==============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 9, 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)
==============================================================================
<PAGE>
ITEM 5. OTHER EVENTS
On September 9, 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 THIRD QUARTER FISCAL YEAR 1998 RESULTS -
REVENUES INCREASE 21 PERCENT, EARNINGS INCREASE 27 PERCENT, EARNINGS PER
SHARE INCREASE 19 PERCENT
Metairie, Louisiana, September 9, 1998. . . Stewart Enterprises, Inc.
(Nasdaq NMS: STEI) today announced that revenues for the third quarter of
1998 compared to the third quarter of 1997 increased 21 percent to $169.1
million from $139.5 million, earnings increased 27 percent to $24.3 million
from $19.1 million, and earnings per share (basic and diluted) increased 19
percent to $.25 from $.21.
Third quarter 1998 per-share performance reflects a nine percent increase
in the weighted average number of diluted shares outstanding, from 90.5
million to 98.6 million, and a nine percent increase in the weighted
average number of basic shares outstanding, from 89.7 million to 97.8
million, due principally to the Company's June 1997 equity offering. All
share and per-share information presented reflects the Company's two-for-
one stock split effective April 24, 1998.
For the nine months ended July 31, 1998, compared to the corresponding
period in 1997, revenues increased 21 percent to $473.0 million from $390.4
million, earnings increased 37 percent to $70.5 million from $51.3 million,
and diluted earnings per share increased 22 percent to $.72 from $.59,
before giving effect to the $76.8 million ($50.3 million, or diluted
earnings per share of $.51, after tax) previously announced non-recurring,
non-cash stock option charge recorded during the second quarter of fiscal
year 1998, and the $2.3 million, or $.03 per share charge for the
cumulative effect of the change in accounting principles recorded in fiscal
year 1997.
Basic earnings per share for the nine months ended July 31, 1998 increased
20 percent, to $.72 from $.60, excluding the effect of the 1998 stock
option charge and the 1997 cumulative effect of the accounting change.
Including the effect of the stock option charge, the Company reported
earnings of $20.2 million, or $.21 per share (basic and diluted), for the
first nine months of this fiscal year.
Year to date fiscal 1998 per-share performance reflects a 13 percent
increase in the weighted average number of diluted shares outstanding, from
86.9 million to 98.4 million, and a 14 percent increase in the weighted
average number of basic shares outstanding, from 85.9 million to 97.6
million, due principally to the Company's June 1997 equity offering. All
share and per-share information presented reflects the Company's two-for-
one stock split effective April 24, 1998.
Joseph P. Henican, III, Chief Executive Officer, commented, "The third
quarter of fiscal year 1998 was another excellent quarter as demonstrated
by significant increases in revenue, gross profit, earnings and earnings
per share. In addition, we enjoyed a particularly active quarter for
acquisitions." Mr. Henican continued, "We entered several new countries and
states, acquiring a total of 88 businesses for $90.5 million during the
quarter."
"We entered Europe in April of last year. In the 15 months that followed,
we have successfully grown those European operations to nearly 80
businesses. We were excited to announce last month the appointment of our
two new EuroStewart executives, Thomas Briers as executive vice president
and chief operating officer of EuroStewart and Timothy Kiessling as chief
administrative officer for Europe. We continue to be optimistic about our
long-term opportunities in Europe, and we are excited about the knowledge
and expertise these executives bring to our operations there," said Mr.
Henican.
Mr. Henican added, "In April of this year, we announced our achievement of
the stock price performance objective for the performance-based options
granted under the Company's 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 that Plan to
purchase 3.6 million shares of Class A Common Stock with similar
performance criteria as previous option grants."
William E. Rowe, President and Chief Operating Officer, commented, "Our
operating results during the third quarter and first nine months of this
fiscal year reflect our firm commitment to improve the performance of our
core businesses, to assimilate new businesses efficiently and to control
costs. For the quarter, our gross margin expanded 70 basis points, to
30.4%, and our operating margin expanded 60 basis points, to 27.9 %,
from 29.7% and 27.3%, respectively, for the third quarter of fiscal year
1997. For the year to date period, our gross margin increased 150 basis
points, to 31.1%, and our operating margin (excluding the stock option
charge) increased 160 basis points, to 28.5%, from 29.6% and 26.9%,
respectively, reported for the comparable period last fiscal year."
Mr. Rowe continued, "Thus far in fiscal year 1998, we have acquired or
committed to acquire 192 businesses for an aggregate purchase price of
approximately $306 million. These businesses are expected to generate
annualized revenues of approximately $127 million and serve over 44,000
families worldwide."
