UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 8, 2014

StoneMor Partners L.P.
(Exact Name of Registrant as Specified in Its Charter)

 
					
Delaware	 	001-32270	 	80-0103159	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02	Results of Operations and Financial Condition	
On May 8, 2014, StoneMor Partners L.P. issued a press release announcing its operating results for the first quarter of 2014. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.
 
Item 9.01	Financial Statements and Exhibits	
 
 	(d)	Exhibits.	
The following exhibit is furnished herewith:

Exhibit
No.	  	Description	
		
99.1	  	Press Release dated May 8, 2014.	
 
2

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 hereunto duly authorized.

	 		 	STONEMOR PARTNERS L.P.	
				
	 		 	By:	 	StoneMor GP LLC	
	 		 		 	its general partner	
				
Date: May 8, 2014	 		 	By:	 	/s/    Timothy K. Yost        	
	 		 	Name:	 	Timothy K. Yost	
	 		 	Title:	 	Chief Financial Officer	
 
3

Exhibit Index

Exhibit
No.	  	Description	
		
99.1	  	Press Release dated May 8, 2014.	

Exhibit 99.1

StoneMor Partners L.P. Announces First Quarter 2014 Financial Results
LEVITTOWN, Pa., May 8, 2014—StoneMor Partners L.P. (NYSE: STON) (“StoneMor”) announced its results from operations for the three months ended March 31, 2014. Investors are encouraged to read the Company’s quarterly report on Form 10-Q to be filed with the SEC, which contains additional details, as well as financial tables, and can be found at www.stonemor.com .
Commenting on the quarter, Larry Miller, StoneMor’s President and CEO said, “Despite a very harsh winter, StoneMor continues to successfully execute its business plan. While our pre-need sales were impacted by the severe weather we experienced between January and March, we generated increases in both our GAAP revenue and production based revenue (non-GAAP) during the period. At the same time we saw strong increases in both operating profits and adjusted operating profits (non-GAAP ) while generating a solid increase in distributable free cash flow. Lastly, we also generated stronger than usual returns from our trust fund investments.”
Financial Highlights
 
•	 	Revenues (GAAP) for the three months ended March 31, 2014 were $64.4 million versus $59.6 million in prior year period, an 8.0% increase.	
 
•	 	Production-based revenue (non-GAAP) for the three months ended March 31, 2014 increased by $5.5 million, or 6.9%, to $85.7 million from $80.2 million during the prior-year period.	
 
•	 	Operating profits (GAAP) increased by $3.9 million to $5.3 million for the three months ended March 31, 2014, as compared to the $1.4 million in the prior-year period.	
 
•	 	Adjusted operating profits (non-GAAP) increased by $4.3 million, or 24.3%, to $22.0 million for the three-month period ended March 31, 2014 from $17.7 million in the same period last year.	
 
•	 	Distributable free cash flow (non-GAAP) for the three-month period ended March 31, 2014 increased to $22.1 million from $17.6 million in the same period last year, a 25.6% increase.	
 
•	 	Net cash used in operations was $2.9 million in the 2014 first quarter versus $6.9 million provided by operations in the prior year period, a decline of $9.8 million. The decline was primarily the result of changes in the timing of accounts payable and accrued liabilities plus an increase in the flow of funds into the merchandise trust.	

•	 	Backlog increased $16.8 million during the period ended March 31, 2014 to $497.7 million from $480.9 million at the end of December 31, 2013, and $61.0 million compared to the prior year period.	
 
•	 	Cash, accounts receivable and merchandise trusts, net of merchandise liabilities reached $462.6 million at the end of March 31, 2014.	
 
