
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.

Part I—Item 1—Financial Statements

Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard improves the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard clarifies identifying performance obligations and the licensing implementation guidance.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard provides additional guidance on (a) the objective of the collectability criterion, (b) the presentation of sales tax collected from customers, (c) the measurement date of non-cash consideration received, (d) practical expedients in respect of contract modifications and completed contracts at transition and (e) disclosure of the effects of the accounting change in the period of adoption.

In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which amends certain narrow aspects of the guidance, including the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the ~~issuance~~guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples.

In September 2017, the ~~Partnership’s Form 10-Q~~FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, which provides additional clarification and implementation guidance on ASU 2014-09 and is effective consistent with the adoption schedule for ASU 2014-09.

The new guidance in ASU 2014-09, as well as all amendments discussed above, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The new guidance permits two methods of adoption, full retrospective or modified retrospective and we intend to implement the ~~period ended June 30, 2016,~~standard with the ~~Partnership determined~~modified retrospective approach, which recognizes the cumulative effect of application recognized on that ~~material adjustments were needed~~date. Management has developed an implementation plan and is continuing to ~~correct certain accounting errors. Accordingly,~~evaluate the ~~accompanying consolidated~~impact that the adoption of this guidance will have on the financial statements of the ~~Partnership as~~Partnership. Management is in the midst of ~~June 30, 2016 and December 31, 2015 and for each~~assessing the impact of the ~~three~~guidance on our contracts in all our revenue streams by reviewing our current accounting policies and ~~six months ended June 30, 2016~~practices to identify potential differences that would result from applying the new requirements to our revenue contracts. Management continues to monitor modifications, clarifications and ~~2015,~~interpretations issued by the FASB. Part of the implementation plan includes performing a detailed review of contracts and also evaluating the ~~related notes hereto, have been restated~~impact, if any, on changes to ~~correct these accounting errors (the “Restatement”). A summary~~business processes, systems and controls to support recognition and disclosure under the new guidance. Although the Partnership has not yet fully determined the scope of ~~these accounting errors, and their effect~~the impact of the new standard on ~~the Partnership’s~~our consolidated ~~financial statements is, as follows:~~

A. The Partnership allocates net loss to the General Partner and its limited partners for the purposes of determining the General Partner’s and limited partners’ capital accounts within “Partners’ capital”, and to calculate net loss per limited partner unit (basic and diluted). However, the historical allocation of the Partnership’s net losses did not appropriately consider available cash that had been (or will be) distributed to the separate class of nonvoting limited partner interest (the incentive distribution rights) held by the General Partner. While this misallocation had no impact on the Partnership’s consolidated net loss for both the three and six months ended June 30, 2016 and 2015, the revised calculation to correctly allocate net losses increased the limited partners’ historical share of allocated net loss and decreased the General Partner’s historical share of allocated net loss. As a result, the accompanying consolidated statement of operations and consolidated statement of partners’ capital have been restated to increase the limited partners’ share of allocated net loss and decrease the General Partner’s share of allocated net loss by approximately $1.2 million and $1.0 million for the three months ended June 30, 2016 and 2015, respectively, and $2.4 million and $1.8 million for the six months ended June 30, 2016 and 2015. Accordingly, the accompanying consolidated statement of partner’s capital has also been restated to decrease the limited partners’ share of partners’ capital, and increase the General Partner’s share of partners’ capital by approximately $12.5 million and $10.2 million as of June 30, 2016 and December 31, 2015, respectively.

The Partnership had historically presented the cost component of its performance obligations as a liability referred to as “Merchandise liability” and the offset for these liabilities was recognized as a reduction in “Deferred cemetery revenues, net” in the Partnership’s consolidated balance sheet. However, subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016, the Partnership determined that the correct presentation of these obligations is “Deferred revenues”, rather than a separate “Merchandise liability”. Accordingly, the accompanying consolidated balance sheet as of June 30, 2016 and December 31, 2015, has been restated to reclassify merchandise liabilities of approximately $170.0 million and $173.1 million as of June 30, 2016 and December 31, 2015, respectively, from “Merchandise liability” to “Deferred revenue”. The Partnership restated its financial statement line item presentation of “Deferred cemetery revenues, net” to “Deferred revenues”. Accordingly, the accompanying consolidated balance sheet as of June 30, 2016 and December 31, 2015 has been restated to reclassify approximately $695.1 million and $637.5 million as of June 30, 2016 and December 31, 2015, respectively, from “Deferred cemetery revenue, net” to “Deferred revenue”.

The Partnership had historically presented revenue related to assumed obligations from acquisitions on a net basis in the Partnership’s consolidated statement of operations. However, subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016, the Partnership determined that the correct presentation of this revenue was on a gross basis. Accordingly, the accompanying consolidated statement of operations has been restated to present such revenue on a gross basis. This classification resulted in an increase in “Cemetery merchandise revenues” of approximately $0.8 million and $1.3 million for the three months ended June 30, 2016 and 2015, respectively, and $1.6 million and $2.5 million for the six months ended June 30, 2016 and 2015, respectively, an increase in “Cemetery services revenue” of approximately $0.3 million and $0.2 million for the three months ended June 30, 2016 and 2015, respectively, and $0.5 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively, and an increase “Cost of goods sold” of approximately $1.0 million and $1.5 million for the three months ended June 30, 2016 and 2015, respectively, and $2.0 million and $2.8 million for the six months ended June 30, 2016 and 2015, respectively.

The Partnership had historically recorded funeral home land from acquisitions within “Cemetery property”. However, subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016, the Partnership determined that such Funeral home land should be recorded within “Property and equipment”. This adjustment resulted in a decrease of $11.7 million and $11.8 million in “Cemetery property” as of June 30, 2016 and December 31, 2015, respectively, and a corresponding increase in “Property and equipment”. Additionally, the Partnership had historically recorded deferred cemetery property within “Deferred cemetery revenues, net”. However, subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016, the Partnership determined that such amounts should have been recorded within “Cemetery property”. This adjustment resulted in an increase in “Cemetery property” in the amount of $3.7 million and $3.6 million as of June 30, 2016 and December 31, 2015, respectively.

The Partnership had historically recorded the obligation for certain of the Partnership’s outstanding phantom unit awards as liabilities. However, subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016, the Partnership determined that these awards are equity awards and should be classified as equity. Accordingly, the accompanying consolidated balance sheet as of June 30, 2016 and December 31, 2015, has been restated to adjust the awards as equity award, resulting in a $1.9 million increase to “Common limited partners’ interest” and a decrease for the same amount to “Accounts payable and accrued liabilities” as of June 30, 2016 and December 31, 2015.

