##### 



CONTACT:
    
    Thomas J. Crawford
    
    FOR IMMEDIATE RELEASEStewart Enterprises, Inc.1333 S. Clearview ParkwayJefferson, LA 70121504-729-1400
 STEWART ENTERPRISES REPORTS RESULTS FOR THE SECOND FISCAL QUARTER OF 2007
WITH INCREASES IN REVENUE AND NET EARNINGS




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Second quarter Results From Continuing Operations
 FUNERAL
 
    
    Funeral revenue increased $2.0 million, or 2.8 percent, to $73.8 million.
    
    The Companys same-store funeral operations achieved a 3.9 percent increase in the average
revenue per traditional funeral service and an 8.2 percent increase in the average revenue
per cremation service, due in part to new funeral package pricing.
    
    The increase in the average revenue per traditional funeral and cremation service coupled
with a quarter-over-quarter increase in funeral trust earnings resulted in an overall
increase in the same-store average revenue per funeral service for the quarter of 4.1
percent.
    
    The increase in funeral revenue was also due to increased insurance commission revenue as a
result of a 19.6 percent increase in preneed funeral insurance sales for the quarter. The
Company sells preneed products and services through trust and insurance, and earns a
commission on these preneed insurance sales.
    
    Same-store funeral services performed decreased 1.7 percent, or 262 calls, to 15,475 calls.
    
    The cremation rate for the Companys same-store businesses was 39.0 percent for the second
quarter of 2007 compared to 38.5 percent for the second quarter of 2006.
    
    Funeral gross profit increased $0.5 million to $18.9 million, or 25.6 percent of revenue,
for the second quarter of 2007 compared to the same margin for the same period of 2006.
    
    Preneed funeral sales increased 12.3 percent during the second quarter of 2007 compared to
the second quarter of 2006, continuing to add to the preneed funeral backlog.
 CEMETERY
 
    
    Cemetery revenue increased $4.9 million, or 8.3 percent, to $63.8 million for the second
quarter of 2007. This increase was due primarily to an increase of $4.3 million in
construction during the quarter on various cemetery projects and a $1.2 million, or 4.7
percent, increase in gross cemetery property sales, partially offset by a $0.5 million
decrease in merchandise delivery revenue. The increase in gross cemetery property sales was
due in part to serving customers interested in large cemetery property purchases. Revenue
related to the sale of cemetery property prior to its construction is recognized on a
percentage of completion method of accounting as construction occurs.
    
    Cemetery gross profit increased $0.3 million to $13.8 million due to the increase in
cemetery revenue. Cemetery gross profit margin decreased from 22.9 percent for the second
quarter of 2006 to 21.6 percent for the second quarter of 2007 due primarily to increased
merchandise costs and decreased merchandise delivery revenue.
 OTHER
 
    
    Corporate general and administrative expenses increased $0.5 million to $7.7 million due
primarily to costs related to the issuance of stock grants and the accelerated depreciation
of the Companys current computer software systems associated with the implementation of two
new business systems. This was partially offset by decreased professional fees, which were
higher than normal during the second quarter of 2006 because of restated SEC filings.




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##### 




    
    The Company recorded hurricane related charges of $0.3 million ($0.2 million after tax)
during the quarter, net of insurance proceeds, compared to a recovery of $0.5 million ($0.3
million after tax, or $.01 per diluted share) for the same period of 2006. These charges
were due to repairs at locations damaged by Hurricane Katrina. The timing of the receipt of
insurance proceeds is not in line with the timing of cash spending related to Hurricane
Katrina. The Company is continuing to work with its insurance carriers on remaining claims.
    
    Interest expense decreased $1.4 million to $6.3 million during the second quarter of 2007
due to a $29.3 million decrease in average debt outstanding. In addition, the Company
experienced a 61 basis point decrease in the average rate due primarily to additional
interest incurred in the second quarter of fiscal 2006 on the Companys 6.25 percent senior
notes as a result of the Companys inability to timely complete a required exchange offer.
    
    Other operating income, net, increased $0.8 million to $0.9 million primarily due to the
sale of excess cemetery property and proceeds related to the sale of an investment.
    
    Investment and other income decreased $0.1 million to $0.6 million.
    
