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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): December 15, 1998
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)
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<PAGE>
ITEM 5. OTHER EVENTS
On December 15, 1998 the Company issued the following press release.
CONTACT: Kenneth C. Budde
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
504/837-5880
FOR IMMEDIATE RELEASE
STEWART ENTERPRISES REPORTS FOURTH QUARTER AND YEAR-END RESULTS - FISCAL
YEAR 1998 EARNINGS INCREASE 32 PERCENT, EARNINGS PER SHARE INCREASE 21
PERCENT, REVENUES INCREASE 22 PERCENT
Metairie, Louisiana, December 15, 1998. . . Stewart Enterprises, Inc.
(Nasdaq NMS: STEI) today announced significant increases in revenues,
earnings and earnings per share for the fiscal year ended October 31, 1998
compared to fiscal year 1997. Revenues increased 22 percent to $648.4
million from $532.6 million, earnings increased 32 percent to $92.2 million
from $69.7 million, and diluted earnings per share increased 21 percent to
$.94 from $.78, before giving effect to the $50.3 million or $.51 per
diluted share, after-tax, previously announced non-recurring, non-cash stock
option charge recorded during the second quarter of fiscal year 1998, and
before the $2.3 million, or $.03 per diluted share, after-tax, charge for
the cumulative effect of the change in accounting principles recorded in
fiscal year 1997. Including the effect of the stock option charge, the
Company reported earnings of $41.9 million, or $.43 per share, for the
fiscal year.
Fiscal year 1998 earnings per share reflect a 10 percent increase in the
weighted average number of diluted shares outstanding, from 89.7 million to
98.4 million, and a 10 percent increase in the weighted average number of
basic shares outstanding, from 88.8 million to 97.7 million, due principally
to the Company's June 1997 equity offering. All share and per-share
information reflects the Company's two-for-one stock split effective April
24, 1998.
For the fourth quarter of 1998 compared to the fourth quarter of 1997,
revenues increased 23 percent to $175.4 million from $142.2 million.
Earnings increased 18 percent to $21.7 million from $18.4 million, and
earnings per share increased 16 percent to $.22 from $.19.
Joseph P. Henican, III, Chief Executive Officer, commented, "Fiscal year
1998 has been a very exciting year for Stewart Enterprises. Once again, we
have achieved 20+% increases in revenue, gross profit, earnings and diluted
earnings per share (excluding the performance-based stock option charge).
We generated revenues of approximately $650 million, two and a half times
the amount recorded just five years ago and posted a 21% increase in diluted
EPS growth over fiscal year 1997 levels. Furthermore, we achieved this
solid performance during the largest year for acquisitions in our Company's
history. As of October 31, 1998, we owned ten times as many properties as
we owned when we went public in 1991."
Mr. Henican added, "An important part of Stewart's business strategy is to
pursue acquisitions that management and our Board of Directors believe,
after careful analysis, will enhance shareholder value. Because of the
sensitivity of acquisition negotiations, it has been our long-standing
policy not to comment on potential acquisition transactions or rumors of
potential transactions. However, there have been persistent rumors about
our possible interest in a transaction with The Loewen Group, Inc., perhaps
fueled by a Canadian press report in early October that Loewen had confirmed
that Stewart had expressed such an interest. In view of that report, the
continuing speculation and the number of questions we have received from
shareholders and analysts, we have concluded that we should make a one-time
exception to our acquisition disclosure policy by reporting that Stewart is
not currently considering a transaction with Loewen. Consistent with our
acquisition disclosure policy, we do not plan to make any further comments
on this topic, and we undertake no obligation to update this statement."
Mr. Henican went on to state, "In April of 1998, we completed a $200 million
offering of 6.40% Remarketable or Redeemable Securities (ROARS), effected a
two-for-one stock split, and achieved the stock price performance objective
for the performance-based stock options awarded under our 1995 Incentive
Compensation Plan. To ensure that management's interests continue to be
aligned with those of our shareholders, the Company has granted new options
under the 1995 Incentive Compensation Plan to purchase 3.6 million shares of
Class A Common Stock with performance criteria similar to those in previous
option grants. Each of these accomplishments demonstrates our commitment to
the principles of quality, service and value, with the ultimate goal of
enhancing shareholder value. As we approach the next millennium, we are
confident that Stewart Enterprises will uphold its reputation as an industry
leader and a premier death care provider."
William E. Rowe, President and Chief Operating Officer, commented, "We are
pleased with the strong financial results we have achieved through the
disciplined and balanced manner in which we have grown the Company. For the
year, our gross margin increased 70 basis points, to 30.2%, and our
operating margin (excluding the stock option charge) increased 110 basis
points, to 27.7%, from 29.5% and 26.6%, respectively, reported for fiscal
year 1997. These results were accomplished through ongoing improvements in
our core businesses and contributions from recent acquisitions."
Mr. Rowe continued, "In addition, we are proud to share with you the results
of our corporate development efforts in fiscal year 1998. We entered
several countries and states, acquiring 162 businesses for an aggregate
purchase price of approximately $266 million. These businesses are expected
to generate annualized revenues of approximately $109 million and serve over
38,000 families worldwide."