The Partnership had historically recognized incorrect amounts of investment revenues and expenses related to its merchandise and perpetual care trusts on its consolidated statement of operations and was incorrectly tracking its perpetual care-trusting obligations on its consolidated balance sheets. Accordingly, the accompanying consolidated financial statements as of June 30, 2016 and 2015 and for both the three and six months ended June 30, 2016 and 2015 have been restated for these adjustments. The adjustments resulted in an increase in “Deferred revenues” of approximately $18.5 million and $17.9 million, a decrease in “Partners’ Capital” of approximately $26.5 million and $25.4 million, and an increase in “Other long-term liabilities” of approximately $8.0 million and $7.5 million as of June 30, 2016 and December 31, 2015, respectively. In addition, the correction of these accounting errors resulted in an increase in “Investment and other” revenues of $0.3 million in the three months ended June 30, 2016 and $0.2 million in the six months ended June 30, 2016, and an increase in “Cost of goods sold” of $0.7 million and $0.4 million for the three months ended June 30, 2016 and 2015, respectively, and $1.3 million and $0.7 million for the six months ended June 30, 2016 and 2015, respectively.

The Partnership had historically recognized incorrect amounts of revenue from deferred pre-acquisition contracts in its consolidated statement of operations based on inaccurate system inputs. Subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016, the Partnership determined that revenue recognition on such pre-acquisition revenue was understated. Accordingly, the accompanying consolidated financial statements for the three and six months ended June 30, 2016 and 2015 have been restated to reflect the correction of the system inputs. The adjustments resulted in a decrease in “Deferred revenues” and an increase in “Partners’ Capital” of $16.5 million as of June 30, 2016 and December 31, 2015 and an increase in “Cemetery merchandise revenues” of $0.4 million and $0.8 million for the three and six months ended June 30, 2015 and an increase in “Cemetery services revenues” of $0.1 million in the three and six months ended June 30, 2015.

Remaining adjustments principally relate to the recognition, accuracy and/or classification of certain amounts in “Deferred cemetery revenues, net”, “Merchandise liabilities”, and “Other current assets”, determined subsequent to the issuance of the Partnership’s Form 10-Q for the period ended June 30, 2016. Accordingly, the accompanying consolidated financial statements as of June 30, 2016 and December 31, 2015, and for the three and six months ended June 30, 2016 and 2015 have been restated for these adjustments. The adjustments resulted in a decrease of $3.6 million and a decrease of $1.9 million in “Deferred revenues” as of June 30, 2016 and December 31, 2015, respectively. The adjustments also resulted in an increase in “Cemetery merchandise revenues” of $1.0 million and $1.2 million, an increase in “Cemetery services revenues” of $0.4 million and $0.6 million, and an increase in “Cost of goods sold” of $0.6 million and $1.6 million in the three months ended June 30, 2016, and 2015, respectively. The adjustments resulted in an increase in “Cemetery merchandise revenues” of $2.0 million and $2.2 million, an increase in “Cemetery services revenues” of $0.9 million and $1.0 million, and an increase in “Cost of goods sold” of $1.1 million and $2.9 million in the six months ended June 30, 2016, and 2015, respectively.

The Partnership calculated the effect on income taxes associated with the foregoing accounting errors and, as such, “Income tax benefit (expense)” within consolidated statement of operations was restated by $0.1 million for the three and six months ended June 30, 2015 and the “Deferred tax liability” within the consolidated balance sheets are restated by approximately $0.1 million as of June 30, 2016 and December 31, 2015.

~~The effect of these adjustments on the Partnership’s consolidated balance sheets, statements~~results of operations, ~~partners’ capital and~~financial position, cash flows ~~for each~~and 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.

In the first quarter of 2016, ~~and 2015, and as~~the FASB issued Update No. 2016-01, Financial Instruments (Subtopic 825-10) (“ASU 2016-01”). The core principle of ~~June 30, 2016 and~~ASU 2016-01 is that all 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 ~~31, 2015~~15, 2017, including interim periods within that reporting period. Early application is ~~summarized below for each affected caption:~~

      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 flows~~not permitted for the ~~periods noted are included in~~key aspects of the ~~Partnership’s net loss from~~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 ~~offset by changes in operating~~related disclosures.

~~Three funeral homes and one cemetery for cash consideration of $5.7 million on August 6, 2015;~~

~~Two cemeteries for cash consideration of $1.5 million on August 20, 2015;~~

~~One cemetery and two funeral homes for cash consideration of $5.7 million on December 1, 2015.~~

~~The Partnership accounted for these transactions under~~In 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
   $ 2,641
Cemetery property
   5,249
Property and equipment
   7,710
Inventory
   53
Merchandise trusts, restricted
   15,075
Perpetual care trusts, restricted
   4,134
Intangible assets
   406


Total assets
   35,268


Liabilities:

Deferred revenues
   21,349
Perpetual care trust corpus
   4,134
Other liabilities
   21


Total liabilities
   25,504


Fair value of net assets acquired
   9,764


Consideration paid – cash
   18,800
Deferred cash consideration
   876


Total consideration paid
   19,676


Gain on bargain purchase
   $ 766


Goodwill from purchase
   $ 10,678

~~Certain provisional amounts pertaining to the 2015 acquisitions were adjusted in the second~~third quarter of 2016, as the ~~Company obtained additional information related~~FASB 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 ended~~amendment 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 information~~15, 2017, including interim periods within those fiscal years. Early application is ~~received.~~permitted. The Partnership ~~recorded goodwill~~plans 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.

An aging of unrealized losses on the Partnership’s investments in debt and equity securities within the perpetual care trusts as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 is presented below (in thousands):

   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

the ratio of Consolidated Funded Indebtedness to ~~maintain:~~

Consolidated EBITDA, ~~(as defined in~~or the ~~Credit Agreement), calculated over a~~Consolidated Leverage Ratio, as of the last day of any fiscal quarter, commencing on September 30, 2016, determined for the period of four consecutive fiscal quarters ending on such date (the “Measurement Period”), to be ~~no less~~greater than 4.25 to 1.0 for periods ended through September 30, 2017, and 4.00 to 1.0 for periods thereafter, which may be increased to 4.25 to 1.0 (in case of a Designated Acquisition made subsequent to the ~~sum of (i) $80.0 million plus (ii) 80%~~last day of the ~~aggregate Consolidated EBITDA for each permitted acquisition completed after June 30, 2014;~~immediately preceding fiscal quarter) as of the last day of the fiscal quarter in which such Designated Acquisition occurs and as of the last day of the immediately succeeding fiscal quarter; and

the ratio of Consolidated EBITDA ~~(as defined in the Credit Agreement)~~ to Consolidated Debt Service, ~~(as defined in the Credit Agreement), calculated over a period of four fiscal quarters,~~ or the Consolidated Debt Service Coverage Ratio, as of ~~not~~the last day of any fiscal quarter, commencing on September 30, 2016 to be less than 2.50 to ~~1.00~~1.0 for any ~~period; and~~Measurement Period.

the ratio of Consolidated Funded Indebtedness (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement), calculated over a period of four fiscal quarters, or the Consolidated Leverage Ratio, of not greater than 4.00 to 1.00 for any period.

