Amendment No. 1
10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
March 31, 2017
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 80-0103159 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3600 Horizon Boulevard Trevose, Pennsylvania | 19053 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | ||||
Non-accelerated filer | ¨ | ||||||
Smaller reporting company | ¨ | Emerging growth company | ¨ |
37,957,482.
We are filing this Amendment No. 1 to our quarterly report
This Form 10-Q/A contains only Item 1 (Financial Statements), Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), Item 4 (Controls and Procedures) of Part I and Item 6 (Exhibits) of Part II , and items including information not affected by the Restatement have not been repeated in this Form 10-Q/A.
The Restatement corrects accountingcorrecting errors related to:
1. | The allocation of net loss to the General Partner and the limited partners for the purposes of determining the general partner’s and limited partners’ capital accounts presented within “Partners’ |
2. | The presentation of certain components of “Cemetery property”, “Property and equipment, net of accumulated depreciation”, “Deferred cemetery revenues, net”, “Merchandise liability”, “Accounts payable and accrued liabilities” and “Common limited partners’ interest” as of |
3. | The presentation of “Cemetery merchandise revenues”, Cemetery service revenues” |
4. | The recording of incorrect amounts of investment revenues and expenses related to merchandise and perpetual care trusts on the condensed consolidated |
5. | The recognition of incorrect amounts of revenue from deferred pre-acquisition contracts in the condensed consolidated statements of operations based on inaccurate system inputs; |
6. | Other adjustments principally relating to the recognition, accuracy and/or classification of certain amounts in “Deferred cemetery revenues, net”, “Merchandise |
7. | The corresponding effect of the foregoing accounting errors on the Partnership’s income tax accounts, condensed consolidated statement of partners’ capital, condensed consolidated |
1) | The timing and accuracy of the |
2) | The presentation of certain components of “Other current assets” and “Accounts payable and accrued liabilities” in the condensed consolidated balance sheet; |
3) | The corresponding effect of the foregoing accounting errors on the Partnership’s condensed consolidated statement of cash flows and the related notes thereto; |
4) | The recording and presentation of incorrect amounts of individual cemetery and funeral home location-level equity and intercompany balances—the impact of which is limited to Note 11, Supplemental Condensed Consolidating Financial |
5) | The presentation of changes in “Accounts receivable, net of allowance” and “Deferred revenues” on a gross versus net basis in the Partnership’s condensed consolidated statement of cash flows and Note 2, Accounts Receivable, Net of Allowance, and omission of related disclosures. |
weaknesses that had been identified at that time, and those remediation efforts as well as other remediation efforts relating to material weaknesses we identified subsequent to March 31, 2017 remain ongoing.
10-Q.
Page | ||||||
Part I | ||||||
Item 1. | ||||||
Item 2. | ||||||
Item 4. | ||||||
Part II | ||||||
Item 1A. | ||||||
Item 6. | ||||||
(UNAUDITED)
(unaudited)
June 30, 2016 | December 31, 2015 | |||||||
(As restated - see Note 2) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,436 | $ | 15,153 | ||||
Accounts receivable, net of allowance | 74,231 | 68,415 | ||||||
Prepaid expenses | 7,037 | 5,367 | ||||||
Other current assets | 21,823 | 22,241 | ||||||
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Total current assets | 112,527 | 111,176 | ||||||
Long-term accounts receivable, net of allowance | 95,121 | 95,167 | ||||||
Cemetery property | 333,859 | 334,457 | ||||||
Property and equipment, net of accumulated depreciation | 114,790 | 116,127 | ||||||
Merchandise trusts, restricted, at fair value | 494,596 | 464,676 | ||||||
Perpetual care trusts, restricted, at fair value | 321,700 | 307,804 | ||||||
Deferred selling and obtaining costs | 118,410 | 111,542 | ||||||
Deferred tax assets | 181 | 181 | ||||||
Goodwill | 70,572 | 69,851 | ||||||
Intangible assets | 66,098 | 67,209 | ||||||
Other assets | 18,341 | 16,167 | ||||||
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Total assets | $ | 1,746,195 | $ | 1,694,357 | ||||
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Liabilities and Partners’ Capital | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 33,660 | $ | 29,989 | ||||
Accrued interest | 1,473 | 1,503 | ||||||
Current portion, long-term debt | 5,373 | 2,440 | ||||||
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Total current liabilities | 40,506 | 33,932 | ||||||
Long-term debt, net of deferred financing costs | 277,854 | 316,399 | ||||||
Deferred revenues | 868,194 | 815,421 | ||||||
Deferred tax liabilities | 17,828 | 17,747 | ||||||
Perpetual care trust corpus | 321,700 | 307,804 | ||||||
Other long-term liabilities | 24,209 | 21,508 | ||||||
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Total liabilities | 1,550,291 | 1,512,811 | ||||||
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Commitments and contingencies | ||||||||
Partners’ Capital | ||||||||
General partner interest | (632 | ) | 15 | |||||
Common limited partners’ interests | 196,536 | 181,531 | ||||||
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Total partners’ capital | 195,904 | 181,546 | ||||||
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Total liabilities and partners’ capital | $ | 1,746,195 | $ | 1,694,357 | ||||
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March 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,723 | $ | 12,570 | |||
Accounts receivable, net of allowance | 76,430 | 77,253 | |||||
Prepaid expenses | 6,072 | 5,532 | |||||
Other current assets | 21,739 | 23,466 | |||||
Total current assets | 117,964 | 118,821 | |||||
Long-term accounts receivable, net of allowance | 98,879 | 98,886 | |||||
Cemetery property | 335,290 | 337,315 | |||||
Property and equipment, net of accumulated depreciation | 116,906 | 118,281 | |||||
Merchandise trusts, restricted, at fair value | 523,858 | 507,079 | |||||
Perpetual care trusts, restricted, at fair value | 341,479 | 333,780 | |||||
Deferred selling and obtaining costs | 120,113 | 116,890 | |||||
Deferred tax assets | 64 | 64 | |||||
Goodwill | 70,436 | 70,436 | |||||
Intangible assets | 64,852 | 65,438 | |||||
Other assets | 21,429 | 20,023 | |||||
Total assets | $ | 1,811,270 | $ | 1,787,013 | |||
Liabilities and Partners' Capital | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 39,035 | $ | 35,547 | |||
Accrued interest | 5,443 | 1,571 | |||||
Current portion, long-term debt | 1,617 | 1,775 | |||||
Total current liabilities | 46,095 | 38,893 | |||||
Long-term debt, net of deferred financing costs | 303,618 | 300,351 | |||||
Deferred revenues | 891,356 | 866,633 | |||||
Deferred tax liabilities | 20,556 | 20,058 | |||||
Perpetual care trust corpus | 341,479 | 333,780 | |||||
Other long-term liabilities | 38,019 | 36,944 | |||||
Total liabilities | 1,641,123 | 1,596,659 | |||||
Commitments and contingencies | |||||||
Partners' capital (deficit): | |||||||
General partner interest | (2,135 | ) | (1,914 | ) | |||
Common limited partners' interest | 172,282 | 192,268 | |||||
Total partners' capital | 170,147 | 190,354 | |||||
Total liabilities and partners' capital | $ | 1,811,270 | $ | 1,787,013 |
(UNAUDITED)
(unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(As restated - see Note 2) | ||||||||||||||||
Revenues: | ||||||||||||||||
Cemetery: | ||||||||||||||||
Merchandise | $ | 37,855 | $ | 38,999 | $ | 70,623 | $ | 68,402 | ||||||||
Services | 13,676 | 15,367 | 27,139 | 29,924 | ||||||||||||
Investment and other | 12,012 | 16,653 | 26,387 | 27,926 | ||||||||||||
Funeral home: | ||||||||||||||||
Merchandise | 6,569 | 6,250 | 14,025 | 13,325 | ||||||||||||
Services | 8,170 | 7,244 | 17,037 | 15,429 | ||||||||||||
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Total revenues | 78,282 | 84,513 | 155,211 | 155,006 | ||||||||||||
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Costs and Expenses: | ||||||||||||||||
Cost of goods sold | 12,042 | 13,333 | 22,762 | 23,162 | ||||||||||||
Cemetery expense | 17,485 | 19,279 | 33,341 | 35,544 | ||||||||||||
Selling expense | 16,391 | 15,769 | 30,967 | 29,679 | ||||||||||||
General and administrative expense | 8,993 | 9,192 | 18,197 | 18,521 | ||||||||||||
Corporate overhead | 9,737 | 10,429 | 20,048 | 19,512 | ||||||||||||
Depreciation and amortization | 3,155 | 2,944 | 6,220 | 5,896 | ||||||||||||
Funeral home expenses: | ||||||||||||||||
Merchandise | 1,835 | 2,066 | 3,984 | 4,442 | ||||||||||||
Services | 6,151 | 5,703 | 12,602 | 11,296 | ||||||||||||
Other | 4,746 | 4,380 | 9,886 | 8,561 | ||||||||||||
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Total cost and expenses | 80,535 | 83,095 | 158,007 | 156,613 | ||||||||||||
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Operating income (loss) | (2,253 | ) | 1,418 | (2,796 | ) | (1,607 | ) | |||||||||
Other gains (losses), net | (191 | ) | — | (1,073 | ) | — | ||||||||||
Interest expense | (5,707 | ) | (5,770 | ) | (11,497 | ) | (11,233 | ) | ||||||||
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Loss before income taxes | (8,151 | ) | (4,352 | ) | (15,366 | ) | (12,840 | ) | ||||||||
Income tax benefit (expense) | (500 | ) | (292 | ) | (760 | ) | (314 | ) | ||||||||
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Net loss | $ | (8,651 | ) | $ | (4,644 | ) | $ | (16,126 | ) | $ | (13,154 | ) | ||||
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General partner’s interest | $ | 1,085 | $ | 899 | $ | 2,173 | $ | 1,584 | ||||||||
Limited partners’ interest | $ | (9,736 | ) | $ | (5,543 | ) | $ | (18,299 | ) | $ | (14,738 | ) | ||||
Net loss per limited partner unit (basic and diluted) | $ | (0.28 | ) | $ | (0.19 | ) | $ | (0.54 | ) | $ | (0.50 | ) | ||||
Weighted average number of limited partners’ units outstanding (basic and diluted) | 34,837 | 29,286 | 33,688 | 29,258 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(As restated - see Note 1) | |||||||
Revenues: | |||||||
Cemetery: | |||||||
Merchandise | $ | 38,003 | $ | 33,690 | |||
Services | 14,949 | 13,719 | |||||
Investment and other | 12,575 | 14,414 | |||||
Funeral home: | |||||||
Merchandise | 7,836 | 7,482 | |||||
Services | 9,583 | 8,867 | |||||
Total revenues | 82,946 | 78,172 | |||||
Costs and Expenses: | |||||||
Cost of goods sold | 13,519 | 10,720 | |||||
Cemetery expense | 16,697 | 15,856 | |||||
Selling expense | 16,459 | 14,733 | |||||
General and administrative expense | 9,957 | 9,204 | |||||
Corporate overhead | 11,104 | 10,311 | |||||
Depreciation and amortization | 3,455 | 3,065 | |||||
Funeral home expenses: | |||||||
Merchandise | 1,760 | 2,149 | |||||
Services | 5,699 | 6,455 | |||||
Other | 5,345 | 5,140 | |||||
Total costs and expenses | 83,995 | 77,633 | |||||
Other gains (losses), net | — | (882 | ) | ||||
Interest expense | (6,706 | ) | (5,790 | ) | |||
Loss from continuing operations before income taxes | (7,755 | ) | (6,133 | ) | |||
Income tax expense | (806 | ) | (260 | ) | |||
Net loss | $ | (8,561 | ) | $ | (6,393 | ) | |
General partner's interest | $ | (89 | ) | $ | 1,101 | ||
Limited partners' interest | $ | (8,472 | ) | $ | (7,494 | ) | |
Net loss per limited partner unit (basic and diluted) | $ | (0.22 | ) | $ | (0.23 | ) | |
Weighted average number of limited partners' units outstanding (basic and diluted) | 37,918 | 32,539 |
(UNAUDITED)
(unaudited)
Partners’ Capital | ||||||||||||||||
Outstanding | Common | General | ||||||||||||||
Common Units | Limited Partners | Partner | Total | |||||||||||||
(As restated - see Note 2) | ||||||||||||||||
December 31, 2015 | 32,108,782 | $ | 181,531 | $ | 15 | $ | 181,546 | |||||||||
Issuance of common units | 3,203,682 | 77,345 | — | 77,345 | ||||||||||||
Common unit awards under incentive plans | 9,293 | 820 | — | 820 | ||||||||||||
Net loss | — | (18,299 | ) | 2,173 | (16,126 | ) | ||||||||||
Cash distributions | — | (41,883 | ) | (2,820 | ) | (44,703 | ) | |||||||||
Unit distributions paid in kind | 117,290 | (2,978 | ) | — | (2,978 | ) | ||||||||||
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June 30, 2016 | 35,439,047 | $ | 196,536 | $ | (632 | ) | $ | 195,904 | ||||||||
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Partners' Capital | ||||||||||||||
Outstanding Common Units | Common Limited Partners | General Partner | Total | |||||||||||
December 31, 2016 | 37,863,496 | $ | 192,268 | $ | (1,914 | ) | $ | 190,354 | ||||||
Issuance of common units | — | 744 | — | 744 | ||||||||||
Common unit awards under incentive plans | 15,644 | 241 | — | 241 | ||||||||||
Net loss | — | (8,472 | ) | (89 | ) | (8,561 | ) | |||||||
Cash distributions | — | (11,755 | ) | (132 | ) | (11,887 | ) | |||||||
Unit distributions paid in kind | 78,342 | (744 | ) | — | (744 | ) | ||||||||
March 31, 2017 | 37,957,482 | $ | 172,282 | $ | (2,135 | ) | $ | 170,147 |
(UNAUDITED)
(unaudited)
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
(As restated - see Note 2) | ||||||||
Cash Flows From Operating Activities: | ||||||||
Net loss | $ | (16,126 | ) | $ | (13,154 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Cost of lots sold | 4,443 | 4,917 | ||||||
Depreciation and amortization | 6,220 | 5,896 | ||||||
Non-cash compensation expense | 820 | 547 | ||||||
Non-cash interest expense | 1,534 | 1,467 | ||||||
Other gains (losses), net | 1,073 | — | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net of allowance | (5,867 | ) | (9,469 | ) | ||||
Merchandise trust fund | (10,517 | ) | (23,478 | ) | ||||
Other assets | (3,740 | ) | (4,352 | ) | ||||
Deferred selling and obtaining costs | (6,868 | ) | (7,483 | ) | ||||
Deferred revenue | 32,516 | 43,755 | ||||||
Deferred taxes (net) | 81 | (129 | ) | |||||
Payables and other liabilities | 4,890 | 5,458 | ||||||
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Net cash provided by operating activities | 8,459 | 3,975 | ||||||
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Cash Flows From Investing Activities: | ||||||||
Cash paid for capital expenditures | (7,504 | ) | (7,250 | ) | ||||
Cash paid for acquisitions | (1,500 | ) | — | |||||
Proceeds from asset sales | 1,848 | — | ||||||
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Net cash used in investing activities | (7,156 | ) | (7,250 | ) | ||||
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Cash Flows From Financing Activities: | ||||||||
Cash distributions | (44,703 | ) | (36,297 | ) | ||||
Proceeds from borrowings | 38,744 | 56,823 | ||||||
Repayments of debt | (75,247 | ) | (14,215 | ) | ||||
Proceeds from issuance of common units | 74,537 | — | ||||||
Cost of financing activities | (351 | ) | (34 | ) | ||||
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Net cash provided by (used in) financing activities | (7,020 | ) | 6,277 | |||||
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Net increase (decrease) in cash and cash equivalents | (5,717 | ) | 3,002 | |||||
Cash and cash equivalents - Beginning of period | 15,153 | 10,401 | ||||||
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Cash and cash equivalents - End of period | $ | 9,436 | $ | 13,403 | ||||
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Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for interest | $ | 9,994 | $ | 9,551 | ||||
Cash paid during the period for income taxes | $ | 2,325 | $ | 3,516 | ||||
Non-cash investing and financing activities: | ||||||||
Acquisition of assets by financing | $ | 137 | $ | 242 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(As restated - see Note 1) | |||||||
Cash Flows From Operating Activities: | |||||||
Net loss | $ | (8,561 | ) | $ | (6,393 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Cost of lots sold | 3,551 | 2,006 | |||||
Depreciation and amortization | 3,455 | 3,065 | |||||
Provision for cancellations | 1,828 | 2,718 | |||||
Non-cash compensation expense | 241 | 407 | |||||
Non-cash interest expense | 1,085 | 757 | |||||
Other (gains) losses, net | — | 882 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net of allowance | (1,284 | ) | (3,945 | ) | |||
Merchandise trust fund | (3,430 | ) | (11,613 | ) | |||
Other assets | (809 | ) | (2,469 | ) | |||
Deferred selling and obtaining costs | (3,223 | ) | (3,220 | ) | |||
Deferred revenues | 12,802 | 15,711 | |||||
Deferred taxes, net | 498 | 17 | |||||
Payables and other liabilities | 6,198 | 7,311 | |||||
Net cash provided by operating activities | 12,351 | 5,234 | |||||
Cash Flows From Investing Activities: | |||||||
Cash paid for capital expenditures | (1,496 | ) | (4,560 | ) | |||
Proceeds from asset sales | — | 138 | |||||
Net cash used in investing activities | (1,496 | ) | (4,422 | ) | |||
Cash Flows From Financing Activities: | |||||||
Cash distributions | (11,887 | ) | (21,387 | ) | |||
Proceeds from borrowings | 24,000 | 10,500 | |||||
Repayments of debt | (21,072 | ) | (10,355 | ) | |||
Proceeds from issuance of common units, net of costs | — | 18,763 | |||||
Cost of financing activities | (743 | ) | — | ||||
Net cash used in financing activities | (9,702 | ) | (2,479 | ) | |||
Net increase (decrease) in cash and cash equivalents | 1,153 | (1,667 | ) | ||||
Cash and cash equivalents - Beginning of period | 12,570 | 15,153 | |||||
Cash and cash equivalents - End of period | $ | 13,723 | $ | 13,486 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | 1,802 | $ | 1,513 | |||
Cash paid during the period for income taxes | $ | 2,371 | $ | 376 | |||
Non-cash investing and financing activities: | |||||||
Acquisition of assets by financing | $ | 652 | $ | 56 |
June 30, 2016
(Unaudited)
1. GENERAL
(UNAUDITED)
1. | GENERAL |
2017.