"We increased our presence domestically by entering the states of Illinois,
Nevada, New York and Iowa, bringing the total number of states in which we
operate to 28. We entered South America by acquiring the two largest
independent funeral firms in Argentina, both of which are located in Buenos
Aires. Buenos Aires is now the Company's second largest market with 31
funeral homes and two cemeteries serving nearly 13,000 families a year."
"We expanded our European operations with entrance into the Netherlands,
France and Belgium with the acquisition of 46 properties, and the
acquisition of an additional 17 properties in Spain and Portugal. Our
operations in Europe now include 81 businesses and serve over 18,500
families on that continent. To meet the needs of our growing European
operations and to enable us to take advantage of other long-term
opportunities in Europe, we have made key executive appointments and
established our European headquarters in Amsterdam, Holland."
"During the fourth quarter, we acquired the San Diego Cemetery Association,
a firm of seven funeral homes and two cemeteries, including two large
combination operations, all of which serve nearly 4,300 families annually.
Together with our Telophase Society Cremation Centers, these facilities
provide families with the widest selection of funeral and cemetery options
in the San Diego market."
Mr. Rowe added, "We have continued to grow the Company through alliances
with third parties. During the fourth quarter, we signed agreements to
construct and operate three additional funeral homes on land leased from the
Archdiocese of Los Angeles, bringing the total number of funeral homes to be
built for the Archdiocese to nine. We also signed an agreement with the
Wyuka Cemetery Board of Trustees to manage cemetery sales and to construct
and operate a funeral home on the grounds of the cemetery located in
Lincoln, Nebraska."
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 564 funeral homes and 143 cemeteries in North America,
South America, Europe and the Pacific Rim.
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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 July 31, 1998. The
Company assumes no obligation to update information contained herein.
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STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31,
-------------------------------
<S> <C> <C>
1998 1997
Revenues: ------ ------
Funeral $ 103,864 $ 80,110
Cemetery 71,526 62,096
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Total revenues 175,390 142,206
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Costs and expenses:
Funeral 74,408 56,080
Cemetery 51,992 44,617
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Total costs and expenses 126,400 100,697
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Gross profit 48,990 41,509
Corporate general and administrative expenses 4,314 4,943
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Operating earnings 44,676 36,566
Interest expense (12,485) (8,866)
Investment and other income 1,611 416
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Earnings before income taxes 33,802 28,116
Income taxes 12,124 9,700
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Net earnings $ 21,678 $ 18,416
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Earnings per share:
Basic $ 0.22 $ 0.19(a)
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Diluted $ 0.22 $ 0.19(a)
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Weighted average shares outstanding (in thousands):
Basic 98,026 97,288(a)
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Diluted 98,674 98,036(a)
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Dividends per share $ 0.02 $ 0.01(a)
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(a) Restated to reflect the Company's two-for-one stock split
effective April 24, 1998.
<PAGE>
STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
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<S> <C> <C>
1998 1997
Revenues: ---- ----
Funeral $ 379,095 $ 291,649
Cemetery 269,270 240,937
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Total revenues 648,365 532,586
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Costs and expenses:
Funeral 260,669 202,414
Cemetery 191,712 173,000
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Total costs and expenses 452,381 375,414
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Gross profit 195,984 157,172
Corporate general and administrative expense 16,621 15,402
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Operating earnings before performance-
based stock options 179,363 141,770
Performance-based stock options 76,762 0
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Operating earnings 102,601 141,770
Interest expense (43,821) (38,031)
Investment and other income 6,184 2,738
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Earnings before income taxes and
cumulative effect of change in
accounting principles 64,964 106,477
Income taxes 23,062 36,735
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Earnings before cumulative effect of
change in accounting principles 41,902 69,742
Cumulative effect of change in accounting
principles, net of a $2,230 income tax benefit -- (2,324)
---------- ---------
Net earnings $ 41,902 $ 67,418
========== =========
Basic earnings per share:
Earnings before cumulative effect of
change in accounting principles $ 0.43 $ 0.79 (a)
Cumulative effect of change in
accounting principles -- (0.03)(a)
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Net earnings $ 0.43 $ 0.76 (a)
========== =========
Diluted earnings per share:
Earnings before cumulative effect of
change in accounting principles $ 0.43 $ 0.78 (a)
Cumulative effect of change in
accounting principles -- $ (0.03)(a)
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Net earnings $ 0.43 $ 0.75 (a)
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Weighted average shares outstanding (in thousands):
Basic 97,691 88,778 (a)
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Diluted 98,444 89,675 (a)
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Dividends per common share $ 0.06 $ 0.04 (a)
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</TABLE>
(a) Restated to reflect the Company's two-for-one stock split
effective April 24, 1998.
<PAGE>
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.
December 17, 1998 /s/ KENNETH C. BUDDE
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Kenneth C. Budde
Executive Vice President
President-Corporate Division
Chief Financial Officer
