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

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8-K - FORM 8-K - STONEMOR PARTNERS LP	d623705d8k.htm

Exhibit 99.1

LOGO

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

LEVITTOWN, PA., November 7, 2013—StoneMor Partners L.P. (NYSE: STON) (“StoneMor”) announced its results of operations for the three months ended September 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 September 30, 2013 were $61.5 million compared to $62.2 million for the three months ended September 30, 2012, a 1.1% decline.

•

Production-based revenue (non-GAAP) for the three months ended September 30, 2013 increased by $5.5 million, or 7.3%, to $80.6 million from $75.1 million during the prior-year period.

•

Operating profits (GAAP) decreased by $4.4 million, or 85.5%, to $0.7 million for the three months ended September 30, 2013, as compared to $5.1 million in the prior-year period.

•

Adjusted operating profits (non-GAAP) increased by $0.6 million, or 4.2%, to $15.2 million for the three-month period ended September 30, 2013 from $14.6 million in the same period last year.

•

Operating cash flows (GAAP) increased by $3.8 million, or 23.0%, to $20.4 million in the three months ended September 30, 2013, as compared to $16.6 million in the prior-year period.

•

Distributable free cash flow (non-GAAP) for the three-month period ended September 30, 2013 decreased to $14.5 million from $15.3 million for the same period last year, a 5.3% decline.

•

Net loss (GAAP) for the three months ended September 30, 2013 was $1.5 million, as compared to net income of $1.1 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. 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, “We are pleased with our third quarter results. The 2012 third quarter results included a land sale of $2.2 million to a private estate and that item impacted quarterly comparisons. Absent this sale, our GAAP revenues would have increased by $1.5 million compared to the third quarter of last year, and our GAAP operating loss would have narrowed considerably. The quarterly comparison of our distributable free cash flow was similarly impacted by this sale.

“We are very happy that production-based revenue and adjusted operating profits both reflected solid gains due to increases in the value of pre-need cemetery contracts written, gains in investment income from trusts and strong funeral home revenues. We believe that production-based revenues and adjusted operating profits are meaningful measures for evaluating our performance because, among other items, they make adjustments for timing related items we referred to previously. They are the measures by which management conducts the company’s business and evaluates its performance.

“The funeral home segment in particular continues to perform well. The segment recorded a 17.5% growth in revenues which is the result of acquisitions made during and after the third quarter of 2012. All in all, we view this as a solid quarter, and a very good one from the standpoint of positioning ourselves for future performance.

“With respect to future positioning, the notable element of the quarter was the previously announced operating arrangement with the Archdiocese of Philadelphia. As we have discussed, subject to the satisfaction of closing conditions, this arrangement represents an exciting opportunity for us not only in the cemeteries we will now be managing, but also for the potential that exists for this agreement to become a model for future arrangements with other church owned cemeteries around the nation.”

Investor Conference Call and Webcast

StoneMor will conduct a conference call to discuss 2013 third quarter results today, Thursday, November 7, 2013 at 11:00 a.m. EST. The conference call can be accessed by calling (877) 242-2259. An audio replay of the conference call will be available by calling (800) 633-8284 through 1:00 p.m. ET on November 21, 2013. The reservation number for the audio replay is 21682545. 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 90 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 that 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 to differ materially from those stated 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; StoneMor’s ability to complete and fund the transaction with the Archdiocese of Philadelphia; 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 September 30, 2013							Three months ended September 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	$	34,642	$	(10,124	)	$	24,518	$	32,976	$	(7,211	)	$	25,765	$	(1,247	)		-4.8	%
At-need cemetery revenues		19,052		(1,325	)		17,727		19,256		(1,218	)		18,038		(311	)		-1.7	%
Investment income from trusts		12,411		(6,015	)		6,396		9,809		(4,023	)		5,786		610			10.5	%
Interest income		1,484		—			1,484		1,238		—			1,238		246			19.9	%
Funeral home revenues		12,094		(1,721	)		10,373		9,603		(777	)		8,826		1,547			17.5	%
Other cemetery revenues		890		151			1,041		2,188		356			2,544		(1,503	)		-59.1	%


