STONEMOR PARTNERS LP - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - STONEMOR PARTNERS LP	d433167d8k.htm

Exhibit 99.1

StoneMor Partners L.P. Announces Third Quarter 2012 Results

Levittown, PA, November 6, 2012 – StoneMor Partners L.P. (NYSE: STON) announced its results of operations for the three months ended September 30, 2012. Investors are encouraged to read the Company’s quarterly report on Form 10-Q to be filed with the SEC which contains additional details as well as financial tables and can be found at www.stonemor.com.

Financial Highlights

•

Revenues (GAAP) for the three months ended September 30, 2012 increased by $1.9 million, or 3.1%, to $62.2 million from $60.3 million during the three months ended September 30, 2011.

•

Production based revenue (non-GAAP) for the three months ended September 30, 2012 increased by $7.7 million, or 11.4%, to $75.1 million from $67.4 million during the prior year period.

•

Operating profits (GAAP) increased during the three months ended September 30, 2012 to $5.1 million, or 27.5% as compared to $4.0 million in the same period last year.

•

Adjusted operating profits (non-GAAP) increased during the three months ended September 30, 2012 to $14.6 million as compared to $9.1 million in the same period last year.

•

Operating cash flows (GAAP) for the three months ended September 30, 2012 increased to $16.6 million, or 17% versus $14.2 million in the prior year period.

•

Distributable free cash flow (non-GAAP) for the third quarter of 2012 was $15.3 million compared to $8.8 million for the same period last year.

•

Distributable cash available during the period (non-GAAP) was greater than distributions by $11.2 million, or 94.5%, for the three months ended September 30, 2012.

•

Net income (GAAP) was $1.1 million versus a net loss of ($0.2 million) in the prior year period.

“This was a very strong quarter for StoneMor,” said Lawrence Miller, President and Chief Executive Officer. “We experienced double digit percentage increases in our key performance metrics on a year over year basis, with production based revenue rising 11.4%, adjusted operating profits rising 60.7%, and distributable free cash flow increasing 74%. Backlog increased by $9.8 million since June of 2012 to $406.3 million and our distributable cash available exceeded our distributions by $11.2 million.

“We previously announced that we have increased our distribution to $0.59 per unit from $0.585 per unit. The increase reflects the strength of our business and our commitment to generate increasing returns for our unit holders. We continue to see opportunities for growth in our industry and we look forward to capitalizing on these opportunities as they present themselves.”

The Partnership reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures used in managing the business

may provide investors with additional information regarding underlying trends and ongoing results on a comparable basis. Specifically, management believes that production based revenues and adjusted operating profit allow the investor to gain insight into the current operating performance of the company. Please see the section of this press release “Non-GAAP Financial Measures” to view the tables previously presented in the body of the press release. Non-GAAP financial measures used by the company should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for an analysis of the company’s results as reported under U.S. GAAP.

Investor Conference Call and Webcast

StoneMor will conduct a conference call to discuss the third quarter 2012 results today, Tuesday November 6, 2012 at 11:00 a.m. Eastern Time. The conference call can be accessed by calling (800) 630-4153. An audio replay of the conference call will be available by calling (800) 633-8284 through 1:00 p.m. Eastern Time on November 20, 2012. The reservation number for the audio replay is as follows: 21609161. A live webcast and audio replay of the conference call will also be archived on StoneMor’s website at http://www.stonemor.com.

About StoneMor Partners L.P.

StoneMor Partners L.P., headquartered in Levittown, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 276 cemeteries and 85 funeral homes in 28 states and Puerto Rico. StoneMor is the only publicly traded deathcare company structured as a partnership. StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise.

For additional information about StoneMor Partners L.P., please visit StoneMor’s website, and the Investor Relations section, at http://stonemor.com.

Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of our operating activities, the plans and objectives of our management, assumptions regarding our future performance and plans, and any financial guidance provided, as well as certain information in other filings with the SEC and elsewhere are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements. These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated, including, but not limited to, the following: uncertainties associated with future revenue and revenue growth; the effect of the current economic downturn; the impact of our significant leverage on our operating plans; our ability to service our debt and pay distributions; the decline in the fair value of certain equity and debt securities held in our trusts; our ability to attract, train and retain an adequate number of sales people; uncertainties associated with the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments,

including potential changes in tax accounting and trusting policies; our ability to successfully implement a strategic plan relating to producing operating improvements, strong cash flows and further deleveraging; our ability to successfully compete in the cemetery and funeral home industry; uncertainties associated with the integration or anticipated benefits of our recent acquisitions or any future acquisitions; our ability to complete and fund additional acquisitions; our ability to maintain effective disclosure controls and procedures and internal control over financial reporting; the effect of cybersecurity attacks due to our significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund our pre-need funeral contracts; and various other uncertainties associated with the death care industry and our operations in particular.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q filed with the SEC. We assume no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Production Based Revenue

We present production based revenue because management believes it provides for a useful measure of both the value of contracts written and investment and other income generated during a given period and is a critical component of adjusted operating profit.

