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

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8-K - FORM 8-K - STONEMOR PARTNERS LP	d580278d8k.htm

Exhibit 99.1

LOGO

StoneMor Partners L.P. Announces Second Quarter 2013 Financial Results

LEVITTOWN, PA., August 7, 2013—StoneMor Partners L.P. (NYSE: STON) (“StoneMor”) announced its results of operations for the three months ended June 30, 2013. 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 June 30, 2013 were $62.4 million compared to $61.5 million for the three months ended June 30, 2012, a 1.5% increase.

•

Production-based revenue (non-GAAP) for the three months ended June 30, 2013 increased by $4.0 million, or 5.3%, to $79.6 million from $75.6 million during the prior-year period.

•

Operating profits (GAAP) increased by $0.5 million, or 29.4%, to $2.3 million for the three months ended June 30, 2013, as compared to $1.8 million in the prior-year period.

•

Adjusted operating profits (non-GAAP) increased by $1.1 million, or 8.2%, to $13.7 million for the three-month period ended June 30, 2013 from $12.6 million in the same period last year.

•

Operating cash flows (GAAP) increased by $3.6 million, or 60.1%, to $9.6 million in the three months ended June 30, 2013, as compared to $6.0 million in the prior-year period.

•

Distributable free cash flow (non-GAAP) for the three-month period ended June 30, 2013 increased to $24.9 million from $13.3 million for the same period last year, an 86.8% increase.

•

Net loss (GAAP) for the three months ended June 30, 2013 was $11.8 million, as compared to a loss of $2.2 million in the prior-year period.

The Company 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 reconciliation 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.

Larry Miller, StoneMor’s President and CEO commented, “StoneMor put in another strong performance in the second quarter. As we have discussed for some time now, one aspect of our strategic plan includes increasing our funeral home presence. To that end, since the beginning of 2012, we have acquired 23 funeral homes, 21 of which were acquired since June 30, 2012. These acquisitions helped drive a 36.0% year over year increase in second quarter revenues from our funeral home operations. That combined with a decrease in corporate overhead contributed to a more than 29.4% increase in GAAP operating profits in the quarter.

“We generated a GAAP loss for the quarter which was mostly attributable to costs associated with the refinancing of our 10.25 % Senior Notes in May 2013. Those costs included a $14.9 million cash charge as well $6.7 million in other related one-time non-cash charges. In turn, those charges were partially offset by a number of non-recurring gains, including $11.3 million related to a legal settlement. Similarly, the 86.8% year-over-year increase in our distributable free cash flow was also primarily attributable to one-time gains related to the legal settlement. So clearly our GAAP results and distributable free cash flow were dramatically impacted by a number of offsetting one-time events.

“Looking at our other key performance measures, production-based revenues and adjusted operating profits, we showed solid year over year improvement. This was a very busy quarter from the standpoint of positioning ourselves for additional growth. The previously announced refinancing of our Senior Notes will generate significant interest cost savings and has extended the maturity date to 2021. Despite the associated costs we are very happy with the long term benefits we gained from the refinancing. In fact, the anticipated savings were strong enough that we increased our quarterly distribution to $0.60 per unit just after the refinancing, the second such increase in the quarter and the third increase in the last eight months.

“Our capital management efforts combined with solid operating performance keep us on track for what we believe will be continued strong financial results throughout the year.”

Investor Conference Call and Webcast

StoneMor will conduct a conference call to discuss 2013 second quarter results today, Wednesday, August 7, 2013 at 11:00 a.m. EDT. The conference call can be accessed by calling (800) 354-6885. An audio replay of the conference call will be available by calling (800) 633-8284 through 1:00 p.m. EDT on August 21, 2013. The reservation number for the audio replay is 21668875. A live webcast of the conference call will also be available to investors who may access the call through the investor relations section of www.stonemor.com. An audio replay of the conference call will also be archived on StoneMor’s website at 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 277 cemeteries and 92 funeral homes in 28 states and Puerto Rico. StoneMor is the only publicly traded death care 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://www.stonemor.com.

Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of StoneMor’s operating activities, the plans and objectives of its management, assumptions regarding its future performance and plans, and any financial guidance provided, as well as certain information in other filings with the Securities and Exchange Commission and elsewhere, are forward-looking statements. 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 StoneMor’s actual results of operations to differ materially from those expressed or implied by forward-looking statements, 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 StoneMor’s significant leverage on its operating plans; StoneMor’s ability to service its debt and pay distributions; the decline in the fair value of certain equity and debt securities held in its trusts; StoneMor’s 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; StoneMor’s ability to successfully implement a strategic plan relating to achieving operating improvement, strong cash flows and further deleveraging; StoneMor’s ability to successfully compete in the cemetery and funeral home industry; uncertainties associated with the integration or the anticipated benefits of StoneMor’s recent acquisitions and any future acquisitions; StoneMor’s ability to complete and fund additional acquisitions; litigation or legal proceedings that could expose StoneMor to significant liabilities and damage its reputation; StoneMor’s ability to maintain effective disclosure controls and procedures and internal control over financial reporting; the effects of cyber security attacks due to StoneMor’s significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund StoneMor’s pre-need funeral contracts; and various other uncertainties associated with the death care industry and StoneMor’s operations in particular.

When considering forward-looking statements, the reader should keep in mind the risk factors and other cautionary statements set forth in StoneMor’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. Except as required under applicable law, StoneMor assumes no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by StoneMor, whether as a result of new information, future events, or otherwise.


Contact:		John McNamara
		(215) 826-2800

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 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 not 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 (non-GAAP) and Adjusted Operating Profit (non-GAAP)

to Revenue (GAAP) and Operating Profit (GAAP)


	Three months ended									Three months ended
	June 30, 2013									June 30, 2012
	(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	$	36,796		$	(12,961	)	$	23,835		$	33,773	$	(8,631	)	$	25,142	$	(1,307	)		–5.2	%
At-need cemetery revenues		20,595			(1,570	)		19,025			20,428		(850	)		19,578		(553	)		–2.8	%
Investment income from trusts		7,403			(1,405	)		5,998			10,542		(4,526	)		6,016		(18	)		–0.3	%
Interest income		1,860			—			1,860			1,799		—			1,799		61			3.4	%
Funeral home revenues		11,983			(1,307	)		10,676			8,189		(334	)		7,855		2,821			35.9	%
Other cemetery revenues		960			68			1,028			873		245			1,118		(90	)		–8.1	%


Total revenues		79,597			(17,175	)		62,422			75,604		(14,096	)		61,508		914			1.5	%


Costs and expenses

Cost of goods sold		10,145			(2,433	)		7,712			8,788		(1,552	)		7,236		476			6.6	%
Cemetery expense		15,408			—			15,408			14,775		—			14,775		633			4.3	%
Selling expense		15,497			(3,279	)		12,218			14,778		(1,655	)		13,123		(905	)		–6.9	%
General and administrative expense		7,898			—			7,898			7,195		—			7,195		703			9.8	%
Corporate overhead		5,672			—			5,672			7,756		—			7,756		(2,084	)		–26.9	%
Depreciation and amortization		2,451			—			2,451			2,230		—			2,230		221			9.9	%
Funeral home expense		9,498			(134	)		9,364			6,688		(73	)		6,615		2,749			41.6	%
Acquisition related costs, net of recoveries		(625	)		—			(625	)		782		—			782		(1,407	)		–179.9	%


Total costs and expenses		65,944			(5,846	)		60,098			62,992		(3,280	)		59,712		386			0.6	%


Operating profit	$	13,653		$	(11,329	)	$	2,324		$	12,612	$	(10,816	)	$	1,796	$	528			29.4	%


	Six months ended							Six months ended
	June 30, 2013							June 30, 2012
	(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	$	67,739	$	(22,390	)	$	45,349	$	63,615	$	(15,726	)	$	47,889	$	(2,540	)		–5.3	%
At-need cemetery revenues		41,337		(2,934	)		38,403		40,860		(1,978	)		38,882		(479	)		–1.2	%
Investment income from trusts		20,505		(9,878	)		10,627		20,405		(8,909	)		11,496		(869	)		–7.6	%
Interest income		3,725		—			3,725		3,737		—			3,737		(12	)		–0.3	%
Funeral home revenues		24,810		(2,716	)		22,094		17,462		(670	)		16,792		5,302			31.6	%
Other cemetery revenues		1,702		134			1,836		1,792		507			2,299		(463	)		–20.1	%


Total revenues		159,818		(37,784	)		122,034		147,871		(26,776	)		121,095		939			0.8	%


Costs and expenses

Cost of goods sold		17,898		(3,896	)		14,002		16,419		(2,763	)		13,656		346			2.5	%
Cemetery expense		28,193		—			28,193		27,567		—			27,567		626			2.3	%
Selling expense		29,332		(5,890	)		23,442		28,612		(3,702	)		24,910		(1,468	)		–5.9	%
General and administrative expense		15,480		—			15,480		14,388		—			14,388		1,092			7.6	%
Corporate overhead		13,660		—			13,660		14,359		—			14,359		(699	)		–4.9	%
Depreciation and amortization		4,781		—			4,781		4,560		—			4,560		221			4.8	%
Funeral home expense		18,421		(321	)		18,100		13,487		(116	)		13,371		4,729			35.4	%
Acquisition related costs, net of recoveries		658		—			658		1,113		—			1,113		(455	)		–40.9	%


