| STEWART ENTERPRISES INC Item 1A Risk Factors Cautionary Statements Our business is subject to significant risks |
| We caution readers that the following important factors, among others, in some cases have affected, and in the future, could affect, our actual consolidated results and could cause our actual consolidated results in the future to differ materially from the goals and expectations expressed in the forward-looking statements above and in any other forward-looking statements made by us or on our behalf |
| Risks Related to Our Business We have recently been required to restate previously issued financial statements and have discovered material weaknesses in our internal controls over financial reporting, which caused us to be unable to timely file our Form 10-Q for the quarter ended July 31, 2005 and our Form 10-K for the fiscal year ended October 31, 2005 with the Securities and Exchange Commission |
| As a result of our restatement discussed in Note 2 to the consolidated financial statements included in Item 8, we missed filing deadlines for our Form 10-Q for the quarter ended July 31, 2005 (the “2005 Third Quarter Report”) and our Form 10-K for the fiscal year ended October 31, 2005 (the “2005 Form 10-K”) |
| We also have been unable to complete an amendment to our Form 10-K for the fiscal year ended October 31, 2004 (the “2004 Form 10-K/A”) |
| We plan to file a completed 2005 Third Quarter Report by February 22, 2006 and a completed 2004 Form 10-K/A by April 7, 2006 |
| During any period when we are not current with our SEC reports, neither our affiliates nor any person that purchased shares in a private offering during the preceding two years will be able to sell their shares in public markets pursuant to Rule 144 under the Securities Act of 1933 |
| Also our registration statements on Form S-8 regarding sales of our securities through our employee benefit plans will not be available, and we have suspended sales under these registration statements until we are current in our SEC filings |
| As discussed in Item 9A, we are in the process of remediating the material weaknesses in our internal controls, and we can give no assurances as to when the remediation will be completed |
| We are subject to a delisting proceeding by The Nasdaq Stock Market |
| We have received notifications from Nasdaq that our incomplete 2005 Third Quarter Report, the delay in filing our 2005 Form 10-K and our incomplete 2004 Form 10-K/A are not in compliance with the continued listing requirements of Nasdaq Marketplace Rule 4310(c)(14) |
| The Nasdaq Listing Qualifications Panel granted our request for an extension of time to file the complete 2005 Third Quarter Report and the 2005 Form 10-K to February 15, 2006 |
| On February 14, 2006, we requested an additional extension of time to February 22, 2006 in which to file the 2005 Form 10-K and 2005 Third Quarter Report |
| We also requested an extension of time in which to file the 2004 Form 10-K/A until April 7, 2006 |
| Nasdaq has granted these extensions |
| Delisting of our Class A common stock could have a material adverse effect on the trading price of and market for our Class A common stock and on our ability to raise capital |
| The delay in filing our SEC reports has also resulted in an increase in the interest rate payable on our 6dtta25 percent senior notes, and we cannot predict when the increase will be reduced |
| -12- _________________________________________________________________ [52]Table of Contents In connection with the issuance of our 6dtta25 percent senior notes in February 2005, we entered into a registration rights agreement requiring us to conduct a registered exchange offer to allow holders of the unregistered notes to exchange them for similar registered notes, all with specified times |
| Due to accounting matters referenced above, we were unable to comply with the agreement within the specified time frames, and have so far not been able to cause the required registration statement to become effective |
| As a result, we have incurred additional interest on the notes which will continue until the registration statement is effective and the exchange offer completed |
| The additional interest is currently accruing at the rate of 1dtta50 percent, which is the maximum additional interest rate under the agreement |
| See Note 16 to our consolidated financial statements included in Item 8 |
| Before the exchange offer can occur, we must complete and file an amended Form 10-K for the fiscal year ended 2004, file amended Form 10-Qs for the quarters ended January 31, 2005, April 30, 2005 and July 31, 2005, complete a registration statement for the exchange offer and have the registration statement declared effective by the SEC We cannot currently predict when we will be able to file the registration statement and have it declared effective by the SEC Although we believe we have resolved all issues raised by the SEC Staff, we can give no assurances regarding how and when the SEC will complete its review |
| Failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on the market price of our common stock and our access to capital |
| Section 404 of the Sarbanes-Oxley Act requires management’s assessment of the effectiveness of internal controls over financial reporting and a report by our independent registered public accounting firm addressing management’s assessment and the effectiveness of the internal controls over financial reporting |