Production based revenue is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Adjusted Operating Profit

We present Adjusted Operating Profit because management believes it provides for a useful measure of economic value added by presenting an effective matching of the value of current and future revenue sources generated within a given period to the cost of producing such revenue and managing our day to day operations within that same period. It is a significant measure that we believe is an indicator of eventual profit generated within a given period of time.

Adjusted Operating Profit is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Adjusted Operating Cash Generated

We present adjusted operating cash generated revenue because management believes it provides for a useful measure of the amount of cash generated that is available to make capital expenditures and partner distributions once all cash flow timing issues have been settled.

Adjusted operating cash generated is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Distributable Free Cash Flow

We present Distributable Free Cash Flow because management believes this information is a useful adjunct to Net Cash Provided by (Used in) Operating Activities under GAAP. Distributable Free Cash Flow is a significant liquidity metric that we believe is an indicator of our ability to generate cash flow during any quarter at a level sufficient to pay the [minimum] quarterly cash distribution to the holders of our common units and for other purposes, such as repaying debt and expanding through strategic investments.

Distributable Free Cash Flow is similar to quantitative standards of free cash flow used throughout the deathcare industry and to quantitative standards of distributable cash flow used throughout the investment community with respect to publicly traded partnerships, but is not intended to be a prediction of the future. However, our calculation of distributable free cash flow may not be consistent with calculations of free cash flow, distributable cash flow or other similarly titled measures of other companies. Distributable Free Cash Flow should not be used as a substitute for the GAAP measure of cash flows from operating, investing, or financing activities.

Production Based Partners’ Capital

We present production based partners’ capital as a means to provide better insight into the value that our activities contribute to the enterprise. Because a portion of our revenues and direct selling expenses are captured on our balance sheet until we deliver the underlying goods or services, we believe that by including these items in our view of partners’ capital, we gain better insight into the value creation.

Reconciliation of Production Based Revenue and Adjusted Operating Profit (non-GAAP) to Revenue and Operating Profit (GAAP)


	Three months ended September 30, 2012							Three months ended September 30, 2011
	(in thousands)							(in thousands)
	Segment Results (non-GAAP)		GAAP Adjustments			GAAP Results		Segment Results (non-GAAP)		GAAP Adjustments			GAAP Results		Change in GAAP results ($)			Change in GAAP results (%)
Revenues

Pre-need cemetery revenues	$	32,976	$	(7,211	)	$	25,765	$	29,794	$	(4,103	)	$	25,691	$	74			0.3	%
At-need cemetery revenues		19,256		(1,218	)		18,038		19,565		(746	)		18,819		(781	)		-4.2	%
Investment income from trusts		9,809		(4,023	)		5,786		8,315		(2,155	)		6,160		(374	)		-6.1	%
Interest income		1,238		—			1,238		1,442		—			1,442		(204	)		-14.1	%
Funeral home revenues		9,603		(777	)		8,826		7,705		(206	)		7,499		1,327			17.7	%
Other cemetery revenues		2,188		356			2,544		544		170			714		1,830			256.3	%


Total revenues		75,070		(12,873	)		62,197		67,365		(7,040	)		60,325		1,872			3.1	%


Costs and expenses

Cost of goods sold		9,044		(1,398	)		7,646		8,148		(988	)		7,160		486			6.8	%
Cemetery expense		14,252		—			14,252		15,312		—			15,312		(1,060	)		-6.9	%
Selling expense		13,156		(1,866	)		11,290		13,130		(938	)		12,192		(902	)		-7.4	%
General and administrative expense		7,015		—			7,015		7,111		—			7,111		(96	)		-1.4	%
Corporate overhead		6,546		—			6,546		5,628		—			5,628		918			16.3	%
Depreciation and amortization		2,199		—			2,199		1,886		—			1,886		313			16.6	%
Funeral home expense		7,161		(65	)		7,096		5,868		—			5,868		1,228			20.9	%
Acquisition related costs		1,085		—			1,085		1,189		—			1,189		(104	)		-8.7	%


