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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 31, 2015
or
 
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from                      to                      .
Commission File Number: 001-32270

STONEMOR PARTNERS L.P.
(Exact name of registrant as specified in its charter)

 
			
Delaware	 	80-0103159	
(State or other jurisdiction of
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	

311 Veterans Highway, Suite B
Levittown, Pennsylvania	 	19056	
(Address of principal executive offices)	 	(Zip Code)	
(215) 826-2800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	 	¨	  	Accelerated filer	 	x	
				
Non-accelerated filer	 	¨   (Do not check if a smaller reporting company)	  	Smaller reporting company	 	¨	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

 

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The number of the registrant’s outstanding common units at May 1, 2015 was 29,259,424.
 Index – Form 10-Q

			
 	 	 	  	Page	 	
			
Part I	 	Financial Information	  	 	1	  	
			
Item 1.	 	Financial Statements (unaudited)	  	 	1	  	
			
Item 2.	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	26	  	
			
Item 3.	 	Quantitative and Qualitative Disclosures About Market Risk	  	 	41	  	
			
Item 4.	 	Controls and Procedures	  	 	42	  	
			
Part II	 	Other Information	  	 	43	  	
			
Item 1.	 	Legal Proceedings	  	 	43	  	
			
Item 1A.	 	Risk Factors	  	 	43	  	
			
Item 2.	 	Unregistered Sales of Equity Securities and Use of Proceeds	  	 	43	  	
			
Item 3.	 	Defaults Upon Senior Securities	  	 	43	  	
			
Item 4.	 	Mine Safety Disclosures	  	 	43	  	
			
Item 5.	 	Other Information	  	 	43	  	
			
Item 6.	 	Exhibits	  	 	44	  	
			
	 	Signatures	  	 	45	  	

Table of Contents
 Part I – Financial Information
 
 Item 1.	Financial Statements	
StoneMor Partners L.P.
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)

 	  	March 31,
2015	 	 	December 31,
2014	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	6,397	  	 	$	10,401	  	
Accounts receivable, net of allowance	  	 	65,429	  	 	 	62,503	  	
Prepaid expenses	  	 	3,107	  	 	 	4,708	  	
Other current assets	  	 	24,613	  	 	 	24,266	  	
	  	 	 	 	 	 	 	 	
Total current assets		 	99,546	  		 	101,878	  	
Long-term accounts receivable, net of allowance		 	91,088	  		 	89,536	  	
Cemetery property		 	339,821	  		 	339,848	  	
Property and equipment, net of accumulated depreciation		 	99,569	  		 	100,391	  	
Merchandise trusts, restricted, at fair value		 	488,007	  		 	484,820	  	
Perpetual care trusts, restricted, at fair value		 	345,183	  		 	345,105	  	
Deferred financing costs, net of accumulated amortization		 	8,707	  		 	9,089	  	
Deferred selling and obtaining costs		 	102,904	  		 	97,795	  	
Deferred tax assets		 	40	  		 	40	  	
Goodwill		 	58,836	  		 	58,836	  	
Intangible assets		 	68,441	  		 	68,990	  	
Other assets		 	3,211	  		 	3,136	  	
	  	 	 	 	 	 	 	 	
Total assets		$	1,705,353	  		$	1,699,464	  	
	  	 	 	 	 	 	 	 	
Liabilities and partners’ capital									
Current liabilities:									
Accounts payable and accrued liabilities		$	34,552	  		$	35,382	  	
Accrued interest		 	4,742	  		 	1,219	  	
Current portion, long-term debt		 	1,664	  		 	2,251	  	
	  	 	 	 	 	 	 	 	
Total current liabilities		 	40,958	  		 	38,852	  	
Other long-term liabilities		 	1,237	  		 	1,292	  	
Obligation for lease and management agreements, net		 	8,943	  		 	8,767	  	
Long-term debt		 	297,184	  		 	285,378	  	
Deferred cemetery revenues, net		 	661,877	  		 	643,408	  	
Deferred tax liabilities		 	17,573	  		 	17,708	  	
Merchandise liability		 	150,195	  		 	150,192	  	
Perpetual care trust corpus		 	345,183	  		 	345,105	  	
	  	 	 	 	 	 	 	 	
Total liabilities		 	1,523,150	  		 	1,490,702	  	
	  	 	 	 	 	 	 	 	
Commitments and contingencies									
Partners’ capital (deficit)									
General partner deficit		 	(6,204	) 		 	(5,113	) 	
Common partners, 29,259 and 29,204 units outstanding as of March 31, 2015 and December 31, 2014, respectively		 	188,407	  		 	213,875	  	
	  	 	 	 	 	 	 	 	
Total partners’ capital		 	182,203	  		 	208,762	  	
	  	 	 	 	 	 	 	 	
Total liabilities and partners’ capital		$	1,705,353	  		$	1,699,464	  	
	  	 	 	 	 	 	 	 	
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
 
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StoneMor Partners L.P.
Condensed Consolidated Statement of Operations
(in thousands, except per unit data)
(unaudited)

 	  	Three months ended
March 31,	 	
 	  	2015	 	 	2014	 	
Revenues:	  				 				
Cemetery	  				 				
Merchandise	  	$	26,937	  	 	$	26,068	  	
Services	  	 	13,910	  	 	 	10,297	  	
Investment and other	  	 	11,310	  	 	 	16,275	  	
Funeral home	  				 				
Merchandise	  	 	7,075	  	 	 	5,052	  	
Services	  	 	8,185	  	 	 	6,695	  	
	  	 	 	 	 	 	 	 	
Total revenues		 	67,417	  		 	64,387	  	
	  	 	 	 	 	 	 	 	
Costs and expenses:									
Cost of goods sold (exclusive of depreciation shown separately below):									
Perpetual care		 	1,667	  		 	1,391	  	
Merchandise		 	5,416	  		 	6,113	  	
Cemetery expense		 	16,265	  		 	13,329	  	
Selling expense		 	13,910	  		 	11,189	  	
General and administrative expense		 	9,329	  		 	7,645	  	
Corporate overhead (including $272 and $271 in unit-based compensation for the three months ended March 31, 2015 and 2014, respectively)		 	8,734	  		 	7,456	  	
Depreciation and amortization		 	2,952	  		 	2,368	  	
Funeral home expense									
Merchandise		 	2,376	  		 	1,646	  	
Services		 	5,593	  		 	4,787	  	
Other		 	4,181	  		 	2,853	  	
Acquisition related costs, net of recoveries		 	349	  		 	349	  	
	  	 	 	 	 	 	 	 	
Total cost and expenses		 	70,772	  		 	59,126	  	
	  	 	 	 	 	 	 	 	
Operating profit (loss)		 	(3,355	) 		 	5,261	  	
Gain on acquisition		 	—  	  		 	412	  	
Interest expense		 	5,463	  		 	5,574	  	
	  	 	 	 	 	 	 	 	
Net income (loss) before income taxes		 	(8,818	) 		 	99	  	
Income tax expense (benefit)		 	65	  		 	(310	) 	
	  	 	 	 	 	 	 	 	
Net income (loss)		$	(8,883	) 		$	409	  	
	  	 	 	 	 	 	 	 	
General partner’s interest in net income (loss) for the period		$	(120	) 		$	4	  	
Limited partners’ interest in net income (loss) for the period		$	(8,763	) 		$	405	  	
Net income (loss) per limited partner unit (basic and diluted)		$	(.30	) 		$	.02	  	
Weighted average number of limited partners’ units outstanding - basic		 	29,230	  		 	22,493	  	
Weighted average number of limited partners’ units outstanding - diluted		 	29,230	  		 	22,787	  	
Distributions declared per unit		$	.630	  		$	.600	  	
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
 
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StoneMor Partners L.P.
Condensed Consolidated Statement of
Partners’ Capital (Deficit)
(in thousands)
(unaudited)

 	  	Partners’ Capital (Deficit)	 	
 	  	Common
Unit Holders	 	 	General
Partner	 	 	Total	 	
Balance, December 31, 2014	  	$	213,875	  	 	$	(5,113	) 	 	$	208,762	  	
Issuance of common units	  	 	1,421	  	 	 	—  	  	 	 	1,421	  	
Compensation related to unit awards	  	 	272	  	 	 	—  	  	 	 	272	  	
Net loss	  	 	(8,763	) 	 	 	(120	) 	 	 	(8,883	) 	
Cash distributions	  	 	(16,977	) 	 	 	(971	) 	 	 	(17,948	) 	
Unit distributions	  	 	(1,421	) 	 	 	—  	  	 	 	(1,421	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, March 31, 2015		$	188,407	  		$	(6,204	) 		$	182,203	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
 
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StoneMor Partners L.P.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)

 	  	For the three months ended March 31,	 	
 	  	2015	 	 	2014	 	
Operating activities:	  				 				
Net income (loss)	  	$	(8,883	) 	 	$	409	  	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	  				 				
Cost of lots sold	  	 	2,048	  	 	 	3,057	  	
Depreciation and amortization	  	 	2,952	  	 	 	2,368	  	
Unit-based compensation	  	 	272	  	 	 	271	  	
Accretion of debt discounts	  	 	734	  	 	 	624	  	
Gain on acquisition	  	 	—  	  	 	 	(412	) 	
Changes in assets and liabilities that provided (used) cash:	  				 				
Accounts receivable	  	 	(5,196	) 	 	 	(3,168	) 	
Allowance for doubtful accounts	  	 	719	  	 	 	705	  	
Merchandise trust fund	  	 	(10,231	) 	 	 	(16,420	) 	
Prepaid expenses	  	 	1,601	  	 	 	1,142	  	
Other current assets	  	 	(348	) 	 	 	3,394	  	
Other assets	  	 	(92	) 	 	 	(44	) 	
Accounts payable and accrued and other liabilities	  	 	2,524	  	 	 	(9,564	) 	
Deferred selling and obtaining costs	  	 	(5,109	) 	 	 	(2,803	) 	
Deferred cemetery revenue	  	 	24,842	  	 	 	18,881	  	
Deferred taxes (net)	  	 	(135	) 	 	 	(551	) 	
Merchandise liability	  	 	155	  	 	 	(829	) 	
	  	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities		 	5,853	  		 	(2,940	) 	
	  	 	 	 	 	 	 	 	
Investing activities:									
Cash paid for cemetery property		 	(1,501	) 		 	(748	) 	
Purchase of subsidiaries		 	—  	  		 	(200	) 	
Cash paid for property and equipment		 	(1,314	) 		 	(1,330	) 	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities		 	(2,815	) 		 	(2,278	) 	
	  	 	 	 	 	 	 	 	
Financing activities:									
Cash distributions		 	(17,948	) 		 	(13,391	) 	
Additional borrowings on long-term debt		 	20,335	  		 	17,000	  	
Repayments of long-term debt		 	(9,395	) 		 	(55,504	) 	
Proceeds from public offerings		 	—  	  		 	53,178	  	
Cost of financing activities		 	(34	) 		 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities		 	(7,042	) 		 	1,283	  	
	  	 	 	 	 	 	 	 	
Net decrease in cash and cash equivalents		 	(4,004	) 		 	(3,935	) 	
Cash and cash equivalents - Beginning of period		 	10,401	  		 	12,175	  	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents - End of period		$	6,397	  		$	8,240	  	
	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:									
Cash paid during the period for interest		$	1,176	  		$	1,423	  	
Cash paid during the period for income taxes		$	66	  		$	—  	  	
Non-cash investing and financing activities:									
Acquisition of assets by financing		$	137	  		$	30	  	
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
 
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1.	NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	
Nature of Operations
StoneMor Partners L.P. (“StoneMor”, the “Company” or the “Partnership”) is a provider of funeral and cemetery products and services in the death care industry in the United States. Through its subsidiaries, StoneMor offers a complete range of funeral merchandise and services, along with cemetery property, merchandise and services, both at the time of need and on a pre-need basis. As of March 31, 2015, the Partnership operated 303 cemeteries in 27 states and Puerto Rico, of which 272 are owned and 31 are operated under lease, management or operating agreements. The Partnership also owned and operated 98 funeral homes in 19 states and Puerto Rico.
Basis of Presentation
The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All interim financial data is unaudited. However, in the opinion of management, the interim financial data as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The results of operations for interim periods are not necessarily indicative of the results of operations to be expected for a full year. The December 31, 2014 condensed consolidated balance sheet data was derived from audited financial statements included in the Company’s 2014 Annual Report on Form 10-K (“2014 Form 10-K”), but does not include all disclosures required by GAAP, which are presented in the Company’s 2014 Form 10-K.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of each of the Company’s subsidiaries. These statements also include the accounts of the merchandise and perpetual care trusts in which the Company has a variable interest and is the primary beneficiary. The Company operates 31 cemeteries under long-term lease, operating or management contracts. The operations of 16 of these managed cemeteries have been consolidated in accordance with the provisions of Accounting Standards Codification (ASC) 810.
The Company operates 15 cemeteries under long-term lease, operating or management agreements that do not qualify as acquisitions for accounting purposes, including 13 cemeteries related to the transaction with the Archdiocese of Philadelphia that closed in the second quarter of 2014. As a result, the Company did not consolidate all of the existing assets and liabilities related to these cemeteries. The Company has consolidated the existing assets and liabilities of these cemeteries’ merchandise and perpetual care trusts as variable interest entities since the Company controls and receives the benefits and absorbs any losses from operating these trusts. Under these long-term lease, operating or management agreements, which are subject to certain termination provisions, the Company is the exclusive operator of these cemeteries. The Company earns revenues related to sales of merchandise, services, and interment rights and incurs expenses related to such sales and the maintenance and upkeep of these cemeteries. Upon termination of these contracts, the Company will retain all of the benefits and related contractual obligations incurred from sales generated during the contract period. The Company has also recognized the existing merchandise liabilities that it assumed as part of these agreements.
New Accounting Pronouncements
In the second quarter of 2014, the Financial Accounting Standards Board issued Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which supersedes the revenue recognition requirements in “Topic 605 - Revenue Recognition” and most industry-specific guidance. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. On April 29, 2015, the Financial Accounting Standards Board issued for public comment a proposed update that would defer the effective date of ASU 2014-09 by one year. The Company is currently in the process of evaluating the potential impact of this update on its financial statements.
In the first quarter of 2015, the Financial Accounting Standards Board issued Update No. 2015-02, “Consolidation (Topic 810)” (“ASU 2015-02”), which amends previous consolidation analysis guidance. ASU 2015-02 requires
 
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companies to consider revised consolidation criteria regarding limited partnerships and similar legal entities. The amendments are effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early application is permitted. The Company is currently in the process of evaluating the impact of this update, which is not expected to have a significant impact on the Company’s financial position, results of operations, or cash flows.
In the second quarter of 2015, the Financial Accounting Standards Board issued Update No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which changes the presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. The amendments in the update are effective for annual reporting periods beginning after December 15, 2015, including interim periods within those reporting periods. Early application is permitted. The Company is currently in the process of evaluating the impact of this update, which is not expected to have a significant impact on its financial position, results of operations, or cash flows.
Use of Estimates
Preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expense during the reporting periods. As a result, actual results could differ from those estimates. The most significant estimates in the unaudited condensed consolidated financial statements are the valuation of assets in the merchandise trusts and perpetual care trusts, allowance for cancellations, unit-based compensation, merchandise liability, deferred sales revenue, deferred margin, deferred merchandise trust investment earnings, deferred obtaining costs, assets and liabilities obtained via business combinations and income taxes. Deferred sales revenue, deferred margin and deferred merchandise trust investment earnings are included in deferred cemetery revenues, net, on the unaudited condensed consolidated balance sheet.
 
2.	LONG-TERM ACCOUNTS RECEIVABLE, NET OF ALLOWANCE	
Long-term accounts receivable, net, consists of the following:

 	  	As of	 	
 	  	March 31,
2015	 	  	December 31,
2014	 	
 	  	(in thousands)	 	
Customer receivables	  	$	200,643	  	  	$	194,537	  	
Unearned finance income	  	 	(20,911	) 	  	 	(20,360	) 	
Allowance for contract cancellations	  	 	(23,215	) 	  	 	(22,138	) 	
	  	 	 	 	  	 	 	 	
		 	156,517	  		 	152,039	  	
Less: current portion, net of allowance		 	65,429	  		 	62,503	  	
	  	 	 	 	  	 	 	 	
Long-term portion, net of allowance		$	91,088	  		$	89,536	  	
	  	 	 	 	  	 	 	 	
Activity in the allowance for contract cancellations is as follows:
 
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 	  	For the three months ended March 31,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Balance - Beginning of period	  	$	22,138	  	  	$	20,275	  	
Provision for cancellations	  	 	6,072	  	  	 	5,031	  	
Charge-offs - net	  	 	(4,995	) 	  	 	(4,057	) 	
	  	 	 	 	  	 	 	 	
Balance - End of period		$	23,215	  		$	21,249	  	
	  	 	 	 	  	 	 	 	
There have been no changes to the Company’s long-term accounts receivable accounting policies since the filing of the Company’s 2014 Form 10-K.
 
3.	CEMETERY PROPERTY	
Cemetery property consists of the following:

 	  	As of	 	
 	  	March 31,
2015	 	  	December 31,
2014	 	
 	  	(in thousands)	 	
Developed land	  	$	79,134	  	  	$	79,058	  	
Undeveloped land	  	 	172,141	  	  	 	172,238	  	
Mausoleum crypts and lawn crypts	  	 	78,518	  	  	 	78,524	  	
Other land	  	 	10,028	  	  	 	10,028	  	
	  	 	 	 	  	 	 	 	
Total		$	339,821	  		$	339,848	  	

4.	PROPERTY AND EQUIPMENT	
Major classes of property and equipment follow:

 	  	As of	 	
 	  	March 31,
2015	 	  	December 31,
2014	 	
 	  	(in thousands)	 	
Building and improvements	  	$	108,615	  	  	$	108,178	  	
Furniture and equipment	  	 	50,019	  	  	 	49,290	  	
	  	 	 	 	  	 	 	 	
		 	158,634	  		 	157,468	  	
Less: accumulated depreciation		 	(59,065	) 		 	(57,077	) 	
	  	 	 	 	  	 	 	 	
Property and equipment - net		$	99,569	  		$	100,391	  	
	  	 	 	 	  	 	 	 	
Depreciation expense was $2.4 million and $2.0 million during the three months ended March 31, 2015 and 2014, respectively.
 