| During the course of testing, we identified deficiencies and material weaknesses which caused management to conclude that our internal controls over financial reporting were not effective as of the end of fiscal year 2005, and our auditors also concluded that these controls were not effective as of the end of fiscal year 2005 |
| This could have a material adverse effect on the market price of our common stock and on our access to capital |
| If we are unable to achieve and maintain effective internal controls over financial reporting, such adverse effects may continue |
| See Management’s Report on Internal Control over Financial Reporting in Item 9A and the Report of Independent Registered Public Accounting Firm in Item 8 |
| From fiscal years 1994 to 2004, we have experienced a decline in funeral call volume due to many factors, such as the number of deaths and competition in our markets, our ability to identify changing consumer preferences and various other factors, some of which are beyond our control |
| We have experienced declines in same-store funeral call volumes for a number of years due to many factors described elsewhere herein including the number of deaths, intense competition and our ability to identify changing consumer preferences |
| From fiscal years 2001 to 2002 and 2002 to 2003, same-store funeral call volumes decreased 1dtta5 percent and 2dtta6 percent, respectively |
| One of the operating initiatives announced in 2003 was the creation of a funeral call volume task force, which is using the most successful tactics of our top performing funeral homes to develop strategies to drive funeral call growth throughout our organization with an increased focus on preneed funeral sales |
| Nevertheless, we experienced a decline in same-store funeral call volumes from fiscal year 2003 to 2004 of 1dtta0 percent |
| We did experience an increase of 0dtta3 percent in same-store funeral call volumes for the year ended October 31, 2005, as compared to the prior year, which includes the impact of the Louisiana funeral homes affected by Hurricane Katrina |
| We believe the increase in funeral call volume is attributable to the implementation of the operating initiatives described above |
| However, we can give no assurance that we will be able to sustain such increases in the long term or that we will succeed in stopping or reversing the long-term trend in declining same-store funeral call volumes |
| Our company is headquartered in the New Orleans metropolitan area, and approximately 75 of our funeral homes and 45 of our cemeteries, along with our mausoleum construction and sales business, Acme Mausoleum, are located near the Gulf Coast in southern Texas, Louisiana, Mississippi, Alabama and Florida, along the eastern coasts of Florida, and North and South Carolina and in Puerto Rico |
| These areas are periodically threatened by hurricanes, which can damage our properties, interrupt our business and disrupt the lives of our customers and employees |
| -13- _________________________________________________________________ [53]Table of Contents In fiscal year 2005 our business was adversely affected by Hurricanes Katrina, Wilma and Rita |
| We believe that a significant portion of the loss we experienced due to Hurricane Katrina should be covered by insurance, but we cannot predict the long-term effects on our operations of the following factors: the economic conditions currently existing in the New Orleans metropolitan area; the success and timing of repairs and reconstruction of the New Orleans metropolitan area and of our facilities following the effects of Hurricane Katrina; and the timing and amount of collection of insurance recoveries |
| We may experience declines in preneed sales due to numerous factors, including a weakening economy |
| Declines in preneed property sales would reduce current revenue |
| Declines in preneed funeral and cemetery service and merchandise sales would reduce our backlog and could reduce our future revenues and market share |
| A weakening economy that causes customers to reduce discretionary spending could cause, and we believe has caused in the past, a decline in preneed sales |
| Geopolitical concerns could lower consumer confidence, which could also result in a decline in preneed sales |
| Declines in preneed cemetery property sales would reduce current revenue, and declines in other preneed sales would reduce our backlog and future revenue and could reduce future market share |
| Price competition could reduce market share or cause us to reduce prices to retain or recapture market share, either of which could reduce revenues and margins |
| Our funeral home and cemetery operations generally face intense competition in local markets that typically are served by numerous funeral homes and cemetery firms |
| We have historically experienced price competition primarily from independent funeral home and cemetery operators, and from monument dealers, casket retailers, low-cost funeral providers and other non-traditional providers of services or products including, in recent years, Internet providers |
| From time to time, this price competition has caused us to lose market share in some markets |
| Increased price competition in the future could further reduce revenues, profit margins and backlog and potentially impact our annual goodwill impairment analysis |
| Discount retailers sell caskets at prices substantially lower than prices we offer |