Total costs and expenses		60,458		(3,329	)		57,129		58,272		(1,926	)		56,346		783			1.4	%


Operating profit	$	14,612	$	(9,544	)	$	5,068	$	9,093	$	(5,114	)	$	3,979	$	1,089			27.4	%


	Nine months ended September 30, 2012							Nine months ended September 30, 2011
	(in thousands)							(in thousands)
	Segment Results (non-GAAP)		GAAP Adjustments			GAAP Results		Segment Results (non-GAAP)		GAAP Adjustments			GAAP Results		Change in GAAP results ($)			Change in GAAP results (%)
Revenues

Pre-need cemetery revenues	$	96,595	$	(22,936	)	$	73,659	$	90,451	$	(21,314	)	$	69,137	$	4,522			6.5	%
At-need cemetery revenues		60,113		(3,198	)		56,915		59,772		(4,207	)		55,565		1,350			2.4	%
Investment income from trusts		30,214		(12,931	)		17,283		25,582		(9,596	)		15,986		1,297			8.1	%
Interest income		4,972		—			4,972		4,580		—			4,580		392			8.6	%
Funeral home revenues		27,065		(1,447	)		25,618		22,749		(555	)		22,194		3,424			15.4	%
Other cemetery revenues		3,981		864			4,845		1,631		570			2,201		2,644			120.1	%


Total revenues		222,940		(39,648	)		183,292		204,765		(35,102	)		169,663		13,629			8.0	%


Costs and expenses

Cost of goods sold		25,463		(4,161	)		21,302		23,152		(3,783	)		19,369		1,933			10.0	%
Cemetery expense		41,819		—			41,819		42,860		—			42,860		(1,041	)		-2.4	%
Selling expense		41,769		(5,569	)		36,200		39,899		(5,976	)		33,923		2,277			6.7	%
General and administrative expense		21,403		—			21,403		20,569		—			20,569		834			4.1	%
Corporate overhead		20,905		—			20,905		17,572		—			17,572		3,333			19.0	%
Depreciation and amortization		6,759		—			6,759		6,374		—			6,374		385			6.0	%
Funeral home expense		20,648		(181	)		20,467		16,875		—			16,875		3,592			21.3	%
Acquisition related costs		2,198		—			2,198		3,147		—			3,147		(949	)		-30.2	%


Total costs and expenses		180,964		(9,911	)		171,053		170,448		(9,759	)		160,689		10,364			6.4	%


Operating profit	$	41,976	$	(29,737	)	$	12,239	$	34,317	$	(25,343	)	$	8,974	$	3,265			36.4	%

The table above analyzes results of operations and the changes therein for the three and nine months ended September 30, 2012 as compared to the same period last year. The table is structured so that our readers can determine whether changes were based upon changes in the level of merchandise and services and other revenues generated during each period and/ or changes in the timing of when merchandise and services were delivered.

Critical Financial Measures


	Three months ended
	September 30,
	2012		2011
	(In thousands)

Total revenues (a)	$	62,197	$	60,325
Production based revenue consisting of the total value of cemetery contracts written, funeral home revenues and investment and other income (b)		75,070		67,365

Operating profit (a)		5,068		3,979
Adjusted operating profit (b)		14,612		9,093

Net income (loss) (a)		1,061		(223	)

Operating cash flows (a)		16,602		14,195
Adjusted operating cash generated (b)		15,728		9,020
Distributable free cash flow generated (b)	$	15,327	$	8,812

	As of		As of
	September 30, 2012		December 31, 2011

Distribution coverage quarters (b)		7.21		8.63

(a)	This is a GAAP financial measure.

(b)	This is a non-GAAP financial measure as defined by the Securities and Exchange Commission. Please see the reconciliation to GAAP measures or support calculation within this press release.