•	 	Net income (GAAP) for the three months ended March 31, 2014 was approximately $0.4 million, as compared to net loss of $2.2 million in the prior-year period.	
The Company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures used in managing the business may provide investors with additional information regarding underlying trends and ongoing results on a comparable basis. Specifically, management believes that production-based revenues and adjusted operating profit allow the investor to gain insight into the current operating performance of the Company. Please see the section of this press release “Non-GAAP Financial Measures” to view the reconciliation. Non-GAAP financial measures used by the Company should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for an analysis of the Company’s results as reported under U.S. GAAP. Certain 2013 information has been adjusted to include the effects of retrospective adjustments resulting from the Company’s 2013 first quarter acquisition.
“We continued to expand our business with the announcement that we were the successful bidder to acquire a substantial number of funeral homes and cemeteries that were made available as a result of the acquisition of Stewart Enterprises, Inc. by Service Corporation International (NYSE:SCI),” said Miller. “We have since signed definitive agreements to acquire these properties. While the transaction is subject to closing conditions, including FTC approval, as we previously reported, we expect them to be immediately accretive and we look forward to their future contributions.
“Earlier in the quarter we strengthened our balance sheet by paying down borrowings on our credit facility with the proceeds of a unit offering. We continue to grow our backlog while improving the liquidity provided by our aggregate cash, accounts receivable and merchandise trust value less merchandise liabilities, which reached $462.6 million at the end of March 31, 2014. All in all, we believe it was a solid quarter and a good start to 2014.”
Investor Conference Call and Webcast
StoneMor will conduct a conference call to discuss 2014 first quarter results today, Thursday, May 8, 2014 at 10:00 a.m. ET. The conference call can be accessed by calling (800) 954-0643. An audio replay of the conference call will be available by calling (800) 633-8284 through 12:00 p.m. ET on May 22, 2014. The reservation number for the audio replay is as follows: 21715199. A live webcast of the conference call will also be available to investors who may access the call through the Investors section of www.stonemor.com . An audio replay of the conference call will also be archived on StoneMor’s website at www.stonemor.com .

About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Levittown, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 278 cemeteries and 90 funeral homes in 28 states and Puerto Rico. StoneMor is the only publicly traded deathcare company structured as a partnership. StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise.
For additional information about StoneMor Partners L.P., please visit StoneMor’s website, and the Investor Relations section, at http://www.stonemor.com.
Forward-Looking Statements
Certain statements contained in this press release including, but not limited to, information regarding the status and progress of the Company’s operating activities, the plans and objectives of management, assumptions regarding our future performance and plans, and any financial guidance provided, as well as certain information in the Company’s other filings with the Securities and Exchange Commission (the “SEC”) and elsewhere are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements. These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated or implied, including, but not limited to, the following: uncertainties associated with future revenue and revenue growth; the effect of economic downturns; the impact of the Company’s significant leverage on our operating plans; our ability to service our debt and pay distributions; 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; uncertainties associated with the integration or anticipated benefits of our recent acquisitions or any future acquisitions; our ability to complete and fund additional acquisitions; 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, 2013 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.

Contact:	  	John McNamara	
	  	(215) 826-2800	

Non-GAAP Financial Measures
Production Based Revenue
We present production based revenue because management believes it provides for a useful measure of both the value of contracts written and investment and other income generated during a given period and is a critical component of adjusted operating profit.
Production based revenue is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.
Adjusted Operating Profit
We present Adjusted Operating Profit because management believes it provides for a useful measure of economic value added by presenting an effective matching of the value of current and future revenue sources generated within a given period to the cost of producing such revenue and managing our day to day operations within that same period. It is a significant measure that we believe is an indicator of eventual profit generated within a given period of time.
Adjusted Operating Profit is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.
Adjusted Operating Cash Generated
We present adjusted operating cash generated revenue because management believes it provides for a useful measure of the amount of cash generated that is available to make capital expenditures and partner distributions once all cash flow timing issues have been settled.
Adjusted operating cash generated is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.
Distributable Free Cash Flow
We present Distributable Free Cash Flow because management believes this information is a useful adjunct to Net Cash Provided by (Used in) Operating Activities under GAAP. Distributable Free Cash Flow is a significant liquidity metric that we believe is an indicator of our ability to generate cash flow during any quarter at a level sufficient to pay the quarterly distribution to the holders of our common units and for other purposes, such as repaying debt and expanding through strategic investments.
Distributable Free Cash Flow is similar to quantitative standards of free cash flow used throughout the deathcare industry and to quantitative standards of distributable cash flow used throughout the investment community with respect to publicly traded partnerships, but is not intended to be a prediction of the future. However, our calculation of distributable free cash flow may not be consistent with calculations of free cash flow, distributable cash flow or other similarly titled measures of other companies. Distributable Free Cash Flow should not be used as a substitute for the GAAP measure of cash flows from operating, investing, or financing activities.

Production Based Partners’ Capital
We present production based partners’ capital as a means to provide better insight into the value that our activities contribute to the enterprise. Because a portion of our revenues and direct selling expenses are captured on our balance sheet until we deliver the underlying goods or services, we believe that by including these items in our view of partners’ capital, we gain better insight into the value creation.
Backlog
We define backlog as deferred cemetery revenues and investment income less deferred selling and obtaining costs. It does not include deferred unrealized gains and losses on merchandise trust assets.

