Stewart Enterprises Reports Results for the Third Fiscal Quarter of 2009


NEW ORLEANS, Sept. 10, 2009 (GLOBE NEWSWIRE) -- Stewart Enterprises, Inc. (Nasdaq:STEI) reported today its results for the fiscal quarter ended July 31, 2009. The Company reported net earnings for the quarter ended July 31, 2009 of $10.8 million, or $.12 per diluted share, compared to net earnings of $9.1 million, or $.10 per diluted share, for the quarter ended July 31, 2008.

The results for the quarter included an $8.5 million net gain on early extinguishment of debt ($5.4 million after tax, or $.06 per diluted share) related to the Company's purchase of $35.7 million aggregate principal amount of its senior convertible notes in the open market during the quarter. After adjusting net earnings for the note purchases and several other unusual items in the third quarter of 2009, the Company reported adjusted earnings of $4.3 million, or $.05 per diluted share, for the quarter ended July 31, 2009, compared to adjusted earnings of $9.3 million, or $.10 per diluted share, for the quarter ended July 31, 2008. See table under "Reconciliation of Non-GAAP Financial Measures" for further information on adjusted diluted earnings per share, adjusted net earnings and free cash flow.

Thomas J. Crawford, President and Chief Executive Officer, stated, "While we can't control the economy or the number of deaths in our markets, we can control our costs, continue to prudently invest for the long-term and take strong actions to effectively manage our cash, liquidity and tax planning strategies. We have done that in the third quarter and increased both our earnings and cash flow over the prior year. Some of the highlights for the quarter include:



  --  Increased operating cash flow $10.6 million to $34.5
      million, compared to the third quarter of 2008, including the
      receipt of a $12 million tax refund as a result of effective
      tax planning strategies, and increased free cash flow $13.8
      million to $32.5 million, compared to the third quarter of
      2008, primarily due to the $12 million tax refund and a
      decrease in maintenance capital expenditures;
  --  Continued strong liquidity position with $71.2 million in
      cash on hand;
  --  Reduced debt by 8 percent in the third quarter and 13 percent
      year-to-date which will generate approximately $2 million of
      cash interest savings on an annualized basis.  Net debt as of
      July 31, 2009 was $320.5 million;
  --  Maintained funeral gross profit margin by achieving solid
      growth in average revenue per funeral service, despite volume
      declines and by effectively managing labor costs;
  --  Increased net preneed funeral sales 4.3 percent compared to
      the third quarter of 2008; and
  --  Experienced improved trust returns with a total return of
      13.6 percent in our preneed funeral and cemetery merchandise
      and services trusts and a total return of 16.2 percent in our
      perpetual care trusts."

Mr. Crawford continued, "While we continue to be impacted by fewer industry wide deaths and a reduction in cemetery property sales due to general economic conditions, we are also continuing to invest in the future of our Company. During the first nine months, we invested $6.6 million in new businesses and approximately $2 million in new systems. In the third quarter, we completed the Company-wide implementation of our new contract processing system, which was a major accomplishment requiring a significant investment of time and resources. Over the past two years, we have invested in upgrading our accounting, payroll and contract processing information systems, all of which will produce future efficiencies. In addition, as pleased as we are with our progress in better serving our cremation-oriented customers, as evidenced by our steady increase in average revenue per cremation event, we believe we can do much better and plan to implement cremation initiatives in the near future designed to improve our cremation sales and profits. Also, we have redesigned our websites to support e-commerce initiatives that will enable new revenue opportunities in the future. The fundamentals of our business remain solid and continue to generate strong cash flow. We are continuing to prudently invest in our people and processes so that as the economy and consumer attitudes strengthen, the Company is well positioned to grow."

Third Quarter Results

FUNERAL



  *  Funeral revenue decreased $2.5 million, or 3.6 percent, to
     $66.0 million.
  *  The Company's same-store funeral operations achieved a 2.3
     percent increase in the same-store average revenue per funeral
     service, including trust earnings.
  *  Same-store funeral services decreased 6.3 percent, or 884
     events. The decline is due in part to a 313 event decrease,
     or 35 percent of the total decline, in its West Coast
     operations, due in part to a decrease in low-end cremation
     events.  The remaining decrease in funeral services is
     primarily due to a decrease in deaths in the Company's markets,
     when compared with the comparable prior year period.
  *  In the third quarter of fiscal 2009, the Company experienced
     a $2.6 million, or $.02 per diluted share, decrease in earnings
     related to trust activities, of which $1.1 million related to
     the funeral segment and $1.5 million related to the cemetery
     segment.  This decrease is consistent with the Company's
     previously announced expectations.
  *  Funeral gross profit decreased $0.6 million to $14.4 million
     for the third quarter of 2009 compared to $15.0 million for
     the same period of 2008.  The decrease in gross profit is
     primarily due to the decrease in revenue, as noted above,
     partially offset by a $1.9 million decrease in expenses. The
     decrease in expenses is primarily due to a decrease in
     merchandise costs resulting from decreased volume and a
     reduction in salaries and wages due to effective labor
     management.
  *  The cremation rate for the Company's same-store operations
     was 41.8 percent for the third quarter of 2009 compared to
     39.9 percent for the third quarter of 2008.
  *  Net preneed funeral sales increased 4.3 percent during the
     third quarter of 2009 compared to the third quarter of 2008,
     despite current economic conditions. Preneed funeral sales
     are deferred until a future period and have no impact on
     current revenue.

