Basis of Presentation

9 Months Ended

Jul. 31, 2011

Basis of Presentation [Abstract]

Basis of Presentation

(1) Basis of Presentation

     (a) The Company

     Stewart Enterprises, Inc. (the “Company”) is a provider of funeral and cemetery products and services in the death care industry in the United States and Puerto Rico. Through its subsidiaries, the Company offers a complete line of funeral and cremation merchandise and services, along with cemetery property, merchandise and services, both at the time of need and on a preneed basis. As of July 31, 2011, the Company owned and operated 218 funeral homes and 141 cemeteries in 24 states within the United States and Puerto Rico. The Company has three operating and reportable segments consisting of a funeral segment, cemetery segment and corporate trust management segment.

     (b) Principles of Consolidation

     The accompanying condensed consolidated financial statements include the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

     (c) Interim Disclosures

     The information as of July 31, 2011, and for the three and nine months ended July 31, 2011 and 2010, is unaudited but, in the opinion of management, reflects all adjustments, which are of a normal recurring nature, necessary to a fair statement of the results for the interim periods. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2010 (the “2010 Form 10-K”).

     The October 31, 2010 condensed consolidated balance sheet data was derived from audited financial statements in the Company’s 2010 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America, which are presented in the Company’s 2010 Form 10-K.

     The results of operations for the three and nine months ended July 31, 2011 are not necessarily indicative of the results to be expected for the fiscal year ending October 31, 2011.

     (d) Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates are disclosed in Note 2 in the Company’s 2010 Form 10-K.

     (e) Share-Based Compensation

     The Company has share-based compensation plans, which are described in more detail in Note 19 to the consolidated financial statements in the Company’s 2010 Form 10-K. Net earnings for the three months ended July 31, 2011 and 2010 include $281 and $265, respectively, of stock option expenses, all of which are included in corporate general and administrative expenses in the condensed consolidated statements of earnings. Net earnings for the nine months ended July 31, 2011 and 2010 include $842 and $805, respectively, of stock option expenses, all of which are included in corporate general and administrative expenses in the condensed consolidated statements of earnings. As of July 31, 2011, there was $2,656 of total unrecognized compensation costs related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.9 years, of which $1,046 of total stock option expense is expected for fiscal year 2011. The expense related to restricted stock is reflected in corporate general and administrative expenses in the condensed consolidated statements of earnings and amounted to $333 and $205 for the three months ended July 31, 2011 and 2010, respectively, and $977 and $751 for the nine months ended July 31, 2011 and 2010, respectively. As of July 31, 2011, there was $1,134 of remaining future restricted stock expense to be recognized. Total restricted stock expense for fiscal year 2011 is expected to be $1,324.

     In November 2010, the Company issued 82,160 shares of Class A common stock and paid approximately $114 in cash to the independent directors of the Company. The expense related to this stock grant amounted to $456 and was recorded in corporate general and administrative expenses during the first quarter of fiscal year 2011. In November 2009, the Company issued 90,000 shares of Class A common stock and paid approximately $96 in cash to the independent directors of the Company. The expense related to this stock grant was $414 and was recorded in corporate general and administrative expenses during the first quarter of fiscal year 2010. Each of the shares received has a restriction requiring each independent director to hold the respective shares until completion of service as a member of the Board of Directors.

     The table below presents all stock options and restricted stock granted to employees during the nine months ended July 31, 2011:

			Weighted
	Number of Shares		Average
Grant Type	Granted		Price per Share		Vesting Period	Vesting Condition
Stock options		1,339,000	$	6.25	Equal one-fourth	Service condition
					portions over 4 years
Restricted stock		520,500	$	6.25	Equal one-third	Market condition
					portions over 3 years

     The fair value of the Company’s service based stock options granted in fiscal year 2011 is the estimated present value at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for the nine months ended July 31, 2011: expected dividend yield of 1.9 percent; expected volatility of 41.5 percent; risk-free interest rate of 1.9 percent; and an expected term of 4.8 years. During the nine months ended July 31, 2011, the Company granted 520,500 shares of restricted stock with market conditions based on achieving certain target stock prices in the fiscal years 2011, 2012 and 2013. The Company records the expense over the requisite service period. The market condition related to fiscal year 2011 was achieved during the second quarter of fiscal year 2011.

     (f) Purchase and Retirement of Common Stock

     Share repurchases are recorded at stated value with the amount in excess of stated value recorded as a reduction to additional paid-in capital. Share repurchases reduce the weighted average number of common shares outstanding during each period.

     On September 19, 2007, the Company announced a new stock repurchase program, authorizing the investment of up to $25,000 in the repurchase of the Company’s common stock. Repurchases under the program are limited to the Company’s Class A common stock, and can be made in the open market or in privately negotiated transactions at such times and in such amounts as management deems appropriate, depending upon market conditions and other factors. The program was increased by $25,000 in December 2007 and an additional $25,000 in June 2008 resulting in a $75,000 program. In June 2011, the program was further increased by $25,000 resulting in a $100,000 program. During the nine months ended July 31, 2011, the Company repurchased 2,347,200 shares of its Class A common stock for $15,552 at an average price of $6.63 per share. As of July 31, 2011, the Company has repurchased 9,724,598 shares of its Class A common stock since the start of the program for $68,090 at an average price of $7.00 per share and has $31,910 remaining available under this program.