"During the third quarter, we entered France and Belgium, bringing the
total number of countries in which we operate to 12. We entered France
with the acquisition of the country's largest private funeral firm
operating 36 funeral homes in Paris and its suburbs and performing nearly
5,000 services annually. Additionally, we entered New York and Iowa,
bringing the total number of states in which we operate to 28. We purchased
ten additional funeral homes and one cemetery in Argentina bringing the
total number of families we serve in the Buenos Aires market to over
11,000. We also added 14 additional funeral homes in Spain."
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 534 funeral homes and 136 cemeteries in
North America, South America, Europe and the Pacific Rim.
Statements made herein that are not historical facts are forward-looking
statements. The Company's actual results could differ materially due to
several important factors including the following: the Company's ability to
sustain recent levels of acquisition activity and enter new markets; the
economy, death rate and competition in the Company's markets; financial market
conditions, including stock and bond prices and interest rates; the Company's
ability to achieve economies of scale and manage growth; and the performance of
acquired businesses. Such factors, and others, are more fully described in
Item 5 of the Company's Form 10-Q for the quarter ended April 30, 1998. The
Company assumes no obligation to update information contained herein.
###
<PAGE>
STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended July 31,
---------------------------
1998 1997
---- ----
Revenues:
Funeral $ 96,561 $ 75,350
Cemetery 72,527 64,196
-------- --------
Total revenues 169,088 139,546
-------- --------
Costs and expenses:
Funeral 66,191 52,559
Cemetery 51,566 45,481
-------- --------
Total costs
and expenses 117,757 98,040
-------- --------
Gross profit 51,331 41,506
Corporate general and
administative expenses 4,139 3,423
-------- --------
Operating earnings 47,192 38,083
Interest expense (11,309) (10,132)
Investment and other
income 1,539 756
-------- --------
Earnings before
income taxes 37,422 28,707
Income taxes 13,098 9,656
-------- --------
Net earnings $ 24,324 $ 19,051
========= ========
Earnings per share:
Basic $ 0.25 $ 0.21 (a)
========= ========
Diluted $ 0.25 $ 0.21 (a)
========= ========
Weighted average shares
outstanding(in thousands):
Basic 97,784 89,651 (a)
========= ========
Diluted 98,616 90,480 (a)
========= ========
Dividends per share $ 0.02 $ 0.01 (a)
========= ========
(a) Restated to reflect the Company's two-for-one stock split
effective April 24, 1998.
STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
Nine Months Ended July 31,
--------------------------
1998 1997
---- ----
Revenues:
Funeral $ 275,231 $ 211,539
Cemetery 197,744 178,841
--------- ---------
Total revenues 472,975 390,380
--------- ---------
Costs and expenses:
Funeral 186,261 146,334
Cemetery 139,720 128,383
--------- ---------
Total costs
and expenses 325,981 274,717
--------- ---------
Gross profit 146,994 115,663
Corporate general and
administrative expenses 12,307 10,459
--------- ---------
Operatating earnings
before performance-
based stock options 134,687 105,204
Performance-based stock
options 76,762 0
--------- ---------
Operating earnings 57,925 105,204
Interest expense (31,336) (29,165)
Investment and other
income 4,573 2,322
--------- ---------
Earnings before income
taxes and cumulative
effect of change in
accounting principles 31,162 78,361
Income taxes 10,938 27,035
--------- ---------
Earnings before
cumulative effect of
change in accounting
principles 20,224 51,326
Cumulative effect of
change in accounting
principles, net of
a $2,230 income tax
benefit 0 (2,324)
--------- ---------
Net earnings $ 20,224 $ 49,002
========= =========
Basic earnings per share:
Earnings before cumulative
effect of change in
accounting principles 0.21 0.60 (a)
Cumulative effect of
change in accounting
principles 0 (0.03)(a)
--------- ---------
Net earnings $ 0.21 $ 0.57 (a)
========= =========
Diluted earnings per share:
Earnings before
cumulative effect of
change in accounting
principles 0.21 $ 0.59 (a)
Cumulative effect of
change in accounting
principles 0 (0.03)(a)
--------- ---------
Net earnings $ 0.21 $ 0.56 (a)
========= =========
Weighted average shares
outstanding (in thousands):
Basic 97,578 85,911 (a)
========= =========
Diluted 98,368 86,858 (a)
========= =========
Dividends per common
share $ 0.04 $ 0.03 (a)
========= =========
(a) Restated to reflect the Company's two-for-one stock split
effective April 24, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STEWART ENTERPRISES, INC.
September 9 , 1998 /s/ KENNETH C. BUDDE
---------------------------
Kenneth C. Budde
Executive Vice President
President-Corporate Division
Chief Financial Officer
