CONTACT:  

Lewis J. Derbes, Jr.

Stewart Enterprises, Inc.

1333 S. Clearview Parkway

Jefferson, LA 70121

504-729-1400

Generating strong operating and free cash flow of $86.8 million and $69.2 million, respectively. As of October 31, 2011, the Company had $66.4 million of cash and marketable securities;

Achieving the best fiscal year results in the past three years including: the highest net earnings and earnings per share, the highest increase in same-store funeral calls, the highest annual cemetery property sales and the lowest corporate and general administrative costs;

Producing a 3 percent increase in overall revenue and a 12 percent increase in adjusted earnings per share from continuing operations over the last fiscal year;

Settling the Company’s litigation related to Hurricane Katrina damages for $12.4 million;

Amending the $95 million revolving credit facility, which was undrawn and scheduled to mature in June 2012, to increase its size to $150 million and extend its maturity date to April 2016. The $150 million credit facility remains undrawn;

Completing an offering of $200 million 6.50 percent senior notes due in 2019 and repurchasing $200 million of the outstanding 6.25 percent senior notes due in 2013;

Announcing a 17 percent increase in the Company’s dividend to $.14 per share and returning nearly $12 million through the payment of dividends;

Repurchasing 5 percent of the Company’s common stock during the fiscal year and increasing its stock repurchase program by $50 million.

Funeral revenue increased $1.6 million, or 2.4 percent, to $68.0 million for the fourth quarter of 2011 from $66.4 million for the fourth quarter of 2010. The Company’s same-store funeral operations generated a 2.5 percent increase in average revenue per traditional funeral service and a 0.4 percent increase in average revenue per cremation service.

The Company’s same-store funeral services for the fourth quarter of 2011 were essentially flat compared to the fourth quarter of 2010.

Funeral gross profit decreased $0.9 million, or 6.1 percent, to $13.8 million for the fourth quarter of 2011, compared to $14.7 million for the same period of 2010. The decrease in funeral gross profit is primarily due to an increase in compensation and health benefits, coupled with an increase in general liability insurance.

The cremation rate for the Company’s same-store operations grew to 42.1 percent for the fourth quarter of 2011 compared to 41.8 percent for the fourth quarter of 2010.

Net preneed funeral sales increased 8.8 percent during the fourth quarter of 2011 compared to the fourth quarter of 2010. Preneed funeral sales are deferred until the underlying contracts are performed and have no impact on current revenue.

Cemetery revenue increased $2.5 million, or 4.2 percent, to $61.4 million for the fourth quarter of 2011 from $58.9 million for the fourth quarter of 2010. This increase is due primarily to a $3.6 million, or 14.4 percent, improvement in cemetery property sales, coupled with a $1.1 million improvement in revenue related to trust activities. These increases were partially offset by a $1.7 million decrease related to the timing of construction during the period on various cemetery projects and a $0.6 million reduction in finance charges as a result of reduced interest rates in this low interest rate environment.

Cemetery gross profit increased $1.6 million, or 17.2 percent, to $10.9 million for the fourth quarter of 2011 primarily due to the $2.5 million increase in cemetery revenue, as noted above.

The effective tax rate for the quarter ended October 31, 2011 was 28.5 percent compared to 12.9 percent for the same period in 2010. The tax rate for the three months ended October 31, 2011 was impacted primarily by a tax benefit associated with a deduction attributable to the prior sale of a business. The tax rate for the three months ended October 31, 2010 was primarily due to a reduction in the valuation allowance on the Company’s capital loss carry forward and an increased tax benefit from the recognition of net operating losses in certain states and a U.S. possession.

During the fourth quarter of 2011, the Company repurchased 2.2 million shares of the Company’s outstanding Class A common stock for $13.2 million under its share repurchase program.

In the fourth quarter of 2010, the Company purchased $14.9 million aggregate principal amount of its senior convertible notes in the open market at $1.8 million less than the face value of the notes. In connection with the purchases, the Company recorded a net loss on early extinguishment of debt of $0.9 million for the three months ended October 31, 2010.

Funeral revenue increased $7.8 million, or 2.8 percent, to $283.7 million for fiscal year 2011 from $275.9 million for the same period of 2010. The Company’s same-store funeral operations generated a 1.6 percent increase in average revenue per traditional funeral service and a 3.3 percent increase in average revenue per cremation service, coupled with a 0.6 percent increase in same-store funeral services.

Funeral gross profit increased $1.0 million, or 1.5 percent, to $66.6 million for fiscal year 2011, primarily due to the $7.8 million increase in funeral revenue, as noted above, partially offset by an increase in funeral expenses. This increase is due in part to an increase in compensation in the current year, primarily resulting from changes made in the Company’s compensation package to incentivize improvements in operational performance, as well as an increase in health and general liability insurance, funeral bad debt and energy costs.