CEMETERY



  *  Cemetery revenue decreased $10.2 million to $51.7 million
     for the third quarter of 2009.  This decrease is due primarily
     to a $3.7 million, or 13.5 percent, decrease in cemetery
     property sales, net of discounts, due in part to current
     economic conditions.  While cemetery property sales have
     increased in some of the Company's operations, approximately
     75 percent of the decline is occurring in two states where
     the current economic environment is having the largest impact.
     In addition, the Company experienced a $2.8 million decrease
     in cemetery merchandise delivered and services performed, a
     $2.4 million decrease in construction on various cemetery
     projects and a $1.5 million decrease in earnings related to
     trust activities, as noted above.
  *  Cemetery gross profit decreased $8.1 million to $4.9 million
     for the third quarter of 2009 compared to $13.0 million for
     the same period of 2008.  The decrease in gross profit is
     primarily due to the decrease in revenue, as discussed above,
     partially offset by a $2.1 million decrease in expenses. The
     decrease in expenses is primarily due to a decrease in
     property costs and selling costs resulting from the decline
     in cemetery property sales.

OTHER



  *  Interest expense decreased $0.7 million to $5.3 million during
     the third quarter of 2009 primarily due to the repurchase of
     the Company's senior convertible notes in the open market.
  *  Investment and other income, net decreased $0.6 million to
     less than $0.1 million due primarily to a decrease in the
     average rate earned on the Company's cash balances from 1.42
     percent in the third quarter of 2008 to 0.08 percent in the
     third quarter of 2009.
  *  The effective tax rate for the quarter ended July 31, 2009 was
     26.4 percent compared to 37.0 percent for the same period in
     2008. The decreased rate in the current quarter is primarily
     due to a tax benefit of $1.0 million attributable to a
     decrease in the Company's valuation allowance on its capital
     loss carryforward established at October 31, 2008 and a lower
     effective state tax rate primarily attributable to the net
     gain on early extinguishment of debt.
  *  In the third quarter of fiscal year 2009, the Company
     purchased $11.8 million aggregate principal amount of its
     3.125 percent senior convertible notes due 2014 and $23.9
     million aggregate principal amount of its 3.375 percent
     senior convertible notes due 2016 in the open market. As a
     result, the Company recorded an $8.5 million net gain on
     early extinguishment of debt.

Year to Date Results

FUNERAL



  *  Funeral revenue decreased $9.9 million, or 4.5 percent, to
     $209.0 million.
  *  The Company's same-store funeral operations achieved a 3.6
     percent increase in the same-store average revenue per
     funeral service, including trust earnings.
  *  Same-store funeral services performed decreased 7.5 percent,
     or 3,400 events.  The decline is due to several factors. The
     Company experienced a 1,384 call decline, or 40.7 percent of
     the total decline, in its West Coast operations, due in part
     to a decrease in low-end cremation events.  In addition, the
     Company experienced a 222 call decline, or 6.5 percent of the
     total decline, in funeral services due to an additional day
     in the second quarter of 2008 due to leap year.  Finally, the
     remaining decrease in funeral services is primarily due to a
     decrease in deaths in the Company's markets, when compared
     with the comparable prior year period.
  *  For the first nine months of fiscal 2009, the Company realized
     a $6.9 million, or $.05 per diluted share, decrease in
     earnings related to trust activities, of which $2.8 million
     related to the funeral segment and $4.1 million related to
     the cemetery segment.  This decrease is consistent with the
     Company's previously announced expectations.
  *  Funeral gross profit decreased $4.4 million to $51.2 million
     for the first nine months of 2009 compared to $55.6 million
     for the same period of 2008. The decrease in gross profit is
     primarily due to the decrease in revenue, as noted above,
     partially offset by a $5.5 million decrease in expenses.
     The decrease in expenses is primarily related to a decrease
     in merchandise costs resulting from decreased volume and a
     reduction in salaries and wages due to effective labor
     management.
  *  The cremation rate for the Company's same-store operations
     was 41.2 percent for the first nine months of fiscal 2009
     compared to 40.0 percent for the same period of fiscal 2008.
  *  Net preneed funeral sales decreased 3.6 percent during the
     first nine months of fiscal 2009 compared to the first nine
     months of fiscal 2008 due in part to current economic
     conditions. Preneed funeral sales are deferred until the
     underlying contracts are performed and have no impact on
     current revenue.

