Stewart Enterprises Announces Completion of Deferred Revenue Project, Filing of Form 10-K for Fiscal Year 2005 and Conference Ca
18 2월 2006 - 8:05AM
Business Wire
Stewart Enterprises, Inc. (Nasdaq NMS: STEIE) announced today that
it has completed its deferred revenue project and filed its Form
10-K for the fiscal year ended October 31, 2005 ("2005 Form 10-K").
The Company also announced that it plans to file its amended Form
10-Q for the quarter ended July 31, 2005 ("2005 Form 10-Q/A") by
February 22, 2006. The Company will host a conference call for
investors on February 21, 2006. The Company's financial statements
for the fiscal years ended October 31, 2001, 2002, 2003, 2004 and
the first three quarters of 2005 have been restated to correct for
certain accounting errors. The Company's filings will reflect the
following adjustments to its previously reported earnings (loss)
per share for fiscal years 2001-2004 and the first nine months of
fiscal 2005: -0- *T Nine Months Ended July FY 2001 FY 2002 FY 2003
FY 2004 31, 2005
----------------------------------------------------- Diluted
earnings (loss) per share previously reported ($3.81)(1)(2)
$0.29(1) ($0.68)(1) $0.43(1) ($1.14)(5) Effect of restating to
correct for goodwill reporting unit errors -- (1.78)(4) 0.64 0.02
-- Effect of restating to correct for the impact of the deferred
revenue project (0.17) (3) (0.18) (0.12) (0.11) (0.16)(6) Other
adjustments -- -- (0.01) -- 0.01
----------------------------------------------------- Diluted
earnings (loss) per share, as restated ($3.98) ($1.67) ($0.17)
$0.34 ($1.29) =====================================================
Weighted average diluted common shares outstanding 107,355 108,299
108,230 108,159 109,430 (1) Represents amounts reported in the
April 12, 2005 Form 8-K. (2) Includes ($2.33) for the cumulative
effect of change in accounting principle upon adoption of SAB 101
"Revenue Recognition in Financial Statements". (3) Includes a $0.01
adjustment to the cumulative effect of change in accounting
principle upon adoption of SAB 101. (4) Reflected as a cumulative
effect of change in accounting principle upon adoption of SFAS No.
142 "Goodwill and Other Intangible Assets". (5) Represents amounts
reported in the incomplete Form 10-Q for the quarter ended July 31,
2005 filed on October 24, 2005. (6) Includes ($0.11) related to the
cumulative effect of change in accounting principle for the change
in accounting for preneed selling costs. The Company's filings will
reflect adjustments to the following key items on its previously
reported balance sheet as of October 31, 2004: Effect of Effect of
restating to restating to reflect impact As Previously correct for
of the Reported goodwill deferred October 31, reporting revenue
Consolidated Balance Sheets: 2004(1) unit changes project
----------------------------------------------------------------------
(dollars in thousands) Deferred income taxes $43,124 $11,794
$37,593 Goodwill 404,169 (131,400) 2,980 Total assets 2,565,198
(121,857) 69,226 Deferred preneed funeral revenue 156,164 --
145,161 Deferred preneed cemetery revenue 288,516 -- (5,278)
Retained earnings (accumulated deficit) 3,298 (121,857) (71,447)
Total shareholders' equity 784,258 (121,857) (71,447) As restated
and As restated reclassified Other October 31, October 31,
Consolidated Balance Sheets: adjustments(2) 2004 2004(3)
----------------------------------------------------------------------
(dollars in thousands) Deferred income taxes $481 $92,992 $93,014
Goodwill (2,976) 272,773 272,729 Total assets (1,081) 2,511,486
2,511,508 Deferred preneed funeral revenue (2,653) 298,672 297,328
Deferred preneed cemetery revenue (1,963) 281,275 280,570 Retained
earnings (accumulated deficit) (2,976) (192,982) (192,982) Total
shareholders' equity (2,976) 587,978 587,978 (1) Represents amounts
reported in the April 12, 2005 Form 8-K. (2) Represents adjustments
which are immaterial individually and in the aggregate relating to
lease-related accounting practices and other miscellaneous
adjustments. (3) The reported amounts from the April 12, 2005 Form
8-K represent the January 2005 classification of continuing and
discontinued operations. The restated and reclassified amounts
represent the October 2005 classification of continuing and
discontinued operations. *T The financial statement restatements
resulting from the deferred revenue project reflect an increase in
deferred revenue as of October 31, 2005 of $157 million, a decrease
in shareholders' equity of $93 million (which reflects the
cumulative impact on net earnings for annual and interim periods
through October 31, 2005) and an increase totaling $61 million to
net deferred taxes and income tax receivable. The restatements are
primarily due to errors identified in recognition of revenue on
preneed cemetery merchandise and services contracts and on realized
trust earnings on preneed cemetery and funeral merchandise and