New Accounting Pronouncements
In
A. | The Partnership understated recognized revenues from the satisfaction of cemetery and funeral home performance obligations in its condensed consolidated statement of operations. The understatement was primarily due to lags in or omissions of the data entry of a contract servicing event. The adjustments to correct these accounting errors resulted in a net increase of $1.2 million in revenues, of which $1.0 million related to merchandise revenues, for the three months ended March 31, 2016. |
B. | In conjunction with the foregoing revenue recognition errors, on its condensed consolidated balance sheet, the Partnership had historically (i) deferred incorrect and imprecise amounts of investment revenues and expenses related to its merchandise trusts, (ii) reserved incorrect amounts for future cancellations related to its cemetery and funeral home performance obligations, and (iii) deferred incorrect amounts of selling costs. The correction of these accounting errors resulted in a net increase in “Cemetery investment and other revenues” of $0.1 million for the three months ended March 31, 2016 due to changes in the inputs used to calculate trust income recognition. This also resulted in a decrease in “Cemetery merchandise revenues” of $0.1 million for the three months ended March 31, 2016 due to an increase in cancellation reserve expense, and an increase in “Selling expense” of $0.2 million for the three months ended March 31, 2016. |
C. | Certain components of “Other current assets” and “Accounts payable and accrued liabilities” on its condensed consolidated balance sheet were determined to be inappropriate in the Partnership’s review of accounting policies during its ongoing remediation. The Partnership had historically presented intercompany deposits due to its merchandise and perpetual care trust funds within “Other current assets” and presented intercompany payables to its merchandise and perpetual care trusts in “Accounts payable and accrued liabilities”. The Partnership has determined the intercompany payables and liabilities to its consolidated trust funds should be eliminated. The correction of the error resulted in a reclassification of $0.4 million in the condensed consolidated statements of cash flows between "Other assets" and "Payables and other liabilities" for the three months ended March 31, 2016. |
D. | Specific to the Partnership’s disclosure in Note 11, Supplemental Condensed Consolidating Financial Information, (“Note 11”) the Partnership recorded incorrect amounts for its individual cemetery and funeral home location-level equity and intercompany balances at its formation and in subsequent acquisitions. Additionally, the Partnership presented certain managed locations as guarantor subsidiaries instead of non-guarantor subsidiaries in Note 11. Note that this error had no impact to amounts presented on the face of the condensed consolidated financial statements. |
E. | The Partnership incorrectly presented the changes in “Accounts receivable, net of allowance” net of the income statement “Provision for cancellations” and omitted certain disclosures regarding the components of the changes in “Accounts receivable, net of allowance” and “Deferred revenues” in its condensed consolidated statement of cash flows. Additionally, specific to the Partnership’s related disclosure in Note 2, Accounts Receivable, Net of Allowance, the Partnership presented activity in the allowance for cancellations that related to deferred revenues on a gross basis instead of on a net basis. The correction of the error resulted in a reclassification of $2.7 million in the condensed consolidated statement of cash flows between "Provision for cancellations" and "Accounts receivable, net of allowance" for the three months ended March 31, 2016. |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | Three Months Ended March 31, 2016 | ||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | ||||||||||
Cemetery revenues: | |||||||||||||
Merchandise | A, B | $ | 32,768 | $ | 922 | $ | 33,690 | ||||||
Services | A | 13,463 | 256 | 13,719 | |||||||||
Investment and other | B | 14,375 | 39 | 14,414 | |||||||||
Funeral home revenues: | |||||||||||||
Merchandise | A | 7,456 | 26 | 7,482 | |||||||||
Total revenues | 76,929 | 1,243 | 78,172 | ||||||||||
Selling expense | B | 14,576 | 157 | 14,733 | |||||||||
Funeral home expenses: | |||||||||||||
Services | B | 6,451 | 4 | 6,455 | |||||||||
Total costs and expenses | 77,472 | 161 | 77,633 | ||||||||||
Net loss | (7,475 | ) | 1,082 | (6,393 | ) | ||||||||
General partner's interest for the period | 1,088 | 13 | 1,101 | ||||||||||
Limited partners' interest for the period | (8,563 | ) | 1,069 | (7,494 | ) | ||||||||
Net loss per limited partner unit (basic and diluted) | $ | (0.26 | ) | $ | 0.03 | $ | (0.23 | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | Three Months Ended March 31, 2016 | ||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | ||||||||||
Net loss | $ | (7,475 | ) | $ | 1,082 | $ | (6,393 | ) | |||||
Provision for cancellations | E | — | 2,718 | 2,718 | |||||||||
Changes in assets and liabilities: | |||||||||||||
Accounts receivable, net of allowance | E | (1,227 | ) | (2,718 | ) | (3,945 | ) | ||||||
Other assets | B, C | (2,847 | ) | 378 | (2,469 | ) | |||||||
Deferred selling and obtaining costs | B | (3,379 | ) | 159 | (3,220 | ) | |||||||
Deferred revenues | A, B | 16,952 | (1,241 | ) | 15,711 | ||||||||
Payables and other liabilities | C | 7,689 | (378 | ) | 7,311 | ||||||||
Net cash provided by operating activities | $ | 5,234 | $ | — | $ | 5,234 |
period beginning after December 15, 2016. During the first quarter of 2016, Update No. 2016-08, “Revenue from Contracts with Customers (Topic 606)” was released, which clarifies the implementation guidance on principal versus agent considerations. During the second quarter of 2016, Update No. 2016-10, “Revenue from Contracts with Customers (Topic 606)” was released, which clarifies the implementation guidance on identifying performance obligations. The FASB also issued Update No. 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The core principle of ASU 2016-12 is to narrow scope improvementswill enhance its liquidity and practical expedients by clarifying the collectability criteria for customer collection exclusions representing an improvement over previous guidance.financial flexibility. The Partnership will adoptlikely seek to continue to supplement cash generation with proceeds from financing activities, including borrowings under the requirementscredit facility and other borrowings, the issuance of these updates uponadditional limited partner units, capital contributions from the effective dategeneral partner and the sale of January 1, 2018,assets and other transactions. As of March 31, 2017, the Partnership had $12.8 million of total available borrowing capacity under its revolving credit facility.
In the first quarter of 2016, the FASB issued Update No. 2016-01, “Financial Instruments (Subtopic 825-10)” (“ASU 2016-01”). The core principle of ASU 2016-01 is that equity investments should be measured at fair value with changes in the fair value recognized through net income. The amendment is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permittedForm 10-K for the key aspectsyear ended December 31, 2016 for the complete summary of the amendment. The Partnership will adopt the requirements of ASU 2016-01 upon its effective date of January 1, 2018, and is evaluating the potential impact of the adoption on its financial position, results of operations and related disclosures.
In the first quarter of 2016, the FASB issued Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The core principle of ASU 2016-02 is that all leases create an asset and a liability for lessees and recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. The amendment is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Partnership plans to adopt the requirements of ASU 2016-02 upon its effective date of January 1, 2019, and is evaluating the potential impact of the adoption on its financial position, results of operations and related disclosures.
In the second quarter of 2016, the FASB issued Update No. 2016-13, “Credit Losses (Topic 326)” (“ASU 2016-13”). The core principle of ASU 2016-13 is that all assets measured at amortized cost basis should be presented at the net amount expected to be collected using historical experience, current conditions, and reasonable and supportable forecasts as a basis for credit loss estimates, instead of the probable initial recognition threshold used under current GAAP. The amendment is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted. The Partnership plans to adopt the requirements of ASU 2016-13 upon its effective date of January 1, 2020, and is evaluating the potential impact of the adoption on its financial position, results of operations and related disclosures.
In 2015, the FASB issued Update No. 2015-07, “Fair Value Measurement (Topic 820).” The amendments in this update removed the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient. The entity adopted this guidance in the current period pertaining to its new investment funds (see Notes 6, 7 and 14).
significant accounting policies.
calculated on a quarterly basis based upon its ownership interestunits and incentive distributions to be distributed for the quarter, with a priority allocation of net income to the general partner’s incentive distributions, if any, in accordance with the partnership agreement, and the remaining net income (loss) allocated with respect to the general partner’s and limited partners’ ownership interests.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net loss | $ | (8,651 | ) | $ | (4,644 | ) | $ | (16,126 | ) | $ | (13,154 | ) | ||||
Less: Incentive distribution right (“IDR”) payments to general partner | 1,195 | 975 | 2,387 | 1,786 | ||||||||||||
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|
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|
| |||||||||
Net loss to allocate to general and limited partners | (9,846 | ) | (5,619 | ) | (18,513 | ) | (14,940 | ) | ||||||||
General partner’s interest excluding IDRs | (110 | ) | (76 | ) | (214 | ) | (202 | ) | ||||||||
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|
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| |||||||||
Net loss attributable to common limited partners | $ | (9,736 | ) | $ | (5,543 | ) | $ | (18,299 | ) | $ | (14,738 | ) | ||||
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|
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|
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(As restated - see above) | |||||||
Net loss | $ | (8,561 | ) | $ | (6,393 | ) | |
Less: Incentive distribution right (“IDR”) payments to general partner | — | 1,192 | |||||
Net loss to allocate to general and common limited partners | (8,561 | ) | (7,585 | ) | |||
Less: General partner’s interest excluding IDRs | (89 | ) | (91 | ) | |||
Net loss attributable to common limited partners | $ | (8,472 | ) | $ | (7,494 | ) |
plan.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Weighted average number of common limited partner units - basic | 34,837 | 29,286 | 33,688 | 29,258 | ||||||||||||
Add effect of dilutive incentive awards (1) | — | — | — | — | ||||||||||||
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| |||||||||
Weighted average number of common limited partner units - diluted | 34,837 | 29,286 | 33,688 | 29,258 | ||||||||||||
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|
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Weighted average number of common limited partner units - basic | 37,918 | 32,539 | |||
Add effect of dilutive incentive awards (1) | — | — | |||
Weighted average number of common limited partner units - diluted | 37,918 | 32,539 |
(1) | The diluted weighted average number of limited partners’ units outstanding presented on the condensed consolidated statement of operations does not include |
2. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
Subsequent
The effect of these adjustments on the Partnership’s consolidated balance sheets, statementsresults of operations, partners’ capital andfinancial position, cash flows for eachand financial statement disclosures, management expects that there will be an impact to the financial reporting disclosures and internal control over financial reporting. The Partnership will adopt the requirements of the three and six months ended June 30,new standard upon its effective date of January 1, 2018.
As of June 30, | As of December 31, | |||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||
As | Restatement | As | As | Restatement | As | |||||||||||||||||||||||
Reference | Filed | Adjustments | Restated | Filed | Adjustments | Restated | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Other current assets | H | $ | 19,126 | $ | 2,697 | $ | 21,823 | $ | 18,863 | $ | 3,378 | $ | 22,241 | |||||||||||||||
Total current assets | 109,830 | 2,697 | 112,527 | 107,798 | 3,378 | 111,176 | ||||||||||||||||||||||
Cemetery property | D | 341,825 | (7,966 | ) | 333,859 | 342,639 | (8,182 | ) | 334,457 | |||||||||||||||||||
Property and equipment, net of accumulated depreciation | D | 103,083 | 11,707 | 114,790 | 104,330 | 11,797 | 116,127 | |||||||||||||||||||||
Deferred tax assets | I | 40 | 141 | 181 | 40 | 141 | 181 | |||||||||||||||||||||
Other assets | H | 17,243 | 1,098 | 18,341 | 15,069 | 1,098 | 16,167 | |||||||||||||||||||||
Total assets | 1,738,518 | 7,677 | 1,746,195 | 1,686,125 | 8,232 | 1,694,357 | ||||||||||||||||||||||
Accounts payable and accrued liabilities | E | 35,546 | (1,886 | ) | 33,660 | 31,875 | (1,886 | ) | 29,989 | |||||||||||||||||||
Total current liabilities | 42,392 | (1,886 | ) | 40,506 | 35,818 | (1,886 | ) | 33,932 | ||||||||||||||||||||
Deferred cemetery revenues, net | B | 695,092 | (695,092 | ) | — | 637,536 | (637,536 | ) | — | |||||||||||||||||||
Merchandise liability | B | 169,974 | (169,974 | ) | — | 173,097 | (173,097 | ) | — | |||||||||||||||||||
Deferred revenues | B, D, F, G, H | — | 868,194 | 868,194 | — | 815,421 | 815,421 | |||||||||||||||||||||
Deferred tax liabilities | I | 17,914 | (86 | ) | 17,828 | 17,833 | (86 | ) | 17,747 | |||||||||||||||||||
Other long-term liabilities | F | 16,168 | 8,041 | 24,209 | 13,960 | 7,548 | 21,508 | |||||||||||||||||||||
Total liabilities | 1,541,094 | 9,197 | 1,550,291 | 1,502,447 | 10,364 | 1,512,811 | ||||||||||||||||||||||
General partner interest | A, F, G, H, I | (13,054 | ) | 12,422 | (632 | ) | (10,038 | ) | 10,053 | 15 | ||||||||||||||||||
Common limited partners’ interest | A, E, F, G, H, I | 210,478 | (13,942 | ) | 196,536 | 193,716 | (12,185 | ) | 181,531 | |||||||||||||||||||
Total partners’ capital | 197,424 | (1,520 | ) | 195,904 | 183,678 | (2,132 | ) | 181,546 | ||||||||||||||||||||
Total liabilities and partners’ capital | $ | 1,738,518 | $ | 7,677 | $ | 1,746,195 | $ | 1,686,125 | $ | 8,232 | $ | 1,694,357 |
Three months ended June 30, | ||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||
As | Restatement | As | As | Restatement | As | |||||||||||||||||||||
Reference | Filed | Adjustments | Restated | Filed | Adjustments | Restated | ||||||||||||||||||||
(in thousands, except per unit data) | ||||||||||||||||||||||||||
Cemetery revenues: | ||||||||||||||||||||||||||
Merchandise | C, G, H | $ | 36,105 | $ | 1,750 | $ | 37,855 | $ | 36,042 | $ | 2,957 | $ | 38,999 | |||||||||||||
Services | C, G, H | 12,984 | 692 | 13,676 | 14,591 | 776 | 15,367 | |||||||||||||||||||
Investment and other | F | 11,721 | 291 | 12,012 | 16,698 | (45 | ) | 16,653 | ||||||||||||||||||
Total revenues | 75,549 | 2,733 | 78,282 | 80,825 | 3,688 | 84,513 | ||||||||||||||||||||
Cost of goods sold | C, F, H | 9,737 | 2,305 | 12,042 | 9,807 | 3,526 | 13,333 | |||||||||||||||||||
Total cost and expenses | 78,230 | 2,305 | 80,535 | 79,569 | 3,526 | 83,095 | ||||||||||||||||||||
Operating income (loss) | (2,681 | ) | 428 | (2,253 | ) | 1,256 | 162 | 1,418 | ||||||||||||||||||
Loss before income taxes | (8,579 | ) | 428 | (8,151 | ) | (4,514 | ) | 162 | (4,352 | ) | ||||||||||||||||
Income tax benefit (expense) | I | (500 | ) | — | (500 | ) | (334 | ) | 42 | (292 | ) | |||||||||||||||
Net loss | (9,079 | ) | 428 | (8,651 | ) | (4,848 | ) | 204 | (4,644 | ) | ||||||||||||||||
General partner’s interest for the period | A, F, G, H, I | (103 | ) | 1,188 | 1,085 | (65 | ) | 964 | 899 | |||||||||||||||||
Limited partners’ interest for the period | A, F, G, H, I | (8,976 | ) | (760 | ) | (9,736 | ) | (4,783 | ) | (760 | ) | (5,543 | ) | |||||||||||||
Net loss per limited partner unit (basic and diluted) | A, F, G, H, I | $ | (0.26 | ) | $ | (0.02 | ) | $ | (0.28 | ) | $ | (0.16 | ) | $ | (0.03 | ) | $ | (0.19 | ) |
Six months ended June 30, | ||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||
As | Restatement | As | As | Restatement | As | |||||||||||||||||||||
Reference | Filed | Adjustments | Restated | Filed | Adjustments | Restated | ||||||||||||||||||||
(in thousands, except per unit data) | ||||||||||||||||||||||||||
Cemetery revenues: | ||||||||||||||||||||||||||
Merchandise | C, G, H | $ | 67,080 | $ | 3,543 | $ | 70,623 | $ | 62,979 | $ | 5,423 | $ | 68,402 | |||||||||||||
Services | C, G, H | 25,816 | 1,323 | 27,139 | 28,501 | 1,423 | 29,924 | |||||||||||||||||||
Investment and other | F | 26,173 | 214 | 26,387 | 28,008 | (82 | ) | 27,926 | ||||||||||||||||||
Total revenues | 150,131 | 5,080 | 155,211 | 148,242 | 6,764 | 155,006 | ||||||||||||||||||||
Cost of goods sold | C, F, H | 18,294 | 4,468 | 22,762 | 16,890 | 6,272 | 23,162 | |||||||||||||||||||
Total cost and expenses | 153,539 | 4,468 | 158,007 | 150,341 | 6,272 | 156,613 | ||||||||||||||||||||
Operating income (loss) | (3,408 | ) | 612 | (2,796 | ) | (2,099 | ) | 492 | (1,607 | ) | ||||||||||||||||
Loss before income taxes | (15,978 | ) | 612 | (15,366 | ) | (13,332 | ) | 492 | (12,840 | ) | ||||||||||||||||
Income tax benefit (expense) | I | (760 | ) | — | (760 | ) | (399 | ) | 85 | (314 | ) | |||||||||||||||
Net loss | (16,738 | ) | 612 | (16,126 | ) | (13,731 | ) | 577 | (13,154 | ) | ||||||||||||||||
General partner’s interest for the period | A, F, G, H, I | (196 | ) | 2,369 | 2,173 | (185 | ) | 1,769 | 1,584 | |||||||||||||||||
Limited partners’ interest for the period | A, F, G, H, I | (16,542 | ) | (1,757 | ) | (18,299 | ) | (13,546 | ) | (1,192 | ) | (14,738 | ) | |||||||||||||
Net loss per limited partner unit (basic and diluted) | A, F, G, H, I | $ | (0.49 | ) | $ | (0.05 | ) | $ | (0.54 | ) | $ | (0.46 | ) | $ | (0.04 | ) | $ | (0.50 | ) |
Common Limited Partners | General Partner | Total | Common Limited Partners | General Partner | Total | Common Limited Partners | General Partner | Total | ||||||||||||||||||||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | |||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||
Capital Balance at December 31, 2015 | A, E, F, G, H, I | $ | 193,716 | $ | (10,038 | ) | $ | 183,678 | $ | (12,185 | ) | $ | 10,053 | $ | (2,132 | ) | $ | 181,531 | $ | 15 | $ | 181,546 | ||||||||||||||||
Net loss | A, F, G, H | (16,542 | ) | (196 | ) | (16,738 | ) | (1,757 | ) | 2,369 | 612 | (18,299 | ) | 2,173 | (16,126 | ) | ||||||||||||||||||||||
Capital Balance at June 30, 2016 | A, E, F, G, H, I | $ | 210,478 | $ | (13,054 | ) | $ | 197,424 | $ | (13,942 | ) | $ | 12,422 | $ | (1,520 | ) | $ | 196,536 | $ | (632 | ) | $ | 195,904 |
Six months ended June 30, | ||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||
As | Restatement | As | As | Restatement | As | |||||||||||||||||||||
Reference | Filed | Adjustments | Restated | Filed | Adjustments | Restated | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Net loss | F, G, H, I | $ | (16,738 | ) | $ | 612 | $ | (16,126 | ) | $ | (13,731 | ) | $ | 577 | $ | (13,154 | ) | |||||||||
Changes in assets and liabilities: | ||||||||||||||||||||||||||
Other assets | D, H | (4,295 | ) | 555 | (3,740 | ) | (9,162 | ) | 4,810 | (4,352 | ) | |||||||||||||||
Deferred revenues | B, D, F, G, H | 37,755 | (5,239 | ) | 32,516 | 45,307 | (1,552 | ) | 43,755 | |||||||||||||||||
Deferred taxes (net) | I | — | — | — | (44 | ) | (85 | ) | (129 | ) | ||||||||||||||||
Payables and other liabilities | F | 818 | 4,072 | 4,890 | 9,208 | (3,750 | ) | 5,458 | ||||||||||||||||||
Net cash provided by operating activities . | $ | 8,459 | $ | — | $ | 8,459 | $ | 3,975 | $ | — | $ | 3,975 |
The Restatement adjustments affecting the consolidated statement of cash flowsnot permitted for the periods noted are included inkey aspects of the Partnership’s net loss fromamendment. The Partnership will adopt the requirements of ASU 2016-01 upon its effective date of January 1, 2018, and is evaluating the potential impact of the adoption on its financial position, results of operations and offset by changes in operatingrelated disclosures.