    The effective tax rate for our continuing operations for the three months ended April 30,
2007 was 30.4 percent compared to 37.7 percent for the same period in 2006. The reduced
rate in 2007 was primarily caused by a tax benefit of $1.5 million attributable to the
utilization of a capital loss carryforward prior to its expiration at the end of fiscal
2007. The effective tax rate exclusive of this benefit would have been 38.1 percent.
 Year to Date Results From Continuing Operations
 FUNERAL
 
    
    Funeral revenue increased $3.1 million, or 2.2 percent, to $146.5 million.
    
    The Companys same-store funeral operations achieved a 4.5 percent increase in the average
revenue per traditional funeral service and a 9.1 percent increase in the average revenue
per cremation service, due in part to new funeral package pricing, resulting in an overall
increase in the same-store average revenue per funeral service for the first six months of
4.9 percent. Funeral trust earnings were relatively flat compared to the prior year period.
    
    The increase in funeral revenue was also due to increased insurance commission revenue as a
result of a 6.0 percent increase in preneed funeral insurance sales for the six month
period. The Company sells preneed products and services through trust and insurance and
earns a commission on these preneed insurance sales.
    
    Same-store funeral services performed decreased 3.6 percent, or 1,133 calls, to 30,678 calls.
    
    The cremation rate for the Companys same-store businesses was 38.9 percent compared to 38.6
percent for the first six months of fiscal 2006.
    
    Funeral gross profit increased $1.3 million to $37.6 million, or 25.7 percent of revenue,
for the first six months of fiscal 2007 compared to 25.3 percent for the same period of last
year due primarily to the increase in funeral revenue mentioned above. This increase was
partially offset by an increase in property, casualty and general liability insurance costs
incurred during the first six months of 2007.
    
    Preneed funeral sales increased 7.1 percent during the first six months of fiscal 2007
compared to the same period of last year, continuing to add to the preneed funeral backlog.
 CEMETERY
 
    
    Cemetery revenue increased $10.4 million, or 9.2 percent, to $123.8 million for the first
six months of fiscal 2007. This increase was due primarily to an increase of $6.9 million in
construction during the period on various cemetery projects and a $5.1 million, or 10.0
percent, increase in gross cemetery property sales, partially offset by a $0.9 million
decrease in merchandise delivery revenue. The increase in gross cemetery property sales was
due in part to serving customers interested in large cemetery property purchases. Revenue
related to the sale of cemetery property prior to its construction is recognized on a
percentage of completion method of accounting as construction occurs.
    
    Cemetery gross profit increased $1.3 million to $26.1 million due to the increases in
cemetery revenue. Cemetery gross profit margin decreased from 21.9 percent for the six
months ended April 30, 2006 to 21.1 percent for the six months ended April 30, 2007. The
decrease in the margin is primarily due to an increase in merchandise costs, a decrease in
merchandise delivery revenue and an increase in property, casualty and general liability
insurance costs.




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OTHER
 
    
    Corporate general and administrative expenses increased $0.3 million to $14.8 million.
    
    During the first six months of fiscal 2007, the Company recorded hurricane related charges
of $2.1 million ($1.3 million after tax, or $.01 per diluted share), net of insurance
proceeds, compared to $2.1 million ($1.2 million after tax, or $.01 per diluted share) for
the same period of 2006. These charges were due to repairs at locations damaged by Hurricane
Katrina. The timing of the receipt of insurance proceeds is not in line with the timing of
cash spending related to Hurricane Katrina. The Company is continuing to work with its
insurance carriers on remaining claims.
    
    The Company incurred separation charges of $0.5 million ($0.3 million after tax) during the
first six months of fiscal 2007 due primarily to separation pay to a former officer who
retired in the first quarter of 2007. This compares to $0.3 million ($0.2 million after tax)
of separation charges incurred for the comparable period of 2006.
    
    Interest expense decreased $2.1 million to $13.1 million during the first six months of
fiscal 2007 due to a $31.3 million decrease in average debt outstanding during the six
months. In addition, the Company experienced a 30 basis point decrease in the average rate
due primarily to additional interest incurred in the first half of fiscal 2006 on the
Companys 6.25 percent senior notes as a result of the Companys inability to timely
complete a required exchange offer.
    
