common Stock, no par value, $1.00 stated
value, 5,000,000 shares authorized; 1,777,510
shares issued and outstanding.................... 1,778 1,778
Additional paid-in capital........................ 306,155 452,851
Retained earnings................................. 229,851 229,851
Cumulative foreign translation adjustment......... (22,380) (22,380)
Unrealized appreciation of investments............ 2,201 2,201
---------- ----------
Total shareholders' equity...................... 557,877 708,823
---------- ----------
Total capitalization............................ $1,103,532 $1,103,532
========== ==========
</TABLE>
- --------

(1) Adjusted to reflect the sale of the Class A Common Stock offered hereby
and the application of the net proceeds of approximately $150.9 million
therefrom to repay a portion of the balance outstanding under the
Company's revolving lines of credit, which amount will then become
available to the Company to fund its continuing acquisition program and
for general corporate purposes.

(2) Long-term debt outstanding at January 31, 1997, excluding current
maturities, included $316.6 million under three revolving lines of credit.
Subsequent to January 31, 1997, the Company replaced these revolving lines
of credit with a $600 million revolving line of credit which matures on
April 30, 2002. The revolving line of credit contains a facility fee of
12.5 basis points, and borrowings bear interest at the lead lending bank's
prime rate, or certain optional rates at the Company's election. As of May
19, 1997, borrowings under the revolving line of credit totalled $418
million and had a weighted average interest rate of approximately 6.23%.
The Company also has available a $10 million revolving line of credit that
is used for interim cash advances in amounts less than $5 million, which
are cumulated periodically and replaced with cash advances under the $600
million revolving line of credit. As of May 19, 1997, no amounts were
outstanding under the $10 million revolving line of credit. Long-term debt
outstanding at January 31, 1997, excluding current maturities, also
included (i) $42.9 million of senior notes, bearing interest at 6.04% and
maturing on November 30, 2003, with principal payments of $7.143 million
due on November 30 each year; (ii) $75 million of senior notes with an
average maturity of seven years, a weighted average interest rate of
8.44%, and principal payments of $15 million due May 1, 1998, $16.7
million due on each of November 1, 2000 and 2001, $16.6 million due
November 1, 2002 and $10 million due on November 1, 2006; and (iii) $100
million senior debt securities, bearing interest at 6.70% due 2003. All of
the Company's debt is unsecured, except for approximately $2 million as of
April 30, 1997, which was incurred principally in connection with
acquisitions.

9
<PAGE>

BUSINESS

THE COMPANY

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 345 funeral homes and 124 cemeteries in 23 states, Puerto Rico,
Mexico, Australia, New Zealand, Canada and Spain. During fiscal year 1996, the
Company acquired 134 funeral homes and 15 cemeteries for an aggregate purchase
price of $179.0 million. During fiscal year 1997, as of May 20, 1997, the
Company has acquired 47 funeral homes and five cemeteries for an aggregate
purchase price of $111.4 million and has entered into agreements in principle
or letters of intent to acquire 22 funeral homes and two cemeteries for an
aggregate purchase price of approximately $32.5 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.

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 four
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.

10
<PAGE>

Effective January 1, 1997, the Company expanded its two North American
operating divisions to four. The new Western Division includes the Company's
operations in Canada and on the West Coast, which previously were part of the
Central Division. The new Southern Division includes the Company's operations
in Florida, Puerto Rico and Mexico, which previously were part of the Eastern
Division. These changes should enable the Company to more efficiently meet the
demands of future growth and support the Company's philosophy of decentralized
management.

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 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
3,000 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 May 20, 1997, it has acquired
295 funeral homes and 96 cemeteries and has entered 17 states, Puerto Rico and
five foreign countries.

The following table sets forth certain information with respect to the
Company's completed and pending acquisition activity.