On ~~June 30, 2016,~~March 31, 2017, the Partnership’s Consolidated Leverage Ratio and the Consolidated Debt Service Coverage Ratio were ~~3.11~~4.09 and ~~4.37,~~3.51, respectively.

increase the facility’s Consolidated Leverage Ratio to 4.50:1.00 for the period ended September 30, 2017 and the period ending December 31, 2017, stepping down to 4.25:1.00 for periods ending in fiscal 2018, and then reverting back to 4.00:1.00;

provide that, in calculating Consolidated EBITDA for purposes of various financial covenants:

amend the definition of “Consolidated Leverage Ratio” to permit the Partnership to deduct from Indebtedness the aggregate amount of all unrestricted cash and Cash Equivalents of the Partnership and its Subsidiaries in accounts subject to a first priority, perfected lien (subject to certain permitted liens) in favor of the Administrative Agent in an amount not to exceed $5,000,000;

reduce the revolver commitment to $200.0 million;

add provisions relating to a Fixed Charge Coverage Ratio that:

prior to the date on which the Partnership shall have achieved, as of the last day of any fiscal quarter after September 29, 2017, a Consolidated Leverage Ratio of less than 4.00:1.00 for the four consecutive fiscal quarters ending on such date: (a) limit Revolving Credit Availability to (i) the lesser of the Borrowing Base, which is equal to the sum of 80% of accounts receivable outstanding less than 120 days plus 40% of the book value, net of depreciation, of property, plant and equipment, and the aggregate Revolving Commitments of the Lenders at such time, minus (ii) the aggregate outstanding amount of Revolving Credit Exposures of the Lenders and (b) in the event the sum of the aggregate principal amount of all of the Revolving Credit Exposures of the Lenders exceeds the Borrowing Base then in effect, require the Borrowers to immediately prepay borrowings in an amount so that the Revolving Credit Availability is at least $0; and

extend the deadline for filing the Partnership’s Form 10-Q for the period ended September 30, 2017 to forty-five days following the filing of its Form 10-Q for the period ended June 30, ~~2016.~~

2017, but not later than January 31, 2018.

Anderson v. StoneMor Partners, LP, et al., No. 2:16-cv-06111 pending in the United States District Court for the Eastern District of Pennsylvania, and filed on November 21, 2016. The plaintiffs in this case (as well as Klein v. StoneMor Partners, LP, et al., No. 2:16-cv-06275, filed in the United States District Court for the Eastern District of Pennsylvania on December ~~31, 2014,~~2, 2016, which has been consolidated with this case) brought an action on behalf of a putative class of the ~~General Partner’s Board~~holders of ~~Directors (the “Board”)~~Partnership units and allege that the Partnership made misrepresentations to investors in violation of Section 10(b) of the Securities Exchange Act of 1934 by, among other things and in general, failing to clearly disclose the use of proceeds from debt and equity offerings by making allegedly false or misleading statements concerning (a) the Partnership’s unitholders approved a 2014 Long-Term Incentive Plan (“2014 LTIP”). The Compensation, Nominating and Governance, and Compliance Committee of the Board (the “Compensation Committee”) administers the 2014 LTIP. The 2014 LTIP permits the grant of awards, which may be in the form of phantom units, restricted units, unit appreciation rights (“UAR”),strength or unit options, including performance factors for each, covering an aggregate of 1,500,000 common units, a number that the Board may increase by up to 100,000 common units per year. At June 30, 2016, the estimated number of common units to be issued upon vesting and exercise of outstanding rights under this plan, assuming the satisfaction of the maximum conditions for performance factors, was 110,090. A cumulative number of 14,455 common units have been issued, leaving 1,375,455 common units available for future grants under the plan, assuming no increases by the Board.

~~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

~~(1)~~

The weighted-average grant date fair value for the unit awards on the date of grant was $23.95 and $29.52 for three months ended June 30, 2016 and 2015, respectively, and $24.60 and $29.11 for six months ended June 30, 2016 and 2015, respectively. The intrinsic value of vested unit awards was $0.1 million for both the three months ended June 30, 2016 and 2015 and $0.2 million and $0.1 million for the six months ended June 30, 2016 and 2015, respectively.

~~(2)~~

~~Based on the closing price of the common units on June 30, 2016, the estimated intrinsic value of the outstanding unit awards was $2.8 million at June 30, 2016.~~

~~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 accounts~~health in connection with ~~DERs accruing~~a 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 under~~April 24, 2017. Defendants filed a motion to dismiss that Consolidated Amended Complaint on June 8, 2017; the ~~2004 LTIP. These DERs continue~~motion 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.

Bunim v. Miller, et al., No. 2:17-cv-00519-ER, pending in the United States District Court for the Eastern District of Pennsylvania, and filed on February 6, 2017. The plaintiff in this case brought, derivatively on behalf of the Partnership, claims that StoneMor GP’s officers and directors aided and abetted in breaches of StoneMor GP’s purported fiduciary duties by, among other things and in general, allegedly making misrepresentations through the use of non-GAAP accounting standards in its public filings, by allegedly failing to ~~accrue until~~clearly disclose the ~~underlying securities are issued.~~use of proceeds from debt and equity offerings, and by allegedly approving unsustainable distributions. The ~~following table sets forth~~plaintiff also claims that these actions and misrepresentations give rise to causes of action for gross mismanagement, unjust enrichment, and (in connection with a purportedly misleading proxy statement filed in 2014) violations of Section 14(a) of the ~~2004 LTIP activity related~~Securities Exchange Act of 1934. The derivative plaintiff seeks an award of damages, attorneys’ fees and costs in favor of the Partnership as nominal plaintiff, as well as general compliance and governance changes. This case has been stayed, by the agreement of the parties, pending the resolution of the motion to ~~DERs credited~~dismiss filed in the Anderson case.