CEMETERY



  *  Cemetery revenue decreased $24.0 million to $154.7 million
     for the first nine months of fiscal 2009.  This decrease is
     due primarily to a $13.2 million, or 16.8 percent, decrease
     in cemetery property sales, net of discounts, due to current
     economic conditions, a $5.8 million decrease in cemetery
     merchandise delivered and services performed and a $4.1
     million decrease in earnings related to trust activities,
     as noted above.
 *   Cemetery gross profit decreased $18.3 million from $35.1
     million in the first nine months of 2008 to $16.8 million for
     the first nine months of 2009. The decrease in gross profit
     is primarily due to the decrease in revenue, as noted above,
     partially offset by a $5.7 million decrease in expenses. The
     decrease in expenses is primarily related to a decrease in
     property costs and selling costs resulting from the decline
     in cemetery property sales and a reduction in salaries and
     wages due to effective labor management.  The decrease in
     cemetery expenses is partially offset by a $3.2 million
     charge recorded during the nine months ended July 31, 2009
     for the Company's estimated probable obligation to restore
     the net realized losses in certain of the Company's cemetery
     perpetual care trusts primarily related to investments in
     General Motors.

OTHER



  *  Corporate general and administrative expenses decreased $1.6
     million to $22.6 million for the first nine months of fiscal
     2009 primarily due to a $1.6 million decrease in professional
     fees due in part to the resolution of the SEC investigation
     in 2008.
  *  Interest expense decreased $0.9 million to $17.1 million
     during the first nine months of fiscal 2009 primarily due to
     the repurchase of the Company's senior convertible notes in
     the open market.
  *  Investment and other income, net decreased $1.6 million to
     $0.1 million due primarily to a decrease in the average rate
     earned on the Company's cash balances from 2.08 percent in
     the first nine months of fiscal year 2008 to 0.16 percent
     for the first nine months of fiscal year 2009.
  *  The effective tax rate for the nine months ended July 31,
     2009 was 34.6 percent compared to 37.0 percent for the same
     period in 2008. The decreased rate is due in part to a lower
     effective state tax rate primarily attributable to the net
     gain on early extinguishment of debt.
  *  The Company's weighted average diluted shares outstanding
     decreased to 91.9 million shares for the nine months ended
     July 31, 2009 compared to 94.7 million shares for the same
     period in 2008, yielding a positive impact on earnings per
     share.
  *  In the first nine months of fiscal year 2009, the Company
     purchased $15.8 million aggregate principal amount of its
     3.125 percent senior convertible notes due 2014 and $42.5
     million aggregate principal amount of its 3.375 percent
     senior convertible notes due 2016 in the open market. As
     a result, the Company recorded a $17.2 million net gain on
     early extinguishment of debt during the nine months ended
     July 31, 2009.
  *  As of September 9, 2009, the Company has purchased an
     additional $12.2 million aggregate principal amount of its
     senior convertible notes, resulting in an additional net
     gain on early extinguishment of debt of approximately $1.8
     million, or a total of $70.5 million aggregate principal
     amount purchased and approximately $19.0 million net gain
     for fiscal year 2009.

Depreciation and Amortization



  *  Depreciation and amortization was $7.3 million for the
     third quarter of 2009 compared to $7.2 million for the
     third quarter of 2008.
  *  Depreciation and amortization was $22.1 million for the
     first nine months of 2009 compared to $21.2 million for
     the first nine months of 2008.

