Increased net preneed funeral sales 17 percent and cemetery property sales 4 percent compared to the same period of last year;

Improved same-store average revenue per funeral service by 1.3 percent;

Earned total returns for the first three months of fiscal 2012 of 4 percent in both the Company’s preneed trusts and perpetual care trusts;

Recognized over $9 million in revenue related to trust activities in the Company’s funeral and cemetery segments combined, representing a $1 million improvement over the same period of last year;

Purchased 1.3 million shares of the Company’s outstanding common stock and paid $3.1 million in dividends; and

Generated operating and free cash flow of $7.8 million and $3.8 million, respectively.

Funeral revenue decreased $1.9 million, or 2.6 percent, to $72.0 million for the first quarter of 2012. This decrease is primarily due to a 4.4 percent decrease in same-store funeral services, which the Company believes is generally consistent with industry-wide data in the Company’s markets. This decrease was partially offset by a 1.3 percent improvement in same-store average revenue per funeral service.

Funeral gross profit decreased $1.7 million, to $18.7 million for the first quarter of 2012 compared to $20.4 million for the same period of 2011, primarily due to the $1.9 million decrease in revenue, as noted above.

The cremation rate for the Company’s same-store operations rose to 43.2 percent for the first quarter of 2012 compared to 41.7 percent for the first quarter of 2011.

Net preneed funeral sales increased 17.0 percent during the first quarter of 2012 compared to the first quarter of 2011. Preneed funeral sales are deferred until the underlying contracts are performed and have no impact on current revenue.

Cemetery revenue decreased $2.6 million, or 4.7 percent, to $52.8 million for the first quarter of 2012. As a result of lower average down payments, the Company experienced a $3.3 million decline in cemetery property revenue due to the revenue recognition requirements for cemetery property sales. In addition, the Company experienced a $1.3 million decrease related to the timing of construction during the period on various cemetery projects. This $4.6 million decrease was partially offset by a $0.9 million improvement in revenue related to trust activities and a $0.8 million, or 3.7 percent, increase in cemetery property sales.

Cemetery gross profit decreased $1.3 million to $6.7 million for the first quarter of 2012 compared to $8.0 million for the same period of 2011. This decrease is primarily attributable to the decrease in cemetery revenue as noted above. In addition, during the first quarter of 2012 as a result of Eastman Kodak’s bankruptcy, the Company recorded a $0.6 million charge to record a probable funding obligation related to the Company’s perpetual care trusts.

Corporate general and administrative expenses increased $0.4 million to $7.0 million for the first quarter of 2012, compared to $6.6 million for the same period of 2011. During the first quarter of 2012, the Company invested $1.1 million, $.01 per share, in continuous improvement, e-commerce and third-party growth initiatives, compared to $0.4 million for the same period of last year.

The effective tax rate for the quarter ended January 31, 2012 was 34.5 percent compared to 50.3 percent for the same period in 2011. For the three months ended January 31, 2012, the Company recorded a tax benefit of $0.6 million resulting from a reduction in the valuation allowance for capital losses associated with the improved performance of the Company’s trust portfolio. The higher rate for the three months ended January 31, 2011 was primarily due to a change in Puerto Rican tax legislation that decreased the top tax rate for businesses from 39 percent to 30 percent. As a result, the Company revalued its previously recorded deferred tax assets and recorded a one-time non-cash charge to income tax expense for $2.9 million, net during the first quarter of 2011. This charge was partially offset by a tax benefit of $0.9 million primarily related to the reduction in the valuation allowance for capital losses associated with the improved performance of the Company’s trust portfolio in the first quarter of 2011. For additional information, see Note 17 to the financial statements included in the Company’s Form 10-K for the year ended October 31, 2011.

Cash flow provided by operating activities for the first quarter of fiscal year 2012 was $7.8 million compared to $15.2 million for the same period of last year. During the first quarter of 2012, the Company invested in several cemetery inventory development projects, including the Company’s cremation gardens. In addition, the decline in operating cash flow was due in part to the decrease in pre-tax income, the timing of payroll payments, as well as trust withdrawals and deposits.

Free cash flow was $3.8 million for the first quarter of 2012 compared to $11.2 million during the first quarter of 2011.