3. ACQUISITIONS
2016 Acquisition
Duringdisclosures.
Assets: | ||||
Accounts receivable | $ | 22 | ||
Cemetery and funeral home property | 90 | |||
Property and equipment | 220 | |||
Merchandise trusts, restricted | 290 | |||
Other assets | 13 | |||
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| |||
Total assets | 635 | |||
|
| |||
Liabilities: | ||||
Deferred revenues | 193 | |||
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| |||
Total liabilities | 193 | |||
|
| |||
Fair value of net assets acquired | 442 | |||
|
| |||
Consideration paid - cash | 1,500 | |||
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Total consideration paid | 1,500 | |||
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Goodwill from purchase | $ | 1,058 | ||
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|
The Partnership recorded goodwill of $1.1 million in the Funeral Home reporting unit for the properties acquired in 2016.
2015 Acquisitions
During the year ended December 31, 2015, the Partnership acquired the following propertiesoperations and related assets, net of certain assumed liabilities:
The Partnership accounted for these transactions underIn the acquisition method of accounting. Accordingly, the Partnership evaluated the identifiable assets acquired and liabilities assumed at their respective acquisition date fair values. All other costs incurred associated with the acquisition of the assets noted were expensed as incurred. The following table presents the Partnership’s values assigned to the assets acquired and liabilities assumed in the acquisitions, based on their estimated and revised fair values, as applicable, which may be prospectively adjusted as additional information is received (in thousands):
Assets: Accounts receivable Cemetery property Property and equipment Inventory Merchandise trusts, restricted Perpetual care trusts, restricted Intangible assets Total assets Liabilities: Deferred revenues Perpetual care trust corpus Other liabilities Total liabilities Fair value of net assets acquired Consideration paid – cash Deferred cash consideration Total consideration paid Gain on bargain purchase Goodwill from purchase $ 2,641 5,249 7,710 53 15,075 4,134 406 35,268 21,349 4,134 21 25,504 9,764 18,800 876 19,676 $ 766 $ 10,678
Certain provisional amounts pertaining to the 2015 acquisitions were adjusted in the secondthird quarter of 2016, as the Company obtained additional information relatedFASB issued Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The core principle of ASU 2016-15 is to two of the acquisitions.provide cash flow statement classification guidance. The changes resulted in an adjustment to the gain on acquisition recognized during the year endedamendment is effective for annual reporting periods beginning after December 31, 2015, reducing the gain by $0.8 million via a loss recognized in the current period in accordance with GAAP. The amounts shown may be adjusted as additional information15, 2017, including interim periods within those fiscal years. Early application is received.permitted. The Partnership recorded goodwillplans to adopt the requirements of $1.1 million and $9.6 million in the Cemetery and Funeral Home reporting units, respectively, with regard to the properties acquired during the year ended December 31, 2015.
The following data presents pro forma revenues, net income (loss) and basic and diluted net income (loss) per unit for the Partnership as if the acquisitions consummated during the six months ended June 30, 2016 and the year ended December 31, 2015 had occurred asASU 2016-15 upon its effective date of January 1, 2015.2018, and is evaluating the potential impact of the adoption on its financial position, results of operations and related disclosures.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 78,282 | $ | 86,426 | $ | 155,324 | $ | 158,832 | ||||||||
Net loss | (8,651 | ) | (4,516 | ) | (16,107 | ) | (12,898 | ) | ||||||||
Net loss per limited partner unit (basic and diluted) | $ | (0.28 | ) | $ | (0.18 | ) | $ | (0.54 | ) | $ | (0.50 | ) |
exceeds its fair value, up to the total amount of goodwill. The properties acquired in 2016 have contributed $0.1 millionPartnership plans to adopt the requirements of revenueASU 2017-04 upon its effective date of January 1, 2020, and less than $0.1 millionis evaluating the impact, if any, on its financial position, results of operating profit for the threeoperations and six months ended June 30, 2016, respectively. The properties acquired in 2015 have contributed $4.8 million and $2.4 million of revenue and $0.8 million and $0.4 million of operating profit for the three and six months ended June 30, 2016 respectively.
4. ACCOUNTS RECEIVABLE, NET OF ALLOWANCE
Accountsrelated disclosures.
2. | ACCOUNTS RECEIVABLE, NET OF ALLOWANCE |
June 30, 2016 | December 31, 2015 | |||||||
Customer receivables | $ | 217,071 | $ | 207,645 | ||||
Unearned finance income | (20,323 | ) | (20,078 | ) | ||||
Allowance for contract cancellations | (27,396 | ) | (23,985 | ) | ||||
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| |||||
Accounts receivable, net of allowance | 169,352 | 163,582 | ||||||
Less: current portion, net of allowance | 74,231 | 68,415 | ||||||
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Long-term portion, net of allowance | $ | 95,121 | $ | 95,167 | ||||
|
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|
|
March 31, 2017 | December 31, 2016 | ||||||
Customer receivables | $ | 223,113 | $ | 223,326 | |||
Unearned finance income | (20,803 | ) | (21,034 | ) | |||
Allowance for contract cancellations | (27,001 | ) | (26,153 | ) | |||
Accounts receivable, net of allowance | 175,309 | 176,139 | |||||
Less: Current portion, net of allowance | 76,430 | 77,253 | |||||
Long-term portion, net of allowance | $ | 98,879 | $ | 98,886 |
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Balance, beginning of period | $ | 23,985 | $ | 22,138 | ||||
Provision for cancellations | 13,267 | 13,200 | ||||||
Charge-offs, net | (9,856 | ) | (10,264 | ) | ||||
|
|
|
| |||||
Balance, end of period | $ | 27,396 | $ | 25,074 | ||||
|
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|
|
5. CEMETERY PROPERTY
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(As restated - see Note 1) | |||||||
Balance, beginning of period | $ | 26,153 | $ | 23,985 | |||
Provision for cancellations | 1,828 | 2,718 | |||||
Cancellations | (980 | ) | (1,682 | ) | |||
Balance, end of period | $ | 27,001 | $ | 25,021 |
3. | CEMETERY PROPERTY |
June 30, 2016 | December 31, 2015 | |||||||
Cemetery land | $ | 253,596 | $ | 253,955 | ||||
Mausoleum crypts and lawn crypts | 80,263 | 80,502 | ||||||
|
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| |||||
Cemetery property | $ | 333,859 | $ | 334,457 | ||||
|
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|
|
6. PROPERTY AND EQUIPMENT
March 31, 2017 | December 31, 2016 | ||||||
Cemetery land | $ | 256,482 | $ | 257,914 | |||
Mausoleum crypts and lawn crypts | 78,808 | 79,401 | |||||
Cemetery property | $ | 335,290 | $ | 337,315 |
4. | PROPERTY AND EQUIPMENT |
June 30, 2016 | December 31, 2015 | |||||||
Building and improvements | $ | 119,634 | $ | 117,034 | ||||
Furniture and equipment | 54,202 | 54,346 | ||||||
Funeral home land | 11,707 | 11,797 | ||||||
|
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|
| |||||
Property and equipment, gross | 185,543 | 183,177 | ||||||
Less: accumulated depreciation | (70,753 | ) | (67,050 | ) | ||||
|
|
|
| |||||
Property and equipment, net of accumulated depreciation | $ | 114,790 | $ | 116,127 | ||||
|
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|
|
March 31, 2017 | December 31, 2016 | ||||||
Buildings and improvements | $ | 126,025 | $ | 125,442 | |||
Furniture and equipment | 56,106 | 56,408 | |||||
Funeral home land | 11,505 | 11,527 | |||||
Property and equipment, gross | 193,636 | 193,377 | |||||
Less: Accumulated depreciation | (76,730 | ) | (75,096 | ) | |||
Property and equipment, net of accumulated depreciation | $ | 116,906 | $ | 118,281 |
7. MERCHANDISE TRUSTS
5. | MERCHANDISE TRUSTS |
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Balance, beginning of period | $ | 464,676 | $ | 484,820 | ||||
Contributions | 30,259 | 31,667 | ||||||
Distributions | (29,645 | ) | (21,231 | ) | ||||
Interest and dividends | 11,686 | 8,391 | ||||||
Capital gain distributions | 263 | (741 | ) | |||||
Realized gains and losses | 2,337 | 14,453 | ||||||
Taxes | (1,694 | ) | (3,026 | ) | ||||
Fees | (1,048 | ) | (1,632 | ) | ||||
Unrealized change in fair value | 17,762 | (33,774 | ) | |||||
|
|
|
| |||||
Balance, end of period | $ | 494,596 | $ | 478,927 | ||||
|
|
|
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 507,079 | $ | 464,676 | |||
Contributions | 14,916 | 13,305 | |||||
Distributions | (16,728 | ) | (7,797 | ) | |||
Interest and dividends | 6,284 | 5,773 | |||||
Capital gain distributions | 237 | 219 | |||||
Realized gains and losses | 1,810 | 1,270 | |||||
Taxes | (1,675 | ) | (37 | ) | |||
Fees | (708 | ) | (383 | ) | |||
Unrealized change in fair value | 12,643 | 2,982 | |||||
Balance, end of period | $ | 523,858 | $ | 480,008 |
$27.1 million and $12.6 million, respectively. Cash flows from pre-need customer contracts are presented as operating cash flows in our condensed consolidated statement of cash flows.
Gross | Gross | |||||||||||||||||||
Fair Value | Unrealized | Unrealized | Fair | |||||||||||||||||
June 30, 2016 | Hierarchy Level | Cost | Gains | Losses | Value | |||||||||||||||
Short-term investments | 1 | $ | 28,567 | $ | — | $ | — | $ | 28,567 | |||||||||||
Fixed maturities: | ||||||||||||||||||||
U.S. governmental securities | 2 | 96 | 9 | — | 105 | |||||||||||||||
Corporate debt securities | 2 | 8,854 | 169 | (493 | ) | 8,530 | ||||||||||||||
Other debt securities | 2 | 160 | — | — | 160 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 9,110 | 178 | (493 | ) | 8,795 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 1 | 245,134 | 3,267 | (6,829 | ) | 241,572 | ||||||||||||||
Mutual funds - equity securities | 1 | 137,408 | 5,502 | (8,085 | ) | 134,825 | ||||||||||||||
Other investment funds (1) | 27,458 | 183 | — | 27,641 | ||||||||||||||||
Equity securities | 1 | 40,616 | 2,386 | (3,346 | ) | 39,656 | ||||||||||||||
Other invested assets | 2 | 1,630 | 314 | — | 1,944 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total managed investments | $ | 489,923 | $ | 11,830 | $ | (18,753 | ) | $ | 483,000 | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Assets acquired via acquisition | 3,264 | — | — | 3,264 | ||||||||||||||||
West Virginia Trust Receivable | 8,332 | — | — | 8,332 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 501,519 | $ | 11,830 | $ | (18,753 | ) | $ | 494,596 | |||||||||||
|
|
|
|
|
|
|
|
March 31, 2017 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 26,925 | $ | — | $ | — | $ | 26,925 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 172 | 1 | (52 | ) | 121 | |||||||||||
Corporate debt securities | 2 | 5,673 | 306 | (303 | ) | 5,676 | |||||||||||
Total fixed maturities | 5,845 | 307 | (355 | ) | 5,797 | ||||||||||||
Mutual funds - debt securities | 1 | 229,609 | 4,845 | (133 | ) | 234,321 | |||||||||||
Mutual funds - equity securities | 1 | 111,335 | 11,349 | (160 | ) | 122,524 | |||||||||||
Other investment funds (1) | 75,498 | 597 | (564 | ) | 75,531 | ||||||||||||
Equity securities | 1 | 35,203 | 5,047 | (289 | ) | 39,961 | |||||||||||
Other invested assets | 2 | 10,100 | — | — | 10,100 | ||||||||||||
Total investments | $ | 494,515 | $ | 22,145 | $ | (1,501 | ) | $ | 515,159 | ||||||||
West Virginia Trust Receivable | 8,699 | — | — | 8,699 | |||||||||||||
Total | $ | 503,214 | $ | 22,145 | $ | (1,501 | ) | $ | 523,858 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have redemption periods ranging from 30 to 90 days, and private credit funds, which have lockup periods of five years with two potential one year extensions at the discretion of the funds’ general partners. As of March 31, 2017, there were $3.7 million in unfunded commitments to the private credit funds, which are callable at any time. |
December 31, 2016 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 17,317 | $ | — | $ | — | $ | 17,317 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 172 | 2 | (44 | ) | 130 | |||||||||||
Corporate debt securities | 2 | 6,311 | 269 | (202 | ) | 6,378 | |||||||||||
Total fixed maturities | 6,483 | 271 | (246 | ) | 6,508 | ||||||||||||
Mutual funds - debt securities | 1 | 236,159 | 1,580 | (96 | ) | 237,643 | |||||||||||
Mutual funds - equity securities | 1 | 126,215 | 3,361 | (533 | ) | 129,043 | |||||||||||
Other investment funds (1) | 60,017 | 603 | (387 | ) | 60,233 | ||||||||||||
Equity securities | 1 | 35,079 | 3,640 | (192 | ) | 38,527 | |||||||||||
Other invested assets | 2 | 9,239 | — | — | 9,239 | ||||||||||||
Total investments | $ | 490,509 | $ | 9,455 | (1,454 | ) | $ | 498,510 | |||||||||
West Virginia Trust Receivable | 8,569 | — | — | 8,569 | |||||||||||||
Total | $ | 499,078 | $ | 9,455 | $ | (1,454 | ) | $ | 507,079 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have redemption periods ranging from 30 to 90 days. |
December 31, 2015 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||
Short-term investments | 1 | $ | 35,150 | $ | — | $ | — | $ | 35,150 | |||||||||||
Fixed maturities: | ||||||||||||||||||||
U.S. governmental securities | 2 | 98 | 6 | (3 | ) | 101 | ||||||||||||||
Corporate debt securities | 2 | 11,922 | 8 | (546 | ) | 11,384 | ||||||||||||||
Other debt securities | 2 | 7,150 | 11 | (7 | ) | 7,154 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 19,170 | 25 | (556 | ) | 18,639 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 1 | 232,096 | 86 | (10,713 | ) | 221,469 | ||||||||||||||
Mutual funds - equity securities | 1 | 139,341 | 69 | (12,249 | ) | 127,161 | ||||||||||||||
Equity securities | 1 | 49,563 | 1,127 | (2,474 | ) | 48,216 | ||||||||||||||
Other invested assets | 2 | 1,681 | — | — | 1,681 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total managed investments | $ | 477,001 | $ | 1,307 | $ | (25,992 | ) | $ | 452,316 | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Assets acquired via acquisition | 4,185 | — | — | 4,185 | ||||||||||||||||
West Virginia Trust Receivable | 8,175 | — | — | 8,175 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 489,361 | $ | 1,307 | $ | (25,992 | ) | $ | 464,676 | |||||||||||
|
|
|
|
|
|
|
|
Less than | 1 year through | 6 years through | More than | |||||||||||||
1 year | 5 years | 10 years | 10 years | |||||||||||||
U.S. governmental securities | $ | 11 | $ | 12 | $ | 82 | $ | — | ||||||||
Corporate debt securities | — | 7,202 | 1,328 | — | ||||||||||||
Other debt securities | 160 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total fixed maturities | $ | 171 | $ | 7,214 | $ | 1,410 | $ | — | ||||||||
|
|
|
|
|
|
|
|
(in thousands):
Less than 1 year | 1 year through 5 years | 6 years through 10 years | More than 10 years | ||||||||||||
U.S. governmental securities | $ | — | $ | 56 | $ | 65 | $ | — | |||||||
Corporate debt securities | 369 | 4,547 | 746 | 14 | |||||||||||
Total fixed maturities | $ | 369 | $ | 4,603 | $ | 811 | $ | 14 |
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
June 30, 2016 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||
Corporate debt securities | $ | 4,385 | $ | 314 | $ | 2,116 | $ | 179 | $ | 6,501 | $ | 493 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 4,385 | 314 | 2,116 | 179 | 6,501 | 493 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 16,342 | 463 | 138,981 | 6,366 | 155,323 | 6,829 | ||||||||||||||||||
Mutual funds - equity securities | 11,037 | 899 | 55,539 | 7,186 | 66,576 | 8,085 | ||||||||||||||||||
Equity securities | 14,913 | 1,846 | 7,104 | 1,500 | 22,017 | 3,346 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 46,677 | $ | 3,522 | $ | 203,740 | $ | 15,231 | $ | 250,417 | $ | 18,753 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
December 31, 2015 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 33 | $ | 3 | $ | 33 | $ | 3 | ||||||||||||
Corporate debt securities | 7,247 | 411 | 1,513 | 135 | 8,760 | 546 | ||||||||||||||||||
Other debt securities | 2,883 | 7 | — | — | 2,883 | 7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 10,130 | 418 | 1,546 | 138 | 11,676 | 556 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 121,777 | 6,938 | 36,682 | 3,775 | 158,459 | 10,713 | ||||||||||||||||||
Mutual funds - equity securities | 58,467 | 10,994 | 5,465 | 1,255 | 63,932 | 12,249 | ||||||||||||||||||
Equity securities | 21,480 | 2,275 | 649 | 199 | 22,129 | 2,474 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 211,854 | $ | 20,625 | $ | 44,342 | $ | 5,367 | $ | 256,196 | $ | 25,992 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
March 31, 2017 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 102 | $ | 52 | $ | 102 | $ | 52 | |||||||||||
Corporate debt securities | 1,040 | 116 | 370 | 187 | 1,410 | 303 | |||||||||||||||||
Total fixed maturities | 1,040 | 116 | 472 | 239 | 1,512 | 355 | |||||||||||||||||
Mutual funds - debt securities | 9,529 | 126 | 20 | 7 | 9,549 | 133 | |||||||||||||||||
Mutual funds - equity securities | 15,641 | 127 | 1,287 | 33 | 16,928 | 160 | |||||||||||||||||
Other investment funds | 33,259 | 564 | — | — | 33,259 | 564 | |||||||||||||||||
Equity securities | 3,278 | 216 | 429 | 73 | 3,707 | 289 | |||||||||||||||||
Total | $ | 62,747 | $ | 1,149 | $ | 2,208 | $ | 352 | $ | 64,955 | $ | 1,501 | |||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 87 | $ | 44 | $ | 87 | $ | 44 | |||||||||||
Corporate debt securities | 556 | 6 | 871 | 196 | 1,427 | 202 | |||||||||||||||||
Total fixed maturities | 556 | 6 | 958 | 240 | 1,514 | 246 | |||||||||||||||||
Mutual funds - debt securities | 6,040 | 61 | 754 | 35 | 6,794 | 96 | |||||||||||||||||
Mutual funds - equity securities | 7,475 | 357 | 2,578 | 176 | 10,053 | 533 | |||||||||||||||||
Other investment funds | 37,357 | 387 | — | — | 37,357 | 387 | |||||||||||||||||
Equity securities | 1,292 | 89 | 413 | 103 | 1,705 | 192 | |||||||||||||||||
Total | $ | 52,720 | $ | 900 | $ | 4,703 | $ | 554 | $ | 57,423 | $ | 1,454 |
8. PERPETUAL CARE TRUSTS
6. | PERPETUAL CARE TRUSTS |
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Balance, beginning of period | $ | 307,804 | $ | 345,105 | ||||
Contributions | 5,146 | 5,766 | ||||||
Distributions | (7,818 | ) | (6,253 | ) | ||||
Interest and dividends | 8,127 | 8,144 | ||||||
Capital gain distributions | 85 | 35 | ||||||
Realized gains and losses | (470 | ) | 15,296 | |||||
Taxes | (757 | ) | (605 | ) | ||||
Fees | (622 | ) | (1,073 | ) | ||||
Unrealized change in fair value | 10,205 | (34,305 | ) | |||||
|
|
|
| |||||
Balance, end of period | $ | 321,700 | $ | 332,110 | ||||
|
|
|
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 333,780 | $ | 307,804 | |||
Contributions | 2,115 | 2,474 | |||||
Distributions | (3,031 | ) | (3,723 | ) | |||
Interest and dividends | 3,871 | 4,149 | |||||
Capital gain distributions | 216 | 81 | |||||
Realized gains and losses | 2,065 | 74 | |||||
Taxes | (165 | ) | (97 | ) | |||
Fees | (608 | ) | (287 | ) | |||
Unrealized change in fair value | 3,236 | (268 | ) | ||||
Balance, end of period | $ | 341,479 | $ | 310,207 |
$64.1 million and $0.3 million, respectively. Cash flows from perpetual care trust related contracts are presented as operating cash flows in our condensed consolidated statement of cash flows.