     (g) Dividends

     In March 2005, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend of two and one-half cents per share of Class A and B common stock. In September 2009, the Company announced that it had increased the quarterly dividend rate to three cents per share of Class A and B common stock. In June 2011, the Company announced that it had increased the quarterly dividend rate to three and one-half cents per share of Class A and B common stock. Although the Company intends to pay regular quarterly cash dividends for the foreseeable future, the declaration and payment of future dividends are discretionary and will be subject to determination by the Board of Directors each quarter after its review of the Company’s financial performance. For the nine months ended July 31, 2011 and 2010, the Company paid $8,662 and $8,278, respectively, in dividends.

     (h) Receivables and Allowance for Doubtful Accounts

     The Company establishes an allowance for uncollectible installment contracts and trade accounts based on a range of percentages applied to accounts receivable aging categories. These percentages are based on an analysis of the Company’s historical collection and write-off experience. At-need funeral and other receivables are considered past due after 30 days. The Company records an allowance on its interest accruals similar to the corresponding principal aging categories. For accounts that are greater than 90 days past due, interest continues to be accrued, however, an allowance is established to fully reserve for the interest. Interest income on these receivables is recognized only to the extent the account becomes less than 90 days past due and then only on the non-reserved portion. Accounts are restored to normal accrual status only when interest and principal payments are brought current and future payments are reasonably assured.

     As of July 31, 2011 and October 31, 2010, the Company’s receivables and related allowances were as follows:

	Receivables as of July 31, 2011		Receivables as of October 31, 2010
	Ending Balance Collectively		Ending Balance Collectively
	Evaluated for Impairment		Evaluated for Impairment
Current receivables — at-need funeral	$	9,172	$	9,153
Current receivables — other		55,209		47,736
Receivables, due beyond one year — other		73,314		75,782
Preneed funeral receivables		42,951		42,879
Preneed cemetery receivables		30,279		31,643
Total	$	210,925	$	207,193
Total current receivables		64,381		56,889
Total noncurrent receivables		146,544		150,304
Total	$	210,925	$	207,193

     Other receivables are comprised primarily of receivables related to the sale of preneed property interment rights but also include income tax receivables, trade and other receivables and a receivable for hurricane related insurance proceeds (as discussed in Note 7).

	Allowance for Doubtful Accounts			Allowance for Doubtful Accounts
	and Cancellations as of			and Cancellations as of
	July 31, 2011			October 31, 2010
	Ending Balance Collectively			Ending Balance Collectively
	Evaluated for Impairment			Evaluated for Impairment
Current receivables — at-need funeral and other	$	(5,293	)	$	(5,738	)
Receivables, due beyond one year — other		(7,732	)		(8,324	)
Preneed funeral receivables		(11,576	)		(11,753	)
Preneed cemetery receivables		(3,683	)		(4,692	)
Total	$	(28,284	)	$	(30,507	)
Total current receivables		(5,293	)		(5,738	)
Total noncurrent receivables		(22,991	)		(24,769	)
Total	$	(28,284	)	$	(30,507	)

	Allowance for Doubtful Accounts and Cancellations Rollforward
	Balance —							Balance —
	October 31,		Charged to costs					July 31,
	2010		and expenses		Write-offs			2011
Current receivables — at-need funeral and other	$	5,738		1,568		(2,013	)	$	5,293
Receivables, due beyond one year — other	$	8,324		2,291		(2,883	)	$	7,732
	$	14,062		3,859		(4,896	)	$	13,025

     The Company has established allowances for preneed funeral and cemetery merchandise and services trust receivables. Changes in these allowances have no effect on the condensed consolidated statement of earnings but are recorded as reductions in preneed receivables and preneed deferred revenue in the condensed consolidated balance sheet.

     The following summarizes the Company’s receivables aging analysis:

	Receivables Aging Analysis
	as of July 31, 2011
							Greater than
	1 to 30 Days		31 to 60 Days		61 to 90 Days		90 Days		Total
Receivables — at-need funeral	$	5,677	$	668	$	298	$	2,529	$	9,172
Receivables — other		106,367		4,010		2,067		16,079		128,523
Preneed funeral receivables		29,351		924		507		12,169		42,951
Preneed cemetery receivables		24,508		1,113		517		4,141		30,279
	$	165,903	$	6,715	$	3,389	$	34,918	$	210,925

     (i) Restricted Cash and Cash Equivalents

     In connection with its workers’ compensation and automobile liability program with its insurance carrier, the Company is required to maintain collateral in the amount of $6,250. In the past, the Company has posted letters of credit to meet the collateral requirement. In the third quarter of fiscal year 2011 in order to reduce the letter of credit fees, the Company posted cash to satisfy the collateral requirement by investing $6,250 in a money market fund comprised of short-term U.S. treasury securities. This amount is classified in the “restricted cash and cash equivalents” line in the current assets section of the condensed consolidated balance sheet as of July 31, 2011. Both methods of posting collateral are available to the Company in the future.

     (j) Reclassifications

     Certain reclassifications have been made to the 2010 condensed consolidated statements of earnings and balance sheet in order for these periods to be comparable. These reclassifications had no effect on the Company’s net earnings, total shareholders’ equity or cash flows.