During the first quarter of 2012, the Company paid $3.1 million, or $.035 per share, in dividends compared to $2.7 million, or $.03 per share, in dividends during the first quarter of 2011.

During the first quarter of 2012, the Company purchased 1.3 million shares of its outstanding Class A common stock for approximately $7.8 million under its share repurchase program.

Subsequent to quarter-end, the Company repurchased an additional 0.4 million shares of outstanding Class A common stock for $2.4 million under its share repurchase program. Since the reinstatement of the program in September 2010, the Company has purchased a total of 7.0 million shares for $43.0 million. The Company currently has $33.5 million remaining under its $125.0 million program.

For the quarter ended January 31, 2012, the Company’s preneed funeral and cemetery merchandise and services trusts experienced a total return of 4.1 percent, and its perpetual care trusts experienced a total return of 3.9 percent.

For the last twelve months ended January 31, 2012, the Company’s preneed funeral and cemetery merchandise and services trusts experienced an annual total return of 3.8 percent, and its perpetual care trusts experienced an annual total return of 6.6 percent.

For the last three years ended January 31, 2012, the Company’s preneed funeral and cemetery merchandise and services trusts experienced an average annual total return of 15.4 percent, and its perpetual care trusts experienced an average annual total return of 16.7 percent.

For the last five years ended January 31, 2012, the Company’s preneed funeral and cemetery merchandise and services trusts experienced an average annual total return of 1.2 percent, and its perpetual care trusts experienced an average annual total return of 2.9 percent.

For the last twelve months ended January 31, 2012, the fair market value of the Company’s portfolio improved $12.6 million to $828.7 million.

Revenues:

Funeral

Cemetery

Costs and expenses:

Funeral

Cemetery

Gross profit

Corporate general and administrative expenses

Hurricane related charges, net

Net gain on dispositions

Other operating income, net

Operating earnings

Interest expense

Investment and other income, net

Earnings before income taxes

Income taxes

Net earnings

Net earnings per common share:

Basic

Diluted

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

Marketable securities

Receivables, net of allowances

Inventories

Prepaid expenses

Deferred income taxes, net

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

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

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

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 83,640,638 and 84,421,416 shares at January 31, 2012 and October 31, 2011, respectively

Class B authorized 5,000,000 shares; issued and outstanding 3,555,020 shares at January 31, 2012 and October 31, 2011; 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 gain on dispositions

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) decrease in receivables

Increase in prepaid expenses

(Increase) decrease in inventories and cemetery property

Decrease in accounts payable and accrued expenses

Net effect of preneed funeral production and maturities:

(Increase) decrease in preneed funeral receivables and trust investments

Decrease in deferred preneed funeral revenue

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

Net effect of preneed cemetery production and deliveries:

Increase in preneed cemetery receivables and trust investments

Decrease in deferred preneed cemetery revenue

Increase in deferred preneed cemetery receipts held in trust

Increase in other

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from sales of certificates of deposit and marketable securities

Deposits of restricted funds and purchases of marketable securities

Proceeds from sale of assets

Purchase of subsidiaries, net of cash acquired

Additions to property and equipment

Other

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Repayments of long-term debt

Debt refinancing costs

Issuance of common stock

Purchase and retirement of common stock

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 period

Cash and cash equivalents, end of period

Supplemental cash flow information:

Cash paid (received) during the period for:

Income taxes, net

Interest

Non-cash investing and financing activities:

Issuance of common stock to directors

Issuance of restricted stock, net of forfeitures

Consolidated net earnings

Subtract: Net gain on dispositions

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

Add: Perpetual care funding obligation ⁽³⁾

Add (subtract): Unusual tax adjustments ⁽⁴⁾

Adjusted earnings from continuing operations

Free Cash Flow

(Dollars in millions)

Net cash provided by operating activities ⁽¹⁾

Less: Maintenance capital expenditures

Free cash flow

Adjusted EBITDA

(Dollars in millions)

Consolidated net earnings

Add: Depreciation and amortization

Add: Interest expense

Add: Income taxes

Add: Perpetual care funding obligation ⁽¹⁾

Subtract: Net gain on dispositions

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 unrealized losses in the investments in our trusts, 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;

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;

Stewart Enterprises, Inc.

1333 S. Clearview Parkway

Jefferson, LA 70121

504-729-1400