Total revenues		80,573		(19,034	)		61,539		75,070		(12,873	)		62,197		(658	)		-1.1	%


Costs and expenses

Cost of goods sold		8,942		(1,840	)		7,102		9,044		(1,398	)		7,646		(544	)		-7.1	%
Cemetery expense		14,507		—			14,507		14,252		—			14,252		255			1.8	%
Selling expense		14,217		(2,525	)		11,692		13,156		(1,866	)		11,290		402			3.6	%
General and administrative expense		7,902		—			7,902		7,015		—			7,015		887			12.6	%
Corporate overhead		7,997		—			7,997		6,546		—			6,546		1,451			22.2	%
Depreciation and amortization		2,378		—			2,378		2,199		—			2,199		179			8.1	%
Funeral home expense		9,161		(180	)		8,981		7,161		(65	)		7,096		1,885			26.6	%
Acquisition related costs, net of recoveries		243		—			243		1,085		—			1,085		(842	)		-77.6	%


Total costs and expenses		65,347		(4,545	)		60,802		60,458		(3,329	)		57,129		3,673			6.4	%


Operating profit	$	15,226	$	(14,489	)	$	737	$	14,612	$	(9,544	)	$	5,068	$	(4,331	)		-85.5	%


	Nine months ended September 30, 2013							Nine months ended September 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	$	102,383	$	(32,513	)	$	69,870	$	96,595	$	(22,936	)	$	73,659	$	(3,789	)		-5.1	%
At-need cemetery revenues		60,387		(4,259	)		56,128		60,113		(3,198	)		56,915		(787	)		-1.4	%
Investment income from trusts		32,916		(15,892	)		17,024		30,214		(12,931	)		17,283		(259	)		-1.5	%
Interest income		5,209		—			5,209		4,972		—			4,972		237			4.8	%
Funeral home revenues		36,904		(4,437	)		32,467		27,065		(1,447	)		25,618		6,849			26.7	%
Other cemetery revenues		2,592		283			2,875		3,981		864			4,845		(1,970	)		-40.7	%


Total revenues		240,391		(56,818	)		183,573		222,940		(39,648	)		183,292		281			0.2	%


Costs and expenses

Cost of goods sold		26,841		(5,737	)		21,104		25,463		(4,161	)		21,302		(198	)		-0.9	%
Cemetery expense		42,700		—			42,700		41,819		—			41,819		881			2.1	%
Selling expense		43,549		(8,415	)		35,134		41,769		(5,569	)		36,200		(1,066	)		-2.9	%
General and administrative expense		23,382		—			23,382		21,403		—			21,403		1,979			9.2	%
Corporate overhead		21,657		—			21,657		20,905		—			20,905		752			3.6	%
Depreciation and amortization		7,159		—			7,159		6,759		—			6,759		400			5.9	%
Funeral home expense		27,582		(501	)		27,081		20,648		(181	)		20,467		6,614			32.3	%
Acquisition related costs, net of recoveries		901		—			901		2,198		—			2,198		(1,297	)		-59.0	%


Total costs and expenses		193,771		(14,653	)		179,118		180,964		(9,911	)		171,053		8,065			4.7	%


Operating profit	$	46,620	$	(42,165	)	$	4,455	$	41,976	$	(29,737	)	$	12,239	$	(7,784	)		-63.6	%

The tables above analyze our results of operations and the changes therein for the three months and nine months ended September 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 September 30,					Nine months ended September 30,
	2013			2012		2013			2012
	(in thousands)					(in thousands)

Total revenues (a)	$	61,539		$	62,197	$	183,573		$	183,292
Production based revenue consisting of the total value of cemetery contracts written, funeral home revenues and investment and other income (b)		80,573			75,070		240,391			222,940

Operating profit (a)		737			5,068		4,455			12,239
Adjusted operating profit (b)		15,226			14,612		46,620			41,976