| Consumers can now buy caskets in funeral supply stores and directly from manufacturers, as well as over the Internet, and the first large general merchandise company recently entered the market for low-cost caskets |
| Competition from these sources could reduce our casket sales, which could adversely affect funeral revenues and margins |
| Increased advertising and better marketing by competitors, as well as increased offering of products or services over the Internet, could cause us to lose market share and revenues or cause us to incur increased costs in order to retain or recapture market share |
| In recent years, the marketing of preneed funeral services through television, radio and print advertising, direct mailings and personal sales calls has increased |
| Extensive advertising or effective marketing by competitors in local markets could cause us to lose market share and revenues or cause us to incur increased marketing costs |
| In addition, competitors may change the types or mix of products or services offered |
| These changes may attract customers, causing us to lose market share and revenue or to incur costs necessary to respond to competition by varying the types or mix of products or services offered by us |
| Also, increased use of the Internet by customers to research and/or purchase products and services could cause us to lose market share to competitors offering to sell products or services over the Internet |
| We do not currently sell products or services over the Internet |
| If we are not able to respond effectively to changing consumer preferences, our market share, revenues and profitability could decrease |
| Future market share, revenues and profits will depend in part on our ability to anticipate, identify and respond to changing consumer preferences |
| During fiscal year 2000, we began to implement strategies based on an extensive proprietary study of consumer preferences we commissioned in 1999 |
| However, we may not correctly anticipate or identify trends in consumer preferences, or we may identify them later than our competitors do |
| In -14- _________________________________________________________________ [54]Table of Contents addition, any strategies we may implement to address these trends may prove incorrect or ineffective |
| Earnings from and principal of trusts and escrow accounts could be reduced by changes in stock and bond prices and interest and dividend rates |
| We maintain three types of trusts and escrow accounts: (1) preneed funeral merchandise and services, (2) preneed cemetery merchandise and services and (3) cemetery perpetual care |
| Earnings and investment gains and losses on trusts and escrow accounts are affected by financial market conditions that are not within our control |
| Earnings are also affected by the mix of fixed-income and equity securities that we choose to maintain in the trusts, and we may not choose the optimal mix for any particular market condition |
| The size of the trusts depends upon the level of preneed sales and maturities, the amount of ordinary income and investment gains or losses and funds added through acquisitions, if any |
| Declines in earnings from cemetery perpetual care trusts would cause a decline in current revenues, while declines in earnings from other trusts and escrow accounts could cause a decline in future cash flows and revenues |
| In addition, any significant or sustained investment losses could result in there being insufficient funds in the trusts to cover the cost of delivering services and merchandise or maintaining cemeteries in the future |
| Any such deficiency would have to be covered by cash flow, which could have a material adverse effect on our financial position and results of operations |
| Unrealized gains and losses in the preneed funeral and cemetery merchandise and services trusts have no immediate impact on our revenues, margins, earnings or cash flow, unless the fair market value of the trusts were to decline below the estimated costs to deliver the underlying products and services |
| If that were to occur, we would record a charge to earnings to record a liability for the expected losses on the delivery of the associated contract |
| Over time, gains and losses realized in the trusts are allocated to underlying preneed contracts and affect the amount of the trust earnings we record when we deliver the underlying products or services |
| Accordingly, if current market conditions do not improve, the trusts may eventually realize losses, and our revenues, margins, earnings and cash flow would be negatively affected by the reduced revenue when we deliver the underlying products and services |
| Unrealized gains and losses in the cemetery perpetual care trusts do not affect earnings but could limit the capital gains available to us and could result in lower returns and lower current revenues than we have historically achieved |
| Increased preneed sales may have a negative impact on cash flow and earnings |
| Preneed sales of cemetery property and funeral and cemetery products and services are generally cash flow negative initially, primarily due to the commissions and other costs to acquire the sale, the portion of the sales proceeds required to be placed into trusts or escrow accounts and the terms of the particular contract, such as the size of the down payment required and the length of the contract |
| We will continue to invest a significant portion of cash flow in preneed acquisition costs, which reduces cash flow available for other activities, and, to the extent preneed activities are increased, cash flow would be further reduced, and our ability to service debt could be adversely affected |