Total costs and expenses		128,423		(10,107	)		118,316		120,505		(6,581	)		113,924		4,392			3.9	%


Operating profit	$	31,395	$	(27,677	)	$	3,718	$	27,366	$	(20,195	)	$	7,171	$	(3,453	)		–48.2	%

The tables above analyze our results of operations and the changes therein for the three months and six months ended June 30, 2013, as compared to the same periods last year. The tables are 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 the periods and/ or changes in the timing when merchandise and services were delivered.

Critical Financial Measures


	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)

Total revenues (a)	$	62,422		$	61,508		$	122,034		$	121,095
Production based revenue consisting of the total value of cemetery contracts written, funeral home revenues and investment and other income (b)		79,597			75,604			159,818			147,871

Operating profit (a)		2,324			1,796			3,718			7,171
Adjusted operating profit (b)		13,653			12,612			31,395			27,366

Net income (loss) (a)		(11,809	)		(2,169	)		(14,009	)		(139	)

Operating cash flows (a)		9,616			6,005			16,483			14,195
Adjusted operating cash generated (b)		27,663			13,482			45,784			27,868
Distributable free cash flow generated (b)	$	24,889		$	13,327		$	42,522		$	27,146


	As of		As of
	June 30, 2013		December 31, 2012

Distribution coverage quarters (b)		8.31		6.57

(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.

Reconciliation of Adjusted Operating Profit (non-GAAP) to Operating Profit (GAAP)


	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)

GAAP operating profit	$	2,324		$	1,796		$	3,718		$	7,171

Increase in applicable deferred revenues		17,175			14,096			37,784			26,776
Increase in deferred cost of goods sold and selling and obtaining costs		(5,846	)		(3,280	)		(10,107	)		(6,581	)


Adjusted operating profit	$	13,653		$	12,612		$	31,395		$	27,366

Reconciliation of Production Based Revenues (non-GAAP) to Revenues (GAAP)


	Three months ended June 30,						Increase			Increase
	2013			2012			(Decrease) ($)			(Decrease) (%)
	(In thousands)

Value of pre-need cemetery contracts written	$	36,796		$	33,773		$	3,023			9.0	%
Value of at-need cemetery contracts written		20,595			20,428			167			0.8	%
Investment income from trusts		7,403			10,542			(3,139	)		–29.8	%
Interest income		1,860			1,799			61			3.4	%
Funeral home revenues		11,983			8,189			3,794			46.3	%
Other cemetery revenues		960			873			87			10.0	%


Total production based revenues	$	79,597		$	75,604		$	3,993			5.3	%


Less:
Increase in deferred sales revenue and investment income		(17,175	)		(14,096	)		(3,079	)		21.8	%


Total GAAP revenues	$	62,422		$	61,508		$	914			1.5	%

Reconciliation of Adjusted Operating Cash Flows (non-GAAP) and Distributable Free

Cash Flow (Non-GAAP) to Operating Cash Flows (GAAP)


	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)

GAAP operating cash flows	$	9,616		$	6,005		$	16,483		$	14,195


Add: net cash inflows into (outflows from) the merchandise trust		10,450			(773	)		22,611			1,917
Add net increase in accounts receivable		5,814			6,806			7,199			8,180
Add: net decrease in merchandise liabilities		608			1,715			1,612			4,451

Deduct: net (increase) decrease in accounts payable and accrued expenses		1,601			929			(3,677	)		(348	)
Other float related changes		(426	)		(1,200	)		1,556			(527	)


Adjusted operating cash flow generated		27,663			13,482			45,784			27,868


Less: maintenance capital expenditures		(2,149	)		(937	)		(3,920	)		(1,835	)
Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a)		(625	)		782			658			1,113


Distributable free cash flow generated		24,889			13,327			42,522			27,146

Cash on hand - beginning of the period		8,536			8,778			7,946			12,058

Distributable cash available for the period		33,425			22,105			50,468			39,204


Partner distributions made	$	13,242		$	11,783		$	25,267		$	23,563

(a)	We maintain a credit facility 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.