services contracts. The primary reason for the differences between
the adjustments the Company is reporting and the adjustments it
projected in its press release dated January 18, 2006 are
unexpected errors identified during the deferred revenue project
with respect to the Company's recognition of realized trust
earnings. These restatements as well as the Company's failure to
deliver financial statements within the specified deadlines in its
senior secured credit facility resulted in a default and potential
event of default under the facility. The Company sought and
received waivers of the defaults and potential events of default
related to the restatements and failure to deliver audited
consolidated financial statements by the specified deadline. A
waiver granted an extension to deliver the audited consolidated
financial statements for a date subsequent to today. The Company
delivered the financial statements within the time period specified
in the waiver. The Company believes its incomplete July 31, 2005
Form 10-Q filed with the SEC in conjunction with management
certifications met the compliance requirements of its senior
secured credit facility. The Company believes it is in compliance
with the terms of the senior secured credit facility. The indenture
governing the 6.25 percent notes requires the Company to furnish to
the trustee for forwarding to the holders of the notes, within the
time periods specified in the SEC's rules and regulations, all
quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the
annual information only, a report on the annual financial
statements from our certified independent accountants. In addition,
the Company must file a copy with the SEC for public availability
within the time periods specified in the SEC's rules and
regulations. An event of default would occur if the Company failed
to provide that information within 30 days after receipt of written
notice by the trustee or holders of at least 25 percent of the
principal amount outstanding. The Company furnished its July 31,
2005 Form 10-Q to the trustee and filed it with the SEC, and
believes that doing so complied with the requirements of the
indenture. The Company has not received a default notice from the
trustee or note holders with respect to the late filing of the Form
10-K for the fiscal year ended October 31, 2005 and has now filed
this report with the SEC. The Company believes it is in compliance
with the terms of its 6.25 percent notes. The Company has received
notifications from Nasdaq that the Company's incomplete Form 10-Q
for the quarter ended July 31, 2005, the delay in filing the 2005
Form 10-K and the Company's incomplete amended Form 10-K for the
fiscal year ended October 31, 2004 are not in compliance with the
continued listing requirements of Nasdaq Marketplace Rule
4310(c)(14). The Nasdaq Listing Qualifications Panel granted the
Company's request for an extension of time to file the complete
2005 third quarter report and the 2005 Form 10-K to February 15,
2006, and the Company was granted an additional extension of time
to February 22, 2006 in which to file these reports. The Company
was also granted an extension of time in which to file a completed
amended Form 10-K for the fiscal year ended October 31, 2004 until
April 7, 2006. The 2005 Form 10-K reflects that the Company has
identified material weaknesses in its internal control over
financial reporting as of October 31, 2005 relating to (1) revenue
recognition on preneed cemetery merchandise and services contracts
and (2) recognition of realized trust earnings on preneed cemetery
and funeral contracts. The Company is in the process of remediating
the material weaknesses in its internal controls, and can give no
assurances as to when the remediation will be completed. The
Company's 2005 Form 10-K reflects the following information. For
fiscal year 2005, the Company had a net loss of $143.3 million
compared to restated net earnings of $36.7 million for fiscal year
2004. Contributing to the net loss was a charge of $153.2 million
for the cumulative effect of change in accounting principle related
to the change in the Company's method of accounting for preneed
selling costs, implemented effective November 1, 2004. Fiscal year
2005 earnings from continuing operations before the cumulative
effect of change in accounting principle decreased by $22.2 million
to $8.8 million, compared to $31.0 million as restated for fiscal
year 2004. Contributing to the decline were charges for loss on
early extinguishment of debt of $32.8 million related to the
refinancing of the Company's senior secured credit facility and its
10.25 percent senior subordinated notes. Also contributing to the
decline was a $9.9 million increase in funeral costs of which $5.4
million was due to the 2005 change in accounting for preneed
selling costs and the remainder was due primarily to increased