Gross | Gross | |||||||||||||||||||
Fair Value | Unrealized | Unrealized | Fair | |||||||||||||||||
June 30, 2016 | Hierarchy Level | Cost | Gains | Losses | Value | |||||||||||||||
Short-term investments | 1 | $ | 35,904 | $ | — | $ | — | $ | 35,904 | |||||||||||
Fixed maturities: | ||||||||||||||||||||
U.S. governmental securities | 2 | 187 | 17 | — | 204 | |||||||||||||||
Corporate debt securities | 2 | 14,116 | 262 | (570 | ) | 13,808 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 14,303 | 279 | (570 | ) | 14,012 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 1 | 161,372 | 1,322 | (2,312 | ) | 160,382 | ||||||||||||||
Mutual funds - equity securities | 1 | 36,838 | 2,888 | (552 | ) | 39,174 | ||||||||||||||
Other investment funds (1) | 69,073 | 431 | — | 69,504 | ||||||||||||||||
Equity securities | 1 | 1,476 | 614 | (7 | ) | 2,083 | ||||||||||||||
Other invested assets | 2 | 79 | 3 | (2 | ) | 80 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total managed investments | $ | 319,045 | $ | 5,537 | $ | (3,443 | ) | $ | 321,139 | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Assets acquired via acquisition | 561 | — | — | 561 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 319,606 | $ | 5,537 | $ | (3,443 | ) | $ | 321,700 | |||||||||||
|
|
|
|
|
|
|
|
March 31, 2017 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 9,671 | $ | — | $ | — | $ | 9,671 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 457 | 5 | (27 | ) | 435 | |||||||||||
Corporate debt securities | 2 | 6,785 | 214 | (190 | ) | 6,809 | |||||||||||
Total fixed maturities | 7,242 | 219 | (217 | ) | 7,244 | ||||||||||||
Mutual funds - debt securities | 1 | 145,648 | 1,962 | (658 | ) | 146,952 | |||||||||||
Mutual funds - equity securities | 1 | 17,800 | 3,296 | (21 | ) | 21,075 | |||||||||||
Other investment funds (1) | 127,371 | 3,463 | (720 | ) | 130,114 | ||||||||||||
Equity securities | 1 | 24,007 | 2,782 | (451 | ) | 26,338 | |||||||||||
Other invested assets | 2 | 85 | — | — | 85 | ||||||||||||
Total investments | $ | 331,824 | $ | 11,722 | $ | (2,067 | ) | $ | 341,479 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 30 to 90 days, and private credit funds, which have lockup periods ranging from five to ten years with three potential one year extensions at the discretion of the funds’ general partners. As of March 31, 2017, there were $56.2 million in unfunded commitments to the private credit funds, which are callable at any time. |
December 31, 2016 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 16,113 | $ | — | $ | — | $ | 16,113 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 483 | 14 | (23 | ) | 474 | |||||||||||
Corporate debt securities | 2 | 12,598 | 380 | (152 | ) | 12,826 | |||||||||||
Total fixed maturities | 13,081 | 394 | (175 | ) | 13,300 | ||||||||||||
Mutual funds - debt securities | 1 | 127,033 | 1,187 | (669 | ) | 127,551 | |||||||||||
Mutual funds - equity securities | 1 | 30,708 | 1,940 | (26 | ) | 32,622 | |||||||||||
Other investment funds (1) | 119,196 | 2,672 | (622 | ) | 121,246 | ||||||||||||
Equity securities | 1 | 20,978 | 2,150 | (432 | ) | 22,696 | |||||||||||
Other invested assets | 2 | 252 | — | — | 252 | ||||||||||||
Total investments | $ | 327,361 | $ | 8,343 | $ | (1,924 | ) | $ | 333,780 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 30 to 90 days, and private credit funds, which have lockup periods ranging from six to ten years with three potential one year extensions at the discretion of the funds’ general partners. As of |
Gross | Gross | |||||||||||||||||||
Fair Value | Unrealized | Unrealized | Fair | |||||||||||||||||
December 31, 2015 | Hierarchy Level | Cost | Gains | Losses | Value | |||||||||||||||
Short-term investments | 1 | $ | 36,618 | $ | — | $ | — | $ | 36,618 | |||||||||||
Fixed maturities: | ||||||||||||||||||||
U.S. governmental securities | 2 | 126 | 14 | — | 140 | |||||||||||||||
Corporate debt securities | 2 | 22,837 | 57 | (845 | ) | 22,049 | ||||||||||||||
Other debt securities | 2 | 36 | — | (1 | ) | 35 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 22,999 | 71 | (846 | ) | 22,224 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 1 | 184,866 | 35 | (7,180 | ) | 177,721 | ||||||||||||||
Mutual funds - equity securities | 1 | 68,079 | 1,054 | (1,713 | ) | 67,420 | ||||||||||||||
Equity securities | 1 | 2,319 | 636 | (7 | ) | 2,948 | ||||||||||||||
Other invested assets | 2 | 473 | 1 | (162 | ) | 312 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total managed investments | $ | 315,354 | $ | 1,797 | $ | (9,908 | ) | $ | 307,243 | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Assets acquired via acquisition | 561 | — | — | 561 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 315,915 | $ | 1,797 | $ | (9,908 | ) | $ | 307,804 | |||||||||||
|
|
|
|
|
|
|
|
Less than | 1 year through | 6 years through | More than | |||||||||||||
1 year | 5 years | 10 years | 10 years | |||||||||||||
U.S. governmental securities | $ | 111 | $ | — | $ | 39 | $ | 54 | ||||||||
Corporate debt securities | 123 | 11,915 | 1,770 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total fixed maturities | $ | 234 | $ | 11,915 | $ | 1,809 | $ | 54 | ||||||||
|
|
|
|
|
|
|
|
(in thousands):
Less than 1 year | 1 year through 5 years | 6 years through 10 years | More than 10 years | ||||||||||||
U.S. governmental securities | $ | — | $ | 226 | $ | 165 | $ | 44 | |||||||
Corporate debt securities | 633 | 5,319 | 783 | 74 | |||||||||||
Total fixed maturities | $ | 633 | $ | 5,545 | $ | 948 | $ | 118 |
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
June 30, 2016 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||
Corporate debt securities | $ | 6,115 | $ | 371 | $ | 2,096 | $ | 199 | $ | 8,211 | $ | 570 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 6,115 | 371 | 2,096 | 199 | 8,211 | 570 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 21,362 | 665 | 39,903 | 1,647 | 61,265 | 2,312 | ||||||||||||||||||
Mutual funds - equity securities | 1,496 | 115 | 4,181 | 437 | 5,677 | 552 | ||||||||||||||||||
Equity securities | 290 | 7 | — | — | 290 | 7 | ||||||||||||||||||
Other invested assets | — | — | 67 | 2 | 67 | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 29,263 | $ | 1,158 | $ | 46,247 | $ | 2,285 | $ | 75,510 | $ | 3,443 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
December 31, 2015 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 112 | $ | — | $ | 112 | $ | — | ||||||||||||
Corporate debt securities | 12,482 | 535 | 4,505 | 310 | 16,987 | 845 | ||||||||||||||||||
Other debt securities | 35 | 1 | — | — | 35 | 1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total fixed maturities | 12,517 | 536 | 4,617 | 310 | 17,134 | 846 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Mutual funds - debt securities | 81,215 | 4,263 | 50,774 | 2,917 | 131,989 | 7,180 | ||||||||||||||||||
Mutual funds - equity securities | 16,514 | 1,363 | 4,308 | 350 | 20,822 | 1,713 | ||||||||||||||||||
Equity securities | 488 | 6 | 1,137 | 1 | 1,625 | 7 | ||||||||||||||||||
Other invested assets | — | — | 315 | 162 | 315 | 162 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 110,734 | $ | 6,168 | $ | 61,151 | $ | 3,740 | $ | 171,885 | $ | 9,908 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
March 31, 2017 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 363 | $ | 27 | $ | 363 | $ | 27 | |||||||||||
Corporate debt securities | 960 | 67 | 2,388 | 123 | 3,348 | 190 | |||||||||||||||||
Total fixed maturities | 960 | 67 | 2,751 | 150 | 3,711 | 217 | |||||||||||||||||
Mutual funds - debt securities | 43,199 | 631 | 536 | 27 | 43,735 | 658 | |||||||||||||||||
Mutual funds - equity securities | 1,168 | 17 | 113 | 4 | 1,281 | 21 | |||||||||||||||||
Other investment funds | 39,059 | 720 | — | — | 39,059 | 720 | |||||||||||||||||
Equity securities | 6,880 | 438 | 156 | 13 | 7,036 | 451 | |||||||||||||||||
Total | $ | 91,266 | $ | 1,873 | $ | 3,556 | $ | 194 | $ | 94,822 | $ | 2,067 | |||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 283 | $ | 23 | $ | 283 | $ | 23 | |||||||||||
Corporate debt securities | 747 | 10 | 2,980 | 142 | 3,727 | 152 | |||||||||||||||||
Total fixed maturities | 747 | 10 | 3,263 | 165 | 4,010 | 175 | |||||||||||||||||
Mutual funds - debt securities | 24,026 | 620 | 1,908 | 49 | 25,934 | 669 | |||||||||||||||||
Mutual funds - equity securities | 3,836 | 16 | 452 | 10 | 4,288 | 26 | |||||||||||||||||
Other investment funds | 37,577 | 622 | — | — | 37,577 | 622 | |||||||||||||||||
Equity securities | 4,532 | 409 | 145 | 23 | 4,677 | 432 | |||||||||||||||||
Total | $ | 70,718 | $ | 1,677 | $ | 5,768 | $ | 247 | $ | 76,486 | $ | 1,924 |
9. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The Partnership has recorded goodwill of approximately $70.6 million as of June 30, 2016 and $69.9 million as of December 31, 2015. This amount represents the excess of the purchase price over the fair value of identifiable net assets acquired.
A rollforward of goodwill by reporting unit is as follows (in thousands):
Cemeteries | Funeral Homes | Total | ||||||||||
Balance at December 31, 2015 | $ | 25,320 | $ | 44,531 | $ | 69,851 | ||||||
Goodwill from acquisitions during 2015 | — | (337 | ) | (337 | ) | |||||||
Goodwill from acquisitions during 2016 | — | 1,058 | 1,058 | |||||||||
|
|
|
|
|
| |||||||
Balance at June 30, 2016 | $ | 25,320 | $ | 45,252 | $ | 70,572 | ||||||
|
|
|
|
|
|
The Partnership adjusted preliminary amounts relating to 2015 acquisitions during the second quarter of 2016 as the Company obtained additional information. These updates resulted in a decrease in goodwill acquired from 2015 acquisitions.
The Partnership tests goodwill for impairment at each year end by comparing its reporting units’ estimated fair values to carrying values. There were no goodwill impairments recognized by the Partnership during the periods presented. Management will continue to evaluate goodwill at least annually or when impairment indicators arise.
Intangible Assets
The Partnership has intangible assets with finite lives recognized in connection with acquisitions and long-term lease, management and operating agreements. The Partnership amortizes these intangible assets over their estimated useful lives.
The following table reflects the components of intangible assets as of June 30, 2016 and December 31, 2015 (in thousands):
June 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Gross Carrying | Accumulated | Net Intangible | Gross Carrying | Accumulated | Net Intangible | |||||||||||||||||||
Amount | Amortization | Asset | Amount | Amortization | Asset | |||||||||||||||||||
Lease and management agreements | $ | 59,758 | $ | (2,075 | ) | $ | 57,683 | $ | 59,758 | $ | (1,577 | ) | $ | 58,181 | ||||||||||
Underlying contract value | 6,239 | (1,092 | ) | 5,147 | 6,239 | (1,014 | ) | 5,225 | ||||||||||||||||
Non-compete agreements | 5,486 | (3,452 | ) | 2,034 | 5,656 | (3,112 | ) | 2,544 | ||||||||||||||||
Other intangible assets | 1,439 | (205 | ) | 1,234 | 1,439 | (180 | ) | 1,259 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total intangible assets | $ | 72,922 | $ | (6,824 | ) | $ | 66,098 | $ | 73,092 | $ | (5,883 | ) | $ | 67,209 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for intangible assets was $0.6 million for both the three months ended June 30, 2016 and 2015 and $1.1 million for both the six months ended June 30, 2016 and 2015. The following is estimated amortization expense related to intangible assets with finite lives for the periods noted below (in thousands):
2016 (remainder) | $ | 1,069 | ||
2017 | $ | 1,956 | ||
2018 | $ | 1,708 | ||
2019 | $ | 1,440 | ||
2020 | $ | 1,266 |
10. LONG-TERM DEBT
7. | LONG-TERM DEBT |
June 30, 2016 | December 31, 2015 | |||||||
Credit Facility: | ||||||||
Working Capital Draws | $ | 68,000 | $ | 105,000 | ||||
Acquisition Draws | 44,500 | 44,500 | ||||||
7.875% Senior Notes, due June 2021 | 172,400 | 172,186 | ||||||
Notes payable - acquisition debt | 596 | 687 | ||||||
Notes payable - acquisition non-competes | 1,279 | 1,629 | ||||||
Insurance and vehicle financing | 3,464 | 2,336 | ||||||
Less deferred financing costs, net of accumulated amortization | (7,012 | ) | (7,499 | ) | ||||
|
|
|
| |||||
Total debt | 283,227 | 318,839 | ||||||
Less current maturities | (5,373 | ) | (2,440 | ) | ||||
|
|
|
| |||||
Total long-term debt | $ | 277,854 | $ | 316,399 | ||||
|
|
|
|
March 31, 2017 | December 31, 2016 | ||||||
Credit facility | $ | 140,625 | $ | 137,125 | |||
7.875% Senior Notes, due June 2021 | 172,738 | 172,623 | |||||
Notes payable - acquisition debt | 453 | 502 | |||||
Notes payable - acquisition non-competes | 721 | 928 | |||||
Insurance and vehicle financing | 1,657 | 1,807 | |||||
Less deferred financing costs, net of accumulated amortization | (10,959 | ) | (10,859 | ) | |||
Total debt | 305,235 | 302,126 | |||||
Less current maturities | (1,617 | ) | (1,775 | ) | |||
Total long-term debt | $ | 303,618 | $ | 300,351 |
The
Each individual acquisition drawAgreement is subject to equal quarterly amortization of the principal amount, with annual principal payments comprised of ten percent of the related advance amount, commencing on the second anniversary of such advance, with the remaining principal due on December 19, 2019, subject to certain mandatory prepayment requirements. Up to $10.0 million of the Credit Facility may be in the form of standby letters of credit, of which there were $6.5 million outstanding at June 30, 2016 and none outstanding at December 31, 2015.