    Investment and other income increased $0.5 million to $1.6 million due primarily to $0.4
million of interest income receivable from the Internal Revenue Service.
    
    The effective tax rate for our continuing operations for the six months ended April 30, 2007
was 28.6 percent compared to 37.7 percent for the same period in 2006. The reduced rate in
2007 was primarily caused by a tax benefit of $3.4 million attributable to the utilization
of a capital loss carryforward, which was not previously recorded because the Company was
uncertain it could generate sufficient capital gain income prior to its expiration at the
end of fiscal 2007. The effective tax rate exclusive of this benefit would have been 38.0
percent.
 Depreciation and Amortization
 
    
    Depreciation and amortization from continuing operations and total operations was $6.8
million for the second quarter of 2007 and $6.2 million for the same period of 2006.
 
    
    Depreciation and amortization from continuing operations and total operations was $13.3
million for the first six months of fiscal year 2007 and $12.3 million for the same period
of 2006. The increase is due to the accelerated depreciation of our current software systems
associated with the implementation of two new business systems.
 Cash Flow Results and Debt for Total Operations
 
    
    Cash flow provided by operating activities for the second quarter of 2007 was $14.6 million
compared to $23.8 million for the same period of last year. Cash flow from operating
activities was impacted by non-recurring items. Recurring free cash flow was $11.5 million
during the second quarter of 2007 compared to $18.9 million for the second quarter of fiscal
year 2006. The decrease in recurring free cash flow was due to a $7.0 million tax payment
made during the second quarter of 2007, compared with $0.5 million in tax payments during
the second quarter of 2006 due to a net operating loss carryforward utilized in that fiscal
year.
    
    Cash flow provided by operating activities for the first six months of fiscal year 2007 was
$32.5 million compared to $51.1 million for the same period of last year. Cash flow from
operating activities was impacted by non-recurring items. Recurring free cash flow was $23.7
million during the first six months of 2007 compared to $33.0 million for the same period of
last year.
    
    The decrease in recurring free cash flow was due in part to $5.6 million in tax payments
made during the first six months of 2007, net of $1.4 million of tax refunds received during
the first quarter of 2007. Due to a net operating loss carryforward utilized in fiscal year
2006, the Company was required to pay $0.7 million in tax payments during the comparable
period of 2006. In addition, recurring free cash flow in the first half of 2006 was enhanced
as a result of an increase in customer collections following the delay in collection
processing during the fourth quarter of 2005 due to Hurricane Katrina. Also, there was an
increase in annual property and casualty insurance premiums that were paid in the first
quarter of 2007.
    
    During the second quarter of 2007, the Company paid $2.6 million in dividends.




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
    
    As of April 30, 2007, the Company had outstanding debt of $363.3 million and cash on hand of
$46.5 million, or net debt of $316.8 million.
 Trust Performance
  
    
    For the last twelve months ended April 30, 2007, the Companys preneed funeral and cemetery
merchandise trust funds experienced a total return of 12.2 percent, and its perpetual care
trust funds experienced a total return of 12.3 percent.
    
    For the last twelve months ended April 30, 2006, the Companys preneed funeral and cemetery
merchandise trust funds experienced a total return of 10.5 percent, and its perpetual care
trust funds experienced a total return of 6.7 percent.
    
    For the last three years ended April 30, 2007, the Companys preneed funeral and cemetery
merchandise trust funds experienced an annual total average return of 8.6 percent, and its
perpetual care trust funds experienced a total return of 7.4 percent.
  http://www.stewartenterprises.com




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STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
 Three Months Ended April 30,2007
    
    
    2006Revenues:Funeral
    
    $
    73,839
    
    
    $
    71,807Cemetery
    
    
    63,896
    
    
    
    58,991137,735
    
    
    
    130,798Costs and expenses:Funeral
    
    
    54,944
    
    
    
    53,395Cemetery
    
    
    50,075
    
    
    
    45,445105,019
    
    
    
    98,840Gross profit
    
    
    32,716
    
    
    
    31,958Corporate general and administrative expenses
    
    
    (7,744
    )
    