The cremation rate for the Company’s same-store operations was 42.5 percent for fiscal year 2011 compared to 41.9 percent for the same period of 2010.

Net preneed funeral sales increased 1.8 percent during fiscal year 2011 compared to the same period of 2010. Preneed funeral sales are deferred until the underlying contracts are performed and have no impact on current revenue.

Cemetery revenue increased $5.0 million, or 2.2 percent, to $229.0 million for fiscal year 2011, compared to $224.0 million for the same period of 2010. This improvement is primarily due to a $7.3 million, or 7.6 percent, increase in cemetery property sales, coupled with a $1.9 million improvement in revenue related to trust activities. These increases were partially offset by a $1.2 million reduction in finance charges as a result of reduced interest rates in this low interest rate environment and a $0.9 million decrease in merchandise delivered.

Cemetery gross profit increased $2.7 million, or 8.7 percent, to $33.8 million for fiscal year 2011, even after considering a $1.1 million positive impact in fiscal year 2010 of perpetual care withdrawals related to prior cancellations which the Company used to offset its perpetual care expenses. The improvement in cemetery gross profit is primarily due to the $5.0 million increase in revenue, as noted above.

Corporate general and administrative expenses decreased $0.3 million to $28.0 million for fiscal year 2011, compared to $28.3 million for the same period of 2010. During fiscal year 2010, the Company experienced increased litigation costs primarily related to the settlement of litigation. During fiscal year 2011, the Company realized cost savings from its continuous improvement initiatives. The Company used these savings to fund $2.0 million of expenses in various growth initiatives in fiscal year 2011. The Company believes these investments in e-commerce and third-party growth initiatives will provide benefits in the future. For additional information on the Company’s e-commerce and third-party growth initiatives, see Item 1. “Business-Operations” in the Company’s Form 10-K for the year ended October 31, 2011.

In August 2011, the Company successfully settled litigation related to Hurricane Katrina damages for $12.4 million, including $1.1 million that was advanced to the Company in fiscal year 2007. The settlement increased pre-tax earnings by $12.4 million, net earnings by $7.5 million and diluted earnings per share by $.08 for the fiscal year.

Interest expense decreased $1.7 million to $22.7 million during fiscal year 2011 primarily due to the significant repurchases of a portion of the Company’s senior convertible notes in the open market that occurred throughout fiscal year 2010.

In fiscal year 2011, the Company recorded a $1.9 million charge for the early extinguishment of debt as a result of the April 2011 refinancing transactions, which significantly extended the Company’s debt maturity profile at favorable terms. During fiscal year 2010, the Company purchased $35.9 million aggregate principal amount of its senior convertible notes in the open market at $4.5 million less than the face value of the notes. In connection with the purchases, the Company recorded a net loss on early extinguishment of debt of $1.0 million for fiscal year 2010.

The effective tax rate for fiscal year 2011 was 37.7 percent compared to 31.3 percent for the same period in 2010. The decreased rate in fiscal year 2010 was primarily due to a tax benefit from the net reduction in the valuation allowance on the Company’s capital loss carry forwards and an increased tax benefit from the recognition and utilization of net operating losses in certain states and a U.S. possession.

During fiscal year 2011, the Company repurchased 4.5 million shares of the Company’s outstanding Class A common stock for $28.7 million under its share repurchase program.

Subsequent to year-end, the Company repurchased an additional 0.6 million shares of outstanding Class A common stock for $3.7 million under its share repurchase program, for a total of 5.9 million shares for $36.4 million since the reinstatement of the share repurchase program in September 2010. The Company currently has $40.1 million remaining under its $125.0 million program.

Cash flow provided by operating activities for the fourth quarter of fiscal year 2011 was $26.4 million compared to $14.2 million for the same period of last year. The Company received $11.3 million during the fourth quarter of 2011 as a result of the Hurricane Katrina settlement.

Cash flow provided by operating activities for fiscal year 2011 was $86.8 million compared to $63.4 million for the same period of last year. The increase in operating cash flow is primarily due to $11.3 million of the Hurricane Katrina settlement received during the fourth quarter of 2011. In addition, the Company experienced a change in working capital during fiscal year 2011, primarily driven by the timing of trust withdrawals and deposits, partially offset by an increase in inventory and receivables. These increases are due in part to the improved cemetery property sales, which are typically financed.

Free cash flow was $21.7 million and $69.2 million for the fourth quarter and fiscal year 2011, respectively, compared to $10.1 million and $50.7 million for the fourth quarter and fiscal year 2010, respectively.

The Company paid $3.1 million or $.035 per share, and $11.8 million, or $.13 per share, in dividends for the fourth quarter and fiscal year 2011, respectively, compared to $2.9 million, or $.03 per share, and $11.2 million, or $.12 per share, in dividends during the fourth quarter and fiscal year 2010, respectively.