<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
FUNERAL HOMES PURCHASE PRICE
AND CEMETERIES (IN MILLIONS)
-------------- --------------
<S> <C> <C>
Properties owned at October 31, 1991........ 72 $ --
Acquisitions(1):
Fiscal year 1992.......................... 11 30.0
Fiscal year 1993.......................... 49 94.6
Fiscal year 1994.......................... 60 177.6
Fiscal year 1995.......................... 70 154.4
Fiscal year 1996.......................... 149 179.0
November 1, 1996--May 20, 1997............ 52 111.4
Pending acquisitions as of May 20, 1997... 24 32.5
</TABLE>
- --------
(1) Excludes funeral homes constructed by the Company.

----------------

The Company's acquisition strategy reflects a trend in the United States
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.

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

11
<PAGE>

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.

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, New Zealand and Mexico. The Company
has acquired a total of 149 funeral homes and cemeteries in Mexico, Australia,
New Zealand, Canada and Spain since it first entered foreign markets in the
fourth quarter of fiscal year 1994, and it believes that attractive expansion
opportunities exist in those and other foreign countries. During the first half
of fiscal year 1997, the Company entered the European market through the
acquisition of one of the largest independent funeral homes in Spain, and
expanded its presence in New Zealand and Australia with the acquisition of
another 12 funeral homes there. 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. Of the Company's 124 cemeteries, 52 are combined
operations.

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 year ended October 31, 1996, cremations
accounted for approximately 21% of funeral services performed by the Company in
the United States. In Australia, New Zealand and Mexico, cremations accounted
for 63%, 71% and 46%, respectively, of funeral services performed by the
Company for the year ended October 31, 1996. In the fourth quarter of fiscal
year 1996, the Company entered two 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. In the second quarter
of fiscal year 1997, the Company entered the European market through the
acquisition of one of the largest independent funeral homes in Spain;
historically, cremations have accounted for approximately 14% of the funeral
services performed by that funeral home. 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 3,000 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. 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 37,545 prearranged
funeral services during the fiscal year ended October 31, 1996 and 9,057 during
the first quarter of fiscal year 1997. At January 31, 1997, the Company had a
backlog of 296,014 prearranged funeral services expected to be delivered some
time in the future.

12
<PAGE>

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 $363.1 million at January 31, 1997, 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 of the sale price, which is often paid in
installments, is 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 jurisdictions where earnings revert to the customer if a prearranged
funeral service contract is canceled. Principal and earnings are withdrawn
only as funeral services are delivered or contracts are canceled, except in
jurisdictions that permit earnings to be withdrawn currently and in
unregulated jurisdictions where escrow accounts are used.

Funeral operations accounted for approximately 52% of the Company's revenues
during the fiscal year ended October 31, 1996 and 56% during the three months
ended January 31, 1997.

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, 1996.

Prearranged cemetery merchandise trust funds and escrow accounts, which
amounted to approximately $119.2 million at January 31, 1997, 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 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
canceled.

13
<PAGE>

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 $147.9 million at January 31, 1997.

Cemetery operations accounted for 48% of the Company's revenues during the
fiscal year ended October 31, 1996 and 44% during the three months ended
January 31, 1997.

Combined Funeral and Cemetery Operations. Of the Company's 124 cemeteries,
52 are combined operations, including eight developed by the Company from
October 1991 through May 1997 through the construction of funeral homes on the
grounds of Company-owned cemeteries. 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 and San Francisco,
California; Santa Fe, New Mexico; and Washington, D.C.

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 Company first entered foreign markets in the
fourth quarter of fiscal year 1994, the Company has acquired a total of 149
funeral homes and cemeteries in Mexico, Australia, New Zealand, Canada and
Spain. The Company's foreign operations generated approximately 10% of total
revenues during the year ended October 31, 1996 and 14% during the first
quarter of fiscal year 1997. In addition, foreign operations accounted for
approximately 34% of the Company's funeral homes and cemetery locations and
approximately 18% of consolidated total assets as of October 31, 1996. See
Note 13 to the consolidated financial statements included in Item 8 of the
Company's Form 10-K for the year ended October 31, 1996.