5.	MERCHANDISE TRUSTS	
At March 31, 2015, the Company’s merchandise trusts consisted of the following types of assets:
 
 	•	 	Money market funds that invest in low risk short term securities;	
 
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 	•	 	Publicly traded mutual funds that invest in underlying debt securities;	
 
 	•	 	Publicly traded mutual funds that invest in underlying equity securities;	
 
 	•	 	Equity investments primarily in securities that are currently paying dividends or distributions. These investments include Master Limited Partnerships and global equity securities;	
 
 	•	 	Fixed maturity debt securities issued by various corporate entities; and	
 
 	•	 	Fixed maturity debt securities issued by U.S. states and local government agencies.	
All of these investments are classified as Available for Sale as defined by the Investments in Debt and Equity topic of the ASC. Accordingly, all of the assets are carried at fair value. All of these investments are considered to be either Level 1 or Level 2 assets as defined by the Fair Value Measurements and Disclosures topic of the ASC. See Note 15 for further details. There were no Level 3 assets.
The merchandise trusts are variable interest entities (VIE) for which the Company is the primary beneficiary. The assets held in the merchandise trusts are required to be used to purchase the merchandise to which they relate. If the value of these assets falls below the cost of purchasing such merchandise, the Company may be required to fund this shortfall.
The Company has included $8.4 million and $8.3 million of investments held in trust by the West Virginia Funeral Directors Association at March 31, 2015 and December 31, 2014, respectively, in its merchandise trust assets. As required by law, the Company deposits a portion of certain funeral merchandise sales in West Virginia into a trust that is held by the West Virginia Funeral Directors Association. These trusts are recorded at their account value, which approximates their fair value.
The cost and market value associated with the assets held in the merchandise trusts at March 31, 2015 and December 31, 2014 were as follows:
 
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As of March 31, 2015	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Gross
Unrealized
Losses	 	  	Fair
Value	 	
 	  	(in thousands)	 	
Short-term investments	  	$	31,591	  	  	$	—  	  	  	$	—  	  	  	$	31,591	  	
Fixed maturities:	  				  				  				  				
U.S. State and local government agency	  	 	65	  	  	 	15	  	  	 	—  	  	  	 	80	  	
Corporate debt securities	  	 	12,566	  	  	 	67	  	  	 	(376	) 	  	 	12,257	  	
Other debt securities	  	 	7,182	  	  	 	—  	  	  	 	(8	) 	  	 	7,174	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	19,813	  		 	82	  		 	(384	) 		 	19,511	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	246,768	  		 	978	  		 	(9,047	) 		 	238,699	  	
Mutual funds - equity securities		 	129,452	  		 	2,772	  		 	(1,578	) 		 	130,646	  	
Equity securities		 	54,888	  		 	3,500	  		 	(4,336	) 		 	54,052	  	
Other invested assets		 	5,469	  		 	—  	  		 	(343	) 		 	5,126	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total managed investments		$	487,981	  		$	7,332	  		$	(15,688	) 		$	479,625	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
West Virginia Trust Receivable		 	8,382	  		 	—  	  		 	—  	  		 	8,382	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	496,363	  		$	7,332	  		$	(15,688	) 		$	488,007	  	

																	
As of December 31, 2014	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Gross
Unrealized
Losses	 	  	Fair
Value	 	
 	  	(in thousands)	 	
Short-term investments	  	$	52,521	  	  	$	—  	  	  	$	—  	  	  	$	52,521	  	
Fixed maturities:	  				  				  				  				
U.S. State and local government agency	  	 	270	  	  	 	—  	  	  	 	(1	) 	  	 	269	  	
Corporate debt securities	  	 	9,400	  	  	 	23	  	  	 	(447	) 	  	 	8,976	  	
Other debt securities	  	 	7,157	  	  	 	—  	  	  	 	(18	) 	  	 	7,139	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	16,827	  		 	23	  		 	(466	) 		 	16,384	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	150,477	  		 	869	  		 	(8,666	) 		 	142,680	  	
Mutual funds - equity securities		 	167,353	  		 	12,568	  		 	(463	) 		 	179,458	  	
Equity securities		 	81,639	  		 	4,167	  		 	(5,507	) 		 	80,299	  	
Other invested assets		 	5,400	  		 	—  	  		 	(241	) 		 	5,159	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total managed investments		$	474,217	  		$	17,627	  		$	(15,343	) 		$	476,501	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
West Virginia Trust Receivable		 	8,319	  		 	—  	  		 	—  	  		 	8,319	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	482,536	  		$	17,627	  		$	(15,343	) 		$	484,820	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The contractual maturities of debt securities as of March 31, 2015 are presented below:
 
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As of March 31, 2015	  	Less than
1 year	 	  	1 year through
5 years	 	  	6 years through
10 years	 	  	More than
10 years	 	
 	  	(in thousands)	 	
U.S. State and local government agency	  	$	—  	  	  	$	18	  	  	$	60	  	  	$	2	  	
Corporate debt securities	  	 	—  	  	  	 	7,052	  	  	 	5,205	  	  	 	—  	  	
Other debt securities	  	 	891	  	  	 	6,283	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		$	891	  		$	13,353	  		$	5,265	  		$	2	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Temporary Declines in Fair Value
The Company evaluates declines in fair value below cost of each individual asset held in the merchandise trusts on a quarterly basis.
An aging of unrealized losses on the Company’s investments in fixed maturities and equity securities at March 31, 2015 and December 31, 2014 is presented below:

 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	  	Number of
Securities in
Loss Position	 	
As of March 31, 2015	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  			
 	  	(in thousands, except number of securities data)	 	
Fixed maturities:	  				  				  				  				  				  				  				
Corporate debt securities	  	$	6,070	  	  	$	214	  	  	$	2,539	  	  	$	162	  	  	$	8,609	  	  	$	376	  	  	 	46	  	
Other debt securities	  	 	2,384	  	  	 	2	  	  	 	4,790	  	  	 	6	  	  	 	7,174	  	  	 	8	  	  	 	13	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	8,454	  		 	216	  		 	7,329	  		 	168	  		 	15,783	  		 	384	  		 	59	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	87,042	  		 	617	  		 	132,090	  		 	8,430	  		 	219,132	  		 	9,047	  		 	28	  	
Mutual funds - equity securities		 	49,100	  		 	1,578	  		 	—  	  		 	—  	  		 	49,100	  		 	1,578	  		 	4	  	
Equity securities		 	26,285	  		 	3,671	  		 	3,511	  		 	665	  		 	29,796	  		 	4,336	  		 	56	  	
Other invested assets		 	—  	  		 	—  	  		 	4,918	  		 	343	  		 	4,918	  		 	343	  		 	1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	170,881	  		$	6,082	  		$	147,848	  		$	9,606	  		$	318,729	  		$	15,688	  		 	148	  	

																													
 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	  	Number of
Securities in
Loss Position	 	
As of December 31, 2014	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  			
 	  	(in thousands, except number of securities data)	 	
Fixed maturities:	  				  				  				  				  				  				  				
U.S. State and local government agency	  	$	143	  	  	$	1	  	  	$	—  	  	  	$	—  	  	  	$	143	  	  	$	1	  	  	 	3	  	
Corporate debt securities	  	 	5,905	  	  	 	342	  	  	 	1,506	  	  	 	105	  	  	 	7,411	  	  	 	447	  	  	 	58	  	
Other debt securities	  	 	2,370	  	  	 	8	  	  	 	4,769	  	  	 	10	  	  	 	7,139	  	  	 	18	  	  	 	13	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	8,418	  		 	351	  		 	6,275	  		 	115	  		 	14,693	  		 	466	  		 	74	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	32,072	  		 	1,039	  		 	95,629	  		 	7,627	  		 	127,701	  		 	8,666	  		 	34	  	
Mutual funds - equity securities		 	4,147	  		 	463	  		 	—  	  		 	—  	  		 	4,147	  		 	463	  		 	2	  	
Equity securities		 	44,563	  		 	4,641	  		 	3,909	  		 	866	  		 	48,472	  		 	5,507	  		 	60	  	
Other invested assets		 	—  	  		 	—  	  		 	4,881	  		 	241	  		 	4,881	  		 	241	  		 	1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	89,200	  		$	6,494	  		$	110,694	  		$	8,849	  		$	199,894	  		$	15,343	  		 	171	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
There were 148 and 171 securities in an unrealized loss position in merchandise trusts as of March 31, 2015 and December 31, 2014, respectively, of which 38 and 39, respectively, were in an unrealized loss position for more than twelve months. For all securities in an unrealized loss position, the Company evaluated the severity of the impairment and length of time that a security has been in a loss position and has concluded the decline in fair value below the asset’s cost was temporary in nature. In addition, the Company is not aware of any circumstances that would prevent the future market value recovery for these securities.
 
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Other-Than-Temporary Impairment of Trust Assets
During the three months ended March 31, 2015, the Company determined that there were two securities with an aggregate cost basis of approximately $0.6 million and an aggregate fair value of approximately $0.4 million, resulting in an impairment of $0.2 million, wherein such impairment was considered to be other-than-temporary. Accordingly, the Company adjusted the cost basis of these assets to their current value and offset this change against deferred revenue. This reduction in deferred revenue will be reflected in earnings in future periods as the underlying merchandise is delivered or the underlying service is performed.
During the three months ended March 31, 2014, the Company determined that there were no other than temporary impairments to the investment portfolio in the merchandise trusts.
A reconciliation of the Company’s merchandise trust activities for the three months ended March 31, 2015 is presented below:

Fair
Value at
12/31/2014	 	Contributions	 	Distributions	 	Interest/
Dividends	 	Capital
Gain
Distributions	 	Realized
Gain/
Loss (1)	 	Taxes	 	Fees	 	Unrealized
Change in
Fair Value	 	Fair
Value at
3/31/2015	
(in thousands)	
$484,820	 	16,540	 	(11,537)	 	3,874	 	—  	 	5,702	 	(15)	 	(737)	 	(10,640)	 	$488,007	
 
(1)	Includes $3.9 million representing the net effect of other-than-temporary impairment charges and the release of previously realized impairment charges, as a result of sales and maturities of impaired securities.	
The Company made net contributions into the trusts of approximately $5.0 million during the three months ended March 31, 2015. During the three months ended March 31, 2015, purchases and sales of securities available for sale included in trust investments were approximately $239.0 million and $239.1 million, respectively.
 
6.	PERPETUAL CARE TRUSTS	
At March 31, 2015, the Company’s perpetual care trusts consisted of the following types of assets:
 
 	•	 	Money market funds that invest in low risk short term securities;	
 
 	•	 	Publicly traded mutual funds that invest in underlying debt securities;	
 
 	•	 	Publicly traded mutual funds that invest in underlying equity securities;	
 
 	•	 	Equity investments that are currently paying dividends or distributions. These investments include Master Limited Partnerships and global equity securities;	
 
 	•	 	Fixed maturity debt securities issued by various corporate entities;	
 
 	•	 	Fixed maturity debt securities issued by the U.S. Government and U.S. Government agencies; and	
 
 	•	 	Fixed maturity debt securities issued by U.S. states and local government agencies.	
All of these investments are classified as Available for Sale as defined by the Investments in Debt and Equity topic of the ASC. Accordingly, all of the assets are carried at fair value. All of these investments are considered to be either Level 1 or Level 2 assets as defined by the Fair Value Measurements and Disclosures topic of the ASC. See Note 15 for further details. There were no Level 3 assets.
The cost and market value associated with the assets held in the perpetual care trusts at March 31, 2015 and December 31, 2014 were as follows:
 
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As of March 31, 2015	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Gross
Unrealized
Losses	 	  	Fair
Value	 	
 	  	(in thousands)	 	
Short-term investments	  	$	30,012	  	  	$	—  	  	  	$	—  	  	  	$	30,012	  	
Fixed maturities:	  				  				  				  				
U.S. Government and federal agency	  	 	100	  	  	 	15	  	  	 	—  	  	  	 	115	  	
U.S. State and local government agency	  	 	27	  	  	 	1	  	  	 	—  	  	  	 	28	  	
Corporate debt securities	  	 	24,774	  	  	 	224	  	  	 	(782	) 	  	 	24,216	  	
Other debt securities	  	 	371	  	  	 	—  	  	  	 	—  	  	  	 	371	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	25,272	  		 	240	  		 	(782	) 		 	24,730	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	202,419	  		 	414	  		 	(4,777	) 		 	198,056	  	
Mutual funds - equity securities		 	77,034	  		 	12,763	  		 	(40	) 		 	89,757	  	
Equity securities		 	2,167	  		 	489	  		 	(35	) 		 	2,621	  	
Other invested assets		 	7	  		 	—  	  		 	—  	  		 	7	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	336,911	  		$	13,906	  		$	(5,634	) 		$	345,183	  	

																	
As of December 31, 2014	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Gross
Unrealized
Losses	 	  	Fair Value	 	
 	  	(in thousands)	 	
Short-term investments	  	$	26,644	  	  	$	—  	  	  	$	—  	  	  	$	26,644	  	
Fixed maturities:	  				  				  				  				
U.S. Government and federal agency	  	 	100	  	  	 	16	  	  	 	—  	  	  	 	116	  	
U.S. State and local government agency	  	 	78	  	  	 	1	  	  	 	—  	  	  	 	79	  	
Corporate debt securities	  	 	24,275	  	  	 	104	  	  	 	(913	) 	  	 	23,466	  	
Other debt securities	  	 	371	  	  	 	—  	  	  	 	—  	  	  	 	371	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	24,824	  		 	121	  		 	(913	) 		 	24,032	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	128,735	  		 	379	  		 	(5,220	) 		 	123,894	  	
Mutual funds - equity securities		 	103,701	  		 	23,003	  		 	(1,268	) 		 	125,436	  	
Equity securities		 	30,617	  		 	14,704	  		 	(247	) 		 	45,074	  	
Other invested assets		 	25	  		 	—  	  		 	—  	  		 	25	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	314,546	  		$	38,207	  		$	(7,648	) 		$	345,105	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The contractual maturities of debt securities as of March 31, 2015 were as follows:

As of March 31, 2015	  	Less than
1 year	 	  	1 year through
5 years	 	  	6 years through
10 years	 	  	More than
10 years	 	
 	  	(in thousands)	 	
U.S. Government and federal agency	  	$	—  	  	  	$	115	  	  	$	—  	  	  	$	—  	  	
U.S. State and local government agency	  	 	28	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Corporate debt securities	  	 	455	  	  	 	14,723	  	  	 	9,018	  	  	 	20	  	
Other debt securities	  	 	371	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		$	854	  		$	14,838	  		$	9,018	  		$	20	  	

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Temporary Declines in Fair Value
The Company evaluates declines in fair value below cost of each individual asset held in the perpetual care trusts on a quarterly basis.
An aging of unrealized losses on the Company’s investments in fixed maturities and equity securities at March 31, 2015 and December 31, 2014 is presented below:

 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	  	Number of
Securities in
Loss Position	 	
As of March 31, 2015	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  			
 	  	(in thousands, except number of securities data)	 	
Fixed maturities:	  				  				  				  				  				  				  				
Corporate debt securities	  	$	10,571	  	  	$	516	  	  	$	3,861	  	  	$	266	  	  	$	14,432	  	  	$	782	  	  	 	55	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	10,571	  		 	516	  		 	3,861	  		 	266	  		 	14,432	  		 	782	  		 	55	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	18,437	  		 	529	  		 	119,177	  		 	4,248	  		 	137,614	  		 	4,777	  		 	30	  	
Mutual funds - equity securities		 	3,458	  		 	40	  		 	—  	  		 	—  	  		 	3,458	  		 	40	  		 	2	  	
Equity securities		 	237	  		 	32	  		 	619	  		 	3	  		 	856	  		 	35	  		 	25	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	32,703	  		$	1,117	  		$	123,657	  		$	4,517	  		$	156,360	  		$	5,634	  		 	112	  	

																													
 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	  	Number of
Securities in
Loss Position	 	
As of December 31, 2014	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  	Fair
Value	 	  	Unrealized
Losses	 	  			
 	  	(in thousands, except number of securities data)	 	
Fixed maturities:	  				  				  				  				  				  				  				
Corporate debt securities	  	$	14,434	  	  	$	798	  	  	$	2,519	  	  	$	115	  	  	$	16,953	  	  	$	913	  	  	 	83	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities		 	14,434	  		 	798	  		 	2,519	  		 	115	  		 	16,953	  		 	913	  		 	83	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	30,345	  		 	768	  		 	86,814	  		 	4,452	  		 	117,159	  		 	5,220	  		 	31	  	
Mutual funds - equity securities		 	13,035	  		 	1,268	  		 	—  	  		 	—  	  		 	13,035	  		 	1,268	  		 	5	  	
Equity securities		 	3,866	  		 	245	  		 	620	  		 	2	  		 	4,486	  		 	247	  		 	29	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	61,680	  		$	3,079	  		$	89,953	  		$	4,569	  		$	151,633	  		$	7,648	  		 	148	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
There were 112 and 148 securities in an unrealized loss position in perpetual care trusts as of March 31, 2015 and December 31, 2014, respectively, of which 22 and 20, respectively, were in an unrealized loss position for more than twelve months. For all securities in an unrealized loss position, the Company evaluated the severity of the impairment and length of time that a security has been in a loss position and has concluded the decline in fair value below the asset’s cost was temporary in nature. In addition, the Company is not aware of any circumstances that would prevent the future market value recovery for these securities.
Other-Than-Temporary Impairment of Trust Assets
During the three months ended March 31, 2015 and 2014, the Company determined that there were no other than temporary impairments to the investment portfolio in the perpetual care trusts.
A reconciliation of the Company’s perpetual care trust activities for the three months ended March 31, 2015 is presented below:
 
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Fair
Value at
12/31/2014	  	Contributions	 	  	Distributions	 	 	Interest/
Dividends	 	  	Capital
Gain
Distributions	 	  	Realized
Gain/
Loss (1)	 	  	Taxes	 	 	Fees	 	 	Unrealized
Change in
Fair Value	 	 	Fair
Value at
3/31/2015	 	
(in thousands)	 	
$345,105	  	 	6,478	  	  	 	(2,793	) 	 	 	3,649	  	  	 	—  	  	  	 	15,699	  	  	 	(134	) 	 	 	(534	) 	 	 	(22,287	) 	 	$	345,183	  	
 
(1)	Includes $12.0 million representing the net effect of other-than-temporary impairment charges and the release of previously realized impairment charges, as a result of sales and maturities of impaired securities.	
The Company made net contributions into the trusts of approximately $3.7 million during the three months ended March 31, 2015. During the three months ended March 31, 2015, purchases and sales of securities available for sale included in trust investments were approximately $233.9 million and $230.7 million, respectively.
 
