878522--2/17/2006--STEWART_ENTERPRISES

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{interest, director, officer}

{operation, international, foreign}

{control, financial, internal}

{stock, price, operating}

{capital, credit, financial}

{stock, price, share}

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. 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. Earnings from and principal of trusts and escrow accounts could be reduced by changes in stock and bond prices and interest and dividend rates. 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. The payment of dividends on our common stock in the future is subject to uncertainties. 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.

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878522--2/17/2006--STEWART_ENTERPRISES_INC