Muth v. StoneMor G.P. LLC, et al., December Term, 2016, No. 01196 and Binder v. StoneMor G.P. LLC, et al., January Term, 2017, No. 04872, both pending in the Court of Common Pleas for Philadelphia County, Pennsylvania, and filed on December 20, 2016 and February 3, 2017, respectively. In these cases, the plaintiffs brought, derivatively on behalf of the Partnership, claims that StoneMor GP’s officers and directors aided and abetted in breaches of StoneMor GP’s purported fiduciary duties by, among other things and in general, allegedly making misrepresentations through the use of non-GAAP accounting standards in its public filings and by failing to clearly disclose the use of proceeds from debt and equity offerings, as ~~phantom units~~well as approving unsustainable distributions. The plaintiffs also claim that these actions and misrepresentations give rise to a cause of action for unjust enrichment. The derivative plaintiffs seek an award of damages, attorneys’ fees and costs in favor of the Partnership as nominal plaintiff, as well as alterations to the ~~participant’s accounts~~procedures 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
   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

~~(1)~~

The weighted-average fair value for the phantom units credited was $23.52 and $30.04 for the three months ended June 30, 2016 and 2015, respectively, and $24.80 and $29.02 for the six months ended June 30, 2016 and 2015, respectively. The intrinsic value of vested phantom unit awards was $0.1 million for both the three months ended June 30, 2016 and 2015 and $0.2 million for both the six months ended June 30, 2016 and 2015.

~~(2)~~

~~Based on the closing price of the common units on June 30, 2016, the estimated intrinsic value of the outstanding unit awards was $4.9 million at June 30, 2016.~~

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 equal~~electing members to the ~~closing price~~board 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 on~~parties, pending the ~~date preceding the exercise date less the exercise price~~resolution of the ~~UARs,~~motion to dismiss filed in the ~~extent~~Anderson case.

CONDENSED CONSOLIDATING BALANCE SHEETS

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










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)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

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)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

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


Cash and cash equivalents - End of period
   $ —      $ —      $ 10,297    $ 3,106    $ —      $ 13,403

~~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)

The Partnership’s operations include two reportable operating segments, Cemetery Operations and Funeral ~~Homes.~~Home Operations. These operating segments reflect the way the Partnership ~~manages~~managed its operations and ~~makes~~made business decisions as of ~~June 30, 2016 and represent a change from the comparable period presented. Prior period information was revised to the current year presentation.~~March 31, 2017. Operating segment data for and as of the periods indicated were as follows (in thousands):

   Three months ended June 30,    Six months ended June 30,
   2016    2015    2016    2015
Cemetery Operations:

Revenues
   $ 63,543       $ 71,019       $ 124,149       $ 126,252
Operating costs and expenses
   (54,911 )    (57,573 )    (105,267 )    (106,906 )
Depreciation and amortization
   (2,014 )    (1,904 )    (3,984 )    (3,810 )








Segment income
   $ 6,618       $ 11,542       $ 14,898       $ 15,536








Funeral Homes:

Revenues
   $ 14,739       $ 13,494       $ 31,062       $ 28,754
Operating costs and expenses
   (12,732 )    (12,149 )    (26,472 )    (24,299 )
Depreciation and amortization
   (858 )    (802 )    (1,735 )    (1,601 )








Segment income
   $ 1,149       $ 543       $ 2,855       $ 2,854








Reconciliation of segment income to net loss:

Cemeteries
   $ 6,618       $ 11,542       $ 14,898       $ 15,536
Funeral homes
   1,149       543       2,855       2,854








Total segment income
   7,767       12,085       17,753       18,390








Corporate overhead
   (9,737 )    (10,429 )    (20,048 )    (19,512 )
Corporate depreciation and amortization
   (283 )    (238 )    (501 )    (485 )
Other gains (losses), net
   (191 )    —         (1,073 )    —
Interest expense
   (5,707 )    (5,770 )    (11,497 )    (11,233 )
Income tax benefit (expense)
   (500 )    (292 )    (760 )    (314 )








Net loss
   $ (8,651 )    $ (4,644 )    $ (16,126 )    $ (13,154 )








Capital expenditures:

Cemeteries
   $ 2,691       $ 4,127       $ 4,632       $ 6,693
Funeral homes
   44       207       495       382
Corporate
   209       101       2,377       175








Total capital expenditures
   $ 2,944       $ 4,435       $ 7,504       $ 7,250








Balance sheet information:    June 30, 2016    December 31, 2015
Assets:

Cemetery Operations
   $ 1,528,569       $ 1,481,926
Funeral Homes
   197,481       190,443
Corporate
   20,145       21,988





Total assets
   $ 1,746,195       $ 1,694,357





Goodwill:

Cemetery Operations
   $ 25,320       $ 25,320
Funeral Homes
   45,252       44,531





Total goodwill
   $ 70,572       $ 69,851

~~19. SUBSEQUENT EVENTS~~

Income tax expense was ~~$0.5~~$0.8 million for the three months ended ~~June 30, 2016, an increase of $0.2 million from~~March 31, 2017, as compared to $0.3 million for the three months ended ~~June 30, 2015.~~March 31, 2016. The additional income tax expense was due to an increase in deferred tax liabilities associated with long-lived intangibles that will reverse after the expiration of the existing deferred tax assets. 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.

~~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




Total revenue
   124,149       126,252




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




Merchandise
   3,984       4,442
Service
   12,602       11,296
Depreciation and amortization
   1,735       1,601
Other
   9,886       8,561




Total expenses
   28,207       25,900




Operating income
   $ 2,855       $ 2,854

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.

working capital deficits through cash generated from operations and additional borrowings;

expansion capital expenditures, net contributions to the merchandise and perpetual care trust funds and debt service obligations through additional borrowings, issuance of additional limited partner units or asset sales. Amounts contributed to the merchandise trust funds will be withdrawn at the time of the delivery of the product or service sold to which the contribution relates (see “Critical Accounting Policies and Estimates” regarding revenue recognition), which will reduce the amount of additional borrowings, issuance of additional limited partner units or asset sales needed; and

cash distributions in accordance with our partnership agreement and maintenance capital expenditures through available cash and cash flows from operating ~~activities;~~activities.