7.	GOODWILL AND INTANGIBLE ASSETS	
Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in acquisitions.
There have been no changes in the goodwill balance during the period and a summary by reportable segment is as follows:

 	  	Cemeteries	 	  	Funeral
Homes	 	  	 	 	
 	  	Southeast	 	  	Northeast	 	  	West	 	  			  	Total	 	
 	  	(in thousands)	 	
Goodwill as of March 31, 2015 and December 31, 2014	  	$	8,950	  	  	$	3,288	  	  	$	11,948	  	  	$	34,650	  	  	$	58,836	  	
Other Acquired Intangible Assets
The Company has other acquired intangible assets, most of which have been recognized as a result of acquisitions and long-term lease, management and operating agreements. All of the intangible assets are amortized as a component of depreciation and amortization in the unaudited condensed consolidated statement of operations. The major classes of intangible assets are as follows:

 	  	As of March 31, 2015	 	  	As of December 31, 2014	 	
 	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	 	Net Intangible
Asset	 	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	 	Net Intangible
Asset	 	
 	  	(in thousands)	 	
Amortized intangible assets:	  				  				 				  				  				 				
Lease and management agreements	  	$	59,758	  	  	$	(830	) 	 	$	58,928	  	  	$	59,758	  	  	$	(581	) 	 	$	59,177	  	
Underlying contract value	  	 	6,239	  	  	 	(897	) 	 	 	5,342	  	  	 	6,239	  	  	 	(858	) 	 	 	5,381	  	
Non-compete agreements	  	 	5,250	  	  	 	(2,375	) 	 	 	2,875	  	  	 	5,250	  	  	 	(2,126	) 	 	 	3,124	  	
Other intangible assets	  	 	1,439	  	  	 	(143	) 	 	 	1,296	  	  	 	1,439	  	  	 	(131	) 	 	 	1,308	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets		$	72,686	  		$	(4,245	) 		$	68,441	  		$	72,686	  		$	(3,696	) 		$	68,990	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
See Note 7 of the Company’s 2014 Form 10-K for a discussion of the Company’s intangible assets, including its contract-based intangible asset pertaining to the lease and management agreements with the Archdiocese of Philadelphia.
 
8.	LONG-TERM DEBT	
The Company had the following outstanding debt:
 
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 	  	As of	 	
 	  	March 31,
2015	 	  	December 31,
2014	 	
 	  	(in thousands)	 	
7.875% Senior Notes, due June 2021	  	$	175,000	  	  	$	175,000	  	
Credit Facility, due December 2019:	  				  				
Working Capital Draws	  	 	97,902	  	  	 	85,902	  	
Acquisition Draws	  	 	25,000	  	  	 	25,000	  	
Notes payable - acquisition debt	  	 	819	  	  	 	861	  	
Notes payable - acquisition non-competes	  	 	2,396	  	  	 	2,765	  	
Insurance and vehicle financing	  	 	1,121	  	  	 	1,632	  	
	  	 	 	 	  	 	 	 	
Total		 	302,238	  		 	291,160	  	
Less current portion		 	1,664	  		 	2,251	  	
Less unamortized bond and note payable discounts		 	3,390	  		 	3,531	  	
	  	 	 	 	  	 	 	 	
Long-term portion		$	297,184	  		$	285,378	  	
	  	 	 	 	  	 	 	 	
This note includes a summary of material terms of the Company’s senior notes and revolving credit facility. For a more detailed description of the Company’s long-term debt agreements, see the Company’s 2014 Form 10-K.
7.875% Senior Notes due 2021
On May 28, 2013, the Company issued $175.0 million aggregate principal amount of 7.875% Senior Notes due 2021 (the “Senior Notes”). The Company 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, since December 1, 2013. 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. The Company incurred debt issuance costs and fees of approximately $4.6 million. These costs and fees are deferred and are amortized over the life of the Senior Notes. Based on trades made on March 31, 2015, the Company has estimated the fair value of its Senior Notes to be in excess of par and trading at a premium of 4.94%, which would imply a fair value of $183.6 million at March 31, 2015. The Senior Notes are valued using Level 2 inputs as defined by the Fair Value Measurements and Disclosures topic of the ASC in Note 15. As of March 31, 2015, the Company was in compliance with all applicable covenants of the Senior Notes.
Credit Facility
On December 19, 2014, the Partnership entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”).
The Credit Agreement provides for a single revolving credit facility of $180.0 million (the “Credit Facility”) maturing on December 19, 2019. Additionally the Credit Agreement provides for an uncommitted ability to increase the Credit Facility by an additional $70.0 million. The summary of the material terms of the Credit Agreement is set forth below. Capitalized terms, which are not defined in the following description, shall have the meaning assigned to such terms in the Credit Agreement.
At March 31, 2015, amounts outstanding under the Credit Facility bore interest at rates of approximately 3.5%. The interest rates on the Credit Facility are calculated as follows:
 
 	•	 	For Eurodollar Rate Loans, the outstanding principal amount thereof bears interest for each Interest Period at a rate per annum equal to the Eurodollar Rate for the Interest Period plus the Applicable Rate for Eurodollar Rate Loans; and	
 
 	•	 	For Base Rate Loans and Swing Line Loans, the outstanding principal amount thereof bears interest from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for Base Rate Loans.	
 
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In addition, the Borrowers must pay a Letter of Credit Fee for each Letter of Credit equal to the Applicable Rate for Letter of Credit Fees times the daily amount to be drawn under such Letter of Credit. The Applicable Rate is determined based on the Consolidated Leverage Ratio of the Partnership and its Subsidiaries, and ranges from 2.25% to 4.00% for Eurodollar Rate Loans and Letter of Credit Fees, and 1.25% to 3.00% for Base Rate Loans. The current Applicable Rate for each of: (i) Eurodollar Rate Loans and Letter of Credit Fees is 3.75% and (ii) Base Rate Loans is 2.75% based on the current Consolidated Leverage Ratio. The Credit Agreement also requires the Borrowers to pay a quarterly unused commitment fee, which is calculated based on the amount by which the commitments under the Credit Agreement exceed the usage of such commitments.
The Credit Agreement contains financial covenants, pursuant to which the Borrowers and the Guarantors will not permit:
 
 	•	 	Consolidated EBITDA for any Measurement Period to be less than the sum of (i) $80.0 million plus (ii) 80% of the aggregate of all Consolidated EBITDA for each Permitted Acquisition completed after June 30, 2014;	
 
 	•	 	the Consolidated Debt Service Coverage Ratio to be less than 2.50 to 1.0 for any Measurement Period; and	
 
 	•	 	the Consolidated Leverage Ratio to be greater than 4.00 to 1.0 for any period.	
The covenants include, among other limitations, limitations on: (i) liens, (ii) the creation or incurrence of debt, (iii) investments and acquisitions, (iv) dispositions of property, (v) dividends, distributions and redemptions, and (vi) transactions with Affiliates.
The Credit Agreement provides that two types of draws are permitted with respect to the Credit Facility: Acquisition Draws and Working Capital Draws. The proceeds of Acquisition Draws may be utilized by the Borrowers to finance Permitted Acquisitions, the purchase and construction of mausoleums and related costs or the net amount of Merchandise Trust deposits made after the Closing Date under the Credit Agreement, irrespective of whether such amounts relate to new or existing cemeteries or funeral homes. The proceeds of Working Capital Draws, Letters of Credit and Swing Line Loans may be utilized by the Borrowers to finance working capital requirements, Capital Expenditures and for other general corporate purposes. The borrowing of Working Capital Advances is subject to a borrowing formula of 85% of Eligible Receivables. This limit was $133.0 million at March 31, 2015.
Each Acquisition Draw is subject to equal quarterly amortization of the principal amount of such draw, with annual principal payments comprised of ten percent (10%) of the related draw amount, commencing on the second anniversary of such draw, with the remaining principal due on the Maturity Date, subject to certain mandatory prepayment requirements. Working Capital Draws are due on the Maturity Date, subject to certain mandatory prepayment requirements.
As of March 31, 2015, there were $122.9 million of outstanding borrowings under the Credit Facility. The Credit Facility approximates fair value as it consists of multiple current LIBOR borrowings with maturities of 90 days or less, with amounts that can be rolled-over or reborrowed at market rates. It is valued using Level 2 inputs. As of March 31, 2015, the Company complied with all applicable financial covenants.
The Company routinely incurs debt financing costs and fees when borrowing under, or making amendments to, the Credit Facility. These costs and fees are deferred and are amortized over the life of the Credit Facility.
 
9.	INCOME TAXES	
As of March 31, 2015, the Company’s taxable corporate subsidiaries had federal net operating loss carryforwards of approximately $223.1 million, which will begin to expire in 2017 and $272.0 million in state net operating loss carryforwards, a portion of which expires annually.
The Partnership is not a taxable entity for federal and state income tax purposes; rather, the Partnership’s tax attributes, except those of its corporate subsidiaries, are to be included in the individual tax returns of its partners. Neither the Partnership’s financial reporting income, nor the cash distributions to unit-holders, can be used as a substitute for the detailed tax calculations that the Partnership must perform annually for its partners. Net income from the Partnership is not treated as “passive income” for federal income tax purposes. As a result, partners subject to the passive activity loss rules are not permitted to offset income from the Partnership with passive losses from other sources.
The Partnership’s corporate subsidiaries account for their income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
 
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Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The provision for income taxes for the three months ended March 31, 2015 and 2014 is based upon the estimated annual effective tax rates expected to be applicable to the Company for 2015 and 2014, respectively. The Company’s effective tax rate differs from its statutory tax rate primarily because the Company’s legal entity structure includes different tax filing entities, including a significant number of partnerships that are not subject to paying tax.
The Company is not currently under examination by any federal or state jurisdictions. The federal statute of limitations and certain state statutes of limitations are open from 2011 forward. Management believes that the accrual for tax liabilities is adequate for all open years. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. On the basis of present information, it is the opinion of the Company’s management that there are no pending assessments that will result in a material effect on the Company’s consolidated financial statements over the next twelve months.
 
10.	DEFERRED CEMETERY REVENUES, NET	
At March 31, 2015 and December 31, 2014, deferred cemetery revenues, net, consisted of the following:

 	  	As of	 	
 	  	March 31,
2015	 	  	December 31,
2014	 	
 	  	(in thousands)	 	
Deferred cemetery revenue	  	$	477,420	  	  	$	456,632	  	
Deferred merchandise trust revenue	  	 	116,678	  	  	 	104,717	  	
Deferred merchandise trust unrealized gains (losses)	  	 	(8,356	) 	  	 	2,284	  	
Deferred pre-acquisition margin	  	 	139,344	  	  	 	140,378	  	
Deferred cost of goods sold	  	 	(63,209	) 	  	 	(60,603	) 	
	  	 	 	 	  	 	 	 	
Deferred cemetery revenues, net		$	661,877	  		$	643,408	  	
	  	 	 	 	  	 	 	 	
Deferred selling and obtaining costs		$	102,904	  		$	97,795	  	
Deferred selling and obtaining costs are carried as an asset on the unaudited condensed consolidated balance sheet in accordance with the Financial Services – Insurance topic of the ASC.
 
11.	COMMITMENTS AND CONTINGENCIES	
Legal
The Company is party to legal proceedings in the ordinary course of its business but does not expect the outcome of any proceedings, individually or in the aggregate, to have a material effect on the Company’s financial position, results of operations or liquidity.
Leases
At March 31, 2015, the Company was committed to operating lease payments for premises, automobiles and office equipment under various operating leases with initial terms ranging from one to twenty five years and options to renew at varying terms. Expenses under these operating leases were $0.7 million and $0.6 million during the three months ended March 31, 2015 and 2014, respectively.
The operating leases will result in future payments in the following approximate amounts from March 31, 2015 and beyond:
 
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 	  	(in thousands)	 	
2015	  	$	2,000	  	
2016	  	 	2,444	  	
2017	  	 	2,305	  	
2018	  	 	1,912	  	
2019	  	 	1,726	  	
2020	  	 	613	  	
Thereafter	  	 	1,744	  	
	  	 	 	 	
Total		$	12,744	  	
	  	 	 	 	
Other
See Note 13 of the Company’s 2014 Form 10-K for a discussion of the Company’s future commitments related to its agreements with the Archdiocese of Philadelphia.
 
12.	PARTNERS’ CAPITAL	
The table below reflects the activity relating to the number of common units outstanding for the three months ended March 31, 2015:

 	  	Three months ended
March 31, 2015	 	
Outstanding, beginning of period	  	 	29,203,595	  	
Unit distributions	  	 	54,622	  	
Unit-based compensation	  	 	1,148	  	
	  	 	 	 	
Outstanding, end of period		 	29,259,365	  	
	  	 	 	 	
Unit-Based Compensation
The Company has issued to certain key employees, management, and directors unit-based compensation in the form of unit appreciation rights and restricted phantom partnership units.
Compensation expense recognized related to unit appreciation rights and restricted phantom unit awards for the three months ended March 31, 2015 and 2014 are summarized in the table below:

 	  	Three months ended
March 31,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Unit appreciation rights	  	$	21	  	  	$	19	  	
Restricted phantom units	  	 	251	  	  	 	252	  	
	  	 	 	 	  	 	 	 	
Total unit-based compensation expense		$	272	  		$	271	  	
	  	 	 	 	  	 	 	 	
As of March 31, 2015, there was approximately $0.1 million in non-vested unit appreciation rights expense outstanding. These unit appreciation rights will be expensed through 2018.
The diluted weighted average number of limited partners’ units outstanding presented on the unaudited condensed consolidated statement of operations does not include 185,194 units for the three months ended March 31, 2015, as their effects would be anti-dilutive.
During the three months ended March 31, 2015, 1,148 common units were issued under the StoneMor Partners L.P. Long-Term Incentive Plans. See Note 11 of the Company’s 2014 Form 10-K for a description of the Company’s Long-Term Incentive Plans.
 
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Other Unit Issuances
Pursuant to a Common Unit Purchase Agreement, dated May 19, 2014, by and between the Company and American Cemeteries Infrastructure Investors, LLC, a Delaware limited liability company (“ACII”), the Company issued 54,622 common units to ACII in lieu of a cash distribution of approximately $1.4 million on February 16, 2015. Refer to the Company’s 2014 Form 10-K, Note 17, for a detailed discussion of the Common Unit Purchase Agreement.
 
13.	ACQUISITIONS	
First Quarter 2014 Acquisition
On January 16, 2014, certain subsidiaries of the Company (collectively the “Buyer”) entered into an Asset Purchase and Sale Agreement with Carriage Cemetery Services, Inc. (the “Seller”). Pursuant to the Agreement, the Buyer acquired one cemetery in Florida, including certain related assets, and assumed certain related liabilities. In consideration for the net assets acquired, the Buyer paid the Seller $0.2 million in cash.
The table below reflects the Company’s final assessment of the fair value of net assets acquired and the resulting gain on bargain purchase.