The following tables reconcile GAAP to Non-GAAP Measures:

Production Based Revenue (non-GAAP)


	Three months ended September 30,						Increase			Increase
	2012			2011			(Decrease) ($)			(Decrease) (%)
	(In thousands)

Value of pre-need cemetery contracts written	$	32,976		$	29,794		$	3,182			10.7	%
Value of at-need cemetery contracts written		19,256			19,565			(309	)		-1.6	%
Investment income from trusts		9,809			8,315			1,494			18.0	%
Interest income		1,238			1,442			(204	)		-14.1	%
Funeral home revenues		9,603			7,705			1,898			24.6	%
Other cemetery revenues		2,188			544			1,644			302.2	%


Total production based revenues	$	75,070		$	67,365		$	7,705			11.4	%


Less:
Increase in deferred sales revenue and investment income		(12,873	)		(7,040	)		(5,833	)		82.9	%


Total GAAP revenues	$	62,197		$	60,325		$	1,872			3.1	%

Adjusted Operating Profit (non-GAAP)


	Three months ended September 30,
	2012			2011
	(In thousands)

GAAP operating profit	$	5,068		$	3,979

Increase in applicable deferred revenues		12,873			7,040
Increase in deferred cost of goods sold and selling and obtaining costs		(3,329	)		(1,926	)


Adjusted operating profit	$	14,612		$	9,093

Adjusted Operating Cash Flows and Distributable Free Cash Flow (Non-GAAP)


	Three months ended September 30,
	2012			2011
	(In thousands)

GAAP operating cash flows	$	16,602		$	14,195


Add: net cash inflows (out of) into the merchandise trust		6,260			464
Deduct: net decrease in accounts receivable		(5,847	)		(3,921	)
Add: net decrease in merchandise liabilities		1,198			1,331

Deduct: net (increase) decrease in accounts payable and accrued expenses		(1,859	)		(6,259	)
Other float related changes		(626	)		3,210


Adjusted operating cash flow generated		15,728			9,020


Less: maintenance capital expenditures		(1,486	)		(1,397	)
Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a)		1,085			1,189


Distributable free cash flow generated		15,327			8,812

Cash on hand - beginning of the period		7,787			12,734

Distributable cash available for the period		23,114			21,546


Partner distributions made	$	11,884		$	11,771

(a)	We maintain a line of credit from which to make acquisitions and pay acquisition related costs. We utilize this line for these costs. Accordingly, distributable free cash flow is not negatively impacted by amounts spent on acquisitions that are recorded as expenses.


	Nine months ended September 30, 2012
	(in thousands)

GAAP operating cash flows	$	30,797


Add: net cash inflows into the merchandise trust		8,177
Add: net increase in accounts receivable		2,333
Add: net decrease in merchandise liabilities		5,649
Add (deduct): net decrease in accounts payable and accrued expenses		(2,207	)
Other float related changes		(1,155	)


Adjusted operating cash generated		43,594


Less: maintenance capital expenditures		(3,321	)
Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a)		2,198


Distributable free cash flow generated		42,471

Cash on hand - beginning of the period		12,058

Distributable cash available for the period		54,529


Partner distributions made	$	35,447

Production Based Partners’ Capital


	As of
	September 30,			As of December 31,
	2012			2011			2010

Partners’ Capital	$	150,328		$	180,279		$	128,191

Deferred selling and obtaining costs		(73,904	)		(68,542	)		(59,422	)
Deferred cemetery revenues, net		484,941			441,678			386,465


Production based partners’ capital	$	561,365		$	553,415		$	455,234

Other Information

Capital Base


			As of		As of
			September 30, 2012		December 31, 2011
			(in thousands)

Debt on lines of credit			$	84,700	$	43,750
Debt due within three years	(a	)		6,096		4,792
Debt due between three and five years				—		—
Debt due between five and ten years				150,000		150,000

Availability under credit lines:
Availability under the acquisition line of credit				—		54,250
Availability under the revolving line of credit			$	45,300	$	22,000

(a)	Debt due within three years includes smaller notes payable related to recent acquisitions.

The combined long and short-term debt on the balance sheet at September 30, 2012 and December 31, 2011 includes an unamortized bond discount of $2,908 and $3,220, respectively, which is not reflected in the table above.