Reconciliation of Production Based Revenue (non-GAAP) and Adjusted Operating Profit (non-GAAP) to Revenue (GAAP) and Operating Profit (GAAP)

 	  	Three months ended	 	  	Three months ended	 	  	 	 	 	 	 	
 	  	March 31, 2014	 	  	March 31, 2013	 	  	 	 	 	 	 	
 	  	(in thousands)	 	  	(in thousands)	 	  	 	 	 	 	 	
 	  	Segment	 	  	 	 	 	 	 	  	Segment	 	  	 	 	 	 	 	  	Change in	 	 	Change in	 	
 	  	Results	 	  	GAAP	 	 	GAAP	 	  	Results	 	  	GAAP	 	 	GAAP	 	  	GAAP results	 	 	GAAP results	 	
 	  	(non-GAAP)	 	  	Adjustments	 	 	Results	 	  	(non-GAAP)	 	  	Adjustments	 	 	Results	 	  	($)	 	 	(%)	 	
Revenues	  				  				 				  				  				 				  				 				
Pre-need cemetery revenues	  	$	29,976	  	  	$	(9,268	) 	 	$	20,708	  	  	$	30,941	  	  	$	(9,429	) 	 	$	21,512	  	  	$	(804	) 	 	 	-3.7	% 	
At-need cemetery revenues	  	 	19,848	  	  	 	(1,225	) 	 	 	18,623	  	  	 	20,743	  	  	 	(1,364	) 	 	 	19,379	  	  	 	(756	) 	 	 	-3.9	% 	
Investment income from trusts	  	 	15,628	  	  	 	(9,651	) 	 	 	5,977	  	  	 	13,102	  	  	 	(8,472	) 	 	 	4,630	  	  	 	1,347	  	 	 	29.1	% 	
Interest income	  	 	2,007	  	  	 	—  	  	 	 	2,007	  	  	 	1,865	  	  	 	—  	  	 	 	1,865	  	  	 	142	  	 	 	7.6	% 	
Funeral home revenues	  	 	13,254	  	  	 	(1,507	) 	 	 	11,747	  	  	 	12,827	  	  	 	(1,409	) 	 	 	11,418	  	  	 	329	  	 	 	2.9	% 	
Other cemetery revenues	  	 	5,026	  	  	 	299	  	 	 	5,325	  	  	 	741	  	  	 	67	  	 	 	808	  	  	 	4,517	  	 	 	559.0	% 	

Total revenues	  	 	85,739	  	  	 	(21,352	) 	 	 	64,387	  	  	 	80,219	  	  	 	(20,607	) 	 	 	59,612	  	  	 	4,775	  	 	 	8.0	% 	

Costs and expenses	  				  				 				  				  				 				  				 				
									
Cost of goods sold	  	 	9,247	  	  	 	(1,743	) 	 	 	7,504	  	  	 	7,753	  	  	 	(1,463	) 	 	 	6,290	  	  	 	1,214	  	 	 	19.3	% 	
Cemetery expense	  	 	13,329	  	  	 	—  	  	 	 	13,329	  	  	 	12,785	  	  	 	—  	  	 	 	12,785	  	  	 	544	  	 	 	4.3	% 	
Selling expense	  	 	13,829	  	  	 	(2,640	) 	 	 	11,189	  	  	 	13,835	  	  	 	(2,611	) 	 	 	11,224	  	  	 	(35	) 	 	 	-0.3	% 	
General and administrative expense	  	 	7,645	  	  	 	—  	  	 	 	7,645	  	  	 	7,582	  	  	 	—  	  	 	 	7,582	  	  	 	63	  	 	 	0.8	% 	
Corporate overhead	  	 	7,456	  	  	 	—  	  	 	 	7,456	  	  	 	7,988	  	  	 	—  	  	 	 	7,988	  	  	 	(532	) 	 	 	-6.7	% 	
Depreciation and amortization	  	 	2,368	  	  	 	—  	  	 	 	2,368	  	  	 	2,330	  	  	 	—  	  	 	 	2,330	  	  	 	38	  	 	 	1.6	% 	
Funeral home expense	  	 	9,504	  	  	 	(218	) 	 	 	9,286	  	  	 	8,923	  	  	 	(187	) 	 	 	8,736	  	  	 	550	  	 	 	6.3	% 	
Acquisition related costs, net of recoveries	  	 	349	  	  	 	—  	  	 	 	349	  	  	 	1,283	  	  	 	—  	  	 	 	1,283	  	  	 	(934	) 	 	 	-72.8	% 	