 	  	Final
Assessment	 	
 	  	(in thousands)	 	
Assets:	  				
Accounts receivable	  	$	47	  	
Cemetery property	  	 	470	  	
Property and equipment	  	 	140	  	
Merchandise trusts, restricted, at fair value	  	 	2,607	  	
Perpetual care trusts, restricted, at fair value	  	 	691	  	
	  	 	 	 	
Total assets		 	3,955	  	
	  	 	 	 	
Liabilities:					
Deferred margin		 	1,035	  	
Merchandise liabilities		 	956	  	
Deferred tax liability		 	641	  	
Perpetual care trust corpus		 	691	  	
Other liabilities		 	20	  	
	  	 	 	 	
Total liabilities		 	3,343	  	
	  	 	 	 	
Fair value of net assets acquired		 	612	  	
	  	 	 	 	
Consideration paid		 	200	  	
	  	 	 	 	
Gain on bargain purchase		$	412	  	
	  	 	 	 	
If the acquisition noted above had been consummated at the beginning of the comparable prior annual reporting period, on a pro forma basis, for the three months ended March 31, 2015 and 2014, consolidated revenues, consolidated net income (loss), and net income (loss) per limited partner unit (basic and diluted) would have been as follows:
 
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 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands, except per unit data)	 	
Revenue	  	$	67,417	  	  	$	64,398	  	
Net income (loss)	  	 	(8,883	) 	  	 	(2	) 	
Net income (loss) per limited partner unit (basic and diluted)	  	$	(.30	) 	  	$	—  	  	
These pro forma results are unaudited, have been prepared for comparative purposes only, and may include certain adjustments such as increased interest on the acquisition of debt, changes in the timing of financing events and the recognition of gains on acquisitions. They do not purport to be indicative of the results of operations which actually would have resulted had this acquisition been in effect at the beginning of the comparable prior annual reporting period or of future results of operations of the location.
The property acquired in the first quarter of 2014 has contributed less than $0.1 million of revenue and operating profit for both the three months ended March 31, 2015 and the three months ended March 31, 2014.
Other 2014 Acquisitions and Agreements
See Note 13 of the Company’s 2014 Form 10-K for a discussion of the Company’s other 2014 acquisitions and its agreements with the Archdiocese of Philadelphia. There have been no changes during the period to assessments of the fair value of net assets acquired in the other 2014 acquisitions. Those amounts may be retrospectively adjusted as additional information is received.
 
14.	SEGMENT INFORMATION	
The Company is organized into five distinct reportable segments, which are classified as Cemetery Operations – Southeast, Cemetery Operations – Northeast, Cemetery Operations – West, Funeral Homes, and Corporate.
The Company has chosen this level of organization of reportable segments due to the fact that a) each reportable segment has unique characteristics that set it apart from other segments; b) the Company has organized its management personnel at these operational levels; and c) it is the level at which the Company’s chief decision makers and other senior management evaluate performance.
The cemetery operations segments sell interment rights, caskets, burial vaults, cremation niches, markers and other cemetery related merchandise. The nature of the Company’s customers differs in each of its regionally based cemetery operating segments. Cremation rates in the West region are substantially higher than they are in the Southeast region. Rates in the Northeast region tend to be somewhere between the two. Statistics indicate that customers who select cremation services have certain attributes that differ from customers who select other methods of interment. The disaggregation of cemetery operations into the three distinct regional segments is primarily due to these differences in customer attributes along with the previously mentioned management structure and senior management analysis methodologies.
The Company’s Funeral Homes segment offers a range of funeral-related services such as family consultation, the removal of and preparation of remains and the use of funeral home facilities for visitation. These services are distinctly different than the cemetery merchandise and services sold and provided by the cemetery operations segments.
The Company’s Corporate segment includes various home office selling and administrative expenses that are not allocable to the other operating segments.
Segment information is as follows:
As of and for the three months ended March 31, 2015:
 
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 	  	Cemeteries	 	  	Funeral
Homes	 	  	 	 	 	 	 	 	 	 	
 	  	Southeast	 	  	Northeast	 	  	West	 	  			  	Corporate	 	 	Adjustment	 	 	Total	 	
 	  	(in thousands)	 	
Revenues	  				  				  				  				  				 				 				
Sales	  	$	24,290	  	  	$	12,485	  	  	$	10,695	  	  	$	—  	  	  	$	—  	  	 	$	(17,526	) 	 	$	29,944	  	
Service and other	  	 	11,886	  	  	 	8,759	  	  	 	9,000	  	  	 	—  	  	  	 	—  	  	 	 	(7,432	) 	 	 	22,213	  	
Funeral home	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	17,415	  	  	 	—  	  	 	 	(2,155	) 	 	 	15,260	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues		 	36,176	  		 	21,244	  		 	19,695	  		 	17,415	  		 	—  	  		 	(27,113	) 		 	67,417	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Costs and expenses																													
Cost of sales		 	5,268	  		 	2,329	  		 	2,140	  		 	—  	  		 	—  	  		 	(2,654	) 		 	7,083	  	
Cemetery		 	6,834	  		 	5,853	  		 	3,578	  		 	—  	  		 	—  	  		 	—  	  		 	16,265	  	
Selling		 	9,147	  		 	5,005	  		 	4,152	  		 	—  	  		 	200	  		 	(4,594	) 		 	13,910	  	
General and administrative		 	4,670	  		 	2,540	  		 	2,119	  		 	—  	  		 	—  	  		 	—  	  		 	9,329	  	
Corporate overhead		 	—  	  		 	—  	  		 	—  	  		 	—  	  		 	8,734	  		 	—  	  		 	8,734	  	
Depreciation and amortization		 	800	  		 	607	  		 	499	  		 	799	  		 	247	  		 	—  	  		 	2,952	  	
Funeral home		 	—  	  		 	—  	  		 	—  	  		 	12,611	  		 	—  	  		 	(461	) 		 	12,150	  	
Acquisition related costs, net of recoveries		 	—  	  		 	—  	  		 	—  	  		 	—  	  		 	349	  		 	—  	  		 	349	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses		 	26,719	  		 	16,334	  		 	12,488	  		 	13,410	  		 	9,530	  		 	(7,709	) 		 	70,772	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Operating profit (loss)		$	9,457	  		$	4,910	  		$	7,207	  		$	4,005	  		$	(9,530	) 		$	(19,404	) 		$	(3,355	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total assets		$	645,407	  		$	428,673	  		$	444,411	  		$	165,828	  		$	21,034	  		$	—  	  		$	1,705,353	  	
Amortization of cemetery property		$	1,130	  		$	485	  		$	390	  		$	—  	  		$	—  	  		$	(417	) 		$	1,588	  	
Long lived asset additions		$	1,505	  		$	746	  		$	497	  		$	218	  		$	84	  		$	—  	  		$	3,050	  	
Goodwill		$	8,950	  		$	3,288	  		$	11,948	  		$	34,650	  		$	—  	  		$	—  	  		$	58,836	  	
 
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As of and for the three months ended March 31, 2014:

 	  	Cemeteries	 	  	Funeral
Homes	 	  	 	 	 	 	 	 	 	 	
 	  	Southeast	 	  	Northeast	 	  	West	 	  			  	Corporate	 	 	Adjustment	 	 	Total	 	
 	  	(in thousands)	 	
Revenues	  				  				  				  				  				 				 				
Sales	  	$	22,101	  	  	$	7,410	  	  	$	9,821	  	  	$	—  	  	  	$	—  	  	 	$	(10,458	) 	 	$	28,874	  	
Service and other	  	 	11,626	  	  	 	10,604	  	  	 	10,923	  	  	 	—  	  	  	 	—  	  	 	 	(9,387	) 	 	 	23,766	  	
Funeral home	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	13,254	  	  	 	—  	  	 	 	(1,507	) 	 	 	11,747	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues		 	33,727	  		 	18,014	  		 	20,744	  		 	13,254	  		 	—  	  		 	(21,352	) 		 	64,387	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Costs and expenses																													
Cost of sales		 	4,792	  		 	1,678	  		 	2,777	  		 	—  	  		 	—  	  		 	(1,743	) 		 	7,504	  	
Cemetery		 	6,395	  		 	3,235	  		 	3,699	  		 	—  	  		 	—  	  		 	—  	  		 	13,329	  	
Selling		 	7,248	  		 	2,802	  		 	3,234	  		 	—  	  		 	545	  		 	(2,640	) 		 	11,189	  	
General and administrative		 	4,096	  		 	1,492	  		 	2,057	  		 	—  	  		 	—  	  		 	—  	  		 	7,645	  	
Corporate overhead		 	—  	  		 	—  	  		 	—  	  		 	—  	  		 	7,456	  		 	—  	  		 	7,456	  	
Depreciation and amortization		 	633	  		 	236	  		 	521	  		 	736	  		 	242	  		 	—  	  		 	2,368	  	
Funeral home		 	—  	  		 	—  	  		 	—  	  		 	9,504	  		 	—  	  		 	(218	) 		 	9,286	  	
Acquisition related costs, net of recoveries		 	—  	  		 	—  	  		 	—  	  		 	—  	  		 	349	  		 	—  	  		 	349	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses		 	23,164	  		 	9,443	  		 	12,288	  		 	10,240	  		 	8,592	  		 	(4,601	) 		 	59,126	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Operating profit (loss)		$	10,563	  		$	8,571	  		$	8,456	  		$	3,014	  		$	(8,592	) 		$	(16,751	) 		$	5,261	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total assets		$	580,359	  		$	318,937	  		$	434,562	  		$	135,819	  		$	23,290	  		$	—  	  		$	1,492,967	  	
Amortization of cemetery property		$	1,251	  		$	583	  		$	1,223	  		$	—  	  		$	—  	  		$	(334	) 		$	2,723	  	
Long lived asset additions		$	1,564	  		$	442	  		$	1,041	  		$	57	  		$	52	  		$	—  	  		$	3,156	  	
Goodwill		$	6,174	  		$	—  	  		$	11,948	  		$	30,615	  		$	—  	  		$	—  	  		$	48,737	  	
Results of individual operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to GAAP; therefore, the financial results of individual operating segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the operating segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. Revenues and associated expenses are not deferred in accordance with SAB No. 104; therefore, the deferral of these revenues and expenses is provided in the adjustment column to reconcile the Company’s managerial financial statements to those prepared in accordance with GAAP. Pre-need sales revenues included within the sales category consist primarily of the sale of burial lots, burial vaults, mausoleum crypts, grave markers and memorials, and caskets. Management accounting practices included in the Southeast, Northeast, and Western Regions reflect these pre-need sales when contracts are signed by the customer and accepted by the Company. Pre-need sales reflected in the unaudited condensed consolidated financial statements, prepared in accordance with GAAP, recognize revenues for the sale of burial lots and mausoleum crypts when the product is constructed and at least 10% of the sales price is collected. With respect to the other products, the unaudited condensed consolidated financial statements prepared under GAAP recognize sales revenues when the criteria for delivery under SAB No. 104 are met. These criteria include, among other things, purchase of the product, delivery and installation of the product in the ground, and transfer of title to the customer. In each case, costs are accrued in connection with the recognition of revenues; therefore, the unaudited condensed consolidated financial statements reflect Deferred Cemetery Revenue, Net, and Deferred Selling and Obtaining Costs on the unaudited condensed consolidated balance sheet, whereas the Company’s management accounting practices exclude these items.
 
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15.	FAIR VALUE MEASUREMENTS	
The Fair Value Measurements and Disclosures topic of the ASC defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. This topic also establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy defined by this topic are described below.
Level 1: Quoted market prices available in active markets for identical assets or liabilities. The Company includes short-term investments, consisting primarily of money market funds, U.S. Government debt securities and publicly traded equity securities and mutual funds in its level 1 investments.
Level 2: Quoted prices in active markets for similar assets; quoted prices in non-active markets for identical or similar assets; inputs other than quoted prices that are observable. The Company includes U.S. state and municipal, corporate and other fixed income debt securities in its level 2 investments.
Level 3: Any and all pricing inputs that are generally unobservable and not corroborated by market data.
On the Company’s unaudited condensed consolidated balance sheet, current assets, long-term accounts receivable and current liabilities are recorded at amounts that approximate fair value.
The following table displays the Company’s assets measured at fair value as of March 31, 2015 and December 31, 2014.
 
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As of March 31, 2015
Merchandise Trust

 	  	Level 1	 	  	Level 2	 	  	Total	 	
 	  	(in thousands)	 	
Assets	  				  				  				
				
Short-term investments	  	$	31,591	  	  	$	—  	  	  	$	31,591	  	
				
Fixed maturities:	  				  				  				
U.S. state and local government agency	  	 	—  	  	  	 	80	  	  	 	80	  	
Corporate debt securities	  	 	—  	  	  	 	12,257	  	  	 	12,257	  	
Other debt securities	  	 	—  	  	  	 	7,174	  	  	 	7,174	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity investments		 	—  	  		 	19,511	  		 	19,511	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	238,699	  		 	—  	  		 	238,699	  	
Mutual funds - equity securities - real estate sector		 	19,133	  		 	—  	  		 	19,133	  	
Mutual funds - equity securities - energy sector		 	12,815	  		 	—  	  		 	12,815	  	
Mutual funds - equity securities - MLP’s		 	21,308	  		 	—  	  		 	21,308	  	
Mutual funds - equity securities - other		 	77,390	  		 	—  	  		 	77,390	  	
				
Equity securities:													
Master limited partnerships		 	25,224	  		 	—  	  		 	25,224	  	
Global equity securities		 	28,828	  		 	—  	  		 	28,828	  	
Other invested assets		 	—  	  		 	5,126	  		 	5,126	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	454,988	  		$	24,637	  		$	479,625	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Perpetual Care Trust

 	  	Level 1	 	  	Level 2	 	  	Total	 	
 	  	(in thousands)	 	
Assets	  				  				  				
				
Short-term investments	  	$	30,012	  	  	$	—  	  	  	$	30,012	  	
				
Fixed maturities:	  				  				  				
U.S. government and federal agency	  	 	115	  	  	 	—  	  	  	 	115	  	
U.S. state and local government agency	  	 	—  	  	  	 	28	  	  	 	28	  	
Corporate debt securities	  	 	—  	  	  	 	24,216	  	  	 	24,216	  	
Other debt securities	  	 	—  	  	  	 	371	  	  	 	371	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity investments		 	115	  		 	24,615	  		 	24,730	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	198,056	  		 	—  	  		 	198,056	  	
Mutual funds - equity securities - real estate sector		 	17,052	  		 	—  	  		 	17,052	  	
Mutual funds - equity securities - energy sector		 	20,424	  		 	—  	  		 	20,424	  	
Mutual funds - equity securities - MLP’s		 	40,474	  		 	—  	  		 	40,474	  	
Mutual funds - equity securities - other		 	11,807	  		 	—  	  		 	11,807	  	
				
Equity securities:													
Master limited partnerships		 	988	  		 	—  	  		 	988	  	
Global equity securities		 	1,633	  		 	—  	  		 	1,633	  	
Other invested assets		 	—  	  		 	7	  		 	7	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	320,561	  		$	24,622	  		$	345,183	  	

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As of December 31, 2014
Merchandise Trust

 	  	Level 1	 	  	Level 2	 	  	Total	 	
 	  	(in thousands)	 	
Assets	  				  				  				
				
Short-term investments	  	$	52,521	  	  	$	—  	  	  	$	52,521	  	
				
Fixed maturities:	  				  				  				
U.S. state and local government agency	  	 	—  	  	  	 	269	  	  	 	269	  	
Corporate debt securities	  	 	—  	  	  	 	8,976	  	  	 	8,976	  	
Other debt securities	  	 	—  	  	  	 	7,139	  	  	 	7,139	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity investments		 	—  	  		 	16,384	  		 	16,384	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	142,680	  		 	—  	  		 	142,680	  	
Mutual funds - equity securities - real estate sector		 	58,672	  		 	—  	  		 	58,672	  	
Mutual funds - equity securities - energy sector		 	7,733	  		 	—  	  		 	7,733	  	
Mutual funds - equity securities - MLP’s		 	22,927	  		 	—  	  		 	22,927	  	
Mutual funds - equity securities - other		 	90,126	  		 	—  	  		 	90,126	  	
				
Equity securities:													
Master limited partnerships		 	50,091	  		 	—  	  		 	50,091	  	
Global equity securities		 	30,208	  		 	—  	  		 	30,208	  	
Other invested assets		 	—  	  		 	5,159	  		 	5,159	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	454,958	  		$	21,543	  		$	476,501	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Perpetual Care Trust

 	  	Level 1	 	  	Level 2	 	  	Total	 	
 	  	(in thousands)	 	
Assets	  				  				  				
				
Short-term investments	  	$	26,644	  	  	$	—  	  	  	$	26,644	  	
				
Fixed maturities:	  				  				  				
U.S. government and federal agency	  	 	116	  	  	 	—  	  	  	 	116	  	
U.S. state and local government agency	  	 	—  	  	  	 	79	  	  	 	79	  	
Corporate debt securities	  	 	—  	  	  	 	23,466	  	  	 	23,466	  	
Other debt securities	  	 	—  	  	  	 	371	  	  	 	371	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity investments		 	116	  		 	23,916	  		 	24,032	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds - debt securities		 	123,894	  		 	—  	  		 	123,894	  	
Mutual funds - equity securities - real estate sector		 	41,753	  		 	—  	  		 	41,753	  	
Mutual funds - equity securities - energy sector		 	14,829	  		 	—  	  		 	14,829	  	
Mutual funds - equity securities - MLP’s		 	43,596	  		 	—  	  		 	43,596	  	
Mutual funds - equity securities - other		 	25,258	  		 	—  	  		 	25,258	  	
				
Equity securities:													
Master limited partnerships		 	43,207	  		 	—  	  		 	43,207	  	
Global equity securities		 	1,867	  		 	—  	  		 	1,867	  	
Other invested assets		 	—  	  		 	25	  		 	25	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total		$	321,164	  		$	23,941	  		$	345,105	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Level 1 securities primarily consist of actively publicly traded money market funds, mutual funds and equity securities.
Level 2 securities primarily consist of corporate and other fixed income debt securities. The Company obtains pricing information for these securities from an independent pricing vendor. The pricing vendor uses various pricing models for each asset class that are consistent with what other market participants would use. The inputs and
 
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assumptions to the pricing vendor’s model are derived from market observable sources including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and other market-related data. Since many fixed income securities do not trade on a daily basis, the pricing vendor uses available information as applicable such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. Thus, certain securities may not be priced using quoted prices, but rather determined from market observable information. These investments are included in Level 2. The Company reviews the information provided by the pricing vendor on a regular basis. In addition, the pricing vendor has an established process in place for the identification and resolution of potentially erroneous prices.
There were no level 3 assets.
 
 Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	
The words “we,” “us,” “our,” “StoneMor,” the “Partnership,” the “Company” and similar words refer to StoneMor Partners L.P. and its subsidiaries.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in “Part I, Item 1” of this Quarterly Report on Form 10-Q.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q, including, but not limited to, information regarding the status and progress of our operating activities, the plans and objectives of our management, assumptions regarding our future performance and plans, and any financial guidance provided or guidance related to our future distributions, as well as certain information in our other filings with the SEC and elsewhere are forward-looking statements.
Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend (including, but not limited to our intent to maintain or increase our distributions),” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements.
These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated or implied. Our major risk is related to uncertainties associated with the 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.
Our additional risks and uncertainties, include, but are not limited to, the following: uncertainties associated with future revenue and revenue growth; uncertainties associated with the integration or anticipated benefits of our recent acquisitions or any future acquisitions; our ability to complete and fund additional acquisitions; the effect of economic downturns; the impact of our significant leverage on our operating plans; the decline in the fair value of certain equity and debt securities held in our trusts; our ability to attract, train and retain an adequate number of sales people; uncertainties associated with the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies; our ability to successfully implement a strategic plan relating to achieving operating improvements, strong cash flows and further deleveraging; our ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose us to significant liabilities and damage our reputation; the effects of cyber security attacks due to our significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund our pre-need funeral contracts; and various other uncertainties associated with the death care industry and our operations in particular.
When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (“2014 Form 10-K”) and our other reports filed with the SEC. Except as required under applicable law, we assume no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events or otherwise.
 
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Overview
Cemetery Operations
We are currently the second largest owner and operator of cemeteries in the United States. As of March 31, 2015, we operated 303 cemeteries in 27 states and Puerto Rico. We own 272 of these cemeteries and we manage or operate the remaining 31 under lease, operating or management agreements with the nonprofit cemetery companies that own the cemeteries. As a result of the agreements, other control arrangements and applicable accounting rules, we have treated 16 of these cemeteries as acquisitions for accounting purposes.
We operate 15 cemeteries under long-term lease, operating or management agreements that do not qualify as acquisitions for accounting purposes. As a result, we did not consolidate all of the existing assets and liabilities related to these cemeteries. We have consolidated the existing assets and liabilities of these cemeteries’ merchandise and perpetual care trusts as variable interest entities since we control and receive the benefits and absorb any losses from operating these trusts. Under these long-term lease, operating or management agreements, which are subject to certain termination provisions, we are the exclusive operator of these cemeteries. We earn revenues related to sales of merchandise, services, and interment rights and incur expenses related to such sales and the maintenance and upkeep of these cemeteries. Upon termination of these contracts, we will retain all of the benefits and related contractual obligations incurred from sales generated during the contract period. We have also recognized the existing merchandise liabilities assumed as part of these agreements.
We sell cemetery products and services both at the time of death, which we refer to as at-need, and prior to the time of death, which we refer to as pre-need. Revenues from cemetery operations accounted for approximately 77.4% and 81.8% of our total revenues during the three months ended March 31, 2015 and 2014, respectively. The change in the contribution to total revenues was primarily due to one large land sale from the first quarter of 2014. In addition, during the first quarter of 2015, we had reductions in investment income from our trusts, as well as higher contributions from our 2014 funeral home acquisitions.
Our results of operations for our cemetery operations are determined primarily by the volume of sales of products and services and the timing of product delivery and performance of services. We derive our cemetery revenues primarily from:
 
 	•	 	at-need sales of cemetery interment rights, merchandise and services, which we recognize as revenue when we have delivered the related merchandise or performed the service;	
 
 	•	 	pre-need sales of cemetery interment rights, which we generally recognize as revenues when we have collected 10% of the sales price from the customer;	
 
 	•	 	pre-need sales of cemetery merchandise, which we recognize as revenues when we satisfy the criteria specified below for delivery of the merchandise to the customer;	
 
 	•	 	pre-need sales of cemetery services which we recognize as revenues when we perform the services for the customer;	
 
 	•	 	investment income from assets held in our merchandise trust, which we recognize as revenues when we deliver the underlying merchandise or perform the underlying services and recognize the associated sales revenue as discussed above;	
 
 	•	 	investment income from perpetual care trusts, excluding realized gains and losses on the sale of trust assets, which we recognize as revenues as the income is earned in the trust; and	
 
 	•	 	other items, such as interest income on pre-need installment contracts and sales of land.	
The criteria for recognizing revenue related to the sale of cemetery merchandise is that such merchandise is “delivered” to our customer, which generally means that:
 
 	•	 	the merchandise is complete and ready for installation; or	
 
 	•	 	the merchandise is either installed or stored at an off-site location, at no additional cost to us, and specifically identified with a particular customer; and	
 
 	•	 	the risks and rewards of ownership have passed to the customer.	
We generally satisfy these delivery criteria by purchasing the merchandise and either installing it on our cemetery property or storing it, at the customer’s request, in third-party warehouses, at no additional cost to us, until the time of need. With respect to burial vaults, we install the vaults rather than storing them to satisfy the delivery criteria. When merchandise is stored for a customer, we may issue a certificate of ownership to the customer to evidence the transfer to the customer of the risks and rewards of ownership.
 
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Pre-need Sales
As previously noted, we do not recognize revenue on pre-need sales of merchandise and services until we have delivered the merchandise or performed the services. Accordingly, deferred revenues from pre-need sales and related merchandise trust earnings are reflected as a liability on our unaudited condensed consolidated balance sheet in deferred cemetery revenues, net.
Total deferred cemetery revenues, net, also includes deferred revenues from pre-need sales that were entered into by entities we acquired prior to the time we acquired them. This includes both those entities that we acquired at the time of the formation of Cornerstone and other subsequent acquisitions. Our profit margin on pre-need sales entered into by entities we subsequently acquired is generally less than our profit margin on other pre-need sales because, in accordance with industry practice at the time these acquired pre-need sales were made, none of the selling expenses were recognized at the time of sale. As a result, we are required to recognize all of the expenses (including deferred selling expenses) associated with these acquired pre-need sales when we recognize the revenues from that sale.
Pre-need products and services are typically sold on an installment basis. Subject to state law, these contracts are normally subject to “cooling-off” periods, generally between three and thirty days, during which the customer may elect to cancel the contract and receive a full refund of amounts paid. Also, subject to applicable state law, we are generally permitted to retain the amounts already paid on contracts, including any amounts that were required to be deposited into trust, on contracts cancelled after the “cooling-off” period. Historical post “cooling-off” period cancellations total approximately 10% of our pre-need sales (based on contract dollar amounts). If the products and services purchased under a pre-need contract are needed for interment before payment has been made in full, generally the balance due must be immediately paid in full.
Contracts related to pre-need installment sales are usually for a period not to exceed 60 months, with payments of principal and interest required. Pre-need sales contracts normally contain provisions for both principal and interest. For those contracts that do not bear a market rate of interest, we impute such interest based upon the prime rate plus 150 basis points, which resulted in a rate of 4.75% for the three months ended March 31, 2015 and 2014.
We normally offer prepayment incentives to customers whose pre-need contracts are longer than 36 months and bear interest. If those customers pay their contracts in full in less than 12 months, we rebate the interest that we have collected from them. Even though this rebate policy reduces the amount of interest income we receive on our accounts receivable, the net effect is an increase in our immediate cash flow.
In certain cases, pre-need contracts will be cancelled before they are fully paid. In these circumstances, we are generally permitted to retain amounts already paid to us, including any amounts that were required to be deposited into trust. In certain other cases, the products and services purchased under a pre-need contract are needed for interment before payment has been made in full. In these cases, we are generally entitled to be immediately paid in full for any amounts still outstanding.
At-need Sales
Revenue on at-need merchandise sales is deferred until the time that such merchandise is delivered. The lag between the contract origination and delivery is normally minimal. At-need sales of products and services are generally required to be paid for in full at the time of sale. At that time, we will deposit amounts, as legally required, into our perpetual care trusts. We are not required to deposit any amounts from our at-need sales into merchandise trusts.
Expenses
We analyze and categorize our operating expenses as follows:
1. Cost of goods sold and selling expenses
Cost of goods sold reflects the actual cost of purchasing products and performing services. Sales of cemetery lots and interment rights, whether at-need or pre-need, typically have a lower cost of goods sold than other merchandise that we sell.
Selling expenses consist of salesperson and sales management payroll costs, including selling commissions, bonuses and employee benefits. We self-insure medical expenses of our employees up to certain individual and aggregate limits
 
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over which we have stop-loss insurance coverage. Our self-insurance policy may result in variability in our future operating expenses. Selling expenses also include other costs of obtaining product and service sales, such as advertising, marketing, postage and telephone.
Direct costs associated with pre-need sales of cemetery merchandise and services, such as sales commissions and cost of goods sold, are reflected in the unaudited condensed consolidated balance sheet in deferred selling and obtaining costs and deferred cemetery revenues, net, respectively, and are expensed as the merchandise is delivered or the services are performed. Indirect costs, such as marketing and advertising costs, are expensed in the period in which they are incurred.
2. Cemetery Expenses
Cemetery expenses represent the cost to maintain and repair our cemetery properties and consist primarily of labor and equipment, utilities, real estate taxes and other maintenance items. Repairs necessary to maintain our cemeteries are expensed as they are incurred. Other maintenance costs required over the long term to maintain the operating capacity of our cemeteries, such as to build roads and install sprinkler systems are capitalized.
3. General and administrative expenses
General and administrative expenses, which do not include corporate overhead, primarily include personnel costs, insurance and other costs necessary to maintain our cemetery offices.
4. Depreciation and amortization
We depreciate our property and equipment on a straight-line basis over their estimated useful lives.
5. Acquisition related costs
Acquisition related costs, which include legal fees and other third party costs incurred in acquisition related activities, are expensed as incurred.
Funeral Home Operations
As of March 31, 2015, we owned and operated 98 funeral homes. These properties are located in 19 states and Puerto Rico. Forty-five of our funeral homes are located on the grounds of cemeteries that we own.
We derive revenues at our funeral homes from the sale of funeral home merchandise, including caskets and related funeral merchandise, and services, including removal and preparation of remains, the use of our facilities for visitation, worship and performance of funeral services and transportation services. We sell these services and merchandise generally at the time of need utilizing salaried licensed funeral directors. Our funeral home operations also include revenues related to the sale of term and final expense whole life insurance in markets where we do not own a funeral home, as well as pre-need whole life insurance in markets where we own a funeral home. Funeral home revenues accounted for approximately 22.6% of our total revenues during the three months ended March 31, 2015 as compared to 18.2% during the same period last year.
Pursuant to state law, a portion of proceeds received from pre-need funeral service contracts is put into trust while amounts used to defray the initial administrative costs are not. All investment earnings generated by the assets in the trust (including realized gains and losses) are deferred until the associated merchandise is delivered or the services are performed. The balance of the amounts in these trusts is included within the merchandise trusts.
We generally include revenues from pre-need casket sales in the results of our cemetery operations. However, some states require that caskets be sold by funeral homes, and revenues from casket sales in those states are included in our funeral home results.
Our funeral home operating expenses consist primarily of compensation to our funeral directors, day to day costs of managing the business and the cost of caskets.
 
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Corporate
We incur fixed costs for corporate overhead primarily for centralized functions, such as payroll, accounting, collections and professional fees. We also incur expenses related to reporting requirements under U.S. federal securities laws and certain other additional expenses of being a public company.
Current Market Conditions and Economic Developments
As of March 31, 2015, the amortized cost of the assets in our merchandise trusts exceeded their market value by 1.7%, compared to December 31, 2014 when the market value of the assets exceeded their amortized cost by 0.5%. As of March 31, 2015, the market value of the assets in our perpetual care trusts exceeded their amortized cost by 2.5% as compared to December 31, 2014 when the market value of the assets exceeded their amortized cost by 9.7%. Changes in the cost to market ratios are due in part to the repositioning of assets within our merchandise and perpetual care trust portfolios.
As of March 31, 2015, the majority of our long-term debt consisted of $175.0 million in Senior Notes due 2021, the offering of which took place in May of 2013, and $122.9 million of borrowings under our credit facility, which expires in 2019. As of March 31, 2015, we had $57.1 million of total availability under our revolving credit facility. The revolving credit facility provides for both acquisition draws, which are used primarily to finance acquisitions, acquisition related costs and mausoleum construction costs, and working capital draws, which are used to finance all other corporate costs. As of March 31, 2015, we had approximately $97.9 million of working capital draws, which are limited to a borrowing formula of 85% of eligible account receivables. This limit was $133.0 million at March 31, 2015.
The aggregate values of pre-need and at-need contracts written were $78.3 million for the three months ended March 31, 2015 as compared to $63.7 million during the same period last year.
Impact on Our Ability to Meet Our Debt Covenants
Current market conditions have not negatively impacted our ability to meet our significant debt covenants. These covenants specifically relate to a certain measure of Consolidated EBITDA and certain coverage and leverage ratios as defined in the Credit Agreement described below.
Consolidated EBITDA is a non-GAAP financial measure and is primarily related to the current period value of contracts written, investment income from the merchandise and perpetual care trusts, and current expenses incurred.
We have two primary debt covenants that are dependent upon our financial results, the Consolidated Leverage Ratio and the Consolidated Debt Service Coverage Ratio. The Consolidated Leverage Ratio relates to the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA. Our Consolidated Leverage Ratio was 3.43 at March 31, 2015 compared to a maximum allowed ratio of 4.00. The Consolidated Debt Service Coverage Ratio relates to the ratio of Consolidated EBITDA to Consolidated Debt Service. Our Consolidated Debt Service Coverage Ratio was 4.37 at March 31, 2015 compared to a minimum allowed ratio of 2.50.
Segment Reporting and Related Information
The Company is organized into five distinct reportable segments, which are classified as Cemetery Operations—Southeast, Cemetery Operations—Northeast, Cemetery Operations—West, Funeral Homes, and Corporate.
We chose this level of organization and disaggregation of reportable segments due to the fact that a) each reportable segment has unique characteristics that set it apart from each other; b) we have organized our management personnel at these operational levels; and c) this is the level at which our chief decision makers and other senior management evaluate performance.
The Cemetery Operations segments sell interment rights, caskets, burial vaults, cremation niches, markers and other cemetery related merchandise. Our cemetery operations are disaggregated into three different geographically based segments. The nature of our customers differs in each of our regionally based cemetery operating segments. Cremation rates in the West region are substantially higher than they are in the Southeast region. Rates in the Northeast region tend to be somewhere between the two. Statistics indicate that customers who select cremation services have certain attributes that differ from customers who select other methods of interment. The disaggregation of cemetery operations into the three distinct regional segments is primarily due to these differences in customer attributes along with the previously mentioned management structure and senior management analysis methodologies.
 
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Our Funeral Homes segment offers a range of funeral-related services such as family consultation, the removal of and preparation of remains and the use of funeral home facilities for visitation. These services are distinctly different than the cemetery merchandise and services sold and provided by the Cemetery Operations segments.
Our Corporate segment includes various home office expenses, miscellaneous selling, cemetery and general administrative expenses that are not allocable to other operating segments, certain depreciation and amortization expenses and acquisition related costs.
Critical Accounting Policies and Estimates
The unaudited condensed consolidated financial statements are prepared in conformity with GAAP. The preparation of these consolidated financial statements required us to make estimates, judgments and assumptions that affected the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods (see Note 1 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q). Our critical accounting policies are those that are both important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgment. These critical accounting policies are discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our 2014 Form 10-K. There have been no significant changes to our critical accounting policies since the filing of our 2014 Form 10-K.
Results of Operations – Segments
We account for and analyze the results of operations for our segments on a basis of accounting that is different from GAAP. We reconcile these non-GAAP accounting results of operations to GAAP based amounts at the consolidated level. This reconciliation is included in Note 14 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
The method of accounting we utilize to analyze our overall results of operations, including segment results, provides for a production based view of our business. Under the production based view, we recognize revenues at their contract value at the point in time in which the contract is written, less a historic cancellation reserve. All related costs are expensed in the period the contract is recognized as revenue. In contrast, GAAP requires that we defer all revenues, and the direct costs associated with these revenues, until we meet certain delivery and performance requirements. The nature of our business is such that there is no meaningful relationship between the time that elapses from the date a contract is executed and the date the underlying merchandise is delivered or the service, delivery and performance requirements are met. Further, certain factors affecting this time period, such as weather and supplier issues, are out of our control. As a result, during a period of growth, operating profits as defined by GAAP will tend to lag behind operating profits on a production based view because of the required deferral of revenues. Our performance based view ignores these delays and presents results based upon the underlying value of contracts written. We believe this is the most reliable indicator of our performance for a given period as the value of contracts written less a historical cancellation reserve reflects the economic value added during a given period of time. Accordingly, the ensuing segment discussion is on a basis of accounting that differs from GAAP. See Note 1 to the consolidated financial statements included in the 2014 Form 10-K for a more detailed discussion of our accounting policies under GAAP.
Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014
Cemetery Segments
Cemetery Operations – Southeast
Since January 1, 2014, we have acquired ten properties in our Cemetery Operations – Southeast segment. The first acquisition occurred during the first quarter of 2014 and the remaining nine occurred during the second quarter of 2014. The results of operations for these acquired properties have either less or no impact on the results for the three months ended March 31, 2014, but are included in the results for the three months ended March 31, 2015. The acquisitions contributed approximately $3.4 million of the revenues and $2.4 million of the costs and expenses for the three months ended March 31, 2015, compared to less than $0.1 million of the revenues and costs and expenses for the three months ended March 31, 2014.
The table below compares the results of operations for our Cemetery Operations – Southeast for the three months ended March 31, 2015 to the same period last year:
 
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 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	  	Change ($)	 	  	Change (%)	 	
 	  	(in thousands)
(non-GAAP)	 	
Total revenues	  	$	36,176	  	  	$	33,727	  	  	$	2,449	  	  	 	7.3	% 	
Total costs and expenses	  	 	26,719	  	  	 	23,164	  	  	 	3,555	  	  	 	15.3	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Operating profit		$	9,457	  		$	10,563	  		$	(1,106	) 		 	-10.5	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Revenues
The increase in revenues was primarily related to increases of $0.9 million in the value of pre-need contracts written, $1.7 million in the value of at-need contracts written and $0.3 million in interest and other income, partially offset by a reduction of $0.5 million in income from our trusts. Our investment results can vary from period to period based on a number of factors including realized income and the timing of the recognition of gains within the trusts.
Total costs and expenses
The net increase in costs and expenses was primarily related to:
 
 	•	 	A $0.5 million increase in the cost of goods sold primarily attributable to sales from the acquired properties and changes in product mix.	
 