Borrowings under the Credit FacilityBase Rate Loans or Eurodollar Loans. The Loans comprising each Base Rate Borrowing (including each Swingline Loan) bear interest at the Partnership’s election,Base Rate plus the Applicable Rate, and the Loans comprising each Eurodollar Borrowing bear interest at either an adjusted LIBOR ratethe Eurodollar Rate plus an applicable margin between 2.25% and 4.00% per annum or the base rate (whichApplicable Rate.
On June 30, 2016,March 31, 2017, the Partnership’s Consolidated Leverage Ratio and the Consolidated Debt Service Coverage Ratio were 3.114.09 and 4.37,3.51, respectively.
◦ | the Partnership is entitled to add back: |
▪ | non-cash compensation or other expense attributable to equity compensation awards and certain other non-cash expenses; |
▪ | unrealized losses (less unrealized gains) and non-cash expenses arising from or attributable to the early termination of any swap agreement; |
▪ | other non-recurring cash expenses, losses, costs and charges subject to a limit of $14.3 million for the period ended June 30, 2017, $12.0 million for the period ended September 30, 2017 and periods ending December 31, 2017, March 31, 2018 and June 30, 2018, $4.0 million for the period ending September 30, 2018 and $2.0 million for periods thereafter; |
▪ | non-recurring cash expenses, costs and charges relating to the previously announced Securities and Exchange Commission investigation and related actions, ongoing class action litigation and any other non-ordinary course of business legal matters in an aggregate amount for all periods not to exceed $5.0 million; and |
▪ | certain cash expenses, costs and charges with respect to liability or casualty events to the extent insurance or indemnity recovery from a third party is actually received or is reasonably expected to be received within 90 days following the end of the applicable period; and |
◦ | require the Partnership to subtract the following: |
▪ | non-cash items increasing Consolidated Net Income for the applicable period; |
▪ | federal, state, local and foreign income tax credits or refunds during such period; |
▪ | certain cash payments made during the applicable period in respect of any noncash accrual, reserve or other non-cash charge that is accounted for in a prior period which was added to Consolidated Net Income to determine Consolidated EBITDA for such prior period and which does not otherwise reduce Consolidated Net Income for the current period; and |
▪ | the amount of any insurance or indemnity recovery not so received within the 90 day period (or such longer period) set forth above and any recovery payments which are made by third parties within the 90 day period (or such longer period) set forth above, in each case to the extent added back to consolidated net income in the prior period; |
◦ | establish a minimum Consolidated Fixed Charge Coverage Ratio (as described below), as of the last day of any fiscal quarter, commencing on September 30, 2017, determined for the period of four (4) consecutive fiscal quarters ending on such date, of 1.20:1.00 for the four fiscal quarter period ending on such measurement date; |
◦ | define “Consolidated Fixed Charge Ratio” as the ratio of (i) Consolidated EBITDA for the four fiscal quarter period ending on the applicable measurement date, minus (x) the aggregate of all expenditures by the Partnership and its Subsidiaries for a specified period which are included in “Maintenance Capital Expenditures” or “Growth Capital Expenditures” reflected in the consolidated statement of cash flows of the Partnership, but excluding any such expenditures to the extent financed from the proceeds of Indebtedness (other than Revolving Loans) or insurance proceeds or other similar recoveries paid on account of the loss of or damage to the assets being replaced or restored or other assets and that are made during such period, (y) any federal, state, local and foreign taxes paid by the Partnership and its Subsidiaries during such period (net of any tax credits or refunds during such period), and (z) all Restricted Payments (which includes distributions) paid in cash by the Partnership during such period, to (ii) Consolidated Fixed Charges for the four fiscal quarter period ending on such measurement date; and |
◦ | define “Consolidated Fixed Charges” as the sum of (i) Consolidated Interest Expense paid or payable in cash plus (ii) the aggregate amount of all scheduled principal payments with respect to all Consolidated Funded Indebtedness, but excluding any such payments to the extent refinanced through the incurrence of additional Indebtedness permitted under the Amended Credit Agreement; |
2017, but not later than January 31, 2018.
Year | Percentage | |||
2016 | 105.906 | % | ||
2017 | 103.938 | % | ||
2018 | 101.969 | % | ||
2019 and thereafter | 100.000 | % |
Year | Percentage |
2017 | 103.938% |
2018 | 101.969% |
2019 and thereafter | 100.000% |
11. INCOME TAXES
The Partnership is not subject to U.S. federal and most state income taxes. The partners of the Partnership are liable for income tax in regard to their distributive share of the Partnership’s taxable income. Such taxable income may vary substantially from net income reported in the accompanying unaudited consolidated financial statements. Certain corporate subsidiaries are subject to federal and state income tax. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Partnership records a valuation allowance against its deferred tax assets if it deems that it is more likely than not that some portion or all of the recorded deferred tax assets will not be realizable in future periods.
As of June 30, 2016, the Partnership had available approximately less than $0.1 million of alternative minimum tax credit carryforwards, which are available indefinitely, and $264.5 million of federal net operating loss carryforwards, which will begin to expire in 2017 and $321.8 million in state net operating loss carryforwards, a portion of which expires annually.
In assessing the realizability of deferred tax assets, management considers whether it’s more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. As of June 30, 2016, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Partnership will realize a partial benefit of these deductible differences. The amount of deferred tax assets considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.
In accordance with applicable accounting standards, the Partnership recognizes only the impact of income tax positions that, based upon their merits, are more likely than not to be sustained upon audit by a taxing authority. To evaluate its current tax positions in order to identify any material uncertain tax positions, the Partnership developed a policy of identifying and evaluating uncertain tax positions that considers support for each tax position, industry standards, tax return disclosures and schedules and the significance of each position. It is the Partnership’s policy to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. At June 30, 2016 and December 31, 2015, the Partnership had no material uncertain tax positions.
The Partnership is not currently under examination by any federal or state jurisdictions. The federal statute of limitations and certain state statutes of limitations are open from 2012 forward.
12. DEFERRED REVENUES
8. | DEFERRED REVENUES |
At June 30, 2016
June 30, 2016 | December 31, 2015 | |||||||
Deferred contract revenues | $ | 785,072 | $ | 759,812 | ||||
Deferred merchandise trust revenue | 90,045 | 80,294 | ||||||
Deferred merchandise trust unrealized gains (losses) | (6,923 | ) | (24,685 | ) | ||||
|
|
|
| |||||
Deferred revenues | $ | 868,194 | $ | 815,421 | ||||
|
|
|
| |||||
Deferred selling and obtaining costs | $ | 118,410 | $ | 111,542 |
13. LONG-TERM INCENTIVE PLANS
2014 Long-Term Incentive Plan
During
March 31, 2017 | December 31, 2016 | ||||||
Deferred contract revenues | $ | 788,477 | $ | 782,120 | |||
Deferred merchandise trust revenue | 82,235 | 76,512 | |||||
Deferred merchandise trust unrealized gains | 20,644 | 8,001 | |||||
Deferred revenues | $ | 891,356 | $ | 866,633 | |||
Deferred selling and obtaining costs | $ | 120,113 | $ | 116,890 |
9. | COMMITMENTS AND CONTINGENCIES |
Phantom Unit Awards
Phantom units represent rights to receive a common unit or an amount of cash, or a combination of either, based upon the value of a common unit. Phantom units become payable, in cash or common units, at the Partnership’s election, upon the separation of directors and executives from service or upon the occurrence of certain other events specified in the underlying agreements. Phantom units are subject to terms and conditions determined by the Compensation Committee. In tandem with phantom unit grants, the compensation committee may grant distribution equivalent rights (“DERs”), which are the right to receive an amount in cash or common units equal to the cash distributions made by the Partnership with respect to common unit during the period that the underlying phantom unit is outstanding. All phantom units outstanding under the 2014 LTIP at June 30, 2016 contain tandem DERs.
The following table sets forth the 2014 LTIP phantom unit award activity for the three and six months ended June 30, 2016 and 2015, respectively:
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Outstanding, beginning of period | 105,167 | 4,241 | 102,661 | 2,189 | ||||||||||||
Granted (1) | 4,923 | 2,040 | 7,429 | 4,092 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Outstanding, end of period (2) | 110,090 | 6,281 | 110,090 | 6,281 | ||||||||||||
|
|
|
|
|
|
|
|
2004 Long-Term Incentive Plan
The Compensation Committee administers the Partnership’s 2004 Long-Term Incentive Plan (“2004 LTIP”). The 2004 LTIP permitted the grant of awards, which may be in the form of phantom units, restricted units, or unit appreciation rights (“UAR”). At June 30, 2016, the estimated number of common units to be issued upon vesting and exercise of outstanding rights under this plan was 194,820, based upon the closing price of our common units at June 30, 2016. A cumulative number of 626,188 common units have been issued under the 2004 LTIP. There were no awards available for grant under the 2004 LTIP at June 30, 2016 because the plan expired in 2014.
Phantom Unit Awards
Phantom units were credited to participants’ mandatory deferred compensation accountshealth in connection with DERs accruinga particular quarter’s distribution announcement, (b) the connection between operations and distributions and (c) the Partnership’s use of cash from equity offerings and its credit facility. Lead plaintiffs have been appointed in this case, and filed a Consolidated Amended Class Action Complaint on phantom units received underApril 24, 2017. Defendants filed a motion to dismiss that Consolidated Amended Complaint on June 8, 2017; the 2004 LTIP. These DERs continuemotion is pending. Plaintiffs seek damages from the Partnership and certain of its officers and directors on behalf of the class of Partnership unitholders, as well as costs and attorneys’ fees.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Outstanding, beginning of period | 188,948 | 172,793 | 184,457 | 169,122 | ||||||||||||
Granted (1) | 5,137 | 3,556 | 9,628 | 7,227 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Outstanding, end of period (2) | 194,085 | 176,349 | 194,085 | 176,349 | ||||||||||||
|
|
|
|
|
|
|
|
Total compensation expense for phantom units credited under both the 2004 and 2014 plans was approximately $0.2 million for the three months ended June 30, 2016 and 2015, and $0.4 million and $0.5 million for the six months ended June 30, 2016 and 2015, respectively.
Unit Appreciation Rights Awards
UAR awards represent a right to receive an amount equalelecting members to the closing priceboard of StoneMor GP, and other compliance and governance changes. These cases have been consolidated and stayed, by the agreement of the Partnership’s common units onparties, pending the date preceding the exercise date less the exercise priceresolution of the UARs,motion to dismiss filed in the extentAnderson case.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Outstanding, beginning of period | 66,793 | 112,346 | 66,793 | 123,000 | ||||||||||||
Exercised | — | (19,595 | ) | — | (30,249 | ) | ||||||||||
Forfeited | — | (5,730 | ) | — | (5,730 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Outstanding, end of period (1) | 66,793 | 87,021 | 66,793 | 87,021 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Exercisable, end of period | 44,968 | 41,383 | 44,968 | 41,383 |
At June 30, 2016, the Partnership had approximately $0.1 million of unrecognized compensation expense related to unvested UAR awards that will be recognized through the year ended December 31, 2018. The Partnership recognized total compensation expense for UAR awards of less than $0.1 million for the three and six months ended June 30, 2016 and 2015. The Partnership issued 3,416 common units for the three months ended June 30, 2015 and 4,564 common units for the six months ended June 30, 2015 due to exercised UAR awards. There were no UAR exercises during the three and six months ended June 30, 2016.
14. COMMITMENTS AND CONTINGENCIES
Legal
second, more limited, subpoena.
Lease Years 1-5 (May 28, 2014 - May 31, 2019) | None | |
Lease Years 6-20 (June 1, 2019 - May 31, 2034) | $1,000,000 per Lease Year | |
Lease Years 21-25 (June 1, 2034 - May 31, 2039) | $1,200,000 per Lease Year | |
Lease Years 26-35 (June 1, 2039 - May 31, 2049) | $1,500,000 per Lease Year | |
Lease Years 36-60 (June 1, 2049 - May 31, 2074) | None |
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
2024.
10. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
These funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy.
16. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
11. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
accounting:
June 30, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 6,382 | $ | 3,054 | $ | — | $ | 9,436 | ||||||||||||
Other current assets | — | 5,276 | 82,814 | 15,001 | — | 103,091 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total current assets | — | 5,276 | 89,196 | 18,055 | — | 112,527 | ||||||||||||||||||
Long-term accounts receivable | — | 2,821 | 81,134 | 11,166 | — | 95,121 | ||||||||||||||||||
Cemetery property and equipment | — | 1,020 | 416,052 | 31,577 | — | 448,649 | ||||||||||||||||||
Merchandise trusts | — | — | — | 494,596 | — | 494,596 | ||||||||||||||||||
Perpetual care trusts | — | — | — | 321,700 | — | 321,700 | ||||||||||||||||||
Deferred selling and obtaining costs | — | 5,967 | 96,730 | 15,713 | — | 118,410 | ||||||||||||||||||
Goodwill and intangible assets | — | — | 78,331 | 58,339 | — | 136,670 | ||||||||||||||||||
Other assets | — | — | 16,151 | 2,371 | — | 18,522 | ||||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 263,879 | 175,341 | 465,794 | — | (905,014 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total assets | $ | 263,879 | $ | 190,425 | $ | 1,243,388 | $ | 953,517 | $ | (905,014 | ) | $ | 1,746,195 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||
Current liabilities | $ | — | $ | 36 | $ | 39,636 | $ | 834 | $ | — | $ | 40,506 | ||||||||||||
Long-term debt, net of deferred financing costs | 67,975 | 104,425 | 105,454 | — | — | 277,854 | ||||||||||||||||||
Deferred revenues | — | 41,456 | 740,550 | 86,188 | — | 868,194 | ||||||||||||||||||
Perpetual care trust corpus | — | — | — | 321,700 | — | 321,700 | ||||||||||||||||||
Other long-term liabilities | — | — | 32,158 | 9,879 | — | 42,037 | ||||||||||||||||||
Due to affiliates | — | — | 172,400 | 477,824 | (650,224 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total liabilities | 67,975 | 145,917 | 1,090,198 | 896,425 | (650,224 | ) | 1,550,291 | |||||||||||||||||
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|
| |||||||||||||
Partners’ capital | 195,904 | 44,508 | 153,190 | 57,092 | (254,790 | ) | 195,904 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total liabilities and partners’ capital | $ | 263,879 | $ | 190,425 | $ | 1,243,388 | $ | 953,517 | $ | (905,014 | ) | $ | 1,746,195 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
December 31, 2015 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 11,869 | $ | 3,284 | $ | — | $ | 15,153 | ||||||||||||
Other current assets | — | 4,858 | 78,464 | 12,701 | — | 96,023 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total current assets | — | 4,858 | 90,333 | 15,985 | — | 111,176 | ||||||||||||||||||
Long-term accounts receivable | — | 2,888 | 80,969 | 11,310 | — | 95,167 | ||||||||||||||||||
Cemetery property and equipment | — | 1,084 | 418,400 | 31,100 | — | 450,584 | ||||||||||||||||||
Merchandise trusts | — | — | — | 464,676 | — | 464,676 | ||||||||||||||||||
Perpetual care trusts | — | — | — | 307,804 | — | 307,804 | ||||||||||||||||||
Deferred selling and obtaining costs | — | 5,967 | 91,275 | 14,300 | — | 111,542 | ||||||||||||||||||
Goodwill and intangible assets | — | — | 78,223 | 58,837 | — | 137,060 | ||||||||||||||||||
Other assets | — | — | 14,153 | 2,195 | — | 16,348 | ||||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 249,436 | 165,639 | 436,811 | — | (851,886 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total assets | $ | 249,436 | $ | 180,436 | $ | 1,210,164 | $ | 906,207 | $ | (851,886 | ) | $ | 1,694,357 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||
Current liabilities | $ | — | $ | 12 | $ | 33,083 | $ | 837 | $ | — | $ | 33,932 | ||||||||||||
Long-term debt, net of deferred financing costs | 67,890 | 104,295 | 144,214 | — | — | 316,399 | ||||||||||||||||||
Deferred revenues | — | 40,467 | 697,516 | 77,438 | — | 815,421 | ||||||||||||||||||
Perpetual care trust corpus | — | — | — | 307,804 | — | 307,804 | ||||||||||||||||||
Other long-term liabilities | — | — | 29,761 | 9,494 | — | 39,255 | ||||||||||||||||||
Due to affiliates | — | — | 172,185 | 454,605 | (626,790 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total liabilities | 67,890 | 144,774 | 1,076,759 | 850,178 | (626,790 | ) | 1,512,811 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Partners’ capital | 181,546 | 35,662 | 133,405 | 56,029 | (225,096 | ) | 181,546 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total liabilities and partners’ capital | $ | 249,436 | $ | 180,436 | $ | 1,210,164 | $ | 906,207 | $ | (851,886 | ) | $ | 1,694,357 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
March 31, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 10,531 | $ | 3,192 | $ | — | $ | 13,723 | |||||||||||
Other current assets | — | 3,325 | 83,711 | 17,205 | — | 104,241 | |||||||||||||||||
Total current assets | — | 3,325 | 94,242 | 20,397 | — | 117,964 | |||||||||||||||||
Long-term accounts receivable | — | 1,886 | 83,847 | 13,146 | — | 98,879 | |||||||||||||||||
Cemetery property and equipment | — | 925 | 417,124 | 34,147 | — | 452,196 | |||||||||||||||||
Merchandise trusts | — | — | — | 523,858 | — | 523,858 | |||||||||||||||||
Perpetual care trusts | — | — | — | 341,479 | — | 341,479 | |||||||||||||||||
Deferred selling and obtaining costs | — | 5,843 | 93,754 | 20,516 | — | 120,113 | |||||||||||||||||
Goodwill and intangible assets | — | — | 72,665 | 62,623 | — | 135,288 | |||||||||||||||||
Other assets | — | — | 18,665 | 2,828 | — | 21,493 | |||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 238,255 | 159,173 | 577,374 | — | (974,802 | ) | — | ||||||||||||||||
Total assets | $ | 238,255 | $ | 171,152 | $ | 1,357,671 | $ | 1,018,994 | $ | (974,802 | ) | $ | 1,811,270 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities | $ | — | $ | 474 | $ | 45,455 | $ | 166 | $ | — | $ | 46,095 | |||||||||||
Long-term debt, net of deferred financing costs | 68,108 | 104,630 | 130,880 | — | — | 303,618 | |||||||||||||||||
Deferred revenues | — | 30,182 | 764,839 | 96,335 | — | 891,356 | |||||||||||||||||
Perpetual care trust corpus | — | — | — | 341,479 | — | 341,479 | |||||||||||||||||
Other long-term liabilities | — | — | 47,191 | 11,384 | — | 58,575 | |||||||||||||||||
Due to affiliates | — | — | 172,738 | 598,250 | (770,988 | ) | — | ||||||||||||||||
Total liabilities | 68,108 | 135,286 | 1,161,103 | 1,047,614 | (770,988 | ) | 1,641,123 | ||||||||||||||||
Partners' capital | 170,147 | 35,866 | 196,568 | (28,620 | ) | (203,814 | ) | 170,147 | |||||||||||||||
Total liabilities and partners' capital | $ | 238,255 | $ | 171,152 | $ | 1,357,671 | $ | 1,018,994 | $ | (974,802 | ) | $ | 1,811,270 |
December 31, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 9,145 | $ | 3,425 | $ | — | $ | 12,570 | |||||||||||
Other current assets | — | 4,567 | 83,765 | 17,919 | — | 106,251 | |||||||||||||||||
Total current assets | — | 4,567 | 92,910 | 21,344 | — | 118,821 | |||||||||||||||||
Long-term accounts receivable | — | 1,725 | 83,993 | 13,168 | — | 98,886 | |||||||||||||||||
Cemetery property and equipment | — | 930 | 420,077 | 34,589 | — | 455,596 | |||||||||||||||||
Merchandise trusts | — | — | — | 507,079 | — | 507,079 | |||||||||||||||||
Perpetual care trusts | — | — | — | 333,780 | — | 333,780 | |||||||||||||||||
Deferred selling and obtaining costs | — | 5,668 | 91,252 | 19,970 | — | 116,890 | |||||||||||||||||
Goodwill and intangible assets | — | — | 72,963 | 62,911 | — | 135,874 | |||||||||||||||||
Other assets | — | — | 17,244 | 2,843 | — | 20,087 | |||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 258,417 | 182,060 | 557,455 | — | (997,932 | ) | — | ||||||||||||||||
Total assets | $ | 258,417 | $ | 194,950 | $ | 1,335,894 | $ | 995,684 | $ | (997,932 | ) | $ | 1,787,013 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities | $ | — | $ | 320 | $ | 38,336 | $ | 237 | $ | — | $ | 38,893 | |||||||||||
Long-term debt, net of deferred financing costs | 68,063 | 104,560 | 127,728 | — | — | 300,351 | |||||||||||||||||
Deferred revenues | — | 30,321 | 738,184 | 98,128 | — | 866,633 | |||||||||||||||||
Perpetual care trust corpus | — | — | — | 333,780 | — | 333,780 | |||||||||||||||||
Other long-term liabilities | — | — | 45,802 | 11,200 | — | 57,002 | |||||||||||||||||
Due to affiliates | — | — | 172,623 | 581,427 | (754,050 | ) | — | ||||||||||||||||
Total liabilities | 68,063 | 135,201 | 1,122,673 | 1,024,772 | (754,050 | ) | 1,596,659 | ||||||||||||||||
Partners’ capital | 190,354 | 59,749 | 213,221 | (29,088 | ) | (243,882 | ) | 190,354 | |||||||||||||||
Total liabilities and partners’ capital | $ | 258,417 | $ | 194,950 | $ | 1,335,894 | $ | 995,684 | $ | (997,932 | ) | $ | 1,787,013 |
Three months ended June 30, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Total revenues | $ | — | $ | 1,653 | $ | 66,407 | $ | 12,590 | $ | (2,368 | ) | $ | 78,282 | |||||||||||
Total cost and expenses | — | (2,575 | ) | (67,877 | ) | (12,451 | ) | 2,368 | (80,535 | ) | ||||||||||||||
Other income (loss) | — | (191 | ) | — | — | (191 | ) | |||||||||||||||||
Net loss from equity investment in subsidiaries | (7,292 | ) | (8,816 | ) | — | — | 16,108 | — | ||||||||||||||||
Interest expense | (1,359 | ) | (2,087 | ) | (2,066 | ) | (195 | ) | — | (5,707 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) before income taxes | (8,651 | ) | (11,825 | ) | (3,727 | ) | (56 | ) | 16,108 | (8,151 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax benefit (expense) | — | — | (500 | ) | — | — | (500 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | (8,651 | ) | $ | (11,825 | ) | $ | (4,227 | ) | $ | (56 | ) | $ | 16,108 | $ | (8,651 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Three months ended June 30, 2015 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Total revenues | $ | — | $ | 1,505 | $ | 73,659 | $ | 12,822 | $ | (3,473 | ) | $ | 84,513 | |||||||||||
Total cost and expenses | — | (2,865 | ) | (70,398 | ) | (13,305 | ) | 3,473 | (83,095 | ) | ||||||||||||||
Net loss from equity investment in subsidiaries | (3,285 | ) | (4,637 | ) | — | — | 7,922 | — | ||||||||||||||||
Interest expense | (1,359 | ) | (2,087 | ) | (2,144 | ) | (180 | ) | — | (5,770 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) before income taxes | (4,644 | ) | (8,084 | ) | 1,117 | (663 | ) | 7,922 | (4,352 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax benefit (expense) | — | — | (292 | ) | — | — | (292 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | (4,644 | ) | $ | (8,084 | ) | $ | 825 | $ | (663 | ) | $ | 7,922 | $ | (4,644 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Six months ended June 30, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Total revenues | $ | — | $ | 2,886 | $ | 130,701 | $ | 26,356 | $ | (4,732 | ) | $ | 155,211 | |||||||||||
Total cost and expenses | — | (5,092 | ) | (133,648 | ) | (23,999 | ) | 4,732 | (158,007 | ) | ||||||||||||||
Other income (loss) | — | — | (1,073 | ) | — | — | (1,073 | ) | ||||||||||||||||
Net loss from equity investment in subsidiaries | (13,409 | ) | (16,455 | ) | — | — | 29,864 | — | ||||||||||||||||
Interest expense | (2,717 | ) | (4,174 | ) | (4,220 | ) | (386 | ) | — | (11,497 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) before income taxes | (16,126 | ) | (22,835 | ) | (8,240 | ) | 1,971 | 29,864 | (15,366 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax benefit (expense) | — | — | (760 | ) | — | — | (760 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | (16,126 | ) | $ | (22,835 | ) | $ | (9,000 | ) | $ | 1,971 | $ | 29,864 | $ | (16,126 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Six months ended June 30, 2015 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Total revenues | $ | — | $ | 2,785 | $ | 134,945 | $ | 23,670 | $ | (6,394 | ) | $ | 155,006 | |||||||||||
Total cost and expenses | — | (5,276 | ) | (133,114 | ) | (24,617 | ) | 6,394 | (156,613 | ) | ||||||||||||||
Net loss from equity investment in subsidiaries | (10,437 | ) | (11,385 | ) | — | — | 21,822 | — | ||||||||||||||||
Interest expense | (2,717 | ) | (4,174 | ) | (3,985 | ) | (357 | ) | — | (11,233 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) before income taxes | (13,154 | ) | (18,050 | ) | (2,154 | ) | (1,304 | ) | 21,822 | (12,840 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax benefit (expense) | — | — | (314 | ) | — | — | (314 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | (13,154 | ) | $ | (18,050 | ) | $ | (2,468 | ) | $ | (1,304 | ) | $ | 21,822 | $ | (13,154 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
Three Months Ended March 31, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Total revenues | $ | — | $ | 2,045 | $ | 68,642 | $ | 14,942 | $ | (2,683 | ) | $ | 82,946 | ||||||||||
Total costs and expenses | — | (3,404 | ) | (69,482 | ) | (13,792 | ) | 2,683 | (83,995 | ) | |||||||||||||
Net loss from equity investment in subsidiaries | (7,203 | ) | (8,214 | ) | — | — | 15,417 | — | |||||||||||||||
Interest expense | (1,358 | ) | (2,087 | ) | (3,036 | ) | (225 | ) | — | (6,706 | ) | ||||||||||||
Net income (loss) before income taxes | (8,561 | ) | (11,660 | ) | (3,876 | ) | 925 | 15,417 | (7,755 | ) | |||||||||||||
Income tax benefit (expense) | — | — | (806 | ) | — | — | (806 | ) | |||||||||||||||
Net income (loss) | $ | (8,561 | ) | $ | (11,660 | ) | $ | (4,682 | ) | $ | 925 | $ | 15,417 | $ | (8,561 | ) | |||||||
Three Months Ended March 31, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Total revenues | $ | — | $ | 1,269 | $ | 64,346 | $ | 14,921 | $ | (2,364 | ) | $ | 78,172 | ||||||||||
Total costs and expenses | — | (2,526 | ) | (65,023 | ) | (12,448 | ) | 2,364 | (77,633 | ) | |||||||||||||
Other income (loss) | — | — | (882 | ) | — | — | (882 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (5,035 | ) | (6,252 | ) | — | — | 11,287 | — | |||||||||||||||
Interest expense | (1,358 | ) | (2,087 | ) | (2,154 | ) | (191 | ) | — | (5,790 | ) | ||||||||||||
Net income (loss) before income taxes | (6,393 | ) | (9,596 | ) | (3,713 | ) | 2,282 | 11,287 | (6,133 | ) | |||||||||||||
Income tax benefit (expense) | — | — | (260 | ) | — | — | (260 | ) | |||||||||||||||
Net income (loss) | $ | (6,393 | ) | $ | (9,596 | ) | $ | (3,973 | ) | $ | 2,282 | $ | 11,287 | $ | (6,393 | ) |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the three months ended March 31, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $1.0 million increase in non-guarantor revenues and a $0.8 million increase in non-guarantor costs and expenses and corresponding reductions to guarantor revenues and costs and expenses. |
Six months ended June 30, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 2,624 | $ | 61 | $ | 13,804 | $ | 1,485 | $ | (9,515 | ) | $ | 8,459 | |||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures | — | (61 | ) | (5,380 | ) | (1,715 | ) | — | (7,156 | ) | ||||||||||||||
Payments to affiliates | (32,458 | ) | — | — | — | 32,458 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net cash used in investing activities | (32,458 | ) | (61 | ) | (5,380 | ) | (1,715 | ) | 32,458 | (7,156 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Cash Flows From Financing Activities: | ||||||||||||||||||||||||
Cash distributions | (44,703 | ) | — | — | — | — | (44,703 | ) | ||||||||||||||||
Payments from affiliates | — | — | 22,943 | — | (22,943 | ) | — | |||||||||||||||||
Net borrowings and repayments of debt | — | — | (36,503 | ) | — | — | (36,503 | ) | ||||||||||||||||
Proceeds from issuance of common units | 74,537 | — | — | — | — | 74,537 | ||||||||||||||||||
Other financing activities | — | — | (351 | ) | — | — | (351 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net cash provided by (used in) financing activities | 29,834 | — | (13,911 | ) | — | (22,943 | ) | (7,020 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | (5,487 | ) | (230 | ) | — | (5,717 | ) | |||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 11,869 | 3,284 | — | 15,153 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 6,382 | $ | 3,054 | $ | — | $ | 9,436 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Six months ended June 30, 2015 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 36,297 | $ | 151 | $ | 9,324 | $ | 1,391 | $ | (43,188 | ) | $ | 3,975 | |||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures | — | (151 | ) | (5,472 | ) | (1,627 | ) | — | (7,250 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net cash used in investing activities | — | (151 | ) | (5,472 | ) | (1,627 | ) | — | (7,250 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Cash Flows From Financing Activities: | ||||||||||||||||||||||||
Cash distributions | (36,297 | ) | — | — | — | — | (36,297 | ) | ||||||||||||||||
Payments to affiliates | — | — | (43,188 | ) | — | 43,188 | — | |||||||||||||||||
Net borrowings and repayments of debt | — | — | 42,608 | — | — | 42,608 | ||||||||||||||||||
Other financing activities | — | — | (34 | ) | — | — | (34 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net cash provided by (used in) financing activities | (36,297 | ) | — | (614 | ) | — | 43,188 | 6,277 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | 3,238 | (236 | ) | — | 3,002 | |||||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 7,059 | 3,342 | — | 10,401 | ||||||||||||||||||
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Cash and cash equivalents - End of period | $ | — | $ | — | $ | 10,297 | $ | 3,106 | $ | — | $ | 13,403 | ||||||||||||
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17. ISSUANCES OF LIMITED PARTNER UNITS
On November 19, 2015, the Partnership entered into an equity distribution agreement (“ATM Equity Program”) with a group of banks (the “Agents”) whereby it may sell, from time to time, common units representing limited partner interests having an aggregate offering price of up to $100,000,000. During the three months ended June 30, 2016, the Partnership issued 176,208 common units under the ATM Equity Program for net proceeds of $4.2 million. During the six months ended June 30, 2016, the Partnership issued 903,682 common units under the ATM Equity Program for net proceeds of $23.0 million.
(in thousands)
Three Months Ended March 31, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Net cash provided by (used in) operating activities | $ | 11,887 | $ | 11 | $ | 15,826 | $ | (41 | ) | $ | (15,332 | ) | $ | 12,351 | |||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures | — | (11 | ) | (1,293 | ) | (192 | ) | — | (1,496 | ) | |||||||||||||
Net cash used in investing activities | — | (11 | ) | (1,293 | ) | (192 | ) | — | (1,496 | ) | |||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||||||
Cash distributions | (11,887 | ) | — | — | — | — | (11,887 | ) | |||||||||||||||
Payments to affiliates | — | — | (15,332 | ) | — | 15,332 | — | ||||||||||||||||
Net borrowings and repayments of debt | — | — | 2,928 | — | — | 2,928 | |||||||||||||||||
Other financing activities | — | — | (743 | ) | — | — | (743 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | (11,887 | ) | — | (13,147 | ) | — | 15,332 | (9,702 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | 1,386 | (233 | ) | — | 1,153 | ||||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 9,145 | 3,425 | — | 12,570 | |||||||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 10,531 | $ | 3,192 | $ | — | $ | 13,723 | |||||||||||
Three Months Ended March 31, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 2,624 | $ | 5 | $ | 7,950 | $ | 724 | $ | (6,069 | ) | $ | 5,234 | ||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures, net of proceeds from asset sales | — | (5 | ) | (3,774 | ) | (643 | ) | — | (4,422 | ) | |||||||||||||
Net cash used in investing activities | — | (5 | ) | (3,774 | ) | (643 | ) | — | (4,422 | ) | |||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||||||
Cash distributions | (21,387 | ) | — | — | — | — | (21,387 | ) | |||||||||||||||
Payments to affiliates | — | — | (6,069 | ) | — | 6,069 | — | ||||||||||||||||
Net borrowings and repayments of debt | — | — | 145 | — | — | 145 | |||||||||||||||||
Proceeds from issuance of common units | 18,763 | — | — | — | — | 18,763 | |||||||||||||||||
Net cash provided by (used in) financing activities | (2,624 | ) | — | (5,924 | ) | — | 6,069 | (2,479 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | (1,748 | ) | 81 | — | (1,667 | ) | |||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 11,809 | 3,344 | — | 15,153 | |||||||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 10,061 | $ | 3,425 | $ | — | $ | 13,486 |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the three months ended March 31, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $0.2 million decrease in non-guarantor cash provided by operating activities, with a corresponding increase in guarantor cash provided by operating activities. |
12. | ISSUANCES OF LIMITED PARTNER UNITS |
On April 20, 2016, the Partnership completed a follow-on public offering of 2,000,000 common units at a public offering price of $23.65 per unit. Additionally, the underwriters exercised their option to purchase an additional 300,000 common units. The offering resulted in net proceeds, after deducting underwriting discounts and offering expenses, of $51.5 million. The proceeds from the offering were used to pay down outstanding indebtedness under the Credit Facility.
18. SEGMENT INFORMATION
March 31, 2017.