Total costs and expenses	  	 	63,727	  	  	 	(4,601	) 	 	 	59,126	  	  	 	62,479	  	  	 	(4,261	) 	 	 	58,218	  	  	 	908	  	 	 	1.6	% 	

Operating profit	  	$	22,012	  	  	$	(16,751	) 	 	$	5,261	  	  	$	17,740	  	  	$	(16,346	) 	 	$	1,394	  	  	$	3,867	  	 	 	277.4	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
The table above analyzes our results of operations and the changes therein for the three months ended March 31, 2014, 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 the period and/ or changes in the timing when merchandise and services were delivered.
Critical Financial Measures

 	  	Three months ended	 	
 	  	March 31,	 	
 	  	2014	 	 	2013	 	
 	  	(in thousands)	 	
			
Total revenues (a)	  	$	64,387	  	 	$	59,612	  	
Production based revenue consisting of the total value of cemetery contracts written, funeral home revenues and investment and other income (b)	  	 	85,739	  	 	 	80,219	  	
			
Operating profit (a)	  	 	5,261	  	 	 	1,394	  	
Adjusted operating profit (b)	  	 	22,012	  	 	 	17,740	  	
			
Net income (loss) (a)	  	 	409	  	 	 	(2,200	) 	
			
Operating cash flows (a)	  	 	(2,940	) 	 	 	6,867	  	
Adjusted operating cash generated (b)	  	 	23,068	  	 	 	18,119	  	
Distributable free cash flow generated (b)	  	$	22,087	  	 	$	17,631	  	

 	  	As of	 	 	As of	 	
 	  	March 31, 2014	 	 	December 31, 2013	 	
			
Distribution coverage quarters (b)	  	 	11.18	  	 	 	7.65	  	

(a)	This is a GAAP financial measure.	
(b)	This is a non-GAAP financial measure as defined by the Securities and Exchange Commission. Please see the reconciliation to GAAP measures or support calculation within this press release.	

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

 	  	Three months ended	 	
 	  	March 31,	 	
 	  	2014	 	 	2013	 	
 	  	(in thousands)	 	
			
GAAP operating profit	  	$	5,261	  	 	$	1,394	  	
			
Increase in applicable deferred revenues	  	 	21,352	  	 	 	20,607	  	
Increase in deferred cost of goods sold and selling and obtaining costs	  	 	(4,601	) 	 	 	(4,261	) 	

Adjusted operating profit	  	$	22,012	  	 	$	17,740	  	
	  	 	 	 	 	 	 	 	
Reconciliation of Production Based Revenues (non-GAAP) to Revenues (GAAP)

 	  	Three months ended March 31,	 	 	Increase	 	 	Increase	 	
 	  	2014	 	 	2013	 	 	(Decrease) ($)	 	 	(Decrease) (%)	 	
 	  	(in thousands)	 	
					
Value of pre-need cemetery contracts written	  	$	29,976	  	 	$	30,941	  	 	$	(965	) 	 	 	-3.1	% 	
Value of at-need cemetery contracts written	  	 	19,848	  	 	 	20,743	  	 	 	(895	) 	 	 	-4.3	% 	
Investment income from trusts	  	 	15,628	  	 	 	13,102	  	 	 	2,526	  	 	 	19.3	% 	
Interest income	  	 	2,007	  	 	 	1,865	  	 	 	142	  	 	 	7.6	% 	
Funeral home revenues	  	 	13,254	  	 	 	12,827	  	 	 	427	  	 	 	3.3	% 	
Other cemetery revenues	  	 	5,026	  	 	 	741	  	 	 	4,285	  	 	 	578.3	% 	

Total production based revenues	  	 	85,739	  	 	 	80,219	  	 	 	5,520	  	 	 	6.9	% 	

Less:	  				 				 				 				
Increase in deferred sales revenue and investment income	  	 	(21,352	) 	 	 	(20,607	) 	 	 	(745	) 	 	 	3.6	% 	

Total GAAP revenues	  	$	64,387	  	 	$	59,612	  	 	$	4,775	  	 	 	8.0	% 	

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

 	  	Three months ended March 31,	 	
 	  	2014	 	 	2013	 	
 	  	(in thousands)	 	
			