Selected Net Assets


	As of		As of
	September 30, 2012		December 31, 2011
	(In thousands)

Selected assets:

Cash and cash equivalents	$	8,128	$	12,058
Accounts receivable, net of allowance		48,109		48,837
Long-term accounts receivable, net of allowance		69,631		68,419
Merchandise trusts, restricted, at fair value		372,775		344,515


Total selected assets		498,643		473,829


Selected liabilities:

Accounts payable and accrued liabilities		22,914		26,428
Accrued interest		5,688		1,632
Current portion, long-term debt		1,770		1,487
Other long-term liabilities		1,884		2,830
Long-term debt		236,118		193,835
Deferred tax liabilities		15,191		16,968
Merchandise liability		128,452		128,942


Total selected liabilities		412,017		372,122


Total selected net assets	$	86,626	$	101,707


Distribution coverage quarters (a)		7.21		8.63

(a)

This is a measure of the ratio of selected net assets to a quarterly distribution amount. The quarterly distribution amount is calculated by taking the end of the period outstanding common units (19,538,051 at September 30, 2012 and 19,368,261 at December 31, 2011, respectively) and multiplying these units by the declared distribution. This total is then added to the distribution due to the General Partner based upon the same variables.

StoneMor Partners L.P.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	September 30, 2012		December 31, 2011

Assets
Current assets:
Cash and cash equivalents	$	8,128	$	12,058
Accounts receivable, net of allowance		48,109		48,837
Prepaid expenses		4,727		4,266
Other current assets		15,548		16,670

Total current assets		76,512		81,831

Long-term accounts receivable, net of allowance		69,631		68,419
Cemetery property		309,340		298,938
Property and equipment, net of accumulated depreciation		79,567		73,777
Merchandise trusts, restricted, at fair value		372,775		344,515
Perpetual care trusts, restricted, at fair value		282,651		254,679
Deferred financing costs, net of accumulated amortization		9,681		8,817
Deferred selling and obtaining costs		73,904		68,542
Deferred tax assets		605		415
Goodwill		40,393		31,907
Other assets		14,878		16,918

Total assets	$	1,329,937	$	1,248,758


Liabilities and partners’ capital
Current liabilities:
Accounts payable and accrued liabilities	$	22,914	$	26,428
Accrued interest		5,688		1,632
Current portion, long-term debt		1,770		1,487

Total current liabilities		30,372		29,547

Other long-term liabilities		1,884		2,830
Long-term debt		236,118		193,835
Deferred cemetery revenues, net		484,941		441,678
Deferred tax liabilities		15,191		16,968
Merchandise liability		128,452		128,942
Perpetual care trust corpus		282,651		254,679

Total liabilities		1,179,609		1,068,479


Commitments and contingencies

Partners’ capital
General partner		944		2,192
Common partners		149,384		178,087

Total partners’ capital		150,328		180,279


Total liabilities and partners’ capital	$	1,329,937	$	1,248,758

See accompanying notes to the Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended September 30, 2012.

StoneMor Partners L.P.

Condensed Consolidated Statement of Operations

(in thousands, except unit data)


	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
	(Unaudited)						(Unaudited)
Revenues:
Cemetery
Merchandise	$	29,943		$	28,738		$	87,424		$	81,277
Services		11,134			13,295			34,481			35,697
Investment and other		12,294			10,793			35,769			30,495
Funeral home
Merchandise		3,548			3,041			11,135			9,137
Services		5,278			4,458			14,483			13,057

Total revenues		62,197			60,325			183,292			169,663


Costs and Expenses:
Cost of goods sold (exclusive of depreciation shown separately below):
Perpetual care		1,616			1,373			4,398			4,097
Merchandise		6,030			5,787			16,904			15,272
Cemetery expense		14,252			15,312			41,819			42,860
Selling expense		11,290			12,192			36,200			33,923
General and administrative expense		7,015			7,111			21,403			20,569
Corporate overhead (including $216 and $195 in unit-based compensation for the three months ended September 30, 2012 and 2011, and $625 and $576 for the nine months ended September 30, 2012 and 2011, respectively)		6,546			5,628			20,905			17,572
Depreciation and amortization		2,199			1,886			6,759			6,374
Funeral home expense
Merchandise		1,196			982			3,726			3,197
Services		3,739			3,107			10,446			8,456
Other		2,161			1,779			6,295			5,222
Acquisition related costs		1,085			1,189			2,198			3,147

Total cost and expenses		57,129			56,346			171,053			160,689


Operating profit		5,068			3,979			12,239			8,974

Expenses related to refinancing		—			—			—			453
Gain on termination of operating agreement		—			—			1,737			—
Gain on acquisition		—			—			122			—
Early extinguishment of debt		—			—			—			4,010
Interest expense		5,273			4,824			15,109			14,266


Net loss before income taxes		(205	)		(845	)		(1,011	)		(9,755	)

Income tax expense (benefit)
State		(18	)		69			224			(829	)
Federal		(1,248	)		(691	)		(2,157	)		(2,304	)