In addition to the 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 as of October 31, 1996, the Company was required, during the first
quarter of fiscal year 1997, to change its method of 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 for the first
quarter of fiscal year 1997 were 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 for fiscal year 1997.

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.

14
<PAGE>

FORWARD-LOOKING STATEMENTS

Certain statements made herein that are not historical facts are intended to
be forward-looking statements within the meaning of the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. 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 January 31, 1997.

SELLING SHAREHOLDERS

Of the 4,750,000 shares of Class A Common Stock offered hereby, 4,250,000
are being sold by the Company, 150,000 shares are being sold by Frank B.
Stewart, Jr., the Chairman of the Board of the Company, and 350,000 shares are
being sold by the Frank B. Stewart, Jr. Charitable Remainder Unitrust, a trust
established by Mr. and Mrs. Stewart (the "Trust"). At May 21, 1997, Mr.
Stewart beneficially owned 4,372,148 shares of Class A Common Stock, or
approximately 10.8% of the Class A Common Stock outstanding, and after
completion of the offering, Mr. Stewart will own 3,872,148 shares of Class A
Common Stock, or approximately 8.7% of the Class A Common Stock outstanding.
The Trust currently owns 350,000 shares of Class A Common Stock and after
completion of the Offering will own no such shares.

Additionally, Mr. Stewart owns all of the 1,777,510 shares of Class B Common
Stock outstanding and will continue to own such shares after completion of the
offering. By virtue of his ownership of Class A and Class B Common Stock, at
May 21, 1997, Mr. Stewart held approximately 38.0% of the total voting power
of the Company. Mr. Stewart will continue to hold approximately 34.6% of such
voting power after completion of this offering.

15
<PAGE>

UNDERWRITING

The Underwriters of the offering of the Class A Common Stock (the
"Underwriters"), for whom Bear, Stearns & Co. Inc., Goldman, Sachs & Co., ABN
AMRO Chicago Corporation, and Johnson Rice & Company L.L.C. are acting as
representatives (collectively, the "Representatives"), have severally agreed,
subject to the terms and conditions of the Underwriting Agreement, to purchase
from the Company and the Selling Shareholders the number of shares of Class A
Common Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Bear, Stearns & Co. Inc.........................................
Goldman, Sachs & Co.............................................
ABN AMRO Chicago Corporation....................................
Johnson Rice & Company L.L.C....................................

---------
Total......................................................... 4,750,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that, if any of the foregoing
shares of Class A Common Stock are purchased by the Underwriters pursuant to
the Underwriting Agreement, all such shares must be so purchased. The Company
and the Selling Shareholders have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make in
respect thereof.

The Company and the Selling Shareholders have been advised that the
Underwriters propose to offer the shares of Class A Common Stock to the public
initially at the public offering price set forth on the cover page of this
Prospectus and to certain selected dealers (who may include the Underwriters)
at such public offering price less a concession not to exceed $ per share.
The selected dealers may reallow a concession to certain other dealers not to
exceed $ per share. After the initial offering to the public, the public
offering price, the concession to selected dealers and the reallowance to
other dealers may be changed by the Representatives.

The Company has granted to the Underwriters an option to purchase up to
712,500 additional shares of Class A Common Stock at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus, solely for the purpose of covering over-allotments, if any.
Such option may be exercised at any time until 30 days after the date of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will be committed, subject to certain conditions, to purchase
a number of additional shares proportionate to such Underwriter's initial
commitment as indicated in the preceding table.

