Condensed Consolidating Financial Statements of Guarantors of Senior Notes

In conjunction with the Stewart acquisition, we assumed $200.0 million in aggregate principal amount of 6.5% senior notes due 2019 that were originally issued by Stewart Enterprises, Inc. ('Subsidiary Issuer') and issued a parent guarantee of the notes.

The following tables present the condensed consolidating historical financial statements as of March 31, 2014 and December 31, 2013 and for the three months ended March 31, 2014 and 2013, for SCI ('Parent') on a parent only basis; the Subsidiary Issuer on a parent only basis; the Guarantor subsidiaries, which serve as guarantors for all three notes, on a combined basis; all other non-guarantor subsidiaries on a combined basis; the eliminations necessary to arrive at the information for the Company on a consolidated basis; and the Company on a consolidated basis.

Non-guarantor subsidiaries of the three notes include the Puerto Rican subsidiaries of the Subsidiary Issuer; Investors Trust, Inc.; certain immaterial domestic subsidiaries of the Subsidiary Issuer, which are not 100 percent-owned, or are prohibited by law from guaranteeing the notes; and all subsidiaries of the Parent that are not subsidiaries of Stewart Enterprises, Inc. The guarantor subsidiaries of the notes are 100 percent-owned directly or indirectly by the Parent and the Subsidiary Issuer. The guarantees are full and unconditional and joint and several. The Issuer and Guarantor amounts are not reflected in the Statement of Operations, Comprehensive Income, and Cash Flows information for the three months ended March 31, 2013 as they were not owned by the Company during that period.

Condensed Consolidating Statements of Operations



	Three Months Ended March 31, 2014
	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	110,165		$	636,958		$	—		$	747,123
Costs and expenses	—			—			(78,197		)	(502,544		)	—			(580,741		)
Gross profits	—			—			31,968			134,414			—			166,382
General and administrative expenses	(267		)	(8,979		)	—			(46,764		)	—			(56,010		)
Losses on divestitures and impairment charges, net	—			—			(66		)	(2,746		)	—			(2,812		)
Operating income	$	(267	)	$	(8,979	)	$	31,902		$	84,904		$	—		$	107,560
Interest expense	(40,593		)	(2,652		)	—			(1,751		)	—			(44,996		)
Equity in subsidiaries	66,917			19,394			384			—			(86,695		)	—
Other (expense) income, net	—			(2		)	1			1,535			—			1,534
Income from continuing operations before income taxes	$	26,057		$	7,761		$	32,287		$	84,688		$	(86,695	)	$	64,098
Benefit (provision) for income taxes	15,045			4,691			(12,863		)	(29,580		)	—			(22,707		)
Net income	41,102			12,452			19,424			55,108			(86,695		)	41,391
Net income attributable to noncontrolling interests	—			—			—			—			(289		)	$	(289	)
Net income attributable to common stockholders	$	41,102		$	12,452		$	19,424		$	55,108		$	(86,984	)	$	41,102

Condensed Consolidating Statements of Operations



	Three Months Ended March 31, 2013
	Parent			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	652,352		$	—		$	652,352
Costs and expenses	—			(492,695		)	—			(492,695		)
Gross profits	—			159,657			—			159,657
General and administrative expenses	(262		)	(30,661		)	—			(30,923		)
Losses on divestitures and impairment charges, net	—			(969		)	—			(969		)
Operating income	(262		)	128,027			—			127,765
Interest expense	(31,035		)	(1,734		)	—			(32,769		)
Equity in subsidiaries	77,420			—			(77,420		)	—
Other (expense) income, net	—			(984		)	—			(984		)
Income from continuing operations before income taxes	46,123			125,309			(77,420		)	94,012
Benefit (provision) for income taxes	11,497			(46,787		)	—			(35,290		)
Net income	57,620			78,522			(77,420		)	58,722
Net income attributable to noncontrolling interests	—			—			(1,102		)	(1,102		)
Net income attributable to common stockholders	$	57,620		$	78,522		$	(78,522	)	$	57,620

Condensed Consolidating Statements of Comprehensive Income



	Three Months Ended March 31, 2014
	Parent			Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income	$	41,102		$	12,452	$	19,424	$	55,108		$	(86,695	)	$	41,391
Other comprehensive income	(11,226		)	—		—		(11,226		)	10,937			(11,515		)
Total comprehensive income attributable to common stockholders	$	29,876		$	12,452	$	19,424	$	43,882		$	(75,758	)	$	29,876

Condensed Consolidating Statements of Comprehensive Income



	Three Months Ended March 31, 2013
	Parent			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income	$	57,620		$	78,522		$	(77,420	)	$	58,722
Other comprehensive income	(5,512		)	(5,512		)	4,410			(6,614		)
Total comprehensive income attributable to common stockholders	$	52,108		$	73,010		$	(73,010	)	$	52,108