    
    (7,256
    )Hurricane related recoveries (charges), net
    
    
    (283
    )
    
    
    558Separation charges
    
    
    (47
    )
    
    
    (122
    )Gains on dispositions and impairment (losses), net
    
    
    (8
    )
    
    
    159Other operating income, net
    
    
    883
    
    
    
    36Operating earnings
    
    
    25,517
    
    
    
    25,333Interest expense
    
    
    (6,295
    )
    
    
    (7,681
    )Investment and other income, net
    
    
    567
    
    
    
    652Earnings from continuing operations before income taxes
    
    
    19,789
    
    
    
    18,304Income taxes
    
    
    6,011
    
    
    
    6,901Earnings from continuing operations
    
    
    13,778
    
    
    
    11,403Discontinued operations:Earnings (loss) from discontinued operations before income taxes
    
    
    (281
    )
    
    
    8Income tax benefit
    
    
    (132
    )
    
    
    (36
    )Earnings (loss) from discontinued operations
    
    
    (149
    )
    
    
    44Net earnings
    
    $
    13,629
    
    
    $
    11,447Basic earnings per common share:Earnings from continuing operations
    
    $
    .13
    
    
    $
    .11Earnings from discontinued operations
    
    
    
    
    
    
    Net earnings
    
    $
    .13
    
    
    $
    .11Diluted earnings per common share:Earnings from continuing operations
    
    $
    .13
    
    
    $
    .11Earnings from discontinued operations
    
    
    
    
    
    
    Net earnings
    
    $
    .13
    
    
    $
    .11Weighted average common shares outstanding (in thousands):Basic
    
    
    105,300
    
    
    
    107,951Diluted
    
    
    105,540
    
    
    
    108,035Dividends declared per common share
    
    $
    .025
    
    
    $
    .025




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STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)
 Six Months Ended April 30,2007
    
    
    2006Revenues:Funeral
    
    $
    146,501
    
    
    $
    143,402Cemetery
    
    
    123,807
    
    
    
    113,372270,308
    
    
    
    256,774Costs and expenses:Funeral
    
    
    108,876
    
    
    
    107,117Cemetery
    
    
    97,692
    
    
    
    88,586206,568
    
    
    
    195,703Gross profit
    
    
    63,740
    
    
    
    61,071Corporate general and administrative expenses
    
    
    (14,786
    )
    
    
    (14,475
    )Hurricane related charges, net
    
    
    (2,133
    )
    
    
    (2,080
    )Separation charges
    
    
    (532
    )
    
    
    (276
    )Gains on dispositions and impairment (losses), net
    
    
    90
    
    
    
    159Other operating income, net
    
    
    1,151
    
    
    
    1,012Operating earnings
    
    
    47,530
    
    
    
    45,411Interest expense
    
    
    (13,052
    )
    
    
    (15,209
    )Investment and other income, net
    
    
    1,617
    
    
    
    1,120Earnings from continuing operations before income taxes
    
    
    36,095
    
    
    
    31,322Income taxes
    
    
    10,326
    
    
    
    11,808Earnings from continuing operations
    
    
    25,769
    
    
    
    19,514Discontinued operations:Earnings (loss) from discontinued operations before income taxes
    
    
    (349
    )
    
    
    274Income tax benefit
    
    
    (135
    )
    
    
    (48
    )Earnings (loss) from discontinued operations
    
    
    (214
    )
    
    
    322Net earnings
    
    $
    25,555
    
    
    $
    19,836Basic earnings per common share:Earnings from continuing operations
    
    $
    .24
    
    
    $
    .18Earnings from discontinued operations
    
    
    
    
    
    
    Net earnings
    
    $
    .24
    
    
    $
    .18Diluted earnings per common share:Earnings from continuing operations
    
    $
    .24
    
    
    $
    .18Earnings from discontinued operations
    
    
    
    
    
    
    Net earnings
    
    $
    .24
    
    
    $
    .18Weighted average common shares outstanding (in thousands):Basic
    
    
    105,097
    
    
    
    108,232Diluted
    
    
    105,248
    
    
    
    108,260Dividends declared per common share
    
    $
    .05
    
    
    $
    .05




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STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
 April 30,
    