| Increased costs may have a negative impact on earnings and cash flows |
| During fiscal year 2004, we reduced funeral, cemetery and corporate general and administrative expenses, primarily through a reduction in our workforce |
| While we intend to continue to control costs, we do not anticipate any further significant cost cuts |
| We may not be successful in maintaining our margins and may incur additional costs |
| For example, we are experiencing increased costs, at least in the near term, as a result of Hurricane Katrina |
| We have also incurred significant legal costs to defend unanticipated class action litigation and significant costs in connection with Sarbanes-Oxley compliance, our deferred revenue project and restatement of our financial statements |
| We may incur additional costs in fiscal year 2006 in conjunction with improving our systems and remediating control deficiencies noted as part of our Sarbanes-Oxley Section 404 assessment |
| Insurance costs, in particular, have increased substantially in recent years |
| The terrorist attacks in the United States on September 11, 2001 and related subsequent events have resulted in higher insurance premiums |
| The volume of claims made in such a short span of time resulted in liquidity challenges that many insurers have passed on to their policyholders |
| Insurers have increased premiums to offset losses in equity markets due to recent economic conditions |
| Insurance costs may also increase in the future due to the volume of claims associated with -15- _________________________________________________________________ [55]Table of Contents Hurricanes Katrina, Rita and Wilma |
| Additionally, we have experienced increases in health insurance costs |
| Additional increases in insurance costs cannot be predicted |
| Our Chairman Emeritus may have a significant and disproportionate influence on the outcome of election of directors and other matters presented for a vote of shareholders and this control may be exercised in a manner that may conflict with the interests of shareholders |
| As of October 31, 2005, our Chairman Emeritus, Frank B Stewart, Jr, held 7cmam235cmam623 shares (or approximately 7 percent) of our outstanding Class A common stock and all of the 3cmam555cmam020 outstanding shares of our Class B common stock |
| Because each share of Class B common stock is entitled to 10 votes on all matters presented for a vote by our shareholders, Mr |
| Stewart controls approximately 30 percent of our total voting power, while holding approximately 10 percent of our outstanding equity |
| Stewart may have a significant and disproportionate influence over the election of directors and other matters requiring the affirmative vote of our shareholders and this control may be exercised in a manner that may conflict with the interest of shareholders |
| Additionally, because Louisiana law and our articles of incorporation require the affirmative vote of two-thirds of the voting power present to approve certain major transactions and any amendments to our articles of incorporation, Mr |
| Stewart may have the ability to prevent the consummation of such actions, even if they are recommended by our Board of Directors and favored by a substantial majority of our shareholders |
| Servicing our debt will require a significant amount of cash, and our ability to generate sufficient cash depends on many factors, some of which are beyond our control |
| Our ability to make payments on and to refinance our debt depends on our ability to generate cash flow |
| This, to a significant extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control |
| In addition, our ability to borrow funds in the future to make payments on our debt will depend on our meeting the financial covenants in our senior secured credit facility and other debt agreements we may have in the future |
| Our business may not generate cash flow from operations, and future borrowings may not be available to us under our senior secured credit facility or otherwise in an amount sufficient to enable us to pay our debt or to fund other liquidity needs |
| Any inability to generate sufficient cash flow or refinance our debt on favorable terms could have a material adverse effect on our financial condition |
| Increases in interest rates would increase interest costs on our variable-rate long-term debt and could have a material adverse effect on our net income and earnings per share |
| Amounts borrowed under the senior secured credit facility are subject to variable interest rates |
| Any significant increase in interest rates could increase our interest costs on our variable-rate long-term debt or indebtedness incurred in the future, which could decrease our net income and earnings per share materially |
| Our ability to maintain compliance with our covenants under our senior secured credit facility and 6dtta25 percent senior notes is dependent upon many factors, one of which is our ability to file timely reports with the SEC Covenant restrictions may also limit our ability to operate our business |
| The restatements described in Note 2 to the consolidated financial statements included in Item 8 as well as our failure to deliver financial statements within the specified deadlines in our senior secured credit facility resulted in a default and potential event of default under the facility |
| We 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 this filing |