Net income (loss) (a)		(1,484	)		1,061		(15,493	)		922

Operating cash flows (a)		20,413			16,602		36,896			30,797
Adjusted operating cash generated (b)		15,719			15,728		61,502			43,594
Distributable free cash flow generated (b)	$	14,516		$	15,327	$	57,037		$	42,471


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

Distribution coverage quarters (b)		7.43		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 September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(in thousands)						(in thousands)

GAAP operating profit	$	737		$	5,068		$	4,455		$	12,239

Increase in applicable deferred revenues		19,034			12,873			56,818			39,648

Increase in deferred cost of goods sold and selling and obtaining costs		(4,545	)		(3,329	)		(14,653	)		(9,911	)


Adjusted operating profit	$	15,226		$	14,612		$	46,620		$	41,976

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


	Three months ended September 30,						Increase (Decrease) ($)			Increase (Decrease) (%)
	2013			2012			Increase (Decrease) ($)			Increase (Decrease) (%)
	(in thousands)

Value of pre-need cemetery contracts written	$	34,642		$	32,976		$	1,666			5.1	%
Value of at-need cemetery contracts written		19,052			19,256			(204	)		-1.1	%
Investment income from trusts		12,411			9,809			2,602			26.5	%
Interest income		1,484			1,238			246			19.9	%
Funeral home revenues		12,094			9,603			2,491			25.9	%
Other cemetery revenues		890			2,188			(1,298	)		-59.3	%


Total production based revenues	$	80,573		$	75,070		$	5,503			7.3	%


Less:
Increase in deferred sales revenue and investment income		(19,034	)		(12,873	)		(6,161	)		47.9	%


Total GAAP revenues	$	61,539		$	62,197		$	(658	)		-1.1	%

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


	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(in thousands)						(in thousands)

GAAP operating cash flows	$	20,413		$	16,602		$	36,896		$	30,797


Add: net cash inflows into the merchandise trust		1,100			6,260			23,711			8,177
Add net increase (decrease) in accounts receivable		(5,051	)		(5,847	)		2,148			2,333
Add: net decrease (increase) in merchandise liabilities		(1,075	)		1,198			537			5,649

Deduct: net decrease in accounts payable and accrued expenses		(4,663	)		(1,859	)		(8,340	)		(2,207	)
Other float related changes		4,995			(626	)		6,550			(1,155	)


Adjusted operating cash flow generated		15,719			15,728			61,502			43,594


Less: maintenance capital expenditures		(1,446	)		(1,486	)		(5,366	)		(3,321	)
Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a)		243			1,085			901			2,198


Distributable free cash flow generated		14,516			15,327			57,037			42,471

Cash on hand - beginning of the period		14,075			7,787			7,946			12,058

Distributable cash available for the period		28,591			23,114			64,983			54,529


Partner distributions made	$	13,386		$	11,884		$	38,653		$	35,447

(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
	September 30, 2013			December 31, 2012
	(in thousands)
Partners’ Capital	$	124,127		$	135,182

Deferred selling and obtaining costs		(85,201	)		(76,317	)
Deferred cemetery revenues, net		557,973			497,861


Production based partners’ capital	$	596,899		$	556,726

Selected Net Assets


	As of		As of
	September 30, 2013		December 31, 2012
	(in thousands)

Selected assets:

Cash and cash equivalents	$	19,984	$	7,946
Accounts receivable, net of allowance		52,202		51,895
Long-term accounts receivable, net of allowance		76,045		71,521
Merchandise trusts, restricted, at fair value		415,355		375,973


Total selected assets		563,586		507,335


Selected liabilities:

Accounts payable and accrued liabilities		34,191		28,973
Accrued interest		5,134		1,833
Current portion, long-term debt		6,550		2,175
Other long-term liabilities		1,571		1,835
Long-term debt		274,542		252,774
Deferred tax liabilities		12,039		14,910
Merchandise liability		129,922		125,869


Total selected liabilities		463,949		428,369


Total selected net assets	$	99,637	$	78,966


Distribution coverage quarters (a)		7.43		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 (21,352,335 at September 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)