    
    October 31,ASSETS
    
    2007
    
    
    2006Current assets:Cash and cash equivalents
    
    $
    46,545
    
    
    $
    43,870Marketable securities
    
    
    385
    
    
    
    239Receivables, net of allowances
    
    
    57,460
    
    
    
    72,499Inventories
    
    
    35,498
    
    
    
    36,358Prepaid expenses
    
    
    10,757
    
    
    
    6,428Deferred income taxes, net
    
    
    8,331
    
    
    
    10,502Assets held for sale
    
    
    
    
    
    
    2,509Total current assets
    
    
    158,976
    
    
    
    172,405Receivables due beyond one year, net of allowances
    
    
    76,947
    
    
    
    75,350Preneed funeral receivables and trust investments.
    
    
    530,228
    
    
    
    517,633Preneed cemetery receivables and trust investments
    
    
    263,686
    
    
    
    258,120Goodwill
    
    
    274,861
    
    
    
    272,976Cemetery property, at cost
    
    
    371,107
    
    
    
    371,071Property and equipment, at cost:Land
    
    
    41,974
    
    
    
    41,336Buildings
    
    
    297,916
    
    
    
    293,530Equipment and other
    
    
    157,962
    
    
    
    149,952497,852
    
    
    
    484,818Less accumulated depreciation
    
    
    201,972
    
    
    
    189,909Net property and equipment
    
    
    295,880
    
    
    
    294,909Deferred income taxes, net
    
    
    179,294
    
    
    
    173,986Cemetery perpetual care trust investments
    
    
    237,598
    
    
    
    230,487Other assets
    
    
    14,326
    
    
    
    13,640Total assets
    
    $
    2,402,903
    
    
    $
    2,380,577




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STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
 April 30,
    
    
    October 31,LIABILITIES AND SHAREHOLDERS EQUITY
    
    2007
    
    
    2006Current liabilities:Current maturities of long-term debt
    
    $
    2,527
    
    
    $
    2,839Accounts payable
    
    
    16,045
    
    
    
    19,375Accrued payroll and other benefits
    
    
    14,888
    
    
    
    17,353Accrued insurance
    
    
    21,778
    
    
    
    21,803Accrued interest
    
    
    5,485
    
    
    
    5,822Other current liabilities
    
    
    11,591
    
    
    
    18,141Income taxes payable
    
    
    5,825
    
    
    
    3,703Liabilities associated with assets held for sale
    
    
    
    
    
    
    942Total current liabilities
    
    
    78,139
    
    
    
    89,978Long-term debt, less current maturities
    
    
    360,771
    
    
    
    374,020Deferred preneed funeral revenue
    
    
    270,493
    
    
    
    274,700Deferred preneed cemetery revenue
    
    
    290,382
    
    
    
    295,989Non-controlling interest in funeral and cemetery trusts
    
    
    681,294
    
    
    
    657,607Other long-term liabilities
    
    
    13,707
    
    
    
    12,410Total liabilities
    
    
    1,694,786
    
    
    
    1,704,704Commitments and contingenciesNon-controlling interest in perpetual care trusts
    
    
    236,667
    
    
    
    228,980Shareholders equity:Preferred stock, $1.00 par value, 5,000,000 shares
authorized; no shares issued
    
    
    
    
    
    
    Common stock, $1.00 stated value:Class A authorized 150,000,000 shares; issued
and outstanding 102,295,505 and 101,408,227
shares at April 30, 2007 and October 31,
2006, respectively
    
    
    102,296
    
    
    
    101,408Class B authorized 5,000,000 shares; issued
and outstanding 3,555,020 shares at April 30,
2007 and October 31, 2006, 10 votes per
share, convertible into an equal number of
Class A shares
    
    
    3,555
    
    
    
    3,555Additional paid-in capital
    
    
    638,759
    
    
    
    640,648Accumulated deficit
    
    
    (273,160
    )
    
    
    (298,715
    )Accumulated other comprehensive loss:Unrealized depreciation of investments
    
    
    
    
    
    
    (3
    )Total accumulated other comprehensive losses
    
    
    
    
    
    
    (3
    )Total shareholders equity
    
    
    471,450
    
    
    