Cash Flow Results and Debt for Total Operations



  *  Cash flow provided by operating activities for the third
     quarter of fiscal year 2009 was $34.5 million compared to
     $23.9 million for the same period of last year. The increase
     in operating cash flow is primarily due to a $12.0 million
     tax refund received in the current quarter due to effective
     tax planning strategies.  The Company paid $1.1 million in
     net tax payments in the third quarter of 2008 compared to
     receiving $11.5 million of net tax refunds in the third
     quarter of 2009.
  *  Cash flow provided by operating activities for the first
     nine months of 2009 was $63.6 million compared to $52.3
     million for the same period of last year.   The increase
     in operating cash flow is primarily due to a $12.0 million
     tax refund received in the third quarter of 2009 due to
     effective tax planning strategies.  The Company paid $11.8
     million in net tax payments in the first nine months of
     2008 compared to receiving $8.2 million of net tax refunds
     in the first nine months of 2009. In addition, the increase
     is partially due to collections of prior period sales
     exceeding receivables for new sales. These increases were
     partially offset by $1.2 million of cash outflows related
     to Hurricane Ike paid in the first nine months of 2009,
     coupled with the timing of payments to vendors and the
     timing of payroll payments.  For additional information
     on the Company's taxes, see Note 17 to the condensed
     consolidated financial statements in the Company's Form
     10-Q for the quarter ended July 31, 2009.
  *  Free cash flow was $32.5 million during the third quarter
     of 2009 compared to $18.7 million for the third quarter of
     2008, primarily due to the $12.0 million tax refund received
     in the third quarter and a decrease in maintenance capital
     expenditures.
  *  Free cash flow was $55.1 million for the first nine months
     of fiscal year 2009 compared to $39.9 million for the same
     period last year, primarily due to the $12.0 million tax
     refund received in the third quarter and a decrease in
     maintenance capital expenditures.
  *  During the third quarter of 2009 and 2008, the Company
     paid $2.3 million, or $.025 per share, in dividends.
  *  During the first nine months of 2009, the Company paid
     $7.0 million, or $.075 per share, in dividends compared
     to $7.1 million, or $.075 per share, paid in the first
     nine months of 2008.
  *  As of July 31, 2009, the Company had outstanding debt of
     $391.7 million and cash on hand of $71.2 million, or net
     debt of $320.5 million.

Trust Performance

The following returns include realized and unrealized gains and losses:



  *  For the quarter ended July 31, 2009, the Company's preneed
     funeral and cemetery merchandise and services trusts
     experienced a total return of 13.6 percent, and its
     perpetual care trusts experienced a total return of 16.2
     percent.
  *  For the last three years ended July 31, 2009, the Company's
     preneed funeral and cemetery merchandise and services trusts
     experienced an annual total average decline in value of 2.8
     percent, and its perpetual care trusts experienced an annual
     total average decline in value of 0.8 percent.
  *  For the last five years ended July 31, 2009, the Company's
     preneed funeral and cemetery merchandise and services trusts
     experienced an annual total return of 0.8 percent, and its
     perpetual care trusts experienced an annual total return of
     1.4 percent.

Founded in 1910, Stewart Enterprises is the second largest provider of products and services in the death care industry in the United States. The Company currently owns and operates 220 funeral homes and 140 cemeteries in the United States and Puerto Rico. Through its subsidiaries, the Company provides a complete range of funeral merchandise and services, along with cemetery property, merchandise and services, both at the time of need and on a preneed basis.

Stewart Enterprises, Inc. will host its quarterly conference call for investors to discuss third quarter results on Thursday, September 10, 2009 at 10 a.m. Central Standard Time. The teleconference dial-in number is 888-278-8465. To participate, please call the number at least 15 minutes prior to the call. If you are calling from outside the United States, the dial-in number is 913-312-1232. A replay of the call will be available by dialing 888-203-1112 (from within the continental United States) or 719-457-0820 (from outside the continental United States), and using pass code 8608014 until September 17, 2009, at 10:59 p.m. Central Standard Time. Interested parties will also have the opportunity to listen to the live conference call via the Internet through Stewart Enterprises' website http://www.stewartenterprises.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. A replay will be available at this website shortly following the conference call and will be available at the website until October 10, 2009.

The Stewart Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4456



            
                      STEWART ENTERPRISES, INC.
                           AND SUBSIDIARIES

             CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                             (Unaudited)
           (Dollars in thousands, except per share amounts)

                                           Three Months Ended July 31,
                                          ---------------------------
                                              2009             2008
                                          ----------       ----------
 Revenues:
   Funeral                                $   66,017       $   68,558 
   Cemetery                                   51,735           61,870 
                                          ----------       ----------
                                             117,752          130,428 
                                          ----------       ----------
 Costs and expenses:
   Funeral                                    51,607           53,524 
   Cemetery                                   46,812           48,906 
                                          ----------       ----------
                                              98,419          102,430 
                                          ----------       ----------
   Gross profit                               19,333           27,998 

 Corporate general and administrative 
  expenses                                    (8,089)          (8,188)