Production Based Partners’ Capital


	As of			As of
	June 30, 2013			December 31, 2012
	(In thousands)			(In thousands)

Partners’ Capital	$	138,649		$	135,182

Deferred selling and obtaining costs		(82,501	)		(76,317	)
Deferred cemetery revenues, net		544,322			497,861


Production based partners’ capital	$	600,470		$	556,726

Selected Net Assets


	As of		As of
	June 30, 2013		December 31, 2012
	(In thousands)

Selected assets:

Cash and cash equivalents	$	14,075	$	7,946
Accounts receivable, net of allowance		54,396		51,895
Long-term accounts receivable, net of allowance		77,297		71,521
Merchandise trusts, restricted, at fair value		414,382		375,973


Total selected assets		560,150		507,335


Selected liabilities:

Accounts payable and accrued liabilities		32,992		28,973
Accrued interest		1,625		1,833
Current portion, long-term debt		6,936		2,175
Other long-term liabilities		1,616		1,835
Long-term debt		266,290		252,774
Deferred tax liabilities		12,554		14,910
Merchandise liability		127,875		125,869


Total selected liabilities		449,888		428,369


Total selected net assets	$	110,262	$	78,966


Distribution coverage quarters (a)		8.31		6.57

(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 (21,350,152 at June 30, 2013 and 19,568,448 at December 31, 2012, 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 Sheet

(In thousands)

(Unaudited)


	June 30, 2013			December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	14,075		$	7,946
Accounts receivable, net of allowance		54,396			51,895
Prepaid expenses		5,565			3,832
Other current assets		18,679			17,418

Total current assets		92,715			81,091

Long-term accounts receivable, net of allowance		77,297			71,521
Cemetery property		312,506			309,980
Property and equipment, net of accumulated depreciation		84,793			79,740
Merchandise trusts, restricted, at fair value		414,382			375,973
Perpetual care trusts, restricted, at fair value		302,773			282,313
Deferred financing costs, net of accumulated amortization		8,865			9,238
Deferred selling and obtaining costs		82,501			76,317
Deferred tax assets		381			381
Goodwill		47,570			42,392
Other assets		11,849			14,779

Total assets	$	1,435,632		$	1,343,725


Liabilities and partners’ capital
Current liabilities:
Accounts payable and accrued liabilities	$	32,992		$	28,973
Accrued interest		1,625			1,833
Current portion, long-term debt		6,936			2,175

Total current liabilities		41,553			32,981

Other long-term liabilities		1,616			1,835
Long-term debt		266,290			252,774
Deferred cemetery revenues, net		544,322			497,861
Deferred tax liabilities		12,554			14,910
Merchandise liability		127,875			125,869
Perpetual care trust corpus		302,773			282,313

Total liabilities		1,296,983			1,208,543


Commitments and contingencies
Partners’ capital
General partner		(893	)		386
Common partners		139,542			134,796

Total partners’ capital		138,649			135,182


Total liabilities and partners’ capital	$	1,435,632		$	1,343,725

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2013.

StoneMor Partners L.P.

Condensed Consolidated Statement of Operations

(In thousands, except per unit data)


	Three months ended						Six months ended
	June 30,						June 30,
	2013			2012			2013			2012
	(Unaudited)						(Unaudited)

Revenues:
Cemetery
Merchandise	$	28,669		$	30,337		$	55,321		$	57,481
Services		11,072			11,265			22,371			23,347
Investment and other		12,005			12,051			22,248			23,475
Funeral home
Merchandise		4,517			3,569			9,470			7,587
Services		6,159			4,286			12,624			9,205

Total revenues		62,422			61,508			122,034			121,095


Costs and Expenses:
Cost of goods sold (exclusive of depreciation shown separately below):
Perpetual care		1,500			1,415			2,781			2,782
Merchandise		6,212			5,821			11,221			10,874
Cemetery expense		15,408			14,775			28,193			27,567
Selling expense		12,218			13,123			23,442			24,910
General and administrative expense		7,898			7,195			15,480			14,388
Corporate overhead (including $360 and $210 in unit-based compensation for the three months ended June 30, 2013 and 2012, and $690 and $409 for the six months ended June 30, 2013 and 2012, respectively)		5,672			7,756			13,660			14,359
Depreciation and amortization		2,451			2,230			4,781			4,560
Funeral home expense
Merchandise		1,703			1,107			3,225			2,530
Services		4,768			3,302			9,325			6,707
Other		2,893			2,206			5,550			4,134
Acquisition related costs, net of recoveries		(625	)		782			658			1,113

Total cost and expenses		60,098			59,712			118,316			113,924


Operating profit		2,324			1,796			3,718			7,171

Gain (loss) on termination of operating agreement		—			(83	)		—			1,737
Gain on settlement agreement, net		11,349			—			12,261			—
Gain on acquisition		—			122			—			122
Loss on early extinguishment of debt		21,595			—			21,595			—
Gain on sale of other assets		155			—			155			—
Interest expense		5,132			4,870			10,595			9,836