    446,893Total liabilities and shareholders equity
    
    $
    2,402,903
    
    
    $
    2,380,577




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##### 



STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands, except per share amounts)
 Six Months Ended April 30,2007
    
    
    2006Cash flows from operating activities:Net earnings
    
    $
    25,555
    
    
    $
    19,836Adjustments to reconcile net earnings to net cash provided by operating activities:(Gains) losses on dispositions and impairment losses, net
    
    
    265
    
    
    
    (563
    )Depreciation and amortization
    
    
    13,268
    
    
    
    12,269Provision for doubtful accounts
    
    
    3,401
    
    
    
    3,049Share-based compensation
    
    
    691
    
    
    
    834Excess tax benefits from share-based payment arrangements
    
    
    (37
    )
    
    
    Provision (benefit) for deferred income taxes
    
    
    (3,138
    )
    
    
    9,091Other
    
    
    806
    
    
    
    187Changes in assets and liabilities:(Increase) decrease in other receivables
    
    
    9,106
    
    
    
    (1,170
    )(Increase) decrease in inventories and cemetery property
    
    
    103
    
    
    
    (50
    )Decrease in accounts payable and accrued expenses
    
    
    (8,561
    )
    
    
    (3,485
    )Net effect of preneed funeral production and maturities:(Increase) decrease in preneed funeral receivables and trust investments
    
    
    (1,470
    )
    
    
    7,317Decrease in deferred preneed funeral revenue
    
    
    (6,132
    )
    
    
    (11,005
    )Increase (decrease) in funeral non-controlling interest
    
    
    2,790
    
    
    
    (1,073
    )Net effect of preneed cemetery production and deliveries:(Increase) decrease in preneed cemetery receivables and trust investments.
    
    
    (2,956
    )
    
    
    8,763Increase (decrease) in deferred preneed cemetery revenue
    
    
    (5,575
    )
    
    
    4,045Increase in cemetery non-controlling interest
    
    
    8,550
    
    
    
    4,145Decrease in other
    
    
    (4,135
    )
    
    
    (1,133
    )Net cash provided by operating activities
    
    
    32,531
    
    
    
    51,057Cash flows from investing activities:Proceeds from sale of assets, net
    
    
    1,635
    
    
    
    751Purchase of subsidiaries, net of cash acquired
    
    
    (2,805
    )
    
    
    Insurance proceeds related to hurricane damaged properties
    
    
    1,400
    
    
    
    5,300Additions to property and equipment
    
    
    (13,605
    )
    
    
    (9,949
    )Other
    
    
    (106
    )
    
    
    19Net cash used in investing activities
    
    
    (13,481
    )
    
    
    (3,879
    )Cash flows from financing activities:Repayments of long-term debt
    
    
    (13,561
    )
    
    
    (31,650
    )Issuance of common stock
    
    
    2,414
    
    
    
    Purchase and retirement of common stock
    
    
    
    
    
    
    (8,141
    )Dividends
    
    
    (5,265
    )
    
    
    (5,405
    )Excess tax benefits from share-based payment arrangements
    
    
    37
    
    
    
    Other
    
    
    
    
    
    
    61Net cash used in financing activities
    
    
    (16,375
    )
    
    
    (45,135
    )Net increase in cash
    
    
    2,675
    
    
    
    2,043Cash and cash equivalents, beginning of period
    
    
    43,870
    
    
    
    40,605Cash and cash equivalents, end of period
    
    $
    46,545
    
    
    $
    42,648Supplemental cash flow information:Cash paid during the period for:Income taxes
    
    $
    5,600
    
    
    $
    700Interest
    
    $
    13,246
    
    
    $
    14,510Non-cash investing and financing activities:Issuance of common stock to executive officers and directors
    
    $
    1,028
    
    
    $
    Issuance of restricted stock, net of forfeitures
    
    $
    2,931
    
    
    $
    




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##### 



STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE PERIODS ENDED APRIL 30, 2007 AND 2006
(Unaudited)
   Three Months Ended
    
    
    Six Months EndedEBITDA from Continuing Operations
    
    April 30,
    
    
    April 30,(Dollars in millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Consolidated net earnings
    