 Hurricane related charges, net                  (46)            (341)
 Gain on dispositions and impairment 
  (losses), net                                 (117)              25 
 Other operating income, net                     397              407 
                                          ----------       ----------
   Operating earnings                         11,478           19,901 

 Interest expense                             (5,299)          (6,000)

 Gain on early extinguishment of debt          8,533               -- 
 Investment and other income, net                 12              593 
                                          ----------       ----------
   Earnings before income taxes               14,724           14,494 
   Income taxes                                3,886            5,365 
                                          ----------       ----------
     Net earnings                         $   10,838       $    9,129 
                                          ==========       ==========

 Net earnings per common share:
   Basic                                  $      .12       $      .10 
                                          ==========       ==========
   Diluted                                $      .12       $      .10 
                                          ==========       ==========

 Weighted average common shares 
  outstanding (in thousands):
     Basic                                    91,936           92,203 
                                          ==========       ==========
     Diluted                                  92,118           92,414 
                                          ==========       ==========

 Dividends declared per common share      $     .025       $     .025 
                                          ==========       ==========



          
                      STEWART ENTERPRISES, INC.
                          AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                             (Unaudited)
             (Dollars in thousands, except per share amounts)



                                           Nine Months Ended July 31,
                                          ---------------------------
                                              2009            2008
                                          ----------       ----------
 Revenues:
   Funeral                                $  209,007       $  218,862 
   Cemetery                                  154,693          178,658 
                                          ----------       ----------
                                             363,700          397,520 
                                          ----------       ----------
 Costs and expenses:
   Funeral                                   157,817          163,260 
   Cemetery                                  137,872          143,558 
                                          ----------       ----------
                                             295,689          306,818 
                                          ----------       ----------
   Gross profit                               68,011           90,702 

 Corporate general and administrative 
  expenses                                   (22,601)         (24,226)

 Hurricane related charges, net                 (566)            (351)

 Separation charges                             (275)              -- 
 Gain on dispositions and impairment 
  (losses), net                                 (215)             153 
 Other operating income, net                     960              753 
                                          ----------       ----------
   Operating earnings                         45,314           67,031 

 Interest expense                            (17,088)         (17,981)

 Gain on early extinguishment of debt         17,204               -- 
 Investment and other income, net                 85            1,670 
                                          ----------       ----------
   Earnings before income taxes               45,515           50,720 
   Income taxes                               15,759           18,766 
                                          ----------       ----------
     Net earnings                         $   29,756       $   31,954 
                                          ==========       ==========

 Net earnings per common share:
   Basic                                  $      .32       $      .34 
                                          ==========       ==========
   Diluted                                $      .32       $      .34 
                                          ==========       ==========

 Weighted average common shares 
  outstanding (in thousands):
     Basic                                    91,883           94,504 
                                          ==========       ==========
     Diluted                                  91,936           94,676 
                                          ==========       ==========

 Dividends declared per common share      $     .075       $     .075 
                                          ==========       ==========



          
                             STEWART ENTERPRISES, INC.
                                  AND SUBSIDIARIES

                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                  (Dollars in thousands, except per share amounts)





                ASSETS                     July 31,        October 31,
                ------                       2009             2008
                                          ----------       ----------
 Current assets:                        
   Cash and cash equivalents              $   71,214       $   72,574
   Marketable securities                          --               55
   Receivables, net of allowances             62,205           59,129
   Inventories                                36,256           35,870
   Prepaid expenses                            9,279            7,317
   Deferred income taxes, net                 18,604            8,798
                                          ----------       ----------
     Total current assets                    197,558          183,743
 Receivables due beyond one year, net      
  of allowances                               63,142           70,671
 Preneed funeral receivables and trust     
  investments                                378,096          368,412
 Preneed cemetery receivables and trust    
  investments                                191,135          182,141
 Goodwill                                    247,236          247,236
 Cemetery property, at cost                  385,946          377,271
 Property and equipment, at cost:          
   Land                                       42,244           42,244
   Buildings                                 327,243          319,463
   Equipment and other                       184,571          178,534
                                          ----------       ----------
                                             554,058          540,241
   Less accumulated depreciation             254,618          236,066
                                          ----------       ----------
   Net property and equipment                299,440          304,175
 Deferred income taxes, net                  134,658          179,515
 Cemetery perpetual care trust             
  investments                                197,858          173,090
 Non-current assets held for sale              1,663            1,787
 Other assets                                 15,695           16,474
                                          ----------       ----------
     Total assets                         $2,112,427       $2,104,515
                                          ==========       ==========
                                          
 


                
                      STEWART ENTERPRISES, INC.
                           AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)
           (Dollars in thousands, except per share amounts)