~~debt service obligations through additional borrowings or by the issuance of additional limited partner units or asset sales.~~

We rely on cash flow from operations, borrowings under our credit facility and the issuance of additional limited partner units to execute our ~~growth~~operational 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.

operating performance not meeting reasonably expected forecasts;

failing to attract and retain qualified sales personnel and management;

investments in our trust funds experiencing significant declines due to factors outside our control;

being unable to compete successfully with other cemeteries and funeral homes in our markets;

the number of deaths in our markets declining; and

the financial condition of third-party insurance companies that fund our pre-need funeral contracts deteriorating.

Expansion capital expenditures – we consider expansion capital expenditures to be capital expenditures that expand the capacity of our existing operations; and

Maintenance capital expenditures – we consider maintenance capital expenditures to be any capital expenditures that are not expansion capital expenditures – generally, this will include ~~expenditures to maintain our facilities.~~furniture, fixtures, equipment and major facility improvements that are capitalized in accordance with GAAP.

the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, or ~~investments, make cash distributions if a default exists or would result from~~ the distribution, merger or consolidation with other persons, or engage in certain asset dispositions including the sale of all or substantially all of its assets. We were in compliance with these covenantsConsolidated Leverage Ratio, as of ~~June~~the last day of any fiscal quarter, commencing on September 30, ~~2016. The Credit Agreement also requires us to maintain:~~

~~Consolidated EBITDA (as defined in~~2016, determined for the ~~Credit Agreement), calculated over a~~ period of four consecutive fiscal quarters ending on such date (the “Measurement Period”), to be ~~no less~~greater than 4.25 to 1.0 for the ~~sum~~Measurement Periods ended March 31, 2017 and June 30, 2017, 4.50 to 1.0 for the Measurement Period ended September 30, 2017 and the Measurement Period ending December 31, 2017, 4.25 to 1.0 for Measurement Periods ending in fiscal 2018 and 4.00 to 1.0 for Measurement Periods ending thereafter, which may be increased after January 1, 2019 to 4.25 to 1.0 (in case of ~~(i) $80.0 million plus (ii) 80%~~a Designated Acquisition made subsequent to the last day of the ~~aggregate Consolidated EBITDA for each permitted acquisition completed after June 30, 2014;~~immediately preceding fiscal quarter) as of the last day of the fiscal quarter in which such Designated Acquisition occurs and as of the last day of the immediately succeeding fiscal quarter;

the ratio of Consolidated ~~Funded Indebtedness (as defined~~EBITDA (reduced by the amount of capital expenditures not financed with debt other than Revolving Commitments, taxes and restricted payments including distributions paid in ~~the Credit Agreement)~~cash) to Consolidated ~~EBITDA (as defined in~~Fixed Charges, as of the last day of any fiscal quarter, commencing on September 30, 2017, to be less than 1.20 to 1.0 for any Measurement Period.

On March 31, 2017, the Partnership’s Consolidated Leverage Ratio and the Consolidated Debt Service Coverage Ratio were 4.09 and 3.51, respectively.

The Amended Credit ~~Agreement), calculated over~~Agreement prohibits the Partnership from increasing its regularly scheduled quarterly cash distributions otherwise permitted under the Amended Credit Agreement until January 1, 2018 unless at the time such distribution is declared and on a ~~period~~pro forma basis after giving effect to the payment of ~~four fiscal quarters, or~~any such distribution the Consolidated Leverage Ratio ~~of not~~is no greater than ~~4.00~~3.75:1.00. Additional covenants include customary limitations, subject to ~~1.00 for any period.~~certain exceptions, on, among others: (i) the incurrence of Indebtedness; (ii) granting of Liens; (iii) fundamental changes and dispositions; (iv) investments, loans, advances, guarantees and acquisitions; (v) swap agreements; (vi) transactions with Affiliates; (vii) Restricted Payments; and (viii) Sale and Leaseback Transactions. The Partnership was in compliance with the Original Credit Agreement covenants as of March 31, 2017 and was in compliance with the Amended Credit Agreement covenants as of June 30, 2017.

The Borrowers’ obligations under the Amended Credit Agreement are guaranteed by the Partnership and the Borrowers. Pursuant to the Guaranty Agreement, the Borrowers’ obligations under the Amended 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 excluded assets, which include, among others: (i) Trust Accounts, certain proceeds required by law to be placed into such Trust Accounts and funds held in such Trust Accounts; and (ii) Excluded Real Property, including owned and leased real property that may not be pledged as a matter of law.

Senior Notes

On May 28, 2013, wethe Partnership issued $175.0 million aggregate principal amount of 7.875% Senior Notes due 2021 (the “Senior Notes”). ~~We pay~~The Partnership pays 7.875% interest per annum on the principal amount of the Senior Notes, payable in cash semi-annually in arrears on June 1 and December 1 of each year. The net proceeds from the offering were used to retire a $150.0 million aggregate principal amount of 10.25% Senior Notes due 2017 and the remaining proceeds were used for general corporate purposes. The Senior Notes were issued at 97.832% of par resulting in gross proceeds of $171.2 million with an original issue discount of approximately $3.8 million. WeThe Partnership incurred debt issuance costs and fees of approximately $4.6 million. These costs and fees are deferred and are being amortized over the life of ~~these notes.~~the Senior Notes. The Senior Notes mature on June 1, 2021.

At any time on or after June 1, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount) set forth below, together with accrued and unpaid interest, if any, to the redemption date, if redeemed during the 12-month period beginning June 1 of the years indicated:

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%

Subject to certain exceptions, upon the occurrence of a Change of Control (as defined in the Indenture), each holder of the Senior Notes will have the right to require us to purchase that holder’s Senior Notes for a cash price equal to 101% of the principal amounts to be purchased, plus accrued and unpaid interest.

The Senior Notes are jointly and severally guaranteed by certain of our ~~material~~ subsidiaries. The Indenture governing the Senior Notes contains covenants, including limitations of our ability to incur certain additional indebtedness and liens, make certain dividends, distributions, redemptions or investments, enter into certain transactions with affiliates, make certain asset sales, and engage in certain mergers, consolidations or sales of all or substantially all of our assets, among other items. As of ~~June 30, 2016,~~March 31, 2017, we were in compliance with these covenants.

Cash ~~Distribution Policy~~

Distributions

Our partnership agreement requires that we distribute 100% of available cash to our common unitholders and general partner within 45 days following the end of each calendar quarter in accordance with their respective percentage interests. Available cash consists generally of all of our cash receipts, less cash disbursements. Our general partner is granted discretion under the partnership agreement to establish, maintain and adjust reserves for ~~future operating expenses,~~the conduct of the Partnership's business, debt service ~~maintenance capital expenditures~~and compliance with our credit agreement and distributions for the next four quarters. These reserves are not restricted by magnitude, but only by type of future cash requirements with which they can be associated.