In connection with its workers’ compensation and automobile liability program with its carrier, the Company is required to maintain collateral in the amount of $6.3 million. In the past, the Company has posted letters of credit to meet this requirement. In fiscal year 2011, in order to reduce letter of credit fees, the Company posted cash to satisfy the collateral requirement by investing $6.3 million in a money market fund comprised of short-term U.S. treasury securities. Both methods of posting collateral are available to the Company at any time in the future.

In April 2011, the Company completed refinancing transactions which significantly extended its debt maturity profile at favorable terms. The Company completed an offering of $200.0 million 6.50 percent senior notes due 2019 and repurchased $194.2 million of its $200.0 million outstanding 6.25 percent senior notes due 2013. The Company redeemed the remaining $5.8 million notes outstanding in May 2011 at par. The Company also amended its $95.0 million revolving credit facility, which was undrawn and scheduled to mature in June 2012, to increase its size to $150.0 million and extend its maturity date to April 2016. The $150.0 million revolving credit facility is currently undrawn.

For the quarter ended October 31, 2011, the Company’s preneed trusts experienced a total decline of 1.9 percent and its perpetual care trusts generated a positive total return of 0.3 percent.

For the twelve months ended October 31, 2011, the Company’s preneed trusts experienced a total return of 4.4 percent and its perpetual care trusts generated a total return of 4.9 percent.

For the last five years ended October 31, 2011, the Company’s preneed trusts experienced an annual total return of 1.0 percent and its perpetual care trusts generated an annual total return of 2.7 percent.

As of November 30, 2011, the fair market value of the Company’s preneed trusts and its cemetery perpetual care trusts decreased 1.4 percent, or approximately $11.6 million from October 31, 2011.

As of October 31 2011, the Company concluded that a number of securities in its trust portfolios are other-than-temporarily impaired. For these securities, the Company no longer believes that it has the ability, or in some cases, the intent to hold the securities until they recover their cost value. The Company has written the cost basis of these securities down to their fair market value as of October 31, 2011. The aggregate amounts of the other-than-temporary impairments recorded in the Company’s preneed trusts and its perpetual care trusts were $44.7 million and $11.0 million, respectively. This impairment had no impact on the Company’s balance sheet, as the securities in the trust portfolios and corresponding liabilities are already recorded at fair market value on the balance sheet. The impairment also had no impact on the Company’s income statement for fiscal year 2011; however, these impairments will be allocated to the underlying contracts in the preneed trusts as of October 31, 2011, and will be recognized as the services and merchandise are performed and delivered in the future. In addition, the Company determined that the impairment did not create a probable funding obligation. Given that the contracts in the trusts have historically had an average term of approximately 10-15 years, the Company projects that this impairment could decrease its revenue and gross profit for the foreseeable future by approximately $2 million to $4 million per year. For additional information, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 4, 5 and 6 to the consolidated financial statements included in Item 8. in the Company’s Form 10-K for the year ended October 31, 2011.

Revenues:

Funeral

Cemetery

Costs and expenses:

Funeral

Cemetery

Gross profit

Corporate general and administrative expenses

Hurricane related charges, net

Other operating income, net

Operating earnings

Interest expense

Loss on early extinguishment of debt

Investment and other income, net

Earnings from continuing operations before income taxes

Income taxes

Earnings from continuing operations

Discontinued operations:

Earnings from discontinued operations before income taxes

Income taxes

Earnings from discontinued operations

Net earnings

Basic earnings per common share:

Earnings from continuing operations

Earnings from discontinued operations

Net earnings

Diluted earnings per common share:

Earnings from continuing operations

Earnings from discontinued operations

Net earnings

Weighted average common shares outstanding (in thousands):

Basic

Diluted

Dividends declared per common share

Revenues:

Funeral

Cemetery

Costs and expenses:

Funeral

Cemetery

Gross profit

Corporate general and administrative expenses

Hurricane related recoveries (charges), net

Net loss on dispositions

Other operating income, net

Operating earnings

Interest expense

Loss on early extinguishment of debt

Investment and other income, net

Earnings from continuing operations before income taxes

Income taxes

Earnings from continuing operations

Discontinued operations:

Earnings from discontinued operations before income taxes

Income taxes

Earnings from discontinued operations

Net earnings

Basic earnings per common share:

Earnings from continuing operations

Earnings from discontinued operations

Net earnings

Diluted earnings per common share:

Earnings from continuing operations

Earnings from discontinued operations

Net earnings

Weighted average common shares outstanding (in thousands):

Basic

Diluted

Dividends declared per common share

ASSETS

Current assets:

Cash and cash equivalents

Restricted cash and cash equivalents

Certificates of deposit and marketable securities

Receivables, net of allowances

Inventories

Prepaid expenses

Deferred income taxes, net

Assets held for sale

Total current assets

Receivables due beyond one year, net of allowances

Preneed funeral receivables and trust investments

Preneed cemetery receivables and trust investments

Goodwill

Cemetery property, at cost

Property and equipment, at cost:

Land

Buildings

Equipment and other

Less accumulated depreciation

Net property and equipment

Deferred income taxes, net

Cemetery perpetual care trust investments

Non-current assets held for sale

Other assets

Total assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Current maturities of long-term debt

Accounts payable and accrued expenses

Accrued payroll and other benefits

Accrued insurance

Accrued interest

Estimated obligation to fund cemetery perpetual care trust

Other current liabilities

Income taxes payable

Liabilities associated with assets held for sale

Total current liabilities

Long-term debt, less current maturities

Deferred income taxes, net

Deferred preneed funeral revenue

Deferred preneed cemetery revenue

Deferred preneed funeral and cemetery receipts held in trust

Perpetual care trusts’ corpus

Long-term liabilities associated with assets held for sale

Other long-term liabilities

Total liabilities

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 84,421,416 and 88,739,140 shares at October 31, 2011 and October 31, 2010, respectively

Class B authorized 5,000,000 shares; issued and outstanding 3,555,020 shares at October 31, 2011 and October 31, 2010; 10 votes per share convertible into an equal number of Class A shares

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income:

Unrealized appreciation of investments

Total accumulated other comprehensive income

Total shareholders’ equity

Total liabilities and shareholders’ equity

Cash flows from operating activities:

Net earnings

Adjustments to reconcile net earnings to net cash provided by operating activities:

Net (gains) losses on dispositions, net

Loss on early extinguishment of debt

Premiums paid on early extinguishment of debt

Depreciation and amortization

Non-cash interest and amortization of discount on senior convertible notes

Provision for doubtful accounts

Share-based compensation

Excess tax benefits from share-based payment arrangements

Provision for deferred income taxes

Estimated obligation to fund cemetery perpetual care trust

Other

Changes in assets and liabilities:

Increase in receivables

Decrease in prepaid expenses

(Increase) decrease in inventories and cemetery property

Federal income tax refunds

Decrease in accounts payable and accrued expenses

Net effect of preneed funeral production and maturities:

Decrease in preneed funeral receivables and trust investments

Decrease in deferred preneed funeral revenue

Decrease in deferred preneed funeral receipts held in trust

Net effect of preneed cemetery production and deliveries:

Decrease in preneed cemetery receivables and trust investments

Decrease in deferred preneed cemetery revenue

Increase (decrease) in deferred preneed cemetery receipts held in trust

Increase (decrease) in other

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from sales of certificates of deposit and marketable securities

Purchases of restricted cash equivalents, certificates of deposit and marketable securities

Proceeds from sale of assets

Purchase of subsidiaries and other investments, net of cash acquired

Additions to property and equipment

Other

Net cash used in investing activities

Cash flows from financing activities:

Proceeds of long-term debt

Repayments of long-term debt

Retirement of common stock warrants

Issuance of common stock

Retirement of call options

Purchase and retirement of common stock

Debt refinancing costs

Dividends

Excess tax benefits from share-based payment arrangements

Net cash used in financing activities

Net increase (decrease) in cash

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Supplemental cash flow information:

Cash paid (received) during the year for:

Income taxes, net

Interest

Non-cash investing and financing activities:

Issuance of common stock to executive officers and directors

Issuance of restricted stock, net of forfeitures

Consolidated net earnings

Subtract: Earnings from discontinued operations

Earnings from continuing operations

Add: Non-cash interest expense on senior convertible notes ⁽²⁾

Add: Loss on early extinguishment of debt

Add: Net impairment losses on dispositions

Subtract: Hurricane related recoveries, net ⁽³⁾

Subtract: Unusual tax adjustments ⁽⁴⁾

Adjusted earnings from continuing operations

Net cash provided by operating activities ⁽¹⁾

Subtract: Maintenance capital expenditures ⁽²⁾

Free cash flow

Consolidated net earnings

Subtract: Earnings from discontinued operations

Earnings from continuing operations

Add: Depreciation and amortization

Add: Interest expense

Add: Income taxes

Add: Loss on early extinguishment of debt

Subtract: Hurricane recoveries, net

Adjusted EBITDA

effects on our trusts and escrow accounts of changes in stock and bond prices and interest and dividend rates;

effects of the substantial decline in market value of our trust assets since the fourth quarter of fiscal year 2008, 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 weak economy;

effects on revenue due to the changes in the number of deaths in our markets and recent annual declines in funeral call volume;

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;

effects on cash flow and earnings as a result of increased costs, particularly supply costs related to increases in commodity prices and fuel costs;

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 and increased offerings of products or services over the Internet;

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;