In order to facilitate the offering, certain persons participating in the
offering may engage in transactions that stabilize, maintain or otherwise
affect the price of the Class A Common Stock during and after the offering.
Specifically, the Underwriters may over-allot or otherwise create a short
position in the Class A Common Stock for their own account by selling more
shares of Class A Common Stock than have been sold to them by the Company and
the Selling Shareholders. The Underwriters may elect to cover any such short
position by purchasing shares of Class A Common Stock in the open market or by
exercising the over-allotment option granted to the Underwriters by the
Company. In addition, such persons may stabilize or maintain the price of the
Class A Common Stock by bidding for or purchasing shares of Class A Common
Stock in the open market and may impose penalty bids, under which selling
concessions allowed to syndicate members or other broker-dealers participating
in the offering are reclaimed, if shares of Class A Common Stock previously
distributed in the

16
<PAGE>

offering are repurchased in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain
the market price of the Class A Common Stock at a level above that which might
otherwise prevail in the open market. The imposition of a penalty bid may also
affect the price of the Class A Common Stock to the extent that it discourages
resales thereof. No representation is made as to the magnitude or effect of
any such stabilization or other transactions. Such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

In connection with the offering, the Company and its directors and executive
officers, beneficially owning in the aggregate approximately 14.8% of the
Class A Common Stock and 100% of the Class B Common Stock, have agreed that
they will not sell, contract to sell or otherwise dispose of any shares of
capital stock of the Company for a period of 90 days after the date of this
Prospectus without the prior written consent of the Underwriters, except for
the shares offered hereby, issuances or sales by the Company upon the exercise
of outstanding stock options, grants of employee stock options, or issuances
or sales by the Company in connection with acquisitions.

Michael O. Read, a director of the Company, is a brother-in-law of a partner
of Johnson Rice & Company L.L.C., one of the Underwriters. Johnson Rice &
Company L.L.C. will be paid a portion of the underwriting discounts and
commissions in connection with this offering. Certain of the Underwriters have
engaged in transactions with and performed various investment banking and
other services for the Company in the past, and may do so from time to time in
the future.

ABN AMRO Chicago Corporation is an affiliate of ABN AMRO Bank, N.V. ("ABN
AMRO"), which is a lender to the Company under the $600 million revolving line
of credit. ABN AMRO will receive its proportionate share of any repayment by
the Company of amounts outstanding under such line of credit from the proceeds
of the offering of the Class A Common Stock offered hereby by the Company. In
addition, ABN AMRO or its affiliates participate from time to time in various
general financing and banking transactions for the Company and its affiliates.

LEGAL MATTERS

The validity of the Class A Common Stock offered hereby will be passed upon
for the Company by Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P., New Orleans, Louisiana. Certain legal matters in connection with this
offering will be passed upon for the Underwriters by Jenkens & Gilchrist, a
Professional Corporation, Dallas, Texas.

INDEPENDENT ACCOUNTANTS

The audited consolidated financial statements and financial statement
schedule of the Company incorporated by reference in this Registration
Statement have been audited by Coopers & Lybrand L.L.P., independent
accountants, as stated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of such firm
as experts in accounting and auditing.

17
<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, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLD-
ERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDIC-
TION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. UNDER NO CIR-
CUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT TO
THIS PROSPECTUS CREATE ANY IMPLICATION THAT INFORMATION CONTAINED IN THIS PRO-
SPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
Prospectus Summary......................................................... 3
Use of Proceeds............................................................ 7
Price Range of Common Stock
and Dividend Policy....................................................... 8
Capitalization............................................................. 9
Business................................................................... 10
Selling Shareholders....................................................... 15
Underwriting............................................................... 16
Legal Matters.............................................................. 17
Independent Accountants.................................................... 17
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

4,750,000 SHARES

LOGO
[LOGO OF STEWART ENTERPRISES APPEARS HERE]

STEWART
ENTERPRISES,
INC.

CLASS A
COMMON STOCK

---------------
PROSPECTUS
---------------

BEAR, STEARNS & CO. INC.

GOLDMAN, SACHS & CO.

ABN AMRO CHICAGO CORPORATION

JOHNSON RICE & COMPANY L.L.C.