    $
    13.7
    
    
    $
    11.4
    
    
    $
    25.6
    
    
    $
    19.8Add (Subtract): (Earnings) loss from
discontinued operations
    
    
    0.1
    
    
    
    
    
    
    
    0.2
    
    
    
    (0.3
    )Earnings from continuing operations
    
    
    13.8
    
    
    
    11.4
    
    
    
    25.8
    
    
    
    19.5Add: Depreciation and amortization from
continuing operations
    
    
    6.8
    
    
    
    6.2
    
    
    
    13.3
    
    
    
    12.3Add: Interest expense
    
    
    6.3
    
    
    
    7.7
    
    
    
    13.1
    
    
    
    15.2Add: Income taxes from continuing operations
    
    
    6.0
    
    
    
    6.9
    
    
    
    10.3
    
    
    
    11.8EBITDA from continuing operations
    
    $
    32.9
    
    
    $
    32.2
    
    
    $
    62.5
    
    
    $
    58.8




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##### 



STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE PERIODS ENDED APRIL 30, 2007 AND 2006
(Unaudited)
  Three Months Ended
    
    
    Six Months EndedFree Cash Flow
    
    April 30,
    
    
    April 30,(Dollars in millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net cash provided by operating activities
    
    $
    14.6
    
    
    $
    23.8
    
    
    $
    32.5
    
    
    $
    51.1Less: Maintenance capital expenditures
    
    
    (3.5
    )
    
    
    (3.8
    )
    
    
    (7.1
    )
    
    
    (8.1
    )Free cash flow
    
    $
    11.1
    
    
    $
    20.0
    
    
    $
    25.4
    
    
    $
    43.0Net cash provided by operating activities
    
    $
    14.6
    
    
    $
    23.8
    
    
    $
    32.5
    
    
    $
    51.1Less: Trust withdrawals during deferred
revenue project(1)
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (11.1
    )Add (Subtract): Net cash outflows
(inflows) from insurance proceeds and
expenditures recorded related to Hurricane
Katrina
    
    
    0.4
    
    
    
    (1.0
    )
    
    
    (1.7
    )
    
    
    1.1Adjusted cash provided by operating activities
    
    $
    15.0
    
    
    $
    22.7
    
    
    $
    30.8
    
    
    $
    41.1Less: Maintenance capital expenditures
    
    
    (3.5
    )
    
    
    (3.8
    )
    
    
    (7.1
    )
    
    
    (8.1
    )Recurring free cash flow
    
    $
    11.5
    
    
    $
    18.9
    
    
    $
    23.7
    
    
    $
    33.0
 
 (1)
    
    Represents cash inflows for cash withdrawn from trusts during the deferred
revenue project that relates to services and merchandise delivered in prior periods.




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##### 



CAUTIONARY STATEMENTS
  
    
    the effects on us as a result of our industrys complex accounting model;
    
    our ability to renew insurance coverages in appropriate amounts at an acceptable cost and on appropriate terms
and conditions, especially in the aftermath of Hurricane Katrina;
    
    possible adverse outcomes of pending class action lawsuits and the continuing cost of defending against them;
    
    effects of increased regulation, such as that required by the Sarbanes-Oxley Act, and the related legal and
outside accounting expenses associated with compliance with such regulations;
    
    effects on earnings and cash flow of increased costs;
    
    effects of changes in the number of deaths in our markets on revenues;
    
    effects on our revenue and earnings of the continuing national trend toward increased cremation, and the
increase in the percentage of cremations performed by us that are inexpensive direct cremations;
    
    our ability to respond effectively to changing consumer preferences;
    
    effects on our trust fund and escrow accounts of changes in stock and bond prices and interest and dividend
rates;
    
    effects on cash flow and earnings as a result of preneed sales;
    
    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;
    
    effects on preneed sales of changes made to contract terms, sales force compensation, or a weakening economy;
    
    our ability to generate sufficient cash to service our debt and effects of increases in interest rates on our
variable-rate long-term debt;
    
    effects of covenant restrictions under our senior secured credit facility on our flexibility in operating our
business;
    
    our ability to pay future dividends on our common stock;
    
    effects of changes in revenue on our cash flow and profits;