Available cash is distributed to the common limited partners and the general partner in accordance with their ownership interests, subject to the general partner’s incentive distribution rights if quarterly cash distributions per limited partner unit exceed specified targets. Incentive distribution rights are generally defined as all cash distributions paid to our general partner that are in excess of its general partner ownership interest. The incentive distribution rights will entitle our general partner to receive the following increasing percentage of cash distributed by us as it reaches certain target distribution levels:

13.0% of all cash distributed in any quarter after each common unit has received $0.5125 for that quarter;

23.0% of all cash distributed in any quarter after each common unit has received $0.5875 for that quarter; and

48.0% of all cash distributed in any quarter after each common unit has received $0.7125 for that quarter.

On April 28, 2017, we announced a quarterly cash distribution of $0.33 per common unit pertaining to the results for the first quarter of 2017. The distribution was paid on May 15, 2017 to common unit holders of record as of the close of business on May 8, 2017. A part of or all of this quarterly cash distribution may be deemed to have been a return 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 end of the period, the distribution represented a return of capital to those interests in accordance with US GAAP.

We are deferring the determination regarding a distribution with respect to the quarter ended June 30, 2017 until the Board of Directors of our general partner is able to review financial information as of and for the period ended September 30, 2017. However, we expect that the amount of any such distribution will be reduced by at least 50 percent from the distribution paid with regard to the quarter ended March 31, 2017. Due to both the delay in making our determination with respect to the second quarter distribution and our capital resource and liquidity constraints, it is possible that we will not pay four distributions in 2017 as we have in previous years.

We historically have sought to include in our distributions to unitholders for a particular financial reporting period the profit we anticipate the Partnership will generate with respect to the sales, including pre-need sales, of interment rights, merchandise and services, and trust returns during the applicable period. However, we currently expect that, for the foreseeable future, the amount of our distributions will be based on our cash flow from operating activities. We anticipate that we will use any cash generated from borrowings, equity issuances or assets sales during this period to reduce our outstanding indebtedness, provide a reserve to enhance our financial condition relative to the financial covenants in the Amended Credit Agreement and to fund acquisitions.

Agreements with the Archdiocese of Philadelphia

In accordance with the lease and management agreements with the Archdiocese of Philadelphia, we have agreed to pay to the Archdiocese aggregate fixed rent of $36.0 million in the following amounts:



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

The fixed rent for lease years 6 through 11, ~~shall be~~an 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, ~~prior~~we 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 ~~shall~~will become due and payable on or before June 30, ~~days after the end of lease year 11.~~

2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires making estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of actual revenue and expenses during the reporting period. Although we base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, actual results may differ from the estimates on which our financial statements are prepared at any given point of time. Changes in these estimates could materially affect our financial position, results of operations or cash flows. Significant items that are subject to such estimates and assumptions include revenue and expense accruals, fair value of merchandise and perpetual care ~~trusts~~trust 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/A~~10-K for the year ended December 31, ~~2015,~~2016, and we summarize our significant accounting policies ~~within our consolidated financial statements included~~and any updates in Note 1 under “Item 1” of this Form ~~10-Q/A.~~

10-Q.



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term “market” risk refers to the risk of gains or losses arising from changes in interest rates and prices of marketable securities. The disclosures are not meant to be precise indicators of expected future gains or losses, but rather indicators of reasonably possible gains or losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk-sensitive instruments were entered into for purposes other than trading.

INTEREST-BEARING INVESTMENTS

Our fixed-income securities subject to market risk consist primarily of certain investments in our merchandise trusts and perpetual care trusts. As of March 31, 2017, the fair value of fixed-income securities in our merchandise trusts and perpetual care trusts represented 1.1% and 2.1%, respectively, of the fair value of total trust assets. The aggregate of the quoted fair value of these fixed-income securities was $5.8 million and $7.2 million in the merchandise trusts and perpetual care trusts, respectively, as of March 31, 2017. Holding all other variables constant, a hypothetical 1% change in variable interest rates on these fixed-income securities would change the fair market value of the assets in our merchandise trusts and perpetual care trusts each by approximately $0.1 million, based on discounted expected future cash flows. If these securities are held to maturity, no change in fair market value will be realized. Our money market and other short-term investments subject to market risk consist primarily of certain investments in our merchandise trusts and perpetual care trusts. As of March 31, 2017, the fair value of money market and short-term investments in our merchandise trusts and perpetual care trusts represented 5.1% and 2.8%, respectively, of the fair value of total trust assets. The aggregate of the quoted fair value of these money market and short-term investments was $26.9 million and $9.7 million in the merchandise trusts and perpetual care trusts, respectively, as of March 31, 2017. Holding all other variables constant, a hypothetical 1% change in variable interest rates on these money market and short-term investments would change the fair market value of the assets in our merchandise trusts and perpetual care trusts by approximately $0.3 million and $0.1 million, respectively, based on discounted expected future cash flows.

MARKETABLE EQUITY SECURITIES

Our marketable equity securities subject to market risk consist primarily of certain investments held in our merchandise trusts and perpetual care trusts. These assets consist of investments in both individual equity securities as well as closed and open-ended mutual funds. As of March 31, 2017, the fair value of marketable equity securities in our merchandise trusts and perpetual care trusts represented 7.6% and 7.7%, respectively, of the fair value of total trust assets. The aggregate of the quoted fair market value of these marketable equity securities was $40.0 million and $26.3 million in our merchandise trusts and perpetual care trusts, respectively, as of March 31, 2017, based on final quoted sales prices. Holding all other variables constant, a hypothetical 10% change in variable interest rates of the equity securities would change the fair market value of the assets in our merchandise trusts and perpetual care trusts each by approximately $4.0 million and $2.6 million, based on discounted expected future cash flows. As of March 31, 2017, the fair value of marketable closed and open-ended mutual funds in our merchandise trusts represented 68.1% of the fair value of total trust assets, 65.7% of which pertained to fixed-income mutual funds. As of March 31, 2017, the fair value of marketable closed and open-ended mutual funds in our perpetual care trusts represented 49.2% of total trust assets, 87.5% of which pertained to fixed-income mutual funds. The aggregate of the quoted fair market value of these closed and open-ended mutual funds was $356.8 million and $168.0 million, respectively, in the merchandise trusts and perpetual care trusts as of March 31, 2017, based on final quoted sales prices, of which $234.3 million and $147.0 million, respectively, pertained to fixed-income mutual funds. Holding all other variables constant, a hypothetical 10% change in the average market prices of the closed and open-ended mutual funds would change the fair market value of the assets in our merchandise trusts and perpetual care trusts by approximately $35.7 million and $16.8 million, respectively, based on discounted expected future cash flows.