| We delivered the financial statements within the time period specified in the waiver |
| We believe our incomplete July 31, 2005 Form 10-Q filed with the SEC met the financial statement compliance requirements of our senior secured credit facility |
| We believe we were in compliance with the terms of the senior secured credit facility |
| The indenture governing our 6dtta25 percent notes requires us 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, we 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 we 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 |
| We furnished our July 31, 2005 Form 10-Q to the trustee and filed it with the SEC, and believe that doing so complied with the requirements of the indenture |
| We have 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 have now filed this report with the SEC We believe we are in compliance with the terms of our 6dtta25 percent notes |
| Our senior secured credit facility and the indenture governing the 6dtta25 percent senior notes contain, among other things, covenants that restrict our and our subsidiaries’ activities |
| Our senior secured credit facility limits, among other things, our and the guarantors’ ability to: borrow money; pay dividends or distributions; purchase or redeem stock; make investments; engage in transactions with affiliates; engage in sale and leaseback transactions; consummate specified asset sales; effect a consolidation or merger or sell, transfer, lease, or otherwise dispose of all or substantially all of our assets; and create liens on our assets |
| In addition, our senior secured credit facility contains specific limits on capital expenditures |
| Furthermore, our senior secured credit facility requires us to maintain specified financial ratios and satisfy financial condition tests |
| The indenture governing the 6dtta25 percent senior notes restricts our and the guarantors’ ability to create liens on assets, enter into sale and leaseback transactions and merge or consolidate with other companies |
| Our and our subsidiaries’ future indebtedness may contain similar or even -16- _________________________________________________________________ [56]Table of Contents more restrictive covenants |
| These covenants may require that we take action to reduce our debt or to act in a manner contrary to our business objectives |
| In addition, events beyond our control, including changes in general economic and business conditions, may affect our ability to satisfy these covenants |
| We might not meet those covenants, and the lenders might not waive any failure to meet those covenants |
| A breach of any of those covenants could result in a default under such indebtedness |
| If an event of default under our senior secured credit facility occurs, the lenders could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable |
| Any such declaration would also result in an event of default under the indenture governing the 6dtta25 percent senior notes |
| For additional information, see “Liquidity and Capital Resources” included in Item 7 |
| The payment of dividends on our common stock in the future is subject to uncertainties |
| The declaration of dividends on our common stock in the future is subject to the discretion of our Board of Directors each quarter after its review of our financial performance |
| Our ability to pay dividends is restricted under our senior credit facility |
| See Note 16 to the consolidated financial statements included in Item 8 |
| Unanticipated litigation or negative developments in pending litigation could have a material adverse effect on our financial statements |
| We are a defendant in the litigation described in Note 21 to the consolidated financial statements included in Item 8 and other litigation in the ordinary course of business |
| The outcome of litigation is inherently uncertain and adverse developments or outcomes can result in significant monetary damages, penalties or injunctive relief against us |
| Our projections do not include any earnings from acquisition activity |
| Several important factors, among others, may affect our ability to consummate acquisitions |
| Although we have not made any significant acquisitions in recent years, we may in the future |
| Any such acquisitions have risks |
| We may fail to identify suitable acquisition candidates, and even if we do, acquisitions may not be completed on acceptable terms or successfully integrated into our existing business |
| We may not be able to find businesses for sale at prices we are willing to pay |
| Acquisition activity, if any, will also depend on our ability to enter new markets |
| Due in part to our lack of experience operating in new areas and to the presence of competitors who have been in certain markets longer than we have, such entry may be more difficult or expensive than we anticipate |
| We have had significant changes in the application of generally accepted accounting principles to our business |
| In recent years we have had significant changes in the application of generally accepted accounting principles to our business |
| These changes have sometimes made it difficult to compare results from one period to the next and have also resulted in reclassifications and restatements of previously reported results |
| We can give no assurances that we will not face similar issues in the future |
| Changes in the number of deaths are not predictable from market to market or over the short term |