GAAP operating cash flows	  	$	(2,940	) 	 	$	6,867	  	

Add net cash inflows into the merchandise trust	  	 	16,420	  	 	 	12,161	  	
Add net increase (decrease) in accounts receivable	  	 	3,168	  	 	 	1,385	  	
Add net decrease (increase) in merchandise liabilities	  	 	829	  	 	 	1,004	  	
Add net decrease (deduct net increase) in accounts payable and accrued expenses	  	 	9,564	  	 	 	(5,278	) 	
Other float related changes	  	 	(3,973	) 	 	 	1,980	  	

Adjusted operating cash flow generated	  	 	23,068	  	 	 	18,119	  	

Less: maintenance capital expenditures	  	 	(1,330	) 	 	 	(1,771	) 	
Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a)	  	 	349	  	 	 	1,283	  	

Distributable free cash flow generated	  	 	22,087	  	 	 	17,631	  	
Cash on hand - beginning of the period	  	 	12,175	  	 	 	7,946	  	

Distributable cash available for the period	  	 	34,262	  	 	 	25,577	  	

Partner distributions made	  	$	13,391	  	 	$	12,025	  	

(a)	We maintain a credit facility from which to make acquisitions and pay acquisition related costs. We utilize this line for these costs. Accordingly, distributable free cash flow is not negatively impacted by amounts spent on acquisitions that are recorded as expenses.	
Production Based Partners’ Capital

 	  	As of	 	 	As of	 	
 	  	March 31,
2014	 	 	December 31,
2013	 	
 	  	(in thousands)	 	
Partners’ capital	  	$	147,987	  	 	$	107,520	  	
			
Deferred selling and obtaining costs	  	 	(90,801	) 	 	 	(87,998	) 	
Deferred cemetery revenues, net	  	 	598,159	  	 	 	579,993	  	

Production based partners’ capital	  	$	655,345	  	 	$	599,515	  	

Selected Net Assets

 	  	As of	 	  	As of	 	
 	  	March 31, 2014	 	  	December 31, 2013	 	
 	  	(in thousands)	 	
			
Selected assets:	  				  				
			
Cash and cash equivalents	  	$	8,240	  	  	$	12,175	  	
Accounts receivable, net of allowance	  	 	55,809	  	  	 	55,415	  	
Long-term accounts receivable, net of allowance	  	 	80,484	  	  	 	78,367	  	
Merchandise trusts, restricted, at fair value	  	 	449,853	  	  	 	431,556	  	

Total selected assets	  	 	594,386	  	  	 	577,513	  	

Selected liabilities:	  				  				
			
Accounts payable and accrued liabilities	  	 	24,273	  	  	 	37,269	  	
Accrued interest	  	 	5,013	  	  	 	1,512	  	
Current portion, long-term debt	  	 	1,555	  	  	 	2,916	  	
Other long-term liabilities	  	 	1,457	  	  	 	1,527	  	
Long-term debt	  	 	252,054	  	  	 	289,016	  	
Deferred tax liabilities	  	 	12,498	  	  	 	12,407	  	
Merchandise liability	  	 	131,817	  	  	 	130,412	  	

Total selected liabilities	  	 	428,667	  	  	 	475,059	  	

Total selected net assets	  	$	165,719	  	  	$	102,454	  	

Distribution coverage quarters (a)	  	 	11.18	  	  	 	7.65	  	

(a)	This is a measure of the ratio of selected net assets to a quarterly distribution amount. The quarterly distribution amount is calculated by taking the end of the period outstanding common units (23,696,975 at March 31, 2014 and 21,377,102 at December 31, 2013, respectively) and multiplying these units by the declared distribution. This total is then added to the distribution due to the General Partner based upon the same variables.	

StoneMor Partners L.P.
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)

 	  	March 31,	 	 	December 31,	 	
 	  	2014	 	 	2013	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	8,240	  	 	$	12,175	  	
Accounts receivable, net of allowance	  	 	55,809	  	 	 	55,415	  	
Prepaid expenses	  	 	2,480	  	 	 	3,622	  	
Other current assets	  	 	19,199	  	 	 	22,667	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	85,728	  	 	 	93,879	  	
			