Condensed Consolidating Balance Sheets



	March 31, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	21,341	$	753	$	126,525	$	—		$	148,619
Receivables, net	—		909		5,536		99,368		—			105,813
Inventories, net	—		—		10,194		24,314		—			34,508
Current assets held for sale	—		—		4,164		1,576		—			5,740
Other	9,176		7,668		34,403		30,077		—			81,324
Total current assets	$	9,176	$	29,918	$	55,050	$	281,860	$	—		$	376,004
Equity in subsidiaries	4,280,493		657,543		4,546		—		(4,942,582		)	—
Preneed funeral receivables, net and trust investments	—		—		376,292		1,495,247		—			1,871,539
Preneed cemetery receivables, net and trust investments	—		—		255,305		2,046,328		—			2,301,633
Cemetery property, at cost	—		—		233,661		1,487,785		—			1,721,446
Property and equipment, net	—		13,900		294,574		1,578,545		—			1,887,019
Non-current assets held for sale	—		—		451,409		343,592		—			795,001
Deferred charges and other assets	39,887		17,684		171,703		402,485		—			631,759
Goodwill, net	—		647,890		—		1,330,731		—			1,978,621
Cemetery perpetual care trust investments	—		—		206,859		1,135,730		—			1,342,589
Total assets	$	4,329,556	$	1,366,935	$	2,049,399	$	10,102,303	$	(4,942,582	)	$	12,905,611
LIABILITIES & EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	54,039	$	25,723	$	25,955	$	371,651	$	—		$	477,368
Current maturities of long-term debt	—		95		291		105,319		—			105,705
Current liabilities held for sale	—		—		3,484		1,366		—			4,850
Income taxes	—		74		90		3,137		—			3,301
Total current liabilities	$	54,039	$	25,892	$	29,820	$	481,473	$	—		$	591,224
Long-term debt	2,833,690		209,418		172		90,645		—			3,133,925
Deferred preneed funeral revenues	—		—		177,046		495,585		—			672,631
Deferred preneed cemetery revenues	—		—		106,168		880,370		—			986,538
Deferred tax liability	1,082		—		152,608		433,301		—			586,991
Non-current liabilities held for sale	—		—		208,029		296,394		—			504,423
Other liabilities	4,318		14,779		7,168		378,428		—			404,693
Deferred preneed funeral and cemetery receipts held in trust	—		—		473,606		2,772,023		—			3,245,629
Care trusts’ corpus	—		—		207,309		1,133,052		—			1,340,361
Equity:
Common stock	213,532		85,175		102		25		(85,302		)	213,532
Other equity	1,145,680		1,031,671		687,371		3,141,007		(4,860,049		)	1,145,680
Accumulated other comprehensive income	77,215		—		—		—		—			77,215
Total common stockholders’ equity	1,436,427		1,116,846		687,473		3,141,032		(4,945,351		)	1,436,427
Noncontrolling interests	—		—		—		—		2,769			2,769
Total equity	1,436,427		1,116,846		687,473		3,141,032		(4,942,582		)	1,439,196
Total liabilities and equity	$	4,329,556	$	1,366,935	$	2,049,399	$	10,102,303	$	(4,942,582	)	$	12,905,611

Condensed Consolidating Balance Sheets



	December 31, 2013
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	53,543	$	1,898	$	89,432	$	—		$	144,873
Receivables, net	—		442		23,908		81,549		—			105,899
Inventories, net	—		—		10,925		23,743		—			34,668
Current assets held for sale	—		—		3,333		1,236		—			4,569
Other	9,083		29,133		35,368		31,014		—			104,598
Total current assets	9,083		83,118		75,432		226,974		—			394,607
Equity in subsidiaries	4,132,098		828,457		4,546		—		(4,965,101		)	—
Preneed funeral receivables, net and trust investments	—		—		358,567		1,512,307		—			1,870,874
Preneed cemetery receivables, net and trust investments	—		—		265,346		2,035,565		—			2,300,911
Cemetery property, at cost	—		—		264,226		1,482,899		—			1,747,125
Property and equipment, net	—		15,243		306,174		1,599,451		—			1,920,868
Non-current assets held for sale	—		—		443,170		303,304		—			746,474
Deferred charges and other assets	42,068		31,807		150,665		407,548		—			632,088
Goodwill, net	—		624,711		—		1,343,524		—			1,968,235
Cemetery perpetual care trust investments	—		—		223,903		1,123,719		—			1,347,622
Total assets	$	4,183,249	$	1,583,336	$	2,092,029	$	10,035,291	$	(4,965,101	)	$	12,928,804
LIABILITIES & EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	31,914	$	46,020	$	43,706	$	365,008	$	—		$	486,648
Current maturities of long-term debt	30,000		106,939		—		39,423		—			176,362
Current liabilities held for sale	—		—		1,647		1,536		—			3,183
Income taxes	—		560		1,427		4,404		—			6,391
Total current liabilities	61,914		153,519		46,780		410,371		—			672,584
Long-term debt	2,701,611		270,578		89		153,270		—			3,125,548
Deferred preneed funeral revenues	—		—		176,958		509,202		—			686,160
Deferred preneed cemetery revenues	—		—		85,163		889,594		—			974,757
Deferred tax liability	1,092		—		61,835		518,513		—			581,440
Non-current liabilities held for sale	—		—		162,668		274,416		—			437,084
Other liabilities	4,402		29,944		11,116		384,931		—			430,393
Deferred preneed funeral and cemetery receipts held in trust	—		—		503,667		2,746,919		—			3,250,586
Care trusts’ corpus	—		—		223,903		1,121,971		—			1,345,874
Equity:
Common stock	212,317		85,175		102		25		(85,302		)	212,317
Other equity	1,113,472		1,044,120		819,748		2,937,638		(4,801,506		)	1,113,472
Accumulated other comprehensive income	88,441		—		—		88,441		(88,441		)	88,441
Total common stockholders’ equity	1,414,230		1,129,295		819,850		3,026,104		(4,975,249		)	1,414,230
Noncontrolling interests	—		—		—		—		10,148			10,148
Total equity	1,414,230		1,129,295		819,850		3,026,104		(4,965,101		)	1,424,378
Total liabilities and equity	$	4,183,249	$	1,583,336	$	2,092,029	$	10,035,291	$	(4,965,101	)	$	12,928,804