 	•	 	A $0.4 million increase in cemetery expenses due to an increase in labor costs.	
 
 	•	 	A $1.9 million increase in selling expenses due to increases of $1.5 million in commissions and personnel costs, $0.3 million in advertising and marketing expenses and $0.1 million in travel expenses.	
 
 	•	 	A $0.6 million increase in general and administrative expenses, primarily due to a $0.3 million increase in insurance costs and a $0.2 million increase in personnel costs.	
 
 	•	 	A $0.2 million increase in depreciation expense.	
Cemetery Operations – Northeast
During the second quarter of 2014, we acquired three properties and separately obtained the rights from the Archdiocese of Philadelphia to operate thirteen properties in our Cemetery Operations – Northeast segment. The results of operations for these properties have no impact on the results for the three months ended March 31, 2014, but are included in the results for the three months ended March 31, 2015. These properties have contributed approximately $9.2 million of the revenues and $6.2 million of the costs and expenses of the segment for the three months ended March 31, 2015. In addition, in the first quarter of 2014 as noted below, we had one large land sale, which had a high profit margin and is the primary driver behind the decrease in operating profit period over period.
The table below compares the results of operations for our Cemetery Operations – Northeast for the three months ended March 31, 2015 to the same period last year:

 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	  	Change ($)	 	  	Change (%)	 	
 	  	(in thousands)
(non-GAAP)	 	
Total revenues	  	$	21,244	  	  	$	18,014	  	  	$	3,230	  	  	 	17.9	% 	
Total costs and expenses	  	 	16,334	  	  	 	9,443	  	  	 	6,891	  	  	 	73.0	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Operating profit		$	4,910	  		$	8,571	  		$	(3,661	) 		 	-42.7	% 	

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Revenues
The increase in revenues was primarily related to increases of $4.2 million in the value of pre-need contracts written and $4.4 million in the value of pre-need contracts written, partially offset by decreases of $1.1 million in income from our trusts and $4.3 million in other income. Our investment results can vary from period to period based on a number of factors including realized income and the timing of the recognition of gains within the trusts. The decrease in other income was primarily related to one land sale that occurred during the first quarter of 2014.
Total costs and expenses
The net increase in costs and expenses was mostly attributable to the new properties and was primarily related to:
 
 	•	 	A $0.7 million increase in the cost of goods sold primarily attributable to sales from the acquired properties and changes in product mix.	
 
 	•	 	A $2.6 million increase in cemetery expenses primarily due to increases of $2.1 million in labor costs, $0.3 million in repairs and maintenance expense, $0.1 million in utility and fuel costs and $0.1 million in real estate tax expense.	
 
 	•	 	A $2.2 million increase in selling expenses attributable to a $1.8 million increase in commissions and personnel costs and a $0.4 million increase in advertising and marketing costs.	
 
 	•	 	A $1.0 million increase in general and administrative expenses, primarily due to a $0.3 million increase in insurance costs, a $0.4 million increase in personnel costs and $0.1 million increase in professional fees, with the remaining increase in general office costs.	
 
 	•	 	A $0.4 million increase in depreciation and amortization expense, $0.3 million of which was attributable to the amortization of the intangible assets relating to the lease and management agreements with the Archdiocese of Philadelphia.	
Cemetery Operations – West
The table below compares the results of operations for our Cemetery Operations – West for the three months ended March 31, 2015 to the same period last year:

 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	  	Change ($)	 	  	Change (%)	 	
 	  	(in thousands)
(non-GAAP)	 	
Total revenues	  	$	19,695	  	  	$	20,744	  	  	$	(1,049	) 	  	 	-5.1	% 	
Total costs and expenses	  	 	12,488	  	  	 	12,288	  	  	 	200	  	  	 	1.6	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Operating profit		$	7,207	  		$	8,456	  		$	(1,249	) 		 	-14.8	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Revenues
The decrease in revenues was primarily related to a decrease of $2.1 million in income from our trusts, which was partially offset by increases of $0.8 million in the value of pre-need contracts written, $0.1 million in the value of at-need contracts written and $0.2 million in interest and other income. Our investment results can vary from period to period based on a number of factors including realized income and the timing of the recognition of gains within the trusts.
Total costs and expenses
The net increase in costs and expenses was primarily related to:
 
 	•	 	A $0.6 million decrease in the cost of goods sold primarily attributable to changes in product mix.	
 
 	•	 	A $0.1 million decrease in cemetery expenses primarily related to a decrease in repair and maintenance costs.	
 
 	•	 	A $0.9 million increase in selling expenses primarily related to commissions and personnel costs.	
Funeral Homes Segment
In the second quarter of 2014, we acquired nine funeral homes and in the fourth quarter of 2014, we acquired two funeral homes. Therefore, the results of operations for these properties have no impact on the results for the three months
 
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ended March 31, 2014, but are included in the results for the three months ended March 31, 2015. The additions have contributed approximately $2.9 million of the revenues and $2.1 million of the costs and expenses of the segment for the three months ended March 31, 2015.
The table below compares the results of operations for our Funeral Homes segment for the three months ended March 31, 2015 to the same period last year:

 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	  	Change ($)	 	  	Change (%)	 	
 	  	(in thousands)
(non-GAAP)	 	
Total revenues	  	$	17,415	  	  	$	13,254	  	  	$	4,161	  	  	 	31.4	% 	
Total costs and expenses	  	 	13,410	  	  	 	10,240	  	  	 	3,170	  	  	 	31.0	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Operating profit		$	4,005	  		$	3,014	  		$	991	  		 	32.9	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Revenues
The increase in revenues was primarily attributable to increases of $1.7 million in the value of pre-need contracts written, $2.1 million in the value of at-need contracts written, $0.1 million in other income and $0.3 million in insurance-related revenues.
Total costs and expenses
The net increase in costs and expenses was primarily attributable to increases of $1.0 million in personnel costs, $0.8 million in merchandise costs, $0.3 million in facility related costs, $0.3 million in other service and supplies expense, and $0.4 million in expenses related to insurance sales, with the remaining increase in other general costs and depreciation.
Corporate Segment
The table below compares expenses incurred by the Corporate segment for the three months ended March 31, 2015 to the same period last year:

 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	  	Change ($)	 	  	Change (%)	 	
 	  	(in thousands) (non-GAAP)	 	
Selling, cemetery and general and administrative expenses	  	$	200	  	  	$	545	  	  	$	(345	) 	  	 	100.0	% 	
Depreciation and amortization	  	 	247	  	  	 	242	  	  	 	5	  	  	 	2.1	% 	
Acquisition related costs, net of recoveries	  	 	349	  	  	 	349	  	  	 	—  	  	  	 	0.0	% 	
					
Corporate expenses	  				  				  				  				
Corporate personnel expenses	  	 	3,711	  	  	 	3,243	  	  	 	468	  	  	 	14.4	% 	
Other corporate expenses	  	 	5,023	  	  	 	4,213	  	  	 	810	  	  	 	19.2	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total corporate overhead		 	8,734	  		 	7,456	  		 	1,278	  		 	17.1	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total corporate expenses		$	9,530	  		$	8,592	  		$	938	  		 	10.9	% 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The increase in corporate expenses was primarily driven by increases of $0.5 million in corporate personnel expenses, $0.2 million in both professional fees and information technology costs and $0.1 million in insurance costs, with the remaining increase in general corporate costs. These increases were partially offset by a $0.3 million decrease in selling expenses, primarily related to a reduction in compensation expense, with the remaining increase in general corporate costs.
 
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Reconciliation of Segment Results of Operations to Consolidated Results of Operations
As discussed in the segment sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, revenues and their associated costs as reported at the segment level are not deferred.
Periodic consolidated revenues recorded in accordance with GAAP reflect the amount of total merchandise and services that were delivered during the period. Accordingly, period over period changes to revenues can be impacted by:
 
 	•	 	Changes in the value of contracts written and other revenues generated during a period that are delivered in their period of origination and are recognized as revenue and not deferred as of the end of their period of origination.	
 
 	•	 	Changes in merchandise and services that are delivered during a period that had been originated during a prior period.	
The table below analyzes results of operations and the changes therein for the three months ended March 31, 2015 as compared to the same period last year. The table is structured so that our readers can determine whether changes were based upon changes in the level of merchandise and services and other revenues generated during each period and/or changes in the timing of when merchandise and services were delivered. During 2014, we acquired 13 cemeteries and 11 funeral homes, and obtained the rights from the Archdiocese of Philadelphia to operate 13 cemetery properties. The results of operations for these properties have either less or no impact on the results for the three months ended March 31, 2014, but are included in the results for the three months ended March 31, 2015. These properties are contributing a significant portion of the increases to revenues and costs and expenses in the table below.

 	  	Three months ended
March 31, 2015	 	 	Three months ended
March 31, 2014	 	  	 	 	 	 	 	
 	  	(in thousands)	 	 	(in thousands)	 	  	 	 	 	 	 	
 	  	Segment
Results
(non-GAAP)	 	  	GAAP
Adjustments	 	 	GAAP
Results	 	 	Segment
Results
(non-GAAP)	 	  	GAAP
Adjustments	 	 	GAAP
Results	 	  	Change in
GAAP results
($)	 	 	Change in
GAAP results
(%)	 	
Revenues	  				  				 				 				  				 				  				 				
									
Pre-need cemetery revenues	  	$	35,893	  	  	$	(15,231	) 	 	$	20,662	  	 	$	29,976	  	  	$	(9,268	) 	 	$	20,708	  	  	$	(46	) 	 	 	-0.2	% 	
At-need cemetery revenues	  	 	25,976	  	  	 	(2,658	) 	 	 	23,318	  	 	 	19,848	  	  	 	(1,225	) 	 	 	18,623	  	  	 	4,695	  	 	 	25.2	% 	
Investment income from trusts	  	 	11,985	  	  	 	(7,449	) 	 	 	4,536	  	 	 	15,628	  	  	 	(9,651	) 	 	 	5,977	  	  	 	(1,441	) 	 	 	-24.1	% 	
Interest income	  	 	2,200	  	  	 	—  	  	 	 	2,200	  	 	 	2,007	  	  	 	—  	  	 	 	2,007	  	  	 	193	  	 	 	9.6	% 	
Funeral home revenues	  	 	17,415	  	  	 	(2,155	) 	 	 	15,260	  	 	 	13,254	  	  	 	(1,507	) 	 	 	11,747	  	  	 	3,513	  	 	 	29.9	% 	
Other cemetery revenues	  	 	1,061	  	  	 	380	  	 	 	1,441	  	 	 	5,026	  	  	 	299	  	 	 	5,325	  	  	 	(3,884	) 	 	 	-72.9	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total revenues		 	94,530	  		 	(27,113	) 		 	67,417	  		 	85,739	  		 	(21,352	) 		 	64,387	  		 	3,030	  		 	4.7	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Costs and expenses																																	
									
Cost of goods sold		 	9,737	  		 	(2,654	) 		 	7,083	  		 	9,247	  		 	(1,743	) 		 	7,504	  		 	(421	) 		 	-5.6	% 	
Cemetery expense		 	16,265	  		 	—  	  		 	16,265	  		 	13,329	  		 	—  	  		 	13,329	  		 	2,936	  		 	22.0	% 	
Selling expense		 	18,504	  		 	(4,594	) 		 	13,910	  		 	13,829	  		 	(2,640	) 		 	11,189	  		 	2,721	  		 	24.3	% 	
General and administrative expense		 	9,329	  		 	—  	  		 	9,329	  		 	7,645	  		 	—  	  		 	7,645	  		 	1,684	  		 	22.0	% 	
Corporate overhead		 	8,734	  		 	—  	  		 	8,734	  		 	7,456	  		 	—  	  		 	7,456	  		 	1,278	  		 	17.1	% 	
Depreciation and amortization		 	2,952	  		 	—  	  		 	2,952	  		 	2,368	  		 	—  	  		 	2,368	  		 	584	  		 	24.7	% 	
Funeral home expense		 	12,611	  		 	(461	) 		 	12,150	  		 	9,504	  		 	(218	) 		 	9,286	  		 	2,864	  		 	30.8	% 	
Acquisition related costs, net of recoveries		 	349	  		 	—  	  		 	349	  		 	349	  		 	—  	  		 	349	  		 	—  	  		 	0.0	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total costs and expenses		 	78,481	  		 	(7,709	) 		 	70,772	  		 	63,727	  		 	(4,601	) 		 	59,126	  		 	11,646	  		 	19.7	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Operating profit (loss)		$	16,049	  		$	(19,404	) 		$	(3,355	) 		$	22,012	  		$	(16,751	) 		$	5,261	  		$	(8,616	) 		 	-163.8	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Revenues
Pre-need cemetery revenues were $20.7 million for the three months ended March 31, 2015 and the same period last year. Comparing the two periods, there were offsetting $5.9 million increases in the value of cemetery contracts written and deferred revenue.
At-need cemetery revenues were $23.3 million for the three months ended March 31, 2015, an increase of $4.7 million, or 25.2%, as compared to $18.6 million during the same period last year. The increase was primarily caused by an increase of $6.1 million in the value of cemetery contracts written, partially offset by an increase of $1.4 million in deferred revenue.
Investment income from trusts was $4.5 million for the three months ended March 31, 2015, a decrease of $1.5 million, or 24.1%, as compared to $6.0 million during the same period last year. On a segment basis, we had a decrease of $3.6 million, which was offset by an adjustment of $2.1 million related to funds for which we have met the requirements that would allow us to recognize them as revenue. Our investment results can vary from period to period based on a number of factors including realized income and the timing of the recognition of gains within the trusts.
 
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Interest income on accounts receivable was $2.2 million for the three months ended March 31, 2015, an increase of $0.2 million, or 9.6%, as compared to $2.0 million during the same period last year, primarily due to an increase in accounts receivable.
Funeral home revenues were $15.3 million for the three months ended March 31, 2015, an increase of $3.6 million, or 29.9%, as compared to $11.7 million during the same period last year. The increase was primarily caused by an aggregate increase of $4.2 million from an increase the value of contracts written and other revenues, which was partially offset by an increase of $0.6 million in deferred revenue.
Other cemetery revenues were $1.4 million during the three months ended March 31, 2015 as compared to $5.3 million in the same period last year. The decrease was primarily related to one land sale that occurred during the first quarter of 2014.
Costs and Expenses
The cost of goods sold was $7.1 million for the three months ended March 31, 2015, a decrease of $0.4 million, or 5.6%, as compared to $7.5 million during the same period last year. The ratio of cost of goods sold to pre-need and at-need cemetery revenues was 16.1% during the three months ended March 31, 2015 as compared to 19.1% during the same period last year. The change in the ratio primarily relates to changes in product mix and the inclusion of the cost of property sold as part of a land sale that is presented within “Other cemetery revenues” in results for the three months ended March 31, 2014.
Cemetery expenses were $16.3 million during the three months ended March 31, 2015, an increase of $3.0 million, or 22.0%, compared to $13.3 million during the same period last year. Within this category, there were increases of $2.5 million in personnel costs largely due to newly acquired properties, $0.3 million in repairs and maintenance expense and a net $0.2 million increase in other cemetery expenses. Cemetery expenses relate to the current costs of managing and maintaining our cemetery properties. These costs are expensed as incurred and are not deferred. Accordingly, from a margin standpoint, the most effective gauge of measuring cemetery expenses is as a ratio of segment level pre-need and at-need cemetery revenues. Changes in this ratio give an indication of our ability to manage and control our operating costs relative to our overall cemetery operations. An increase in the ratio indicates that expense increases related to the operation and maintenance of our cemetery properties exceeded increases in the value of contracts written, while a decrease in the ratio indicates that expense growth did not exceed increases in the value of contracts written. In the short-term, this ratio can be positively or negatively impacted by our acquisitions, including such factors as how long it takes us to fully implement our pre-need sales programs and whether there are any unanticipated costs. Over the long-term, we would expect this ratio to slightly decline as many of the expenses in this category are fixed in nature. The ratio of cemetery expenses to segment level pre-need and at-need cemetery revenues was 26.3% during the three months ended March 31, 2015 as compared to 26.8% during the same period last year.
Selling expenses were $13.9 million during the three months ended March 31, 2015, an increase of $2.7 million, or 24.3%, as compared to $11.2 million during the same period last year. The ratio of selling expenses to cemetery revenues was 31.6% during the three months ended March 31, 2015 as compared to 28.4% during the same period last year. This is largely due to segment based increases of $3.5 million in commissions and personnel costs, $0.8 million in advertising and marketing costs, $0.2 million in travel costs, and $0.2 million in other general selling costs, partially offset by a $2.0 million increase in deferred selling expenses. The ratio gives some indication of how effectively the money we invest in selling efforts is translating into sales. However, the majority of our selling expenses are directly related to sales commissions and bonuses, which would be directly related to changes in the value of pre-need and at-need contracts written. As a result, we would expect this ratio to follow relatively consistent trends over the long-term.
General and administrative expenses were $9.3 million during the three months ended March 31, 2015, an increase of $1.7 million, or 22.0%, as compared to $7.6 million during the same period last year. The increase was due to increases of $0.7 million in both personnel costs and insurance costs and $0.2 million in professional fees, with the remaining increase in other general office costs. General and administrative expenses are expensed as incurred and are not deferred. Accordingly, from a margin standpoint, the most effective gauge of measuring general and administrative expenses is as a ratio of segment level pre-need and at-need cemetery revenues. Changes in this ratio give an indication of our ability to manage and control our general and administrative costs relative to our overall cemetery operations. An increase in the ratio indicates that general and administrative percentage expense increases related to our cemetery properties exceeded percent increases in the value of contracts written, while a decrease in the ratio indicates that expense growth on a percentage basis did not exceed percentage increases in the value of contracts written. In the short-term, this ratio can be positively or negatively impacted by our acquisitions, including such factors as how long it takes us to fully implement our pre-need sales programs and whether there are any unanticipated costs. Over the long-term, we would expect this ratio to decrease slightly as many of the expenses in this category are fixed in nature. The ratio of general and administrative expenses to segment level pre-need and at-need cemetery revenues was 15.1% during the three months ended March 31, 2015 as compared to 15.3% during the same period last year.
 