	September 30, 2013			December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	19,984		$	7,946
Accounts receivable, net of allowance		52,202			51,895
Prepaid expenses		5,758			3,832
Other current assets		21,387			17,418

Total current assets		99,331			81,091

Long-term accounts receivable, net of allowance		76,045			71,521
Cemetery property		316,522			309,980
Property and equipment, net of accumulated depreciation		85,282			79,740
Merchandise trusts, restricted, at fair value		415,355			375,973
Perpetual care trusts, restricted, at fair value		302,766			282,313
Deferred financing costs, net of accumulated amortization		8,764			9,238
Deferred selling and obtaining costs		85,201			76,317
Deferred tax assets		69			381
Goodwill		47,570			42,392
Other assets		11,910			14,779

Total assets	$	1,448,815		$	1,343,725


Liabilities and partners’ capital
Current liabilities:
Accounts payable and accrued liabilities	$	34,191		$	28,973
Accrued interest		5,134			1,833
Current portion, long-term debt		6,550			2,175

Total current liabilities		45,875			32,981

Other long-term liabilities		1,571			1,835
Long-term debt		274,542			252,774
Deferred cemetery revenues, net		557,973			497,861
Deferred tax liabilities		12,039			14,910
Merchandise liability		129,922			125,869
Perpetual care trust corpus		302,766			282,313

Total liabilities		1,324,688			1,208,543


Commitments and contingencies
Partners’ capital
General partner		(1,495	)		386
Common partners		125,622			134,796

Total partners’ capital		124,127			135,182


Total liabilities and partners’ capital	$	1,448,815		$	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 September 30, 2013.

StoneMor Partners L.P.

Condensed Consolidated Statement of Operations

(in thousands, except per unit data)

(unaudited)


	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Revenues:
Cemetery
Merchandise	$	28,265		$	29,943		$	83,586		$	87,424
Services		11,051			11,134			33,422			34,481
Investment and other		11,850			12,294			34,098			35,769
Funeral home
Merchandise		4,266			3,548			13,736			11,135
Services		6,107			5,278			18,731			14,483

Total revenues		61,539			62,197			183,573			183,292


Costs and Expenses:
Cost of goods sold (exclusive of depreciation shown separately below):
Perpetual care		1,418			1,616			4,199			4,398
Merchandise		5,684			6,030			16,905			16,904
Cemetery expense		14,507			14,252			42,700			41,819
Selling expense		11,692			11,290			35,134			36,200
General and administrative expense		7,902			7,015			23,382			21,403
Corporate overhead (including $348 and $216 in unit-based compensation for the three months ended September 30, 2013 and 2012, and $1,038 and $625 for the nine months ended September 30, 2013 and 2012, respectively)		7,997			6,546			21,657			20,905
Depreciation and amortization		2,378			2,199			7,159			6,759
Funeral home expense
Merchandise		1,573			1,196			4,798			3,726
Services		4,914			3,739			14,239			10,446
Other		2,494			2,161			8,044			6,295
Acquisition related costs, net of recoveries		243			1,085			901			2,198

Total cost and expenses		60,802			57,129			179,118			171,053


Operating profit		737			5,068			4,455			12,239

Gain on acquisitions		2,530			—			2,530			122
Gain on termination of operating agreement		—			—			—			1,737
Gain on settlement agreement, net		—			—			12,261			—
Gain on sale of other assets		—			—			155			—
Loss on early extinguishment of debt		—			—			21,595			—
Interest expense		5,193			5,273			15,788			15,109


Net loss before income taxes		(1,926	)		(205	)		(17,982	)		(1,011	)

Income tax benefit		(442	)		(1,266	)		(2,489	)		(1,933	)


Net income (loss)	$	(1,484	)	$	1,061		$	(15,493	)	$	922


General partner’s interest in net income (loss) for the period	$	(26	)	$	21		$	(284	)	$	18
Limited partners’ interest in net income (loss) for the period	$	(1,458	)	$	1,040		$	(15,209	)	$	904

Net income (loss) per limited partner unit (basic and diluted)	$	(.07	)	$	.05		$	(.73	)	$	.05

Weighted average number of limited partners’ units outstanding - basic		21,351			19,491			20,814			19,412
Weighted average number of limited partners’ units outstanding - diluted		21,351			19,743			20,814			19,672

Distributions declared per unit	$	.600		$	.590		$	1.785		$	1.760

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 September 30, 2013.

