_______________________________________________________________________________
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 8, 1999
STEWART ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 0-19508 72-0693290
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
110 VETERANS MEMORIAL BOULEVARD
METAIRIE, LOUISIANA 70005
(Address of principal executive offices) (Zip Code)
(504) 837-5880
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
_______________________________________________________________________________
Item 5. Other Events
On September 8, 1999 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 1999 RESULTS
Metairie, Louisiana, September 8, 1999. . . Stewart Enterprises, Inc. (Nasdaq
NMS: STEI) today announced that revenues for the third quarter of 1999 as
compared to the third quarter of 1998 increased 20 percent to $202.5 million
from $169.1 million. Operating earnings increased 22 percent to $57.4 million
from $47.2 million, net earnings increased 19 percent to $28.9 million from
$24.3 million and diluted earnings per share increased 4 percent to $.26 from
$.25.
Third quarter diluted per share performance reflects a 14 percent increase in
the weighted average number of shares outstanding from 98.6 million to 112.2
million, due principally to the Company's equity offering completed in February
1999.
Year-to-date revenues increased 24 percent to $587.6 million from $473.0
million for the comparable period last fiscal year. Operating earnings
increased 29 percent from $134.7 million to $173.7 million, net earnings
increased 24 percent from $70.5 million to $87.6 million and diluted earnings
per share increased 13 percent from $.72 to $.81 for the first nine months of
fiscal year 1998, before giving effect to the stock option charge recorded
during the second quarter of fiscal year 1998.
Fiscal year-to-date diluted per share performance reflects a 9 percent increase
in the weighted average number of shares outstanding from 98.4 million to 107.6
million, due principally to the Company's equity offering completed in February
1999.
Joseph P. Henican, III, Chief Executive Officer, commented, "Although we are
disappointed with our quarterly results and the reduction in our earnings
growth rate as discussed in our August 12 announcement, we nevertheless
achieved growth of approximately 20 percent in revenue, gross profit and net
earnings in the third quarter. Our Company continues to produce solid
financial and operational results and is well positioned for continued growth
and prosperity with a debt-to-equity ratio of .8 to 1.0, approximately $65
million in cash and marketable securities and a backlog of preneed contracts as
of July 31, 1999, that is expected to produce future funeral revenue of
approximately $1.5 billion."
Mr. Henican added, "Since the announcement of our stock repurchase program on
August 18, 1999, the Company has purchased 3.2 million shares in the open
market for $18.5 million, at an average purchase price of $5.78 per share.
We believe this program represents a prudent deployment of our capital, allows
us to pursue other attractive investment opportunities as they become available
and maintains sufficient resources for working capital purposes. Our Board
authorized the repurchase of up to 5 percent of our outstanding common stock
because of their belief in the strong fundamentals and future potential of our
Company and industry and the belief that the current market price does not
accurately reflect this intrinsic value."
William E. Rowe, President and Chief Operating Officer, commented, "Our
management team has worked diligently to analyze and address the issues that
slowed our earnings growth in the third quarter and to develop a plan to
continue to grow the Company. We are establishing new programs to address the
trends affecting at-need funeral pricing and changing preneed sales management
in several major markets where appropriate. We are also refocusing on
continued margin improvement in our existing businesses and internal growth
strategies such as the development of alternative service firms, operating
partnerships with third parties and the creation of new combination
operations."
Mr. Rowe continued, "Thus far in fiscal year 1999, we have acquired or
committed to acquire 88 funeral homes and 23 cemeteries for an aggregate
purchase price of approximately $168.9 million. These businesses are expected
to generate annualized revenues of approximately $81.4 million and serve nearly
25,500 families worldwide. Our acquisition activity has slowed in recent
months due to our commitment to adhere to stricter pricing criteria, as a
significant number of potential sellers have withdrawn their businesses from
the market because of lower prices. Nonetheless, we believe that the non-price
factors that contributed to their desire to sell still exist and that many
owners will put their businesses back on the market, although we cannot predict
when that will occur."
"Recently, we have tightened our pricing criteria one step further by reducing
our target acquisition multiple to 6 to 7 times pro forma earnings before
interest and taxes (EBIT) for domestic acquisitions and 5 to 6 times pro forma
EBIT for international acquisitions. As of September 8, 1999, the businesses
that we have currently committed to acquire are priced at 6.1 times EBIT and
1.1 times revenue. Because we are committed to the principles of discipline
and balance and the prudent operation of our businesses over the long-term, we
will only acquire businesses and employ internal strategies that we believe
will yield the best return on our capital."
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 633 funeral homes and 157 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
make acquisitions 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, 1999. The Company
assumes no obligation to update information contained herein.
# # #
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STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended July 31,
-----------------------------
1999 1998
----------- -------------
<S> <C> <C>
Revenues:
Funeral $ 120,844 $ 96,561
Cemetery 81,622 72,527
---------- -----------
Total revenues 202,466 169,088
---------- -----------
Costs and expenses:
Funeral 80,668 66,191
Cemetery 59,379 51,566
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Total costs and expenses 140,047 117,757
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Gross profit 62,419 51,331
Corporate general and administrative expenses 5,012 4,139
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Operating earnings 57,407 47,192
Interest expense, net (13,224) (10,827)
Other income 1,328 1,057
---------- -----------
Earnings before income taxes 45,511 37,422
Income taxes 16,612 13,098
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Net earnings $ 28,899 $ 24,324
========== ===========
Earnings per share:
Basic $ 0.26 $ 0.25
========== ===========
Diluted $ 0.26 $ 0.25
========== ===========
Weighted average shares outstanding (in thousands):
Basic 111,752 97,784
========== ===========
Diluted 112,196 98,616
========== ===========
Dividends per common share $ 0.02 $ 0.02
========== ===========
</TABLE>
STEWART ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended July 31,
-----------------------------
1999 1998
----------- -------------
<S> <C> <C>
Revenues:
Funeral $ 353,485 $ 275,231
Cemetery 234,159 197,744
----------- -------------
Total revenues 587,644 472,975
----------- -------------
Costs and expenses:
Funeral 234,040 186,261
Cemetery 166,567 139,720
----------- -------------
Total costs and expenses 400,607 325,981
----------- -------------
Gross profit 187,037 146,994
Corporate general and administrative expenses 13,360 12,307
----------- -------------
Operating earnings before performance-based stock options 173,677 134,687
Performance-based stock options - 76,762
----------- -------------
Operating earnings 173,677 57,925
Interest expense, net (38,718) (29,527)
Other income 2,961 2,764
----------- -------------
Earnings before income taxes 137,920 31,162
Income taxes 50,341 10,938
----------- -------------
Net earnings $ 87,579 $ 20,224
=========== =============
Earnings per share
Basic $ 0.82 $ 0.21
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Diluted $ 0.81 $ 0.21
=========== =============
Weighted average shares outstanding (in thousands):
Basic 107,068 97,578
=========== =============
Diluted 107,604 98,368
=========== =============
Dividends per common share $ 0.06 $ 0.04
=========== =============
</TABLE>
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 8, 1999 /s/ KENNETH C. BUDDE
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Kenneth C. Budde
Executive Vice President
Chief Financial Officer