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Total corporate overhead was $8.7 million for the three months ended March 31, 2015, an increase of $1.2 million, or 17.1% compared to $7.5 million during the same period last year. The increase was primarily driven by increases of $0.5 million in corporate personnel expenses, $0.2 million in both professional fees and information technology costs and $0.1 million in insurance costs, with the remaining increase in general corporate costs.
Depreciation and amortization was $3.0 million for the three months ended March 31, 2015, an increase of $0.6 million, or 24.7%, as compared to $2.4 million during the same period last year. The majority of the increase was attributable to acquired properties and amortization of the intangible assets relating to the lease and management agreements entered into in 2014.
Funeral home expenses were $12.2 million for the three months ended March 31, 2015, an increase of $2.9 million, or 30.8%, as compared to $9.3 million during the same period last year. The increase was primarily attributable to segment based increases of $1.0 million in personnel costs, $0.8 million in merchandise costs, $0.3 million in facility related costs, $0.3 million in other service and supplies expense, $0.4 million in expenses related to insurance sales, partially offset by a $0.2 million increase in deferred funeral home expenses, with the remaining increase in other general costs.
Acquisition related costs were $0.3 million for the three months ended March 31, 2015 and the same period last year. These costs may vary from period to period depending on the amount of acquisition activity that takes place.
Non-segment Allocated Results
Certain statement of operations amounts are not allocated to segment operations. These amounts are those line items that can be found on our unaudited condensed consolidated statement of operations below operating profit and above net income (loss).
The table below summarizes these items and the changes between the three months ended March 31, 2015 and 2014:

 	  	Three months ended March 31,	 	
 	  	2015	 	  	2014	 	  	Change ($)	 	  	Change (%)	 	
 	  	(in thousands)	 	
Gain on acquisition	  	$	—  	  	  	$	412	  	  	$	(412	) 	  	 	-100.0	% 	
Interest expense	  	 	5,463	  	  	 	5,574	  	  	 	(111	) 	  	 	-2.0	% 	
Income tax expense (benefit)	  	$	65	  	  	$	(310	) 	  	$	375	  	  	 	-121.0	% 	
The gain on acquisition recorded during the three months ended March 31, 2014 relates to our first quarter 2014 acquisition. Refer to Note 13 of our unaudited condensed consolidated financial statements in Item 1 of this Form 10-Q for a more detailed discussion.
Interest expense was relatively consistent period over period. There was a decrease in interest expense on amounts outstanding under the credit facility, primarily due to a reduction in interest rates. This decrease was partially offset by an increase in discount accretion expense, primarily relating to the obligation for the lease and management agreements entered into in 2014 with the Archdiocese of Philadelphia. Average amounts outstanding under the credit facility were $125.0 million and $100.6 million during the three months ended March 31, 2015 and 2014, respectively.
We had an income tax expense of $0.1 million for the three months ended March 31, 2015, as compared to an income tax benefit of $0.3 million during the same period last year. 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.
Supplemental Data
The following table presents supplemental operating data for the periods presented:
 
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 	  	Three months ended
March 31, 2015	 	  	Three months ended
March 31, 2014	 	
Operating Data:	  				  				
Interments performed	  	 	14,612	  	  	 	11,313	  	
Cemetery revenues per interment performed	  	$	3,569	  	  	$	4,653	  	
			
Interment rights sold (1):	  				  				
Lots	  	 	7,050	  	  	 	5,277	  	
Mausoleum crypts (including pre-construction)	  	 	618	  	  	 	564	  	
Niches	  	 	369	  	  	 	261	  	
	  	 	 	 	  	 	 	 	
Net interment rights sold (1)		 	8,037	  		 	6,102	  	
	  	 	 	 	  	 	 	 	
Number of contracts written		 	29,481	  		 	23,831	  	
Aggregate contract amount, in thousands (excluding interest)		$	78,304	  		$	63,672	  	
Average amount per contract (excluding interest)		$	2,656	  		$	2,672	  	
			
Number of pre-need contracts written		 	13,701	  		 	11,928	  	
Aggregate pre-need contract amount, in thousands (excluding interest)		$	50,028	  		$	41,762	  	
Average amount per pre-need contract (excluding interest)		$	3,651	  		$	3,501	  	
			
Number of at-need contracts written		 	15,780	  		 	11,903	  	
Aggregate at-need contract amount, in thousands (excluding interest)		$	28,276	  		$	21,910	  	
Average amount per at-need contract (excluding interest)		$	1,792	  		$	1,841	  	

(1)	Net of cancellations. Sales of double-depth burial lots are counted as two sales.	
Liquidity and Capital Resources
Overview
Our primary short-term liquidity needs are to fund general working capital requirements, repay our debt obligations, service our debt, make routine maintenance capital improvements and pay distributions. We will need additional liquidity to construct mausoleum and lawn crypts on the grounds of our cemetery properties.
Our primary sources of liquidity are cash flows from operations and amounts available under our revolving credit facility as described below. In the past, we have been able to increase our liquidity through long-term bank borrowings and the issuance of additional common units and other partnership securities, including debt, subject to the restrictions in our revolving credit facility and under our senior notes.
We believe that cash generated from operations and our borrowing capacity under our revolving credit facility, which is discussed below, will be sufficient to meet our working capital requirements as well as our anticipated capital expenditures for the foreseeable future.
In addition to macroeconomic conditions, our ability to satisfy our debt service obligations, fund planned capital expenditures, make acquisitions and pay distributions to partners will depend upon our future operating performance. Our operating performance is primarily dependent on the sales volume of customer contracts, the cost of purchasing cemetery merchandise that we have sold, the amount of funds withdrawn from merchandise trusts and perpetual care trusts and the timing and amount of collections on our pre-need installment contracts.
Long-term Debt
7.875% Senior Notes due 2021
On May 28, 2013, we issued $175.0 million aggregate principal amount of 7.875% Senior Notes due 2021 (the “Senior Notes”). We pay 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, since December 1, 2013. The net proceeds from the offering were used to retire our previously outstanding $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
 
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par resulting in gross proceeds of $171.2 million with an original issue discount of approximately $3.8 million. We incurred debt issuance costs and fees of approximately $4.6 million. These costs and fees are deferred and are amortized over the life of the Senior Notes. As of March 31, 2015, we were in compliance with all applicable covenants of the Senior Notes.
Credit Facility
On December 19, 2014, we entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”).
The Credit Agreement provides for a single revolving credit facility of $180.0 million (the “Credit Facility”) maturing on December 19, 2019. Additionally the Credit Agreement provides for an uncommitted ability to increase the Credit Facility by an additional $70.0 million. The summary of the material terms of the Credit Agreement is set forth below. Capitalized terms, which are not defined in the following description, shall have the meaning assigned to such terms in the Credit Agreement.
At March 31, 2015, amounts outstanding under the Credit Facility bore interest at rates of approximately 3.5%. The interest rates on the Credit Facility are calculated as follows:
 
 	•	 	For Eurodollar Rate Loans, the outstanding principal amount thereof bears interest for each Interest Period at a rate per annum equal to the Eurodollar Rate for the Interest Period plus the Applicable Rate for Eurodollar Rate Loans; and	
 
 	•	 	For Base Rate Loans and Swing Line Loans, the outstanding principal amount thereof bears interest from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for Base Rate Loans.	
In addition, the Borrowers must pay a Letter of Credit Fee for each Letter of Credit equal to the Applicable Rate for Letter of Credit Fees times the daily amount to be drawn under such Letter of Credit. The Applicable Rate is determined based on our Consolidated Leverage Ratio, and ranges from 2.25% to 4.00% for Eurodollar Rate Loans and Letter of Credit Fees, and 1.25% to 3.00% for Base Rate Loans. The current Applicable Rate for each of: (i) Eurodollar Rate Loans and Letter of Credit Fees is 3.75% and (ii) Base Rate Loans is 2.75% based on the current Consolidated Leverage Ratio. The Credit Agreement also requires the Borrowers to pay a quarterly unused commitment fee, which is calculated based on the amount by which the commitments under the Credit Agreement exceed the usage of such commitments.
The Credit Agreement contains financial covenants, pursuant to which the Borrowers and the Guarantors will not permit:
 
 	•	 	Consolidated EBITDA for any Measurement Period to be less than the sum of (i) $80.0 million plus (ii) 80% of the aggregate of all Consolidated EBITDA for each Permitted Acquisition completed after June 30, 2014;	
 
 	•	 	the Consolidated Debt Service Coverage Ratio to be less than 2.50 to 1.0 for any Measurement Period; and	
 
 	•	 	the Consolidated Leverage Ratio to be greater than 4.00 to 1.0 for any period.	
The covenants include, among other limitations, limitations on: (i) liens, (ii) the creation or incurrence of debt, (iii) investments and acquisitions, (iv) dispositions of property, (v) dividends, distributions and redemptions, and (vi) transactions with Affiliates.
As of March 31, 2015, we were in compliance with all applicable financial covenants.
The Credit Agreement provides that two types of draws are permitted with respect to the Credit Facility: Acquisition Draws and Working Capital Draws. The proceeds of Acquisition Draws may be utilized by the Borrowers to finance Permitted Acquisitions, the purchase and construction of mausoleums and related costs or the net amount of Merchandise Trust deposits made after the Closing Date under the Credit Agreement, irrespective of whether such amounts relate to new or existing cemeteries or funeral homes. The proceeds of Working Capital Draws, Letters of Credit and Swing Line Loans may be utilized by the Borrowers to finance working capital requirements, Capital Expenditures and for other general corporate purposes. The borrowing of Working Capital Advances is subject to a borrowing formula of 85% of Eligible Receivables.
 
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Each Acquisition Draw is subject to equal quarterly amortization of the principal amount of such draw, with annual principal payments comprised of ten percent (10%) of the related draw amount, commencing on the second anniversary of such draw, with the remaining principal due on the Maturity Date, subject to certain mandatory prepayment requirements. Working Capital Draws are due on the Maturity Date, subject to certain mandatory prepayment requirements.
Amounts outstanding under our Credit Facility fluctuated during the three months ended March 31, 2015 and 2014. At the beginning of 2014, we had $114.0 million outstanding on our Credit Facility. During the first quarter of 2014, we reduced our borrowings on the Credit Facility by $36.6 million as we had borrowed $17.0 million prior to February 27, 2014 and then we used the net proceeds from our February 27, 2014 follow-on public offering and other available cash to repay $53.6 million of amounts outstanding on our Credit Facility, resulting in outstanding borrowings of $77.4 million at March 31, 2014. At the beginning of 2015, we had $110.9 million outstanding on our Credit Facility. During the first quarter of 2015, we increased our borrowings on the Credit Facility by a net $12.0 million resulting in outstanding borrowings of $122.9 million on our Credit Facility at March 31, 2015. The average amounts borrowed under our Credit Facility were $125.0 million and $100.6 million for the three months ended March 31, 2015 and 2014, respectively.
For a more detailed description of our long-term debt agreements, see our 2014 Form 10-K.
Cash Flow from Operating Activities
Net cash flows provided by operating activities were $5.9 million during the three months ended March 31, 2015, compared to net cash flows used in operating activities of $2.9 million during the same period last year. The key factors contributing to the net increase in cash flows were the decreased amount of cash we used to settle accounts payable and accrued liabilities and a decrease in inflows into our trusts. These increases in cash flow were partially offset by an increase in accounts receivable and less cash generated from normal revenue producing activities during the first quarter of 2015 compared to the same period in 2014.
Cash Flow from Investing Activities
Net cash used in investing activities was $2.8 million during the three months ended March 31, 2015 as compared to $2.3 million during the same period last year. Cash flows used for investing activities during the three months ended March 31, 2015 were for capital expenditures, while cash flows used for investing activities during the three months ended March 31, 2014 were $0.2 million for the acquisition of one cemetery and $2.1 million for capital expenditures.
Cash Flow from Financing Activities
Net cash flows used in financing activities were $7.0 million during the three months ended March 31, 2015 as compared to net cash provided of $1.3 million during the same period last year. Cash flows used in financing activities for the three months ended March 31, 2015 consisted of cash distributions to unit holders of $17.9 million, partially offset by approximately $10.9 million of net borrowings from our long-term debt. Cash flows provided by financing activities for the three months ended March 31, 2014 consisted of $53.2 million of proceeds from our follow-on public offering, partially offset by net repayments of long-term debt of $38.5 million, and cash distributions to unit holders of $13.4 million.
Capital Expenditures
The following table summarizes total maintenance capital expenditures and expansion capital expenditures, including expenditures for acquisitions described in Note 13 of our unaudited condensed consolidated financial statements in Item 1 of Part I of this Form 10-Q and the construction of mausoleums for the periods presented:

 	  	Three months ended
March 31,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Maintenance capital expenditures	  	$	1,314	  	  	$	1,330	  	
Expansion capital expenditures	  	 	1,501	  	  	 	948	  	
	  	 	 	 	  	 	 	 	
Total capital expenditures		$	2,815	  		$	2,278	  	

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Seasonality
The death care business is relatively stable and predictable. Although we experience seasonal increases in deaths due to extreme weather conditions and winter flu, these increases have not historically had any significant impact on our results of operations. In addition, we perform fewer initial openings and closings in the winter when the ground is frozen.
 
 Item 3.	Quantitative and Qualitative Disclosure About Market Risk	
The information presented below should be read in conjunction with the notes to our unaudited condensed consolidated financial statements included under “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q.
The market risk inherent in our market risk sensitive instruments and positions is the potential change arising from increases or decreases in interest rates and the prices of marketable equity securities, as discussed below. Our exposure to market risk includes forward-looking statements and represents an estimate of possible changes in fair value or future earnings that would occur assuming hypothetical future movements in interest rates or debt and equity markets. Our views on market risk are not necessarily indicative of actual results that may occur and do not represent the maximum possible gains and losses that may occur, since actual gains and losses will differ from those estimated, based on actual fluctuations in interest rates, equity markets and the timing of transactions. We classify our market risk sensitive instruments and positions as “other than trading.”
Interest-Bearing Investments
Our fixed-income securities subject to market risk consist primarily of investments in our merchandise trusts and perpetual care trusts. As of March 31, 2015, the fair value of fixed-income securities in our merchandise trusts represented 4.0% of the fair value of total trust assets while the fair value of fixed-income securities in our perpetual care trusts represented 7.2% of the fair value of total trust assets. The aggregate quoted fair value of these fixed-income securities was $19.5 million and $24.7 million in merchandise trusts and perpetual care trusts, respectively, as of March 31, 2015. Each 1% change in interest rates on these fixed-income securities would result in changes of approximately $195,000 and $247,000 in the fair market value of the assets in our merchandise trusts and perpetual care trusts, respectively, 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 investments in our merchandise trusts and perpetual care trusts. As of March 31, 2015, the fair value of money market and short-term investments in our merchandise trusts represented 6.5% of the fair value of total trust assets while the fair value of money market and short-term investments in our perpetual care trusts represented 8.7% of the fair value of total trust assets. The aggregate quoted fair value of these money market and short-term investments was $31.6 million and $30.0 million in the merchandise trusts and perpetual care trusts, respectively, as of March 31, 2015. Each 1% change in interest rates on these money market and short-term investments would result in changes of approximately $316,000 and $300,000 in the fair market value of the assets in our merchandise trusts and perpetual care trusts, respectively, based on discounted expected future cash flows.
Marketable Equity Securities
Our marketable equity securities subject to market risk consist primarily of 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, 2015, the fair value of marketable equity securities in our merchandise trusts represented 11.1% of the fair value of total trust assets while the fair value of marketable equity securities in our perpetual care trusts represented 0.8% of total trust assets. The aggregate quoted fair market value of these marketable equity securities was $54.1 million and $2.6 million in our merchandise trusts and perpetual care trusts, respectively, as of March 31, 2015, based on final quoted sales prices. Each 10% change in the average market prices of the equity securities would result in a change of approximately $5.4 million and $0.3 million in the fair market value of securities held in the merchandise trusts and perpetual care trusts, respectively. As of March 31, 2015, the fair value of marketable closed and open ended mutual funds in our merchandise trusts represented 75.7% of the fair value of total trust assets, 48.9% of which pertained to fixed-income mutual funds. As of March 31, 2015, the fair value of closed and open ended mutual funds in our perpetual care trusts represented 83.4% of total trust assets, 57.4% of which pertained to fixed-income mutual funds. The aggregate quoted fair market value of these closed and open ended mutual funds was $369.3 million and $287.8 million, respectively, in the merchandise trusts and perpetual care trusts as of March 31, 2015, based on final quoted sales prices, of which $238.7 million and $198.1 million, respectively, pertained to fixed-income mutual funds. Each 10% change in the average market prices of the closed and open ended mutual funds would result in a change of approximately $36.9 million and $28.8 million in the fair market value of securities held in our merchandise trusts and perpetual care trusts, respectively.
 