June , 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated fees and expenses payable by the Company and the Selling
Shareholders in connection with the issuance and distribution of the Class A
Common Stock registered hereunder are as follows:

<TABLE>
<S> <C>
Registration Fee................................................ $ 60,729
Nasdaq Listing Fee.............................................. 17,500
Printing and Engraving.......................................... 25,000
Legal Fees and Expenses......................................... 100,000
Accounting Fees and Expenses.................................... 45,000
Blue Sky Fees and Expenses...................................... 5,000
Transfer Agent.................................................. 1,500
Miscellaneous................................................... 20,271
--------
Total......................................................... $275,000
========
</TABLE>

The Selling Shareholders will pay approximately $5,559 of the total
estimated expenses.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 83 of the Louisiana Business Corporation Law gives Louisiana
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers; subject to specific conditions and
exclusions gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes Louisiana corporations to buy
directors' and officers' liability insurance. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, authorization of shareholders or otherwise.

The Company's By-laws make mandatory the indemnification of directors and
officers permitted by the Louisiana Business Corporation Law. The standard to
be applied in evaluating any claim for indemnification (excluding claims for
expenses incurred in connection with the successful defense of any proceeding
or matter therein for which indemnification is mandatory without reference to
any such standard) is whether the claimant acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation. With respect to any criminal action or proceeding, the standard
is that the claimant had no reasonable cause to believe the conduct was
unlawful. No indemnification is permitted in respect of any claim, issue or
matter as to which a director or officer shall have been adjudged by a court
of competent jurisdiction to be liable for willful or intentional misconduct
or to have obtained an improper personal benefit, unless, and only to the
extent that the court shall determine upon application that, in view of all
the circumstances of the case, he is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.

The Company has in effect a directors' and officers' liability insurance
policy that provides for indemnification of its officers and directors against
losses arising from claims asserted against them in their capacities as
officers and directors, subject to limitations and conditions set forth in
such policy.

The Company has entered into indemnity agreements with each of its directors
and executive officers, pursuant to which the Company has agreed under certain
circumstances to purchase and maintain directors' and officers' liability
insurance, unless such insurance is not reasonably available or, in the
reasonable judgment of the Board of Directors, there is insufficient benefit
to the Company from such insurance. The agreements also provide that the
Company will indemnify each director and executive officer against any costs
and expenses, judgments, settlements and fines incurred in connection with any
claim involving him by reason of his position as director or officer that are
in excess of the coverage provided by any such insurance, provided that he
meets certain standards of conduct.

II-1
<PAGE>

The Underwriters have also agreed to indemnify the directors and certain of
the Company's officers against certain liabilities under the Securities Act of
1933, as amended, or to contribute to payments that such directors and
officers may be required to make in respect thereof.

ITEM 16. EXHIBITS.

<TABLE>
<C> <S>
1 --Form of Underwriting Agreement.**
4.1 --Specimen of Class A Common Stock certificate (incorporated by
reference to Exhibit 4.2 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 33-42336) filed
with the Commission on October 7, 1991).
4.2 --Credit Agreement by and among the Company, its subsidiaries and
Citicorp USA, Inc., Bank of America Illinois, and NationsBank of Texas,
N.A. dated April 14, 1997.**
4.3 --Amended and Restated Articles of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31, 1996).
4.4 --By-laws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1995).
5 --Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P.*
23.1 --Consent of Coopers & Lybrand L.L.P.*
23.2 --Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. (included in Exhibit 5).*
24 --Power of Attorney.**
</TABLE>
- ----------------

* Refiled with this Amendment.

** Previously filed.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under

II-2
<PAGE>

the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New Orleans, State of Louisiana, on
June 9, 1997.

STEWART ENTERPRISES, INC.

/s/ Joseph P. Henican, III
By:__________________________________
Joseph P. Henican, III
Chief Executive Officer and
Vice Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
* Chairman of the Board
____________________________________
Frank B. Stewart, Jr.