Total income tax expense (benefit)		(1,266	)		(622	)		(1,933	)		(3,133	)


Net income (loss)	$	1,061		$	(223	)	$	922		$	(6,622	)


General partner’s interest in net income (loss) for the period	$	21		$	(4	)	$	18		$	(132	)
Limited partners’ interest in net income (loss) for the period	$	1,040		$	(219	)	$	904		$	(6,490	)

Net income (loss) per limited partner unit (basic and diluted)	$	.05		$	(.01	)	$	.05		$	(.35	)

Weighted average number of limited partners’ units outstanding -basic		19,491			19,353			19,412			18,807

Weighted average number of limited partners’ units outstanding -diluted		19,743			19,353			19,672			18,807

Distributions declared per unit	$	.590		$	.585		$	1.760		$	1.755

See accompanying notes to the Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended September 30, 2012.

StoneMor Partners L.P.

Condensed Consolidated Statement of Cash Flows

(in thousands)


	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
	(Unaudited)						(Unaudited)
Operating activities:
Net income (loss)	$	1,061		$	(223	)	$	922		$	(6,622	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Cost of lots sold		2,201			1,723			6,180			5,004
Depreciation and amortization		2,199			1,886			6,759			6,374
Unit-based compensation		216			195			625			576
Accretion of debt discount		507			325			1,230			950
Gain on acquisition		—			—			(122	)		—
Gain on termination of operating agreement		—			—			(1,737	)		—
Write-off of deferred financing fees		—			—			—			453
Fees paid related to early extinguishment of debt		—			—			—			4,010
Changes in assets and liabilities that provided (used) cash:
Accounts receivable		5,847			3,921			(2,333	)		(5,509	)
Allowance for doubtful accounts		450			1,124			3,743			3,597
Merchandise trust fund		(6,260	)		(464	)		(8,177	)		(11,681	)
Prepaid expenses		801			917			(368	)		586
Other current assets		516			(4,519	)		(344	)		(6,024	)
Other assets		(14	)		46			125			244
Accounts payable and accrued and other liabilities		1,859			6,259			2,207			(1,290	)
Deferred selling and obtaining costs		(1,983	)		(1,135	)		(5,363	)		(6,398	)
Deferred cemetery revenue		11,741			6,202			35,440			31,560
Deferred taxes (net)		(1,341	)		(731	)		(2,341	)		(2,476	)
Merchandise liability		(1,198	)		(1,331	)		(5,649	)		(2,285	)

Net cash provided by operating activities		16,602			14,195			30,797			11,069

Investing activities:

Cash paid for cemetery property		(1,817	)		(1,988	)		(5,417	)		(4,258	)
Purchase of subsidiaries		(22,250	)		(6,450	)		(25,676	)		(10,300	)
Cash paid for property and equipment		(1,486	)		(1,397	)		(3,321	)		(4,601	)

Net cash used in investing activities		(25,553	)		(9,835	)		(34,414	)		(19,159	)

Financing activities:
Cash distribution		(11,884	)		(11,771	)		(35,447	)		(32,827	)
Additional borrowings on long-term debt		34,300			15,500			63,500			27,800
Repayments of long-term debt		(12,715	)		(566	)		(26,137	)		(74,490	)
Proceeds from public offering		—			—			—			103,207
Proceeds from general partner contribution		89			—			89			2,246
Fees paid related to early extinguishment of debt		—			—			—			(4,010	)
Cost of financing activities		(498	)		(122	)		(2,318	)		(1,236	)

Net cash provided by (used in) financing activities		9,292			3,041			(313	)		20,690

Net increase (decrease) in cash and cash equivalents		341			7,401			(3,930	)		12,600
Cash and cash equivalents - Beginning of period		7,787			12,734			12,058			7,535

Cash and cash equivalents - End of period	$	8,128		$	20,135		$	8,128		$	20,135


Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	683		$	345		$	9,731		$	9,897
Cash paid during the period for income taxes	$	323		$	532		$	3,978		$	2,242

Non-cash investing and financing activities
Acquisition of assets by financing	$	146		$	94		$	199		$	237
Issuance of limited partner units for cemetery acquisition	$	3,500		$	—		$	4,103		$	264
Acquisition of assets by assumption of directly related liability	$	1,504		$	—		$	2,048		$	—

See accompanying notes to the Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended September 30, 2012.

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