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Investment Strategies and Objectives
Our internal investment strategies and objectives for funds held in the merchandise trusts and perpetual care trusts are specified in an Investment Policy Statement that requires us to do the following:
 
 	•	 	State in a written document our expectations, objectives, tolerances for risk and guidelines in the investment of our assets;	
 
 	•	 	Set forth a disciplined and consistent structure for managing all trust assets. This structure is based on a long-term asset allocation strategy, which is diversified across asset classes, investment styles and strategies. We believe this structure is likely to meet our stated objectives within our tolerances for risk and variability. This structure also includes ranges around the target allocations allowing for adjustments when appropriate to reduce risk or enhance returns. It further includes guidelines for the selection of investment managers and vehicles through which to implement the investment strategy;	
 
 	•	 	Provide specific guidelines for each investment manager. These guidelines control the level of overall risk and liquidity assumed in each portfolio;	
 
 	•	 	Appoint third-party investment advisors to oversee the specific investment managers and advise our Trust Committee; and	
 
 	•	 	Establish criteria to monitor, evaluate and compare the performance results achieved by the overall trust portfolios and by our investment managers. This allows us to compare the performance results of the trusts to our objectives and other benchmarks, including peer performance, on a regular basis.	
Our investment guidelines are based on relatively long investment horizons, which vary with the type of trust. Because of this, interim fluctuations should be viewed with appropriate perspective. The strategic asset allocation of the trust portfolios is also based on this longer-term perspective. However, in developing our investment policy, we have taken into account the potential negative impact on our operations and financial performance of significant short-term declines in market value.
We recognize the challenges we face in achieving our investment objectives in light of the uncertainties and complexities of contemporary investment markets. Furthermore, we recognize that in order to achieve the stated long-term objectives we may have short-term declines in market value. Given the need to maintain consistent values in the portfolio, we have attempted to develop a strategy, which is likely to maximize returns and earnings without experiencing overall declines in value in excess of 3% over any 12-month period. However, we are considering alternative strategies in light of current market conditions.
In order to consistently achieve the stated return objectives within our tolerance for risk, we use a strategy of allocating appropriate portions of our portfolio to a variety of asset classes with attractive risk and return characteristics, and low to moderate correlations of returns. See the notes to our unaudited condensed consolidated financial statements for a breakdown of the assets held in our merchandise trusts and perpetual care trusts by asset class.
Debt Instruments
Our Credit Facility bears 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, 2015, we had $122.9 million of borrowings outstanding under our Credit Facility. After these borrowings, our total available borrowing capacity under the Credit Facility is $57.1 million. The revolving credit facility provides for both acquisition draws, which are used primarily to finance acquisitions, acquisition related costs and mausoleum construction costs, and working capital draws, which are used to finance all other corporate costs. As of March 31, 2015, we had approximately $97.9 million of working capital draws, which are limited to a borrowing formula of 85% of eligible account receivables. This limit was $133.0 million at March 31, 2015. The amounts outstanding under the Credit Facility bore interest at rates of approximately 3.5% at March 31, 2015.
 
 Item 4.	Controls and Procedures	
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the 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.
 
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As of the end of the period covered by this report, 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 upon, and as of the date of this evaluation, our Chief Executive Officer and our 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 reports under 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.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 Part II – Other Information
 
 Item 1.	Legal Proceedings	
We and certain of our subsidiaries are parties to legal proceedings that have arisen in the ordinary course of business. We do not expect these matters to have a material adverse effect on our consolidated financial position, results of operations or cash flows. We carry insurance with coverage and coverage limits that we believe to be customary in the funeral home and cemetery industries. Although there can be no assurance that such insurance will be sufficient to protect us against all contingencies, we believe that our insurance protection is reasonable in view of the nature and scope of our operations.
 
 Item 1A.	Risk Factors	
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in “Part I, Item 1A. Risk Factors” in our 2014 Form 10-K and other reports that we file with the SEC, which could materially affect our business, financial condition or future results.
The risks described in the 2014 Form 10-K and other reports that we file with the SEC are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including the risks faced by us described in our 2014 Form 10-K and other reports that we file with the SEC.
 
 Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	
None.
 
 Item 3.	Defaults Upon Senior Securities	
None.
 
 Item 4.	Mine Safety Disclosures	
None.
 
 Item 5.	Other Information	
None.
 
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 Item 6.	Exhibits	

Exhibit
Number	  	Description	
		
10.1	  	Form of Indemnification Agreement by and between StoneMor GP LLC and Leo J. Pound and Jonathan Contos, dated February 26, 2015.	
		
31.1	  	Certification pursuant to Exchange Act Rule 13a-14(a) of Lawrence Miller, Chief Executive Officer, President and Chairman of the Board of Directors.	
		
31.2	  	Certification pursuant to Exchange Act Rule 13a-14(a) of Timothy K. Yost, Chief Financial Officer.	
		
32.1	  	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and Exchange Act Rule 13a-14(b) of Lawrence Miller, Chief Executive Officer, President and Chairman 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 Rule 13a-14(b) of Timothy K. Yost, Chief Financial Officer (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 March 31, 2015, and December 31, 2014; (ii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014; (iii) Unaudited Condensed Consolidated Statement of Partners’ Capital (Deficit); (iv) Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2015 and 2014; 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.	
 
44

Table of Contents
 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.

		STONEMOR PARTNERS L.P.	
		By: StoneMor GP LLC	
		its general partner	
		
May 8, 2015		/s/ Lawrence Miller	
		Lawrence Miller	
		Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)	
		
May 8, 2015		/s/ Timothy K. Yost	
		Timothy K. Yost	
		Chief Financial Officer (Principal Financial Officer)	
 
45

Table of Contents
Exhibit Index

Exhibit
Number	  	Description	
		
10.1	  	Form of Indemnification Agreement by and between StoneMor GP LLC and Leo J. Pound and Jonathan Contos, dated February 26, 2015.	
		
31.1	  	Certification pursuant to Exchange Act Rule 13a-14(a) of Lawrence Miller, Chief Executive Officer, President and Chairman of the Board of Directors.	
		
31.2	  	Certification pursuant to Exchange Act Rule 13a-14(a) of Timothy K. Yost, Chief Financial Officer.	
		
32.1	  	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and Exchange Act Rule 13a-14(b) of Lawrence Miller, Chief Executive Officer, President and Chairman 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 Rule 13a-14(b) of Timothy K. Yost, Chief Financial Officer (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 March 31, 2015, and December 31, 2014; (ii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014; (iii) Unaudited Condensed Consolidated Statement of Partners’ Capital (Deficit); (iv) Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2015 and 2014; 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.	
 
46

Exhibit 10.1
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, dated February 26, 2015, is effective as of August 26, 2014, between StoneMor GP LLC, a Delaware limited liability company (the “Company”), and the undersigned director of the Company (“Indemnitee”).
WHEREAS, the Company has adopted a Limited Liability Company Agreement (the “LLC Agreement”) providing for indemnification of the Company’s directors and officers to the fullest extent authorized by the Delaware Limited Liability Company Act (the “State Statute”); and
WHEREAS, the LLC Agreement and State Statute contemplate that contracts and insurance policies may be entered into with respect to indemnification of directors; and
WHEREAS, there are questions concerning the adequacy and reliability of the protection which might be afforded to directors and officers from acquisition of policies of Directors and Officers Liability Insurance (“D&O Insurance”), covering certain liabilities which might be incurred by directors in the performance of their services to the Company; and
WHEREAS, it is reasonable, prudent and necessary for the Company to obligate itself contractually to indemnify Indemnitee so that he will serve or continue to serve the Company free from undue concern that he will not be adequately protected; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on condition that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
1. Definitions. As used in this Agreement:
(a) The term “Proceeding” shall include any threatened, pending or completed action, suit, inquiry or proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil, criminal, administrative, arbitrative or investigative nature, in which Indemnitee is or will be involved as a party, as a witness or otherwise, by reason of the fact that Indemnitee is or was a director or agent of the Company, by reason of any action taken by him or of any inaction on his part while acting as a director or agent or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement; provided that any such action, suit or proceeding that is brought by Indemnitee against that Company or directors or officers of the Company, other than an action brought by Indemnitee to enforce his rights under this Agreement, shall not be deemed a Proceeding without prior approval by a majority of the Board of Directors of the Company.
(b) The term “Expenses” shall include, without limitation, any judgments, fines and penalties against Indemnitee in connection with a Proceeding; amounts paid by Indemnitee in settlement of a Proceeding; and all attorneys’ fees and disbursements, accountants’ fees, private investigation fees and

disbursements, retainers, court costs, transcript costs, fees of experts, fees and expenses of witnesses, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements, or expenses, reasonably incurred by or for Indemnitee in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in a Proceeding or establishing Indemnitee’s right of entitlement to indemnification for any of the foregoing.
(c) References to “other enterprise” shall include employee benefit plans; references to “Fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director or agent of the Company that imposes duties on, or involves services by, such director or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Company” as referred to in this Agreement.
(d) The term “substantiating documentation” shall mean copies of bills or invoices for costs incurred by or for Indemnitee, or copies of court or agency orders or decrees or settlement agreements, as the case may be, accompanied by a sworn statement from Indemnitee that such bills, invoices, court or agency orders or decrees or settlement agreements, represent costs or liabilities meeting the definition of “Expenses” herein.
(e) The terms “he” and “his” have been used for convenience and mean “she” and “her” if Indemnitee is a female.
2. Indemnity of Director. The Company hereby agrees to hold harmless and indemnify Indemnitee against Expenses to the fullest extent authorized or permitted by law (including the applicable provisions of the State Statute). The phrase “to the fullest extent permitted by law” shall include, but not be limited to (i) to the fullest extent permitted by any provision of the State Statute that authorizes or permits additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the State Statute and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the State Statute adopted after the date of this Agreement that increase the extent to which a limited liability company may indemnify its directors. Any amendment, alteration or repeal of the State Statute that adversely affects any right of Indemnitee shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
3. Additional Indemnity. The Company hereby further agrees to hold harmless and indemnify Indemnitee against Expenses incurred by reason of the fact that Indemnitee is or was a director or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise, including, without limitation, any predecessor, subsidiary or affiliated entity of the Company, provided that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or gross negligence, or, in the case

of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful. The termination of any Proceeding by judgment, order of the court, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that Indemnitee acted in bad faith or engaged in fraud, willful misconduct or gross negligence, or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.
4. Choice of Counsel. If Indemnitee is not an officer of the Company, he, together with the other directors who are not officers of the Company (the “Outside Directors”), shall be entitled to employ, and be reimbursed for the fees and disbursements of, counsel separate from that chosen by Indemnitees who are officers of the Company. The principal counsel for Outside Directors (“Principal Counsel”) shall be determined by majority vote of the Outside Directors, and the Principal Counsel for the Indemnitees who are not Outside Directors (“Separate Counsel”) shall be determined by majority vote of such Indemnitees. The obligation of the Company to reimburse Indemnitee for the fees and disbursements of counsel hereunder shall not extend to the fees and disbursements of any counsel employed by Indemnitee other than Principal Counsel or Separate Counsel, as the case may be, unless, in the opinion of other counsel for Indemnitee, concurred in by Principal Counsel or Separate Counsel, as the case may be, Indemnitee may have defenses available to him that are in addition to or different from those of the other Indemnitees such that there is a substantial possibility that Principal Counsel of Separate Counsel, as the case may be, will have a conflict of interest in representing Indemnitee.
5. Advances of Expenses. Expenses (other than judgments, penalties, fines and settlements) incurred by Indemnitee shall be paid by the Company, in advance of the final disposition of the Proceeding, within 10 days after receipt of Indemnitee’s written request accompanied by substantiating documentation and Indemnitee’s written affirmation that he has met the standard of conduct for indemnification and a written undertaking to repay such amount to the extent it is ultimately determined that indemnitee is not entitled to indemnification. No objections based on or involving the question whether such charges meet the definition of “Expenses,” including any question regarding the reasonableness of such Expenses, shall be grounds for failure to advance to such Indemnitee, or to reimburse such Indemnitee for, the amount claimed within such 10-day period, and the undertaking of Indemnitee set forth in Section 7 hereof to repay any such amount to the extent it is ultimately determined that Indemnitee is not entitled to indemnification shall be deemed to include an undertaking to repay any such amounts determined not to have met such definition.
6. Right of Indemnitee to Indemnification Upon Application; Procedure Upon Application. Any indemnification under this Agreement, other than pursuant to Section 5 hereof, shall be made no later than 45 days after receipt by the Company of the written request of Indemnitee, accompanied by substantiating documentation, unless a determination is made within said 45-day period by (1) the Board of Directors by a majority vote of a quorum consisting of directors who are not or were not parties to such Proceeding, (2) by a committee of the Board of Directors designated by majority vote of the Board of Directors, even though less than a quorum, (3) if there are no such directors, or if such directors so direct, independent legal counsel in a written opinion or (4) by the members, that Indemnitee has not met the relevant standards for indemnification set forth in Section 3 hereof.
The right to indemnification or advances as provided by this Agreement shall be enforceable by Indemnitee in any court of competent jurisdiction. The burden of proving that indemnification is not appropriate shall be on the Company. Neither the failure of the Company (including its Board of Directors, committee thereof, independent legal counsel or members) to have made a determination

prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standards of conduct, nor an actual determination by the Company (including its Board of Directors, committee thereof, independent legal counsel or members) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
7. Undertaking by Indemnitee. Indemnitee hereby undertakes to repay to the Company any advances of Expenses pursuant to Section 5 hereof to the extent that it is ultimately determined that Indemnitee is not entitled to indemnification.
8. Indemnification Hereunder Not Exclusive. The indemnification and advancement of expenses provided by this Agreement shall not deemed exclusive of any other rights to which Indemnitee may be entitled under the LLC Agreement, the State Statute, D&O Insurance, any agreement, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office; provided, however, that this Agreement supersedes all prior written indemnification agreements between the Company (or any predecessor thereof) and Indemnitee with respect to the subject matter hereof. However, Indemnitee shall reimburse the Company for amounts paid to him pursuant to such other rights to the extent such payments duplicate any payments received pursuant to this Agreement.
9. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding.
10. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
11. Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without the Company’s written consent. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. Neither the Company nor Indemnitee will unreasonably withhold their consent to any proposed settlement. The Company shall not be liable to indemnify Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action.
12. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on the Company hereby in order to induce Indemnitee to serve as a director of the Company, and acknowledges that Indemnitee is relying upon this Agreement in continuing as a director.

(b) In the event Indemnitee is required to bring any action or other proceeding to enforce rights or to collect money due under this Agreement and is successful in such action, the Company shall reimburse Indemnitee for all of Indemnitee’s Expenses in bringing and pursuing such action.
13. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware.
(b) This Agreement shall be binding upon the Company, its successors and assigns, and shall inure to the benefit of Indemnitee, his heirs, personal representatives and assigns and to the benefit of the Company, its successors and assigns.
(c) No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by the Company and Indemnitee.
14. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable (a) the validity, legality and enforceability of the remaining provisions of this Agreement shall not be in any way affected or impaired thereby, and (b) to the fullest extent possible, the provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. Each section of this Agreement is a separate and independent portion of this Agreement. If the indemnification to which Indemnitee is entitled as respects any aspect of any claim varies between two or more sections of this Agreement, that section providing the most comprehensive indemnification shall apply.
15. Notice. Notice to the Company shall be directed to StoneMor GP LLC, 311 Veterans Highway, Levittown, Pennsylvania 19056, Attention: Chief Executive Officer. Notice to Indemnitee shall be directed to the address set forth under his signature hereto. The foregoing addresses may be changed from time to time by the addressee upon notice to the other parties.
Notice shall be deemed received three days after the date postmarked if sent by prepaid mail, properly addressed.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF , the parties hereto have executed this Agreement on and as of the day and year first above written.

STONEMOR GP LLC	
		
By:		 	
Name: Lawrence Miller	
Title: President and Chief Executive Officer	
	
INDEMNITEE	

Name:	
Address:	

CERTIFICATION
Exhibit 31.1
I, Lawrence Miller, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of StoneMor Partners L.P.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    May 8, 2015				By:		/s/ Lawrence Miller	
						Lawrence Miller	
						President and Chief Executive Officer	
						(Principal Executive Officer)	

CERTIFICATION
Exhibit 31.2
I, Timothy K. Yost, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of StoneMor Partners L.P.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    May 8, 2015				By:		/s/ Timothy K. Yost	
						Timothy K. Yost	
						Chief Financial Officer	
						(Principal Financial Officer)	

Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of StoneMor GP LLC, the general partner of StoneMor Partners L.P. (the “Partnership”), does hereby certify with respect to the Quarterly Report of the Partnership on Form 10-Q for the quarter ended March 31, 2015 (the “Report”) that:
 
 	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.	

/s/ Lawrence Miller					
President and Chief Executive Officer				Date: May 8, 2015	
(Principal Executive Officer)					
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of StoneMor GP LLC, the general partner of StoneMor Partners L.P. (the “Partnership”), does hereby certify with respect to the Quarterly Report of the Partnership on Form 10-Q for the quarter ended March 31, 2015 (the “Report”) that:
 
 	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.	

/s/ Timothy K. Yost					
Chief Financial Officer				Date: May 8, 2015	
(Principal Financial Officer)					
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.