13. | SEGMENT INFORMATION |
Cemetery Operations: Revenues Operating costs and expenses Depreciation and amortization Segment income Funeral Homes: Revenues Operating costs and expenses Depreciation and amortization Segment income Reconciliation of segment income to net loss: Cemeteries Funeral homes Total segment income Corporate overhead Corporate depreciation and amortization Other gains (losses), net Interest expense Income tax benefit (expense) Net loss Capital expenditures: Cemeteries Funeral homes Corporate Total capital expenditures Assets: Cemetery Operations Funeral Homes Corporate Total assets Goodwill: Cemetery Operations Funeral Homes Total goodwill Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 $ 63,543 $ 71,019 $ 124,149 $ 126,252 (54,911 ) (57,573 ) (105,267 ) (106,906 ) (2,014 ) (1,904 ) (3,984 ) (3,810 ) $ 6,618 $ 11,542 $ 14,898 $ 15,536 $ 14,739 $ 13,494 $ 31,062 $ 28,754 (12,732 ) (12,149 ) (26,472 ) (24,299 ) (858 ) (802 ) (1,735 ) (1,601 ) $ 1,149 $ 543 $ 2,855 $ 2,854 $ 6,618 $ 11,542 $ 14,898 $ 15,536 1,149 543 2,855 2,854 7,767 12,085 17,753 18,390 (9,737 ) (10,429 ) (20,048 ) (19,512 ) (283 ) (238 ) (501 ) (485 ) (191 ) — (1,073 ) — (5,707 ) (5,770 ) (11,497 ) (11,233 ) (500 ) (292 ) (760 ) (314 ) $ (8,651 ) $ (4,644 ) $ (16,126 ) $ (13,154 ) $ 2,691 $ 4,127 $ 4,632 $ 6,693 44 207 495 382 209 101 2,377 175 $ 2,944 $ 4,435 $ 7,504 $ 7,250 Balance sheet information: June 30, 2016 December 31, 2015 $ 1,528,569 $ 1,481,926 197,481 190,443 20,145 21,988 $ 1,746,195 $ 1,694,357 $ 25,320 $ 25,320 45,252 44,531 $ 70,572 $ 69,851
19. SUBSEQUENT EVENTS
Three Months Ended March 31, | |||||||
STATEMENT OF OPERATIONS DATA: | 2017 | 2016 | |||||
(As restated - see Note 1) | |||||||
Cemetery Operations: | |||||||
Revenues | $ | 65,527 | $ | 61,823 | |||
Operating costs and expenses | (56,632 | ) | (50,513 | ) | |||
Depreciation and amortization | (2,261 | ) | (1,970 | ) | |||
Segment income | $ | 6,634 | $ | 9,340 | |||
Funeral Home Operations: | |||||||
Revenues | $ | 17,419 | $ | 16,349 | |||
Operating costs and expenses | (12,804 | ) | (13,744 | ) | |||
Depreciation and amortization | (806 | ) | (877 | ) | |||
Segment income | $ | 3,809 | $ | 1,728 | |||
Reconciliation of segment income to net loss: | |||||||
Cemetery Operations | $ | 6,634 | $ | 9,340 | |||
Funeral Home Operations | 3,809 | 1,728 | |||||
Total segment income | 10,443 | 11,068 | |||||
Corporate overhead | (11,104 | ) | (10,311 | ) | |||
Corporate depreciation and amortization | (388 | ) | (218 | ) | |||
Other gains (losses), net | — | (882 | ) | ||||
Interest expense | (6,706 | ) | (5,790 | ) | |||
Income tax benefit (expense) | (806 | ) | (260 | ) | |||
Net loss | $ | (8,561 | ) | $ | (6,393 | ) | |
CASH FLOW DATA: | |||||||
Capital expenditures: | |||||||
Cemetery Operations | $ | 1,309 | $ | 1,941 | |||
Funeral Home Operations | 47 | 451 | |||||
Corporate | 140 | 2,168 | |||||
Total capital expenditures | $ | 1,496 | $ | 4,560 | |||
BALANCE SHEET DATA | March 31, 2017 | December 31, 2016 | |||||
Assets: | |||||||
Cemetery Operations | $ | 1,596,167 | $ | 1,573,494 | |||
Funeral Home Operations | 200,127 | 198,200 | |||||
Corporate | 14,976 | 15,319 | |||||
Total assets | $ | 1,811,270 | $ | 1,787,013 | |||
Goodwill: | |||||||
Cemetery Operations | $ | 24,862 | $ | 24,862 | |||
Funeral Home Operations | 45,574 | 45,574 | |||||
Total goodwill | $ | 70,436 | $ | 70,436 |
14. | SUPPLEMENTAL CONDENSED CONSOLIDATED CASH FLOW INFORMATION |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Pre-need/at-need contract originations (sales on credit) | $ | (26,911 | ) | $ | (26,220 | ) | |
Cash receipts from sales on credit (post-origination) | 25,627 | 22,275 | |||||
Changes in Accounts receivable, net of allowance | $ | (1,284 | ) | $ | (3,945 | ) | |
Deferrals: | |||||||
Cash receipts from customer deposits at origination, net of refunds | $ | 37,342 | $ | 35,950 | |||
Withdrawals of realized income from merchandise trusts during the period | 3,608 | 3,130 | |||||
Pre-need/at-need contract originations (sales on credit) | 26,911 | 26,220 | |||||
Undistributed merchandise trust investment earnings, net | 3,310 | 3,488 | |||||
Recognition: | |||||||
Merchandise trust investment income, net withdrawn as of end of period | (1,900 | ) | (2,022 | ) | |||
Recognized maturities of customer contracts collected as of end of period | (46,179 | ) | (42,079 | ) | |||
Recognized maturities of customer contracts uncollected as of end of period | (10,290 | ) | (8,976 | ) | |||
Changes in Deferred revenues | $ | 12,802 | $ | 15,711 |
15. | SUBSEQUENT EVENTS |
On August 4, 2016, StoneMor Operating LLC (the “Operating Company”),May 8, 2017. A part of or all of this quarterly cash distribution may be deemed to be a wholly-owned subsidiaryreturn of capital for our limited partners if such quarterly cash distribution, when combined with all other cash distributions made during the calendar year, exceeds the partner’s share of taxable income for the corresponding period, depending upon the individual limited partner’s specific tax position. Because the Partnership’s general and limited partner interests have cumulative net losses as of the Partnership, entered into a new Credit Agreement (the “New Credit Agreement”) among eachend of the Subsidiariesperiod, the distribution represented a return of the Operating Company (togethercapital to those interests in accordance with the Operating Company, “Borrowers”), the Lenders identified therein, Capital One, National Association (“Capital One”), as Administrative Agent, Issuing Bank and Swingline Lender, Citizens Bank of Pennsylvania, as Syndication Agent, and TD Bank, N.A. and Raymond James Bank, N.A., as Co-Documentation Agents. In addition, on the same date, the Partnership,US GAAP.
The New Agreements replaced the Partnership’s Credit Agreement, as amended with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and other lenders party thereto (the “Prior Credit Agreement”), Second Amended and Restated Security Agreement, and Second Amended and Restated Pledge Agreement, each dated as of December 19, 2014 (collectively, “Prior Agreements”).
The New Credit Agreement providesSeptember 29, 2017. See Note 7 for up to $210.0 million initial aggregate amount of Revolving Commitments, which may be increased, from time to time, in minimum increments of $5.0 million so long as the aggregate amount of such increases does not exceed $100.0 million. The Operating Company may also request the issuance of Letters of Credit for up to $15.0 million in the aggregate. The Maturity Date under the New Credit Agreement is the earlier of (i) August 4, 2021 and (ii) the date that is six months prior to the earliest scheduled maturity date of any outstanding Permitted Unsecured Indebtedness (at present, such date is December 1, 2020, which is six months prior to June 1, 2021 maturity date of outstanding 7.875% senior notes).
Generally, proceedsa discussion of the Loans under the New Credit Agreement can be used to finance the working capital needs and for other general corporate purposescumulative effect of the Borrowers and Guarantors, including acquisitions and distributions permitted under the New Credit Agreement. The terms and covenants of the New Credit Agreement, taken as a whole, are substantially similar to those of the Prior Credit Agreement.
The Borrowers’ obligations under the New Credit Agreement are guaranteed by the Partnership and the Borrowers. Pursuant to the Guaranty Agreement, the Borrowers’ obligations under the Credit Agreement are secured by a first priority lien and security interest (subject to permitted liens and security interests) in substantially all of the Partnership’s and Borrowers’ assets, whether then owned or thereafter acquired, excluding certain assets.
In connection with entering into the New Credit Agreement, the Partnership incurred an extinguishment of debt charge of approximately $1.2 million pertaining to deferred financing costs on the Prior Credit Agreement.
these amendments.
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
As discussed in the Explanatory Note to this Form 10-Q/A and Note 2,Restatement of Previously Issued Consolidated Financial Statements, in the Partnership’s consolidated financial statements included in Item 1 to this Form 10-Q/A, the consolidated financial statements of the Partnership as of June 30, 2016 and December 31, 2015 and for both the three and six months ended June 30, 2016 and 2015 have been revised to give effect to the Restatement. Accordingly, the discussion and analysis below for both the three and six months ended June 30, 2016 and 2015 has been revised to give effect to the Restatement.
1 of this Form 10-Q. Unless the context otherwise requires, references to “we,” “us,” “our,” “StoneMor,” the “Company,” or the “Partnership” are to StoneMor Partners L.P. and its subsidiaries.
10-Q. We believe the assumptions underlying the condensed consolidated financial statements are reasonable.
Form 10-Q/A,10-Q, which speak only as of the date hereof.the statements were made. Except as required by applicable laws, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
FINANCIAL PRESENTATION
SUBSEQUENT EVENTS
On July 25, 2016, we announced a quarterly cash distribution of $0.66 per common unit pertaining to the results for the second quarter of 2016. The distribution is scheduledservices required to be paid August 12, 2016 to common unit holders of record as of the close of business on August 5, 2016.
On August 4, 2016, our wholly-owned subsidiary, StoneMor Operating LLC entered into a credit agreement (the “New Credit Agreement”), which replaced the Partnership’s existing credit agreement. The New Credit Agreement provides for up to $210.0 million initial aggregate amount of Revolving Commitments, which may be increased, from time to time,maintained in minimum increments of $5.0 million so long as the aggregate amount of such increases does not exceed $100.0 million. We may also request the issuance of Letters of Credit for up to $15.0 million in the aggregate. The Maturity Date under the New Credit Agreement is the earlier of (i) August 4, 2021 and (ii) the date that is six months prior to the earliest scheduled maturity date of any outstanding Permitted Unsecured Indebtedness (at present, such date is December 1, 2020, which is six months prior to June 1, 2021 maturity date of outstanding 7.875% senior notes).
Generally, proceeds of the Loans under the New Credit Agreement can be used to finance our working capital needs and for other general corporate purposes, including acquisitions and distributions permitted under the New Credit Agreement. The terms and covenants of the New Credit Agreement, taken as a whole, are substantially similar to those of the existing credit agreement.
In connection with entering into the New Credit Agreement, the Partnership incurred an extinguishment of debt charge of approximately $1.2 million pertaining to deferred financing costs on the existing credit agreement.
REVENUE RECOGNITION
Cemetery Operations
trust by state law. Our cemetery revenues are principally derived from sales of interment rights, merchandise and services, and our funeral home revenues are principally derived from sales of caskets and related items and funeral home services including family consultation, the removal and preparation of remains and the use of funeral home facilities for visitation and prayer services. These sales occur both at the time of death, which we refer to as at-need, and prior to the time of death, which we refer to as pre-need. Pre-need sales are typically sold on an installment plan. At-need cemetery sales and pre-need merchandise and services sales are recognized as revenue when the merchandise is delivered or the service is performed. For pre-need sales of interment rights, we recognize the associated revenue when we have collected 10% of the sales price from the customer. We consider our cemetery merchandise delivered to our customer when it is either installed or ready to be installed and delivered to a third-party storage facility until it is needed, with ownership transferred to the customer at that time. Pre-need sales that have not yet been recognized as revenue are recognized as deferred revenues, a liability on our consolidated balance sheet. Direct costs associated with pre-need sales that are recognized as deferred revenues, such as sales commissions, are recognized as deferred selling and obtaining costs, an asset on our consolidated balance sheet, until the merchandise is delivered or the services are performed.
Funeral Home Operations
Our funeral home revenues are principally derived from at-need and pre-need sales of merchandise and services. Pre-need sales are typically sold on an installment plan. Both at-need and pre-need funeral home sales are recognized as revenue when the merchandise is delivered or the service is performed. Pre-need sales that have not yet been recognized as revenue are recognized as deferred revenues, a liability on our consolidated balance sheet. Direct costs associated with pre-need sales that are recognized as deferred revenues, such as sales commissions, are recognized as deferred selling and obtaining costs, an asset on our consolidated balance sheet, until the merchandise is delivered or the services are performed. Our funeral home operations also include revenues related to the sale of term and final expense whole life insurance. As an agent for these insurance sales, weon agency basis. We earn and recognize commission-related revenue streams from the sales of these policies.
Trust Investment Income
Sales
Capital Resources sections below.
March 31, 2016
March 31, 2017.
(As Restated)
Three months ended June 30, | ||||||||
2016 | 2015 | |||||||
Merchandise | $ | 37,855 | $ | 38,999 | ||||
Services | 13,676 | 15,367 | ||||||
Interest income | 2,252 | 2,184 | ||||||
Investment and other | 9,760 | 14,469 | ||||||
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| |||||
Total revenue | 63,543 | 71,019 | ||||||
|
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|
| |||||
Cost of goods sold | 12,042 | 13,333 | ||||||
Cemetery expense | 17,485 | 19,279 | ||||||
Selling expense | 16,391 | 15,769 | ||||||
General and administrative expense | 8,993 | 9,192 | ||||||
Depreciation and amortization | 2,014 | 1,904 | ||||||
|
|
|
| |||||
Total cost and expenses | 56,925 | 59,477 | ||||||
|
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|
| |||||
Operating income | $ | 6,618 | $ | 11,542 | ||||
|
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|
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(As restated) | |||||||
Merchandise | $ | 38,003 | $ | 33,690 | |||
Services | 14,949 | 13,719 | |||||
Interest income | 2,228 | 2,229 | |||||
Investment and other | 10,347 | 12,185 | |||||
Total revenues | 65,527 | 61,823 | |||||
Cost of goods sold | 13,519 | 10,720 | |||||
Cemetery expense | 16,697 | 15,856 | |||||
Selling expense | 16,459 | 14,733 | |||||
General and administrative expense | 9,957 | 9,204 | |||||
Depreciation and amortization | 2,261 | 1,970 | |||||
Total costs and expenses | 58,893 | 52,483 | |||||
Segment income | $ | 6,634 | $ | 9,340 |
Cost of goods sold2016.
Cemetery expenses were $17.5perpetual care trust income, which was $3.1 million for the three months ended June 30, 2016,March 31, 2017, representing a $0.7 million decrease of $1.8from $3.8 million from $19.3earned during the three months ended March 31, 2016. Merchandise trust income was $1.4 million for the three months ended June 30, 2015. ThisMarch 31, 2017, representing a $0.3 million decrease was principally due to a $1.1from $1.7 million earned during the three months ended March 31, 2016, primarily from the effects of other than temporary impairment. A portion of deferred trust income is recognized as underlying merchandise is delivered or underlying services are performed. The remaining $0.9 million decrease in personnel costsinvestment and other income was primarily attributable to a $0.7 million decreasereduction in repairrevenues derived from land sales and maintenance expenses.
Selling expensesa $0.3 million reduction in accrued investment income, which were $16.4partially offset by a $0.2 million increase in other fee revenue.
General and administrativeamortization of cemetery property, an expense associated with recognizing sales of cemetery interment spaces.
insurance expense.
expenses associated with properties acquired in August 2016.
March 31, 2017.
(As Restated)
Three months ended June 30, | ||||||||
2016 | 2015 | |||||||
Merchandise | $ | 6,569 | $ | 6,250 | ||||
Services | 8,170 | 7,244 | ||||||
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|
|
| |||||
Total revenue | 14,739 | 13,494 | ||||||
|
|
|
| |||||
Merchandise | 1,835 | 2,066 | ||||||
Service | 6,151 | 5,703 | ||||||
Depreciation and amortization | 858 | 802 | ||||||
Other | 4,746 | 4,380 | ||||||
|
|
|
| |||||
Total expenses | 13,590 | 12,951 | ||||||
|
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|
| |||||
Operating income | $ | 1,149 | $ | 543 | ||||
|
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|
|
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(As restated) | |||||||
Merchandise | $ | 7,836 | $ | 7,482 | |||
Services | 9,583 | 8,867 | |||||
Total revenues | 17,419 | 16,349 | |||||
Merchandise | 1,760 | 2,149 | |||||
Services | 5,699 | 6,455 | |||||
Depreciation and amortization | 806 | 877 | |||||
Other | 5,345 | 5,140 | |||||
Total expenses | 13,610 | 14,621 | |||||
Segment income | $ | 3,809 | $ | 1,728 |
insurance commission revenue.
professional fees and recruiting costs resulting from the delayed filing of our 10-K and various changes in our senior management.
Other Gains and Losses
In the second quarter of 2016, we obtained additional information related to two of the acquisitions that closed during 2015. The changes resulted in an adjustment to the gain on acquisition recognized during the year ended December 31, 2015, reducing the gain by $0.8 million via a loss recognized in the current period in accordance with GAAP. Also, we sold a warehouse during the period for a gain of $1.3 million, of which $0.7 million was deferred in accordance with sale-leaseback accounting.
Interest Expense
Interest expense was relatively consistent with the prior period, with $5.7$0.4 million for the three months ended June 30,March 31, 2017, compared to $0.2 million for the three months ended March 31, 2016.
March 31, 2016. This was principally due to the weighted average interest rate on the line of credit balance outstanding for the three months ended March 31, 2017 being higher than for the three months ended March 31, 2016.
Benefit (Expense)
Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
Cemetery Operations
Operating Results
Revenues from cemetery operations accounted for approximately 80.0% of our total revenues during the six months ended June 30, 2016. The following table presents operating results for our cemetery operations for the respective reporting periods (in thousands):
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Merchandise | $ | 70,623 | $ | 68,402 | ||||
Services | 27,139 | 29,924 | ||||||
Interest income | 4,481 | 4,384 | ||||||
Investment and other | 21,906 | 23,542 | ||||||
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|
| |||||
Total revenue | 124,149 | 126,252 | ||||||
|
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| |||||
Cost of goods sold | 22,762 | 23,162 | ||||||
Cemetery expense | 33,341 | 35,544 | ||||||
Selling expense | 30,967 | 29,679 | ||||||
General and administrative expense | 18,197 | 18,521 | ||||||
Depreciation and amortization | 3,984 | 3,810 | ||||||
|
|
|
| |||||
Total cost and expenses | 109,251 | 110,716 | ||||||
|
|
|
| |||||
Operating income | $ | 14,898 | $ | 15,536 | ||||
|
|
|
|
Cemetery merchandise revenues were $70.6 million for the six months ended June 30, 2016, an increase of $2.2 million from $68.4 million for the six months ended June 30, 2015. The increase is principally due to increases in recognized sales of markers and mausoleums, partially offset by decreases in recognized sales of crypts and niches. Cemetery services revenues were $27.1 million for the six months ended June 30, 2016, a decrease of $2.8 million from $29.9 million for the six months ended June 30, 2015. This decrease was primarily due to a reduction in opening and closing service revenues. Investment and other income was $21.9 million for the six months ended June 30, 2016, a decrease of $1.6 million from $23.5 million for the six months ended June 30, 2015. This decrease was primarily due to a $3.0 million decrease in merchandise trust income attributable to a comparatively smaller deferred merchandise trust revenue balance in the current period, partially offset by $0.6 million increase in excess-land sale revenues with the remaining increase in miscellaneous income. Interest income remained consistent for both the six months ended June 30, 2016 and 2015.