OTHER INVESTMENT FUNDS

Other investment funds are measured at fair value using the net asset value per share practical expedient. 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. This asset class has an inherent valuation risk as the values provided by investment fund managers may not represent the liquidation values obtained by the trusts upon redemption or liquidation of the fund assets. As of March 31, 2017, the fair value of other investment funds in our merchandise trusts and perpetual care trusts represented 14.4% and 38.1%, respectively, of the fair value of total trust assets. The fair market value of the holdings in these funds was $75.5 million and $130.1 million in our merchandise trusts and perpetual care trusts, respectively, as of March 31, 2017, based on net asset value quotes.

DEBT INSTRUMENTS

Certain borrowings under our Amended Credit Facility bear interest at a floating rate, based on LIBOR, which is adjusted quarterly. This subjects us to increases in interest expense resulting from movements in interest rates. As of March 31, 2017, we had $140.6 million of borrowings outstanding under our Amended Credit Facility, which generally bears interest at a variable rate. Holding all other variables constant, a hypothetical 1% change in variable interest rates would change our consolidated interest expense for the three-month period ending March 31, 2017 by approximately $0.4 million.



ITEM 4.	CONTROLS AND PROCEDURES ~~(As Revised)~~

~~We maintain~~

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Partnership maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in ~~the~~our 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’s~~SEC rules and forms and that such information is accumulated and communicated to our management, including ~~our~~the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

~~In connection with~~

Our management, including the ~~restatement of our consolidated financial statements (see Note 2,~~~~Restatement of Previously Issued Consolidated Financial Statements~~~~, under Item 1. Financial Statements unaudited), under~~CEO and CFO, evaluated the ~~supervision~~design and ~~with the participation of the Chief Executive Officer and Chief Financial Officer, we re-evaluated the effectiveness~~operation of our disclosure controls and ~~procedures. In conducting~~procedures 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.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis. The deficiencies noted below could result in a material misstatement in our financial statements; therefore, they represent material weaknesses in our internal control over financial reporting.

We previously identified and reported material weaknesses in internal control over financial reporting as of December 31, 2016 in our Annual Report on Form 10-K related to the following:


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.

Notwithstanding these material weaknesses, based on the additional analysis and other post-closing procedures performed, management believes that the financial statements included in this report fairly present in all material respects our financial position, results of operations, capital position, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States (“GAAP”).

STATUS OF REMEDIATION OF MATERIAL WEAKNESSES

While we ~~considered~~continue 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.

We will test the ongoing operating effectiveness of the new controls subsequent to implementation and consider the material weaknesses remediated after the applicable remedial controls operate effectively for a sufficient period of time.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the fiscal quarter ended March 31, 2017, we continued to make improvements to our internal control over financial reporting ~~as follows:~~

~~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.~~

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”.

~~The Partnership did not design and maintain effective controls over the reconciliation of amounts recorded in the general ledger~~with 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 the~~that 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 measures~~other remediation efforts relating to ~~remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses, which primarily include:~~

~~Reevaluating and establishing, on a periodic basis, accounting policies and the appropriate application thereof;~~

~~Enhancing control procedures related to the review of certain recorded balances affected by the material weaknesses to ensure the appropriateness of such balances; and~~

~~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 required~~identified subsequent to ~~address~~March 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 REPORTING~~

~~Except as set forth above,~~fiscal year ended December 31, 2016, there ~~have been~~were no changes in our internal control over financial reporting ~~that occurred~~as defined in Rules 13a-15(d) and 15d-15(d) of the Exchange Act during ~~our most recent fiscal quarter~~the three months ended ~~June 30, 2016~~March 31, 2017 that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Part~~

PART II – ~~Other Information~~

~~Item 6.~~

~~Exhibits~~

~~Exhibits are listed in the Exhibit Index, which is incorporated herein by reference.~~

OTHER INFORMATION

~~SIGNATURES~~

~~Pursuant 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.~~

There have been no material changes in our Risk Factors as set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, except as set forth below.

We may not have sufficient cash from operations to increase or restore cuts in distributions, to continue paying distributions at their current level, or at all, after we have paid our expenses, including the expenses of our general partner, funded merchandise and perpetual care trusts and established necessary cash reserves.

The amount of cash we can distribute on our units principally depends upon the amount of cash we generate from operations, which fluctuates from quarter to quarter based on, among other things:

the volume of our sales;

the prices at which we sell our products and services; and

the level of our operating and general and administrative costs.

In addition, the actual amount of cash we will have available for distribution will depend on other factors, such as working capital borrowings, capital expenditures and funding requirements for trusts and our ability to withdraw amounts from trusts. Therefore, our major risk is related to uncertainties associated with our cash flow from our pre-need and at-need sales, our trusts, and financings, which may impact our ability to meet our financial projections, our ability to service our debt and pay distributions, and our ability to increase our distributions.

If we do not generate sufficient cash to continue paying distributions at least at their current level or restore them to previous levels, the market price of our common units may decline materially or remain stagnant. We have supplemented and expect that at least during the year ending December 31, 2017 we will seek to continue to supplement our cash generation with proceeds from financing activities. As a master limited partnership, our primary cash requirements, in addition to normal operating expenses, are for capital expenditures, net contributions to the merchandise trust funds, debt service and cash distributions. Accordingly, we expect that we will need working capital borrowings in order to prudently operate our business and in turn allow us to pay distributions to our unitholders. We cannot be certain that additional capital will be available to us to the extent required and on acceptable terms, which could have an adverse impact on our ability to pay distributions to our unitholders.

Although we have deferred a determination as to the distribution for our unitholders with respect to the quarter ended June 30, 2017 until we have reviewed financial information as of and for the period ended September 30, 2017, we do expect that the distribution will be reduced by at least 50% from the distribution we paid with respect to the quarter ended March 31, 2017. Due to both the delay in making our determination with respect to the second quarter distribution and our capital resource and liquidity constraints, it is possible that we will not pay four distributions in 2017 as we have in previous years.