| Declines in the number of deaths could cause at-need sales of funeral and cemetery services, property and merchandise to decline, which could decrease revenues |
| Although the United States Bureau of the Census estimates -17- _________________________________________________________________ [57]Table of Contents that the number of deaths in the United States will increase by approximately 1 percent per year from 2000 to 2010, longer lifespans could reduce the rate of deaths |
| Changes in the number of deaths can vary among local markets and from quarter to quarter, and variations in the number of deaths in our markets or from quarter to quarter are not predictable |
| However, generally the number of deaths fluctuates with the seasons with more deaths occurring during the winter months primarily resulting from pneumonia and influenza |
| These variations can cause revenues to fluctuate |
| Our comparisons of the change in the number of families served to the change in the number of deaths reported by the Centers for Disease Control and Prevention (“CDC”) from time to time may not necessarily be meaningful |
| The CDC receives weekly mortality reports from 122 cities and metropolitan areas in the United States within two to three weeks from the date of death and reports the total number of deaths occurring in these areas each week based on the reports received from state health departments |
| The comparability of our funeral calls to the CDC data is limited, as reports from the state health departments are often delayed, and the 122 cities reporting to the CDC are not necessarily comparable with the markets in which we operate |
| The increasing number of cremations in the United States could cause revenues to decline because we could lose market share to firms specializing in cremations |
| In addition, basic cremations produce no revenues for cemetery operations and lesser funeral revenues and, in certain cases, lesser profit margins than traditional funerals |
| Our traditional cemetery and funeral service operations face competition from the increasing number of cremations in the United States |
| Industry studies indicate that the percentage of cremations has steadily increased and that cremations will represent approximately 36 percent of the deaths in the United States by the year 2010, compared to 29 percent in 2003 |
| In fiscal years 2002, 2003, 2004 and 2005, 35 percent, 36 percent, 37 percent and 38 percent, respectively, of the funeral services we performed in our continuing operations were cremations |
| The trend toward cremation could cause cemeteries and traditional funeral homes to lose market share and revenues to firms specializing in cremations |
| In addition, basic cremations (with no funeral service, casket, urn, mausoleum niche, columbarium niche or burial) produce no revenues for cemetery operations and lower revenues than traditional funerals and, when delivered at a traditional funeral home, produce lower profit margins as well |
| Because the funeral and cemetery businesses are high fixed-cost businesses, positive or negative changes in revenue can have a disproportionately large effect on cash flow and profits |
| Funeral homes and cemetery businesses must incur many of the costs of operating and maintaining facilities, land and equipment regardless of the level of sales in any given period |
| For example, we must pay salaries, utilities, property taxes and maintenance costs on funeral homes and maintain the grounds of cemeteries regardless of the number of funeral services or interments performed |
| Because we cannot decrease these costs significantly or rapidly when we experience declines in sales, declines in sales can cause margins, profits and cash flow to decline at a greater rate than the decline in revenues |
| Changes or increases in, or failure to comply with, regulations applicable to our business could increase costs or decrease cash flows |
| The death care industry is subject to extensive regulation and licensing requirements under federal, state and local laws |
| For example, the funeral home industry is regulated by the Federal Trade Commission, which requires funeral homes to take actions designed to protect consumers |
| State laws impose licensing requirements and regulate preneed sales |
| Embalming facilities are subject to stringent environmental and health regulations |
| Compliance with these regulations is burdensome, and we are always at risk of not complying with the regulations |
| In addition, from time to time, governments and agencies propose to amend or add regulations, which could increase costs or decrease cash flows |
| For example, federal, state, Puerto Rican and other regulatory agencies have considered and may enact additional legislation or regulations that could affect the death care industry |
| Several jurisdictions and regulatory agencies have considered or are considering regulations that could require more liberal refund and cancellation policies for preneed sales of products and services, limit or eliminate our ability to use surety bonding, impose or increase trust requirements and prohibit the common ownership of funeral homes and cemeteries in the same market |
| If adopted by the regulatory authorities of the jurisdictions in which we operate, -18- _________________________________________________________________ [58]Table of Contents these and other possible proposals could have a material adverse effect on us, our financial condition, our results of operations, our cash flows and our future prospects |