   LIABILITIES AND SHAREHOLDERS' EQUITY    July 31,        October 31,
   ------------------------------------      2009             2008
                                         -----------       ----------

 Current liabilities:
   Current maturities of long-term 
    debt                                 $         5       $       20
   Accounts payable                           23,828           27,652
   Accrued payroll and other benefits         14,824           14,133
   Accrued insurance                          20,765           21,287
   Accrued interest                            6,310            5,864
   Estimated obligation to fund 
    cemetery perpetual care trust             14,134           13,281
   Other current liabilities                  14,260           16,198
   Income taxes payable                        2,302            2,061
                                         -----------       ----------
     Total current liabilities                96,428          100,496
 Long-term debt, less current 
  maturities                                 391,747          450,095
 Deferred preneed funeral revenue            245,411          245,182
 Deferred preneed cemetery revenue           272,685          275,835
 Deferred preneed funeral and cemetery 
  receipts held in trust                     499,362          475,420
 Perpetual care trusts' corpus               196,835          171,371
 Other long-term liabilities                  21,471           20,479
                                         -----------       ----------
     Total liabilities                     1,723,939        1,738,878
                                         -----------       ----------
 Commitments and contingencies           -----------       ----------

 Shareholders' equity:
   Preferred stock, $1.00 par value,
    5,000,000 shares authorized; no 
    shares issued                                 --               -- 
   Common stock, $1.00 stated value:                   
       Class A authorized 200,000,000 
        shares; issued and outstanding 
        89,119,832 and 88,693,127 shares 
        at July 31, 2009 and October 31, 
        2008, respectively                    89,120           88,693 
       Class B authorized 5,000,000 
        shares; issued and outstanding 
        3,555,020 shares at July 31, 2009
        and October 31, 2008; 10 votes 
        per share convertible into an 
        equal number of Class A shares         3,555            3,555 
   Additional paid-in capital                529,574          536,902 
   Accumulated deficit                      (233,794)        (263,550)
   Accumulated other comprehensive 
    income:
     Unrealized appreciation of 
      investments                                 33               37 
                                         -----------       ----------
     Total accumulated other 
      comprehensive income                        33               37 
                                         -----------       ----------
       Total shareholders' equity            388,488          365,637 
                                         -----------       ----------
     Total liabilities and shareholders' 
      equity                             $ 2,112,427       $2,104,515 
                                         ===========       ==========



          
                     STEWART ENTERPRISES, INC.
                         AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited)
            (Dollars in thousands, except per share amounts)


                                           Nine Months Ended July 31,
                                         ----------------------------
                                             2009             2008
                                         -----------       ----------
 Cash flows from operating activities:
   Net earnings                          $    29,756       $   31,954 
   Adjustments to reconcile net earnings 
    to net cash provided by operating
    activities:
     (Gains) on dispositions and 
      impairment losses, net                     215             (153)
     Gain on early extinguishment of debt    (17,204)              -- 
     Depreciation and amortization            22,060           21,188 
     Provision for doubtful accounts           6,610            5,742 
     Share-based compensation                  1,732            2,519 
     Excess tax benefits from share-based
      payment arrangements                        --             (171)
     Provision for deferred income taxes      12,994            5,844 
     Estimated obligation to fund 
      cemetery perpetual care trust            3,222               -- 
     Other                                       146             (115)
     Changes in assets and liabilities:
       (Increase) decrease in receivables      6,736           (3,902)
       Increase in prepaid expenses           (1,962)          (2,574)
       Decrease in inventories and 
        cemetery property                       (639)          (2,072)
       Federal income tax refund              12,000               -- 
       Decrease in accounts payable and 
        accrued expenses                      (8,068)            (477)
       Net effect of preneed funeral 
        production and maturities:
         Decrease in preneed funeral 
          receivables and trust 
          investments                         16,245            7,711 
         Increase (decrease) in deferred 
          preneed funeral revenue                229           (5,767)
         Decrease in deferred preneed 
          funeral receipts held in trust     (13,288)          (5,395)
       Net effect of preneed cemetery 
        production and deliveries:                          
         (Increase) decrease in preneed 
          cemetery receivables and trust
          investments                          7,530             (52) 
         Decrease in deferred preneed 
          cemetery revenue                   (10,620)          (4,652)
         Increase (decrease) in deferred 
          preneed cemetery receipts held 
          in trust                            (5,222)           3,712 
   Increase (decrease) in other                1,118           (1,087)
                                         -----------       ----------
 Net cash provided by operating 
  activities                                  63,590           52,253 
                                         -----------       ----------