Cost of goods sold was $22.8 million for the six months ended June 30, 2016, a decrease of $0.4 million from $23.2 million for the six months ended June 30, 2015. This decrease was primarily due to changes in the value and mix of products.
Cemetery expenses were $33.3 million for the six months ended June 30, 2016, a decrease of $2.2 million from $35.5 million for the six months ended June 30, 2015. This decrease was principally due to a $1.7 million decrease in personnel costs and a $0.5 million decrease in repair and maintenance expenses.
Selling expenses were $31.0 million for the six months ended June 30, 2016, an increase of $1.3 million from $29.7 million for the six months ended June 30, 2015. This increase was primarily due to a $0.4 million increase in personnel costs and a $0.9 million increase in advertising and marketing costs.
General and administrative expenses were $18.2 million for the six months ended June 30, 2016, a decrease of $0.3 million from $18.5 million for the six months ended June 30, 2015. This decrease was primarily due to a $1.1 million decrease in personnel costs, $0.1 million decrease in insurance costs, partially offset by a $0.9 million increase in general overhead expenses.
Depreciation and amortization expense was relatively consistent with the prior period, with $4.0 million for the six months ended June 30, 2016 compared to $3.8 million for the six months ended June 30, 2015.
Funeral Home Operations
Operating Results
Revenues from funeral home operations accounted for approximately 20.0% of our total revenues during six months ended June 30, 2016. The following table presents operating results for our funeral home operations for the respective reporting periods (in thousands):
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Merchandise | $ | 14,025 | $ | 13,325 | ||||
Services | 17,037 | 15,429 | ||||||
|
|
|
| |||||
Total revenue | 31,062 | 28,754 | ||||||
|
|
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Merchandise | 3,984 | 4,442 | ||||||
Service | 12,602 | 11,296 | ||||||
Depreciation and amortization | 1,735 | 1,601 | ||||||
Other | 9,886 | 8,561 | ||||||
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Total expenses | 28,207 | 25,900 | ||||||
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Operating income | $ | 2,855 | $ | 2,854 | ||||
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Funeral home merchandise revenues were $14.0 million for the six months ended June 30, 2016, an increase of $0.7 million from $13.3 million for the six months ended June 30, 2015. Funeral home service revenues were $17.0 million for the six months ended June 30, 2016, an increase of $1.6 million from $15.4 million for the six months ended June 30, 2015. The overall increase was largely due to the locations acquired in the last twelve months, specifically with increases in casket and at-need service revenue, respectively.
Funeral home expenses were $28.2 million for the six months ended June 30, 2016, an increase of $2.3 million from $25.9 million for the six months ended June 30, 2015. This increase principally consists of a $1.4 million increase in personnel costs primarily due to the locations acquired in the last twelve months and a $0.5 million increase in costs associated with insurance-related sales.
Corporate Overhead
Corporate overhead was $20.0 million for the six months ended June 30, 2016, an increase of $0.5 million from $19.5 million for the six months ended June 30, 2015. This increase was principally due to a $2.6 million increase in acquisition-related costs, partially offset by a $1.3 million decrease in personnel costs, a $0.3 million decrease in professional fees and a $0.5 million decrease in advertising and marketing costs due to improved expense management. Acquisition costs may vary from period to period depending on the amount of acquisition activity that takes place.
Corporate Depreciation and Amortization
Depreciation and amortization expense was consistent with the prior period, with $0.5 million for the six months ended June 30, 2016 and 2015.
Other Gains and Losses
In the second quarter of 2016, we obtained additional information related to two of the acquisitions that closed during 2015. The changes resulted in an adjustment to the gain on acquisition recognized during the year ended December 31, 2015, reducing the gain by $0.8 million via a loss recognized in the current period in accordance with GAAP. Also, we sold a warehouse during the period for a total gain of $1.3 million, of which $0.7 million was deferred in accordance with sale-leaseback accounting. In addition, a cease-use expense of $0.5 million was recorded due to the relocation of corporate headquarters to Trevose, Pennsylvania. We also sold a funeral home building and related real property for a net loss of $0.4 million.
Interest Expense
Interest expense was $11.5 million for the six months ended June 30, 2016, an increase of $0.3 million from $11.2 million for the six months ended June 30, 2015. This increase was principally due to an increase in interest expense on amounts outstanding under the credit facility, which had higher average amounts outstanding during the current period than the comparable period.
Income Tax Expense
Income tax expense was $0.8 million for the six months ended June 30, 2016, an increase of $0.4 million from $0.4 million for the six months ended June 30, 2015. Our effective tax rate differs from our statutory tax rate primarily because our legal entity structure includes different tax filing entities, including a significant number of partnerships that are not subject to paying tax.
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Interments performed | 14,430 | 13,633 | |||
Interment rights sold (1) | |||||
Lots | 6,856 | 6,606 | |||
Mausoleum crypts (including pre-construction) | 489 | 470 | |||
Niches | 441 | 352 | |||
Net interment rights sold (1) | 7,786 | 7,428 | |||
Number of pre-need cemetery contracts written | 11,435 | 11,376 | |||
Number of at-need cemetery contracts written | 15,285 | 14,655 | |||
Number of cemetery contracts written | 26,720 | 26,031 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Interments performed | 13,401 | 14,024 | 27,034 | 28,636 | ||||||||||||
Interment rights sold (1) | ||||||||||||||||
Lots | 8,635 | 8,844 | 15,241 | 15,894 | ||||||||||||
Mausoleum crypts (including pre-construction) | 582 | 715 | 1,052 | 1,333 | ||||||||||||
Niches | 403 | 475 | 755 | 844 | ||||||||||||
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Net interment rights sold (1) | 9,620 | 10,034 | 17,048 | 18,071 | ||||||||||||
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Number of cemetery contracts written | 28,365 | 30,227 | 54,396 | 57,626 | ||||||||||||
Number of pre-need cemetery contracts written | 12,784 | 13,965 | 24,160 | 26,048 | ||||||||||||
Number of at-need cemetery contracts written | 15,581 | 16,262 | 30,236 | 31,578 |
(1) | Net of cancellations. Sales of double-depth burial lots are counted as two sales. |
We rely on cash flow from operations, borrowings under our credit facility and the issuance of additional limited partner units to execute our growthoperational strategy and meet our financial commitments and other short-term financial needs. We cannot be certain that additional capital will be available to us to the extent required and on acceptable terms.
The Partnership continually monitors its financial position, liquidity and credit facility financial covenants to determine the likelihood of shortfalls in future reporting periods.
March 31, 2016 (As Restated)
expenditures, primarily related to our corporate office relocation, partially offset by $0.1 million of proceeds from asset sales.
borrowings.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Maintenance capital expenditures | $ | 1,289 | $ | 2,065 | $ | 4,293 | $ | 3,379 | ||||||||
Expansion capital expenditures | 1,655 | 2,370 | 3,211 | 3,871 | ||||||||||||
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Total capital expenditures | $ | 2,944 | $ | 4,435 | $ | 7,504 | $ | 7,250 | ||||||||
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Issuance
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Maintenance capital expenditures | $ | 829 | $ | 3,004 | |||
Expansion capital expenditures | 667 | 1,556 | |||||
Total capital expenditures | $ | 1,496 | $ | 4,560 |
During the Subsidiaries of the Operating Company (together with the Operating Company, “Borrowers”), the Lenders identified therein, Capital One, National Association (“Capital One”), as Administrative Agent, Issuing Bank and Swingline Lender, Citizens Bank of Pennsylvania, as Syndication Agent, and TD Bank, N.A. and Raymond James Bank, N.A., as Co-Documentation Agents. In addition, on the same date, the Partnership, the Borrowers and Capital One, as Administrative Agent, entered into the Guaranty and Collateral Agreement (the “Guaranty Agreement,” and together with the Credit Agreement, “New Agreements”). Capitalized terms which are not defined in the following description of the New Agreements shall have the meaning assigned to such terms in the New Agreements.
On April 20, 2016, we completed a follow-on public offering of 2,000,000 common units at a public offering price of $23.65 per unit. Additionally, the underwriters exercised their option to purchase an additional 300,000 common units. The offering resulted in net proceeds, after deducting underwriting discounts and offering expenses, of $51.5 million. The proceeds from the offering wereAmended Credit Agreement was $140.6 million, which was used to pay down outstanding indebtedness under the Credit Facility.
Long-Term Debt
Credit Facility
We are a party to the Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”), which provides for a single revolving credit facility of $180.0 million (the “Credit Facility”) maturing on December 19, 2019. Additionally, the Credit Agreement provides for an uncommitted ability to increase the Credit Facility by an additional $70.0 million. Our obligations under the Credit Facility are secured by substantially allPartnership's prior credit agreement, to pay fees, costs and expenses related to the New Agreements and to fund working capital needs. Generally, proceeds of our assets, excluding those held in trust. Borrowingsthe Loans under the Amended Credit Facility are classified as either acquisition draws orAgreement can be used to finance the working capital draws. Acquisition draws may be utilized to finance permitted acquisitions, the purchase and construction of mausoleums and related costs or the net amount of merchandise trust deposits. Working capital draws may be utilized to finance working capital requirements, capital expendituresneeds and for other general corporate purposes. The amountpurposes of the Credit Facility that is available for working capital draws is subject to a borrowing formula equal to 85% of eligible accounts receivable, as defined withinBorrowers and Guarantors, including acquisitions and distributions permitted under the Amended Credit Agreement. AtAs of June 30, 2016,2017, the amountPartnership estimates that it had approximately $3.5 million of total available borrowing capacity under its revolving credit facility, based on a preliminary calculation of its Consolidated Leverage Ratio.
Each individual acquisition drawAgreement is subject to equal quarterly amortization of the principal amount, with annual principal payments comprised of ten percent of the related advance amount, commencing on the second anniversary of such advance, with the remaining principal due on December 19, 2019, subject to certain mandatory prepayment requirements. Up to $10.0 million of the Credit Facility may be in the form of standby letters of credit, of which there were $6.5 million outstanding at June 30, 2016 and none outstanding at December 31, 2015.
Borrowings under the Credit FacilityBase Rate Loans or Eurodollar Loans. The Loans comprising each Base Rate Borrowing (including each Swingline Loan) bear interest at our election,the Base Rate plus the Applicable Rate, and the Loans comprising each Eurodollar Borrowing bear interest at either an adjusted LIBOR ratethe Eurodollar Rate plus an applicable margin between 2.25% and 4.00% per annum or the base rate (whichApplicable Rate.
Year 2016 2017 2018 2019 and thereafter Percentage 105.906 % 103.938 % 101.969 % 100.000 %
Year | Percentage |
2017 | 103.938% |
2018 | 101.969% |
2019 and thereafter | 100.000% |
Distributions
Lease Years 1-5 Lease Years 6-20 Lease Years 21-25 Lease Years 26-35 Lease Years 36-60 2024. 10-Q. OTHER INFORMATION Description to the Archdiocese aggregate fixed rent of $36.0 million in the following amounts: (May 28, 2014 - May 31, 2019) None (June 1, 2019 - May 31, 2034) $1,000,000 per Lease Year (June 1, 2034 - May 31, 2039) $1,200,000 per Lease Year (June 1, 2039 - May 31, 2049) $1,500,000 per Lease Year (June 1, 2049 - May 31, 2074) None shall bean aggregate of $6.0 million, is deferred. If, prior to May 31, 2024, the Archdiocese terminates the agreements pursuant to aits right to do so in its sole discretion during lease year 11 termination or we terminate the agreements as a result of a default by the Archdiocese, priorwe are entitled to the end of lease year 11,retain the deferred fixed rent shall be retained by us.rent. If the agreements are not terminated, the deferred fixed rent shallwill become due and payable on or before June 30, days after the end of lease year 11.truststrust assets and the allocation of purchase price to the fair value of assets acquired. A discussion of our significant accounting policies we have adopted and followed in the preparation of our condensed consolidated financial statements was included in our Annual Report on Form 10-K/A10-K for the year ended December 31, 2015,2016, and we summarize our significant accounting policies within our consolidated financial statements includedand any updates in Note 1 under “Item 1” of this Form 10-Q/A.ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 4. CONTROLS AND PROCEDURES (As Revised)We maintaintheour reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.In connection with our Original Filing, we carried out an evaluation, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, as of June 30, 2016, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in our reportsfiled under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’sSEC rules and forms and that such information is accumulated and communicated to our management, including ourthe Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.In connection withrestatement of our consolidated financial statements (see Note 2,Restatement of Previously Issued Consolidated Financial Statements, under Item 1. Financial Statements unaudited), underCEO and CFO, evaluated the supervisiondesign and with the participation of the Chief Executive Officer and Chief Financial Officer, we re-evaluated the effectivenessoperation of our disclosure controls and procedures. In conductingprocedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of March 31, 2017. Based on such evaluation, our re-evaluation,CEO and CFO concluded the disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.a. control environment, control activities and monitoring; b. establishment and review of certain accounting policies; c. reconciliation of certain general ledger accounts to supporting details; d. accurate and timely relief of deferred revenues and corresponding recognition of income statement impacts; and e. review of financial statement disclosures. consideredcontinue to make improvements to our internal control over financial reporting related to the material weaknesses described above, material weaknesses continue to exist, and we believe that the material weaknesses referenced above accurately reflect the material weaknesses in our internal control over financial reporting as discussed below. Based on this reevaluation,of March 31, 2017. Management, with oversight from our Audit Committee, has identified and begun executing actions we believe will remediate the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2016.As discussed in the Explanatory Note and Note 2,Restatement of Previously Issued Consolidated Financial statements,included in this Form 10-Q/A, we determined to restate our previously issued financial statements to correct for errors associated with the recognition and presentation of certain revenues, expenses, assets, and liabilities, both recognized and deferred, the allocation of income and loss to our partners, and errors in the processing of transactions. As a result of this restatement, management identified deficiencies in our processes and procedures that constitute material weaknesses indescribed above once fully implemented and operating for a sufficient period of time, and we will continue to devote significant time and attention, including internal and external resources, to these remedial efforts.as follows:A.The Partnership did not design and maintain effective controls over establishing accounting policies nor did they periodically review them for appropriate application in the financial statements.B.The Partnership did not design and maintain effective controls over the review of certain recorded balances within “Deferred cemetery revenues, net,” “Merchandise liability,” “Investment and other” revenues, ”Cemetery property,” and “Partners’ Capital”.C.The Partnership did not design and maintain effective controls over the reconciliation of amounts recorded in the general ledgerwith respect to relevant supporting details.In connection with the restatement of our consolidated financial statements, management re-evaluated the effectiveness of our internal control over financial reporting. Based on that re-assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2015, due to the material weaknesses described above.Management is committed to thethat had been identified at that time, and those remediation of the material weaknesses,efforts as well as the continued improvement of our internal control over financial reporting (“ICFR”). We are in the process of implementing measuresother remediation efforts relating to remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses, which primarily include:1.Reevaluating and establishing, on a periodic basis, accounting policies and the appropriate application thereof;2.Enhancing control procedures related to the review of certain recorded balances affected by the material weaknesses to ensure the appropriateness of such balances; and3.Enhancing the control procedures related to the reconciliation of amounts recorded in the general ledger to relevant supporting details.We believe these measures will remediate the material weaknesses noted. While we have completed some of these measures as of the date of this report, we have not completed and tested all of the planned corrective processes, enhancements, procedures and related evaluation that we believe are necessary to determine whether the material weaknesses have been fully remediated. We believe the corrective actions and controls need to be in operation for a sufficient period of time for management to conclude that the control environment is operating effectively and has been adequately tested through audit procedures. Therefore, the material weaknesses have not been fully remediated as of the date of this report. As we continue to evaluate and work to remediate the control deficiencies that gave rise to the material weaknesses we may determine that additional measures or time are requiredidentified subsequent to addressMarch 31, 2017 remain ongoing. Other than as described above and in greater detail in our Annual Report on Form 10-K for the control deficiencies or that we need to modify or otherwise adjust the remediation measures described above. We will continue to assess the effectiveness of our remediation efforts in connection with our evaluation of our ICFR.CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTINGExcept as set forth above,fiscal year ended December 31, 2016, there have beenwere no changes in our internal control over financial reporting that occurredas defined in Rules 13a-15(d) and 15d-15(d) of the Exchange Act during our most recent fiscal quarterthe three months ended June 30, 2016March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.PartOther InformationItem 6.ExhibitsExhibits are listed in the Exhibit Index, which is incorporated herein by reference.SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.ITEM 1A. STONEMOR PARTNERS L.P.RISK FACTORSBy: StoneMor GP LLCitsITEM 6. EXHIBITS November 9, 2016/s/ Lawrence MillerLawrence MillerChief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)November 9, 2016/s/ Sean P. McGrathSean P. McGrathChief Financial Officer (Principal Financial Officer)EXHIBIT INDEX 10.1**10.1 Restricted Phantom Unit 10.2**10.2 10.3 10.4 10.3** Confidentiality, Nondisclosure and Restrictive Covenant Agreement by and between Austin So and StoneMor GP LLC, dated May 26, 2016 (incorporated by reference to Exhibit 10.1 of Registrant’s Original Filing filed on August 5, 2016).31.1 31.2 Officer and Senior Vice President. 32.1 32.2 101 Attached as Exhibit 101 to this report are the following Interactive Data Files formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of June 30, 2016,March 31, 2017, and December 31, 2015;2016; (ii) Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016March 31, 2017 and 2015;2016; (iii) Unaudited Condensed Consolidated Statement of Partners’ Capital (Deficit); (iv) Unaudited Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2016March 31, 2017 and 2015;2016; and (v) Notes to the Unaudited Condensed Consolidated Financial Statements. Users of this data are advised that the information contained in the XBRL documents is unaudited and these are not the official publicly filed financial statements of StoneMor Partners L.P.**Previously filed withSTONEMOR PARTNERS L.P. By: StoneMor GP LLC its general partner Date: October 27, 2017 R. Paul Grady President, Chief Executive Officer and Member of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 as originally filed with the SecuritiesBoard of Directors (Principal Executive Officer)Date: October 27, 2017 Mark L. Miller Chief Financial Officer and Exchange Commission on August 5, 2016.Senior Vice President (Principal Financial Officer)47