StoneMor Partners L.P.

Condensed Consolidated Statement of Cash Flows

(in thousands)

(unaudited)


	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Operating activities:
Net income (loss)	$	(1,484	)	$	1,061		$	(15,493	)	$	922
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Cost of lots sold		1,853			2,201			6,047			6,180
Depreciation and amortization		2,378			2,199			7,159			6,759
Unit-based compensation		348			216			1,038			625
Accretion of debt discounts		665			507			1,676			1,230
Gain on termination of operating agreement		—			—			—			(1,737	)
Gain on acquisitions		(2,530	)		—			(2,530	)		(122	)
Gain on sale of other assets		—			—			(155	)		—
Loss on early extinguishment of debt		—			—			21,595			—
Changes in assets and liabilities that provided (used) cash:
Accounts receivable		5,051			5,847			(2,148	)		(2,333	)
Allowance for doubtful accounts		(1,080	)		450			(1,163	)		3,743
Merchandise trust fund		(1,100	)		(6,260	)		(23,711	)		(8,177	)
Prepaid expenses		(193	)		801			(1,926	)		(368	)
Other current assets		(2,645	)		516			(3,906	)		(344	)
Other assets		(399	)		(14	)		3,573			125
Accounts payable and accrued and other liabilities		4,663			1,859			8,340			2,207
Deferred selling and obtaining costs		(2,700	)		(1,983	)		(8,884	)		(5,363	)
Deferred cemetery revenue		17,415			11,741			51,181			35,440
Deferred taxes (net)		(904	)		(1,341	)		(3,260	)		(2,341	)
Merchandise liability		1,075			(1,198	)		(537	)		(5,649	)

Net cash provided by operating activities		20,413			16,602			36,896			30,797

Investing activities:

Cash paid for cemetery property		(1,958	)		(1,817	)		(4,210	)		(5,417	)
Purchase of subsidiaries		(5,000	)		(22,250	)		(14,100	)		(25,676	)
Cash paid for property and equipment		(1,446	)		(1,486	)		(5,366	)		(3,321	)
Proceeds from sales of other assets		—			—			155			—

Net cash used in investing activities		(8,404	)		(25,553	)		(23,521	)		(34,414	)

Financing activities:
Cash distributions		(13,386	)		(11,884	)		(38,653	)		(35,447	)
Additional borrowings on long-term debt		19,896			34,300			237,002			63,500
Repayments of long-term debt		(12,236	)		(12,715	)		(218,036	)		(26,137	)
Proceeds from public offering		—			—			38,377			—
Proceeds from general partner contribution		—			89			—			89
Fees paid related to early extinguishment of debt		—			—			(14,920	)		—
Cost of financing activities		(374	)		(498	)		(5,107	)		(2,318	)

Net cash provided by (used in) financing activities		(6,100	)		9,292			(1,337	)		(313	)

Net increase (decrease) in cash and cash equivalents		5,909			341			12,038			(3,930	)
Cash and cash equivalents - Beginning of period		14,075			7,787			7,946			12,058

Cash and cash equivalents - End of period	$	19,984		$	8,128		$	19,984		$	8,128


Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	1,002		$	683		$	10,756		$	9,731
Cash paid during the period for income taxes	$	183		$	323		$	3,315		$	3,978

Non-cash investing and financing activities:
Acquisition of assets by financing	$	15		$	146		$	107		$	199
Issuance of limited partner units for cemetery acquisition	$	—		$	3,500		$	3,718		$	4,103
Acquisition of assets by assumption of directly related liability	$	—		$	1,504		$	3,924		$	2,048

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 September 30, 2013.

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