Condensed Consolidating Statements of Cash Flows



	Three Months Ended March 31, 2014
	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net cash (used in) provided by operating activities	$	(28,168	)	$	(32,202	)	$	47,998		$	140,259		$	—		$	127,887
Cash flows from investing activities:
Capital expenditures	—			—			(4,120		)	(21,102		)	—			(25,222		)
Acquisitions, net of cash acquired	—			—			—			(779		)	—			(779		)
Proceeds from divestitures and sales of property and equipment	—			—			—			2,639			—			2,639
Net withdrawals (deposits) of restricted funds and other	—			2,035			(14,260		)	—			—			(12,225		)
Contributions to subsidiaries	(70,858		)	—			—			—			70,858			—
Net cash (used in) provided by investing activities	(70,858		)	2,035			(18,380		)	(19,242		)	70,858			(35,587		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	110,000			—			—			—			—			110,000
Payments of debt	(7,500		)	—			—			(79		)	—			(7,579		)
Early extinguishment of debt	—			(167,093		)	—			—			—			(167,093		)
Principal payments on capital leases	—			—			(23		)	(7,208		)	—			(7,231		)
Proceeds from exercise of stock options	7,915			—			—			—			—			7,915
Excess tax benefits from share based awards	6,744			—			—			—			—			6,744
Purchase of Company common stock	(1,053		)	—			—			—			—			(1,053		)
Payments of dividends	(17,080		)	—			—			—			—			(17,080		)
Purchase of noncontrolling interest	—			—			—			(15,000		)	—			(15,000		)
Bank overdrafts and other	—			—			—			3,762			—			3,762
Contributions from (distributions to) parent	—			165,058			(30,740		)	(63,460		)	(70,858		)	—
Net cash provided by (used in) financing activities	99,026			(2,035		)	(30,763		)	(81,985		)	(70,858		)	(86,615		)
Effect of foreign currency	—			—			—			(1,939		)	—			(1,939		)
Net decrease (increase) in cash and cash equivalents	—			(32,202		)	(1,145		)	37,093			—			3,746
Cash and cash equivalents at beginning of period	—			53,543			1,898			89,432			—			144,873
Cash and cash equivalents at end of period	$	—		$	21,341		$	753		$	126,525		$	—		$	148,619

Condensed Consolidating Statements of Cash Flows



	Three Months Ended March 31, 2013
	Parent			Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net cash (used in) provided by operating activities	$	(1,261	)	$	152,385		$	—		$	151,124
Cash flows from investing activities:
Capital expenditures	—			(22,569		)	—			(22,569		)
Proceeds from divestitures and sales of property and equipment	—			1,816			—			1,816
Net withdrawals (deposits) of restricted funds and other	—			339			—			339
Distributions from subsidiaries	16,558			—			(16,558		)	—
Net cash provided by (used in) investing activities	16,558			(20,414		)	(16,558		)	(20,414		)
Cash flows from financing activities:
Payments of debt	(4,757		)	(191		)	—			(4,948		)
Principal payments on capital leases	—			(6,468		)	—			(6,468		)
Proceeds from exercise of stock options	3,094			—			—			3,094
Excess tax benefits from share based awards	772			—			—			772
Purchase of Company common stock	(1,708		)	—			—			(1,708		)
Payments of dividends	(12,698		)	—			—			(12,698		)
Distributions to parent	—			(16,558		)	16,558			—
Purchase of noncontrolling interest	—			(8,333		)	—			(8,333		)
Bank overdrafts and other	—			(4,004		)	—			(4,004		)
Net cash (used in) provided by financing activities	(15,297		)	(35,554		)	16,558			(34,293		)
Effect of foreign currency	—			(579		)	—			(579		)
Net increase in cash and cash equivalents	—			95,838			—			95,838
Cash and cash equivalents at beginning of period	—			92,708			—			92,708
Cash and cash equivalents at end of period	$	—		$	188,546		$	—		$	188,546