 Cash flows from investing activities:
   Proceeds from sales of marketable 
    securities                                   250           20,219 
   Purchases of marketable securities           (199)         (19,955)
   Proceeds from sale of assets                  494              358 
   Purchase of subsidiaries and other 
    investments, net of cash acquired         (1,923)          (1,378)
   Additions to property and equipment       (15,029)         (20,370)
   Other                                          37               75 
                                         -----------       ----------
     Net cash used in investing 
      activities                             (16,370)         (21,051)
                                         -----------       ----------

 Cash flows from financing activities:
   Repayments of long-term debt              (39,901)            (190)
   Issuance of common stock                      225            1,659 
   Retirement of call options                  5,111               -- 
   Purchase and retirement of common 
    stock                                        (52)         (48,627)
   Retirement of common stock warrants        (4,981)              -- 
   Debt refinancing costs                     (2,029)              -- 
   Dividends                                  (6,953)          (7,067)
   Excess tax benefits from share-based 
    payment arrangements                          --              171 
                                         -----------       ----------
     Net cash used in financing 
      activities                             (48,580)         (54,054)
                                         -----------       ----------

 Net decrease in cash                         (1,360)         (22,852)
 Cash and cash equivalents, beginning of 
  period                                      72,574           71,545 
                                         -----------       ----------
 Cash and cash equivalents, end of 
  period                                 $    71,214       $   48,693 
                                         ===========       ==========
                                                        
 Supplemental cash flow  information:                   
   Cash paid (received) during the period               
    for:                                                
   Income taxes, net                     $    (8,168)      $   11,767 
   Interest                              $    15,647       $   15,799 
                                                        
 Non-cash investing and financing                       
  activities:                                           
   Issuance of common stock to executive                
    officers and directors               $       305       $      923 
   Issuance of restricted stock, net of                 
    forfeitures                          $        22       $      260 
                                                        
                                                      


                           STEWART ENTERPRISES, INC.
                               AND SUBSIDIARIES

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                 FOR THE PERIODS ENDED JULY 31, 2009 AND 2008
                                  (Unaudited)


 The Company recorded several items during the three and nine months ended
 July 31, 2009 and 2008 that impacted earnings including unusual items 
 such as perpetual care funding obligations and tax valuation charges and
 non-recurring items such as gain on the early extinguishment of debt,
 hurricane related charges, gain on dispositions and impairment (losses)
 and separation pay. The Company is presenting adjusted earnings in the
 table below to eliminate the effects of the specified items, which are
 not comparable from one period to the next.
                                             
                                              
 Adjusted 
  Balances are  Three Months Ended July 31,  Nine Months Ended July 31,
  Net of Tax    --------------------------   -------------------------
                   2009           2008           2009          2008
                ------------  ------------   ------------  -----------
                 mil-   per    mil-   per     mil-   per    mil-  per 
                lions  share  lions  share   lions  share  lions share
                                                                       
 Consolidated 
  net 
  earnings      $10.8   $.12   $9.1   $.10   $29.8  $.32  $32.0   $.34
   Subtract:                                       
    Gain on                                        
     early                                         
     extinguish-                                         
     ment of                                       
     debt        (5.4)  (.06)    --     --   (11.2) (.12)    --     -- 
   Subtract:                                       
    Tax                                            
     valuation                                          
     charge      (1.2)  (.01)    --     --    (0.3)   --     --     -- 
   Add:                                            
    Hurricane                                      
    related                                        
    charges,                                       
    net            --     --    0.2     --     0.4   .01    0.2     -- 
   Add:                                            
    Perpetual                                      
     care                                          
    funding                                        
    obligation     --     --     --     --     2.1   .02     --     -- 
   Add:                                            
  Separation                                       
    charges        --     --     --     --     0.2    --     --     -- 
   Add: Gain                                       
    on                                             
    dispositions                                       
    and                                            
   impairment                                      
   (losses)       0.1     --     --     --     0.1    --     --     -- 
                 ----   ----   ----   ----   -----  ----  -----   ----
 Adjusted                                          
  earnings       $4.3   $.05   $9.3   $.10   $21.1  $.23  $32.2   $.34
                 ====   ====   ====   ====   =====  ====  =====   ====
                                                   
                                                    



                          STEWART ENTERPRISES, INC.
                              AND SUBSIDIARIES

              RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
              FOR THE PERIODS ENDED JULY 31, 2009 AND 2008
                               (Unaudited)