ITEM 6.	EXHIBITS


~~November 9, 2016~~						~~/s/ Lawrence Miller~~
						~~Lawrence Miller~~
						~~Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)~~

~~November 9, 2016~~						~~/s/ Sean P. McGrath~~
						~~Sean P. McGrath~~
						~~Chief Financial Officer (Principal Financial Officer)~~

~~EXHIBIT INDEX~~


Exhibit Number		Description

10.1**
10.1		~~Restricted Phantom Unit~~ First Amendment and Limited Waiver to Credit Agreement, ~~under the StoneMor Partners L.P. 2014 Long-Term Incentive Plan, entered into~~dated as of ~~April 1, 2016,~~March 15, 2017, by and ~~between~~among StoneMor GPOperating LLC, the other Borrowers party thereto, Capital One, National Association, as Administrative Agent, and ~~William Shane~~the Required Lenders party thereto (incorporated by reference to Exhibit 10.1 of Registrant’s ~~Original Filing~~Current Report on Form 8-K filed on ~~August 5, 2016)~~March 16, 2017).

10.2**
10.2		Separation Agreement and General Release, dated as of February 27, 2017 by and between StoneMor GP Holdings LLC and Sean P. McGrath (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed on March 3, 2017).

10.3		Separation Agreement and General Release, dated as of March 27, 2017, by and between StoneMor GP Holdings LLC and Lawrence Miller (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed on March 28, 2017).

10.4		Letter Agreement by and between Austin So and StoneMor GP LLC, dated ~~May 26, 2016~~January 28, 2017 (incorporated by reference to Exhibit ~~10.1~~10.36 of Registrant’s ~~Original Filing~~Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on ~~August 5, 2016)~~September 18, 2017).

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		Certification pursuant to Exchange Act Rule 13a-14(a) of ~~Lawrence Miller,~~R. Paul Grady, President, Chief Executive Officer ~~President~~ and ~~Chairman~~Member of the Board of Directors.


31.2		Certification pursuant to Exchange Act Rule 13a-14(a) of ~~Sean P. McGrath,~~Mark L. Miller, Chief Financial ~~Officer.~~
	Officer and Senior Vice President.

32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and Exchange Act Rule13a-14(b) of ~~Lawrence Miller,~~R. Paul Grady, President, Chief Executive Officer ~~President~~ and ~~Chairman~~Member of the Board of Directors (furnished herewith).


32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and Exchange Act Rule13a-14(b) of ~~Sean P. McGrath,~~Mark L. Miller, Chief Financial Officer and Senior Vice President (furnished herewith).


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, 2016~~March 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, 2016~~March 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.

SIGNATURES

Pursuant 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.

**
	~~Previously filed with~~

		STONEMOR PARTNERS L.P.
		By: StoneMor GP LLC
		its general partner

Date: October 27, 2017		/s/ R. Paul Grady
		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 Securities~~Board of Directors (Principal Executive Officer)

Date: October 27, 2017		/s/ Mark L. Miller
		Mark L. Miller
		Chief Financial Officer and ~~Exchange Commission on August 5, 2016.~~Senior Vice President (Principal Financial Officer)



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	¨	~~☐ (Do not check if a smaller reporting company)~~
Smaller reporting company	¨	☐	Emerging growth company	¨



	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



	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

☒

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	2)
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 ~~June 30,~~March 31, 2016 and December 31, 2015;

	3)
3.	The presentation of “Cemetery merchandise revenues”, Cemetery service revenues”, and “Cost of goods sold” related to assumed performance obligations from acquisitions for ~~each of~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2016 and 2015;

	4)
4.	The recording of incorrect amounts of investment revenues and expenses related to merchandise and perpetual care trusts on the condensed consolidated ~~statement~~statements of operations and the incorrect tracking of perpetual care-trusting obligations on the condensed consolidated balance sheets;

	5)
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)
6.	Other adjustments principally relating to the recognition, accuracy and/or classification of certain amounts in “Deferred cemetery revenues, net”, “Merchandise ~~liabilities”,~~liability” and “Other current assets”; and


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 ~~Statements (unaudited)” to this Form 10-Q/A.~~Information; and




		Page

Part I		Financial Information


Item 1.		Financial Statements ~~(unaudited)~~(Unaudited)	1
		1

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

31Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44


Item 4.		Controls and Procedures	46
		44

Part II		Other Information

Item 1A.	Risk Factors	48

Item 6.		Exhibits	49

45	Signatures	50



1.	GENERAL


	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

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

Total assets	$	1,746,195		$	1,694,357

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

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

Total liabilities		1,550,291			1,512,811

Commitments and contingencies
Partners’ Capital
General partner interest		(632	)		15
Common limited partners’ interests		196,536			181,531

Total partners’ capital		195,904			181,546

Total liabilities and partners’ capital	$	1,746,195		$	1,694,357


	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

Total revenues		78,282			84,513			155,211			155,006

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

Total cost and expenses		80,535			83,095			158,007			156,613

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	)

Loss before income taxes		(8,151	)		(4,352	)		(15,366	)		(12,840	)
Income tax benefit (expense)		(500	)		(292	)		(760	)		(314	)

Net loss	$	(8,651	)	$	(4,644	)	$	(16,126	)	$	(13,154	)

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


	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	)

June 30, 2016		35,439,047	$	196,536		$	(632	)	$	195,904



	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



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


			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


		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


Assets:
Accounts receivable	$	22
Cemetery and funeral home property		90
Property and equipment		220
Merchandise trusts, restricted		290
Other assets		13

Total assets		635

Liabilities:
Deferred revenues		193

Total liabilities		193

Fair value of net assets acquired		442

Consideration paid - cash		1,500

Total consideration paid		1,500

Goodwill from purchase	$	1,058


Assets:
Accounts receivable	$	2,641
Cemetery property		5,249
Property and equipment		7,710
Inventory		53
Merchandise trusts, restricted		15,075
Perpetual care trusts, restricted		4,134
Intangible assets		406

Total assets		35,268

Liabilities:
Deferred revenues		21,349
Perpetual care trust corpus		4,134
Other liabilities		21

Total liabilities		25,504

Fair value of net assets acquired		9,764

Consideration paid – cash		18,800
Deferred cash consideration		876

Total consideration paid		19,676

Gain on bargain purchase	$	766

Goodwill from purchase	$	10,678


	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	)

Accounts receivable, net of allowance		169,352			163,582
Less: current portion, net of allowance		74,231			68,415

Long-term portion, net of allowance	$	95,121		$	95,167


	June 30, 2016		December 31, 2015
Cemetery land	$	253,596	$	253,955
Mausoleum crypts and lawn crypts		80,263		80,502

Cemetery property	$	333,859	$	334,457


	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

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



	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


					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


	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	$	—



	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


	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

~~STONEMOR PARTNERS L.P.~~RISK FACTORS

~~By: StoneMor GP LLC~~