health insurance costs. Corporate general and administrative
expenses increased $2.3 million due primarily to increased
professional fees associated with the Company's defense of class
action litigation, the Section 404 internal controls review
process, the deferred revenue project and additional audit related
services. The Company also recorded a $9.4 million charge for net
hurricane-related costs. In addition, cemetery revenues declined
$2.1 million primarily due to a decrease in revenue associated with
the construction of cemetery projects, a decrease in earned finance
charges, a decrease in revenue due to Hurricane Katrina and an
increase in bad debt expenses resulting from the impact of
Hurricane Katrina. Partially offsetting these declines, interest
expense decreased by $16.8 million to $30.5 million in fiscal year
2005 from $47.3 million in fiscal year 2004, reflecting the results
of the refinancing of the Company's senior secured credit facility
and 10.25 percent senior subordinated notes at lower rates and a
$39.5 million decrease in average debt outstanding. As of October
31, 2005 the Company had achieved its lowest net debt level in nine
years. In addition, funeral revenue increased $2.9 million from a
restated $271.2 million in fiscal year 2004 to $274.1 million in
fiscal year 2005 primarily due to an increase in average revenue
per call of 2.7 percent and increased same-store funeral call
growth of 0.3 percent. Same-store results include the three funeral
homes impacted by Hurricane Katrina. Excluding these funeral homes,
same-store funeral call growth increased 0.9 percent. Management
believes that the increase in funeral calls can be attributed to
the Company's funeral home incentive compensation plan implemented
during the first quarter of fiscal year 2005 and can also be
attributed to the execution of its strategic plan. Management
believes this increase is a significant accomplishment given that
this is the first year since 1994 that the Company has experienced
positive year-over-year call growth. For fiscal year 2004, the
Company achieved a 9 percent increase in preneed funeral sales,
which was in line with its goal of 5 percent to 10 percent for
2004, and for fiscal year 2005, the Company achieved a 5 percent
increase in preneed funeral sales, which was in line with its goal
of 4 percent to 8 percent for 2005. For fiscal year 2004, the
Company achieved a 9 percent increase in cemetery property sales,
which was in line with its goal of 5 percent to 10 percent for
2004. For fiscal year 2005, the Company achieved a 0.9 percent
increase in cemetery property sales, which was below its goal of 4
percent to 8 percent, due in part to the effect of Hurricanes
Katrina, Rita and Wilma. Operations provided cash of $52.8 million
for the year ended October 31, 2005 compared to $93.6 million for
the comparable period in 2004. The 2005 amount included a cash
inflow of approximately $19 million for cash withdrawn from trust
accounts during the year resulting from the determination during
the deferred revenue project that those amounts had not been
withdrawn in prior periods, even though the related services and
merchandise had been delivered in prior periods. The 2005 amount
also included a cash outflow of approximately $2.5 million related
to Hurricane Katrina and $25.5 million for premiums paid for the
early extinguishment of debt related to the refinancings in 2005.
The 2004 amount included a $33.2 million tax refund received during
the first quarter of 2004 resulting from a change in tax accounting
methods for cemetery merchandise revenue. The Company is issuing
this press release to update previous disclosure and provide the
foregoing key information contained in the 2005 Form 10-K and
anticipated to be contained in the 2005 Form 10-Q/A. This release
may not contain all of the information that may be important to
you. The Company encourages investors to read the 2005 Form 10-K
and 2005 Form 10-Q/A, when filed, for additional information and a
more complete understanding of the information discussed in this
release. On Tuesday, February 21, 2006 the Company will issue a
press release summarizing financial results for fiscal year 2005
and will hold a conference call for investors at 10:00a.m., Central
Standard Time. The teleconference dial-in number is 800-665-0430.
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 913-312-1300. 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 9234828 until February 28, 2006,
midnight 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 March 21, 2006. Founded in
1910, Stewart Enterprises is the third largest provider of products
and services in the death care industry in the United States,
currently owning and operating 230 funeral homes and 144
cemeteries. 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 (NASDAQ:STEIE)
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