 Free cash flow is defined as net cash provided by operating activities
 less maintenance capital expenditures. Management believes that free cash
 flow is a useful measure of the Company's ability to repay debt, make
 strategic investments, repurchase stock or pay dividends (subject to the
 restrictions in its debt agreements). The following table provides a 
 reconciliation between net cash provided by operating activities (the
 GAAP financial measure that the Company believes is most directly
 comparable to free cash flow) and free cash flow for the three and nine
 months ended July 31, 2009 and 2008:


                                         Three Months     Nine Months
                                             Ended           Ended
 Free Cash Flow                            July 31,        July 31,
 (Dollars in millions)                  --------------  --------------
                                         2009    2008    2009    2008
                                        ------  ------  ------  ------

 Net cash provided by operating
  activities (1)                        $ 34.5  $ 23.9  $ 63.6  $ 52.3
   Less:  Maintenance capital
    expenditures                          (2.0)   (5.2)   (8.5)  (12.4)
                                        ------  ------  ------  ------
 Free cash flow                         $ 32.5  $ 18.7  $ 55.1  $ 39.9
                                        ======  ======  ======  ======


 (1) Cash flow provided by operating activities for the third quarter of
     fiscal year 2009 was $34.5 million compared to $23.9 million for the
     same period of last year.  The increase in operating cash flow is
     primarily due to a $12.0 million tax refund in the current quarter
     due to effective tax planning strategies.  The Company paid $1.1 
     million in net tax payments in the third quarter of 2008 compared to
     receiving $11.5 million of net tax refunds in the third quarter of
     2009.  Cash flow provided by operating activities for the first nine
     months of 2009 was $63.6 million compared to $52.3 million for the
     same period of last year.   The increase in operating cash flow is
     primarily due to a $12.0 million tax refund in the third quarter of
     2009 due to effective tax planning strategies. The Company paid $11.8
     million in net tax payments in the first nine months of 2008 compared
     to receiving $8.2 million of net tax refunds in the first nine months
     of 2009. In addition, the increase is partially due to collections of
     prior period sales exceeding receivables for new sales. These 
     increases were partially offset by $1.2 million of cash outflows 
     related to Hurricane Ike paid in the first nine months of 2009,
     coupled with the timing of payments to vendors and the timing of 
     payroll payments.  For additional information on the Company's taxes,
     see Note 17 to the condensed consolidated financial statements in the
     Company's Form 10-Q for the quarter ended July 31, 2009.


                           STEWART ENTERPRISES, INC.
                               AND SUBSIDIARIES

                            CAUTIONARY STATEMENTS

This press release includes forward-looking statements that are generally identifiable through the use of words such as "believe," "expect," "intend," "plan," "estimate," "anticipate," "project," "will" and similar expressions. These forward-looking statements rely on assumptions, estimates and predictions that could be inaccurate and that are subject to risks and uncertainties that could cause actual results to differ materially from our goals or forecasts. These risks and uncertainties include, but are not limited to:



  *  effects on our trusts and escrow accounts of changes in stock 
     and bond prices and interest and dividend rates;
  *  effects of the recent substantial decline in market value of our
     trust assets, including:
     *  decreased future cash flow and earnings as a result of reduced 
        earnings from our trusts and trust fund management;
     *  the potential to realize additional losses and additional 
        cemetery perpetual care funding obligations and tax valuation 
        allowances;
  *  effects on at-need and preneed sales of a weakening economy;
  *  effects on revenue due to the changes in the number of deaths in 
     our markets and decline in funeral call volume;
  *  effects on cash flow and earnings as a result of increased costs, 
     particularly supply costs related to increases in commodity prices;
  *  effects on our market share, prices, revenues and margins of 
     intensified price competition or improved advertising and
     marketing by competitors, including low-cost casket providers 3
     and increased offerings of products or services over the Internet;	
  *  effects on our revenue and earnings of the continuing national 
     trend toward increased cremation and the increases in the 
     percentage of cremations performed by us that are inexpensive 
     direct cremations;
  *  risk of loss due to hurricanes and other natural disasters;
  *  effects of the call options the Company purchased and the 
     warrants the Company sold on our Class A common stock and the 
     effects of the outstanding warrants on the ownership interest 
     of our current stockholders;
  *  our ability to pay future dividends on and repurchase our common 
     stock; 
  *  our ability to consummate significant acquisitions of or 
     investments in death care or related businesses successfully;
  *  the effects on us as a result of our industry's complex 
     accounting model;
  *  the effect of the change in accounting method for our senior 
     convertible notes;

and other risks and uncertainties described in our Form 10-K for the year ended October 31, 2008, filed with the SEC. We disclaim any obligation or intent to update or revise any forward-looking statements in order to reflect events or circumstances after the date of this release.



            

Contact Data