Long-term accounts receivable, net of allowance	  	 	80,484	  	 	 	78,367	  	
Cemetery property	  	 	314,909	  	 	 	316,469	  	
Property and equipment, net of accumulated depreciation	  	 	84,555	  	 	 	85,007	  	
Merchandise trusts, restricted, at fair value	  	 	449,853	  	 	 	431,556	  	
Perpetual care trusts, restricted, at fair value	  	 	318,154	  	 	 	311,771	  	
Deferred financing costs, net of accumulated amortization	  	 	7,836	  	 	 	8,308	  	
Deferred selling and obtaining costs	  	 	90,801	  	 	 	87,998	  	
Deferred tax assets	  	 	42	  	 	 	42	  	
Goodwill	  	 	48,737	  	 	 	48,737	  	
Other assets	  	 	11,868	  	 	 	12,209	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,492,967	  	 	$	1,474,343	  	

Liabilities and partners’ capital	  				 				
Current liabilities:	  				 				
Accounts payable and accrued liabilities	  	$	24,273	  	 	$	37,269	  	
Accrued interest	  	 	5,013	  	 	 	1,512	  	
Current portion, long-term debt	  	 	1,555	  	 	 	2,916	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	30,841	  	 	 	41,697	  	
			
Other long-term liabilities	  	 	1,457	  	 	 	1,527	  	
Long-term debt	  	 	252,054	  	 	 	289,016	  	
Deferred cemetery revenues, net	  	 	598,159	  	 	 	579,993	  	
Deferred tax liabilities	  	 	12,498	  	 	 	12,407	  	
Merchandise liability	  	 	131,817	  	 	 	130,412	  	
Perpetual care trust corpus	  	 	318,154	  	 	 	311,771	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	1,344,980	  	 	 	1,366,823	  	

Commitments and contingencies	  				 				
Partners’ capital	  				 				
General partner	  	 	(2,693	) 	 	 	(2,137	) 	
Common partners	  	 	150,680	  	 	 	109,657	  	
	  	 	 	 	 	 	 	 	
Total partners’ capital	  	 	147,987	  	 	 	107,520	  	

Total liabilities and partners’ capital	  	$	1,492,967	  	 	$	1,474,343	  	
	  	 	 	 	 	 	 	 	
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended March 31, 2014.

StoneMor Partners L.P.
Condensed Consolidated Statement of Operations
(in thousands, except per unit data)
(unaudited)

 	  	Three months ended	 	
 	  	March 31,	 	
 	  	2014	 	 	2013	 	
			
Revenues:	  				 				
Cemetery	  				 				
Merchandise	  	$	26,068	  	 	$	26,652	  	
Services	  	 	10,297	  	 	 	11,299	  	
Investment and other	  	 	16,275	  	 	 	10,243	  	
Funeral home	  				 				
Merchandise	  	 	5,052	  	 	 	4,953	  	
Services	  	 	6,695	  	 	 	6,465	  	
	  	 	 	 	 	 	 	 	
Total revenues	  	 	64,387	  	 	 	59,612	  	

Costs and expenses:	  				 				
Cost of goods sold (exclusive of depreciation shown separately below):	  				 				
Perpetual care	  	 	1,391	  	 	 	1,281	  	
Merchandise	  	 	6,113	  	 	 	5,009	  	
Cemetery expense	  	 	13,329	  	 	 	12,785	  	
Selling expense	  	 	11,189	  	 	 	11,224	  	
General and administrative expense	  	 	7,645	  	 	 	7,582	  	
Corporate overhead (including $271 and $330 in unit-based compensation for the three months ended March 31, 2014 and 2013, respectively)	  	 	7,456	  	 	 	7,988	  	
Depreciation and amortization	  	 	2,368	  	 	 	2,330	  	
Funeral home expense	  				 				
Merchandise	  	 	1,646	  	 	 	1,522	  	
Services	  	 	4,787	  	 	 	4,557	  	
Other	  	 	2,853	  	 	 	2,657	  	
Acquisition related costs, net of recoveries	  	 	349	  	 	 	1,283	  	
	  	 	 	 	 	 	 	 	
Total cost and expenses	  	 	59,126	  	 	 	58,218	  	

Operating profit	  	 	5,261	  	 	 	1,394	  	
			
Gain on acquisition	  	 	412	  	 	 	—  	  	
Gain on settlement agreement	  	 	—  	  	 	 	912	  	
Interest expense	  	 	5,574	  	 	 	5,463	  	
	  	 	 	 	 	 	 	 	
Net income (loss) before income taxes	  	 	99	  	 	 	(3,157	) 	
Income tax expense (benefit)	  	 	(310	) 	 	 	(957	) 	
	  	 	 	 	 	 	 	 	
