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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): APRIL 8, 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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ITEM 5. OTHER EVENTS
On April 8, 1998 the Company issued the following press release regarding
achievement of the performance objective for performance-based stock options
granted under the Company's 1995 Incentive Compensation Plan.
CONTACT: Ronald H. Patron
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, LA 70005
504/837-5880
FOR IMMEDIATE RELEASE
STEWART ENTERPRISES ACHIEVES STOCK OPTION PLAN OBJECTIVES
Metairie, Louisiana, April 8, 1998 . . . Stewart Enterprises, Inc. (Nasdaq
NMS: STEI) today announced that it has achieved the stock price performance
objective for its performance-based options granted under the Company's
1995 Incentive Compensation Plan designed to reward management only in the
event of significant enhancement to shareholder value. This is the second
such plan to be implemented by the Company, with the first plan established
in 1991 and the objectives met in 1995.
The plan provides that the performance-based options become exercisable
only if the average of the closing sale price of a share of the Company's
Class A Common stock equals or exceeds $52.87 for 20 consecutive trading
days. This represents a five-year 20% annual compounded growth in the
price of a share of the Company's Class A Common Stock from the plan's
inception. Under the plan, 119 officers and employees of the Company hold
performance-based options to purchase approximately 2.4 million shares of
Class A Common Stock at exercise prices which range from $21.00 to $43.00
per share.
Unlike more traditional options that vest over time and do not require a
charge to earnings upon vesting, generally accepted accounting principles
require that a charge to earnings be recorded in connection with
performance-based options once achievement of the performance objectives
becomes probable. As the stock price objective has been met, a non-
recurring, non-cash charge will be recognized in the second quarter of
fiscal year 1998. The amount of the charge is the difference between the
option exercise price and the market price of the Company's Class A Common
Stock when achievement of the performance objectives became probable.
Based on a closing price of $54.625 on April 7, 1998, the amount of the
charge is expected to be approximately $78 million (approximately $51
million after-tax, or $1.04 per share). Although this charge will require
the Company to report a loss for the quarter ended April 30, 1998, there
will be no impact on future periods.
Given the success of this option program in focusing management on
increasing shareholder value, the Company is encouraging optionees to
exercise their options immediately in order to renew the performance-based
option program, as it did when the first group of performance-based options
vested in 1995. To facilitate those exercises and to reduce potential
dilution from additional shares in the market, the Company has offered to
repurchase the options for the difference between $54.625 and the exercise
price of the options. Should the option holders choose the repurchase
option, a cash outlay will be required.
Joseph P. Henican, III, Chief Executive Officer of the Company, said: "We
are extremely pleased that we have been able to achieve the aggressive
stock price objective established in 1995, nearly 2 1/2 years ahead of
schedule. These options have provided our management group with a powerful
incentive to enhance shareholder value, which is best evidenced by the fact
that our stock price has increased by more than 160% since September 7,
1995, when the first options were awarded."
Mr. Henican went on to say, "We are committed to increasing shareholder
value, and our goal for our shareholders is to provide an above average and
sustainable return on their investment. We have aligned management
compensation and incentives to ensure that our management team remains
focused on these goals. We believe that this plan has been a significant
factor in the excellent performance of the Company, and it demonstrates our
continuing commitment to increasing shareholder value."
Founded in 1910, Stewart Enterprises, Inc., is the third largest provider
of products and services in the death care industry in North America. The
Company currently owns and operates 430 funeral homes and 132 cemeteries in
North America, Europe and the Pacific Rim.
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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.
April 8, 1998 /s/ KENNETH C. BUDDE
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Kenneth C. Budde
Senior Vice President-Finance
Secretary and Treasurer
(Principal Accounting Officer)