/s/ Joseph P. Henican, III Chief Executive Officer and June 9, 1997
____________________________________ Vice Chairman of the Board
Joseph P. Henican, III (Principal Executive
Officer)

* President, Chief Operating
____________________________________ Officer and Director
William E. Rowe

* Chief Financial Officer,
____________________________________ President--Corporate
Ronald H. Patron Division, Executive Vice
President and Director
(Principal Financial
Officer)

* Senior Vice President--
____________________________________ Finance, Secretary and
Kenneth C. Budde Treasurer (Principal
Accounting Officer)

* Director
____________________________________
Darwin C. Fenner

Director
____________________________________
John P. Laborde

Director
____________________________________
James W. McFarland

* Director
____________________________________
Michael O. Read

/s/ Joseph P. Henican, III June 9, 1997

*By:______________________

Joseph P. Henican, III

Attorney-in-fact
</TABLE>

S-1
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1 --Form of Underwriting Agreement.**
4.1 --Specimen of Class A Common Stock certificate (incorporated by
reference to Exhibit 4.2 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 33-42336)
filed with the Commission on October 7, 1991).
4.2 --Credit Agreement by and among the Company, its subsidiaries and
Citicorp USA, Inc., Bank of America Illinois, and NationsBank of
Texas, N.A. dated April 14, 1997.**
4.3 --Amended and Restated Articles of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31,
1996).
4.4 --By-laws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995).
5 --Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P.*
23.1 --Consent of Coopers & Lybrand L.L.P.*
23.2 --Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. (included in Exhibit 5).*
24 --Power of Attorney**
</TABLE>
- ----------------

* Refiled with the Amendment.

** Previously filed.

<PAGE>

EXHIBIT 5

Jones, Walker
Waechter, Poitevent
Carrere & Denegre, L.L.P.

Place St. Charles
201 St. Charles
Avenue
New Orleans,
Louisiana 70170-5100

June 9, 1997

Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, LA 70005

RE:Stewart Enterprises, Inc.
Class A Common Stock Offering

Ladies and Gentlemen:

We have acted as your counsel in connection with the preparation of
Amendment No. 1 to the registration statement on Form S-3 (the "Registration
Statement") to be filed by you on June 9, 1997 with the Securities and
Exchange Commission (the "Commission") with respect to an offering by you of
up to 4,962,500 shares (the "Company Shares") of Class A Common Stock, no par
value per share, and an offering by the Selling Shareholders of 500,000 shares
(the "Selling Shareholders Shares") of such common stock. In so acting, we
have examined originals, or photostatic or certified copies, of such records
of the Company, certificates of officers of the Company and of public
officials, and of such other documents as we have deemed relevant. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such documents.

Based upon the foregoing, we are of the opinion that the Company Shares and
the Selling Shareholders Shares have been duly authorized and that the Company
Shares, when issued and sold upon the terms described in the Registration
Statement, and the Selling Shareholders Shares, when sold upon the terms
described in the Registration Statement, will be validly issued, fully paid
and non-assessable.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us in the prospectus under the caption
"Legal Matters." In giving this consent, we do not admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the general rules and regulations of
the Commission.

Very truly yours,

Jones, Walker, Waechter,
Poitevent,
Carrere & Denegre, L.L.P.

/s/ L. R. McMillan, II
By:________________________________
L . R. McMillan, II

Baton Rouge Office: Four United Plaza . 8555 United Plaza Boulevard . Baton
Rouge, Louisiana 70809-7000 . 504-231-2000 . Fax 504-231-2010
Washington, D.C. Office: Suite 245, Republic Place . 1776 Eye Street, N.W. .
Washington, D.C. 20006 . 202-828-8363 . Fax 202-828-6907
Lafayette Office: Suite 210 . 201 Rue Iberville . Lafayette, Louisiana 70508 .
318-232-5353 . Fax 318-232-5415

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in Amendment No. 1 to the
registration statement of Stewart Enterprises, Inc. on Form S-3 of our reports
dated December 13, 1996 on our audits of the consolidated financial statements
and financial statement schedule of Stewart Enterprises, Inc. and
Subsidiaries, as of October 31, 1996 and 1995 and for each of the three years
in the period ended October 31, 1996. We also consent to the reference to our
firm under the caption "Independent Accountants."

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana

June 9, 1997