Net income (loss)	  	$	409	  	 	$	(2,200	) 	
	  	 	 	 	 	 	 	 	
General partner’s interest in net income (loss) for the period	  	$	4	  	 	$	(40	) 	
Limited partners’ interest in net income (loss) for the period	  	$	405	  	 	$	(2,160	) 	
			
Net income (loss) per limited partner unit (basic and diluted)	  	$	.02	  	 	$	(.11	) 	
			
Weighted average number of limited partners’ units outstanding - basic	  	 	22,493	  	 	 	19,729	  	
Weighted average number of limited partners’ units outstanding - diluted	  	 	22,787	  	 	 	19,729	  	
			
Distributions declared per unit	  	$	.600	  	 	$	.590	  	
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended March 31, 2014.

StoneMor Partners L.P.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)

 	  	For the three months ended March 31,	 	
 	  	2014	 	 	2013	 	
			
Operating activities:	  				 				
Net income (loss)	  	$	409	  	 	$	(2,200	) 	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	  				 				
Cost of lots sold	  	 	3,057	  	 	 	1,735	  	
Depreciation and amortization	  	 	2,368	  	 	 	2,330	  	
Unit-based compensation	  	 	271	  	 	 	330	  	
Accretion of debt discounts	  	 	624	  	 	 	490	  	
Gain on settlement agreement	  	 	—  	  	 	 	(912	) 	
Gain on acquisition	  	 	(412	) 	 	 	—  	  	
Changes in assets and liabilities that provided (used) cash:	  				 				
Accounts receivable	  	 	(3,168	) 	 	 	(1,385	) 	
Allowance for doubtful accounts	  	 	705	  	 	 	(1,317	) 	
Merchandise trust fund	  	 	(16,420	) 	 	 	(12,161	) 	
Prepaid expenses	  	 	1,142	  	 	 	566	  	
Other current assets	  	 	3,394	  	 	 	696	  	
Other assets	  	 	(44	) 	 	 	(770	) 	
Accounts payable and accrued and other liabilities	  	 	(9,564	) 	 	 	5,278	  	
Deferred selling and obtaining costs	  	 	(2,803	) 	 	 	(2,745	) 	
Deferred cemetery revenue	  	 	18,881	  	 	 	18,987	  	
Deferred taxes (net)	  	 	(551	) 	 	 	(1,051	) 	
Merchandise liability	  	 	(829	) 	 	 	(1,004	) 	
	  	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	  	 	(2,940	) 	 	 	6,867	  	
	  	 	 	 	 	 	 	 	
Investing activities:	  				 				
Cash paid for cemetery property	  	 	(748	) 	 	 	(1,076	) 	
Purchase of subsidiaries	  	 	(200	) 	 	 	(9,100	) 	
Cash paid for property and equipment	  	 	(1,330	) 	 	 	(1,771	) 	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(2,278	) 	 	 	(11,947	) 	

Financing activities:	  				 				
Cash distributions	  	 	(13,391	) 	 	 	(12,025	) 	
Additional borrowings on long-term debt	  	 	17,000	  	 	 	20,948	  	
Repayments of long-term debt	  	 	(55,504	) 	 	 	(41,522	) 	
Proceeds from public offering	  	 	53,178	  	 	 	38,377	  	
Cost of financing activities	  	 	—  	  	 	 	(108	) 	
	  	 	 	 	 	 	 	 	
Net cash provided by financing activities	  	 	1,283	  	 	 	5,670	  	
	  	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	 	(3,935	) 	 	 	590	  	
Cash and cash equivalents - Beginning of period	  	 	12,175	  	 	 	7,946	  	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents - End of period	  	$	8,240	  	 	$	8,536	  	

Supplemental disclosure of cash flow information:	  				 				
Cash paid during the period for interest	  	$	1,423	  	 	$	1,245	  	
Cash paid during the period for income taxes	  	$	—  	  	 	$	451	  	
			
Non-cash investing and financing activities:	  				 				
Acquisition of assets by financing	  	$	30	  	 	$	62	  	
Issuance of limited partner units for cemetery acquisition	  	$	—  	  	 	$	3,592	  	
Acquisition of assets by assumption of directly related liability	  	$	—  	  	 	$	3,924	  	
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements on the Quarterly Report to be filed on Form 10-Q for the quarter ended March 31, 2014.