Net loss before income taxes		(12,899	)		(3,035	)		(16,056	)		(806	)

Income tax expense (benefit)
State		165			97			221			242
Federal		(1,255	)		(963	)		(2,268	)		(909	)

Total income tax benefit		(1,090	)		(866	)		(2,047	)		(667	)


Net loss	$	(11,809	)	$	(2,169	)	$	(14,009	)	$	(139	)


General partner’s interest in net loss for the period	$	(218	)	$	(43	)	$	(258	)	$	(3	)
Limited partners’ interest in net loss for the period	$	(11,591	)	$	(2,126	)	$	(13,751	)	$	(136	)

Net loss per limited partner unit (basic and diluted)	$	(.54	)	$	(.11	)	$	(.67	)	$	(.01	)

Weighted average number of limited partners’ units outstanding (basic and diluted)		21,345			19,375			20,541			19,372
Distributions declared per unit	$	.595		$	.585		$	1.185		$	1.170

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2013.

StoneMor Partners L.P.

Condensed Consolidated Statement of Cash Flows

(In thousands)


	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	(Unaudited)						(Unaudited)
Operating activities:
Net loss	$	(11,809	)	$	(2,169	)	$	(14,009	)	$	(139	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Cost of lots sold		2,459			2,146			4,194			3,979
Depreciation and amortization		2,451			2,230			4,781			4,560
Unit-based compensation		360			211			690			409
Accretion of debt discount		521			287			1,011			723
Gain on settlement agreement, net		912			—			—			—
Gain on termination of operating agreement		—			83			—			(1,737	)
Gain on acquisition		—			(122	)		—			(122	)
Gain on sale of other assets		(155	)		—			(155	)		—
Loss on early extinguishment of debt		21,595			—			21,595			—
Changes in assets and liabilities that provided (used) cash:
Accounts receivable		(5,814	)		(6,806	)		(7,199	)		(8,180	)
Allowance for doubtful accounts		1,234			1,930			(83	)		3,293
Merchandise trust fund		(10,450	)		773			(22,611	)		(1,917	)
Prepaid expenses		(2,299	)		302			(1,733	)		(1,169	)
Other current assets		(1,957	)		(2,041	)		(1,261	)		(860	)
Other assets		4,742			1,967			3,972			139
Accounts payable and accrued and other liabilities		(1,601	)		(929	)		3,677			348
Deferred selling and obtaining costs		(3,439	)		(1,192	)		(6,184	)		(3,380	)
Deferred cemetery revenue		14,779			12,081			33,766			23,699
Deferred taxes (net)		(1,305	)		(1,031	)		(2,356	)		(1,000	)
Merchandise liability		(608	)		(1,715	)		(1,612	)		(4,451	)

Net cash provided by operating activities		9,616			6,005			16,483			14,195

Investing activities:

Cash paid for cemetery property		(1,176	)		(2,383	)		(2,252	)		(3,600	)
Purchase of subsidiaries		—			(1,774	)		(9,100	)		(3,426	)
Cash paid for property and equipment		(2,149	)		(937	)		(3,920	)		(1,835	)
Proceeds from sales of other assets		155			—			155			—

Net cash used in investing activities		(3,170	)		(5,094	)		(15,117	)		(8,861	)

Financing activities:
Cash distribution		(13,242	)		(11,783	)		(25,267	)		(23,563	)
Additional borrowings on long-term debt		196,158			21,850			217,106			29,200
Repayments of long-term debt		(164,278	)		(12,136	)		(205,800	)		(13,422	)
Proceeds from public offering		—			—			38,377			—
Fees paid related to early extinguishment of debt		(14,920	)		—			(14,920	)		—
Cost of financing activities		(4,625	)		167			(4,733	)		(1,820	)

Net cash provided by (used in) financing activities		(907	)		(1,902	)		4,763			(9,605	)

Net increase (decrease) in cash and cash equivalents		5,539			(991	)		6,129			(4,271	)
Cash and cash equivalents - Beginning of period		8,536			8,778			7,946			12,058

Cash and cash equivalents - End of period	$	14,075		$	7,787		$	14,075		$	7,787


Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	8,509		$	8,425		$	9,754		$	9,048
Cash paid during the period for income taxes	$	2,681		$	3,552		$	3,132		$	3,655

Non-cash investing and financing activities:
Acquisition of assets by financing	$	30		$	25		$	92		$	53
Issuance of limited partner units for cemetery acquisition	$	126		$	603		$	3,718		$	603
Acquisition of assets by assumption of directly related liability	$	—		$	544		$	3,924		$	544

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the period ended June 30, 2013.

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